[Federal Register Volume 63, Number 104 (Monday, June 1, 1998)]
[Rules and Regulations]
[Pages 29535-29544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14385]
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NUCLEAR REGULATORY COMMISSION
10 CFR Parts 30, 40, 50, 70, and 72
RIN 3150-AF64
Self-Guarantee of Decommissioning Funding by Nonprofit and Non-
Bond-Issuing Licensees
AGENCY: Nuclear Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Nuclear Regulatory Commission is amending its regulations
to allow additional materials licensees and non-electric utility
reactor licensees who meet certain financial criteria to self-guarantee
funding for decommissioning. Certain commercial corporate licensees who
issue bonds are presently allowed to self-guarantee funding if they
meet stringent financial criteria. This rule allows nonprofit
licensees, such as colleges, universities, and hospitals, as well as
some commercial licensees who do not issue bonds, to self-guarantee
funding provided they meet similarly stringent financial criteria.
Allowing additional qualified licensees to use self-guarantee reduces
licensee costs while providing adequate assurance that funds for
decommissioning will be available when needed.
EFFECTIVE DATE: July 1, 1998.
FOR FURTHER INFORMATION CONTACT: Dr. Clark Prichard, Office of Nuclear
Materials Safety and Safeguards, U.S. Nuclear Regulatory Commission,
Washington, DC 20555-0001, telephone (301)415-6203, e-mail cwp@nrc.gov.
SUPPLEMENTARY INFORMATION:
Licensees subject to 10 CFR parts 30, 40, 70, and 72, whose
operations involve the use of substantial amounts of nuclear materials,
and those subject to 10 CFR Part 50 who are applicants for, or holders
of, operating licenses for production or utilization facilities must
provide financial assurance for decommissioning funding by selecting
from a variety of mechanisms: surety bond or letter of credit,
prepayment, insurance, an external sinking fund coupled with a surety
or insurance,1 parent company guarantee for licensees that
have a qualifying corporate parent, and, for certain financially strong
corporations, self-guarantee. A statement of intent regarding obtaining
funds to satisfy decommissioning obligations may be used by some
licensees that are governmental entities (for example, public
universities whose charter provides for a direct link to the State
Government).
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\1\ Pursuant to 10 CFR 50.75(e)(3), an electric utility can
satisfy the decommissioning funding requirements with an external
sinking fund, standing alone. This rulemaking does not apply to
electric utilities and does not affect the NRC's Notice of Proposed
Rulemaking that addresses decommissioning funding assurance issues
associated with electric utility restructuring (see Financial
Assurance Requirements for Decommissioning Nuclear Power Reactors--
62 FR 47588, September 10, 1997). As part of this proposed rule, the
NRC is considering amending its definition of ``electric utility''
and clarifying the distinction between financial assurance
mechanisms applicable to power reactor licensees and non-power
reactor licensees.
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To date, self-guarantee has not been available to nonprofit
licensees such as hospitals and universities, or to for-profit
licensees who do not issue bonds, because the financial test for self-
guarantee uses the rating of the bonds issued by the licensee as one
measure of the licensee's financial resources and ability to fund
decommissioning.
The NRC is extending the use of self-guarantee, previously limited
to bond-issuing industrial corporations, to additional categories of
qualified licensees. By selecting appropriate financial criteria for
self-guarantee, this extension can be made without jeopardizing the
present high level of financial assurance that the decommissioning
obligation requires. Allowing qualified nonprofit and non-bond-issuing
licensees to self-guarantee will reduce the costs of complying with NRC
financial assurance requirements for those who meet the specified
criteria.
Background
On December 29, 1993 (58 FR 68726), as corrected on January 12,
1994 (59 FR 1618), the NRC published a notice of final rulemaking that
allows financially strong corporations with A or better bond ratings
the option of using self-guarantee as a mechanism for complying with
the regulations on financial assurance for decommissioning. Self-
guarantee was added to the list of financial assurance mechanisms as a
cost-saving option for licensees that are able to meet the stringent
financial test.
