[Federal Register Volume 69, Number 99 (Friday, May 21, 2004)]
[Rules and Regulations]
[Pages 29187-29192]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 04-11506]


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NUCLEAR REGULATORY COMMISSION

10 CFR Chapter I


Regulatory Analysis Guidelines: Final Criteria for the Treatment 
of Individual Requirements in a Regulatory Analysis

AGENCY: Nuclear Regulatory Commission.

ACTION: Regulatory analysis guidelines.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is issuing its final 
criteria for the treatment of individual requirements in a regulatory 
analysis, because aggregating or ``bundling'' different requirements in 
a single regulatory analysis could potentially mask the inclusion of an 
individual requirement that is not cost-justified. As a result of these 
new criteria, the NRC will issue Revision 4 of its Regulatory Analysis 
Guidelines, NUREG/BR-0058 in the near future.

[[Page 29188]]


FOR FURTHER INFORMATION CONTACT: Brian J. Richter, Office of Nuclear 
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001; telephone (301) 415-1978; e-mail bjr@nrc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The NRC usually performs a regulatory analysis for an entire rule 
in evaluating a proposed regulatory initiative to determine if the rule 
is cost-justified. External stakeholders from the nuclear power 
industry raised concerns that bundling different requirements in a 
single regulatory analysis can potentially mask the inclusion of an 
individual requirement when the net benefit from one of the 
requirements supports a second requirement that is not cost-justified.
    In order to address this concern, the NRC published proposed 
criteria for the treatment of individual requirements in a regulatory 
analysis for comment on April 18, 2003 (68 FR 19162).

II. Comments on the Proposed Criteria

    After publishing its proposed criteria for the treatment of 
individual requirements in a regulatory analysis, the NRC received two 
sets of comments: one set from the Nuclear Energy Institute (NEI), an 
organization responsible for establishing unified nuclear industry 
policy on matters affecting the nuclear energy industry and the second 
from the Nuclear Regulatory Services Group (NRSG), a consortium of 
power reactor licensees.
    In general, NEI states that the NRC's proposed criteria do not 
adequately incorporate the relevant Commission guidance on this issue 
and that the public comments made at a public meeting on March 21, 
2002, were not taken into account by the NRC staff. The two areas of 
concern to NEI were the NRC's criteria necessary to evaluate the 
bundling of individual requirements and the NRC's guidance on using 
subjective judgment in making bundling decisions.
    The law firm of Ballard Spahr Andrews & Ingersoll, LLP, also 
submitted a set of comments on behalf of the Nuclear Regulatory 
Services Group (NRSG). NRSG calls the proposed criteria ``a positive 
step in providing detailed guidance in this area for the first time'' 
and suggested some refinements of the criteria so that ``all proposed 
new regulatory requirements receive a proper analysis of their costs 
and benefits.''
    Comment: NEI's initial comment was that on ``* * * rules that 
provide risk-informed voluntary alternatives to current regulations, an 
individual requirement should have to be cost-justified and integral to 
the purpose of the rule rather than [NRC's position that it be] cost-
justified or integral to the purpose of the rule.'' NEI claims that the 
NRC's criteria ``* * * would be a significant disincentive to 
implementation of voluntary alternative requirements developed by 
industry groups because of the lack of scrutable guidance regarding the 
addition of individual requirements by the NRC staff.''
    Response: The NRC believes that its position is correct with 
respect to the need for each criterion to be considered as a basis for 
bundling. NRC's position may be clearer if one considers requirements 
that are not necessary to a rule as enhancements. Then, if one uses 
NEI's criteria of requiring both conditions, i.e., being both cost-
beneficial and necessary, no enhancements to a rule would be tolerated 
or should even be considered because an enhancement is not necessary to 
the purpose of the rule. But a fundamental principle of cost-benefit 
methodology is to select the alternative that achieves the largest net 
benefit, which could conceivably be an alternative with enhancements. 
Thus, NEI's position is tantamount to ignoring the cost-benefit 
implications of any requirement that is not necessary to meet the 
objective of the rule. Under NEI's approach, cost-beneficial 
relaxations could not be included in a rulemaking if they were not 
necessary to the purpose of the rule.
    Alternatively, the NRC's position allows for the selection of the 
alternative with the largest net benefit. Also, the NRC does not 
believe that NEI has demonstrated how the proposed criteria would be a 
``significant disincentive'' to the implementation of voluntary 
alternative requirements developed by industry groups. As long as the 
voluntary alternatives are shown to be cost-beneficial and result in no 
decrease in safety from the NRC's proposed requirement, there should 
not be a problem.
    Comment: NEI notes that the phrase ``integral to the purpose of the 
rule,'' used both in a Staff Requirements Memorandum (SRM), dated 
January 19, 2001, and in the February 2002 preliminary criteria, was 
subsequently dropped from the proposed criteria. The phrase relates to 
whether a proposed requirement can be ``integral to the purpose of the 
rule'' if the individual requirement is not cost-beneficial, not 
required for compliance, and not required for adequate protection. 
NEI's position is that the phrase should be included in the NRC's final 
criteria.
    Response: The NRC replaced the phrase ``integral to the purpose of 
the rule'' as stated in the 2002 criteria, with ``necessary to the 
purpose of the rule'' because NRC believes that ``necessary'' conveys a 
clearer meaning. As discussed in both the proposed and final criteria 
papers, a requirement is necessary to the purpose of the rule if it is 
needed for the regulatory initiative to resolve the problems and 
concerns, and meet the stated objectives that are the focus of the 
regulatory initiative.
    Comment: NEI believes that NRC analysts need more guidance on 
making bundling judgments. They claim that because NRC's guidance is 
confusing and provides no meaningful standard, it is easier for the NRC 
staff to aggregate requirements without explanation.
    Response: The NRC's guidance is consistent with that provided in 
the Office of Management and Budget's (OMB) Circular A-4, ``Regulatory 
Analysis'' issued September 17, 2003, in which OMB recognizes the need 
to examine individual provisions separately and goes on to state:

    Analyzing all possible combinations of provisions is impractical 
if the number is large and interaction effects are widespread. You 
need to use judgment to select the most significant or relevant 
provisions for such analysis. You are expected to document all the 
alternatives that were considered in a list or table and which were 
selected for emphasis in the main analysis.

    The OMB circular recognizes that judgment must be used for such 
analyses. The level of analysis needs to be tempered by many factors 
such as controversiality, complexity, magnitude of consequences, and 
the like. Also, each regulatory analysis could possibly have unique 
features that would likely affect the type of analysis that should be 
done. Further, NRC final guidance will include reference to the OMB 
circular and the NRC does not believe additional guidance is needed.
    Comment: NEI claims that the use of an analyst's judgment as 
proposed by the NRC relies too much on NRC management review and public 
comment. They state: ``The burden should be on the NRC to provide 
sufficient information to evaluate regulatory analysis decisions.''
    Response: Regulatory analyses are well founded and rely on sound 
judgments. This is done through peer review, management oversight, 
review of public comments, etc., and reliance on the analyst's judgment 
which is central to the regulatory analysis process. The NRC believes 
that its guidance ensures that its regulatory

[[Page 29189]]

analyses will provide sufficient information for the public to evaluate 
regulatory decisions and makes the process both ``meaningful and 
scrutable.''
    Comment: NEI quotes the SRM calling for regulatory analyses to be 
``meaningful and scrutable'' and claims that the analysis cannot meet 
this requirement unless there is some documented basis for 
disaggregation.
    Response: The NRC believes that regulatory analyses prepared under 
the revised guidelines are ``meaningful and scrutable,'' especially 
given that the guidance is consistent with that provided by OMB on this 
issue. The reason for disaggregation would be discussed in each 
regulatory analysis on a case-by-case basis.
    Comment: NEI states that the proposed criteria are inconsistent 
with the other detailed guidance on the treatment of values and impacts 
contained in NUREG/BR/0058, as currently written.
    Response: The NRC disagrees with this comment and believes this 
final guidance clarifies and supports existing guidance in NUREG/BR-
0058. Further, the NRC believes this new guidance is directly relevant 
to the current discussion on the identification of alternatives. This 
guidance considers the scope of requirements and the variability in 
physical and technical requirements as bases for defining alternatives. 
This bundling issue should be viewed as an extension or clarification 
of that discussion.
    Comment: NEI states with respect to bundling that the ``proposed 
criteria do not establish a common understanding of new requirements, 
do not establish a scrutable process for making regulatory decisions 
about voluntary initiatives, and do not provide sufficient 
documentation to inform future decisions.''
    Response: The NRC reiterates its position that ``bundling'' 
guidance sets forth in detail how an analyst should handle the 
``bundling'' issue and is also consistent with the cited OMB guidance. 
The NRC also believes that regulatory analyses and supporting 
documentation prepared under the revised guidance will be sufficient to 
provide documentation which may be reviewed to inform future decisions. 
The NRC notes that regulatory analyses are prepared as tools to support 
reasoned decision making and public understanding of the NRC's 
decisions; in this regard, the NRC believes that the revised guidelines 
achieve these objectives.
    Comment: NEI requests that the NRC defer its final decision on 
these criteria until previous comments are ``properly addressed.''
    Response: Sufficient information was not provided to defer a final 
decision. The NRC maintains that it has properly addressed all public 
comments. Also, the Advisory Committee on Reactor Safeguards has stated 
in a July 17, 2003, letter from its Chairman, Mario V. Bonaca, to the 
Chairman of the Commission, that the NRC staff's criteria ``are 
appropriate and responsive to the Commission's direction.''
    Comment: NRSG stated that the NRC should require separate analysis 
of individual requirements to the extent practicable. They went on to 
