[Federal Register Volume 73, Number 14 (Tuesday, January 22, 2008)]
[Proposed Rules]
[Pages 3812-3846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-574]
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Part II
Nuclear Regulatory Commission
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10 CFR Parts 20, 30, 40, et al.
Decommissioning Planning; Proposed Rule
Federal Register / Vol. 73, No. 14 / Tuesday, January 22, 2008 /
Proposed Rules
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NUCLEAR REGULATORY COMMISSION
10 CFR Parts 20, 30, 40, 50, 70 and 72
RIN 3150-AH45
Decommissioning Planning
AGENCY: Nuclear Regulatory Commission.
ACTION: Proposed rule.
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SUMMARY: The Nuclear Regulatory Commission (NRC) is proposing to amend
its regulations to improve decommissioning planning, and thereby reduce
the likelihood that any current operating facility will become a legacy
site. The amended regulations would require licensees to conduct their
operations to minimize the introduction of residual radioactivity into
the site, including subsurface soil and groundwater. Licensees also
would be required to survey certain quantities or concentrations of
residual radioactivity, including in subsurface areas, and keep records
of surveys of subsurface residual radioactivity identified at the site
with records important for decommissioning. The amended regulations
would require licensees to report additional details in their
decommissioning cost estimates, would eliminate two currently approved
financial assurance mechanisms, and would modify the parent company
guarantee and self-guarantee financial assurance mechanisms to
authorize the NRC to require that guaranteed funds be immediately due
and payable to a standby trust if the guarantor is in financial
distress. Finally, the amended regulations would require
decommissioning power reactor licensees to report additional
information on the costs of decommissioning and spent fuel management.
DATES: Submit comments on the proposed rule by April 7, 2008. Submit
comments specific to the information collections aspects of this
proposed rule by February 21, 2008. Comments received after these dates
will be considered if it is practical to do so, but assurance of
consideration cannot be given to comments received after these dates.
ADDRESSES: You may submit comments by any one of the following methods.
Please include the number RIN 3150-AH45 in the subject line of your
comments. Comments on rulemakings or petitions submitted in writing or
electronic form will be made available to the public in their entirety
on the NRC rulemaking Web site. Personal information, such as your
name, address, telephone number, e-mail address, etc., will not be
removed from your submission.
Mail comments to: Secretary, U.S. Nuclear Regulatory Commission,
Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff.
E-mail comments to: [email protected]. If you do not receive a reply e-
mail confirming that we have received your comments, contact us
directly at 301-415-1677. Comments can also be submitted via the
Federal eRulemaking Portal http://www.regulations.gov.
Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland
20852, between 7:30 a.m. and 4:15 p.m. Federal workdays. (Telephone
301-415-1966).
Fax comments to: Secretary, U.S. Nuclear Regulatory Commission at
301-415-1101.
Selected documents and draft guidance related to this rulemaking,
including comments, may be viewed and downloaded electronically via the
Federal eRulemaking Portal http://www.regulations.gov, or may be viewed
electronically on the public computers located at the NRC's Public
Document Room (PDR), O1 F21, One White Flint North, 11555 Rockville
Pike, Rockville, Maryland. The PDR reproduction contractor will copy
documents for a fee.
Publicly available documents created or received at the NRC after
November 1, 1999, are available electronically at the NRC's Electronic
Reading Room at http://www.nrc.gov/reading-rm/adams.html. From this
site, the public can gain entry into ADAMS, which provides text and
image files of NRC's public documents. The ADAMS accession number is
ML073470819 for publicly available documents and draft guidance related
to this rulemaking. If you do not have access to ADAMS or if there are
problems in accessing the documents located in ADAMS, contact the PDR
Reference staff at 1-800-397-4209, 301-415-4737 or by e-mail to
[email protected].
FOR FURTHER INFORMATION CONTACT: Kevin O'Sullivan, Office of Federal
and State Materials and Environmental Management Programs, U.S. Nuclear
Regulatory Commission, Washington, DC 20555-0001, telephone 301-415-
8112, e-mail [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
II. Discussion
A. What Action is the NRC Taking?
B. Who Would This Action Affect?
C. What Steps Did NRC Take to Prepare for This Rulemaking?
D. What Alternatives Has NRC Considered?
E. What Is a Legacy Site?
F. What Are Financial Assurances?
G. Why Might Some Materials Licensees Not Have Funds to
Decommission Their Facility?
H. Why Is 10 CFR 50.82 Being Amended?
I. What Changes Are Being Proposed to 10 CFR 20.1406?
J. What Surveys Are Required Under Proposed Changes to 10 CFR
20.1501(a)?
K. What Information Must the Licensee Collect Under Proposed
Changes to 10 CFR 20.1501?
L. How Would Licensees Report Required Information to the NRC?
M. What Financial Assurance Information Must Licensees Currently
Report to the NRC?
N. What Are the Proposed Changes to the Financial Assurance
Regulations?
O. Will Some Licensees Who Currently Do Not Have Financial
Assurance Need to Get Financial Assurance?
P. What Is Changing With Respect to Materials Facilities'
Decommissioning Funding Plan (DFP) and Decommissioning Cost Estimate
(DCE)?
Q. What Is Changing With Respect to License Transfer Regulations
for Materials Licensees?
R. What Is Changing With Respect to Permanently Shutdown Reactor
Decommissioning Fund Status and Spent Fuel Management Plan
Reporting?
S. When Do These Proposed Actions Become Effective?
T. Has NRC Prepared a Cost-Benefit Analysis of the Proposed
Actions?
U. Has NRC Evaluated the Additional Paperwork Burden to
Licensees?
V. What Should I Consider as I Prepare My Comments to NRC?
III. Discussion of Proposed Amendments by Section
IV. Criminal Penalties
V. Agreement State Compatibility
VI. Plain Language
VII. Voluntary Consensus Standards
VIII. Environmental Assessment and Finding of No Significant
Environmental Impact
IX. Paperwork Reduction Act Statement
X. Public Protection Notification
XI. Regulatory Analysis
XII. Regulatory Flexibility Certification
XIII. Backfit Analysis
I. Background
In 1988, NRC issued regulations in Title 10 Code of Federal
Regulations (10 CFR) parts 30, 40, 50, 51, 70 and 72 establishing new
financial criteria applicable to decommissioning licensed nuclear
facilities (53 FR 24018; June 27, 1988). Planning, estimating costs,
acceptable funding methods, and environmental review provisions were
among the requirements established in 1988, and were designed to ensure
that licensee funds would be available when needed to complete safe and
timely decommissioning of all licensed facilities. Financial assurance
regulations are part of NRC's overall strategy to maintain public
health and
[[Page 3813]]
safety, and protection of the environment, during and after nuclear
facility decommissioning. The NRC announced in 1988 that it intended to
periodically assess the effectiveness of the funding methods permitted
in the regulations. Since then, the NRC has issued several amendments
to the financial criteria applied to decommissioning licensed nuclear
facilities.
After NRC published financial assurance regulations in 1988, a
small number of sites were unable to fully comply with the financial
assurance requirements. In some cases, these sites had large amounts of
onsite residual contamination, remediation of which would exceed
available funds. The Commission directed the staff, in Staff
Requirements Memoranda (SRMs) dated August 22, 1989, and January 31,
1990, to develop a strategy for resolving decommissioning issues and to
develop a prioritized list of contaminated sites. In response, the Site
Decommissioning Management Plan (SDMP) was developed, containing
cleanup criteria based in part on residual radioactivity concentrations
for sites with extensive uranium and thorium contamination.
In 1993 (58 FR 68726), licensees that passed financial test
criteria were allowed to use a self-guarantee to provide financial
assurance for decommissioning. In 1996 (61 FR 39299; July 29, 1996),
nuclear power reactor decommissioning procedures were clarified, while
recognizing that the radioactivity resulting from contaminated
materials and effluents (air and water) must be minimized and
controlled. In 1998 (63 FR 29535; June 1, 1998), use of the self-
guarantee method was broadened to include some commercial licensees who
do not issue bonds, as well as non-profit licensees, such as colleges,
universities and hospitals. Also in 1998 (63 FR 50465; September 22,
1998), NRC amended power reactor decommissioning financial assurance
requirements in response to potential deregulation of the power
generating industry. In 2003 (68 FR 57327; October 3, 2003), the set of
materials licensees for which financial assurance is required was
expanded to include all waste brokers. Additionally, large irradiators
were required to prepare a site-specific decommissioning cost estimate
as the basis of their financial assurance; decommissioning
certification amounts were increased by 50 percent; and decommissioning
cost estimates were required to be updated for certain licensees at
least every 3 years.
Apart from these changes in financial assurance requirements
summarized above, more comprehensive and risk informed decommissioning
regulations were issued in 1997 as Subpart E of 10 CFR part 20 (62 FR
39058; July 21, 1997). This set of requirements is known as the License
Termination Rule (LTR). The LTR is based on calculated doses, and it
established specific radiological criteria for remediation of lands and
structures to complete site decommissioning and successfully terminate
the license. The LTR provides an overall approach for license
termination for two different site conditions: unrestricted use and
restricted conditions for use after license termination. The LTR
applies to the decommissioning of facilities licensed under 10 CFR
parts 30, 40, 50, 60, 61, 63, 70 and 72. In the Federal Register notice
publishing the LTR final rule, in response to a public comment that the
requirements of then-proposed 10 CFR 20.1406 should apply to all
licensees, rather than only to applicants for new licenses, the
Commission stated:
Applicants and existing licensees, including those making
license renewals, are already required by 10 CFR part 20 to have
radiation protection programs aimed towards reducing exposure and
minimizing waste. In particular, Sec. 20.1101(a) requires
development and implementation of a radiation protection plan
commensurate with the scope and extent of licensed activities and
sufficient to ensure compliance with the provisions of 10 CFR part
20. Section 20.1101(b) requires licensees to use, to the extent
practicable, procedures and engineered controls to achieve public
doses that are ALARA. In addition, lessons learned and documented in
reports such as NUREG-1444 have focused attention on the need to
minimize and control waste generation during operations as part of
development of the required radiation protection plans. Furthermore,
the financial assurance requirements issued in the January 27, 1988
(53 FR 24018), rule on planning for decommissioning require
licensees to provide adequate funding for decommissioning. These
funding requirements create great incentive to minimize
contamination and the amount of funds set aside and expended on
cleanup. (62 FR 39082; July 21, 1997).
Current 10 CFR 20.1101(a) requires each licensee to implement a
radiation protection program to ensure compliance with the regulations
in 10 CFR part 20. Current Sec. 20.1101(b) requires each licensee to
use, to the extent practical, procedures and engineering controls based
upon sound radiation protection principles to achieve occupational
doses and doses to members of the public that are as low as reasonably
achievable (ALARA). Licensees need to apply operating procedures and
controls to evaluate potential radiological hazards and methods to
minimize and control waste generation during facility operations, to
achieve doses that are ALARA.
In SRM-SECY-01-0194, dated June 18, 2002, the Commission directed
the staff to conduct an analysis of LTR issues. The staff conducted the
analysis and presented results and recommendations to the Commission in
SECY-03-0069 (http://www.nrc.gov/reading-rm/doc-collections/commission/srm/2003/2003-0069srm.pdf), (dated May 2, 2003, and known as the LTR
Analysis). One of the recommendations was a set of ``measures to
prevent future legacy sites.'' A legacy site is a facility that is in
decommissioning status with complex issues and an owner who cannot
complete the decommissioning work for technical or financial reasons
(as discussed further in Section II.E of this document). The set of
measures to prevent future legacy sites had two distinct parts: (1) The
need for timely reporting during facility operations of subsurface
contamination that has a potential to complicate future decommissioning
efforts; and (2) The need for more detailed reporting of licensee
financial assurance mechanisms to fund site decommissioning activities
and protection of the committed funds in cases of financial distress.
The need for timely reporting of subsurface contamination during
facility operations was explained in Attachment 8 to SECY-03-0069.
Attachment 8, under the heading ``chronic releases,'' recommended
revising 10 CFR 20.1406 to extend its minimization of contamination
requirements to cover licensees in addition to license applicants.
Recommendations for more detailed decommissioning financial assurance
requirements are set forth in Attachment 7 to SECY-03-0069.
In SRM-SECY-03-0069 the Commission approved the staff's
recommendations summarized above, and authorized this proposed
rulemaking. As pertinent to the proposed 10 CFR 20.1406 and 10 CFR
20.1501 revisions, the Commission's SRM states as follows:
``The Commission has approved the staff's recommendation related
to changes in licensee operations as described in attachment 8.
However, in addition to incorporating risk-informed approaches, the
staff should ensure that they are performance-based. The staff will
have to be very careful when crafting the guidance documents so that
it is clear to the licensees and to the staff how much
characterization information is enough. The staff should only ask
for limited information. Licensees should
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not be required to submit the equivalent of a full scale MARSSIM
[Multi-Agency Radiation Survey and Site Investigation Manual] survey
every year.''
During 2003 and 2004, the NRC staff evaluated the decommissioning
program and proposed other improvements to protect public health and
safety beyond those identified in the LTR Analysis. To integrate and
track regulatory improvements resulting from the LTR Analysis and the
Decommissioning Program Evaluation, the NRC adopted an Integrated
Decommissioning Improvement Plan (IDIP) for activities during FY 2004
through 2007. Among other actions, the IDIP calls for publication of
this proposed rule and written guidance describing changes in the
regulations to prevent future legacy sites.
In 2005 and 2006, the operators of several nuclear power plants
reported that inadvertent and unmonitored radioactive liquid releases,
primarily tritium contained in water, had occurred. In some instances,
the release of radioactive liquid was not recognized by the licensee
until years after the release apparently started. The NRC Executive
Director for Operations chartered a Task Force to conduct a lessons-
learned review of these incidents. The Task Force final report dated
September 1, 2006, concluded that the levels of tritium and other
radionuclides measured thus far do not present a health hazard to the
public, and presenting a list of findings and recommendations that the
Task Force believed would improve plant operations and public
confidence in nuclear plant operations. The findings and
recommendations in the Task Force report identified the need to clarify
existing licensee requirements to demonstrate that they have achieved
public and occupational exposures that are ALARA, during the life cycle
of the facility which includes the decommissioning phase.
II. Discussion
A. What Action Is the NRC Taking?
The NRC is proposing changes to its regulations to improve
decommissioning planning, and thereby reduce the likelihood that
facilities under its jurisdiction will become legacy sites. To help
achieve this goal, one set of complementary amendments have been
proposed that would revise 10 CFR 20.1406 to make it applicable to
licensees with operating facilities as well as to license applicants,
and revise 10 CFR 20.1501(a) by replacing its undefined term
``radioactive material'' with ``residual radioactivity,'' a term
already defined in 10 CFR part 20. This defined term includes
subsurface contamination within its scope. Both 10 CFR 20.1406(c) and
20.1501(a) are being worded to include subsurface contamination within
their scope by using the term ``residual radioactivity.'' These changes
serve to reinforce the intended linkage between these provisions, and
are consistent with NRC policy that licensees conduct operations to
minimize the generation of waste, to facilitate later facility
decommissioning. A second set of proposed changes to improve
decommissioning planning addresses decommissioning financial assurance
requirements.
The proposed new 10 CFR 20.1406(c) states as follows:
(c) Licensees shall, to the extent practical, conduct operations
to minimize the introduction of residual radioactivity into the
site, including the subsurface, in accordance with the existing
radiation protection requirements in Subpart B and radiological
criteria for license termination in Subpart E of this part.
The proposed revised 10 CFR 20.1501(a) and (b) state as follows:
(a) Each licensee shall make or cause to be made, surveys of
areas, including the subsurface, that--
(1) May be necessary for the licensee to comply with the
regulations in this part; and
(2) Are reasonable under the circumstances to evaluate--
(i) The magnitude and extent of radiation levels; and
(ii) Concentrations or quantities of residual radioactivity; and
(iii) The potential radiological hazards of the radiation levels
and residual radioactivity detected.
(b) Records from surveys describing the location and amount of
subsurface residual radioactivity identified at the site must be
kept with records important for decommissioning.
As indicated, use of the term ``residual radioactivity'' is a key
component of the above proposed requirements, and this term is
discussed below.
1. Residual Radioactivity
As set forth in 10 CFR 20.1003:
``Residual radioactivity means radioactivity in structures,
materials, soils, groundwater, and other media at a site resulting
from activities under the licensee's control. This includes
radioactivity from all licensed and unlicensed sources used by the
licensee, but excludes background radiation. It also includes
radioactive materials remaining at the site as a result of routine
or accidental releases of radioactive material at the site and
previous burials at the site, even if those burials were made in
accordance with the provisions of 10 CFR part 20.''
Certain operational events (e.g., slow, long-term leaks),
particularly those that cause subsurface soil and ground-water
contamination, can significantly increase the cost of decommissioning.
To adequately assure that a decommissioning fund will cover the costs
of decommissioning, the owner of a facility must have a reasonably
accurate estimate of the extent to which residual radioactivity is
present at the facility, particularly in the subsurface soil and ground
water. As reflected above, the new 10 CFR 20.1406(c) would require that
licensees conduct their operations in a manner that will minimize the
introduction of residual radioactivity into the site.
Section 20.1501(a) would be revised by replacing its undefined term
``radioactive material'' with ``residual radioactivity.'' To some
people, the phrase ``residual radioactivity'' may have a connotation
implying radioactive material that is ``left over'' after operations.
This is not the meaning. As reflected in its definition stated
previously, this term includes everything that the term ``radioactive
material'' implies in the current rule language as well as other
radioactive material resulting from activities under the licensee's
control, such as radioactive material in the subsurface. The use of the
term ``residual radioactivity'' in Sec. 20.1501(a) also is intended to
provide a link with new Sec. 20.1406(c). The amended Sec. 20.1501(a)
would retain previous survey requirements, but would add that such
requirements include consideration of waste in the form of residual
radioactivity. Together, the amended Sec. Sec. 20.1501(a) and
20.1406(c) specify that compliance with 10 CFR part 20 requirements is
a necessary part of effectively planning for decommissioning. The new
Sec. Sec. 20.1406(c) and 20.1501(a) provisions are discussed further
in Sections II.I and J of this document. These activities, undertaken
during facility operations, would provide a technical basis for
licensees and NRC to understand the effects of significant residual
radioactivity on decommissioning costs, and to determine whether
existing financial assurance provided for site-specific decommissioning
is adequate. By using the term ``residual radioactivity,'' the new
Sec. Sec. 20.1406(c) and 20.1501(a) cover any licensed and unlicensed
radioactive material that have been introduced to the site by licensee
activities.
The new paragraph 10 CFR 20.1501(b) would be revised to require
licensees to keep records of surveys of subsurface residual
radioactivity identified at the site with records important for
decommissioning.
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During operations, residual radioactivity that would be significant
for decommissioning planning would be a quantity of radioactive
material that would later require remediation during decommissioning to
meet the unrestricted use criteria of 10 CFR 20.1402. Significant
residual radioactivity in subsurface media, such as soil, is a
component of waste because it must be removed and disposed of to meet
unrestricted use criteria in 10 CFR 20.1402.
During decommissioning, the licensee must evaluate dose from
residual radioactivity surveyed at its site using the radiological
criteria in Subpart E to 10 CFR part 20. For contamination migrating
offsite from previous leaks and spills into the subsurface, a licensee
must comply with the applicable license conditions for its facility.
Such offsite contamination, released as an effluent in quantities below
annual regulatory limits, has been a factor in the decommissioning of a
few NRC and Agreement State sites. However, the scope of this
rulemaking does not include offsite contamination discovered during
decommissioning, unless such contamination is an extension of onsite
contamination (e.g., a contaminated ground water plume originating from
the licensee's facility).
NRC's technical basis for the effect that significant residual
radioactivity in the subsurface has on decommissioning costs is based
on a 2005 NRC staff study, ``General Guidance for Inspections and
Enforcement to Prevent Future Legacy Sites and Indicators of Higher
Risk of Subsurface Contamination'' [NRC ADAMS Accession Number
ML052630421]. The purpose of this study was to evaluate experience at
sites that have undergone, or were undergoing decommissioning to
identify the types of events that have caused subsurface contamination.
Associating these events with knowledge of currently operating sites
provided a means for NRC staff to evaluate the potential for future
subsurface contamination at currently operating facilities. This risk-
informed approach concluded that the sites with a higher likelihood of
becoming legacy sites shared the following characteristics: relatively
large volumes of low specific activity radioactively contaminated
liquids; large volumes of long-lived radionuclides; large throughput;
liquid processes; or processes that involve large quantities of solid
radioactive material stored outdoors. The study identified a number of
events that could increase decommissioning costs by increasing the
possibility of soil or ground-water contamination, and concluded that
these events should cause the licensee to reevaluate its
decommissioning cost estimate. Additional discussion on this topic is
in Sections II.G and II.H of this document.
NRC considers proposed changes to 10 CFR 20.1406 and 20.1501 to be
consistent with existing NRC policy for operating facilities. Under 10
CFR 20.1101(b), licensees must use procedures and engineering controls
to achieve occupational doses and doses to members of the public that
are ALARA, during operations and during decommissioning. To accomplish
this, licensees must be able to demonstrate their knowledge of residual
radioactivity in the subsurface, including soil and ground-water
contamination, particularly if the subsurface contamination is a
significant amount that would require remediation during
decommissioning to meet the unrestricted use criteria of 10 CFR
20.1402. This is an extension of the requirements promulgated, with
widespread agreement, in the 1997 LTR that were applicable only to
license applicants. This action is needed because subsurface residual
radioactivity at current operating facilities may be a potential
radiological hazard, and a risk to fully fund decommissioning while the
facility is in an operating mode. The linkage between new 10 CFR
20.1406(c) and amended 10 CFR 20.1501(a) better institutes existing NRC
policy with respect to subsurface contamination during facility
operations, to achieve doses that are ALARA, and identifies to
licensees that survey requirements may be a necessary part of
effectively planning for decommissioning as well as to comply with dose
limits.
2. Financial Assurance
The proposed rule (amending Sec. Sec. 30.35, 40.36, 70.25 and
72.30, and Criterion 9 of appendix A to part 40) would codify certain
aspects of existing regulatory guidance to improve the quality of
Decommissioning Funding Plans (DFP), and would apply NRC experience to
increase the likelihood that adequate funds will be available when
needed to complete the decommissioning process. The proposed rule
amendments would allow materials licensees to base their financial
assurance for decommissioning on a ``certification amount'' only if the
licensee's site surveys do not indicate the presence of residual
radioactivity in amounts that would prevent the site from meeting the
unrestricted use criteria in Sec. 20.1402. The proposed rule would
address the potential vulnerability of the parent company guarantee and
the self-guarantee as the financial mechanism for decommissioning
funding assurance during financial distress of the guarantor. Each of
the licensees who use the guarantee mechanism would be required to
establish a standby trust fund to receive the guaranteed financial
assurance amount should that amount become immediately due and payable.
Licensees with reactors in a decommissioning status would have
additional reporting requirements for decommissioning fund status,
spent fuel management costs, and estimated decommissioning costs. These
proposed reporting requirements, in part, modify the existing Post
Shutdown Decommissioning Activities Report requirements set forth in 10
CFR 50.82(a)(4)(i). Additional reporting requirements would require
each power reactor licensee undergoing decommissioning to thereafter
submit an annual financial assurance status report, as set forth in new
paragraphs (a)(8)(v)-(a)(8)(vii) of 10 CFR 50.82(a)(8).
Under the proposed rule, all licensees decommissioning their
facilities pursuant to 10 CFR 20.1403 restricted release criteria would
be required to use a trust fund to meet the financial assurance
requirements. A trust fund would be the only financial assurance
mechanism allowed for the long term maintenance and surveillance of
restricted release sites unless a government organization either
provides a guarantee of funds or assumes custody and ownership of the
site. This topic is discussed further in Sections II.M, N and O of this
document.
B. Who Would This Action Affect?
Based on the Regulatory Analysis for this proposed rule, NRC
estimates that a small number of materials licensees (a total of about
5 NRC and Agreement State licensees) would need to perform additional
site surveys due to the presence of significant residual radioactivity.
The licensees who will need to perform additional surveys were modeled
in the Regulatory Analysis as rare metal extraction facilities with
uranium as a soil contaminant. Although the number of licensees
affected by the proposed rule is small, the cost to States or the
Federal Government to enforce and then fully decommission a single
legacy site is much higher than the cost to prevent the occurrence of a
legacy site through amended regulations.
For NRC licensees who have subsurface residual radioactivity with
no ground water implications, a minimal, routine monitoring plan may
remain in effect through license
[[Page 3816]]
termination. The routine monitoring plan is described in draft
regulatory guidance released concurrently with this proposed rule.
Application of a minimal, routine monitoring plan at sites with no
ground water implications is meant to improve licensee decommissioning
planning and the basis used for decommissioning cost estimates.
The large majority of NRC and Agreement State licensees are not
expected to have residual radioactivity because they possess small
amounts of short-lived byproduct material or byproduct material that is
encased in a capsule designed to prevent leakage or escape of the
byproduct material (i.e., a sealed source). This set of licensees is
expected to include the non-fuel-cycle nuclear facilities, which either
have no significant residual radioactive contamination to be cleaned
up, or, if there is contamination, it is localized or will be quickly
reduced to low levels by radioactive decay. Licensees who do not have
residual radioactivity and do not have an obligation to set aside funds
for decommissioning financial assurance would not be affected by this
proposed rule. Draft regulatory guidance released concurrently with
this proposed rule describes an acceptable method for these licensees
to confirm the absence of subsurface residual radioactivity at their
facilities.
