[Federal Register Volume 69, Number 20 (Friday, January 30, 2004)]
[Rules and Regulations]
[Pages 4439-4448]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 04-1942]



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Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Rules 
and Regulations

[[Page 4439]]



NUCLEAR REGULATORY COMMISSION

10 CFR Part 50

RIN 3150-AG84


Financial Information Requirements for Applications To Renew or 
Extend the Term of an Operating License for a Power Reactor

AGENCY: Nuclear Regulatory Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Nuclear Regulatory Commission (NRC) is amending its 
regulations to remove the requirement that non-electric utility power 
reactor licensees submit financial qualifications information in their 
license renewal applications, and to add a new requirement that 
electric utility licensees of nuclear power reactors who become non-
electric utility entities without a license transfer must notify the 
NRC and submit information on their financial qualifications. The final 
rule will reduce unnecessary regulatory burden on licensees seeking 
renewal of operating licenses and ensure that licensees that become 
non-electric utility entities continue to be financially qualified to 
operate their facilities and maintain the public health and safety.

EFFECTIVE DATE: March 1, 2004.

FOR FURTHER INFORMATION CONTACT: George J. Mencinsky, Office of Nuclear 
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001, telephone (301) 415-3093, e-mail gjm@nrc.gov.

SUPPLEMENTARY INFORMATION:

Background

    Section 182.a. of the Atomic Energy Act of 1954, as amended (AEA), 
provides that ``each application for a license * * * shall specifically 
state such information as the Commission, by rule or regulation, may 
determine to be necessary to decide such of the technical and financial 
qualifications of the applicant * * * as the Commission may deem 
appropriate for the license.'' The NRC's regulations governing 
financial qualifications reviews of applications for licenses to 
construct or operate nuclear power plants are provided in 10 CFR 
50.33(f).
    Section 50.33(f)(2), adopted on September 12, 1984 (49 FR 35747), 
requires all applicants for initial operating licenses and renewal of 
operating licenses to submit financial qualifications information, 
except applicants for and holders of operating licenses for nuclear 
power reactors that are electric utilities. The exception for electric 
utilities was based on the premise that the cost-of-service ratemaking 
process ensures that electric utilities will have funds to operate 
their nuclear power plants safely. Because entities other than electric 
utilities do not have recourse to such ratemaking, they were required 
to submit information on financial qualifications in accordance with 
Sec. 50.33(f), and the NRC was required to make a finding of financial 
qualification for these non-electric utility entities under Sec. 
50.57(a)(4).
    In its 1991 License Renewal Rule, 10 CFR part 54 (56 FR 64943; 
December 13, 1991), the NRC reaffirmed that the basis of the 1984 
rulemaking for eliminating financial qualifications reviews for 
electric utilities applies not only for the term of the original 
license, but also for the period of operation covered by a renewed 
license (56 FR at 64968). The License Renewal Rule left unchanged the 
requirement in Sec. 50.33(f)(2) that license renewal applicants that 
are not electric utilities must submit financial qualifications 
information in their renewal applications. However, the section of the 
License Renewal Rule that contains the standards for issuance of a 
renewed license, 10 CFR 54.29, does not require a finding regarding 
financial qualifications for non-electric utility entities applying for 
license renewal. The revisions to 10 CFR part 54 published on May 8, 
1995 (60 FR 22461), did not amend the requirements in 10 CFR 54.29. 
Thus, while non-electric utility entities are required to submit 
financial qualifications information under 10 CFR 50.33, there is no 
requirement under 10 CFR 54.29 for a finding of financial 
qualifications for non-electric utility entities.
    Since the 1995 rulemaking, the NRC has received 40 requests for 
license renewals and has granted 23 renewed licenses for twelve plant 
sites to electric utilities. However, because of ongoing deregulation 
in the power market, new entities other than electric utilities may be 
created and become licensees of nuclear power plants. Some of these 
entities may decide to renew their licenses. Under the current rule, 
these entities would be required to submit financial qualifications 
information under Sec. 50.33(f)(2).
    NRC's case-by-case determination of financial qualifications is 
resource-intensive and may result in delays in approving renewal 
applications. The NRC has reviewed the license transfer process to 
determine if there is a basis in the regulatory process that would 
eliminate the need for such a finding at license renewal. The NRC 
determined that, with one exception, it does not need the financial 
qualifications information from license renewal applicants that are not 
electric utilities. The exception is when an existing nuclear power 
licensee transitions from an electric utility to an entity other than 
an electric utility without transferring its license. All license 
transfers involving non-electric utility applicants require 
consideration of the financial qualifications of the non-electric 
utility entity that holds or will hold the license. However, an 
electric utility licensee transitioning to a non-electric utility 
status without a license transfer would not be subject to an NRC review 
of financial qualifications for the licensee as a non-electric utility 
entity under current NRC rules. If not closed, this regulatory gap 
would prevent the NRC from making a generic determination that 
financial qualifications review is unnecessary at license renewal.
    On June 4, 2002, the NRC published a proposed rule in the Federal 
Register (67 FR 38427). The rule proposed to remove the requirement 
that non-electric utility power reactor licensees submit financial 
qualifications information in their license renewal applications, and 
to add a new requirement that licensees of nuclear power reactors who 
are electric utilities reorganizing as or changing their status to non-
electric utility entities without a

[[Page 4440]]

license transfer must notify the NRC and submit information on their 
financial qualifications. The proposed rule would reduce unnecessary 
regulatory burden on licensees seeking renewal of operating licenses 
and ensure that licensees reorganizing as or changing to non-electric 
utility entities continue to have financial resources to operate their 
facilities safely. The public comment period closed on August 19, 2002. 
Nine comments were received on the proposed rule.