The NRC's decision to add self-guarantee to the list of approved
financial assurance mechanisms for qualified licensees came in response
to a petition for rulemaking filed by General Electric and Westinghouse
(PRM-30-59, Notice of receipt published September 25, 1991 (56 FR
48445)). The petition presented a case for allowing self-guarantee as a
cost-saving option for corporate licensees that are able to pass a
stringent financial test.
Subsequent to the December 29, 1993, final rule, the Commission
initiated a study to determine whether criteria could be developed and
applied by NRC for nonprofit licensees and non-bond-issuing commercial
licensees to use self-guarantee while maintaining the required level of
confidence regarding the availability of decommissioning funds when
needed. The study, ``Analysis of Potential Self-Guarantee Tests for
Demonstrating Financial Assurance by Nonprofit Colleges and
Universities and Hospitals and by Business Firms that Do Not Issue
Bonds,'' NUREG/CR-6514 2 (June 1997), identified a variety
of financial criteria that could be applied to additional categories of
licensees regarding the use of self-guarantee. The financial criteria
in this rule were selected by the NRC based on information in this
report.
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\2\ Single copies are available from the NRC contact. Copies are
available at current rates from the U.S. Government Printing Office,
P.O. Box 37082, Washington, DC 20402-9328 (telephone (202) 512-
2249); or from the National Technical Information Service by writing
NTIS at 5285 Port Royal Road, Springfield, VA 22161. Copies are
available for inspection or copying for a fee from the NRC Public
Document Room at 2120 L Street NW., Washington, DC; the PDR's
mailing address is Mail Stop LL-6, Washington, DC 20555-0001;
telephone (202) 634-3273; fax (202) 634-3343.
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Public Comments on the Proposed Rule
The NRC published a notice of proposed rulemaking on April 30,
1997, (62 FR 23394). In response to this notice, 16 comments were
received; 2 from States, 6 from colleges and universities, 3 from
associations, 3 from
[[Page 29536]]
private corporations, 1 from a hospital, and 1 from the United States
Enrichment Corporation. The commenters all supported the extension of
self-guarantee to qualified nonprofit and non-bond-issuing commercial
licensees. Although some commenters urged NRC to adopt the proposed
rule as written, most favored some type of change to the financial
criteria.
1. Financial Criteria for Colleges and Universities
The financial test criteria proposed for colleges and universities
were an A or better bond rating or, for those not having a bond rating,
unrestricted endowment of at least $50 million or 30 times projected
decommissioning costs, whichever was greater. There were no comments
regarding the A or better bond rating, but several commenters objected
to the non-bond criteria as too conservative.
Comment: A commenter stated that the selected multiple of 30 times
decommissioning costs is excessively conservative. NRC's basis for the
30 multiple is that an amount of money 30 times decommissioning costs
invested at 3 percent would yield an annual amount sufficient to fund
those costs. The commenter said that it should not be difficult to
obtain secure investments yielding 6 percent; thus an appropriate
multiple would be 15 based on investment yield.
Response: NRC's objective in selecting financial criteria was to
provide a level of financial assurance risk similar to the financial
assurance risk in the existing self-guarantee. However, for colleges
and universities that do not issue bonds, lack of appropriate data on
default risk made a financial assurance risk analysis impossible. For
these licensees, NRC deliberately chose financial criteria which are
conservative.
NRC did state in the preamble to the proposed rule, at 62 FR 32296,
that ``[the multiple of 30 has been chosen because this would mean that
any level of decommissioning costs could be covered by the annual
return on an endowment invested at 3 percent.'' However, it is
important to note that NRC was not assuming (1) that institutions will
in fact finance decommissioning out of endowments; (2) that endowments
can be expected in all circumstances to grow at a rate of at least 3
percent annually; or (3) that institutions can be expected to
reallocate up to 3 percent of their spending from endowments in a one-
year period. Rather, the criterion was selected to serve as a measure
of the overall financial strength of the institution, indicating that
NRC can reasonably assume that such a college or university can be
allowed to self-guarantee for the costs of decommissioning because it
possesses sufficient financial strength to obtain the necessary funds
when they are needed.