Approximately 300 NRC materials licensees and over 1,000 Agreement
State licensees have an obligation to set aside funds for
decommissioning financial assurance. Of these, approximately 50 percent
use a certified amount, specified in regulations, with the remaining 50
percent using a site-specific DFP or License Termination Plan to meet
the decommissioning financial assurance requirements. If there is
significant residual radioactivity at the site, the changes in
Sec. Sec. 30.35, 40.36, 70.25, and 72.30 would require a licensee to
switch out of its certified funding amount, and replace the certified
amount with a DFP. In preparing this proposed rule, NRC staff was not
aware of any licensees using certified amounts for decommissioning that
would need to switch to a DFP because of significant residual
radioactivity.
Licensees using a site-specific DFP or License Termination Plan to
meet decommissioning financial assurance requirements would have
additional reporting requirements based on changes in Sec. Sec. 30.35,
40.36, 50.82, 70.25, and 72.30. The materials licensees under 10 CFR
part 30, 40, 70 and 72 would need to provide more details to support
their decommissioning cost estimate, such as the assumed cost of an
independent contractor to perform all decommissioning activities. The
power reactor licensees under 10 CFR part 50 would need to provide more
details to support their decommissioning schedule, cost estimates for
managing irradiated fuel, and annual financial assurance status report.
The proposed changes to 10 CFR 50.82(a) affect the 12 power reactor
licensees undergoing decommissioning. Such licensees would need to
provide more details regarding their decommissioning cost estimates,
including those for managing irradiated fuel. More specifically,
licensees who have submitted a certification of permanent cessation of
operations under 10 CFR 50.82(a) would thereafter be subject to annual
financial assurance reporting requirements similar to those imposed on
operating reactors under existing 10 CFR 50.75(f). The annual reports
would identify yearly decommissioning expenditures, the remaining
balance of decommissioning funds, and would contain a cost estimate to
complete decommissioning. Similar to the one-time reports required by
10 CFR 50.54(bb), the proposed annual reports to be required under 10
CFR 50.82(a)(8) would identify the amount of funds accumulated to
manage irradiated fuel, and the projected cost of managing the
irradiated fuel until title and possession is transferred to the
Secretary of Energy.
Approximately 20 licensees who use an escrow account as a
prepayment financial mechanism would be affected by proposed changes in
Sec. Sec. 30.35, 40.36, 70.25, and 72.30 (which would eliminate the
escrow account as a prepayment financial assurance method). No
licensees are using a line of credit as a financial mechanism; both the
escrow account and the line of credit are proposed for elimination as
acceptable financial assurance instruments.
Approximately 45 NRC licensees use a parent company guarantee or
self-guarantee as a financial assurance mechanism. These licensees may
be affected by proposed changes in 10 CFR part 30, appendices A, C, D,
and E, which would require establishment of a standby trust fund before
the guarantee becomes effective. The standby trust fund would be set up
for receipt of funds in the case of financial distress by the
guarantor. In the Regulatory Analysis and Paperwork Reduction Act
burden estimate, NRC has assumed that a total of 25 of these licensees
would need to establish a trust fund to comply with the amended
regulations with the other 20 already having an established trust fund.
The Regulatory Analysis for this proposed rule, referenced in
Section X of this document, has detailed cost-benefit estimates
regarding the licensees who would be affected by the amended
regulations.
C. What Steps Did NRC Take To Prepare for This Rulemaking?
The NRC took several initiatives to enhance stakeholder involvement
and to improve efficiency during the rulemaking process. On May 28,
2004, the NRC staff issued Regulatory Information Summary (RIS) 2004-
08, ``Results of the License Termination Rule Analysis.'' This RIS was
the first follow-up action taken in response to SRM-SECY-03-0069. The
purpose of the RIS was to inform licensees and stakeholders of NRC's
analysis of the issues associated with implementing the LTR, the
Commission's direction to resolve these issues, the schedule for future
actions, and opportunities for stakeholder comment. The RIS noted that
stakeholder involvement would be an important part of developing the
planned rulemaking and guidance.
In April 2005, the NRC conducted a two-day decommissioning workshop
examining a number of LTR topics, including potential changes in
facility operating requirements and changes to financial assurance to
prevent legacy sites. Stakeholders addressed the issues and potential
resolutions included in this proposed rule. Since then, NRC has
maintained a series of web pages with information (http://www.nrc.gov/about-nrc/regulatory/decommissioning.html) including draft guidance
documents, Commission papers, and a variety of decommissioning program
documents. NRC presented papers on the scope of this proposed
rulemaking at American Nuclear Society conferences in 2004, 2005 and
2006 and other stakeholder forums.
In June 2006, the NRC formed a proposed rule Working Group of NRC
staff and one Agreement State representative from the Organization of
Agreement States (OAS). The NRC has held discussions with State and
Federal agencies on their experience with trust funds for long-term
financial assurance, including a discussion with the U.S. Environmental
Protection Agency (EPA) on October 6, 2006.
In January 2007, the NRC held a public roundtable meeting that was
attended by about 70 stakeholders. The meeting was held to solicit
input from stakeholders and interested members of the public regarding
the issues of licensee control and identification of
[[Page 3817]]
subsurface residual radioactivity, and proposed changes to
decommissioning financial assurance requirements. The Summary Notes and
transcript of this public meeting are posted on: http://www.nrc.gov/about-nrc/regulatory/decommissioning/public-involve.html.
D. What Alternatives Has NRC Considered?
The rulemaking Working Group considered different alternatives for
the proposed rule and agreed on the following for analysis in the
Environmental Assessment (see Section VIII of this preamble) and the
Regulatory Analysis (see Section XI of this preamble):
Alternative 1: No Action.
This alternative provides a baseline to assess the other two
alternatives. It assumes that if no changes are made to the
regulations, there will be additional legacy sites from currently
operating facilities licensed by NRC and Agreement States.
Alternative 2: Monitoring with proposed changes to financial
assurance.
This alternative would implement the proposed changes in 10 CFR
20.1406(c) and 20.1501, and the proposed changes to decommissioning
planning and financial assurance requirements.
Alternative 3: Monitoring with proposed changes to financial
assurance, and collateral.
This alternative would implement the proposed changes in
Alternative 2, and one additional requirement for a security interest
in collateral to support the decommissioning assurance pledged in the
parent company guarantee and self-guarantee financial assurance
mechanisms.
NRC considered two other alternatives, beyond the three noted
previously, but did not analyze them in as much detail. One alternative
was to require that materials licensees obtain accidental property
damage insurance to cover the reasonable costs of decontaminating its
facility and site and disposing of contaminated materials in the event
of a large, sudden and accidental onsite release of radioactive
material. This was prompted, in part, by the objective to apply
consistent financial assurance standards to reactors and materials
facilities. The NRC requires reactor licensees, under 10 CFR 50.54(w),
to obtain insurance to pay for cleaning up an accidental release of
radioactive material that causes a present danger of release offsite
that would pose a threat to public health and safety. NRC staff
evaluated whether it would be appropriate to require onsite property
damage insurance for materials facilities to pay costs associated with
cleaning up a sudden and accidental event that could, if the operators
needed to shut down the facility, overwhelm the decommissioning fund.
This issue has been addressed before. On June 7, 1985 (50 FR 23960),
the NRC published an advanced notice of proposed rulemaking requesting
comments on requiring financial assurance for the cleanup of accidental
or unexpected contamination, both onsite or offsite. After several
technical studies were conducted, the NRC concluded in 1995 that no
such rulemaking was necessary. The NRC has revisited this issue and has
found that there have been no significant changes affecting the 1995
conclusion. Accidents at materials facilities that require expensive
cleanup continue to be rare, with annual costs of cleanup small. The
reportable radioactive material spills and releases from materials
facilities over the 15-year period since 1991, as documented in the
Nuclear Materials Events Database, have been about 2 events per year.
Those events were primarily one-time small spills caused by mechanical
failure of a valve, pump or pipe or in a few cases from human error. In
the early 1990s there were several reportable events of contaminated
drain lines or leakage from a storage pond, but these types of low-
level chronic contaminating events have not been reported at facilities
since then.
NRC determined that materials licensees are not able to obtain, at
reasonable cost, environmental impairment liability insurance,
including nuclear contamination events from both sudden and gradual
accidental releases. American Nuclear Insurers (ANI), an agent for
multiple insurance companies, provides non-reactor nuclear liability
policies that provide coverage for third party claims made to cover
off-site liability damages. The policies do not cover onsite damages
nor do the policies cover the cost of environmental cleanup that would
exceed the actual damages to the third party. NRC had determined that
non-reactor property insurance is available, but this insurance would
exclude ``gradual contamination'' and cover only damages caused by a
``sudden and accidental'' event. Because the events occur only rarely
and on a small scale, NRC has decided not to propose amendments to
require materials licensees to obtain environmental cleanup insurance.
The occurrence of ``gradual contamination,'' such as leakage
outside the licensee's buildings, is intended to be addressed by the
proposed changes to Sec. Sec. 20.1406(c) and 20.1501. Funding to
remediate the leakage would be addressed by changes in the requirements
for reporting decommissioning fund status and decommissioning cost
estimates.
Another alternative considered by NRC is the use of licensee
incentives to facilitate decommissioning planning and reduce the
likelihood of future legacy sites. In Section II.V of this document,
NRC seeks public comments on this topic. The Advisory Committee on
Nuclear Waste (ACNW) recommended, in a December 27, 2006, letter to
Chairman Klein, that NRC staff should consider offering financial
incentives to certain licensees to encourage their use of integrated
monitoring and modeling approaches to demonstrate compliance with
regulations and to apply site characterization data in a conceptual
site model maintained during the facility lifetime. The regulations in
10 CFR 171.11(b) allow the Commission to grant an exemption in a
licensee fee that it determines is authorized by law or otherwise in
the public interest. NRC staff is not aware of any time the Commission
has used a 10 CFR part 171 annual fee exemption for this purpose. NRC
staff was aware of 10 CFR part 170 fee exemptions, or fee waivers, for
plants to ``pilot'' a new license amendment process. In practice, fee
waivers are given very sparingly and only with convincing evidence that
there is a public benefit to the waiver. The cost of a fee waiver would
have to be paid through annual fees from other NRC licensees.
E. What Is a Legacy Site?
A legacy site is a facility that is in decommissioning status with
complex issues and an owner who cannot complete the decommissioning
work for technical or financial reasons. These sites have been
materials facilities, not reactor facilities.
The purpose of this proposed rulemaking is to improve
decommissioning planning and thereby reduce the likelihood that a site
will become a legacy site, thus avoiding unnecessary expense and
promoting more timely return of licensed sites to other productive
uses.
NRC terminates several hundred materials licenses each year. Most
of these are routine actions, and the sites require little, if any,
remediation to meet NRC's unrestricted use criteria. There are other
sites where more complex decommissioning actions are needed. These
complex decommissioning sites are described, along with the objectives
of NRC decommissioning activities, in the ``Status of Decommissioning
[[Page 3818]]
Program 2006 Annual Report'' available at: http://www.nrc.gov/about-nrc/regulatory/decommissioning/program-docs.html. This report
identifies and describes the status of 32 complex materials sites
undergoing decommissioning. Of the total 32 complex sites, NRC
considers 8 of these to be legacy sites as of December 31, 2006.
Residual radioactivity at the complex decommissioning sites is
primarily from the following radionuclides: U-235, U-238, Th-232, Ra-
226, Cs-137, Am-241, Sr-90, and H-3. Public or occupational exposure to
these radionuclides may be a radiological hazard.
F. What Are Financial Assurances?
Financial assurances are financial arrangements provided by a
licensee, whereby funds for decommissioning will be available when
needed. Each NRC licensee has a regulatory obligation to properly
decommission its facility. However, only licensees whose
decommissioning cost is likely to exceed a threshold amount must
provide financial assurance. All nuclear power reactors and about 7
percent of NRC materials licensees must provide decommissioning
financial assurance. This financial assurance may be funds set aside by
the licensee or a guarantee that funds will be available when needed.
The guarantee may be provided by a qualified third party or, upon
passage of a financial test by the licensee. The third party may be the
parent company of the licensee, which is the case for about 10 percent
of the NRC materials licensees who are obligated to have
decommissioning financial assurance.
Nuclear power reactors have financial assurance obligations that
are different from materials licensees. The minimum amount of financial
assurance for reactors is defined in 10 CFR 50.75, and the acceptable
financial assurance mechanisms are defined in Sec. 50.75(e)(1). An
external sinking fund is used to provide financial assurance for about
90 percent of the reactors. The remaining 10 percent of reactors have
assurance through prepaid funds and/or guarantees. No changes in these
requirements are planned for power reactor licensees.
As of December 31, 2006, there are about 300 NRC materials
licensees that have a regulatory obligation to provide approved
financial assurance mechanisms. An acceptable financial assurance
mechanism for unrestricted use decommissioning is any of the following
four types of financial instruments:
A prepayment of the applicable decommissioning costs;
A guarantee to pay the decommissioning costs issued by a
qualified third party or the licensee;
A statement of intent from a Federal, state or local
government licensee; or
An external sinking fund.
The prepayment method is full payment in advance of decommissioning
using an account segregated from licensee assets and outside the
licensee's administrative control. About 11 percent of current
financial assurance mechanisms for materials licensees are prepayment
methods, with most of these being escrow accounts. Currently accepted
prepayment mechanisms include escrow accounts (8 percent), trust funds
(2 percent), certificates of deposit (1 percent), government funds (0
percent), and deposits of government securities (0 percent). The
proposed rule would eliminate all prepayment mechanisms except the
trust fund, for reasons discussed under Section II.N.2 of this
document.
The guarantee method can be used by licensees that demonstrate
adequate financial strength through their annual completion of
financial tests contained in appendices A, C, D, and E of 10 CFR part
30. About 51 percent of current financial assurance mechanisms for
materials licensees are guarantee methods. Currently accepted guarantee
mechanisms include letters of credit (28 percent), parent company
guarantees (8 percent), licensee self-guarantees (7 percent), surety
bonds (8 percent), lines of credit (0 percent), and insurance policies
(0 percent). The proposed rule would eliminate the line of credit as an
acceptable mechanism, for reasons discussed under Section II.N.10 of
this document.
The statement of intent is a commitment from a Federal, state or
local government licensee that it will request and obtain
decommissioning funds from its funding body, when necessary for
decommissioning an NRC licensed site. It is available for use only by
governmental entities. Approximately 38 percent of the NRC materials
licensees with financial assurance use the statement of intent as a
means to provide financial assurance.
The external sinking fund allows the licensee to gradually prepay
the decommissioning cost estimate, with the amount that is not prepaid
covered by a surety mechanism or insurance, for materials licensees, or
by surety, insurance, or a guarantee method for power reactor
licensees. In a final rulemaking for power reactor financial assurance,
the NRC allowed use of a parent company guarantee or self-guarantee
with an external sinking fund (63 FR 50465; September 22, 1998).
Analogous reasoning applies to materials licensees. The proposed rule
amendments would make conforming changes in the financial assurance
requirements for materials licensees (10 CFR 30.35, 40.36, 70.25, and
72.30) to provide greater consistency with the 10 CFR part 50
regulations. None of the NRC materials licensees that have an
obligation to provide decommissioning financial assurance currently use
an external sinking fund.
The previous discussion was for financial assurance to decommission
a site for unrestricted use under 10 CFR 20.1402. If a licensee can
demonstrate its ability to meet the provisions of 10 CFR 20.1403 for
restricted use, financial assurance for long-term surveillance and
control may be provided by a trust fund or by a government entity
assuming ownership and custody of the site.
G. Why Might Some Materials Licensees Not Have Funds To Decommission
Their Facility?
In SECY-03-0069, NRC evaluated licensee decommissioning experience
and identified the following five reasons why some licensees may not
have enough funds to complete their decommissioning activities.
1. Licensees at complex sites may underestimate decommissioning
costs, if the assumption that the site will qualify for a restricted
release proves incorrect. The cost for a restricted release is usually
significantly lower than unrestricted release given the high offsite
disposal costs of licensed material when compared to the cost of onsite
controls. If it turns out that the licensee cannot meet the 10 CFR
20.1403 criteria for restricted conditions, the licensee may then not
be able to meet its decommissioning financial obligations. To address
this problem, the NRC proposes to amend 10 CFR 30.35, 40.36, 70.25 and
72.30 to require licensees to obtain NRC approval of their DFP based on
a decommissioning cost estimate for unrestricted release, unless the
ability to meet the restricted release criteria can be adequately
shown.
2. Certain operational events, particularly those that cause soil
or ground-water contamination, can increase decommissioning costs if
not addressed during the life of the facility. If the licensee does not
identify these events, assess the problem in a timely manner, and
update its decommissioning cost estimate based on new conditions, the
licensee may find it
[[Page 3819]]
difficult to later meet its decommissioning obligations. To address
this problem, the NRC proposes to amend 10 CFR 20.1406 as discussed in
Section II.A above. Licensees also would be required, in proposed
amendments to 10 CFR 30.35, 40.36, 70.25 and 72.30, to factor in
residual radioactivity information in arriving at decommissioning cost
estimates.
3. Certain financial assurance methods may not be effective in
bankruptcy situations, given that funds held in them may be accessible
to creditors. For example, title to property held in escrow remains
with the licensee, making the property potentially vulnerable to claims
by creditors. Another example is the parent and self-guarantees. The
guarantees promise performance rather than payment. In the past, two
companies used corporate reorganization to isolate the decommissioning
obligations with the subsidiary company, but with insufficient funds to
perform the work. In one case, the parent company reorganized without
NRC approval and transferred to the subsidiary few assets and low
levels of operating profits, so that the subsidiary was able to fund
only a small portion of its decommissioning costs. In the second case,
the parent company purchased the licensee before the time the financial
assurance regulations were in effect. The licensee was permanently shut
down after the purchase and was unable to provide full financial
assurance. To address this problem, the NRC proposes to amend 10 CFR
30.35, 40.36, 70.25, 72.30, and 10 CFR part 30 appendices A, C, D, and
E by eliminating the use of an escrow account as a financial assurance
option, and requiring a guarantor, as a condition of using the parent
company guarantee and self-guarantee financial assurance options, to
establish a standby trust fund and to submit to a Commission order, if
the guarantor is in financial distress, to immediately pay the
guaranteed funds into the standby trust.
4. The funds set aside by licensees to carry out decommissioning
may decline in value over time. To address this problem, the NRC
proposes to amend 10 CFR 30.35(h), 40.36(f), 70.25(h), and 72.30(g) to
require that licensees monitor the status of its decommissioning funds
and, if necessary, add funds if the balance falls below the estimated
cost of decommissioning.
5. The initial funding of a trust fund to cover the recurring costs
of long-term surveillance and control for license termination under
restricted release criteria may be inadequate if it is based on a high
assumed rate of return for the trust fund. To address this problem, the
NRC proposes to amend 10 CFR 20.1403 to require that licensees assume
only a 1 percent real rate of return in establishing the initial
funding amount.
H. Why Is 10 CFR 50.82 Being Amended?
Several power reactor licensees have successfully decommissioned
their reactor sites consistent with 10 CFR part 20 requirements. In
some cases, reactor decommissioning costs have exceeded the initial
decommissioning cost estimate. For example, the Connecticut Yankee
Nuclear Plant experienced higher decommissioning costs than planned,
due in part to a larger volume of contaminated soil than was identified
in the initial site characterization.
In the past, NRC has not required licensees to submit details of
decommissioning costs on grounds that the typical reactor licensee was
part of a public utility with access to substantial assets and revenues
and that the minimum required amount for decommissioning financial
assurance was adequate. A licensee's status as a regulated public
utility provided access to cost of service rate recovery to help
provide additional funds. A public utility had access to sales revenues
to fund its obligations, even if rate recovery was limited.
Deregulation of the electric industry now permits a reactor
licensee to operate as a merchant plant not subject to rate regulation
or rate recovery of costs of service. When it ceases operation, it may
have no sales revenues. The licensee may be organized as a separate
company or a subsidiary of a holding company to isolate the risks and
rewards of selling electricity on the open market. Without access to
rate relief, no sales revenues, and with the licensee's owner protected
by limited liability, shortfalls in decommissioning funding may
jeopardize timely completion of decommissioning. Additional oversight
is necessary to assure that the licensee anticipates potential
shortfalls and takes steps to control costs to stay within its budget
or obtain additional funds.
I. What Changes Are Being Proposed to 10 CFR 20.1406?
New 10 CFR 20.1406(c) states as follows:
(c) Licensees shall, to the extent practical, conduct operations
to minimize the introduction of residual radioactivity into the
site, including the subsurface, in accordance with the existing
radiation protection requirements in Subpart B and radiological
criteria for license termination in Subpart E of this part.
The term ``to the extent practical'' is intended to limit the scope
of this provision to actions that are already manifested in practice or
action. The same phrase is used in existing 10 CFR 20.1101(b), which
requires that licensees keep occupational and public radiological doses
to ALARA levels. Draft regulatory guidance released with this proposed
rule specifies that the intent of the proposed rule is to address
amounts of residual radioactivity at a site that are significant to
achieve effective decommissioning planning. For operating facilities,
these events result in residual radioactivity in a quantity that would
later require remediation during decommissioning to meet the
unrestricted use criteria of 10 CFR 20.1402.
The current 10 CFR 20.1101 requirements are related to those in
proposed 10 CFR 20.1406(c). Section 20.1101(a) requires each licensee
to implement a radiation protection program to ensure compliance with
the regulations in 10 CFR part 20. The current 10 CFR 20.1101(b)
requires each licensee to use, to the extent practical, procedures and
engineering controls based upon sound radiation protection principles
to achieve occupational doses and doses to members of the public that
are ALARA. To achieve doses that are ALARA during facility operations
and decommissioning, the Sec. 20.1101(b) operating procedures and
controls must apply to potential radiological hazards and to methods
used by the licensee to minimize and control waste generation.
In furtherance of these existing requirements, the new 10 CFR
20.1406(c) includes the term ``residual radioactivity,'' as discussed
previously in Section II.A. This new section would apply to current
licensee operations, in contrast to the Sec. 20.1406(a) and (b)
requirements which are imposed on license applicants. Residual
radioactivity excludes background radiation. All licensees with
operating facilities must have performed an assessment of background
radiation prior to operating their facility, to be compliant with the
requirements in 10 CFR 20.1301(a)(1).
The proposed rule's use of the term ``subsurface'' designates the
area below the surface by at least 15 centimeters, as defined in NUREG-
1575, ``Multi-Agency Radiation Survey and Site Investigation Manual.''
Under current regulations, residual radioactivity that enters the
ground at a site may go undetected because there are generally no NRC
requirements to monitor the
[[Page 3820]]
ground water onsite for contamination. Based on past NRC experience,
significant concentrations or quantities of undetected and unmonitored
contamination, caused primarily by subsurface migration or ground
water, has been a major contributor to a site becoming a legacy site
and a potential radiological hazard.
Several hundred NRC materials licensees possess radioactive
material and have liquid processes that could cause subsurface
contamination. These licensees generally are compliant with regulations
that limit effluent release to the environment over a specified time.
Some of these licensees may not have documented onsite residual
radioactivity, such as spills, leaks and onsite burials that may be
costly to remediate during decommissioning and should be considered in
arriving at an accurate decommissioning cost estimate. There have been
instances of previously unidentified soil and ground-water
contamination at uranium recovery and rare earth sites undergoing
decommissioning in several states, notably Colorado and Pennsylvania.
Two contributing factors to the accumulation of unidentified subsurface
contamination is reluctance among some licensees to spend funds during
operations to perform surveys and document spills and leaks that may
affect site characterization, and to implement procedures for waste
minimization.
The vast majority of NRC materials licensees do not have processes
that would cause subsurface contamination. NRC's expectation is that
these licensees, including those that release and monitor effluents of
short-lived radionuclides to municipal sewer systems, will not be
impacted by 10 CFR 20.1406(c). The accumulation of radionuclides at
municipal waste treatment facilities was the subject of an Interagency
Steering Committee on Radiation Standards (ISCORS) study (NUREG-1775,
November 2003, ADAMS accession number ML033140171), which concluded
that these facilities do not have significant concentrations of long-
lived radionuclides. Other classes of licensees that are, in general,
not expected to introduce significant residual radioactivity into the
subsurface include broad scope academic, broad scope medical, and small
research and test reactors (less than 1 MWt). The draft regulatory
guidance released concurrently with this proposed rule describes an
acceptable method for these licensees to confirm the absence of
subsurface contamination at their facility.
Power reactor licensees have exhibited a high level of ALARA
discipline with respect to effluent release and known spills and leaks.
Current NRC regulations in Sec. Sec. 20.1301, 20.1302 and 50.36a
ensure that power reactor licensees maintain adequate monitoring and
surveys of radioactive effluent discharges, with annual reporting
requirements outlined in Sec. 50.36a(2) that are made available to the
public on the NRC web site at http://www.reirs.com/effluent/. Several
nuclear power plants recently reported abnormal releases of liquid
tritium, which resulted in ground-water contamination. To address this
issue, the Nuclear Energy Institute (NEI) developed voluntary guidance
for licensees in the Industry Ground Water Protection Initiative (GPI).