Discussion

    After considering public comment, the NRC has decided to adopt the 
proposed rule unchanged as the final rule. The final rule will remove 
the requirement that non-electric utility power reactor licensees 
submit financial qualifications information in their license renewal 
applications. The final rule will also add a new requirement that 
licensees of nuclear power reactors who are electric utilities 
reorganizing as or changing their status to non-electric utility 
entities without a license transfer must notify the NRC and submit 
information on their financial qualifications. The final rule reduces 
unnecessary regulatory burden on licensees seeking renewal of operating 
licenses and ensures that licensees reorganizing as or changing to non-
electric utility entities continue to be financially qualified to 
operate their facilities and maintain the public health and safety. 
These changes will increase regulatory clarity and strengthen the NRC's 
ability to protect public health and safety. The following discussion 
presents the basis and rationale for this action.
    The NRC's regulations provide for an evaluation of the financial 
qualifications of an applicant for a nuclear power reactor operating 
license or a licensee at several points during a reactor's operating 
lifetime--at initial licensing, before license transfers, and when 
circumstances warrant an ad hoc request for additional financial 
information. In addition, the NRC monitors the financial trade press 
and other sources for information on licensees' financial situations.
    Currently, there is one gap in the NRC's regulatory provisions for 
evaluating a power reactor licensee's financial qualifications. The 
NRC's current regulations do not require a financial qualifications 
review when a licensee transitions from an electric utility to an 
entity other than an electric utility without transferring control of 
its license. This final rule will rectify the regulatory gap by 
imposing a requirement that these licensees submit financial 
qualifications information to the NRC. With the addition of this 
provision, the NRC believes it has a basis for concluding that non-
electric utility licensees that are holders of operating licenses for 
nuclear power reactors need not submit financial qualifications 
information during the license renewal process.
    With this final rule, the NRC believes that review of financial 
qualifications of non-electric utility licensee applicants at license 
renewal is not necessary. The resulting process for oversight of 
financial qualifications is sufficient to ensure that the NRC has 
adequate warning of adverse financial impacts so that the NRC can take 
timely regulatory action to ensure public health and safety and the 
common defense and security. The resulting process has two components: 
(1) A formal review of major triggering events, and (2) monitoring of 
financial health between the formal reviews due at the ``triggering 
events.'' The relevant triggering events are (1) initial operating 
license application, (2) license transfer, and (3) transition from an 
electric utility to a non-electric utility, either with or without 
transfer of control of the license. In addition, the NRC can review a 
licensee's financial qualifications at any point during the term of the 
license if there is evidence of a decline in the licensee's financial 
health. The NRC believes that there are no unique financial 
circumstances associated with license renewal because the NRC has no 
information indicating a licensee's revenues and expenses change due to 
license renewal.
    Between major triggering events, the NRC relies upon periodic 
monitoring of the financial health of licensees to detect whether 
additional regulatory scrutiny and action are necessary to assure 
public health and safety and the common defense and security. The NRC's 
current regulations require non-electric utility reactor licensees to 
submit 5 years of financial projections for license renewal 
applications. Because this financial qualifications information ages 
quickly and is of limited relevance years later, the NRC relies on a 
process of monitoring licensees throughout the term of their licenses 
for any indications that they may not have sufficient financial 
resources to operate their plants safely.
    The current licensee monitoring process involves the review of 
financial and industry trade press as well as other publicly available 
information, such as Securities and Exchange Commission (SEC) 
submissions and Federal Energy Regulatory Commission (FERC) 
submissions. The NRC reviews this information to identify changes in 
licensees' financial health, as well as indirect indicators of 
declining financial health such as layoffs or increasing technical 
problems. If the review of any of these sources indicates that a 
licensee's financial health may be deteriorating, the NRC can request 
additional financial information from the licensee as authorized by 10 
CFR 50.33(f)(4) to confirm that a licensee has the financial resources 
to operate the facility safely. The financial information that the NRC 
can request under 10 CFR 50.33(f)(4) can be the same type of 
information required for an initial license application or a license 
transfer.
    The following sections discuss the times in a licensee's term of 
license when financial qualifications are reviewed and the changes made 
by this final rule.

Initial Licensing Reviews

    The NRC performs financial qualifications reviews during initial 
licensing because the startup of a nuclear power reactor is a major 
financial undertaking that has significant implications for a company's 
financial health. The NRC's financial qualifications review process is 
contained in NUREG-1577, ``Standard Review Plan on Power Reactor 
Licensee Financial Qualifications and Decommissioning Funding 
Assurance,'' March 1999. These reviews form part of the licensing basis 
that the licensee must maintain for the 40-year term of the initial 
license and for any license renewal period. Financial qualifications 
reviews at the operating license stage distinguish between license 
applicants that are electric utilities, as defined in 10 CFR 50.2, and 
those that are not. Applicants other than electric utilities are 
required to submit estimates for total annual operating costs for each 
of the first 5 years of operation of the facility and to indicate the 
sources of funds to cover these costs. The NRC's evaluation of the 
financial qualifications of an entity other than an electric utility 
applicant is based on the submitted 5-year projections of income and 
expenses. In addition, the NRC considers current information from 
several major financial rating service publications, and other relevant 
information, may also be considered. As part of its evaluation, the NRC 
reviews the reasonableness of an applicant's assumptions and inputs to 
its projections. The NRC publishes the results of its evaluation in a 
safety evaluation report. The NRC's regulations do not require 
additional financial qualifications reviews at scheduled intervals.

[[Page 4441]]

License Transfer Reviews

    The NRC reviews financial qualifications during direct license 
transfers because a new licensee must be qualified to hold the license. 
A plant acquisition or the indirect transfer of a license through a 
transfer of control of a licensee can have significant implications for 
a licensee's financial health. A license transfer under 10 CFR 50.80 
may occur at any time during the period of the license. The NRC reviews 
the financial qualifications of non-electric utility applicants seeking 
to become licensees through direct license transfers (plant sales), and 
considers changes in the financial qualifications of an existing 
licensee, whether or not it is an electric utility, that might occur in 
connection with an indirect license transfer occurring in connection 
with a merger, acquisition, or restructuring action. For license 
transfers, a non-electric utility applicant must submit all the 
information required under Sec. 50.33(f). As with initial license 
financial qualifications reviews, the NRC uses NUREG-1577 as the basis 
for its review and publishes the results of its evaluation in a safety 
evaluation report. The NRC has performed financial qualifications 
reviews on over 75 license transfer applications in the last 5 years. 
The NRC expects that it will continue to review numerous licensees' 
financial qualifications in the next few years because of license 
transfers.

Reviews of Transition From an Electric Utility to a Non-Electric 
Utility

    The NRC will review financial qualifications when an electric 
utility licensee transitions to non-electric utility status without a 
license transfer because a licensee is no longer ensured the recovery 
of its costs through traditional cost-of-service rate regulation. 
Before this final rule, the NRC had no formal automatic process to 
evaluate the licensee's financial qualifications if such a transition 
occurred in the absence of a license transfer (although the NRC's 
monitoring process should identify such transitions and could trigger a 
request for additional information pursuant to Sec. 50.33(f)(4)). 
Therefore, the NRC is promulgating 10 CFR 50.76, a requirement separate 
from Sec. 50.33(f)(2). Section 50.76 requires licensees that are 
transitioning from an electric utility to non-electric utility status, 
without being required to request approval for license transfers, to 
submit financial information sufficient to allow the NRC to determine 
whether the licensee remains financially qualified to conduct the 
activities authorized by the license. Although the NRC expects that 
this type of transition will occur rarely, if at all, this requirement 
will ensure that a financial qualifications review for non-electric 
utilities results from all relevant triggering events, thereby 
enhancing public confidence while maintaining regulatory efficiency and 
effectiveness. The relevant triggering events are (1) initial operating 
license application, (2) license transfer, and (3) transition from an 
electric utility to non-electric utility status without a license 
transfer.
    Section 50.76 is created separately from Sec. 50.33, because the 
latter section focuses on applicants rather than licensees.