Even assuming the premise of the commenter, NRC does not believe
that reducing the multiple to 15, as the commenter suggests, is
desirable. Although a real rate of return of 3 percent may appear low
under the market conditions prevailing during certain periods, there is
a substantial body of empirical evidence indicating that it is a
reasonable assumption. If a licensee who has been relying on a self-
guarantee is required to fully fund a trust fund for decommissioning in
the year before the beginning of decommissioning, and the licensee
relies on earnings from endowment to create the trust, it is the annual
earnings of the endowment for the year immediately prior to the
decommissioning that must equal the required amount. NRC has reviewed
the information provided in Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation 1995 Yearbook, 1995, which published a summary of market
results for the 69-year period from 1926 to 1995 for five categories of
investments: small company stocks, large company stocks, long-term
government bonds, long-term corporate bonds, and intermediate-term
government bonds.
On a year-by-year basis, less risky investments, such as treasury
bills, showed the most frequent positive returns, but their annual
returns also were relatively low. Riskier investments showed a broad
distribution of returns, from very good to very poor. Overall, however,
with the exception of small and large company stocks, the average
inflation-adjusted earnings (geometric mean) for these categories of
investments were less than 3 percent. In a number of years, earnings
for stocks also were less than 3 percent. Thus, real investment returns
over a one-year period may not even match conservative earnings
assumptions.
The study of endowment sponsored by the National Council of College
and University Business Officers (NACUBO) published in 1995 also
emphasized a concern for this earnings variability in its analysis of
college and university endowment investment. First, NACUBO's study
noted that current high rates of return cannot be expected to continue
indefinitely. ``At a time when many public and private institutions are
searching for ways to bridge the gap between revenues and expenditures,
it is tempting to extrapolate these extraordinary returns into the
future and to budget endowment spending accordingly. However, in this
context it is instructive to note that for a representative group of
institutions, the average annual real return after spending for the 10-
year period ended June 30, 1994, is 4.1 percent, but for the 20 years
ended June 30, 1994, it is 0.9 percent.'' (1994 NACUBO Endowment Study,
National Council of College and University Business Officers, 1995, p.
4)
Therefore, the NACUBO study recommends strongly that institutions
keep their spending from endowment below the rate proposed by the
commenter. The report states that:
Historical precedent indicates that a fund invested
approximately 60 percent in domestic and foreign stocks, 30 percent
in fixed income, and 10 percent in various other asset classes
inevitably experiences recurring periods of absolute decline in
market values over 3 years. Such a decline would trigger a reduction
in spending for an institution sticking to a policy of spending a
fixed percentage of a 3-year moving average of endowment market
values * * * For fiscal year 1994, the average endowment spending
rate reported by responding institutions is 6.0 percent. On average,
the smallest endowments ($25 million and less) spent more (7.2
percent) than the largest (4.5 percent), and public institutions
spent more (6.6 percent) than private institutions (5.7 percent) * *
* With the sole exception of the 4.5 percent spent by the largest
universities, these spending rates are not compatible with most
institutions' stated intention to preserve the purchasing power of
their endowment. Over time, it is possible (difficult, but possible)
for the exceptionally well-managed institution to spend 6.0 percent
of a 3-year moving average of endowment market values, and still
preserve purchasing power. However, it is courting disaster to spend
at an annual rate of 6.0 percent toward the tail end of a long bull
market. (1994 NACUBO Endowment Study, 1995, p. 5)
Based on these considerations, the NRC continues to believe that a
relatively conservative criterion, such as the 30 times requirement, is
a reasonable criterion for the decommissioning self-guarantee test for
colleges and universities. The NRC does not accept the commenter's
recommendation to adopt a substantially less stringent criterion.