The voluntary GPI, planned for implementation by all licensed power
reactors as of September 2008, is a site-specific ground water
protection program to manage situations involving inadvertent releases
of licensed material to ground water and to provide informal
communication to appropriate State/Local officials, with follow-up
notification to the NRC as appropriate. On May 5, 2006, the NRC staff
issued a revised baseline inspection module (Procedure 71122.01) used
to inspect leaks and spills at power reactor sites.
J. What Surveys Are Required Under Proposed Changes to 10 CFR
20.1501(a)?
Existing Sec. 20.1501(a) requires licensees to perform surveys
necessary to comply with part 20 requirements, including surveys
reasonable under the circumstances to evaluate potential radiological
hazards. Slow and long-lasting leaks of radioactive material into the
onsite subsurface may eventually produce radiological hazards and pose
a risk for creation of a legacy site if contaminant characteristics are
not identified when the facility is operating. The staff views
radiological hazards as including those resulting from subsurface
contaminating events, when these events produce subsurface residual
radioactivity that would later require remediation during
decommissioning to meet the unrestricted use criteria of 10 CFR
20.1402. An effective approach to understand the extent of subsurface
residual radioactivity is through the use of radiological surveys.
Appropriate surveys are essential for determining the adequacy of
financial assurance for materials licensees, and need to be done
periodically on a limited basis during operations when the DFP and
financial assurance can be adjusted while the licensee is still
generating revenue. This is far superior to the current practice at
some facilities to delay even limited survey work of the site until
after the facility has been shut down.
Facilities that process large quantities of licensed material,
especially in liquid form, have the potential for causing significant
environmental contamination. Leaks from these facilities can lead to
large amounts of radioactive contamination entering the subsurface
environment over an extended period of time. The estimated doses from
this contamination are below the limits in 10 CFR part 20 that would
initiate immediate regulatory action. Another factor the staff has
considered in this rulemaking is the high cost to dispose of
radioactive materials offsite. These costs are a concern even when the
material contains relatively low concentrations of radioactivity. A
continued trend of high disposal costs could increase the number of
environmental contamination incidents at operating facilities,
resulting in substantially higher decommissioning costs. A third factor
that could cause future legacy sites is the delayed identification of
contamination on the site. Over a long time, contamination that
migrates in subsurface soil or ground water does not cause immediate
exposure to either workers or the public that approach the limits
specified in 10 CFR part 20. It is only after operations have ceased
when the possible results of unlimited access to the site, and
associated exposure pathways (i.e., ingestion and inhalation) are being
evaluated, that the extent of contamination has become apparent.
As discussed previously in Section II.A, in accordance with
proposed changes to 10 CFR 20.1501(a), licensees would be required to
perform contamination surveys to comply with current 10 CFR part 20
requirements, and the new Sec. 20.1406(c). The magnitude and extent of
radiation levels are typically defined in units of radioactivity
measurement, such as in micro-rem per hour ([mu]rem/hr). The
concentrations or quantities of residual radioactivity are typically
defined in units of radioactivity associated with a specific
radionuclide, for example picocurie per liter of tritium (pCi/L of H-
3).
The amended Sec. 20.1501(a) would retain previous survey
requirements and would specify that such requirements include
consideration of subsurface residual radioactivity. Survey requirements
may include ground-water monitoring if reasonable under the site
specific conditions. Soil sampling also
[[Page 3821]]
may be warranted based on site specific conditions, for example if
there is no ground-water monitoring at the site or if known subsurface
contamination has not migrated to the ground water wells. Draft
regulatory guidance released concurrently with the proposed rule
describes a variety of acceptable methods to evaluate subsurface
characteristics. The NRC recognizes that ground-water monitoring may be
a surrogate for subsurface monitoring at some sites, that soil sampling
may be appropriate at other sites, and that there are sites with no
subsurface residual radioactivity where the existing monitoring method
is appropriate. Also, the NRC recognizes that an area within the
footprint of a building, during licensed operations, may not be a
suitable area for subsurface residual radioactivity surveys if the
process of sampling would have an adverse impact on facility
operations. The decision to perform subsurface residual radioactivity
sampling in a particular area should be balanced against the potential
to jeopardize the safe operation of the facility. The purpose of
amended 10 CFR 20.1501(a) and 20.1406(c) is to specify that compliance
with 10 CFR part 20 survey and recordkeeping requirements is necessary
to demonstrate compliance with existing regulations and to plan
effectively for decommissioning, including effects from subsurface
contamination.
Other proposed amendments (revised 10 CFR 30.35(e)(2), 40.36(d)(2),
70.25(e)(2), and 72.30(c)) would require licensees who have a DFP or a
License Termination Plan to factor in the results of surveys, performed
under Sec. 20.1501(a), in estimating decommissioning costs. This new
requirement would apply only to licensees who are required to have a
DFP, and would assure that these licensees properly consider the extent
of subsurface residual radioactivity in their decommissioning cost
estimates, thus improving decommissioning planning and helping to
reduce the likelihood of future legacy sites.
For the materials licensees with a certified amount as
decommissioning financial assurance, NRC assumes their current
monitoring methods are adequate. If these licensees detect onsite
contamination that would later require remediation during
decommissioning to meet the unrestricted use criteria of 10 CFR
20.1402, the licensees would be required to submit a decommissioning
cost estimate.
For the materials licensees who are not required to have financial
assurance for decommissioning based on a license possession limit that
is below the financial assurance threshold values in appendix B of 10
CFR part 30, NRC's expectation is that the monitoring performed under
proposed Sec. 20.1501(a) would be of a simple form, as discussed in
draft regulatory guidance released with this proposed rule. Simple form
monitoring is a method that confirms the absence of leaks or spills to
the subsurface. The risk is low that any of these sites would cause
contamination to create a potential radiological hazard or a future
legacy site.
NRC's expectation is that no additional surveys will be required of
power reactor licensees and fuel cycle facilities. For power reactors,
NRC staff concludes that the monitoring and survey processes and
related reports prepared at power reactor sites likely would contain
sufficient information to satisfy the proposed Sec. Sec. 20.1406(c)
and 20.1501 requirements. NRC is not requiring licensees to submit
reports, but the information must be kept onsite in records that are
available for review. It is not expected that power reactor licensees
would need to install additional monitoring equipment or modify
existing operating procedures to satisfy the proposed 20.1501(a)
requirements. But, it may be necessary for such licensees to take these
actions if, for example, significant residual radioactivity is
identified at a power reactor site at a level higher than had been
previously identified. In any such situations, the need for additional
monitoring would be determined on a case-by-case basis.
Fuel cycle facilities, such as uranium fuel fabrication plants, the
gaseous diffusion enrichment plants, and the dry process natural
uranium conversion/de-conversion facility, also perform surveys to
detect radioactive release to the ground water. NRC staff concludes
that the monitoring and survey processes and related reports prepared
at these facilities likely would contain sufficient information to
satisfy the proposed Sec. Sec. 20.1406(c) and 20.1501 requirements. A
high level of ALARA discipline for onsite spills and leaks is expected
of the centrifuge enrichment plants and mixed oxide fabrication plant
based on the information in their license applications (these
facilities have not begun operations).
K. What Information Must the Licensee Collect Under Proposed Changes to
10 CFR 20.1501?
NRC is proposing, at certain facilities that have significant
subsurface contamination, licensee documentation of contaminating
events and survey results, including ground water monitoring surveys,
and the retention of survey records until license termination, to
facilitate later decommissioning of the facility.
For 10 CFR 20.1501(a), licensees must be able to demonstrate
compliance with the regulations in part 20 through surveys that
evaluate the magnitude and extent of radiation levels, and
concentrations or quantities of residual radioactivity including that
in the subsurface, and any potential radiation hazards of the radiation
levels and residual radioactivity detected. The sampling results would
include the date, time, location, contaminants of interest and
contamination levels, and the concentrations at which action is
required to comply with regulations. The contaminants of interest are
those used within the facility with half-lives long enough that they
would require remediation during decommissioning to meet the
unrestricted use criteria under 10 CFR 20.1402. Contaminants may also
include both chemicals and radionuclides in the ground water from
sources upstream of the NRC-licensed site because of the potential for
interaction with releases from other sites. When ground water is being
monitored, the surveys conducted by the licensee also would include
hydro-geologic evaluations that lead to a determination of effective
sampling and analysis, including accurate placement and installation of
the wells, and well locations to determine the nominal ground water
flow direction and preferential flow paths for each ``aquifer''
underlying the site. Licensees may need to perform surveys to
demonstrate compliance with the new proposed paragraph 10 CFR
20.1406(c).
For 10 CFR 20.1501(b), licensees would document the records from
surveys of subsurface residual radioactivity at the site as records
important for decommissioning, under the requirements of Sec. Sec.
30.35(g), 40.36(f), 50.75(g), 70.25(g), and 72.30(d). These records can
be as simple as a description of the event, to include date, time,
location, and the estimated quantities and activity levels of
radioactive materials that were spilled or leaked. The documentation
may describe the activation of a moisture alarm system used to indicate
the presence of liquid in an area that is supposed to be dry.
Contamination survey results must be included in these records if the
surveys are considered important for decommissioning planning. The
intent of 10 CFR 20.1501(b) recordkeeping is to address onsite
subsurface residual radioactivity that would later require remediation
during decommissioning to meet the
[[Page 3822]]
unrestricted use criteria of 10 CFR 20.1402.
L. How Would Licensees Report Required Information to the NRC?
There are no reporting requirements for licensees under proposed
changes to 10 CFR 20.1406(c) and 20.1501.
Instead, NRC would require licensees to collect information and to
have that information available for review. The information would need
to be retained by licensees in records important for decommissioning
under Sec. Sec. 30.35(g), 40.36(f), 50.75(g), 70.25(g), and 72.30(d).
Under changes proposed to financial assurance regulations, under
Sec. Sec. 30.35(e), 40.36(d), Part 40 Appendix A Criterion 9(b),
70.25(e), and 72.30, reporting requirements would increase for
materials licensees who must prepare a detailed cost estimate for
decommissioning. Reporting requirements also would increase under Sec.
50.82(a) for power reactor licensees who prepare a post-shutdown
decommissioning activities report (PSDAR) or an annual financial
assurance status report.
Under changes proposed to 10 CFR part 30, appendix A, licensees who
use the parent company guarantee as financial assurance for
decommissioning will have increased reporting requirements in proposed
changes to the paragraph A.1 financial test, and in reporting of off-
balance sheet transactions and verification of bond ratings, and in
annual documentation of continuing eligibility to use the parent
company guarantee. Licensees who use the self-guarantee as financial
assurance for decommissioning under 10 CFR part 30, appendices C, D and
E, also would have increased reporting requirements in proposed changes
to report off-balance sheet transactions and annual documentation of
continuing eligibility to use the self-guarantee.
Licensees would continue to submit information to the NRC by
certified mail or through approved Electronic Information Exchange
(EIE) methods. NRC requests comments regarding licensee reporting using
a secure Web site accessible by licensees from the NRC public Web site.
This would include submittal and updating of the DFP, decommissioning
cost estimates, information in the financial tests for the parent
company guarantee and self-guarantees, decommissioning power reactor
annual financial assurance status report, and other information for
which licensees believe the use of a secure Web site would reduce their
labor hours in responding to reporting requirements. Section IX of this
document, Paperwork Reduction Act Statement, provides an estimate of
the hours needed annually for licensees to complete the reporting
requirements for each part with amended regulations.
M. What Financial Assurance Information Must Licensees Currently Report
to the NRC?
Materials licensees with a license possession limit that is below
the financial assurance threshold in 10 CFR part 30, appendix B, are
not required to have financial assurance for decommissioning. For the
licensees under 10 CFR parts 30, 40 and 70 with a license possession
limit above the financial assurance threshold in 10 CFR part 30,
appendix B, but below the threshold requiring a DFP, these licensees
have an option of providing financial assurance based on an amount
specified by regulation or based on a DFP with a site-specific cost
estimate. Materials licensees with a license possession limit above the
financial assurance threshold, and all 10 CFR part 72 licenses, must
submit at intervals not exceeding 3 years, a DFP which includes a site-
specific cost estimate, a description of the methods used to assure the
funds, and a description of the means of adjusting the cost estimate.
Except for 10 CFR part 72 licensees, materials licensees must also
provide the original of the financial instrument obtained to satisfy
the financial assurance requirement.
For materials licensees, Chapter 4 in NUREG-1757, Volume 3,
``Consolidated NMSS Decommissioning Guidance,'' provides details on
information necessary to satisfy their financial assurance
requirements. This document is available on the NRC Web site at: http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1757/.
Power reactor licensees, as required by 10 CFR 50.75(f)(1), must
report on the status of their decommissioning funds at 2-year
intervals. A power reactor licensee that is within 5 years of the end
of its projected life, or will close within 5 years (before the end of
its licensed life), or has already closed, must submit the report of
funds status on an annual basis.
Applicants for power reactor and non-power reactor licenses, and
reactor license holders, must submit a decommissioning report as
required by 10 CFR 50.33(k). The decommissioning report is submitted
once, and contains information indicating how reasonable assurance will
be provided that funds will be available to decommission the facility,
the method used to provide funds for decommissioning, and the means for
adjusting periodically the amount to be provided.
For nuclear power reactor licensees, Chapter 2 in Regulatory Guide
1.159, ``Assuring the Availability of Funds for Decommissioning Nuclear
Reactors,'' provides details on the information necessary to satisfy
their financial assurance requirements. This document is available on
the NRC Web site at: http://www.nrc.gov/reading-rm/doc-collections/reg-guides/power-reactors/active/.
N. What Are the Proposed Changes to the Financial Assurance
Regulations?
Most of the proposed amendments are changes to financial assurance
regulations for materials licensees. A few changes apply to
decommissioning financial assurance for power reactor licensees. The
proposed changes to financial assurance regulations are discussed in
this section, under the following headings:
N.1 Require a trust fund for decommissioning under restricted
release.
N.2 Require a trust fund for the prepayment option.
N.3 Require an upfront standby trust fund for the parent guarantee
and self-guarantee options.
N.4 Require parent company to inform NRC of financial distress and
submit to an Order.
N.5 Require guarantor payment immediately due to standby trust.
N.6 Allow intangible assets, with an investment grade bond, to meet
some financial tests.
N.7 Increase the minimum tangible net worth for the guarantees'
financial tests.
N.8 Clarify guarantees' bond ratings and annual demonstration
submittals.
N.9 Invalidate the use of certification for financial assurance if
there is contamination.
N.10 Other changes to financial assurance regulations.
Many of the proposed changes are currently in NRC guidance and are
being codified in this proposed rule. The proposed amendments
strengthen and clarify the financial assurance requirements. The NRC
seeks to improve decommissioning planning and reduce the number of
funding shortfalls caused in the past by: (1) Overly optimistic
decommissioning assumptions; (2) Lack of adequate updating of cost
estimates during operation; and (3) Licensees falling into financial
distress with financial assurance funds unavailable for
decommissioning. The proposed changes increase licensee reporting
requirements. The added reporting burden is estimated as part of the
Paperwork Reduction Act Statement (Section IX of this document). The
costs
[[Page 3823]]
and benefits of other aspects of these proposed amendments are
evaluated in the Regulatory Analysis in Section X of this document.
N.1 Require a Trust Fund for Decommissioning Under Restricted Release
NRC is proposing changes to the regulations related to
decommissioning financial assurance applied to planned restricted
release sites.
The proposed rule would require, under Sec. 20.1403(c), that the
funds for financial assurance of long-term care and maintenance of a
restricted release site must be placed into a trust segregated from the
licensee's assets and outside the licensee's administrative control.
Section 20.1403(c)(1) currently contains a cross reference to Sec.
30.35(f)(1) that allows use of any of the financial instruments listed
in Sec. 30.35(f)(1) for providing financial assurance for long-term
care and maintenance. The proposed rule would eliminate the reference
to Sec. 30.35(f)(1).
The effect of this change would be to eliminate, as prepayment
options, the escrow account, sureties and insurance, and the parent
company and self-guarantee methods at restricted release sites. To
date, no licensee has chosen to use, at a restricted release site, the
options that the NRC is now proposing to eliminate. These options that
would no longer be allowed possess characteristics that make their use
inadvisable in the types of long-term care and maintenance situations
involved in restricted release sites. The proposed rule would continue
to permit government entities to use a statement of intent or to assume
custody and ownership of a site.
Escrow accounts are not well suited to the protection of funds over
a long term. The purpose normally served by an escrow is to collect or
hold funds for an expense to be paid in the relatively near future
(e.g., property tax escrows). The EPA concluded that a trust was more
protective of funds because, under trust law, the title to property in
a trust is transferred to the trustee (46 FR 2802, 2827; January 12,
1981). In an escrow account, title to the property remains with the
grantor. Thus, escrow property is more likely to be subject to a
creditor's claim than property held in trust. In addition, the law of
trusts places obligations on the trustee to act in the interest of the
beneficiary. In contrast, an escrow agent is responsible only for what
is specified in the escrow agreement. The EPA concluded that it would
be extremely difficult to draft an escrow agreement that adequately
specifies all the actions that an escrow agent would need to take in
all situations to assure the instrument served its intended purpose.
The surety methods and insurance also are not well suited to
protect funds over the long term because these depend on contracts made
by the former licensee. There are no actual funds set aside for future
costs, rather, the methods are promises made by the issuer to pay at a
future time. These methods require renewal to remain effective. They
depend on the former licensee continuing to exist to make renewal
payments for the surety or insurance instruments. The instrument lapses
if the payments are not made. Under the existing rule, NRC may require
the issuer to pay the face amount before the lapse occurs. However,
issuers may resist making the payment, which could delay obtaining and
possibly reduce the amount of funds for long-term care and maintenance.
Whether making the payment is resisted or not, when the funds are paid
for the face amount, the funds will be placed in a trust account. That
is, the response to the non-renewal of a surety is to create a trust to
hold funds. The long-term nature of the obligation increases the
possibility that circumstances may arise that would require a demand
for payment. In view of the potential difficulties and delays, and
recognizing that a trust fund is the preferred long-term instrument for
holding funds, the surety and insurance methods of financial assurance
for long-term maintenance and control would be eliminated.
Likewise, the parent company and self-guarantee mechanisms are not
well suited for providing financial assurance at restricted release
sites because these were designed to assure funding for the relatively
limited time needed to complete most decommissioning projects under 10
CFR 20.1402. The former licensee, or its parent, must continue to exist
to pay for long-term control and maintenance costs. If the former
licensee, or its parent, ceases to exist, the self-guarantee or parent
company guarantee have no source of funds to pay the costs. In
addition, these guarantees presume the existence of a licensee subject
to NRC authority. However, when the license is terminated, the NRC has
no regulatory authority over the former licensee. Therefore, the self-
guarantee and parent company guarantee would be eliminated as a
financial assurance options at restricted release sites.
In contrast, the trust fund is best suited as a financial mechanism
to assure the necessary long-term care and maintenance at restricted
release sites. The trust fund can exist for long periods without need
for renewal. It exists independently of the former licensee, and can
continue to serve the purposes of control and maintenance even if the
former licensee ceases to exist. The trustee has a fiduciary duty to
serve the beneficiaries of the trust. The funds placed in the trust
become property of the trust, and generally cannot be reached by
creditors of the former licensee. Trust funds have traditionally been
used to provide for the long-term care and maintenance of parks and
other public facilities, to care for cemeteries, and for similar
purposes. The NRC is proposing to require the use of trust funds for
the financial assurance for long-term care and maintenance at
restricted release sites, unless a government entity provides long-term
funding or assumes custody and ownership of the site.
A further change to 10 CFR 20.1403(c)(1) would be the addition of a
requirement that the initial amount of the trust fund established for
long-term care and maintenance be based on a 1 percent annual real rate
of return on investment. A similar provision is currently contained in
10 CFR part 40, appendix A, Criterion 10, which provides that if a
site-specific evaluation shows that a sum greater than the minimum
amount specified in the rule is necessary for long-term surveillance
following decontamination and decommissioning of a uranium mill site,
the total amount to cover the cost of long-term surveillance must be
that amount that would yield interest in an amount sufficient to cover
the annual costs of site surveillance, assuming a 1 percent annual real
rate of interest.
The NRC has concluded that a conservative estimate of the annual
real rate of return is justified in the case of financial assurance for
long-term care and maintenance under Sec. 20.1403(c)(1). Although the
NRC in 10 CFR 50.75(e)(1)(ii) allows a licensee of a nuclear power
reactor that is using an external sinking fund to take credit for
projected earnings on the external sinking funds (using up to a 2
percent annual real rate of return from the time of the future fund's
collection through the decommissioning period), the reactor situation
is distinguished by the continuing presence of the reactor licensee,
who is obligated to provide additional funds if necessary. Long-term
trust funds for surveillance and control are created when license
termination relieves the licensee of any further obligation regarding
the site. Therefore, no licensee is available to make up shortfalls in
the fund, which reduces the likelihood that funds will be available
[[Page 3824]]
when needed. A long period of low returns could deplete a trust fund so
that later higher returns would be insufficient to return the fund to
the value needed to permit earnings to cover the recurring long-term
costs. Consequently, a conservative rate of return is necessary to
assure that funds will be available when needed. Over the past 30
years, 1975-2005, the annual real rate of return is 1.58 for U.S.
Treasury Bills and 4.87 for government bonds. Thus, a 1 percent real
rate of return is appropriate for assuring funds under the proposed
Sec. 20.1403(c)(1). The actual rate of return may exceed the 1 percent
real rate. The trust agreement may contain provisions to return excess
funds to the trust grantor if the fund balance significantly exceeds
the amount needed to cover the recurring costs at the 1 percent rate.
The proposed rule would add a new Sec. 20.1404(a)(5) specifying
that one of the factors that the Commission must consider in
determining whether to terminate a license under alternate criteria is
whether the licensee has provided sufficient financial assurance to
enable an independent third party (including a government custodian of
a site) to assume and carry out responsibilities for any necessary
control and maintenance of the site. This new section also would
require that the financial assurance must be in the form of a trust
fund, as specified in Sec. 20.1403(c). Although a requirement to
supply financial assurance can be inferred from the current rule, this
requirement is not stated explicitly.
N.2 Require a Trust Fund for the Prepayment Option
The proposed rule would amend the list of prepayment financial
methods that may be used to provide financial assurance for
decommissioning to provide that prepayment shall only be in the form of
a trust established for decommissioning costs (Sec. Sec. 30.35(f)(1),
40.36(e)(1), 70.25(f)(1), and 72.30(c)(1)). The proposed rule would
eliminate the four other prepayment options currently listed in those
sections (i.e., the escrow account, government fund, certificate of
deposit, and deposit of government securities). Three of these options
(the government fund, certificate of deposit, and deposit of government
securities) initially were authorized for use to provide alternatives
to licensees that elected not to use a trust fund as their prepayment
mechanism, even though the NRC recognized that in the event of the
licensee's bankruptcy, they provided somewhat less assurance that the
funds would remain available to pay for decommissioning. However, no
licensees have elected to use the government fund and deposit of
government securities options, and only two have used a certificate of
deposit. Because of their relative risk in bankruptcy and their non-use
by licensees, the NRC has decided to eliminate them as alternatives for
providing financial assurance for decommissioning.
The NRC recognizes that elimination of the escrow account option
would affect some licensees who currently use escrows. The latest data
compiled from the NRC's License Tracking System (LTS) indicates that
approximately 25 escrows are in use. Because some licensees use more
than one escrow, the number of licensees using escrows is slightly less
than the number of escrows.
The staff has reviewed several studies of the situation of escrows
in bankruptcy, and has concluded that the most accurate summary of the
various assessments is as follows. The funds contained in escrows that
are set up correctly before a licensee's entry into bankruptcy will
likely be secure from transfer into the bankruptcy estate as assets of
the debtor and they will not be reachable by the bankruptcy trustee
using doctrines of fraudulent conveyance or voidable preference.
However, correctly setting up an escrow is difficult, as noted in
Section II.N.1 of this document. The NRC also is concerned that a
determination of the legal status of an escrow may be subject to
considerable delay. In addition to the time necessary to carry out a
legal standing analysis, a bankruptcy trustee could attempt to use the
automatic stay provisions of the bankruptcy code to stop payment by an
escrow agent under the escrow, if that payment is occurring following
the commencement of the bankruptcy action. While this attempt may fail,
it could postpone the NRC's access to the funds held in the escrow and
thereby preclude the prompt commencement of decommissioning. Finally,
the administrative costs of a trust fund are comparable to an escrow,
so there is little economic benefit to using the escrow.
Elimination of the use of escrow accounts was discussed at the
public stakeholder meeting held January 10, 2007. No stakeholders
objected to the elimination of the escrow as a financial assurance
method. Therefore, the proposed rule would eliminate the escrow as a
method to provide financial assurance.
N.3 Require an Upfront Standby Trust Fund for Parent Guarantee and
Self-Guarantee Options
The proposed rule would amend appendices A, C, D, and E to 10 CFR
part 30 (amend Section III.D of appendix A; amend Section III.F and add
a new Section III.G to appendix C; amend Section III.D and add a new
Section III.E to appendix D; and add a new Section III.F to appendix
E). The amendments would clarify that a parent company providing a
parent company guarantee and a licensee providing a self-guarantee are
required to set up a standby trust before they may rely on the
guarantee for financial assurance, and would add criteria for selecting
an acceptable trustee.
The existing regulations do not require the guarantor to set up a
standby trust before it provides a parent company or self-guarantee.