Screening of Financial and Nuclear Industry Trade Press and Other 
Information Sources

    To keep abreast of deregulation and other developments potentially 
affecting power reactor licensees, the NRC regularly screens the 
financial and trade press (e.g., Wall Street Journal, Barron's, Nuclear 
NewsLink, and Nuclear Energy Insight). Other information sources (e.g., 
State legislative reports, SEC and FERC submissions) also can be used. 
The NRC uses the foregoing to identify changes in licensees' financial 
health. A main purpose of this information review is to provide NRC 
with sufficient notification so that it can take regulatory action in a 
timely manner, when necessary. The NRC can then request additional 
information from licensees under Sec. 50.33(f)(4).
    Section 50.33(f)(4) states:

    The Commission may request an established entity or newly formed 
entity to submit additional or more detailed information respecting 
its financial arrangements and status of funds if the Commission 
considers this information to be appropriate. This may include 
information regarding a licensee's ability to continue the conduct 
of the activities authorized by the license and to decommission the 
facility.

This section permits the NRC to require license applicants or licensees 
to submit relevant financial information on their qualifications to 
manage licensed activities safely at any time. The requested additional 
information can then be used to conduct a thorough financial 
qualifications review.

Retention of Nonpower Reactor Financial Reviews at License Renewal

    The NRC will retain the financial qualifications requirements in 
Sec. 50.33(f)(2) for nonpower reactor (NPR) applicants that wish to 
renew or extend their licenses. There are currently 37 nonpower reactor 
licensees. Nonpower reactor licenses are generally renewed for 20 
years. The NRC does not normally follow changes in NPR licensee 
financial qualifications because NPR owners are primarily financially 
stable nonprofit educational or research institutions, either privately 
owned (3 corporate licensees and 28 academic licensees), State-owned (1 
licensee), or Federally owned (5 licensees), and generally do not 
report financial information to sources readily available to the NRC. 
The limited publicly available reporting from these types of owners 
does not permit the same level of ongoing financial qualifications 
oversight as with power reactor licensees. Additionally, license 
transfers for NPRs and the associated financial reviews are rare. Given 
these factors, financial qualification problems with NPR licensees are 
not as likely to become known as problems with power reactor licensees. 
In some cases, the NRC has found financial weaknesses or ambiguities 
during NPR license renewals that it would not have discovered 
otherwise. Therefore, the NRC considers it appropriate to continue to 
review the financial qualifications of NPR licensees when they apply to 
renew their licenses.

Conclusion

    Section 50.33(f) requires all non-electric utility applicants for 
initial and renewed operating licenses, and Sec. 50.80, in conjunction 
with Sec. 50.33(f), requires all non-electric utility applicants for 
transferred licenses, to submit financial qualifications information. 
The NRC does not believe that there are any financial circumstances 
uniquely associated with license renewal that warrant a separate 
financial review. The NRC's regulatory processes for financial 
qualifications reviews adequately ensure that the NRC can take 
appropriate and timely regulatory action when warranted by changes in a 
licensee's financial qualifications. In contrast, there are valid 
regulatory reasons for conducting specified financial qualifications 
reviews at other license stages. The license stages are (1) at initial 
licensing, when an applicant's financial qualifications need to be 
determined in accordance with the AEA's requirements; (2) at the time 
of a license transfer, when new licensees need to be evaluated, or when 
deregulation initiatives may affect an applicant's or licensee's 
financial qualifications; or (3) during special circumstances, when ad 
hoc reviews under Sec. 50.33(f)(4) may be warranted.
    As a result, the NRC is promulgating a change in the requirement in 
the last sentence of Sec. 50.33(f)(2) with respect to entities other 
than electric utilities seeking renewal of operating licenses for

[[Page 4442]]

nuclear power reactors. The final rule (1) eliminates the need for such 
entities to provide financial qualifications information as part of the 
license renewal process, (2) retains the existing requirement in Sec. 
50.33(f) for nonpower reactors to provide financial qualifications 
information, and (3) adds a new Sec. 50.76, ``Licensee's change of 
status; financial qualifications.'' Section 50.76 will require that any 
electric utility power reactor licensee that becomes an entity other 
than an electric utility without transferring control of the license 
must provide the same financial information that is required for 
obtaining an initial operating license. The final rule will not affect 
the submission of financial qualifications information and the need for 
a finding of financial qualifications to the extent presently required 
for license transfers.
    The NRC believes this final rule is consistent with the NRC's 
Strategic Goals of making NRC activities and decisions more effective 
and efficient and reducing unnecessary regulatory burden. The final 
rule will help advance these goals by eliminating the need for 
``entities other than electric utilities'' to submit information on 
financial qualifications (as is the case now for electric utilities) in 
connection with license renewal, and will make the financial 
qualifications review requirements consistent with the bases of the 
License Renewal Rule in 10 CFR part 54, which does not require a 
finding of financial qualifications for those power reactor licensees 
applying for a renewed nuclear power plant operating license. The final 
rule will not have an adverse impact on maintaining safety. The 
provisions in Sec. 50.33(f)(4) already ensure that financial 
information can be obtained from a licensee whenever the NRC considers 
this information appropriate.