state ``that disaggregation of requirements should be the preferred 
approach, with the burden on the NRC to justify why separate analysis 
of individual requirements is not appropriate in a given case.''
    Response: The NRC acknowledges that, for the purposes of developing 
an overall cost estimate of a regulatory initiative, the analyst should 
obtain separate cost estimates for each individual requirement to the 
extent practical. This is because it is the most logical model for 
developing an overall cost estimate, namely a bottom up approach. 
Further, the NRC agrees that cost-benefit analyses of individual 
requirements that are related (but not necessary) to the overall 
regulatory initiative need to be considered in reaching a sound 
regulatory decision. However, it is important to remember that the 
underlying purpose of a regulatory analysis is to provide decision 
makers with a tool for choosing between options or alternatives. When a 
regulatory initiative has a number of discreet, yet necessary 
requirements, the decision maker's choice is not whether to include or 
exclude necessary individual requirements but, rather, whether or not 
to enact the initiative as a whole. Therefore, the separate analyses of 
necessary individual requirements cannot contribute to this decision.
    Further, as stated in the proposed criteria, published for public 
comment in the Federal Register on April 18, 2003 (68 FR 19162): 
``Specifically, this guidance states that a decision on the level of 
disaggregation needs to be tempered by considerations of reasonableness 
and practicality, and that a more detailed disaggregation would only be 
appropriate if it produces substantially different alternatives with 
potentially meaningful results.'' This implies that the analyst must be 
able to demonstrate that any aggregation in the analysis would not 
result in different conclusions of the analysis. Therefore, the NRC 
still does not believe that disaggregation in all cases should be the 
preferred approach and stands by the position stated in the proposed 
criteria. As stated in the guidance, ``the NRC does not believe that 
there should be a general requirement for a separate analysis of each 
individual requirement of a rule. This could lead to unnecessary 
complexities.'' Also, NRC believes that its guidance is consistent with 
OMB Circular A-4, cited above.
    Comment: NRSG states that if, according to the criteria, an 
individual requirement must be both ``related'' to the stated objective 
of the regulatory initiative and be ``cost-beneficial,'' then the NRC 
should clarify what it means by ``cost-beneficial.'' The commenter also 
states that the criteria for the treatment of any individual 
requirement must be consistent with the standards of the backfitting 
rule. Under the backfit rule, any new requirement that is a backfit 
must be shown to be cost-justified and produce a ``substantial 
increase'' in overall safety. Lastly, their final two points in this 
section are in agreement with the NRC criteria. First, the commenter 
agrees with the NRC that in ``cases where a new backfit requirement is 
being considered for inclusion in a voluntary alternative, to current 
regulations * * * NRC should consider imposing such a new requirement, 
if justified under the standards of Section 50.109, through the normal 
disciplined backfitting process, * * * rather than merely including it 
in a voluntary-alternative rule.'' Second, NRSG ``agree(s) with the NRC 
position that if an individual backfit requirement is not related to 
the objective of the regulatory initiative * * * , the ``requirement 
must be addressed and justified as a backfit separately.'''
    Response: For the most part, the NRC agrees with these comments. 
With respect to the NRC's meaning of ``cost-beneficial'' in the 
situation discussed by the commenter, the NRC means that the regulatory 
initiative results in a larger net benefit than would accrue to an 
action without that requirement. Further, with respect to the backfit 
rule, the NRC position is that when an individual requirement is 
related to the stated regulatory objective, the individual requirement 
should be cost-justified, and the overall regulatory initiative should 
constitute a substantial increase in the public health and safety.
    Comment: NRSG stated that there should be further guidance on 
backfitting issues related to the American Society of Mechanical 
Engineers (ASME) Code. Specifically, they state:


[[Page 29190]]


    NRC's guidance should allow the NRC discretion to perform a 
cost-benefit analysis of individual new requirements contained in 
later editions of Section XI before they are incorporated wholesale 
into Section 50.55a. If the NRC finds that individual new 
requirements of later Code editions are not cost-beneficial for some 
or all plants, the NRC should screen out those new individual 
requirements in accordance with the standards of the backfitting 
rule.

    Response: The Commission's policy regarding Inservice Inspection 
(ISI) requirements is to assure the integrity of the reactor coolant 
system (RCS) boundary and containment as they relate to defense-in-
depth considerations, that do not lend themselves to cost-benefit 
analyses. Further, in this specific instance, cost-benefit analyses are 
not well suited to determine if new requirements that address aging of 
components are appropriate because of the many uncertainties associated 
with the effects of aging.
    When the Commission formulated its policy, the then Chairman stated 
that: ``Both the ASME and the ACRS have strongly urged that the 
Commission maintain the current updating requirement'' and that--

    ASME asserts that the failure of the NRC to incorporate later 
editions of the Code in the requirements, absent justification under 
a backfit analysis, would serve to undermine ASME because of the 
disincentive of volunteers to engage themselves in an ASME process 
that will not necessarily affect operating plants. Moreover, because 
some states routinely establish requirements based on current ASME 
codes, the acceptance of the staff's approach would create the 
anomaly that non-nuclear facilities might be required to conform to 
more modern codes than nuclear facilities.

    The Chairman also indicated he was aware ``that industry 
participates in the development of the ASME codes and that costs are 
considered in the amendment process. Thus, although the revisions may 
not be analyzed with the rigor required by our backfit analysis, the 
costs and benefits are implicitly weighed.''
    Another Commissioner commented:

    10 CFR 50.109 has served the NRC, our licensees, and our 
stakeholders well, and thus, my decision to not subject ASME Code 
updates to its backfit provisions was made only after I carefully 
considered how the staff's recommended option should exacerbate the 
complexity, inconsistency, and program divergence associated with 
our current update process. My decision also came after considering 
the diverse makeup of the ASME members that produce Code changes and 
the consensus process they use. * * * I believe that considerations 
of increased safety versus cost are implicit in the ASME consensus 
process.

    In sum, NRSG's suggested approach is inconsistent with the 
Commission's previous guidance to the staff.

III. Final Criteria

    In evaluating a proposed regulatory initiative, the NRC usually 
performs a regulatory analysis for the entire rule to determine whether 
or not it is cost-justified. However, aggregating or ``bundling'' 
different requirements in a single analysis could potentially mask the 
inclusion of an unnecessary individual requirement. In the case of a 
rule that provides a voluntary alternative to current requirements, the 
net benefit from the relaxation of one requirement could potentially 
support a second unnecessary requirement that is not cost-justified. 
Similarly, in the case of other types of rules, including those subject 
to backfit analysis,\1\ the net benefit from one requirement could 
potentially support another requirement that is not cost-justified.\2\
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    \1\ 'The Regulatory Analysis Guidelines of the U.S. Nuclear 
Regulatory Commission,'' (NUREG/BR-0058) have been developed so that 
a regulatory analysis that conforms to these Guidelines will meet 
the requirements of the backfit rule and the provisions of the CRGR 
Charter.
    \2\ This discussion does not apply to backfits that the 
Commission determines qualify under one of the exceptions in 10 CFR 
50.109(a)(4). Those types of backfits require a documented 
evaluation rather than a backfit analysis, and cost is not a 
consideration in deciding whether or not the exceptions are 
justified (though costs may be considered in determining how to 
achieve a certain level of protection).
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    Therefore, when analyzing and making decisions about regulatory 
initiatives that are composed of individual requirements, the NRC must 
determine if it is appropriate to include each individual requirement. 
Clearly, in certain instances, the inclusion of an individual 
requirement is necessary. This would be the case, for example, when the 
individual requirement is needed for the regulatory initiative to 
resolve the problems and concerns and meet the stated objectives \3\ 
that are the focus of the regulatory initiative. Even though inclusion 
of individual requirements is necessary in this case, the analyst 
should obtain separate cost estimates for each requirement, to the 
extent practical, in deriving the total cost estimate presented for the 
aggregated requirements.
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    \3\ The stated objectives of the rule are those stated in the 
preamble (also known as the Statement of Considerations) of the 
rule.
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    However, there will also be instances in which the individual 
requirement is not a necessary component of the regulatory initiative, 
and thus the NRC will have some discretion regarding its inclusion. In 
these circumstances, the NRC should adhere to the following guideline:

    If the individual requirement is related (i.e., supportive but 
not necessary) to the stated objective of the regulatory initiative, 
it should be included only if its overall effect is to make the 
bundled regulatory requirement more cost-beneficial. This would 
involve a quantitative and/or qualitative evaluation of the costs 
and benefits of the regulatory initiative with and without the 
individual requirement included, and a direct comparison of those 
results.\4\
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    \4\ There may be circumstances in which the analyst considers 
including an individual requirement that is unrelated to the overall 
regulatory initiative. For example, an analyst may consider 
combining certain unrelated requirements as a way to eliminate 
duplicative rulemaking costs to the NRC and increase regulatory 
efficiency. Under these circumstances, it would be appropriate to 
combine these discrete individual requirements if the overall effect 
is to make the regulatory initiative more cost-beneficial. In those 
instances in which the individual requirement is a backfit, the 
requirement must be addressed and justified as a backfit separately. 
These backfits are not to be included in the overall regulatory 
analysis of the remainder of the regulatory initiative.

    In applying this guideline, the NRC will need to separate out the 
discrete requirements in order to evaluate their effect on the cost-
benefit results. In theory, each regulatory initiative could include 
several discretionary individual requirements and each of those 
discretionary requirements could be comprised of many discrete steps, 
in which each discrete step could be viewed as a distinct individual 
requirement. This raises the potential for a large number of iterative 
cost-benefit comparisons, with attendant analytical complexities. Thus, 
considerable care needs to be given to the level of disaggregation that 
one attaches to a discretionary requirement.
    In general, a decision on the level of disaggregation needs to be 
tempered by considerations of reasonableness and practicality. For 
example, more detailed disaggregation is only appropriate if it 
produces substantively different alternatives with potentially 
meaningful implications on the cost-benefit results. Alternatively, 
individual elements that contribute little to the overall costs and 
benefits and are noncontroversial may not warrant much, if any, 
consideration. In general, it will not be necessary to provide 
additional documentation or analysis to explain how this determination 
is made, although such a finding can certainly be challenged at the 
public comment stage.\5\ For further guidance, the analyst is referred 
to principles regarding the appropriate level of detail to be included 
in a

[[Page 29191]]