Instead, a standby trust must be set up and used to hold funds for
decommissioning only in the event the NRC requires the guarantor to
provide such funding for decommissioning. Setting up a standby trust at
the time the guarantee is drawn upon could lead to a significant delay,
and therefore creation of a standby trust at the commencement of the
guarantee is recommended in regulatory guidance. A standby trust is
necessary because the NRC cannot accept decommissioning funds directly.
Under the ``miscellaneous receipts'' statute, 31 U.S.C. 3302(b), the
NRC must turn over all payments received to the U.S. Treasury.
Therefore, a standby trust is necessary to receive funds in the event
the NRC requires the guarantor to put the funds into a segregated
account. Creating a standby trust before the guarantee is provided will
avoid potential delays in initiating decommissioning that may be caused
by delays in setting up the trust at a later date. In addition, the use
of a trust protects the funds from creditors' claims, which may be
necessary in the event the guarantor faces financial distress.
Therefore, the proposed rule would require that the guarantor set up a
standby trust. In addition, the proposed rule would provide that the
Commission has the right to change the trustee. That power is necessary
to assure that the trustee will faithfully execute its duties. Finally,
to assure the trust agreement is adequate, the proposed rule would
specify that an acceptable trust is one that meets the regulatory
requirements of the Commission.
[[Page 3825]]
N.4 Require Parent Company To Inform NRC of Financial Distress and
Submit to an Order
Because a parent company is not usually an NRC licensee subject to
the NRC's authority, the parent company guarantee option will include a
contractual agreement by the parent company to submit to NRC payment
orders (10 CFR part 30, appendix A, Section III.F).
The parent company has no present requirement to inform the NRC of
financial distress that may adversely affect its ability to meet its
guarantee obligations. Because the NRC needs to know if the parent
guarantor is in financial distress to take steps to protect the funds
guaranteed for decommissioning, the proposed rule would require the
parent guarantor to notify the NRC in case of its financial distress,
and its plan to transfer the guaranteed amount to the standby trust. In
these situations, payments from the parent company will be immediately
due and payable to the standby trust pursuant to an acceleration
clause, discussed in Section II.N.5 of this document. A similar
notification requirement is not necessary for a licensee guarantor
because NRC regulations under 10 CFR 30.34(h), 40.41(f), 70.32(a)(9),
and 72.44(a)(6) already require licensees to notify NRC of bankruptcy
proceedings.
N.5 Require Guarantor Payment Immediately Due to Standby Trust
The existing regulations do not address the possibility that the
guarantor of the parent guarantee or self-guarantee may be in financial
distress when it is required to provide alternate financial assurance.
In cases where decommissioning is not being conducted at the time of an
insolvency proceeding, creditors could argue that the debtor owes
performance of decommissioning in the future, not money at the present
time. That argument could potentially support a finding that no payment
is owed to the standby trust. In that event, a division of assets to
satisfy creditors' claims may not adequately protect resources needed
to fund decommissioning. To provide a money claim on the assets of the
guarantor that would cover the cost of decommissioning at the time of a
division of assets, the proposed rule would authorize the Commission to
make the amount guaranteed immediately due and payable to the standby
trust (i.e., an acceleration clause).
The proposed rule would clarify that the guarantor's obligation is
not capped at the guaranteed amount, but include costs in excess of the
guaranteed amount if additional funds are required to complete
decommissioning and termination of the license.
N.6 Allow Intangible Assets, With an Investment Grade Bond, To Meet
Some Financial Tests
The existing regulations allow guarantees to be used as financial
assurance for decommissioning by companies whose financial statements
demonstrate a low risk of default for corporate obligations. A set of
financial tests are prescribed in 10 CFR part 30, appendices A, C, D
and E for companies who may qualify to use the guarantee methods. A
requirement to use the parent company guarantee or self-guarantee as a
financial assurance option is passing the tests on an annual basis.
Some of the financial tests in 10 CFR part 30, appendices A, C, and E
are done using bond valuations. In the past, only tangible assets were
considered within the calculations performed under the financial tests.
In response to an inquiry during the public stakeholder meeting on
January 10, 2007, NRC staff considered whether allowing the use of
intangible assets would materially increase the risk of a shortfall in
decommissioning funds. Staff concluded the risk of a shortfall in
funding would not materially increase under the amendments in this
proposed rule.
Financial accounting standards issued since the original
decommissioning regulations were issued in 1988 now provide objective
methods to value intangible assets. The change in accounting standards
provides assurance that intangible asset valuation is reasonable. In
addition, bond rating agencies include intangible assets in their
evaluation of the financial stability of a company's bonds. This
provides an independent check of the reasonableness of the company's
valuation of its assets. The default rate remains low for bonds rated
investment grade. To further assure a current bond rating adequately
reflects the company's financial stability, amendments in the proposed
rule would specify that the bond must be uninsured, uncollateralized,
and unencumbered to be used in the financial test. Finally, the value
of the nuclear facilities, both as tangible and intangible assets, are
excluded from the calculation of net worth on grounds that those assets
would not be available to produce funds for decommissioning after the
facility is shut down. The staff concluded that permitting the use of
intangible assets in conjunction with an investment grade bond rating
would not materially increase the risk of a shortfall in
decommissioning funding.
In addition, the guarantee methods require annual repassage of the
test. Historical trends in bond ratings show that the time between
receiving a rating that is below investment grade to the time of
default is five years, on the average. The annual repassage requirement
will normally provide adequate time for the guarantor to obtain
alternative financial assurance. For the few cases where a default may
occur in a short time, the acceleration clause discussed in N.4 and N.5
of this document, will provide a method to obtain funds in situations
of financial distress.
Therefore, the proposed rule would allow the use of intangible
assets, used in conjunction with an investment grade bond rating, to
meet specified criteria in the financial tests for parent company and
self-guarantees.
N.7 Increase the Minimum Tangible Net Worth for the Guarantees'
Financial Tests
The current regulations require the entity seeking to pass the
relevant financial test to have tangible net worth of at least $10
million. The proposed rule amendments would require tangible net worth
of at least $19 million.
The $10 million in tangible net worth requirement was first adopted
by the EPA in 1981, and the financial test adopted by the NRC in 1988
used the same criterion. The NRC believes that the criterion should be
adjusted to represent the value in current dollars of $10 million in
1981. Therefore, it has calculated the new proposed tangible net worth
amount using the most recent Implicit Price Deflator for Gross Domestic
Product published by the Department of Commerce in its Survey of
Current business, and the equivalent Implicit Price Deflator for 1981,
by dividing the 2005 Implicit Price Deflator by the 1981 Implicit Price
Deflator and multiplying the product times $10 million, as follows:
(112.134 / 59.119) = 1.897 x $10 million = $19 million.
The proposed rule also would add a requirement in Section II.A.(1)
of appendix C to 10 CFR part 30 for tangible net worth of at least $19
million. Currently, that component of the financial test for self-
guarantee specifies only that the applicant or licensee must have
tangible net worth at least 10 times the current decommissioning cost
estimate or certification amount. The proposed amendment would specify
tangible net worth of $19 million and 10 times the
[[Page 3826]]
amount required. This proposed amendment would make the self-guarantee
financial test in appendix C to 10 CFR part 30 consistent with the
tests in appendices A and D to 10 CFR part 30.
N.8 Clarify Guarantees' Bond Ratings and Annual Demonstration
Submittals
The proposed rule amendments would specify that the current rating
of the most recent bond issuance of AAA, AA, or A by Standard and
Poor's could include adjustments of + or - (i.e., AAA+, AA+, or A+ and
AAA-, AA-, and A- would meet the criterion) and the current rating of
Aaa, Aa, or A by Moody's could include adjustments of 1, 2, or 3.
Standard and Poor's and Moody's have introduced the plus or minus
and numerical adjustments to refine the precision of their ratings. As
a result, licensees have been uncertain whether a rating that includes
these adjustments, and in particular ratings that might be considered
below the unadjusted ratings specified in the appendices (e.g., A-)
could be used. Based on the minimal difference in default rate
associated with the qualifiers, the proposed rule would state that all
the bonds within a specified rating level meet the regulatory standard.
In addition, the proposed rule would amend Section II.A.2.(i) of
appendix A to 10 CFR part 30 and Section II.A.(3) of appendix C to 10
CFR part 30 to require the bond to be the most recent ``uninsured,
uncollateralized, and unencumbered'' bond issuance. This amendment
would make the bond criterion in appendix A to 10 CFR part 30 and
appendix C to 10 CFR part 30 consistent with the bond criterion in
appendix E to 10 CFR part 30. As explained in NUREG/CR-6514, where a
rated bond has insurance or pledged assets to provide additional
security, the bond rating may not directly reflect the creditworthiness
of the bond issuer. Therefore, the proposed rule would add the
requirement that the bond rating used to pass the financial test must
be uninsured, uncollateralized, and unencumbered.
The proposed rule would make a conforming change in Section III.E.
of appendix E to 10 CFR part 30 to provide that if, at any time, the
licensee's most recent bond issuance ceases to be rated in any category
of A or above by both Standard and Poor's and Moody's, the licensee no
longer would meet the requirements of the financial test.
The proposed amendments to the bond rating criterion in appendices
A and C to 10 CFR part 30 are intended to clarify the intent of the
rule, eliminate an unintended apparent inconsistency among the
different financial tests that may be used, and to make administration
of the financial assurance requirements more efficient by eliminating
recurring questions.
The proposed rule would require a certified public accountant to
verify that a bond rating, if used to demonstrate passage of the
financial test, meets the requirements. Some financial tests received
by the NRC did not apply the requirement correctly. Requiring an audit
of the bond rating would minimize the potential that an error would be
made.
The existing regulations require the licensee to repeat passage of
the financial test each year, but do not explicitly state that the
licensee must annually submit documentation to the NRC to verify its
passage of the test. However, the parent company and self-guarantee
agreements illustrated in regulatory guidance include a provision that
the licensee will annually submit to NRC revised financial statements,
financial test data, and an auditor's special report. Submittal of the
documents permits NRC to verify the licensee's continuing eligibility
to use the parent company guarantee without incurring the expense of an
onsite inspection. Therefore, the proposed rule would codify the
regulatory guidance to require annual submittal of documentation that
the guarantor passed the financial test.
The existing regulations are unclear in stating that the parent
company guarantee and financial test remain in effect until the license
is terminated. The proposed regulations would clarify that the NRC's
written acceptance of an alternate financial assurance by the parent
company or licensee would allow the guarantee and financial test to
lapse.
N.9 Invalidate the Use of Certification for Financial Assurance if
There Is Contamination
NRC is proposing additions to the regulations related to
decommissioning financial assurance as applied to certifications. The
proposed changes affect Sec. Sec. 30.35(c)(6), 40.36(c)(5), and
70.25(c)(5).
The existing rule prescribes specific amounts of financial
assurance for licensees that are authorized to possess relatively small
amounts of radioactive material. Licensees authorized to possess
radioactive materials in higher amounts must submit a DFP, which
includes a site-specific cost estimate for decommissioning. The site-
specific cost estimate is almost always higher than the prescribed
certification amounts.
The proposed rule would require licensees who qualify to use the
certification amounts to submit a DFP in the event that survey results
detect significant residual radioactivity within the site boundary,
including the subsurface. A significant amount would be residual
radioactivity that would, if left uncorrected, prevent the site from
meeting the criteria for unrestricted use. Remediating subsurface
contamination can be very expensive. However, licensees that qualify to
use the certification amounts have no regulatory requirement to
increase the amount of financial assurance to cover subsurface
remediation costs. In the event subsurface contamination occurred at
such a site, there would be no regulatory basis to require the licensee
to increase its financial assurance to cover the potentially higher
decommissioning cost. The proposed rule would provide the regulatory
basis to require these licensees to cover the full cost, not just the
certification amount.
N.10 Other Changes to Financial Assurance Regulations
The proposed regulations would eliminate the line of credit option
from 10 CFR 30.35(f), 40.36(e), 70.25(f), and 72.30(e) from the list of
surety, insurance, or other guarantee methods that may be used to
provide financial assurance for decommissioning. Although the line of
credit was initially authorized for use to provide an alternative to
licensees that elected not to use a surety or letter of credit, the NRC
recognized that it posed a greater risk than the other two surety
methods, because it might be subject to underlying loan covenants that
could make it more vulnerable to cancellation if the licensee
experienced financial difficulties. However, since 1988, no licensees
have elected to use a line of credit to provide financial assurance for
decommissioning. Because of its greater risk of cancellation and its
non-use by licensees, the NRC has decided to eliminate the line of
credit as an alternative for providing financial assurance for
decommissioning.
The proposed rule would exclude, in the financial tests for the
parent guarantee and self-guarantee, the net book value of the nuclear
facility and site from the calculation of tangible net worth. The
existing rule requires that the calculation of tangible net worth must
exclude the book value of the ``nuclear units.'' That requirement may
lead to confusion because it implies that it applies to nuclear reactor
units, and not other kinds of nuclear facilities. However, other kinds
of nuclear facilities should be excluded from the
[[Page 3827]]
tangible net worth calculation because they are unlikely to provide
funds for decommissioning. The existing rule does not specify whether
the nuclear site, as distinguished from the facility, may be included
in the calculation of tangible net worth. The value of the site is
likely to depend on the probability that the decommissioning will be
completed, and is subject to some degree of uncertainty. Therefore, the
calculation of tangible net worth would be changed to exclude the net
book value of the nuclear facility and site.
The proposed rule would require a certified public accountant to
include an evaluation of off-balance sheet transactions, for the parent
guarantee and self-guarantee. Generally accepted accounting principles
(GAAP) permit certain kinds of transactions to be accounted for off the
company's balance sheet. Many companies, as a means of managing risk
and/or taking advantage of legitimate tax minimization opportunities,
create off-balance-sheet transactions. It is important to understand
the nature and the reason for each off-balance-sheet item, and ensure
that any such relationships are adequately disclosed. (Management's
Summary of Off-Balance Sheet Transactions, American Institute of
Certified Public Accountants, http://www.aicpa.org, last visited
February 8, 2007). The volume and risk of the off-balance-sheet
activities need to be considered. (Risk Management Manual of
Examination Policies, Federal Deposit Insurance Corporation, http://www.fdic.gov, last visited February 8, 2007). The existing rule does
not require the independent certified public accountant's special
report to examine off-balance sheet transactions. However, these
transactions have the potential to materially affect the guarantor's
ability to fund decommissioning obligations. Therefore, the proposed
rule would require the auditor to include an evaluation of off-balance
sheet transactions.
O. Will Some Licensees Who Currently Do Not Have Financial Assurance
Need To Get Financial Assurance?
No. Licensees who are not required to provide financial assurance
for decommissioning will not have to obtain financial assurance as a
result of amendments in this proposed rule.
The decommissioning planning and financial assurance amendments in
this proposed rule only apply to licensees who currently have, or will
have in the future, decommissioning financial assurance requirements
under 10 CFR 30.35, 40.36, 50.75, 70.25, and 72.30.
If a licensee has survey records of residual radioactivity under
the proposed new requirements in Sec. 20.1501(b) or in an application
for license transfer consistent with the proposed language in
Sec. Sec. 30.34(b)(2), 40.46(a)(2), or 70.36(a)(2), and the licensee
has a possession and use quantity that is below the possession limit
thresholds for financial assurance, then no decommissioning financial
assurance is required.
All operating power reactor licensees are required to have
financial assurance, consistent with 10 CFR 50.75(c), and all licensees
with an independent spent fuel storage installation regulated under 10
CFR part 72 must have financial assurance for decommissioning in
accordance with 10 CFR 72.30(c).
P. What is Changing With Respect to Materials Facilities'
Decommissioning Funding Plan (DFP) and Decommissioning Cost Estimate
(DCE)?
The proposed rule would require certain licensees under 10 CFR part
72 to adjust their DCE within 3 years of the previous DCE. This was
done by final rule on October 3, 2003 (68 FR 57327) for licensees under
10 CFR parts 30, 40 and 70. This provision in the proposed rule would
make the timing basis for DCE adjustments consistent among all
materials facilities.
Regarding DFPs, the proposed rule would make changes in Sec. Sec.
30.35(e), 40.36(d), 70.25(e), and 72.30(b) to require additional
information from licensees. NRC's experience indicates that
underestimation of decommissioning costs can occur when the licensee
assumes it will qualify for a restricted site release by meeting all of
the 10 CFR 20.1403 requirements. If it turns out that these
requirements cannot be met, and that an unrestricted site release under
10 CFR 20.1402 will be required, the licensee may not have the ability
to fund a potentially more expensive cleanup. For example, if instead
of leaving large volumes of slightly contaminated soil onsite in a
restricted release decommissioning, the licensee must ship this
material offsite for disposal to support an unrestricted site release,
the decommissioning will typically be much more expensive due to high
offsite disposal costs. Therefore, the proposed rule would require the
licensee to estimate and cover the costs to decommission the facility
to meet unrestricted use criteria. The option of meeting the 10 CFR
20.1403 restricted release requirements will be available, but the
licensee would have to demonstrate it can meet those criteria before a
cost estimate based on that assumption would be acceptable.
In addition, certain operational events can increase
decommissioning costs above the original estimate. These events include
spills, increases in onsite waste inventory, increases in waste
disposal costs, facility modifications, changes in authorized
possession limits, actual remediation costs that exceed the initial
cost estimate, onsite disposal, and use of settling ponds. The proposed
amendments to 10 CFR 30.35(e)(2), 40.36(d)(2), 70.25(e)(2), and
72.30(b) would require the 3 year update of the DFP to consider these
events for the effect, if any, they may have on the estimated cost of
decommissioning. Subsurface contamination can be very expensive to
remediate. The new regulations would require the licensee to estimate
the volume of contaminated subsurface material that would require
remediation, and provide financial assurance for the estimated cost of
remediation. Early consideration and funding arrangements to cover
increased costs will improve decommissioning planning and increase the
likelihood that funds will be available when needed for site
decommissioning.
Existing regulatory guidance identifies recommended methods for
arriving at decommissioning cost estimates, and the NRC is codifying
some of these recommended methods. To assure that funds will be
adequate to complete decommissioning in the event the licensee is
unable to do so, cost estimates would be required to include contractor
overhead and profit. An adequate contingency factor is necessary to
cover unanticipated costs that can arise after the decommissioning
project begins. The key assumptions underlying the cost estimate would
have to be identified to aid the staff in evaluating the adequacy of
the estimate. Codification of these recommendations is expected to
improve the quality of DFP submittals, facilitate the staff's review of
these submittals, and result in regulatory efficiencies.
NRC is aware of the records important for decommissioning reporting
requirements licensees have under Sec. Sec. 30.36(g)(1), 40.36(f)(1),
50.75(g)(1), 70.25(g)(1), and 72.30(d)(1). The proposed additional
reporting requirements are designed to foster a better understanding of
the impact the spill or contaminating event has on the decommissioning
cost estimate.
Q. What is Changing With Respect to License Transfer Regulations for
Materials Licensees?
The NRC proposes to make a set of parallel changes to Sec. Sec.
30.34(b)(2), 40.46(a)(2), and 70.36(a)(2). This would codify NRC
regulatory guidance to
[[Page 3828]]
require the licensee to provide information on the proposed
transferee's technical and financial qualifications, and to provide
decommissioning financial assurance as a condition for approval of the
transfer if the licensee is required to have financial assurance. The
information and financial assurance are necessary to evaluate the
adequacy of the proposed transferee. Placing these provisions in the
regulation, rather than keeping them in regulatory guidance, will
improve regulatory efficiency by improving the quality of license
transfer requests. It also will ensure that a prospective license
transferee provides to the NRC the information necessary to determine
that public health and safety are not compromised by the transfer and
that the radiation safety aspects of the program are not degraded.
R. What Is Changing With Respect to Permanently Shutdown Reactor
Decommissioning Fund Status and Spent Fuel Management Plan Reporting?
The proposed rule would revise Sec. 50.82(a)(4)(i), and add three
new provisions (v-vii) to Sec. 50.82(a)(8). The revised Sec.
50.82(a)(4)(i) would require that the post-shutdown decommissioning
activities report (PSDAR) include, if applicable, a cost estimate for
managing irradiated fuel. Currently, the PSDAR must include a
description of the planned decommissioning activities, a schedule for
their accomplishment, and an estimate of expected costs.
The proposed additions to Sec. 50.82(a)(8) would require each
power reactor licensee undergoing decommissioning to submit, in the
form of an annual financial assurance status report, information
(specified below) regarding its decommissioning funds. Currently, under
Sec. 50.75(f)(1), the information reported to NRC by power reactor
licensees is focused on collection of funds before permanent shutdown,
and does not require information on the actual funds spent. To assess
the adequacy of power reactor decommissioning funding after permanent
shutdown, NRC needs to know the actual costs being incurred at
decommissioned facilities. To obtain this information, the annual
report would be required to include, among other things, the amount
spent on decommissioning over the previous calendar year; the remaining
balance of any decommissioning funds; and an estimate of the costs to
complete decommissioning. If the annual report reveals a projected
funding shortfall, additional financial assurance to cover the cost to
complete decommissioning will have to be provided. These proposed
changes are expected to improve NRC oversight of decommissioning
planning and increase the likelihood that funds for decommissioning
will be available when needed. In Section II.V of this document, NRC
seeks public comment on this topic.
Under proposed Sec. 50.82(a)(8)(vii), the annual financial
assurance status report must also include the status of funds to manage
irradiated fuel. Due to the cessation of operating revenues, spent fuel
management and related funding are a concern after the reactor is
permanently shut down. Therefore, the proposed rule would require that
the amount of funds accumulated to cover the cost of managing the spent
fuel be specified; and that an estimate of the projected costs of spent
fuel management until the Department of Energy takes title to the spent
fuel be provided; and that a plan to obtain additional funds if the
accumulated funds do not cover the projected cost be identified. These
proposed changes are expected to increase the likelihood that funds for
spent fuel management will be available when needed. In Section II.V of
this document, NRC seeks public comment on this topic.
S. When Do These Proposed Actions Become Effective?
The new regulations would become effective 60 days after the final
rule is published in the Federal Register. The NRC estimates that, at
the earliest, the final rule will be published in October 2008.
T. Has NRC Prepared a Cost-Benefit Analysis of the Proposed Actions?
NRC staff has prepared a draft Regulatory Analysis for this
rulemaking. The analysis examines the costs and benefits of the
proposed action and two alternatives. Under the proposed action, the
estimated total costs (2007$) are $109 million and $77 million over a
15-year analysis period at 3 percent and 7 percent discount rates,
respectively. The estimated total costs were higher for each of the two
alternatives. The cost (2007$) of implementing the proposed rule over
the 15-year analysis period is about $43 million at 3 percent discount
rate, with NRC licensee costs at $6 million, Agreement State licensee
costs at $22 million, NRC administrative costs at $3 million, and
Agreement State administrative costs at $12 million. The primary
benefits of the proposed rule are due to reduction in the number of
legacy sites and higher reliability of obtaining sufficient funds
pledged for decommissioning financial assurance to complete the
decommissioning work through license termination. The NRC seeks public
comment on the draft Regulatory Analysis. For example, the NRC and
Agreement States are aware of the existence of facilities and sites
which have the potential to become contaminated with significant
amounts of radium-226 from past practices or operations, or from the
accumulation of radium-226 sources. Do members of the public have
information about these sites to include them in the Regulatory
Analysis as licensees affected by this proposed rule?
More information on this subject is in Section XI of this document.
The Backfit Analysis is included in the Regulatory Analysis, and is
discussed in Section XIII of this document. The NRC seeks public
comment on the Backfit Analysis.
U. Has NRC Evaluated the Additional Paperwork Burden to Licensees?
This proposed rule contains new or amended information collection
requirements that are subject to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq). NRC staff has estimated the impact this
proposed rule would have on reporting and recordkeeping requirements of
NRC and Agreement State licensees. The NRC seeks public comment on
these estimates of additional burden to licensees from the proposed
rule. More information on this subject is in Section IX, Paperwork
Reduction Act Statement, of this document.
V. What Should I Consider as I Prepare My Comments to NRC?
When submitting your comments on this proposed rule:
1. Identify the rulemaking (RIN 3150-AH45).
2. Explain why you agree or disagree with the NRC proposal; suggest
alternatives and substitute language for your requested changes.
3. Describe any assumptions and provide any technical information
and/or data that you used.
4. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow NRC to reproduce
your results.
5. Provide specific examples to illustrate your concerns, and
suggest alternatives.
6. Explain your views as clearly as possible.
7. Submit your comments by the comment period deadline.
8. NRC has specifically requested comments regarding the following
items:
(a) Can ``fee incentives'' be used, as permitted in 10 CFR
171.11(b), to
[[Page 3829]]
induce licensees to characterize subsurface residual radioactivity
while their facility is operating instead of waiting until the facility
is in decommissioning?
(b) Should NRC investigate the use of a secure Web site for use by
licensees to submit and update decommissioning reporting requirements,
information in the financial tests for parent guarantees and self-
guarantees, and other information that licensees believe will improve
the efficiency of the decommissioning planning and reporting process?
(c) Can the additional details that would be required of
decommissioned power reactor licensees in the PSDAR under proposed 10
CFR 50.82(a)(4)(i), and reporting of the actual costs of
decommissioning before license termination as proposed under 10 CFR
50.82(a)(8)(v), be provided to NRC accurately without reference to
confidential information so that NRC may apply the information in
reviewing similar decommissioning activities that are planned or in
progress?