Resolution of Public Comments

    The NRC received comments on the proposed rule from nine different 
organizations, including one State, three nonprofits, and five 
organizations in the nuclear power industry. Five commenters opposed 
the changes to Sec. 50.33 and four commenters supported the changes to 
Sec. 50.33. Two commenters opposed adding the new Sec. 50.76, three 
commenters supported this change, and four commenters were silent on 
the creation of the new Sec. 50.76. After considering the public 
comments, the NRC has decided to adopt the proposed rule on ``Financial 
Information Requirements for Applications To Renew or Extend the Term 
of an Operating License for a Power Reactor'' as final without changes. 
A summary of the comments and the NRC's responses follows:
    Comment 1: Four commenters support the NRC's proposed revisions to 
10 CFR 50.33 to eliminate the requirement that non-electric utility 
power reactor licensees submit financial qualifications information 
during license renewal. One commenter agrees with the NRC's assessment 
that there are no unique financial circumstances associated with 
license renewal that warrant a separate financial review.
    Response: No response necessary.
    Comment 2: Two commenters agree with the proposal to add a 
requirement in 10 CFR 50.76 that electric utilities that transition to 
non-electric utility status without a license transfer should submit 
financial qualifications information.
    Response: No response necessary.
    Comment 3: Five commenters oppose the NRC's proposal to eliminate 
submission of financial qualifications information for non-electric 
utilities during license renewal. One commenter expresses concern that 
the changes to 10 CFR 50.33 would weaken protection of public safety. 
Another commenter states that eliminating this requirement will create 
an ``information vacuum'' that will place the NRC in a state of 
ignorance.
    Response: The NRC disagrees that the changes to 10 CFR 50.33 will 
weaken protection of public health and safety or deprive the NRC of 
necessary information. The NRC's license transfer reviews have provided 
the NRC with financial information on current non-electric utility 
licensees, and will continue to do so for future license transfers. 
Moreover, the NRC's current process for monitoring the financial health 
of licensees, as previously described, is effective in ensuring that 
licensees have adequate financial resources to operate their facilities 
safely and provides sufficient information to allow the NRC to take 
timely regulatory action if a licensee's financial health deteriorates.
    The commenter implies that the changes to 10 CFR 50.33 will allow 
financially weak licensees to continue to operate. The changes to 10 
CFR 50.33 relate to when NRC reviews the financial status of licensees, 
not necessarily whether the licensee should continue to operate. The 
NRC believes that its primary tool for evaluating and ensuring safe 
operations at nuclear power reactors is through its inspection and 
enforcement programs, which are not affected by this rulemaking.
    Comment 4: Two commenters are concerned that in the wake of recent 
corporate financial and accounting scandals, the NRC is considering 
relaxing its financial oversight of non-electric utility power reactor 
licensees. One commenter also states that Congress has acknowledged the 
need for more stringent oversight of corporate accounting and that the 
NRC's actions are incompatible with Congress's findings.
    Response: The NRC disagrees with the commenters that this action is 
incompatible with recent experience or Congress's findings about the 
need for careful oversight. The NRC's purposes and responsibilities are 
different from agencies, such as the Securities and Exchange Commission 
(SEC), that are responsible for oversight of companies with respect to 
accounting or financial reporting improprieties. The NRC has no 
regulatory authority over corporate accounting methods. This action in 
no way relaxes the NRC's regulations that require all part 50 
applications to be submitted under oath and affirmation (see 10 CFR 
50.30) and that require all information submitted to be complete and 
accurate in all material respects (see 10 CFR 50.9). The NRC continues 
to possess the authority to impose sanctions for the submission of 
incomplete or inaccurate information. The NRC does not believe that 
this action has any relationship to recent financial reporting and 
accounting issues cited by the commenters.
    Comment 5: One commenter states that in a U.S. General Accounting 
Office (GAO) report on the Commonwealth Edison and PECO merger, GAO 
pointed out that the NRC did not validate submitted information and the 
NRC approved the license transfers associated with the merger knowing 
that submitted pro forma financial information was inaccurate.
    Response: The comment addresses whether information submitted to 
the NRC for a financial qualifications review is verified for accuracy 
and whether the NRC takes licensing actions based on information known 
to be inaccurate. The NRC's response to the GAO findings, with which 
the NRC disagreed, is contained in the GAO report. With respect to this 
rulemaking, however, which deals with the timing of a financial 
qualifications review, the comment does not pertain to whether a 
financial qualifications review specifically during license renewal is 
necessary, and, therefore, the comment is not relevant.
    Comment 6: One commenter cites an NRC document (NUREG/CR-6617, 
October 1998) that suggests the NRC believes the financial health of 
power reactor licensees may suffer from deregulation. According to one

[[Page 4443]]

commenter, the document suggests that the economic pressures in a 
deregulated environment might hasten the closure of some power 
reactors. The commenter asserts that the fact that the NRC now believes 
that financial qualifications reviews are not necessary during license 
renewal is incompatible with the earlier findings.
    Response: The NRC disagrees that this action is incompatible with 
the information in NUREG/CR-6617. The NRC is concerned with assuring 
that operating reactors are operated safely. If financial circumstances 
force reactors to cease operation, the NRC has other requirements in 
place with respect to decommissioning funds that provide reasonable 
assurance that a prematurely shutdown reactor is decommissioned and 
does not pose a public health and safety risk. The NRC's licensee 
monitoring process, as previously described, will provide adequate 
warning to ensure that the NRC can respond with timely regulatory 
action if a licensee's financial health suffers from deregulation. The 
license renewal application event has no particular bearing on a 
licensee's financial qualifications. If anything, undertaking to renew 
a license suggests that the licensee is projecting future profitability 
by continuing to operate the plant beyond its original operating 
license.
    Comment 7: Three commenters are concerned that the NRC's reliance 
on trade press information is inadequate to track the financial health 
of non-electric utilities. One commenter states that since power 
reactor licensees operate in a competitive environment, they generally 
do not disclose financial information unless required to do so. The 
commenter states that as a minority owner of two power reactors, it has 
difficulty monitoring the financial qualifications of the plant 
operators. In addition, since power reactor licensees are generally 
organized as part of a complex holding company system, the trade press 
does not have sufficient information to report at a level below the 
holding company as a whole. One commenter states that the day-to-day 
informal monitoring of the trade press and limited annual reviews are 
not substitutes for a formal, rigorous, and disciplined review of a 
licensee's financial qualifications at license renewal.
    Response: The NRC disagrees with the commenter's views that the 
NRC's processes are inadequate to monitor the financial health of non-
electric utilities. As previously described, the NRC not only relies 
upon the trade press and licensee filings with other government 
agencies, it also has the benefit of having onsite inspectors who may 
become aware of relevant information. Moreover, the NRC has the 
authority to request additional financial information directly from 
licensees at any time under 10 CFR 50.33(f)(4).
    Monitoring the trade press is a common practice in the financial 
and investment community to screen the financial and business 
conditions of any business activity or entity. The NRC believes that 
its ongoing licensee financial monitoring process is necessary and is a 
better use of the NRC's resources than a formal financial 
qualifications review at license renewal because license renewal occurs 
at an arbitrary point in time during a licensee's operating license. On 
average, power reactor licensees apply for license renewal 14 years 
before their initial license expires. Thus the 5 years of projected 
operating expenses and revenues that non-electric utility power 
reactors are currently required to submit do not include the period to 
be covered by the renewed license. Therefore the information submitted 
is of limited value to the NRC in determining if the licensee will have 
adequate financial qualifications in the period to be covered by the 
renewed license.
    The NRC does not agree that the situation of a minority owner with 
respect to financial information is the same as the situation of the 
NRC. The NRC possesses regulatory authority under Sec. 50.33(f)(4) to 
obtain additional financial information from licensees at any time that 
is necessary to determine whether a licensee continues to be 
financially qualified.
    Comment 8: One commenter states that the aging of power reactors 
requires more, not less, financial oversight. The commenter cites the 
examples of corrosion in the reactor vessel head at the Davis-Besse 
reactor and cracking of reactor pressure vessel head penetration 
nozzles in pressurized water reactors. The commenter also states that 
as reactors age, licensees have conflicting demands of keeping the 
reactors operating and temporarily shutting them down to make necessary 
inspections and repairs. Licensees in poor financial health may be more 
likely to postpone these inspections and repairs, increasing the 
likelihood of an accident.
    Response: The NRC disagrees with the commenter. The rule eliminates 
the burden of the unnecessary financial review so that the NRC can 
focus more resources on the technical aspects of power reactor license 
renewal. The Davis-Besse example cited by the commenter is principally 
a technical issue. Moreover, there does not appear to be any 
information available to the NRC that suggests that the Davis-Besse 
situation was caused by a deterioration in the financial health of the 
licensee, and the commenter does not present any information today to 
show such a causal link. The NRC has not found a consistent correlation 
between licensees' poor financial health and poor safety performance. 
If a licensee postpones inspections and repairs that are subject to NRC 
oversight, the NRC has the authority to shut down the reactor or take 
other appropriate action if there is a safety issue.
    Comment 9: Three commenters are concerned that non-electric utility 
power reactor licensees are organized as single-asset limited liability 
companies (LLCs), which they assert are designed to limit the liability 
of the parent companies in the event of the financial failure of the 
LLC and to shield the power reactor licensee from public scrutiny of 
its finances. One commenter states that, in some cases, the LLCs are 
foreign companies or exist only on paper. Another commenter states that 
a recent report shows that 25 power reactors are owned by LLCs. Another 
commenter states that the selection of the limited liability structure 
indicates that these owners recognize that their financial health is 
subject to substantial change. Because financial well-being is 
essential for power reactor licensees, this structure also signals a 
significant risk to the health and safety of the public.
    Response: While LLCs provide limits on the liability of parent 
organizations, the same is true for traditional corporations that have 
parent companies. Regardless of whether a power reactor licensee is an 
LLC or another corporate form such as a wholly owned corporate 
subsidiary, the NRC has essentially the same opportunity to obtain 
relevant financial information about the licensee. The NRC may request 
and review, on a case-by-case basis, relevant financial information 
from the LLC licensee as authorized under 10 CFR 50.33(f)(4).
    The NRC does not agree with the commenter's view that the use of 
the LLC structure indicates licensees anticipate substantial changes in 
financial health and signals significant risk to the health and safety 
of the public. The Commission retains the same enforcement and 
inspection authority regardless of the corporate structure and can 
ultimately shut any reactors down if they are not operated safely.
    Comment 10: Two commenters state that because non-electric utility 
licensees lack the assured base of funding of electric utility 
licensees, they