Comment: A commenter objected to the requirement that unrestricted
endowment be at least $50 million or at least 30 times the
decommissioning cost estimate, whichever is greater. The requirement
should be compliance with either the $50 million figure or the 30 times
decommissioning cost estimate, but not whichever is greater.
Response: As previously stated, NRC chose conservative financial
criteria for
[[Page 29537]]
non-bond-issuing colleges and universities, aimed at assuring the
financial viability of a licensee qualified to self-guarantee. This is
the only requirement that would apply to non-bond-issuing colleges and
universities, whereas non-bond-issuing hospitals or commercial
licensees would be subject to multiple financial ratios as financial
tests. It is designed to capture two measures of financial viability:
(1) overall financial strength and (2) financial strength relative to
size of decommissioning obligation. The overall financial strength of
an institution is heavily dependent on the size of its unrestricted
endowment. Specific ability to fund decommissioning expenses is
measured by the ratio of unrestricted endowment to decommissioning
costs. A financial test based only on ratio to decommissioning cost
might allow an institution without adequate financial strength to pass
if its decommissioning costs were low. A test based only on the size of
the unrestricted endowment might be inadequate for those institutions
with the highest decommissioning costs. Both threshold requirements are
needed to provide assurance that an institution can meet
decommissioning obligations when necessary.
Comment: A commenter stated that NRC's rationale for a multiple of
30 implies that decommissioning costs are paid from investment yields
over a 1-year period. However, it is more realistic to assume that any
decommissioning activities where financial assurance arrangements are
involved will require considerable coordination with regulators and
financial services involving 2 or 3 years to complete. This
consideration also implies that the appropriate multiple should be 15
rather than 30.
Response: NRC recognizes that decommissioning may occur over a
period longer than one year. The multiple of 30 was chosen without
regard to how many years it would take to decommission a facility. The
commenter is attempting to make this linkage the key factor in arriving
at an appropriate multiple. However, following this line of reasoning,
stretching out the time length of decommissioning would imply ever
decreasing multiples.
NRC's objective is to ensure that decommissioning will take place
on a timely basis. The financial assurance regulations are intended to
assure that inadequate funding does not prevent timely decommissioning.
Timely decommissioning may require that all decommissioning funding be
available up front even though decommissioning activities are not
completed within a single year. For this reason NRC's criteria for
determining whether a licensee should be allowed to self-guarantee the
costs of decommissioning must consider the possibility that the
licensee will be required to fully fund decommissioning in the year
immediately prior to the beginning of decommissioning activities. The
licensee would fund a standby trust if either (1) the licensee no
longer qualifies to use the self-guarantee to provide financial
assurance for decommissioning, even if it was not yet required to
conduct decommissioning, or (2) a licensee using a self-guarantee is
required to carry out decommissioning. NRC currently does not allow
licensees to consider the impact of earnings during the ``payout''
period (the period during which funds are being expended from the
financial assurance standby trust to pay for decommissioning) in
calculating the amount of funds that must be set aside for
decommissioning. Therefore, the NRC disagrees with the commenter's
suggestion that the expected duration of decommissioning activities
should apply to the determination of the appropriate multiple.
Comment: A commenter recommends that [based on the combination of
investment yield of 6 percent and investment yields over 2 to 3 years
rather than 1 year] the multiplication factor [be] reduced from 30 to
10 with ample conservatism.''
Response: For the reasons stated in responses to the preceding
comments, NRC does not accept this recommendation.
2. Financial Criteria for Hospitals
The financial test criteria proposed for hospitals was an A or
better bond rating or, for hospitals not having a bond rating, a
financial ratios test consisting of the following:
(a) Liquidity--(current assets and depreciation fund, divided by
current liabilities) greater than or equal to 2.55.
(b) Net Revenue--(Total revenues less total expenditures divided by
total revenues) greater than or equal to 0.04.
(c) Leverage--(Long term debt divided by net fixed assets) less
than or equal to 0.67.
(d) Operating Revenues at least 100 times decommissioning costs.