(d) Are the input assumptions, methodology and results in the draft
Regulatory Analysis correct, including the Backfit Analysis? Is the
conclusion in the draft Environmental Assessment correct of no
significant environmental impact from the proposed rule?
(e) The NRC and Agreement States are aware of the existence of
facilities and sites which have the potential to become contaminated
with significant amounts of radium-226 from past practices or
operations, or from the accumulation of radium-226 sources. Do members
of the public have information about these sites to include them in the
Regulatory Analysis as licensees affected by this proposed rule?
III. Discussion of Proposed Amendments by Section
As stated previously, the Commission approved the staff's
recommendation to proceed with a proposed rulemaking in SRM-SECY-03-
0069 dated November 17, 2003. Staff's recommendations for changes in
licensee operations to prevent future legacy sites were described in
attachment 8 to the SECY. Two factors that were common among the
existing legacy sites were: (1) They had chronic releases of
radioactive material to the subsurface environment, and (2) NRC did not
recognize the extent of this contamination until near cessation of
operations. To address the problem of chronic releases, staff
recommended a revision to Sec. 20.1406 to make it applicable to
current licensees. Staff recommended that it would emphasize procedural
changes for existing licensees, and that physical changes to the
facility only would be warranted when procedures fail to reduce
releases. These recommendations are proposed for implementation in
Sec. 20.1406(c). To address the reporting deficiencies, staff
recommended a risk-informed approach to require sites that experience
events that contaminate the subsurface to perform surveys to
characterize the extent and migration of resultant plume(s), based on
site conditions, and to record the survey information in records
important for decommissioning. These are proposed for implementation in
Sec. Sec. 20.1501(a) and 20.1501(b).
SRM-SECY-03-0069 also approved staff's plans to add new, and amend
existing financial assurance regulations, including the preparation of
decommissioning cost estimates, the contents of DFPs, and acceptable
financial assurance instruments used to support the DFP or the
certification of funds used only by materials facilities. The
recommended changes to financial assurance regulations and reporting
requirements were described in attachment 7 to the SECY. Following
analysis by NRC staff and input from stakeholders during public
meetings, changes are proposed for implementation in 10 CFR parts 30,
40, 50, 70, and 72 to require more detailed reporting of
decommissioning financial assurance information and to provide greater
certainty to the NRC that adequate financial assurance will be
available at the start of decommissioning activities.
The proposed amendments are discussed in numerical order below.
Section 20.1403 Criteria for License Termination Under Restricted
Conditions
The proposed rule would amend Sec. 20.1403(c)(1) to require
financial assurance funds to be placed into a trust segregated from the
licensee's assets and outside the licensee's administrative control.
The proposed rule would eliminate the licensee's option to use other
prepayment financial mechanisms, such as the escrow account, government
fund, certificate of deposit, or deposit of government securities. No
licensee to date has used these other prepayment mechanisms to provide
financial assurance for a restricted release site.
Amended Sec. 20.1403(c)(1) would require that the initial amount
of the trust fund established for long-term care and maintenance be
based on a conservative assumption of a 1 percent annual real rate of
return on investment.
The current Sec. 20.1403(c)(2) would be deleted. This would remove
the licensee's option to use a surety method, insurance, or other
guarantee method to provide financial assurance for a restricted
release site. The NRC has concluded that these mechanisms are more
suitable for short-term rather than long-term investments, and are not
well adapted to provide assurance that an independent third party will
have the requisite funds to carry out necessary control and maintenance
of the site following license termination. No licensee has to date used
these financial mechanisms to provide financial assurance for long-term
care of a restricted release site. The provisions for government
entities to provide financial assurance for long term control and
maintenance contained in existing Sec. Sec. 20.1403(c)(3) and (4)
would be retained but redesignated as Sec. Sec. 20.1403(c)(2) and (3).
Section II.N.1 of this document has more information on this proposed
amendment.
Section 20.1404 Alternate Criteria for License Termination
The proposed rule would add a new Sec. 20.1404(a)(5) specifying a
fifth criterion that the NRC must consider in determining whether to
terminate a license under alternate site release criteria. This new
fifth criterion is if the licensee has provided sufficient financial
assurance in the form of a trust fund to enable an independent third
party, including a government custodian of a site, to assume and carry
out responsibilities for any necessary control and maintenance of the
site.
Section 20.1406 Minimization of Contamination
The proposed addition of a new Sec. 20.1406(c) is an extension of
the policy articulated by the Commission in 1997, when the LTR was
established (62 FR 39082; July 21, 1997). This policy is that licensees
must conduct their operations to minimize waste during facility
operations to facilitate later decommissioning and to achieve
occupational and public doses that are ALARA. The term ``residual
radioactivity,'' as already defined in 10 CFR part 20, best identifies
the type and scope of radioactive material that must be considered by
licensees to effectively plan for decommissioning activities during
facility operations. The term includes licensed and unlicensed
radioactive material. Section II.A of this document has more
information on the proposed addition of Sec. 20.1406(c).
[[Page 3830]]
Section 20.1501 General
The 10 CFR 20.1501 survey requirements were added to the
regulations in 1991, when 10 CFR part 20 was substantially revised (56
FR 23360; May 21, 1991). To date, these surveys have been done
primarily to demonstrate compliance with occupational and public
exposure limits, and effluent release regulations.
The current Sec. 20.1501(a) requires licensees to perform surveys
of potential radiological hazards. Subsurface contaminating events are
not often a risk to occupational or public health and safety; however,
experience has shown that these events, because they are not obvious or
evident, are a risk for creation of a legacy site if contaminant
characteristics are not addressed early when the facility is operating.
A legacy site is a potential radiological hazard.
The proposed changes to Sec. 20.1501(a) specify that these survey
requirements include consideration of residual radioactivity,
conforming to the new Sec. 20.1406(c). The linkage between new Sec.
20.1406(c) and amended Sec. 20.1501(a) will require that surveys be
performed if there is reason to believe that significant subsurface
contamination is present which constitutes a potential radiological
hazard. Section II.A describes these survey requirements in more
detail.
The proposed new Sec. 20.1501(b) would require licensees to
maintain records from surveys describing the location and amount of
subsurface residual radioactivity identified at the site with records
important for decommissioning. Existing Sec. 20.1501(b) would be
designated as (c) and existing Sec. 20.1501(c) would be designated as
(d).
Section 30.34 Terms and Conditions of Licenses
Section 30.34(b) pertains to license transfers. Existing Sec.
30.34(b) would be designated as (b)(1) and a new paragraph (b)(2) would
be added to require that an application for license transfer must
include the proposed transferee's identity, its technical and financial
qualifications, and a showing that it will be able to provide adequate
financial assurance for decommissioning.
Existing Sec. Sec. 40.46 and 70.36 contain parallel provisions to
those in Sec. 30.34(b). Sections 40.46 and 70.36 would be re-
designated as Sec. Sec. 40.46(a) and 70.36(a). New Sec. Sec. 40.46(b)
and 70.36(b) will parallel the new Sec. 30.34(b)(2) provisions
described previously.
Section 30.35 Financial Assurance and Recordkeeping for Decommissioning
Several changes would be made to these requirements, and parallel
changes would be made in Sec. Sec. 40.36(c) and 70.25(c). These
proposed changes are discussed below.
A new paragraph (c)(6) would be added to 10 CFR 30.35 [and parallel
Sec. Sec. 40.36(c)(5) and 70.25(c)(5)], to reflect the proposed
changes being made to the Sec. 20.1501(a) survey requirements. If
these surveys detect residual radioactivity at a site at levels that
would, if left uncorrected, prevent the site from meeting the Sec.
20.1402 criteria for unrestricted use, the licensee must submit a DFP
within one year of when the survey is complete.
Existing Sec. 30.35(e) [and in parallel add Sec. Sec. 40.36(d)(1)
and (d)(2), part 40 Appendix A, 70.25(e)(1) and (e)(2), and 72.30(b)
and (c)] would be amended to contain new paragraphs (e)(1) and (e)(2).
Section 30.35(e)(1) would require that each DFP submitted for review
and approval must contain a DCE based on three cost components. Two of
the cost components (a dollar amount adequate to cover the cost of an
independent contractor to perform all decommissioning activities, and
an adequate contingency factor) are described in existing guidance. The
new cost component is an estimate of the volume of onsite subsurface
material containing residual radioactivity that will require
remediation to meet the decommissioning criteria. Additionally, the DCE
must be based on the cost of meeting the Sec. 20.1402 criteria for
unrestricted use unless it can be adequately shown that the
requirements of Sec. 20.1403 will be met.
A new provision, Sec. 30.35(e)(1)(ii), would require the licensee
to identify and justify the basis for all key assumptions underlying
the DCE.
Section 30.35(e)(1)(iii) retains the existing Sec. 30.35(e)
provision requiring a description of the method of assuring funds for
decommissioning. Section 30.35(e)(1)(iv) retains the existing Sec.
30.35(e) provision requiring a certification by the licensee that
financial assurance for decommissioning has been provided in the amount
of the DCE. Section 30.35(e)(1)(v) retains the existing Sec. 30.35(e)
requirement that the DFP include ``a signed original of the financial
instrument'' being used to provide financial assurance, if it has not
been previously submitted and accepted as the financial instrument to
cover the cost estimate for decommissioning.
New Sec. 30.35(e)(2) would require that the DFP be submitted at
the time of license renewal, and at intervals not exceeding 3 years
with adjustments as necessary to account for changes in costs and the
extent of contamination. The updated DFP must specifically consider the
effect of the following events on the cost of decommissioning:
Spills of radioactive material producing additional
residual radioactivity in onsite subsurface material;
Waste inventory increasing above the amount previously
estimated;
Waste disposal costs increasing above the amount
previously estimated;
Facility modifications;
Changes in authorized possession limits;
Actual remediation costs that exceed the previous cost
estimate;
Onsite disposal; and
Use of a settling pond.
As discussed below, the proposed rule would amend the introductory
language in 10 CFR 30.35(f), and amend paragraphs (f)(1) through
(f)(3). Parallel changes would be made in Sec. Sec. 40.36(e),
40.36(e)(1), (e)(2) and (e)(3), 70.25(f), 70.25(f)(1), (f)(2) and
(f)(3), 72.30(e), 72.30(e)(1), (e)(2) and (e)(3)].
Section 30.35(f) would be amended to require that the financial
instrument used for decommissioning funding assurance include the
licensee's name, license number, and docket number, and the name,
address, and other contact information of the issuer, and, if a trust
is used, the trustee. If there are any changes to this information, the
licensee must submit financial instruments reflecting these changes
within 30 days.
Revised Sec. 30.35(f)(1) requires that the prepayment financial
method be in the form of a trust. This parallels the rule text change
in Sec. 20.1403, eliminating the four other prepayment mechanisms
(i.e., the escrow account, government fund, certificate of deposit, and
deposit of government securities). No byproduct material licensees have
elected to use the government fund and deposit of government securities
mechanisms, and only 2 have used a certificate of deposit. Because of
their relative risk in bankruptcy and their lack of use by licensees,
the NRC has decided to eliminate them as alternatives for providing
financial assurance for decommissioning. Approximately 25 byproduct
material licensees use escrow accounts.
In Sec. 30.35(f)(2), the proposed rule would eliminate the
existing line of credit option as a guarantee method for financial
assurance. No licensees have elected to use a line of credit to provide
[[Page 3831]]
financial assurance for decommissioning.
In Sec. 30.35(f)(3), the proposed rule would require an external
sinking fund to be in the form of a trust, eliminating the escrow
account, government fund, certificate of deposit, and deposit of
government securities because of their relative risk of loss during
bankruptcy.
A new Sec. 30.35(h) [and in parallel new Sec. Sec. 40.36(f),
70.25(h), and 72.30(g)] would be added, specifying that each licensee
must use its financial assurance funds only for decommissioning
activities. The new section also would require monitoring by the
licensee of its investment balance in the decommissioning trust
account. Conservative investments are expected in the trust account. If
the investment balance in the trust account is below the estimated cost
of decommissioning, but is not below 75 percent of the cost, then the
licensee must, within 5 days after the end of the calendar quarter,
deposit funds into the trust account to fully cover the estimated cost.
If the loss results in a balance that is below 75 percent of the amount
necessary to cover the decommissioning cost, the licensee must, within
5 days of such occurrence, deposit funds into the trust account to
fully cover the estimated cost. The licensee must report taking such
actions to the NRC within 30 days.
Part 30 Appendices A, C, D, and E
The proposed rule would make a set of parallel amendments to 10 CFR
part 30, appendices A, C, D, and E. More information on these proposed
changes is discussed in Sections II.N.3 through II.N.8 of this
document. The types of guarantors for which the financial tests in
these appendices apply are:
Appendix A, Parent company guarantees;
Appendix C, Self-guarantees;
Appendix D, Self-guarantees by companies that have no
rated commercial bonds;
Appendix E, Self-guarantees by non-profit colleges,
universities and hospitals.
In the financial test in section II.A in appendices A, C and D of
part 30, the proposed rule would add language to allow the inclusion of
intangible assets in the determination of net worth. Net worth is
defined to exclude the net book value and goodwill of the nuclear
facility and site. Tangible net worth is defined to exclude all
intangible assets and the net book value of the nuclear facility and
site. In appendix A, section II.A.2.(ii) would be revised to require
the licensee to perform a net worth calculation instead of a tangible
net worth calculation.
In the financial test in section II.A in appendices A, C and D of
part 30, the proposed rule would require that the guarantor's tangible
net worth be at least $19 million to pass one of the criteria for that
financial test. The current rule requires the company seeking to pass
the Section II.A financial test to have tangible net worth of at least
$10 million.
Each set of changes to Appendices A, C, D, and E would require the
independent certified public accountant (who compares the data used in
the financial tests against data in year-end financial statements) to
evaluate the guarantor's off-balance sheet transactions regarding the
impact these transactions may have on the guarantor's ability to pay
decommissioning costs. The accountant would also have to verify bond
ratings if these are used to pass the financial test.
For those licensees or guarantors that issue bonds and use the
financial test under section II.B of appendices A, C and E of part 30,
the proposed rule would specify that the current rating of the most
recent bond issuance of AAA, AA, or A by Standard and Poor's could
include adjustments of + or-(i.e., AAA+, AA+, or A+ and AAA-, AA-, and
A- would meet the criterion) and the current rating of Aaa, Aa, or A by
Moody's could include adjustments of 1, 2, or 3. In each of these
appendices, the proposed rule also would require the bond to be the
most recent ``uninsured, uncollateralized, and unencumbered'' bond
issuance.
In each appendix A, C, D, and E of part 30, the proposed rule would
make changes to the 90-day test to show continued eligibility for the
licensee and guarantor. The current rule requires only the licensee to
repeat passage of the test within 90 days after the close of each
succeeding fiscal year. The proposed rule would apply the same
requirement to the guarantor.
In each appendix A, C, D, and E to part 30, the proposed rule would
amend section III to clarify that the guarantor would be required to
set up a standby trust, with new criteria for selecting an acceptable
trustee.
In appendix A to part 30, the proposed rule would amend section III
to require that the parent company guarantor agree to make itself
subject to Commission orders (e.g., order to make payments under the
guarantee agreement). The parent company guarantor also would have to
agree to make itself jointly and severally liable with the licensee for
the full cost of decommissioning with any additional costs not paid by
the licensee to be paid by the parent company guarantor.
In each appendix A, C, D, and E to part 30, the proposed rule would
amend section III to allow the Commission, in cases of the guarantor
company's financial distress, to declare the financial assurance
guaranteed by the guarantor to be immediately due and payable to the
standby trust. The guarantor companies also would be required to notify
the NRC, in writing, immediately following the occurrence of events
signifying financial distress.
Section 40.36 Financial Assurance and Recordkeeping for Decommissioning
The proposed rule would amend Sec. 40.36(c)(5) in changes that are
parallel to those described under Sec. 30.35(c)(6); would amend Sec.
40.36(d)(1) and (d)(2) in changes that are parallel to those described
under Sec. 30.35(e)(1) and (e)(2); would amend Sec. 40.36(e) in
changes that are parallel to those described under Sec. 30.35(f); and
would amend Sec. 40.36(f) in changes that are parallel to those
described under Sec. 30.35(h).
Section 40.46 Inalienability of Licenses
The proposed rule would amend Sec. 40.46. The proposed changes are
described under the section for Sec. 30.34, above.
Part 40 Appendix A
The proposed rule would amend Appendix A, Criterion 9, to part 40.
The proposed changes are parallel to those described under Sec. Sec.
30.35(e)(1) and 30.35(e)(2).
Section 50.75 Reporting and Recordkeeping for Decommissioning Planning
The proposed rule would eliminate the line of credit in Sec.
50.75(e)(1)(iii)(A) as a guarantee method for financial assurance. No
reactor licensees have elected to use a line of credit to provide
financial assurance for decommissioning.
Section 50.82 Termination of License
The proposed rule would revise Sec. 50.82(a)(4)(i) requiring that
additional details be included in the PSDAR. The PSDAR must now include
a description of the planned decommissioning activities, a schedule for
their accomplishment, and an estimate of expected costs. The proposed
revision specifies that the PSDAR cost estimates include those for
managing irradiated fuel.
The proposed rule also would add paragraphs (v) through (vii) to
existing Sec. 50.82(a)(8). New paragraph (v) would
[[Page 3832]]
require that a power reactor licensee, that has submitted its
certification of permanent cessation of operation, must report annually
on the status of its radiological decommissioning funding on a
calendar-year basis. The information contained in this financial
assurance status report is discussed in Section II.R of this document.
New paragraph (vi) would require that if funds reported in the
financial assurance status report are below the estimated cost to
complete the decommissioning, the licensee would have to make up the
difference.
New paragraph (vii) would require an annual report on the status of
funds for managing irradiated fuel. This report would include the
accumulated amount, the projected costs until title to the fuel is
transferred to the Secretary of Energy, and the plan to obtain the
necessary additional funds if the total projected cost is higher than
the accumulated amount.
Section 70.25 Financial Assurance and Recordkeeping for Decommissioning
The proposed rule would amend Sec. 70.25. The proposed changes are
parallel to those described under Sec. 30.35.
Section 70.36 Inalienability of Licenses
The proposed rule would amend Sec. 70.36. The proposed changes are
parallel to those described under Sec. 30.34.
Section 72.13 Applicability
References in Sec. 72.13(c) to Sec. 72.30 are corrected to
conform with the proposed changes to Sec. 72.30, whereby Sec.
72.30(c) would become Sec. 72.30(e), and Sec. 72.30(d) would become
Sec. 72.30(f).
Section 72.30 Financial Assurance and Recordkeeping for Decommissioning
The proposed rule would amend Sec. 72.30. The proposed changes are
similar to those described under Sec. 30.35(e), and two existing
paragraphs are redesignated.
Section 72.50 Transfer of License
The proposed rule would amend Sec. 72.50 by adding a new paragraph
(b)(3), requiring that the license transfer application describe the
financial assurance that will be provided for the decommissioning under
Sec. 72.30.
IV. Criminal Penalties
For the purpose of Section 223 of the Atomic Energy Act (AEA), the
Commission is proposing to amend 10 CFR parts 20, 30, 40, 50, 70, and
72 under one or more of Sections 161b, 161i, or 161o of the AEA.
Willful violations of the rule would be subject to criminal
enforcement.
V. Agreement State Compatibility
Under the ``Policy Statement on Adequacy and Compatibility of
Agreement State Programs'' approved by the Commission on June 30, 1997,
and published in the Federal Register on September 3, 1997 (62 FR
46517), this proposed rule would be a matter of compatibility between
the NRC and the Agreement States, thereby providing consistency among
the Agreement States and the NRC requirements. The NRC staff analyzed
the proposed rule in accordance with the procedure established within
Part III, ``Categorization Process for NRC Program Elements,'' of
Handbook 5.9 to Management Directive 5.9, ``Adequacy and Compatibility
of Agreement State Programs'' (a copy of which may be viewed at http://www.nrc.gov/reading-rm/doc-collections/management-directives/).
NRC program elements (including regulations) are placed into four
compatibility categories (See the Draft Compatibility Table in this
section). In addition, the NRC program elements also can be identified
as having particular health and safety significance or as being
reserved solely to the NRC. Compatibility Category A establishes
program elements that are basic radiation protection standards and
scientific terms and definitions that are necessary to understand
radiation protection concepts. An Agreement State should adopt Category
A program elements in an essentially identical manner to provide
uniformity in the regulation of agreement material on a nationwide
basis. Compatibility Category B establishes program elements that apply
to activities that have direct and significant effects in multiple
jurisdictions. An Agreement State should adopt Category B program
elements in an essentially identical manner. Compatibility Category C
establishes program elements that do not meet the criteria of Category
A or B, but the essential objectives of which an Agreement State should
adopt to avoid conflict, duplication, gaps, or other conditions that
would jeopardize an orderly pattern in the regulation of agreement
material on a nationwide basis. An Agreement State should adopt the
essential objectives of the Category C program elements. Compatibility
Category D establishes program elements that do not meet any of the
criteria of Category A, B, or C, above, and, thus, do not need to be
adopted by Agreement States for purposes of compatibility.
Health and Safety (H&S) are program elements that are not required
for compatibility but are identified as having a particular health and
safety role (i.e., adequacy) in the regulation of agreement material
within the State. Although not required for compatibility, the State
should adopt program elements in this H&S category based on those of
the NRC that embody the essential objectives of the NRC program
elements, because of particular health and safety considerations.
Compatibility Category NRC establishes program elements that address
areas of regulation that cannot be relinquished to Agreement States
under the Atomic Energy Act, as amended, or provisions of Title 10 of
the Code of Federal Regulations. These program elements are not adopted
by Agreement States.
The following table lists the parts and sections that would be
revised and their corresponding categorization under the ``Policy
Statement on Adequacy and Compatibility of Agreement State Programs.''
Compatibility Table for Decommissioning Planning Proposed Rule
----------------------------------------------------------------------------------------------------------------
Compatibility
Section Change Subject -----------------------------------
Existing New *
----------------------------------------------------------------------------------------------------------------
20.1403(c)(1).................. Amend............. Trust fund for C............... C
restricted use.
20.1403(c)(2).................. Deleted........... Acceptable financial C............... C
assurance methods.
20.1403(c)(3) & (4)............ Redesignated...... Government entity C............... C
financial assurance.
20.1404(a)(5).................. Add............... Trust fund for ................ C
alternate criteria.
20.1406(c)..................... Add............... Minimize residual ................ C
radioactivity.
20.1501(a)..................... Amend............. Surveys and monitoring. H&S............. H&S
20.1501(b)..................... Add............... Records from surveys... ................ H&S
[[Page 3833]]
30.34(b)(1).................... Redesignated...... License transfer C............... C
requirements.
30.34(b)(2).................... Add............... License transfer ................ C
requirements.
30.35(c)(6).................... Add............... Assess subsurface ................ D
contamination.
30.35(d)....................... No change......... Certification amounts H&S **.......... D
financial assurance.
30.35(e)(1).................... Amend............. Contents of D ***........... H&S
decommissioning
funding plan.
30.35(e)(2).................... Amend............. Updates of D ***........... H&S
decommissioning
funding plan.
30.35(f)....................... Amend............. Methods for financial D............... D
assurance.
30.35(h)....................... Add............... Monitor the balance of ................ D
funds.
30 Appendix A.................. Amend............. Parent company D............... D
guarantee.
30 Appendix C.................. Amend............. Self-guarantee with D............... D
bonds.
30 Appendix D.................. Amend............. Self-guarantee without D............... D
bonds.
30 Appendix E.................. Amend............. Self-guarantee D............... D
nonprofits.
40.36(c)(5).................... Add............... Assess subsurface ................ D
contamination.
40.36(d)(1).................... Amend............. Contents of H&S............. H&S
decommissioning
funding plan.
40.36(d)(2).................... Amend............. Updates of H&S............. H&S
decommissioning
funding plan.
40.36(e)....................... Amend............. Methods for financial D............... D
assurance.
40.36(g)....................... Add............... Monitor the balance of ................ D
funds.
40.46(a)....................... Redesignated...... License transfer C............... C
requirements.
40.46(b)....................... Add............... License transfer ................ C
information
requirements.
40 Appendix A Criterion 9(b)... Amend............. Decommissioning cost C............... C
estimates and
financial surety [with
11e.(2)].
40 Appendix A Criterion 9(b)... Amend............. Decommissioning cost NRC............. NRC
estimates and
financial surety
[without 11e.(2)].
50.75(e)(1).................... Amend............. Surety as bond or NRC............. NRC
letter of credit.
50.82(a)(4).................... Amend............. Cost information in the NRC............. NRC
PSDAR.
50.82(a)(8)(v), (vi) & (vii)... Add............... Cost information in the ................ NRC
annual financial
assurance status
report.
70.25(c)(5).................... Add............... Assess subsurface ................ D
contamination.
70.25(d)....................... No change......... Certification amounts H&S **.......... D
financial assurance.
70.25(e)(1).................... Amend............. Contents of D ***........... H&S
decommissioning
funding plan.
70.25(e)(2).................... Amend............. Updates of D ***........... H&S
decommissioning
funding plan.
70.25(f)....................... Amend............. Methods for financial D............... D
assurance.
70.25(h)....................... Add............... Monitor the balance of ................ D
funds.
70.36(b)....................... Add............... License transfer ................ C
requirements.
72.30(b)....................... Amend............. Contents of NRC............. NRC
decommissioning
funding plan.
72.30(c)....................... Add............... Updates of ................ NRC
decommissioning
funding plan.