[[Page 4444]]

increase the risk that there will be insufficient capital resources to 
operate the power reactor safely, as the non-electric utility licensees 
diversify into telecommunications, commodity and energy trading, high-
risk financial activities, or other activities.
    Response: The NRC disagrees with the commenters. The NRC has long 
determined that non-electric utilities can be licensed regardless of 
the fact that they do not have an assured base of funding. In this 
regard, the NRC has a full regulatory regime for licensing non-electric 
utilities that requires substantial financial information be submitted 
and reviewed, which is not the case for licensing reviews for electric 
utilities. In addition, the NRC has no basis for concluding that 
diversification will always threaten the financial well being of non-
electric utility power reactor licensees.
    Comment 11: One commenter states that disclosure and transparency 
to regulators is essential for ensuring that the NRC is not caught 
unaware of a deteriorating financial condition. Given the lack of 
transparency in the structures and finances of many publicly traded 
energy companies, the NRC seems out of step with the widely agreed-upon 
need for increased corporate disclosure.
    Response: The NRC agrees that the NRC needs to be aware of changes 
in the financial condition of licensees and therefore, continues to 
monitor licensees' financial health. The NRC does not believe that the 
action being taken is somehow ``out of step'' with the ``need for 
increased corporate disclosure'' or inconsistent with the NRC's ability 
to obtain relevant corporate financial information. This action only 
removes one requirement to provide certain financial information at one 
point in time; it does not affect in any way the NRC's ability to 
require the submission of additional or more detailed financial 
information at any time the NRC needs such information.
    Comment 12: One commenter believes that the NRC's current review of 
financial qualifications at initial licensing, before license 
transfers, and on an ad hoc basis is not adequate. The commenter states 
that the financial qualifications of a licensee at either initial 
licensing or at license transfer may have little relevance to the 
licensee's financial qualifications many years later when license 
renewal is sought. Because of our dynamic economy, a company's 
financial status can change significantly in a matter of months and 
thus several-year-old financial information is worthless.
    Response: The commenter essentially is questioning the entire NRC 
financial qualifications regulatory process because the argument that 
financial information quickly becomes stale applies whether or not 
there is any decision to renew a license. The NRC agrees with the 
commenter that financial qualifications information eventually becomes 
out of date and is no longer relevant after the passage of time. That 
is the reason why the NRC has a two-pronged process for financial 
qualifications, with the second prong being continued monitoring of the 
financial health of licensees. This process provides a reasonable 
method to keep abreast of licensees' financial health to ensure 
sufficient financial resources are available to continue safe operation 
of nuclear power plants, as well as decommissioning plants when they 
permanently cease operation. For power reactor licensees, financial 
qualifications reviews at license renewal, which takes place at an 
arbitrary point in time, do not solve the problem raised by the 
commenter.
    Comment 13: Three commenters state that license renewal is a 
particularly appropriate time to evaluate the financial requirements of 
power reactor licensees. The commenters state that non-electric utility 
power reactor licensee financial qualifications should be evaluated to 
ensure that there are sufficient financial resources to continue safe 
operation, make capital improvements, add spent fuel storage capacity, 
meet additional licensing conditions imposed because of September 11, 
2001, events, meet decommissioning obligation, and meet public 
liability obligations under the Price-Anderson Act, in light of the 
economic conditions at the time of renewal.
    Response: The NRC disagrees with the commenters' view that license 
renewal is a particularly appropriate time for a financial 
qualifications review given that it is just one point in time over 
potentially 60 years of plant operation. The NRC's process for regular 
monitoring of power reactor licensees meets the need to know whether 
licensees may not have sufficient financial qualifications and allows 
for adequate warning so that the NRC can request financial 
qualifications information and take regulatory action in a timely 
manner if necessary. With respect to the scope of financial 
qualifications analyses, the NRC is not proposing any changes to its 
financial qualifications analyses through this action.
    Comment 14: One commenter states that the same rationale used for 
maintaining the requirement for nonpower reactor licensees to submit 
financial qualifications information during license renewal applies to 
non-electric utility power reactors. The commenter notes that the NRC 
states in the proposed rule (67 FR 38429) that it has found financial 
weaknesses or other ambiguities during the review of nonpower reactor 
licensees' financial information in the license renewal process that it 
would not have discovered otherwise. The commenter states further that 
given the lack of information in the trade press about non-electric 
utility power reactors and because of the use of LLCs, a formal review 
process at the time of license renewal may disclose financial 
weaknesses that otherwise would not be discovered.
    Response: The NRC disagrees that the same rationale used for 
nonpower reactor licensees applies to non-electric utility power 
reactor licensees. There are many nonpower reactor licensees that are 
nonprofit educational or research institutions, with either private, 
State, or Federal ownership, that do not report financial information 
to sources readily available to the NRC. Thus the NRC is not as able to 
monitor the financial health of these organizations on an ongoing 
basis. In addition, many nonpower reactor licensees are multipurpose, 
non-revenue-generating entities that require outside funding for 
financial support and thus are economically more risky. Accordingly, 
the NRC will continue to perform financial qualifications reviews as 
part of the renewal of nonpower reactor licensees, which typically 
occurs every 20 years. On the other hand, power reactor licensees are 
single-purpose, revenue-generating entities. Therefore, the NRC is able 
to review non-electric utility power reactor licensee financial 
information more readily on an ongoing basis.
    Comment 15: One commenter states that the NRC should establish a 
more rigorous financial monitoring system that includes an annual 
review by the NRC of licensees' account books. The commenter states 
that the NRC needs to know the financial status of non-electric utility 
power reactor licensees before the information is published in the 
trade press.
    Response: The NRC disagrees with the comment. The extensive annual 
financial audit process that the commenter suggests is not necessary 
for the NRC to achieve its oversight of licensees under the Atomic 
Energy Act and to ensure public health and safety and promote the 
common defense and security. Nor is it clear why the NRC

