By Timothy Gardner

WASHINGTON, May 30 (Reuters) - The U.S. on Friday said Holtec's planned restart of the Palisades nuclear power plant in Michigan would not harm the environment, a needed step in its plan to become the first such plant to return from permanent shutdown.

The Nuclear Regulatory Commission conducted the environmental review of the Palisades reactor restart with the Department of Energy's Loan Programs Office.

Opponents of the restart had expressed concerns that steam generator tubes at Palisades are degraded because standard maintenance procedures were not followed when the plant went into shutdown. Holtec says it is plugging the tubes.

The LPO, which supports nuclear projects that are unable to get bank loans, closed a $1.52 billion loan guarantee for the Palisades restart in September 2024. President Donald Trump's administration provided the third disbursement of that financing, nearly $47 million, in April.

Power company Entergy ETR.N shut the 800-megawatt Palisades reactor in 2022, two weeks ahead of schedule over a glitch with a control rod. It had generated electricity for more than 50 years.

Holtec bought the plant to decommission it, but now hopes to reopen it. U.S. power demand has been rising for the first time in two decades on the boom in data centers and artificial intelligence.

Holtec says Palisades could reopen as soon as October. But it needs additional permits from the NRC. "Pending all federal reviews and approvals, our restart project is on track and on budget to bring Palisades back online by the fourth quarter of the year," said Holtec spokesperson Nick Culp.

Alan Blind, engineering director at the plant from 2006 to 2013, said in an editorial this month that if steam generator problems lead to a shutdown, it would "erode public confidence, damage investor trust, and raise serious safety concerns."

The NRC is reviewing Holtec's proposed repairs, said Scott Burnell, an agency spokesperson. "Holtec must demonstrate the Palisades steam generators will fulfill their safety functions before the plant restarts," Burnell said.

(Reporting by Timothy Gardner; Editing by David Gregorio)

((timothy.gardner@thomsonreuters.com))