72.30(d)....................... Add............... Assess subsurface ................ NRC
contamination.
72.30(e)....................... Amend............. Methods for financial NRC............. NRC
assurance.
72.30(g)....................... Add............... Monitor the balance of ................ NRC
funds.
72.50(b)(3).................... Add............... License transfer ................ NRC
requirements.
----------------------------------------------------------------------------------------------------------------
* Proposed compatibility category.
** The compatibility category for Sec. Sec. 30.35(d) and 70.25(d) were incorrectly specified in the 68 FR
57334, October 3, 2003, Financial Assurance for Materials Licensees final rule. The correct category for both
of these sections is D.
*** The compatibility category for Sec. Sec. 30.35(e) and 70.25(e) were incorrectly specified in the 68 FR
57334. The correct category for both of these sections is H&S.
VI. Plain Language
The Presidential memorandum dated June 1, 1998, entitled ``Plain
Language in Government Writing'' directed that the Government's writing
be in plain language. The NRC requests comments specifically with
respect to the clarity of the language used in the proposed rule.
Comments should be sent to the address listed under the ADDRESSES
caption of the preamble.
VII. Voluntary Consensus Standards
The National Technology Transfer and Advancement Act of 1995,
Public Law 104-113, requires that Federal agencies use technical
standards developed or adopted by voluntary consensus standards bodies
unless the use of such a standard is inconsistent with applicable law
or otherwise impractical. There are no consensus standards regarding
the methods for preparing decommissioning cost estimates or providing
financial assurance for decommissioning that would apply to the
requirements that would be imposed by this rule. Thus, the provisions
of the Act do not apply to this rule.
VIII. Environmental Assessment and 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, if adopted, would not have
any significant environmental impacts, and therefore this rulemaking
does not warrant the preparation of an environmental impact statement.
A copy of the Environmental Assessment and rule are available at
the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the signature date of this
notice.
The proposed rule would require licensees to conduct their
operations so as to identify the occurrence of residual radioactivity
at their sites, particularly in the subsurface soil and ground water,
and minimize the introduction of additional residual radioactivity.
There are a variety of monitoring methods to evaluate subsurface
characteristics, and these are highly site specific with
[[Page 3834]]
respect to their effectiveness. One or more of the licensees affected
by this proposed rulemaking may find that compliance with the
monitoring requirements will mean the installation of ground water
monitoring wells and surface monitoring devices at their sites. The
installation of these monitoring devices and wells is generally
expected to result in small environmental impacts due to their very
localized nature.
During sampling and testing, the proposed rule introduces the
potential for a small amount of increased occupational exposures. These
exposures are expected to remain within 10 CFR part 20 limits and to be
ALARA. If subsurface contamination is detected, licensees may choose to
remediate when contamination levels are lower and more manageable,
which could result in reduced future occupational exposure rates than
if the contamination conditions were allowed to remain and become
increasingly more hazardous. Licensees may alternatively choose to
provide adequate funding in response to their knowledge of the extent
of any subsurface contamination, which will better ensure that the area
is remediated following decommissioning to a degree that supports
public health and safety, and protection of the environment.
If significant onsite residual radioactivity in the subsurface is
found due to the monitoring imposed by this rulemaking, such knowledge
will better ensure the protection of public health and safety, and
protection of the environment. Identifying and resolving the source of
the contamination will better ensure that waste is not allowed to
migrate offsite. Early identification also provides more time to plan
waste remediation strategies that are both safe and cost effective.
The NRC finds that this proposed rulemaking will not have a
significant environmental impact. Comments on the draft Environmental
Assessment may be submitted to the NRC as indicated under the ADDRESSES
heading.
IX. Paperwork Reduction Act Statement
This proposed rule contains new or amended information collection
requirements that are subject to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.). This rule has been submitted to the Office of
Management and Budget for review and approval of the information
collection requirements.
Type of submission, new or revision: Revision.
The title of the information collection: 10 CFR parts 20, 30, 40,
50, 70 and 72, Decommissioning Planning, Proposed Rule.
The form number if applicable: Not applicable.
How often the collection is required: Initially, periodically based
on regulated activity, quarterly, annually, and at license termination.
Who will be required or asked to report: Licensees and applicants
for nuclear power plants and research and test facilities; applicants
for and holders of NRC licenses authorizing receipt, possession, use or
transfer of radioactive source and byproduct material.
An estimate of the number of annual responses: 239 responses (10
CFR 20--0 responses; 10 CFR 30--151 responses; 10 CFR 40--29 responses;
10 CFR 50--9 responses; 10 CFR 70--49 responses; 10 CFR 72--1
response).
The estimated number of annual respondents: 227 (10 CFR 20--0
respondents; 10 CFR 30--139 respondents; 10 CFR 40--29 respondents; 10
CFR 50--9 respondents; 10 CFR 70--49 respondents; and 10 CFR 72--1
respondent).
An estimate of the total number of hours needed annually to
complete the requirement or request: The total burden increase for this
rulemaking is 1,210.5 hours (10 CFR 20--0 hours; 10 CFR 30--853.5
hours; 10 CFR 40--132.5 hours; 10 CFR 50--48 hours; 10 CFR 70--172.5
hours; 10 CFR 72--4 hour).
Abstract: The NRC is proposing to amend its regulations to improve
decommissioning planning by its licensees who have operating facilities
or who are required to have decommissioning financial assurance. A new
section in 10 CFR 20.1406(c) and an amended Sec. 20.1501(a) would
require licensees to conduct their operations to minimize waste and to
perform surveys of subsurface contamination. The amended regulations
also would require licensees to report additional details in their
decommissioning cost estimates, would eliminate two currently approved
financial assurance mechanisms, and would modify the parent company
guarantee and self-guarantee financial assurance mechanisms to
authorize the Commission to make the amount guaranteed immediately due
and payable to a standby trust if the guarantor is in financial
distress. Finally, the amended regulations would require
decommissioning power reactor licensees to report additional
information on the costs of decommissioning and spent fuel management.
The U.S. Nuclear Regulatory Commission is seeking public comment on
the potential impact of the information collections contained in the
proposed rule and on the following issues:
1. Is the proposed information collection necessary for the
proper performance of the functions of the NRC, including whether
the information will have practical utility?
2. Is the estimate of burden accurate?
3. Is there a way to enhance the quality, utility, and clarity
of the information to be collected?
4. How can the burden of the information collection be
minimized, including the use of automated collection techniques?
A copy of the OMB clearance package may be viewed free of charge at
the NRC Public Document Room, One White Flint North, 11555 Rockville
Pike, Room O-1 F21, Rockville, MD 20852. The OMB clearance package and
rule are available at the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the
signature date of this notice.
Send comments on any aspect of these proposed information
collections, including suggestions for reducing the burden and on the
above issues, by February 21, 2008 to the Records and FOIA/Privacy
Services Branch (T-5 F52), U.S. Nuclear Regulatory Commission,
Washington, DC 20555-0001, or by Internet electronic mail to
[email protected] and to the Desk Officer, Nathan Frey, Office of
Information and Regulatory Affairs, NEOB-10202 (3150-0014; 0017; 0020;
0011; 0009; and 0132), Office of Management and Budget, Washington, DC
20503. Comments received after this date will be considered if it is
practical to do so, but assurance of consideration cannot be given to
comments received after this date. You may also e-mail comments to
[email protected] or comment by telephone at (202) 395-4650.
X. 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.
XI. Regulatory Analysis
The Commission has prepared a draft regulatory analysis on this
proposed rulemaking. An analysis of the proposed rule was performed
comparing it against two other alternatives over a 15-year analysis
period, using 3 percent and 7 percent real discount rates. The NRC
considers the costs of the proposed rule justified in view of the
benefits. The primary benefit is a reduction in the number of legacy
sites that may occur in the future. The baseline of the analysis
assumes No Action is taken and five additional legacy sites require
[[Page 3835]]
government assistance to achieve completion of decommissioning
consistent with unrestricted use criteria. The estimated cost of the
proposed rule, with amended regulations as presented in Section III of
this document, is about 40 percent lower than if No Action is taken. A
third alternative was evaluated that would provide a higher level of
assurance than the proposed rule of obtaining funds guaranteed for
decommissioning financial assurance, but this requirement of collateral
for the guaranteed amount was too costly in relation to the added level
of assurance it would provide.
The estimated cost to implement the proposed rule is about $43
million (2007$) at 3 percent discount rate, of which NRC licensee costs
are about $6 million, Agreement State licensee costs are about $22
million, NRC administrative costs are about $3 million, and Agreement
State administrative costs are about $12 million. The Regulatory
Analysis provides a cost breakdown for activities related to
implementation of the proposed rule by 10 CFR parts 20, 30, 40, 50, 70
and 72.
The Commission requests public comment on the draft Regulatory
Analysis. A copy of the Regulatory Analysis and rule are available at
the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the signature date of this
notice.
XII. Regulatory Flexibility Certification
In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C.
605(b)), the Commission certifies that this rule would not, if
promulgated, have a significant economic impact on a substantial number
of small entities. Only about 300 NRC materials licensees are required
to have decommissioning financial assurance and the large majority of
these organizations do not fall within the scope of the definition of
``small entities'' set forth in the Regulatory Flexibility Act or the
Small Business Size Standards set out in regulations issued by the
Small Business Administration at 13 CFR part 121.
XIII. Backfit Analysis
As discussed more fully in the draft Regulatory Analysis, the NRC
has determined that the NRC's rules on backfitting, 10 CFR 50.109,
70.76, 72.62, and 76.76, do not require the preparation of a backfit
analysis for this proposed rule. A backfit is the modification of
equipment or procedures required to operate a facility resulting from
new or amended NRC regulations, or the imposition of a regulatory staff
position interpreting the Commission rules that is either new or
different from a previously applicable staff position. The new or
amended regulations in this proposed rule either clarify existing
requirements, or require the collection and reporting of information
using existing equipment and procedures. The proposed changes to
requirements are not regulatory actions to which the backfit rule
applies. The new and amended NRC regulations being proposed in this
rulemaking are summarized below.
The ``Minimization of contamination'' requirements in 10 CFR
20.1406 would be amended by adding a new paragraph (c) to read as
follows:
(c) Licensees shall, to the extent practical, conduct operations
to minimize the introduction of residual radioactivity into the
site, including the subsurface, in accordance with existing
radiation protection requirements in Subpart B and radiological
criteria for license termination in Subpart E of this part.
This is not a backfit because it clarifies licensee requirements
under two existing regulations applicable to licensed operations. To
comply with the current ALARA dose requirements in 10 CFR 20.1101(b)
and 10 CFR 20.1402 (within existing subparts B and E, respectively),
licensees must have operating procedures to minimize the introduction
of residual radioactivity into their site, including the subsurface.
Otherwise, licensees may lack information to provide a basis to
demonstrate that they have achieved--during the life cycle of the
facility which includes the decommissioning phase--public and
occupational exposures that are ALARA. Licensees should already have
these procedures in place as part of their radiation protection
program, and the proposed 20.1406(c) clarifies this requirement.
Existing 10 CFR 20.1501(a) is being revised by replacing its
undefined phrase ``radioactive material'' with a defined term
``residual radioactivity.'' As defined in existing 10 CFR 20.1003,
residual radioactivity includes subsurface contamination within its
scope, and the word ``subsurface'' is being added to 10 CFR 20.1501(a).
This regulation (10 CFR 20.1501(a)(2)(iii)) already requires the
evaluation of potential radiological hazards. Thus, as amended, 10 CFR
20.1501(a) makes clear that subsurface residual radioactivity is a
potential radiological hazard, and that the radiological surveys
required by this section must address subsurface residual
radioactivity. This clarification of existing requirements does not
require the preparation of a backfit analysis.
Another proposed amendment would add a new paragraph (b) to 10 CFR
20.1501, requiring that survey records describing the location and
amount of subsurface residual radioactivity identified at a licensed
site be kept with records important for decommissioning.
Regulatory changes imposing information collection and reporting
requirements do not constitute regulatory actions to which the backfit
rule applies. Additionally, NRC licensees are already required to keep
records important for decommissioning. See, e.g., 10 CFR 50.75(g),
70.25(g), and 72.30(d). Moreover, the new 10 CFR 20.1501(b) is not
intended to require recordkeeping of any and all amounts of subsurface
residual radioactivity, but only amounts that are significant to
achieve effective decommissioning planning and ALARA dose requirements.
For operating facilities, significant residual radioactivity is a
quantity of radioactive material that would later require remediation
during decommissioning to meet the unrestricted use criteria of 10 CFR
20.1402. Significant residual radioactivity in subsurface media, such
as soil, is a component of waste because it must be removed and
disposed of to meet unrestricted use criteria.
The proposed rule also revises decommissioning planning and
financial assurance requirements in 10 CFR parts 30, 40, 50, 70 and 72.
These revisions do not entail modifying any equipment or procedures
required to operate the types of NRC-licensed facilities governed by 10
CFR Parts 50, 70 or 72. The proposed changes concern administrative
matters which are outside the scope of protection afforded by the NRC's
backfitting rules (10 CFR 50.109, 70.76, and 72.62). Therefore,
preparation of a backfit analysis is not required for the proposed
revisions to the decommissioning planning and financial assurance
requirements.
Accordingly, the proposed rule's provisions do not constitute a
backfit and a backfit analysis need not be performed. The draft
regulatory analysis identifies the benefits and costs of the proposed
rule, discusses the voluntary GPI, and evaluates other options for
addressing the identified issues. The draft regulatory analysis
constitutes a ``disciplined approach'' for evaluating the merits of the
proposed rule and is consistent with the intent of the backfit rule.
The Commission requests public comment on the backfit issues
summarized above and as set forth more fully in the draft Regulatory
Analysis
[[Page 3836]]
(which is available as discussed under the ADDRESSES heading). Single
copies may be obtained from the contact listed under the FOR FURTHER
INFORMATION CONTACT heading. Comments on the draft Backfit Analysis may
be submitted to the NRC as indicated under the ADDRESSES heading.
List of Subjects
10 CFR Part 20
Byproduct material, Criminal penalties, Licensed material, Nuclear
materials, Nuclear power plants and reactors, Occupational safety and
health, Packaging and containers, Radiation protection, Reporting and
recordkeeping requirements, Source material, Special nuclear material,
Waste treatment and disposal.
10 CFR Part 30
Byproduct material, Criminal penalties, Government contracts,
Intergovernmental relations, Isotopes, Nuclear materials, Radiation
protection, Reporting and recordkeeping requirements.
10 CFR Part 40
Criminal penalties, Government contracts, Hazardous materials
transportation, Nuclear materials, Reporting and recordkeeping
requirements, Source material, Uranium.
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.
10 CFR Part 70
Criminal penalties, Hazardous materials transportation, Material
control and accounting, Nuclear materials, Packaging and containers,
Radiation protection, Reporting and recordkeeping requirements,
Scientific equipment, Security measures, Special nuclear material.
10 CFR Part 72
Administrative practice and procedure, Criminal penalties, Manpower
training programs, Nuclear materials, Occupational safety and health,
Penalties, Radiation protection, Reporting and recordkeeping
requirements, Security measures, Spent fuel, Whistleblowing.
For the reasons set out 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. 553, the NRC is proposing to
adopt the following amendments to 10 CFR parts 20, 30, 40, 50, 70, and
72.
PART 20--STANDARDS FOR PROTECTION AGAINST RADIATION
1. The authority citation for part 20 continues to read as follows:
Authority: Secs. 53, 63, 65, 81, 103, 104, 161, 182, 186, 68
Stat. 930, 933, 935, 936, 937, 948, 953, 955, as amended, sec. 1701,
106 Stat. 2951, 2952, 2953 (42 U.S.C. 2073, 2093, 2095, 2111, 2133,
2134, 2201, 2232, 2236, 2297f), secs. 201, as amended, 202, 206, 88
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846);
sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note), Energy Policy Act
of 2005, Pub. L. 109-58, 119 Stat. 594 (2005).
2. In Sec. 20.1403, paragraph (c)(2) is removed, paragraph (c)(3)
is redesignated as paragraph (c)(2), and paragraph (c)(4) is
redesignated as paragraph (c)(3), and paragraph (c)(1) is revised to
read as follows:
Sec. 20.1403 Criteria for license termination under restricted
conditions.
* * * * *
(c) * * *
(1) Funds placed into a trust segregated from the licensee's assets
and outside the licensee's administrative control, and in which the
adequacy of the trust funds is to be assessed based on an assumed
annual 1 percent real rate of return on investment;
* * * * *
3. In Sec. 20.1404, paragraph (a)(5) is added to read as follows:
Sec. 20.1404 Alternate criteria for license termination.
(a) * * *
(5) Has provided sufficient financial assurance to enable an
independent third party, including a governmental custodian of a site,
to assume and carry out responsibilities for any necessary control and
maintenance of the site. Acceptable financial assurance mechanisms are
specified in Sec. 20.1403(c) of this part.
* * * * *
4. In Sec. 20.1406, paragraph (c) is added to read as follows:
Sec. 20.1406 Minimization of contamination.
* * * * *
(c) Licensees shall, to the extent practical, conduct operations to
minimize the introduction of residual radioactivity into the site,
including the subsurface, in accordance with the existing radiation
protection requirements in Subpart B and radiological criteria for
license termination in Subpart E of this part.
5. In Sec. 20.1501, paragraph (b) is redesignated as paragraph (c)
and paragraph (c) is redesignated as paragraph (d), the introductory
text of paragraphs (a) and (a)(2) and paragraphs (a)(2)(ii) and
(a)(2)(iii) are revised, and a new paragraph (b) is added to read as
follows:
Sec. 20.1501 General.
(a) Each licensee shall make or cause to be made, surveys of areas,
including the subsurface, that--
* * * * *
(2) Are reasonable under the circumstances to evaluate --
* * * * *
(ii) Concentrations or quantities of residual radioactivity; and
(iii) The potential radiological hazards of the radiation levels
and residual radioactivity detected.
(b) Records from surveys describing the location and amount of
subsurface residual radioactivity identified at the site must be kept
with records important for decommissioning.
* * * * *
PART 30--RULES OF GENERAL APPLICABILITY TO DOMESTIC LICENSING OF
BYPRODUCT MATERIAL
6. The authority citation for part 30 continues to read as follows:
Authority: Secs. 81, 82, 161, 182, 183, 186, 68 Stat. 935, 948,
953, 954, 955, as amended, sec. 234, 83 Stat. 444, as amended (42
U.S.C. 2111, 2112, 2201, 2232, 2233, 2236, 2282); secs. 201, as
amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C.
5841, 5842, 5846); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
Section 30.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42
U.S.C. 5851). Section 30.34(b) also issued under sec. 184, 68 Stat.
954, as amended (42 U.S.C. 2234). Section 30.61 also issued under
sec. 187, 68 Stat. 955 (42 U.S.C. 2237).
7. In Sec. 30.34, paragraph (b) is redesignated as paragraph
(b)(1) and a new paragraph (b)(2) is added to read as follows:
Sec. 30.34 Terms and conditions of licenses.
* * * * *
(b) * * *
(2) An application for transfer of license must include:
(i) The identity, technical and financial qualifications of the
proposed transferee; and
(ii) Financial assurance for decommissioning information required
by Sec. 30.35.
* * * * *
8. In Sec. 30.35, a new paragraph (c)(6) is added, and paragraph
(e), the
[[Page 3837]]
introductory text in paragraph (f), paragraph (f)(1), the introductory
text of paragraph (f)(2) and paragraph (f)(3) are revised, and a new
paragraph (h) is added to read as follows:
Sec. 30.35 Financial assurance and recordkeeping for decommissioning.
* * * * *
(c) * * *
(6) If, in surveys made under Sec. 20.1501(a), residual
radioactivity in the facility and environment, including the
subsurface, is detected at levels that would, if left uncorrected,
prevent the site from meeting the 10 CFR 20.1402 criteria for
unrestricted use, the licensee must submit a decommissioning funding
plan within one year of when the survey is completed.
* * * * *
(e)(1) Each decommissioning funding plan must be submitted for
review and approval and must contain--
(i) A detailed cost estimate for decommissioning, in an amount
reflecting:
(A) The cost of an independent contractor to perform all
decommissioning activities;
(B) The cost of meeting the 10 CFR 20.1402 criteria for
unrestricted use, provided that, if the applicant or licensee can
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
(C) The volume of onsite subsurface material containing residual
radioactivity that will require remediation to meet the criteria for
license termination; and
(D) An adequate contingency factor.
(ii) Identification of and justification for using the key
assumptions contained in the decommissioning cost estimate;
(iii) A description of the method of assuring funds for
decommissioning from paragraph (f) of this section, including means for
adjusting cost estimates and associated funding levels periodically
over the life of the facility;
(iv) A certification by the licensee that financial assurance for
decommissioning has been provided in the amount of the cost estimate
for decommissioning; and
(v) A signed original of the financial instrument obtained to
satisfy the requirements of paragraph (f) of this section (unless a
previously submitted and accepted financial instrument continues to
cover the cost estimate for decommissioning).
(2) At the time of license renewal and at intervals not to exceed 3
years, the decommissioning funding plan must be re-submitted with
adjustments as necessary to account for changes in costs and the extent
of contamination. If the amount of financial assurance will be
adjusted, this can not be done until the updated decommissioning
funding plan is approved. The decommissioning funding plan must update
the information submitted with the original or prior approved plan, and
must specifically consider the effect of the following events on
decommissioning costs:
(i) Spills of radioactive material producing additional residual
radioactivity in onsite subsurface material;
(ii) Waste inventory increasing above the amount previously
estimated;
(iii) Waste disposal costs increasing above the amount previously
estimated;
(iv) Facility modifications;
(v) Changes in authorized possession limits;
(vi) Actual remediation costs that exceed the previous cost
estimate;
(vii) Onsite disposal; and
(viii) Use of a settling pond.
(f) The financial instrument must include the licensee's name,
license number, and docket number, and the name, address, and other
contact information of the issuer, and, if a trust is used, the
trustee. When any of the foregoing information changes, the licensee
must, within 30 days, submit financial instruments reflecting such
changes. The financial instrument submitted must be a signed original
or signed original duplicate, except where a copy of the signed
original is specifically permitted. Financial assurance for
decommissioning must be provided by one or more of the following
methods:
(1) Prepayment. Prepayment is the deposit before the start of
operation into an account segregated from licensee assets and outside
the licensee's administrative control of cash or liquid assets such
that the amount of funds would be sufficient to pay decommissioning
costs. Prepayment must be made into a trust account, and the trustee
and the trust must be acceptable to the Commission.
(2) A surety method, insurance, or other guarantee method. These
methods guarantee that decommissioning costs will be paid. A surety
method may be in the form of a surety bond, or letter of credit. A
parent company guarantee of funds for decommissioning costs based on a
financial test may be used if the guarantee and test are as contained
in appendix A to this part. For commercial corporations that issue
bonds, a guarantee of funds by the applicant or licensee for
decommissioning costs based on a financial test may be used if the
guarantee and test are as contained in appendix C to this part. For
commercial companies that do not issue bonds, a guarantee of funds by
the applicant or licensee for decommissioning costs may be used if the
guarantee and test are as contained in appendix D to this part. For
nonprofit entities, such as colleges, universities, and nonprofit
hospitals, a guarantee of funds by the applicant or licensee may be
used if the guarantee and test are as contained in appendix E to this
part. Except for an external sinking fund, a parent company guarantee
or a guarantee by the applicant or licensee may not be used in
combination with any other financial methods used to satisfy the
requirements of this section. A guarantee by the applicant or licensee
may not be used in any situation where the applicant or licensee has a
parent company holding majority control of the voting stock of the
company. Any surety method or insurance used to provide financial
assurance for decommissioning must contain the following conditions:
* * * * *
(3) An external sinking fund in which deposits are made at least
annually, coupled with a surety method, insurance, or other guarantee
method, the value of which may decrease by the amount being accumulated
in the sinking fund. An external sinking fund is a fund established and
maintained by setting aside funds periodically in an account segregated
from licensee assets and outside the licensee's administrative control
in which the total amount of funds would be sufficient to pay
decommissioning costs at the time termination of operation is expected.
An external sinking fund must be in the form of a trust. If the other
guarantee method is used, no surety or insurance may be combined with
the external sinking fund. The surety, insurance, or other guarantee
provisions must be as stated in paragraph (f)(2) of this section.
* * * * *
(h) In providing financial assurance under this section, each
licensee must use the financial assurance funds only for
decommissioning activities and each licensee must monitor the balance
of funds held to account for market variations. The licensee must
replenish the funds, and report such actions to the NRC, as follows:
(1) If, at the end of a calendar quarter, the fund balance is below
the amount necessary to cover the cost of decommissioning, but is not
below 75 percent of the cost, the licensee must increase the balance to
cover the cost, and must do so within 5 days after the end of the
calendar quarter.
[[Page 3838]]
(2) If, at any time, the fund balance falls below 75 percent of the
amount necessary to cover the cost of decommissioning, the licensee
must increase the balance to cover the cost, and must do so within 5
days of the occurrence.
(3) Within 30 days of taking the actions required by paragraphs
(h)(1) or (h)(2) of this section, the licensee must report such actions
to the NRC, and state the new balance of the fund.