[[Page 4445]]

must know the financial status of non-electric utility licensees before 
information on their financial health is published in the trade press. 
The NRC's regulations require that all part 50 applications be 
submitted under oath and affirmation (see 10 CFR 50.30) and that all 
information submitted must be complete and accurate in all material 
respects (see 10 CFR 50.9). The NRC also possesses the authority to 
impose sanctions for incomplete or inaccurate information and, of 
course, possesses the authority to take action necessary to ensure the 
safe operation of nuclear facilities. For these reasons, the NRC 
believes its regulatory process and its financial monitoring system are 
adequate and sufficient to meet these goals.
    Comment 16: One commenter states that the Regulatory Analysis 
disregards the value to the public health and safety of reviewing a 
non-electric utility power reactor licensee's financial qualifications 
at the time of license renewal.
    Response: The NRC disagrees with the commenter that the Regulatory 
Analysis disregarded the value to public health and safety of review of 
financial qualifications at the time of license renewal. The financial 
qualifications review for power reactor relicensing occurs at an 
arbitrary point in time that has no distinct link to public health and 
safety. Public health and safety are primarily protected through the 
NRC's onsite inspection program, and the financial health of a licensee 
is verified through NRC's monitoring of publicly available financial 
information.
    Comment 17: One commenter states that the NRC is not sufficiently 
independent of the industry that it regulates. The commenter mentions 
that the NRC has stated that case-by-case review of financial 
qualifications information might delay the approval of a license 
application. The commenter suggests this gives the impression that the 
NRC believes its duty is to approve renewal applications and not to 
thoroughly review and analyze them prior to accepting or rejecting 
applications. The commenter concludes that the license renewal process 
should be a truly rigorous process and not simply a rubber-stamping 
formality.
    Response: The NRC disagrees with the comment that NRC is not 
sufficiently independent of the industry. The NRC is a fully 
independent regulator of the nuclear power industry. No licensing 
application's approval is a foregone conclusion. The NRC will 
continually conduct technical reviews until the licensee has performed 
all necessary actions as required in the regulations before approving a 
license application. No licensing action is approved until all 
technical issues have been addressed. The NRC's commitment to thorough 
review and analysis of license renewal applications is reflected in the 
staff time to review those applications, which is on the order of 
19,000 person-hours per application.
    Nonetheless, to be an effective regulator, the NRC must also 
conduct its regulatory activities in protecting public health and 
safety and the common defense and security in a manner that is 
efficient and does not impose unnecessary regulatory burdens. This 
final rulemaking is directed towards ensuring that the NRC carries out 
its regulatory responsibilities in an efficient and cost-effective 
manner.
    Comment 18: One commenter stated that the proposed regulatory 
language in Sec. 50.76 is open ended and could cause confusion at the 
end of the 75-day period. The commenter suggested the following 
language should be added: ``Financial qualifications information 
submitted in accordance with this section shall be regarded as accepted 
by the Commission upon receipt of a letter to this effect from the 
appropriate reviewing office of the Commission or 75 days after the 
submittal to the Commission, whichever occurs first.''
    Response: The NRC disagrees with the proposed addition. The NRC 
believes that the regulatory language is clear that information must be 
submitted no later than 75 days before an electric utility licensee 
ceases to be an electric utility. The commenter's proposal would change 
the regulation and require the NRC to take action within 75 days.
    Comment 19: Two commenters disagree that there is a regulatory gap 
that must be filled by the addition of 10 CFR 50.76. One commenter 
states that the NRC has sufficient existing authority under 10 CFR 
50.33(f)(4) to require applicants or licensees to submit financial 
qualifications information. In addition, licensees have an obligation 
to inform and obtain approval from the NRC for any changes that would 
constitute a transfer of license, and licensees must promptly report 
financial qualifications information that may have a significant 
implication for public health and safety. Therefore, the commenter 
believes the new requirement is unnecessary and unjustified. One 
commenter believes the new requirement is unnecessary and unwarranted 
and that the gap is perceived and not real since no problems were cited 
by the NRC. Thus, the new requirement is not necessary and would create 
only unnecessary burden with no benefit.
    Response: The NRC disagrees with the commenters regarding the 
absence of a regulatory gap. The NRC believes that the transition from 
an electric utility to a non-electric utility is a significant event 
that requires regulatory review to ensure continued financial 
qualifications of the licensee lacking assured cost recovery. The fact 
that the NRC has authority to request financial qualification 
information is of no relevance in determining whether there is a 
regulatory gap. In the NRC's view, the regulatory gap exists because 
the current regulatory regime does not compel that the NRC be timely 
informed of changes in a licensee's cost recovery status when there is 
no license transfer. Because such notification would, in all 
likelihood, be followed by an NRC request for information, the final 
rule simply provides that electric utility licensees transitioning to 
non-electric utility status without a license transfer must provide the 
relevant financial qualifications information. The NRC also disagrees 
that the regulatory gap is only perceived because no problems have 
occurred to date. The lack of examples of problems does not support the 
conclusion that a regulatory gap does not exist. With this regulation, 
the NRC is being proactive and is attempting to prevent problems from 
occurring.
    Comment 20: One commenter opposes the addition of 10 CFR 50.76 and 
states that the proposed rule would impose unnecessary regulatory costs 
due to collecting and submitting financial qualifications information 
and that this added burden may impact licensees' business decisions 
about whether to seek license renewals.
    Response: The NRC disagrees with the commenter that the creation of 
10 CFR 50.76 is unnecessary. The NRC strives to ensure that its 
regulations meet real regulatory needs and that unnecessary regulations 
are avoided. Consistent with this objective, the NRC believes that the 
proposed action is necessary to ensure NRC fulfils its regulatory 
responsibilities under the Atomic Energy Act. This change complements 
the existing regulations requiring power reactor licensees to submit 
financial qualifications information when they become non-electric 
utilities during a transfer of control of a license. Thus, under the 
final rule all licensees that transition from electric utilities to 
non-electric utilities will undergo financial qualifications review, 
regardless of whether the transition involves the transfer of control 
of an NRC license. Nor does the NRC believe that the cost of collecting 
and submitting the information to the NRC (see Regulatory

[[Page 4446]]