There were no comments regarding the bond rating criterion but
there were several comments on the non-bond criteria.
Comment: A commenter believed that the selected multiple of 100
[hospital operating revenues at least 100 times decommissioning costs]
was excessively conservative. It appears to reflect an expectation that
the decommissioning will take a short time whereas a realistic time
frame should be 2 years or more. NRC should consider a multiple of 30
or less to be appropriate.
Response: The requirement that hospital operating revenues be at
least 100 times decommissioning costs is a criterion that NRC is
proposing to use to determine whether a licensee has sufficient
financial strength to self-guarantee. However, a potential consequence
of self-guaranteeing could be the need to fully fund a trust fund in a
short period of time if the licensee ceases to be capable of passing
the self-guarantee test or if decommissioning must be carried out. As
discussed above, the operating revenues multiple criterion does not
reflect any expectation concerning the length of time during which
decommissioning will occur. Therefore, NRC does not accept this
recommendation.
Comment: A commenter found the rationale that requires hospitals to
meet all four financial ratios tests unclear. This commenter believed
that using only the operating revenues/decommissioning costs ratio
would appear to provide reasonable assurance of ability to provide
decommissioning funding.
Response: The financial ratios test for hospitals in the rule was
carefully selected to provide a level of financial assurance risk
similar to the financial assurance risk in the existing self-guarantee.
The four ratios in combination represent the financial test that best
achieves this goal. A financial test using just one of these ratios
would not represent the same level of risk and would not provide an
adequate level of financial assurance. Using only the ratio of
operating revenues to decommissioning costs would completely ignore
such determinants of financial strength as liquidity, indebtedness, and
profitability. The financial test used for non-bond-issuing commercial
licensees includes several ratios, not just one. The non-bond financial
test for colleges and universities does use a single ratio, but it is
the ratio of unrestricted endowment to decommissioning costs.
Unrestricted endowment is a fund readily available to meet
decommissioning expenses. Hospital operating revenues are different
because these funds may not be readily available to meet
decommissioning expenses due to other hospital costs.
[[Page 29538]]
3. Prohibition on Using a Guarantee in Combination With Another
Financial Assurance Mechanism
Comment: Some commenters noted that provisions in 10 CFR
30.35(f)(2), 40.36(e)(2), 50.75(e)(2)(iii), 70.25(f)(2), and
72.30(c)(2) provide that neither a parent company guarantee nor a
guarantee by an applicant may be used in combination with other
financial methods to satisfy financial assurance requirements. These
commenters wanted to know the reasons for these restrictions.
Response: This rule makes no change in the already existing
prohibition against combining a parent or self-guarantee with another
type of financial assurance mechanism. The issue of whether or not to
allow such a combination is broader than the focus of this rule. The
NRC has limited experience with parent and self-guarantee to date. It
is expected that the NRC will periodically reevaluate its financial
assurance program in the future and could reassess the need for the
prohibition.
4. Insured Bond Ratings
Comment: Some commenters objected to the proposed financial
criteria which deal with bond ratings. As proposed, for institutions
that issue bonds, only a bond issuance that is ``uninsured'' may be
used; an ``insured'' bond rating would not be eligible. The
justification for this limitation is not warranted because bond
insurers evaluate the financial condition of the prospective issuers
and avoid issuing policies to universities that are not creditworthy.
Consequently, the presence of bond insurance indicates that the issuer
is in sound financial condition.
Response: Bond insurers evaluate the financial condition of the
issuers of the bonds at the time the debt is insured. Bond rating
agencies, such as Moodys and Standard and Poors, typically assign such
bonds a triple-A rating because of the insured status of the bond.
NRC's concerns with accepting insured bonds as a criterion of
financial assurance arise from the possibility that, over time, the
insured bond rating could mask adverse changes in the financial
condition of the bond issuer after the debt has been insured. The rule
includes a requirement that the licensee must ascertain whether it
continues to pass the financial test for self-guarantee every year.