regulatory analysis, as discussed in Chapter 4 of the ``Regulatory 
Analysis Guidelines of the U.S. Nuclear Regulatory Commission.''
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    \5\ See NUREG/BR-0053, Revision 5, March 2001, ``U.S. Nuclear 
Regulatory Commission Regulations Handbook,'' Section 7.9, for 
discussion of how to treat comments.
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    In some cases, an individual requirement that is being considered 
for inclusion in a voluntary alternative to current regulations may be 
justifiable under the backfit criteria. In these cases the individual 
requirement is both cost-justified and provides a substantial increase 
in the overall protection of the public health and safety or the common 
defense and security. If so, the NRC should consider imposing the 
individual requirement as a backfit affecting all plants to which it 
applies, rather than merely including it in a voluntary-alternative 
rule affecting only those plants where the voluntary alternative is 
adopted.
    A special case involves the NRC's periodic review and endorsement 
of consensus standards, such as new versions of the American Society of 
Mechanical Engineers (ASME) codes. These NRC endorsements can typically 
involve hundreds, if not thousands, of individual provisions. Thus, 
evaluating the benefits and costs of each individual provision in a 
regulatory analysis can be a monumental task. Further, the value gained 
by performing such an exercise appears limited. These consensus 
standards tend to be noncontroversial and have already undergone 
extensive external review and been endorsed by industry. Although 
regulatory actions endorsing these consensus standards must be 
addressed in a regulatory analysis, it is usually not necessary for the 
regulatory analysis to address the individual provisions of the 
consensus standards.
    The NRC believes this is appropriate for several reasons:
    (1) It has been longstanding NRC policy to incorporate later 
versions of the ASME Code into its regulations; and thus, licensees 
know when receiving their operating licenses that updating the ASME 
Code is part of the regulatory process;
    (2) Endorsement of the ASME Code is consistent with the National 
Technology Transfer and Advancement Act, inasmuch as the NRC has 
determined that there are sound regulatory reasons for establishing 
regulatory requirements for design, maintenance, inservice inspection 
and inservice testing by rulemaking; and
    (3) These consensus standards undergo significant external review 
and discussion before being endorsed by the NRC.
    Some aspects of these regulatory actions endorsing consensus 
standards are backfits which must be addressed and justified 
individually. For example, NRC endorsement (incorporation by reference) 
of the ASME Boiler and Pressure Vessel Code (BPV) provisions on 
inservice inspection and inservice testing, and the ASME Operations and 
Maintenance (OM) Code, are not ordinarily considered backfits, because 
it has been the NRC's longstanding policy to incorporate later versions 
of the ASME codes into its regulations. However, under some 
circumstances the NRC's endorsement of a later ASME BPV or OM Code is 
treated as a backfit. The application of the backfit rule to ASME code 
endorsements is discussed in the Appendix below. Aside from these 
backfits, these regulatory analyses should include consideration of the 
major features (e.g., process changes, recordkeeping requirements) of 
the regulatory action which should then be aggregated to produce 
qualitative or quantitative estimates of the overall burdens and 
benefits in order to determine if the remainder of the action is 
justified.

    Dated in Rockville, Maryland, this 17th day of May, 2004.

    For the Nuclear Regulatory Commission.
Annette Vietti-Cook,
Secretary of the Commission.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix

Guidance on Backfitting Related to ASME Codes

    10 CFR 50.55a requires nuclear power plant licensees to 
construct ASME Boiler and Pressure Vessel Code (BPV Code) Class 1, 
2, and 3 components under the rules provided in Section III, 
Division 1, of the ASME BPV Code; inspect Class 1, 2, 3, Class MC, 
and Class CC components under the rules provided in Section XI, 
Division 1, of the ASME BPV Code; and test Class 1, 2, and 3 pumps 
and valves under the rules provided in the ASME Code for Operation 
and Maintenance of Nuclear Power Plants (OM Code). From time to 
time, the NRC amends 10 CFR 50.55a to incorporate by reference later 
editions and addenda of: Section III, Division 1, of the ASME BPV 
Code; Section XI, Division 1, of the ASME BPV Code; and the ASME OM 
Code.

Section A. Incorporation by Reference of Later Editions and Addenda of 
Section III, Division 1 of ASME BPV Code

    Incorporation by reference of later editions and addenda of 
Section III, Division 1, of the ASME BPV Code is prospective in 
nature. The later editions and addenda do not affect a plant that 
has received a construction permit or an operating license, or a 
design that has been approved because the edition and addenda to be 
used in constructing a plant are, by rule, determined on the basis 
of the date of the construction permit and are not changed, except 
voluntarily by the licensee. Thus, incorporation by reference of a 
later edition and addenda of Section III, Division 1, does not 
constitute a ``backfitting'' as defined in Sec.  50.109(a)(1).

Section B. Incorporation by reference of later editions and addenda of 
Section XI, Division 1, of the ASME BPV and OM Codes

    Incorporation by reference of later editions and addenda of 
Section XI, Division 1, of the ASME BPV Code and the ASME OM Code 
affect the ISI and IST programs of operating reactors. However, the 
backfit rule generally does not apply to incorporation by reference 
of later editions and addenda of the ASME BPV (Section XI) and OM 
codes for the following reasons--
    (1) The NRC's longstanding policy has been to incorporate later 
versions of the ASME codes into its regulations; thus, licensees 
know when receiving their operating licenses that such updating is 
part of the regulatory process. This is reflected in Sec.  50.55a 
which requires licensees to revise their in-service inspection (ISI) 
and in-service-testing (IST) programs every 120 months to the latest 
edition and addenda of Section XI of the ASME BPV Code and the ASME 
OM Code incorporated by reference into Sec.  50.55a that is in 
effect 12 months before the start of a new 120-month ISI and IST 
interval. Thus, when the NRC endorses a later version of a code, it 
is implementing this longstanding policy.
    (2) ASME BPV and OM codes are national consensus standards 
developed by participants with broad and varied interests, in which 
all interested parties (including the NRC and utilities) 
participate. This consideration is consistent with both the intent 
and spirit of the backfit rule (i.e., the NRC provides for the 
protection of the public health and safety, and does not 
unilaterally imposed undue burden on applicants or licensees).
    (3) Endorsement of these ASME codes is consistent with the 
National Technology Transfer and Advancement Act, inasmuch as the 
NRC has determined that there are sound regulatory reasons for 
establishing regulatory requirements for design, maintenance, 
inservice inspection and inservice testing by rulemaking.