Analysis for a discussion of the projected costs of compliance with the 
final rule) will affect a licensee's decision on whether to seek 
renewal of its operating license in any material way.
    Comment 21: One commenter states that the new requirement at 10 CFR 
50.76 is unnecessary because (1) licensees have an obligation to 
inform, and obtain advanced approval from, the NRC of any changes that 
would constitute a transfer of the license, directly or indirectly, (2) 
licensees have an obligation to inform the NRC if changes in their 
financial qualifications may have significant implications for public 
health and safety, and (3) the NRC monitors the financial and industry 
trade press.
    Response: The NRC disagrees with the commenter that the creation of 
10 CFR 50.76 is unnecessary. Licensees' obligation to inform and obtain 
prior NRC approval of a license transfer is separate from the issue of 
the need for licensee notification and provision of information about 
financial qualifications when a licensee changes its status from an 
electric utility to a non-electric utility without an associated 
transfer of control of the license. Although licensees have an 
obligation to report significant changes in their financial 
qualifications, it is possible that some licensees could believe that 
they will remain financially qualified notwithstanding their change in 
status from an electric utility to a non-electric utility and thus not 
consider that event to be a reportable change in financial 
qualifications. Furthermore, while the NRC monitors the financial and 
industry trade press, the NRC believes that a licensee transition from 
electric utility to non-electric utility status is a significant event 
that automatically warrants a separate financial qualifications review. 
This type of review already occurs when the transition is associated 
with a license transfer. Section 50.76 would simply ensure that 
financial qualification reviews occur as part of a transition from an 
electric utility to non-electric utility status without a license 
transfer.
    Comment 22: One commenter states that the new section creates 
additional regulatory issues and burdens without any corresponding 
safety benefit. A complicating issue that might arise is determining 
precisely what types of changes would cause a licensee to cease being 
an electric utility. The NRC and the licensee may disagree that a 
triggering event has occurred. If so the licensee may not notify the 
NRC before the 75-day deadline.
    Response: The NRC disagrees with the commenter that the new section 
creates additional regulatory issues and burdens without any 
corresponding benefit. The benefit of this action is ensuring on at 
least one occasion that a licensee who transitions from electric 
utility to non-electric utility status without a license transfer will 
continue to have the resources necessary to operate the power plant in 
a manner that protects public health and safety and is consistent with 
the common defense and security.
    With respect to disagreement on what constitutes a transition from 
electric utility to non-electric utility status, the commenter did not 
provide any discussion of such circumstances. The NRC is unaware of any 
significant misunderstandings of what constitutes an electric utility 
under 10 CFR 50.2. Therefore, the commenter does not appear to raise a 
significant issue.
    Comment 23: One commenter suggests that, instead of the proposed 
regulatory changes, the NRC should update the definition of ``electric 
utility'' in 10 CFR 50.2 to reflect the changes that have occurred in 
the electric utility industry. For example, the definition should 
provide flexibility to include utilities that may no longer be subject 
to cost of service rate making. The commenter also suggests that the 
definition should be flexible enough to include entities other than 
traditional vertically integrated utilities, such as those that have 
desegregated their business into generating and transmission/
distribution entities. The commenter concludes that the definition of 
electric utility should include (1) a generating company that is part 
of a diversified holding company or other corporate structure and (2) 
an entity that generates and sells electricity at market-based rates, 
at least so long as the company's market-based rate authority is 
governed by tariffs that are subject to the jurisdiction of a rate 
regulatory agency such as the Federal Energy Regulatory Commission.
    Response: The commenter's suggestions would undermine the NRC's 
longstanding basis for not requiring financial qualifications reviews 
for electric utilities, which is that the recovery of costs is assured. 
Accordingly, the NRC does not believe that the commentator's 
suggestions warrant further consideration.
    Comment 24: One commenter states that if the proposed changes to 10 
CFR 50.33 are finalized, then the NRC should adopt and implement 
procedures to formally and continually monitor the financial 
qualifications of non-electric utility power reactor licensees.
    Response: The NRC will consider the commenter's suggestion when the 
NRC's internal guidance for reviewing licensees' financial information 
is revised.

Section-by-Section Analysis

10 CFR 50.33, Contents of Applications; General Information

    Section 50.33(f)(2) is amended to state that power reactor 
applicants for license renewal need not provide financial 
qualifications information. Nonpower reactor applicants would continue 
to submit financial qualifications information in their applications. A 
new sentence is added to Sec. 50.33(f)(2) to specify that nonpower 
reactor license renewal applicants must continue to submit financial 
qualifications information in their applications.

10 CFR 50.76, Licensee's Change of Status; Financial Qualifications

    A new Sec. 50.76 requires that a licensee changing from an electric 
utility to a non-electric utility entity (i.e., a company that does not 
obtain revenue from the cost-of-service rate making process), in a 
manner other than a license transfer under 10 CFR 50.80, must submit 
the financial information required by Sec. 50.33(f)(2) for obtaining an 
operating license. The section also requires that the licensee notify 
the NRC 75 days before the transition and provide the financial 
information at that time. The language of the proposed rule was changed 
slightly to spell out ``seventy-five.''

Availability of Documents

    The NRC is making the documents identified below available to 
interested persons through one or more of the following:
    Public Document Room (PDR). The NRC Public Document Room is located 
at 11555 Rockville Pike, Public File Area O-1 F21, Rockville, Maryland.
    Rulemaking Web site. The NRC's interactive rulemaking Web site is 
located at http://ruleforum.llnl.gov. The documents may be viewed and 
downloaded electronically via this Web site.
    The NRC's Public Electronic Reading Room (PERR). The NRC's public 
electronic Reading Room is located at http://www.nrc.gov/reading-
rm.html.
    The NRC staff contact (NRC Staff). Single copies of the final rule, 
the Regulatory Analysis, and the Environmental Assessment may be 
obtained from George J. Mencinsky, Office of Nuclear Reactor 
Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-
0001.

[[Page 4447]]

Alternatively, you may contact Mr. Mencinsky at (301) 415-3093 or via 
e-mail to gjm@nrc.gov.

----------------------------------------------------------------------------------------------------------------
                       Document                              PDR           Web           PERR         NRC Staff
----------------------------------------------------------------------------------------------------------------
Regulatory Analysis...................................            X             X      ML032460795            X
Environmental Assessment..............................            X             X      ML032460815            X
Public Comments Received..............................            X   ............     ML032670833            X
----------------------------------------------------------------------------------------------------------------

Voluntary Consensus Standards

    The National Technology Transfer and Advancement Act of 1995, Pub. 
L. 104-113, requires that Federal agencies use technical standards that 
are developed or adopted by voluntary consensus standard bodies unless 
the use of such a standard is inconsistent with applicable law or is 
otherwise impractical. In this final rule, the NRC eliminates the 
requirement that applicants for power reactor license renewal provide 
financial qualifications information and adds a new requirement for 
submission of financial information on electric utilities holding 
operating licenses for nuclear power reactors if the applicants cease 
to be electric utilities in a manner other than a license transfer 
under 10 CFR 50.80. This final rule would not constitute a standard 
that establishes generally applicable requirements, and the requirement 
to use a voluntary consensus standard is not applicable.

Finding of No Significant Environmental Impact: Availability

    The Commission has determined under the National Environmental 
Policy Act of 1969, as amended, and the Commission's regulations in 
subpart A of 10 CFR part 51, that this rule is not a major Federal 
action significantly affecting the quality of the human environment, 
and, therefore, an environmental impact statement is not required.
    This rulemaking will not increase the probability or consequences 
of accidents. No changes are being made in the types of any effluents 
that may be released off site, and there is no increase in public 
radiation exposure. Therefore, there are no radiological impacts 
associated with the action. The rulemaking does not involve 
nonradiological plant effluents and has no other environmental impact. 
Therefore, no nonradiological impacts are associated with the action. 
Therefore, the NRC determines that there will be no off site impact to 
the public from this action.
    The basis for NRC's finding is set forth in an Environmental 
Assessment on this final rule. The Environmental Assessment is 
available as indicated in the section under the Availability of 
Documents heading. The NRC requested the views of the States on the 
environmental assessment for the rule and did not receive any comments 
from the States.