Furthermore, if the licensee no longer meets the test criteria, it must
notify NRC and establish alternative financial assurance. However,
insured bonds would continue to hold their rating, despite declines in
the financial condition of the issuer.
The problem with an insured bond from the standpoint of financial
assurance is that there is no criterion by which NRC can identify when
a licensee/issuer no longer qualifies to self-guarantee. The bond can
retain its high rating despite a decline in the financial strength of
the issuer. Furthermore, the insurance coverage provided by the bond
insurer, which is a guarantee of payment of principal and interest in
accordance with the insured bond issue's payment schedule, will not
provide any additional source of funding for decommissioning. NRC does
not agree with the commenter's suggestion that it accept ratings on
insured bonds as an acceptable criterion for self-guarantee.
5. Requirements for Financial Statements
Comment: Some commenters objected to the proposed requirement in
Appendices D and E to 10 CFR Part 30 that licensees must conduct
accounting by U.S. generally accepted accounting principles (GAAP).
This does not recognize the increasingly multi-national nature of
materials licensees. Foreign ownership of major material licensees is
currently a reality (e.g., Siemens, ABB, Framatome) and can be expected
to increase in the future. The selection of accounting practices to be
used is a significant corporate decision affected by many factors. It
is unreasonable to require that corporate practices of major multi-
national firms be changed for a licensee to be allowed to provide self-
guarantee of decommissioning funding. The rule should allow licensees
to certify adequate assurance that funds will be available by using
other recognized and accepted accounting principles.
Response: Financial statements prepared in accordance with foreign
accounting principles rather than U.S. GAAP pose two problems from the
standpoint of a financial test for self-guarantee. First, the financial
test was developed based on an analysis of financial data for U.S.
firms. Consequently, the financial test criteria may not be applicable
or effective when used in conjunction with financial data that were
prepared in accordance with foreign accounting practices. Second,
allowing firms to rely on financial statements prepared according to
accounting principles in use in their own country could place a heavy
administrative burden on NRC. The examples cited by the commenter, for
instance, might require NRC to know and apply German, Swiss, and French
accounting principles to assess compliance with a financial test
designed using U.S. GAAP. Finally, the present financial assurance
regulations allow the use of a broad range of financial assurance
mechanisms in part to ensure that licensees that are unable to use a
particular mechanism have other alternatives available. NRC does not
expect firms to change their accounting practices in order to make use
of the financial test because a number of other options are available.
6. Financial Criteria for Non-Bond-Issuing Commercial Licensees
The financial test proposed for non-bond issuing commercial
licensees was:
(a) Cash flow divided by total liabilities greater than 0.15.
(b) Total liabilities divided by net worth less than 1.5.
(c) Net worth greater than $10 million or at least 10 times
decommissioning costs, whichever is greater.
Comment: A commenter objected to the net worth criterion of net
worth greater than $10 million or at least 10 times estimated
decommissioning costs. This discriminates against well-funded smaller
firms that could easily self-guarantee smaller decommissioning
projects, but could not meet the $10 million net worth requirement.
Response: The NRC's objective in setting financial criteria for
non-bond-issuing commercial licensees was to make the financial
assurance risk of these criteria equal to the financial assurance risk
of the financial criteria for licensees that issue bonds (estimated to
be approximately 0.13 percent per year). According to the analysis of
potential financial criteria carried out as part of the proposed rule,
the financial criteria in the proposed rule meet this
objective.3 Firms with smaller net worth have a larger
default risk than larger firms. Thus, the $10 million net worth
requirement is an essential part of the overall financial test. The NRC
has retained this requirement in the final rule.
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\3\ ``Analysis of Potential Self-Guarantee Tests for
Demonstrating Financial Assurance by Nonprofit Colleges,
Universities, and Hospitals, and by Business Firms That Do Not Issue
Bonds,'' NUREG/CR-6514, p. 4.7, June 1997.
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7. Decommissioning Cost Estimates
Comment: Several commenters raised the issue of how decommissioning
costs were estimated. The NRC should encourage best available
information estimates of decommissioning costs, based on historic plant
experience in decommissioning and renovation, rather than commercial
estimates by contractors that tend to be too high.