Section C. Other Circumstances Where the NRC Does Not Apply the Backfit 
Rule to the Endorsement of a Later Code

    Other circumstances where the NRC does not apply the backfit 
rule to the endorsement of a later code are as follows--
    (1) When the NRC takes exception to a later ASME BPV or OM code 
provision, and merely retains the current existing requirement, 
prohibits the use of the later code provision, or limits the use of 
the later code provision, the backfit rule does not apply because 
the NRC is not imposing new requirements. However, the NRC provides 
the technical and/or policy bases for taking exceptions to the code 
in the Statement of Considerations for the rule.
    (2) When an NRC exception relaxes an existing ASME BPV or OM 
code provision but does not prohibit a licensee from using the 
existing code provision.

[[Page 29192]]

Section D. Endorsement of Later ASME BPV or OM Codes That Are 
Considered Backfits

    There are some circumstances when the NRC considers it 
appropriate to treat as a backfit the endorsement of a later ASME 
BPV or OM code--
    (1) When the NRC endorses a later provision of the ASME BPV or 
OM code that takes a substantially different direction from the 
currently existing requirements, the action is treated as a backfit. 
An example was the NRC's initial endorsement of Subsections IWE and 
IWL of Section XI, which imposed containment inspection requirements 
on operating reactors for the first time. The final rule dated 
August 8, 1996 (61 FR 41303), incorporated by reference in Sec.  
50.55a the 1992 Edition with the 1992 Addenda of IWE and IWL of 
Section XI to require that containments be routinely inspected to 
detect defects that could compromise a containment's structural 
integrity. This action expanded the scope of Sec.  50.55a to include 
components that were not considered by the existing regulations to 
be within the scope of ISI. Because those requirements involved a 
substantially different direction, they were treated as backfits, 
and justified under the standards of 10 CFR 50.109.
    (2) When the NRC requires implementation of later ASME BPV or OM 
code provision on an expedited basis, the action is treated as a 
backfit. This applies when implementation is required sooner than it 
would be required if the NRC simply endorsed the Code without any 
expedited language. An example was the final rule dated September 
22, 1999 (64 FR 51370), which incorporated by reference the 1989 
Addenda through the 1996 Addenda of Section III and Section XI of 
the ASME BPV Code, and the 1995 Edition with the 1996 Addenda of the 
ASME OM Code. The final rule expedited the implementation of the 
1995 Edition with the 1996 Addenda of Appendix VIII of Section XI of 
the ASME BPV Code for qualification of personnel and procedures for 
performing ultrasonic (UT) examinations. The expedited 
implementation of Appendix VIII was considered a backfit because 
licensees were required to implement the new requirements in 
Appendix VIII before the next 120-month ISI program inspection 
interval update. Another example was the final rule dated August 6, 
1992 (57 FR 34666), which incorporated by reference in Sec.  50.55a 
the 1986 Addenda through the 1989 Edition of Section III and Section 
XI of the ASME BPV Code. The final rule added a requirement to 
expedite the implementation of the revised reactor vessel shell weld 
examinations in the 1989 Edition of Section XI. Imposing these 
examinations was considered a backfit because licensees were 
required to implement the examinations before the next 120-month ISI 
program inspection interval update.
    (3) When the NRC takes an exception to an ASME BPV or OM code 
provision and imposes a requirement that is substantially different 
from the current existing requirement as well as substantially 
different than the later code. An example of this is presented in 
the portion of the final rule dated September 19, 2002, in which the 
NRC adopted dissimilar metal piping weld UT examination coverage 
requirements from those in the ASME code.

[FR Doc. 04-11506 Filed 5-20-04; 8:45 am]
BILLING CODE 7590-01-P