Paperwork Reduction Act Statement

    This final rule eliminates the burden on non-electric utility power 
reactor licensees to submit financial qualifications information upon 
license renewal as required by the current Sec. 50.33(f)(2). The public 
burden reduction for this information collection is estimated to 
average 100 hours per request. Power reactor licensees that transition 
from electric utility to non-electric utility power reactor entities 
without transferring the license would be required to provide this 
information under a new Sec. 50.76. Because the burden reduction for 
this information collection is insignificant, Office of Management and 
Budget (OMB) clearance is not required. Existing requirements were 
approved by the Office of Management and Budget, approval number 3150-
0011.

Public Protection Notification

    The NRC may not conduct or sponsor, and a person is not required to 
respond to, a request for information or an information collection 
requirement unless the requesting document displays a currently valid 
OMB control number.

Regulatory Analysis

    The Commission has prepared a Regulatory Analysis on this final 
regulation. The analysis examines the costs and benefits of the 
alternatives considered by the Commission. The Regulatory Analysis may 
be examined, and/or copied for a fee, at the NRC's Public Document Room 
at One White Flint North, 11555 Rockville Pike (first floor), 
Rockville, Maryland. Single copies of the analysis may be obtained from 
George J. Mencinsky, Office of Nuclear Reactor Regulation, U.S. Nuclear 
Regulatory Commission, telephone (301) 415-3093, e-mail gjm@nrc.gov.

Regulatory Flexibility Certification

    In accordance with the Regulatory Flexibility Act of 1980, (5 
U.S.C. 605(b)), the Commission certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
entities. This final rule affects only the licensing and operation of 
nuclear power plants. The companies that own these plants do not fall 
within the scope of the definition of ``small entities'' set forth in 
the Regulatory Flexibility Act or the size standards established by the 
NRC (10 CFR 2.810).

Backfit Analysis

    The NRC has determined that the backfit rule does not apply to this 
final rule. The final rule will (1) permissively relax the current 
requirement in Sec. 50.33(f) for submission of financial qualifications 
information by entities other than electric utilities seeking renewal 
of their nuclear power plant operating licenses, and (2) impose a new 
requirement for submission of financial information on electric 
utilities who hold operating licenses for nuclear power reactors and, 
then cease to be electric utilities in a manner other than a license 
transfer under 10 CFR 50.80. These information collection and reporting 
requirements do not constitute regulatory actions to which the backfit 
rule applies. In addition, with respect to the permissive relaxation in 
Sec. 50.33(f), such relaxations do not ``impose'' a requirement, which 
is an essential element of ``backfitting'' as defined in Sec. 
50.109(a)(1).
    Accordingly, the final rule's provisions do not constitute a 
backfit and a backfit analysis need not be performed. However, the 
staff has prepared a regulatory analysis that identifies the benefits 
and costs of the final rule and evaluates other options for addressing 
the identified issues. As such, the regulatory analysis constitutes a 
``disciplined approach'' for evaluating the merits of the final rule 
and is consistent with the intent of the backfit rule.

Small Business Regulatory Enforcement Fairness Act

    In accordance with the Small Business Regulatory Enforcement 
Fairness Act of 1996, the NRC has determined that this action is not a 
major rule and has verified this determination with the Office of

[[Page 4448]]

Information and Regulatory Affairs of OMB.

List of Subjects in 10 CFR Part 50

    Antitrust, Classified information, Criminal penalties, Fire 
protection, Intergovernmental relations, Nuclear power plants and 
reactors, Radiation protection, Reactor siting criteria, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble and under the authority of 
the Atomic Energy Act of 1954, as amended; the Energy Reorganization 
Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting 
the following amendments to 10 CFR part 50.

PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION 
FACILITIES

0
1. The authority citation for part 50 continues to read as follows:

    Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 
Stat. 936, 937,938, 948, 953, 954, 955, 956, as amended, sec. 234, 
83 Stat. 444, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 
2232, 2233, 2236, 2239, 2282); secs. 201, as amended, 202, 206, 88 
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846).
    Section 50.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 (42 U.S.C. 5841). Section 50.10 also issued under secs. 101, 
185, 68 Stat. 955, as amended (42 U.S.C. 2131, 2235); sec. 102, Pub. 
L. 91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.13, 50.54(dd), 
and 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 
U.S.C. 2138). Sections 50.23, 50.35, 50.55, and 50.56 also issued 
under sec. 185, 68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a, 
50.55a, and Appendix Q also issued under sec. 102, Pub. L. 91-190, 
83 Stat. 853 (42 U.S.C. 4332). Sections 50.34 and 50.54 also issued 
under sec. 204, 88 Stat. 1245 (42 U.S.C. 5844). Sections 50.58, 
50.91, and 50.92 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 
U.S.C. 2239). Section 50.78 also issued under sec. 122, 68 Stat. 939 
(42 U.S.C. 2152). Sections 50.80 and 50.81 also issued under sec. 
184, 68 Stat. 954, as amended (42 U.S.C. 2234). Appendix F also 
issued under sec. 187, 68 Stat. 955 (42 U.S.C. 2237).


0
2. In Sec. 50.33, paragraph (f)(2) is revised to read as follows:


Sec. 50.33.  Contents of applications; general information.

* * * * *
    (f) * * *
    (2) If the application is for an operating license, the applicant 
shall submit information that demonstrates the applicant possesses or 
has reasonable assurance of obtaining the funds necessary to cover 
estimated operation costs for the period of the license. The applicant 
shall submit estimates for total annual operating costs for each of the 
first five years of operation of the facility. The applicant shall also 
indicate the source(s) of funds to cover these costs. An applicant 
seeking to renew or extend the term of an operating license for a power 
reactor need not submit the financial information that is required in 
an application for an initial license. Applicants to renew or extend 
the term of an operating license for a nonpower reactor shall include 
the financial information that is required in an application for an 
initial license.
* * * * *

0
3. Section 50.76 is added to read as follows:


Sec. 50.76.  Licensee's change of status; financial qualifications.

    An electric utility licensee holding an operating license 
(including a renewed license) for a nuclear power reactor, no later 
than seventy-five (75) days prior to ceasing to be an electric utility 
in any manner not involving a license transfer under Sec. 50.80, shall 
provide the NRC with the financial qualifications information that 
would be required for obtaining an initial operating license as 
specified in Sec. 50.33(f)(2). The financial qualifications information 
must address the first full five years of operation after the date the 
licensee ceases to be an electric utility.

    Dated at Rockville, Maryland, this 26th day of January 2004.

    For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 04-1942 Filed 1-29-04; 8:45 am]
BILLING CODE 7590-01-P