[[Page 29539]]
Conservative assumptions, such as use of rates charged by contractors
and high estimates of waste disposal costs, should not be used. A
commenter also noted that assuming a period for short-lived isotopes to
decay before decommissioning begins would be a realistic assumption.
Also, a typical licensee will not have the maximum amount of material
allowed by the license at the time of decommissioning.
Response: This rulemaking makes no changes in the requirements for
how licensees estimate decommissioning costs. Decommissioning cost
estimates, or use of the certification amounts in 10 CFR Part 30, are
already required by existing regulations on financial assurance. This
rule simply adds an additional financial assurance mechanism to those
already permitted in NRC regulations.
8. Agreement State Compatibility Status of Financial Assurance
Regulations
Comment: Some commenters believed that the proposed regulations
should be assigned a compatibility status of Level 1 with Agreement
States. This will ensure consistent requirements for financial surety
arrangements and will preclude the unintended creation of competitive
disadvantages between facilities in Agreement States and Non-Agreement
States.
Response: When the proposed rule was published in the Federal
Register (see 62 FR 23394, April 30, 1997), it was designated as a
Division 2 compatibility item in accordance with the compatibility
policy in effect at that time. A Division 2 level of compatibility
allowed an Agreement State to promulgate equivalent, or more stringent,
financial assurance regulations than those of NRC.
Under the new ``Policy Statement on Adequacy and Compatibility of
Agreement State Programs,'' (see 62 FR 46517, September 3, 1997)
Agreement States must adopt NRC regulations having particular health
and safety significance and those necessary to maintain compatibility
with the Commission's regulatory program.
The NRC financial assurance regulations, in effect when the new
policy was implemented, were designated as having health and safety
significance. Specifically, sections (a), (b), and (d) of Parts 30.35,
40.36 and 70.25, which require that licensees must consider the cost of
decommissioning their facilities and that those costs must be provided
for through a financial assurance mechanism, have particular health and
safety significance and were designated as category H&S. Under the H&S
category, Agreement States should adopt the essential objectives of
these sections in order to maintain an adequate program. The remaining
sections of the rule, including those which allow self-guarantee of
certain commercial corporate licensees who issue bonds if they meet
stringent financial criteria, were designated as compatibility Category
D. Category D means the Agreement States do not need to adopt a
compatible rule.
The final rule change, which will extend the self-guarantee
financial assurance option to other material and non-electric utility
reactor licensees that meet certain financial criteria, is also
designated as compatibility Category D. Under compatibility category D,
Agreement States may choose to maintain a more stringent rule by not
adopting the self-guarantee option.
9. Requirement for Annual Passage of Financial Test
Comment: A commenter stated that Section II.C.(2) of Appendix E to
Part 30 should be modified so a qualifying licensee would not have to
repeat passage of the financial test for self-guarantee every year.
University endowments are very stable. In addition, Section II.C.(3)
provides sufficient assurance that NRC will be notified when a licensee
no longer meets the criteria for self-guarantee.
Response: Although it is true that university endowments are
relatively stable and Section II.C.(3) provides for notification, the
provision for qualifying licensees to annually pass the test is
retained in the final rule. For a self-guarantee program to provide
adequate assurance of decommissioning funding, the annual
``requalification'' provision is necessary. NRC must have assurance of
financial strength on a timely basis. A self-guarantee relies solely on
the licensee's ability to fund decommissioning. There is no backup such
as that provided by a third-party financial assurance mechanism. The
requirement for repeating the financial test yearly is not unduly
burdensome on a licensee and gives NRC information on the financial
condition of the licensee on a timely basis. This requirement is not
unique to colleges and universities or to this rule. It is found in the
self-guarantee financial tests applicable to other types of licensees,
both profit and nonprofit.