9. In appendix A to part 30, section II, the introductory text of
paragraph A, paragraphs A.1.(ii), A.1.(iii), A.2.(i), A.2.(ii),
A.2.(iii), B and C.1. are revised, in section III paragraphs B, C and D
are revised, and new paragraphs E, F, G and H are added to read as
follows:
Appendix A to Part 30--Criteria Relating to Use of Financial Tests and
Parent Company Guarantees for Providing Reasonable Assurance of Funds
for Decommissioning
* * * * *
II. Financial Test
A. To pass the financial test, the parent company must meet the
criteria of either paragraph A.1 or A.2 of this section. For
purposes of applying the appendix A criteria, tangible net worth
must be calculated to exclude all intangible assets and the net book
value of the nuclear facility and site, and net worth must be
calculated to exclude the net book value and goodwill of the nuclear
facility and site.
* * * * *
(1) * * *
(ii) Net working capital and tangible net worth each at least
six times the amount of decommissioning funds being assured by a
parent company guarantee for the total of all nuclear facilities or
parts thereof (or prescribed amount if a certification is used); and
(iii) Tangible net worth of at least $19 million; and
* * * * *
(2) * * *
(i) A current rating for its most recent uninsured,
uncollateralized, and unencumbered bond issuance of AAA, AA, A, or
BBB (including adjustments of + and -) as issued by Standard and
Poor's or Aaa, Aa, A, or Baa (including adjustment of 1, 2, or 3) as
issued by Moody's; and
(ii) Net worth at least six times the amount of decommissioning
funds being assured by a parent company guarantee for the total of
all nuclear facilities or parts thereof (or prescribed amount if a
certification is used); and
(iii) Tangible net worth of at least $19 million; and
* * * * *
B. The parent company's independent certified public accountant
must compare the data used by the parent company in the financial
test, which is derived from the independently audited, year-end
financial statements for the latest fiscal year, with the amounts in
such financial statement. The accountant must evaluate the parent
company's off-balance sheet transactions and provide an opinion on
whether those transactions could materially adversely affect the
parent company's ability to pay for decommissioning costs. The
accountant must verify that a bond rating, if used to demonstrate
passage of the financial test, meets the requirements of paragraph A
of this section. In connection with the auditing procedure, the
licensee must inform NRC within 90 days of any matters coming to the
auditor's attention which cause the auditor to believe that the data
specified in the financial test should be adjusted and that the
company no longer passes the test.
C.(1) After the initial financial test, the parent company must
annually pass the test and provide documentation of its continued
eligibility to use the parent company guarantee to the Commission
within 90 days after the close of each succeeding fiscal year.
* * * * *
III. Parent Company Guarantee
* * * * *
B. If the licensee fails to provide alternate financial
assurance as specified in the Commission's regulations within 90
days after receipt by the licensee and Commission of a notice of
cancellation of the parent company guarantee from the guarantor, the
guarantor will provide alternative financial assurance that meets
the provisions of the Commission's regulations in the name of the
licensee.
C. The parent company guarantee and financial test provisions
must remain in effect until the Commission has terminated the
license, accepted in writing the parent company's alternate
financial assurances, or accepted in writing the licensee's
financial assurances.
D. A standby trust to protect public health and safety and the
environment must be established for decommissioning costs before the
parent company guarantee agreement is submitted. The trustee and
trust must be acceptable to the Commission. An acceptable trustee
includes an appropriate State or Federal Government agency or an
entity which has the authority to act as a trustee, whose trust
operations are regulated and examined by a Federal or State agency.
The Commission has the right to change the trustee. An acceptable
trust will meet the regulatory criteria established in these
regulations that govern the issuance of the license for which the
guarantor has accepted the obligation to pay for decommissioning
costs.
E. The guarantor must agree that it is jointly and severally
liable with the licensee for the full cost of decommissioning, and
that if the costs of decommissioning and termination of the license
exceed the amount guaranteed, the guarantor will pay such additional
costs that are not paid by the licensee.
F. The guarantor must agree that it would be subject to
Commission orders to make payments under the guarantee agreement.
G. The guarantor must agree that if the guarantor admits in
writing its inability to pay its debts generally, or makes a general
assignment for the benefit of creditors, or any proceeding is
instituted by or against the guarantor seeking to adjudicate it as
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency, or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian, or other similar official for the guarantor or
for any substantial part of its property, or the guarantor takes any
action to authorize or effect any of the actions stated in this
paragraph, then the Commission may:
(1) Declare that the financial assurance guaranteed by the
parent company guarantee agreement is immediately due and payable to
the standby trust set up to protect the public health and safety and
the environment, without diligence, presentment, demand, protest or
any other notice of any kind, all of which are expressly waived by
guarantor; and
(2) Exercise any and all of its other rights under applicable
law.
H. (1) The guarantor must agree to notify the NRC, in writing,
immediately following the filing of a voluntary or involuntary
petition for bankruptcy under any chapter of title 11 (Bankruptcy)
of the United States Code, or the occurrence of any other event
listed in paragraph G of this Appendix, by or against:
(i) The guarantor;
(ii) The licensee;
(iii) An entity (as that term is defined in 11 U.S.C. 101(14))
controlling the licensee or listing the license or licensee as
property of the estate; or
(iv) An affiliate (as that term is defined in 11 U.S.C. 101(2))
of the licensee.
(2) This notification must include:
(i) A description of the event, including major creditors, the
amounts involved, and the actions taken to assure that the amount of
funds guaranteed by the parent company guarantee for decommissioning
will be transferred to the standby trust as soon as possible;
(ii) If a petition of bankruptcy was filed, the identity of the
bankruptcy court in which the petition for bankruptcy was filed; and
(iii) The date of filing of any petitions.
10. In appendix C to part 30, in section II paragraphs A., B.(2)
and B.(3) are revised, in section III paragraphs E and F are revised,
and paragraphs G, H and I are added to read as follows:
Appendix C to Part 30--Criteria Relating to Use of Financial Tests and
Self Guarantees for Providing Reasonable Assurance of Funds for
Decommissioning
* * * * *
II. Financial Test
A. To pass the financial test a company must meet all of the
criteria set forth below. For purposes of applying the appendix C
criteria, tangible net worth must be calculated to exclude all
intangible assets and the net book value of the nuclear facility
[[Page 3839]]
and site, and net worth must be calculated to exclude the net book
value and goodwill of the nuclear facility and site. These criteria
include:
(1) Tangible net worth of at least $19 million, and net worth at
least 10 times the amount of decommissioning funds being assured by
a self-guarantee, for all decommissioning activities for which the
company is responsible as self-guaranteeing licensee and as parent-
guarantor for the total of all nuclear facilities or parts thereof
(or the current amount required if certification is used).
(2) Assets located in the United States amounting to at least 90
percent of total assets or at least 10 times the amount of
decommissioning funds being assured by a self-guarantee, for all
decommissioning activities for which the company is responsible as
self-guaranteeing licensee and as parent-guarantor for the total of
all nuclear facilities or parts thereof (or the current amount
required if certification is used).
(3) A current rating for its most recent uninsured,
uncollateralized, and unencumbered bond issuance of AAA, AA, or A
(including adjustments of + and -) as issued by Standard and Poor's,
or Aaa, Aa, or A (including adjustments of 1, 2, or 3) as issued by
Moody's.
B. * * *
(2) The company's independent certified public accountant must
compare the data used by the company in the financial test, which is
derived from the independently audited, year-end financial
statements for the latest fiscal year, with the amounts in such
financial statement. The accountant must evaluate the company's off-
balance sheet transactions and provide an opinion on whether those
transactions could materially adversely affect the company's ability
to pay for decommissioning costs. The accountant must verify that a
bond rating, if used to demonstrate passage of the financial test,
meets the requirements of section II paragraph A of this appendix.
In connection with the auditing procedure, the licensee must inform
NRC within 90 days of any matters coming to the auditor's attention
which cause the auditor to believe that the data specified in the
financial test should be adjusted and that the company no longer
passes the test.
(3) After the initial financial test, the company must annually
pass the test and provide documentation of its continued eligibility
to use the self-guarantee to the Commission within 90 days after the
close of each succeeding fiscal year.
* * * * *
III. Company Self-Guarantee
* * * * *
E. (1) If, at any time, the licensee's most recent bond issuance
ceases to be rated in any category of ''A'' or above by either
Standard and Poor's or Moody's, the licensee will notify the
Commission in writing within 20 days after publication of the change
by the rating service.
(2) If the licensee's most recent bond issuance ceases to be
rated in any category of A or above by both Standard and Poor's and
Moody's, the licensee no longer meets the requirements of section
II.A. of this appendix.
F. The applicant or licensee must provide to the Commission a
written guarantee (a written commitment by a corporate officer)
which states that the licensee will fund and carry out the required
decommissioning activities or, upon issuance of an order by the
Commission, the licensee will fund the standby trust in the amount
guaranteed by the self-guarantee agreement.
G. (1) A standby trust to protect public health and safety and
the environment must be established for decommissioning costs before
the self-guarantee agreement is submitted.
(2) The trustee and trust must be acceptable to the Commission.
An acceptable trustee includes an appropriate State or Federal
Government agency or an entity which has the authority to act as a
trustee and whose trust operations are regulated and examined by a
Federal or State agency. The Commission has the right to change the
trustee. An acceptable trust will meet the regulatory criteria
established in these regulations that govern the issuance of the
license for which the guarantor has accepted the obligation to pay
for decommissioning costs.
H. The guarantor must agree that if the guarantor admits in
writing its inability to pay its debts generally, or makes a general
assignment for the benefit of creditors, or any proceeding is
instituted by or against the guarantor seeking to adjudicate it as
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency, or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian, or other similar official for the guarantor or
for any substantial part of its property, or the guarantor takes any
action to authorize or effect any of the actions stated in this
paragraph, then the Commission may:
(1) Declare that the financial assurance guaranteed by the
parent company guarantee agreement is immediately due and payable to
the standby trust set up to protect the public health and safety and
the environment, without diligence, presentment, demand, protest or
any other notice of any kind, all of which are expressly waived by
guarantor; and
(2) Exercise any and all of its other rights under applicable
law.
I. The guarantor must notify the NRC, in writing, immediately
following the occurrence of any event listed in paragraph H of this
appendix, and must include a description of the event, including
major creditors, the amounts involved, and the actions taken to
assure that the amount of funds guaranteed by the self-guarantee
agreement for decommissioning will be transferred to the standby
trust as soon as possible.
11. In appendix D to part 30 in section II, the introductory text
of paragraph A., paragraphs A.(1), B.(1), and B.(2) are revised, in
section III paragraph D is revised and paragraphs E, F and G are added
to read as follows:
Appendix D to Part 30--Criteria Relating to Use of Financial Tests and
Self-Guarantee for Providing Reasonable Assurance of Funds for
Decommissioning by Commercial Companies That Have No Outstanding Rated
Bonds
* * * * *
II. Financial Test
A. To pass the financial test a company must meet all of the
criteria set forth below. For purposes of applying the appendix D
criteria, tangible net worth must be calculated to exclude all
intangible assets and the net book value of the nuclear facility and
site.
(1) Tangible net worth greater than $19 million, or at least 10
times the amount of decommissioning funds being assured by a self-
guarantee, whichever is greater, for all decommissioning activities
for which the company is responsible as self-guaranteeing licensee
and as parent-guarantor for the total of all nuclear facilities or
parts thereof (or the current amount required if certification is
used).
* * * * *
B. * * *
(1) The company's independent certified public accountant must
compare the data used by the company in the financial test, which is
derived from the independently audited, year-end financial
statements for the latest fiscal year, with the amounts in such
financial statement. The accountant must evaluate the company's off-
balance sheet transactions and provide an opinion on whether those
transactions could materially adversely affect the company's ability
to pay for decommissioning costs. In connection with the auditing
procedure, the licensee must inform NRC within 90 days of any
matters coming to the auditor's attention which cause the auditor to
believe that the data specified in the financial test should be
adjusted and that the company no longer passes the test.
(2) After the initial financial test, the company must annually
pass the test and provide documentation of its continued eligibility
to use the self-guarantee to the Commission within 90 days after the
close of each succeeding fiscal year.
* * * * *
III. Company Self-Guarantee
* * * * *
D. The applicant or licensee must provide to the Commission a
written guarantee (a written commitment by a corporate officer)
which states that the licensee will fund and carry out the required
decommissioning activities or, upon issuance of an order by the
Commission, the licensee will fund the standby trust in the amount
of the current cost estimates for decommissioning.
E. A standby trust to protect public health and safety and the
environment must be established for decommissioning costs before the
self-guarantee agreement is submitted. The trustee and trust must be
acceptable to
[[Page 3840]]
the Commission. An acceptable trustee includes an appropriate State
or Federal Government agency or an entity which has the authority to
act as a trustee and whose trust operations are regulated and
examined by a Federal or State agency. The Commission will have the
right to change the trustee. An acceptable trust will meet the
regulatory criteria established in the part of these regulations
that governs the issuance of the license for which the guarantor has
accepted the obligation to pay for decommissioning costs.
F. The guarantor must agree that if the guarantor admits in
writing its inability to pay its debts generally, or makes a general
assignment for the benefit of creditors, or any proceeding is
instituted by or against the guarantor seeking to adjudicate it as
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency, or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian, or other similar official for the guarantor or
for any substantial part of its property, or the guarantor takes any
action to authorize or effect any of the actions stated in this
paragraph, then the Commission may:
(1) Declare that the financial assurance guaranteed by the self-
guarantee agreement is immediately due and payable to the standby
trust set up to protect the public health and safety and the
environment, without diligence, presentment, demand, protest or any
other notice of any kind, all of which are expressly waived by
guarantor; and
(2) Exercise any and all of its other rights under applicable
law.
G. The guarantor must notify the NRC, in writing, immediately
following the occurrence of any event listed in paragraph H of this
appendix, and must include a description of the event, including
major creditors, the amounts involved, and the actions taken to
assure that the amount of funds guaranteed by the self-guarantee
agreement for decommissioning will be transferred to the standby
trust as soon as possible.
12. In appendix E to part 30, in section II, paragraphs A.(1),
B.(1), C.(1), and C.(2) are revised, in section III paragraphs D and E
are revised and paragraphs F, G and H are added to read as follows:
Appendix E to Part 30--Criteria Relating to Use of Financial Tests and
Self-Guarantee for Providing Reasonable Assurance of Funds for
Decommissioning by Nonprofit Colleges, Universities, and Hospitals
* * * * *
II. Financial Test
A. * * *
(1) For applicants or licensees that issue bonds, a current
rating for its most recent uninsured, uncollateralized, and
unencumbered bond issuance of AAA, AA, or A (including adjustments
of + or -) as issued by Standard and Poor's (S&P) or Aaa, Aa, or A
(including adjustments of 1, 2, or 3) as issued by Moody's.
B. * * *
(1) For applicants or licensees that issue bonds, a current
rating for its most recent uninsured, uncollateralized, and
unencumbered bond issuance of AAA, AA, or A (including adjustments
of + or -) as issued by Standard and Poor's or Aaa, Aa, or A
(including adjustments of 1, 2, or 3) as issued by Moody's.
* * * * *
C. * * *
(1) The licensee's independent certified public accountant must
compare the data used by the licensee in the financial test, which
is derived from the independently audited, year-end financial
statements for the latest fiscal year, with the amounts in such
financial statement. The accountant must evaluate the licensee's
off-balance sheet transactions and provide an opinion on whether
those transactions could materially adversely affect the licensee's
ability to pay for decommissioning costs. The accountant must verify
that a bond rating, if used to demonstrate passage of the financial
test, meets the requirements of section II of this appendix. In
connection with the auditing procedure, the licensee must inform NRC
within 90 days of any matters coming to the auditor's attention
which cause the auditor to believe that the data specified in the
financial test should be adjusted and that the licensee no longer
passes the test.
(2) After the initial financial test, the licensee must repeat
passage of the test and provide documentation of its continued
eligibility to use the self-guarantee to the Commission within 90
days after the close of each succeeding fiscal year.
* * * * *
III. Self-Guarantee
* * * * *
D. The applicant or licensee must provide to the Commission a
written guarantee (a written commitment by a corporate officer or
officer of the institution) which states that the licensee will fund
and carry out the required decommissioning activities or, upon
issuance of an order by the Commission, the licensee will fund the
standby trust in the amount of the current cost estimates for
decommissioning.
E. (1) If, at any time, the licensee's most recent bond issuance
ceases to be rated in any category of ``A'' or above by either
Standard and Poor's or Moody's, the licensee shall notify the
Commission in writing within 20 days after publication of the change
by the rating service.
(2) If the licensee's most recent bond issuance ceases to be
rated in any category of A or above by both Standard and Poor's and
Moody's, the licensee no longer meets the requirements of section
II.A. of this appendix.
F. (1) A standby trust to protect public health and safety and
the environment must be established for decommissioning costs before
the self-guarantee agreement is submitted.
(2) The trustee and trust must be acceptable to the Commission.
An acceptable trustee includes an appropriate State or Federal
Government agency or an entity which has the authority to act as a
trustee and whose trust operations are regulated and examined by a
Federal or State agency. The Commission has the right to change the
trustee. An acceptable trust will meet the regulatory criteria
established in the part of these regulations that governs the
issuance of the license for which the guarantor has accepted the
obligation to pay for decommissioning costs.
G. The guarantor must agree that if the guarantor admits in
writing its inability to pay its debts generally, or makes a general
assignment for the benefit of creditors, or any proceeding is
instituted by or against the guarantor seeking to adjudicate it as
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency, or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian, or other similar official for guarantor or for
any substantial part of its property, or the guarantor takes any
action to authorize or effect any of the actions stated in this
paragraph, then the Commission may:
(1) Declare that the financial assurance guaranteed by the self-
guarantee agreement is immediately due and payable to the standby
trust set up to protect the public health and safety and the
environment, without diligence, presentment, demand, protest or any
other notice of any kind, all of which are expressly waived by
guarantor; and
(2) Exercise any and all of its other rights under applicable
law.
H. The guarantor must notify the NRC, in writing, immediately
following the occurrence of any event listed in paragraph G of this
appendix, and must include a description of the event, including
major creditors, the amounts involved, and the actions taken to
assure that the amount of funds guaranteed by the self-guarantee
agreement for decommissioning will be transferred to the standby
trust as soon as possible.
PART 40--DOMESTIC LICENSING OF SOURCE MATERIAL
13. The authority citation for part 40 continues to read as
follows:
Authority: Secs. 62, 63, 64, 65, 81, 161, 182, 183, 186, 68
Stat. 932, 933, 935, 948, 953, 954, 955, as amended, secs. 11e(2),
83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended, 3039, sec. 234,
83 Stat. 444, as amended (42 U.S.C. 2014(e)(2), 2092, 2093, 2094,
2095, 2111, 2113, 2114, 2201, 2232, 2233, 2236, 2282); sec. 274,
Pub. L. 86-373, 73 Stat. 688 (42 U.S.C. 2021); secs. 201, as
amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C.
5841, 5842, 5846); sec. 275, 92 Stat. 3021, as amended by Pub. L.
97-415, 96 Stat. 2067 (42 U.S.C. 2022); sec. 193, 104 Stat. 2835, as
amended by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C.
2243); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 (42 U.S.C. 5851).
[[Page 3841]]
Section 40.31(g) also issued under sec. 122, 68 Stat. 939 (42 U.S.C.
2152). Section 40.46 also issued under sec. 184, 68 Stat. 954, as
amended (42 U.S.C. 2234). Section 40.71 also issued under sec. 187,
68 Stat. 955 (42 U.S.C. 2237).
14. In Sec. 40.36, a new paragraph (c)(5) is added, paragraph (d),
the introductory text in paragraph (e), and paragraphs (e)(1), the
introductory text of paragraph (e)(2) and paragraph (e)(3) are revised,
and a new paragraph (g) is added to read as follows:
Sec. 40.36 Financial assurance and recordkeeping for decommissioning.
* * * * *
(c) * * *
(5) If, in surveys made under 10 CFR 20.1501(a), residual
radioactivity in the facility and environment, including the
subsurface, is detected at levels that would, if left uncorrected,
prevent the site from meeting the 10 CFR 20.1402 criteria for
unrestricted use, the licensee must submit a decommissioning funding
plan within one year of when the survey is completed.
(d)(1) Each decommissioning funding plan must be submitted for
review and approval and must contain--
(i) A detailed cost estimate for decommissioning, in an amount
reflecting:
(A) The cost of an independent contractor to perform all
decommissioning activities;
(B) The cost of meeting the 10 CFR 20.1402 criteria for
unrestricted use, provided that, if the applicant or licensee can
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
(C) The volume of onsite subsurface material containing residual
radioactivity that will require remediation; and
(D) An adequate contingency factor.
(ii) Identification of and justification for using the key
assumptions contained in the decommissioning cost estimate;
(iii) A description of the method of assuring funds for
decommissioning from paragraph (e) of this section, including means for
adjusting cost estimates and associated funding levels periodically
over the life of the facility;
(iv) A certification by the licensee that financial assurance for
decommissioning has been provided in the amount of the cost estimate
for decommissioning; and
(v) A signed original, or if permitted, a copy, of the financial
instrument obtained to satisfy the requirements of paragraph (e) of
this section (unless a previously submitted and accepted financial
instrument continues to cover the cost estimate for decommissioning).
(2) At the time of license renewal and at intervals not to exceed 3
years, the decommissioning funding plan must be re-submitted with
adjustments as necessary to account for changes in costs and the extent
of contamination. If the amount of financial assurance will be
adjusted, this can not be done until the updated decommissioning
funding plan is approved. The decommissioning funding plan must update
the information submitted with the original or prior approved plan, and
must specifically consider the effect of the following events on
decommissioning costs:
(i) Spills of radioactive material producing additional residual
radioactivity in onsite subsurface material;
(ii) Waste inventory increasing above the amount previously
estimated;
(iii) Waste disposal costs increasing above the amount previously
estimated;
(iv) Facility modifications;
(v) Changes in authorized possession limits;
(vi) Actual remediation costs that exceed the previous cost
estimate;
(vii) Onsite disposal; and
(viii) Use of a settling pond.
(e) The financial instrument must include the licensee's name,
license number, and docket number; and the name, address, and other
contact information of the issuer, and, if a trust is used, the
trustee. When any of the foregoing information changes, the licensee
must, within 30 days, submit financial instruments reflecting such
changes. The financial instrument submitted must be a signed original
or signed original duplicate, except where a copy is specifically
permitted. Financial assurance for decommissioning must be provided by
one or more of the following methods:
(1) Prepayment. Prepayment is the deposit before the start of
operation into an account segregated from licensee assets and outside
the licensee's administrative control of cash or liquid assets such
that the amount of funds would be sufficient to pay decommissioning
costs. Prepayment must be made into a trust account, and the trustee
and the trust must be acceptable to the Commission.
(2) A surety method, insurance, or other guarantee method. These
methods guarantee that decommissioning costs will be paid. A surety
method may be in the form of a surety bond, or letter of credit. A
parent company guarantee of funds for decommissioning costs based on a
financial test may be used if the guarantee and test are as contained
in appendix A to this part. For commercial corporations that issue
bonds, a guarantee of funds by the applicant or licensee for
decommissioning costs based on a financial test may be used if the
guarantee and test are as contained in appendix C to this part. For
commercial companies that do not issue bonds, a guarantee of funds by
the applicant or licensee for decommissioning costs may be used if the
guarantee and test are as contained in appendix D to this part. For
nonprofit entities, such as colleges, universities, and nonprofit
hospitals, a guarantee of funds by the applicant or licensee may be
used if the guarantee and test are as contained in appendix E to this
part. Except for an external sinking fund, a parent company guarantee
or guarantee by the applicant or licensee may not be used in
combination with any other financial methods used to satisfy the
requirements of this section. A guarantee by the applicant or licensee
may not be used in any situation where the applicant or licensee has a
parent company holding majority control of the voting stock of the
company. Any surety method or insurance used to provide financial
assurance for decommissioning must contain the following conditions:
* * * * *
(3) An external sinking fund in which deposits are made at least
annually, coupled with a surety method, insurance, or other guarantee
method, the value of which may decrease by the amount being accumulated
in the sinking fund. An external sinking fund is a fund established and
maintained by setting aside funds periodically in an account segregated
from licensee assets and outside the licensee's administrative control
in which the total amount of funds would be sufficient to pay
decommissioning costs at the time termination of operation is expected.
An external sinking fund must be in the form of a trust. If the other
guarantee method is used, no surety or insurance may be combined with
the external sinking fund. The surety, insurance, or other guarantee
provisions must be as stated in paragraph (e)(2) of this section.
* * * * *
(g) In providing financial assurance under this section, each
licensee must use the financial assurance funds only for
decommissioning activities and each licensee must monitor the balance
of funds held to account for market variations. The licensee must
replenish the funds, and report such actions to the NRC, as follows:
(1) If, at the end of a calendar quarter, the fund balance is below
the amount necessary to cover the cost of decommissioning, but is not
below 75
[[Page 3842]]
percent of the cost, the licensee must increase the balance to cover
the cost, and must do so within 5 days after the end of the calendar
quarter.
(2) If, at any time, the fund balance falls below 75 percent of the
amount necessary to cover the cost of decommissioning, the licensee
must increase the balance to cover the cost, and must do so within 5
days of the occurrence.
(3) Within 30 days of taking the actions required by paragraphs
(g)(1) or (g)(2) of this section, the licensee must report such actions
to the NRC, and state the new balance of the fund.
15. In Sec. 40.46, the current paragraph is designated as
paragraph (a) and a new paragraph (b) is added to read as follows:
Sec. 40.46 Inalienability of licenses.
* * * * *
(b) An application for transfer of license must include:
(1) The identity, technical and financial qualifications of the
proposed transferee; and
(2) Financial assurance for decommissioning information required by
Sec. 40.36 or appendix A to this part, as applicable.
16. In appendix A to part 40, section II Criterion 9 is revised to
read as follows:
Appendix A to Part 40--Criteria Relating to the Operation of Uranium
Mills and the Disposition of Tailings or Wastes Produced by the
Extraction or Concentration of Source Material From Ores Processed
Primarily for Their Source Material Content
* * * * *
II. Financial Criteria
Criterion 9--(a) Financial surety arrangements must be
established by each mill operator before the commencement of
operations to assure that sufficient funds will be available to
carry out the decontamination and decommissioning of the mill and
site and for the reclamation of any tailings or waste disposal
areas. The amount of funds to be ensured by such surety arrangements
must be based on Commission-approved cost estimates in a Commission-
approved plan, or a proposed revision to the plan submitted to the
Commission for approval, if the proposed revision contains a higher
cost estimate, for
(1) Decontamination and decommissioning of mill buildings and
the milling site to levels which allow unrestricted use of these
areas upon decommissioning, and
(2) The reclamation of tailings and/or waste areas in accordance
with technical criteria delineated in Section I of this appendix.
(b) Each cost estimate must contain--
(1) A detailed cost estimate for decontamination,
decommissioning, and reclamation, in an amount reflecting:
(i) The cost of an independent contractor to perform the
decontamination, decommissioning and reclamation activities; and
(ii) An adequate contingency factor;
(2) An estimate of the amount of residual radioactive material
in onsite subsurface material;
(3) Identification of and justification for using the key
assumptions contained in the decommissioning cost estimate; and
(4) A description of the method of assuring funds for
decontamination, decommissioning, and reclamation.
(c) The licensee shall submit this plan in conjunction with an
environmental report that addresses the expected environmental
impacts of the milling operation, decommissioning and tailings
reclamation, and evaluates alternatives for mitigating these
impacts. The plan must include a signed original of the financial
instrument obtained to satisfy the surety arrangement requirements
of this criterion (unless a previously submitted and approved
financial instrument continues to cover the cost estimate for
decommissioning). The surety arrangement must also cover the cost
estimate and the payment of the charge for long-term surveillance
and control required by Criterion 10 of this section.
(d) To avoid unnecessary duplication and expense, the Commission
may accept financial sureties that have been consolidated with
financial or surety arrangements established to meet requirements of
other Federal or state agencies and/or local governing bodies for
decommissioning, decontamination, reclamation, and long-term site
surveillance and control, provided such arrangements are considered
adequate to satisfy these requirements and that the portion of the
surety which covers the decommissioning and reclamation of the mill,
mill tailings site and associated areas, and the long-term funding
charge is clearly identified and committed for use in accomplishing
these activities.
(e) The licensee's surety mechanism will be reviewed annually by
the Commission to assure that sufficient funds would be available
for completion of the reclamation plan if the work had to be
performed by an independent contractor.
(f) The amount of surety liability should be adjusted to
recognize any increases or decreases resulting from:
(1) Inflation;
(2) Changes in engineering plans;
(3) Activities performed;
(4) Spills, leakage or migration of radioactive material
producing additional residual radioactivity in onsite subsurface
material that must be remediated to meet license termination
criteria;
(5) Waste inventory increasing above the amount previously
estimated;
(6) Waste disposal costs increasing above the amount previously
estimated;
(7) Facility modifications;
(8) Changes in authorized possession limits;
(9) Actual remediation costs that exceed the previous cost
estimate;
(10) Onsite disposal; and
(11) Any other conditions affecting costs.
(g) Regardless of whether reclamation is phased through the life
of the operation or takes place at the end of operations, an
appropriate portion of surety liability must be retained until final
compliance with the reclamation plan is determined.
(h) The appropriate portion of surety liability retained until
final compliance with the reclamation plan is determined will be at
least sufficient at all times to cover the costs of decommissioning
and reclamation of the areas that are expected to be disturbed
before the next license renewal. The term of the surety mechanism
must be open ended, unless it can be demonstrated that another
arrangement would provide an equivalent level of assurance. This
assurance would be provided with a surety instrument which is
written for a specified period of time (e.g., 5 years) that which
must be automatically renewed unless the surety notifies the
beneficiary (the Commission or the State regulatory agency) and the
principal (the licensee) with reasonable time (e.g., 90 days) before
the renewal date of their intention not to renew. In such a
situation the surety requirement still exists and the licensee would
be required to submit an acceptable replacement surety within a
brief period of time to allow at least 60 days for the regulatory
agency to collect.
(i) Proof of forfeiture must not be necessary to collect the
surety. In the event that the licensee cannot provide an acceptable
replacement surety within the required time, the surety shall be
automatically collected before its expiration. The surety instrument
must provide for collection of the full face amount immediately on
demand without reduction for any reason, except for trustee fees and
expenses provided for in a trust agreement, and that the surety will
not refuse to make full payment. The conditions described previously
would have to be clearly stated on any surety instrument which is
not open-ended, and must be agreed to by all parties. Financial
surety arrangements generally acceptable to the Commission are:
(1) Trust funds.
(2) Surety bonds.
(3) Irrevocable letters or credit.
(4) Parent company guarantee under appendix A to 10 CFR part 40.
(iv) Combinations of the above or other types of arrangements as
may be approved by the Commission. If a trust is not used, then a
standby trust must be set up to receive funds in the event the
Commission or State regulatory agency exercises its right to collect
the surety. The surety arrangement and the surety or trustee, as
applicable, must be acceptable to the Commission. Self insurance, or
any arrangement which essentially constitutes self insurance (e.g.,
a contract with a State or Federal agency), will not satisfy the
surety requirement because this provides no additional assurance
other than that which already exists through license requirements.
PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION
FACILITIES
17. The authority citation for part 50 continues to read as
follows:
[[Page 3843]]
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);
sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
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 50.80-50.81 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).
18. In Sec. 50.75, the introductory text of paragraph
(e)(1)(iii)(A) is revised to read as follows:
Sec. 50.75 Reporting and recordkeeping for decommissioning planning.
* * * * *
(e) * * *
(1) * * *
(iii) * * *
(A) These methods guarantee that decommissioning costs will be
paid. A surety method may be in the form of a surety bond, or letter of
credit. Any surety method or insurance used to provide financial
assurance for decommissioning must contain the following conditions:
* * * * *
19. In Sec. 50.82, paragraph (a)(4)(i) is revised, and paragraphs
(a)(8)(v), (a)(8)(vi), and (a)(8)(vii) are added to read as follows:
Sec. 50.82 Termination of license.
* * * * *
(a) * * *
(4)(i) Within 2 years following permanent cessation of operations,
the licensee shall submit a post-shutdown decommissioning activities
report (PSDAR) to the NRC, and a copy to the affected State(s). The
PSDAR must contain a description of the planned decommissioning
activities along with a schedule for their accomplishment, a discussion
that provides the reasons for concluding that the environmental impacts
associated with site-specific decommissioning activities will be
bounded by appropriate previously issued environmental impact
statements, and a site-specific decommissioning cost estimate,
including the projected cost of managing irradiated fuel.
* * * * *
(8) * * *
(v) After submitting its site-specific decommissioning cost
estimate required by paragraph (a)(4)(i) of this section, and until the
licensee has completed its final radiation survey and demonstrated that
residual radioactivity has been reduced to a level that permits
termination of its license, the licensee must annually submit to the
NRC, by March 31, a financial assurance status report. The report must
include the following information, current through the end of the
previous calendar year:
(A) The amount spent on decommissioning, both cumulative and over
the previous calendar year, the remaining balance of any
decommissioning funds, and the amount provided by other financial
assurance methods being relied upon;
(B) An estimate of the costs to complete decommissioning,
reflecting any difference between actual and estimated costs for work
performed during the year, and the decommissioning criteria upon which
the estimate is based;
(C) Any modifications occurring to a licensee's current method of
providing financial assurance since the last submitted report; and
(D) Any material changes to trust agreements or financial assurance
contracts.
(vi) If the sum of the balance of any remaining decommissioning
funds, plus earnings on such funds calculated at not greater than a 2
percent real rate of return, together with the amount provided by other
financial assurance methods being relied upon, does not cover the
estimated cost to complete the decommissioning, the financial assurance
status report must include additional financial assurance to cover the
estimated cost of completion.
(vii) After submitting its site-specific decommissioning cost
estimate required by paragraph (a)(4)(i) of this section, the licensee
must annually submit to the NRC, by March 31, a report on the status of
its funding for managing irradiated fuel. The report must include the
following information, current through the end of the previous calendar
year:
(A) The amount of funds accumulated to cover the cost of managing
the irradiated fuel;
(B) The projected cost of managing irradiated fuel until title to
the fuel and possession of the fuel is transferred to the Secretary of
Energy; and
(C) If the funds accumulated do not cover the projected cost, a
plan to obtain additional funds to cover the cost.
* * * * *
PART 70--DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL
20. The authority citation for part 70 continues to read as
follows:
Authority: Secs. 51, 53, 161, 182, 183, 68 Stat. 929, 930, 948,
953, 954, as amended, sec. 234, 83 Stat. 444, as amended (42 U.S.C.
2071, 2073, 2201, 2232, 2233, 2282, 2297f); secs. 201, as amended,
202, 204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42
U.S.C. 5841, 5842, 5845, 5846). Sec. 193, 104 Stat. 2835, as amended
by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C. 2243); sec.
1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
Sections 70.1(c) and 70.20a(b) also issued under secs. 135, 141,
Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161).
Section 70.7 is also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42
U.S.C. 5851). Section 70.21(g) also issued under sec. 122, 68 Stat.
939 (42 U.S.C. 2152). Section 70.31 also issued under sec. 57d, Pub.
L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44
also issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C.
2234). Section 70.81 also issued under secs. 186, 187, 68 Stat. 955
(42 U.S.C. 2236, 2237). Section 70.82 also issued under sec. 108, 68
Stat. 939, as amended (42 U.S.C. 2138).
21. In Sec. 70.25, a new paragraph (c)(5) is added, paragraph (e),
the introductory text in paragraph (f), and paragraph (f)(1), the
introductory text of paragraph (f)(2) and paragraph (f)(3) are revised,
and a new paragraph (h) is added to read as follows:
Sec. 70.25 Financial assurance and recordkeeping for decommissioning.
* * * * *
(c) * * *
(5) If, in surveys made under 10 CFR 20.1501(a), residual
radioactivity in the facility and environment, including the
subsurface, is detected at levels that would, if left uncorrected,
prevent the site from meeting the 10 CFR 20.1402 criteria for
unrestricted use, the licensee must submit a decommissioning funding
plan within one year of when the survey is completed.
* * * * *
(e)(1) Each decommissioning funding plan must be submitted for
review and approval and must contain--
(i) A detailed cost estimate for decommissioning, in an amount
reflecting:
(A) The cost of an independent contractor to perform all
decommissioning activities;
[[Page 3844]]
(B) The cost of meeting the 10 CFR 20.1402 criteria for
unrestricted use, provided that, if the applicant or licensee can
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
(C) The volume of onsite subsurface material containing residual
radioactivity that will require remediation; and
(D) An adequate contingency factor.
(ii) Identification of and justification for using the key
assumptions contained in the decommissioning cost estimate;
(iii) A description of the method of assuring funds for
decommissioning from paragraph (f) of this section, including means for
adjusting cost estimates and associated funding levels periodically
over the life of the facility;
(iv) A certification by the licensee that financial assurance for
decommissioning has been provided in the amount of the cost estimate
for decommissioning; and
(v) A signed original, or, if permitted, a copy, of the financial
instrument obtained to satisfy the requirements of paragraph (f) of
this section (unless a previously submitted and accepted financial
instrument continues to cover the cost estimate for decommissioning).
(2) At the time of license renewal and at intervals not to exceed 3
years, the decommissioning funding plan must be re-submitted with
adjustments as necessary to account for changes in costs and the extent
of contamination. If the amount of financial assurance will be
adjusted, this cannot be done until the updated decommissioning funding
plan is approved. The decommissioning funding plan must update the
information submitted with the original or prior approved plan, and
must specifically consider the effect of the following events on
decommissioning costs:
(i) Spills of radioactive material producing additional residual
radioactivity in onsite subsurface material;
(ii) Waste inventory increasing above the amount previously
estimated;
(iii) Waste disposal costs increasing above the amount previously
estimated;
(iv) Facility modifications;
(v) Changes in authorized possession limits;
(vi) Actual remediation costs that exceed the previous cost
estimate;
(vii) Onsite disposal; and
(viii) Use of a settling pond.
(f) The financial instrument must include the licensee's name,
license number, and docket number; and the name, address, and other
contact information of the issuer, and, if a trust is used, the
trustee. When any of the foregoing information changes, the licensee
must, within 30 days, submit financial instruments reflecting such
changes. Financial assurance for decommissioning must be provided by
one or more of the following methods:
(1) Prepayment. Prepayment is the deposit before the start of
operation into an account segregated from licensee assets and outside
the licensee's administrative control of cash or liquid assets such
that the amount of funds would be sufficient to pay decommissioning
costs. Prepayment must be made into a trust account, and the trustee
and the trust must be acceptable to the Commission.
(2) A surety method, insurance, or other guarantee method. These
methods guarantee that decommissioning costs will be paid. A surety
method may be in the form of a surety bond, or letter of credit. A
parent company guarantee of funds for decommissioning costs based on a
financial test may be used if the guarantee and test are as contained
in appendix A to this part. For commercial corporations that issue
bonds, a guarantee of funds by the applicant or licensee for
decommissioning costs based on a financial test may be used if the
guarantee and test are as contained in appendix C to this part. For
commercial companies that do not issue bonds, a guarantee of funds by
the applicant or licensee for decommissioning costs may be used if the
guarantee and test are as contained in appendix D to this part. For
nonprofit entities, such as colleges, universities, and nonprofit
hospitals, a guarantee of funds by the applicant or licensee may be
used if the guarantee and test are as contained in appendix E to this
part. Except for an external sinking fund, a parent company guarantee
or a guarantee by the applicant or licensee may not be used in
combination with any other financial methods used to satisfy the
requirements of this section. A guarantee by the applicant or licensee
may not be used in any situation where the applicant or licensee has a
parent company holding majority control of the voting stock of the
company. Any surety method or insurance used to provide financial
assurance for decommissioning must contain the following conditions:
* * * * *
(3) An external sinking fund in which deposits are made at least
annually, coupled with a surety method, insurance, or other guarantee
method, the value of which may decrease by the amount being accumulated
in the sinking fund. An external sinking fund is a fund established and
maintained by setting aside funds periodically in an account segregated
from licensee assets and outside the licensee's administrative control
in which the total amount of funds would be sufficient to pay
decommissioning costs at the time termination of operation is expected.
An external sinking fund must be in the form of a trust. If the other
guarantee method is used, no surety or insurance may be combined with
the external sinking fund. The surety, insurance, or other guarantee
provisions must be as stated in paragraph (f)(2) of this section.
* * * * *
(h) In providing financial assurance under this section, each
licensee must use the financial assurance funds only for
decommissioning activities and each licensee must monitor the balance
of funds held to account for market variations. The licensee must
replenish the funds, and report such actions to the NRC, as follows:
(1) If, at the end of a calendar quarter, the fund balance is below
the amount necessary to cover the cost of decommissioning, but is not
below 75 percent of the cost, the licensee must increase the balance to
cover the cost, and must do so within 5 days after the end of the
calendar quarter.
(2) If, at any time, the fund balance falls below 75 percent of the
amount necessary to cover the cost of decommissioning, the licensee
must increase the balance to cover the cost, and must do so within 5
days of the occurrence.
(3) Within 30 days of taking the actions required by paragraphs
(h)(1) or (h)(2) of this section, the licensee must report such actions
to the NRC, and state the new balance of the fund.
22. In Sec. 70.36, the current paragraph is designated as
paragraph (a) and a new paragraph (b) is added to read as follows:
Sec. 70.36 Inalienability of licenses.
* * * * *
(b) An application for transfer of license must include:
(1) The identity, technical and financial qualifications of the
proposed transferee; and
(2) Financial assurance for decommissioning information required by
Sec. 70.25.
[[Page 3845]]
PART 72--LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF
SPENT NUCLEAR FUEL, HIGH-LEVEL RADIOACTIVE WASTE, AND REACTOR-
RELATED GREATER THAN CLASS C WASTE
23. The authority citation for part 72 continues to read as
follows:
Authority: Secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183,
184, 186, 187, 189, 68 Stat. 929, 930, 932, 933, 934, 935, 948, 953,
954, 955, as amended; sec. 234, 83 Stat. 444, as amended (42 U.S.C.
2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233,
2234, 2236, 2237, 2238, 2282); sec. 274, Pub. L. 86-373, 73 Stat.
688, as amended (42 U.S.C. 2021); sec. 201, as amended; 202, 206, 88
Stat. 1242, as amended; 1244, 1246 (42 U.S.C. 5841, 5842, 5846);
Pub. L. 95-601, sec. 10, 92 Stat. 2951, as amended by Pub. L. 102-
486, sec. 7902, 106 Stat. 3123 (42 U.S.C. 5851); sec. 102, Pub. L.
91-190, 83 Stat. 853 (42 U.S.C. 4332); secs. 131, 132, 133, 135,
137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230, 2232, 2241; sec. 148,
Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10151, 10152, 10153,
10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 (44 U.S.C.
3504 note); sec. 651(e), Pub. L. 109-58, 119 Stat. 806-10 (42 U.S.C.
2014, 2021, 2021b, 2111).
Section 72.44(g) also issued under secs. 142(b) and 148(C), (d),
Pub. L. 100-203, 101 Stat. 1330-232, 1330-236 (42 U.S.C. 10162(b),
10168(c), (d)). Section 72.46 also issued under sec. 189, 68 Stat.
955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42
U.S.C. 10154). Section 72.96(d) also issued under sec. 145(g), Pub.
L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10165(g)). Subpart J also
issued under secs. 2(2), 2(15), 2(19), 117(a), 141(h), Pub. L. 97-
425, 96 Stat. 2202, 2203, 2204, 2222, 2224 (42 U.S.C. 10101,
10137(a), 10161(h)). Subparts K and L are also issued under sec.
133, 98 Stat. 2230 (42 U.S.C. 10153) and sec. 218(a), 96 Stat. 2252
(42 U.S.C. 10198).
24. In Sec. 72.13, paragraph (c) is revised to read as follows:
Sec. 72.13 Applicability.
* * * * *
(c) The following sections apply to activities associated with a
general license: Sec. Sec. 72.1; 72.2(a)(1), (b), (c), and (e); 72.3
through 72.6(c)(1); 72.7 through 72.13(a) and (c); 72.30(e) and (f);
72.32(c) and (d); 72.44(b) and (f); 72.48; 72.50(a); 72.52(a), (b),
(d), and (e); 72.60; 72.62; 72.72 through 72.80(f); 72.82 through
72.86; 72.104; 72.106; 72.122; 72.124; 72.126; 72.140 through 72.176;
72.190; 72.194; 72.210 through 72.220, and 72.240(a).
* * * * *
25. In Sec. 72.30, paragraph (b) is revised, paragraph (c) is
redesignated as paragraph (e) and the introductory text of the newly
redesignated paragraph (e), paragraphs (e)(1), the introductory text of
paragraph (e)(2) and paragraph (e)(3) are revised, paragraph (d) is
redesignated as paragraph (f), and new paragraphs (c), (d), and (g) are
added to read as follows:
Sec. 72.30 Financial assurance and recordkeeping for decommissioning.
* * * * *
(b) Each holder of, or applicant for, a license under this part
must submit for NRC review and approval a decommissioning funding plan
that must contain:
(1) Information on how reasonable assurance will be provided that
funds will be available to decommission the ISFSI or MRS.
(2) A detailed cost estimate for decommissioning, in an amount
reflecting:
(i) The cost of an independent contractor to perform all
decommissioning activities;
(ii) An adequate contingency factor; and
(iii) The cost of meeting the Sec. 20.1402 of this chapter
criteria for unrestricted use, provided that, if the applicant or
licensee can demonstrate its ability to meet the provisions of Sec.
20.1403, the cost estimate may be based on meeting the Sec. 20.1403
criteria.
(3) Identification of and justification for using the key
assumptions contained in the decommissioning cost estimate.
(4) A description of the method of assuring funds for
decommissioning from paragraph (e) of this section, including means for
adjusting cost estimates and associated funding levels periodically
over the life of the facility.
(5) The volume of onsite subsurface material containing residual
radioactivity that will require remediation to meet the criteria for
license termination.
(6) A certification that financial assurance for decommissioning
has been provided in the amount of the cost estimate for
decommissioning.
(c) At the time of license renewal and at intervals not to exceed 3
years the decommissioning funding plan must be re-submitted with
adjustments as necessary to account for changes in costs and the extent
of contamination. If the amount of financial assurance will be
adjusted, this cannot be done until the updated decommissioning funding
plan is approved. The decommissioning funding plan must update the
information submitted with the original or prior approved plan and must
specifically consider the effect of the following events on
decommissioning costs:
(1) Spills of radioactive material producing additional residual
radioactivity in onsite subsurface material.
(2) Facility modifications.
(3) Changes in authorized possession limits.
(4) Actual remediation costs that exceed the previous cost
estimate.
(d) If, in surveys made under 10 CFR 20.1501(a), residual
radioactivity in soils or ground water is detected at levels that would
require such radioactivity to be reduced to a level permitting release
of the property for unrestricted use under the decommissioning
requirements in part 20 of this chapter, the licensee must submit a new
or revised decommissioning funding plan (as described in paragraph (e)
of this section) within one year of when the survey is completed.
(e) The financial instrument must include the licensee's name,
license number, and docket number; and the name, address, and other
contact information of the issuer, and, if a trust is used, the
trustee. When any of the foregoing information changes, the licensee
must, within 30 days, submit financial instruments reflecting such
changes. Financial assurance for decommissioning must be provided by
one or more of the following methods:
(1) Prepayment. Prepayment is the deposit before the start of
operation into an account segregated from licensee assets and outside
the licensee's administrative control of cash or liquid assets such
that the amount of funds would be sufficient to pay decommissioning
costs. Prepayment must be made into a trust account, and the trustee
and the trust must be acceptable to the Commission.
(2) A surety method, insurance, or other guarantee method. These
methods guarantee that decommissioning costs will be paid. A surety
method may be in the form of a surety bond, or letter of credit. A
parent company guarantee of funds for decommissioning costs based on a
financial test may be used if the guarantee and test are as contained
in appendix A to part 30 of this chapter. For commercial corporations
that issue bonds, a guarantee of funds by the applicant or licensee for
decommissioning costs based on a financial test may be used if the
guarantee and test are as contained in appendix C to part 30 of this
chapter. For commercial companies that do not issue bonds, a guarantee
of funds by the applicant or licensee for decommissioning costs may be
used if the guarantee and test are as contained in appendix D to part
30 of this chapter. Except for an external sinking fund, a parent
company guarantee or a guarantee by the applicant or licensee may not
be used in combination with
[[Page 3846]]
other financial methods to satisfy the requirements of this section. A
guarantee by the applicant or licensee may not be used in any situation
where the applicant or licensee has a parent company holding majority
control of the voting stock of the company. Any surety method or
insurance used to provide financial assurance for decommissioning must
contain the following conditions:
* * * * *
(3) An external sinking fund in which deposits are made at least
annually, coupled with a surety method, insurance, or other guarantee
method, the value of which may decrease by the amount being accumulated
in the sinking fund. An external sinking fund is a fund established and
maintained by setting aside funds periodically in an account segregated
from licensee assets and outside the licensee's administrative control
in which the total amount of funds would be sufficient to pay
decommissioning costs at the time termination of operation is expected.
An external sinking fund must be in the form of a trust. If the other
guarantee method is used, no surety or insurance may be combined with
the external sinking fund. The surety, insurance, or other guarantee
provisions must be as stated in paragraph (e)(2) of this section.
* * * * *
(g) In providing financial assurance under this section, each
licensee must use the financial assurance funds only for
decommissioning activities and each licensee must monitor the balance
of funds held to account for market variations. The licensee must
replenish the funds, and report such actions to the NRC, as follows:
(1) If, at the end of a calendar quarter, the fund balance is below
the amount necessary to cover the cost of decommissioning, but is not
below 75 percent of the cost, the licensee must increase the balance to
cover the cost, and must do so within 5 days after the end of the
calendar quarter.
(2) If, at any time, the fund balance falls below 75 percent of the
amount necessary to cover the cost of decommissioning, the licensee
must increase the balance to cover the cost, and must do so within 5
days of the occurrence.
(3) Within 30 days of taking the actions required by paragraphs
(g)(1) or (g)(2) of this section, the licensee must report such actions
to the NRC, and state the new balance of the fund.
25. In Section 72.50, paragraph (b)(3) is added to read as follows:
Sec. 72.50 Transfer of license.
* * * * *
(b) * * *
(3) The application shall describe the financial assurance that
will be provided for the decommissioning of the facility under Sec.
72.30.
* * * * *
For the Nuclear Regulatory Commission.
Dated at Rockville, Maryland, this 7th day of January 2008.
Annette Vietti-Cook,
Secretary for the Commission.
[FR Doc. E8-574 Filed 1-18-08; 8:45 am]
BILLING CODE 7590-01-P