10. Use of Self-Guarantee by the United States Enrichment Corporation
Comment: The United States Enrichment Corporation (USEC) proposed
that the NRC modify the language of the rule to include certificates
(regulated by NRC under 10 CFR Part 76). USEC stated that it would
benefit from the opportunity to reduce the costs of complying with NRC
financial assurance requirements, which USEC estimated would presently
cost in excess of $100,000 per year for letters of credit and surety
bonds.
Response: Under 10 CFR 76.35(n), USEC (or the Corporation) is
required to establish financial surety arrangements to ensure that
sufficient funds will be available for the ultimate disposal of waste
and depleted uranium, and decontamination and decommissioning
activities that are the financial responsibility of the Corporation.
The funding mechanisms currently listed in the regulation as
potentially acceptable for use by the Corporation include prepayment,
surety, insurance, and an external sinking fund, but do not include
self-guarantee or statement of intent. The rule provides that the
funding mechanism must ``ensure availability of funds for any
activities that are required to be completed'' by the Corporation.
USEC was created pursuant to the Energy Policy Act of 1992. It is a
wholly owned government corporation, whose powers are vested in a five-
member Board of Directors appointed by the President of the United
States and confirmed by the Senate. However, on July 25, 1997 a plan
was approved by the President under which USEC will be sold either to
another corporation or to the public through a stock offering. Under
the USEC Privatization Act, Congress set certain restrictions on
foreign involvement in USEC's privatization and required that a
``reliable and economical domestic source of enrichment services''
exist following privatization.
Although the NRC is not currently aware of any reason why it would
be inappropriate to consider expanding the category of funding
mechanisms available to the Corporation to demonstrate the availability
of funds for the actions required under 10 CFR 76.35(n), NRC does not
believe that it would be feasible to do so in the current rule. First,
USEC was not included in any of the analyses performed to evaluate
potential self-guarantee tests for demonstrating financial assurance.
NRC believes that detailed analyses should be undertaken to ensure that
all critical factors have been considered. Second, USEC's current and
future situation with respect to the costs that it might incur is
substantially different from those of the licensees included in the
current rulemaking. In particular, the scope and type of activities
that USEC must carry out under 10 CFR 76.35(n) are very different from
those
[[Page 29540]]
conducted by hospitals and universities, and the non-bond issuing firms
covered by the proposed rule.
Third, the exact size of the obligations that USEC might be
required to cover is uncertain and will not be determined until a later
date, although it is known that many of the costs will remain the
responsibility of the U.S. Department of Energy (DOE). Under 10 CFR
76.35(n), DOE is responsible for those aspects of decontamination and
decommissioning of the gaseous diffusion plants (GDPs) assigned to DOE
under the Atomic Energy Act. DOE also is responsible for all
environmental liabilities associated with the operation of the GDPs
before July 1, 1993. According to USEC's Annual Report for 1996,
``[e]xcept for certain accrued liabilities that will be specified in a
memorandum of agreement entered into prior to privatization, all
environmental liabilities of the Company through the date of
privatization will remain obligations of the U.S. Government.'' (Notes
to Financial Statements: 7. Environmental Matters). Furthermore, as of
June 30, 1996, USEC had accrued liability of $303 million for
transportation, conversion, and disposition of depleted uranium
currently stored at the GDPs. The 1996 Annual Report states that ``USEC
is evaluating various proposals for the disposition of depleted
uranium, and depending on the outcome of such evaluations, the Company
may be able to reduce future cost accruals * * *. Pursuant to the USEC
Privatization Act, all costs and liabilities related to the disposition
of depleted uranium generated prior to the privatization date are the
responsibility of DOE.'' Fourth, until privatization has occurred,
important information about USEC's future corporate structure and
ownership will remain uncertain. As noted above, Congress has allowed
USEC to be sold either to another corporation or to the public through
a stock offering. Thus, the form in which privatization occurs could
affect the NRC's analysis of financial assurance alternatives. Because
of the need to evaluate all of these factors, NRC has determined not to
include 10 CFR part 76 in the current rulemaking.
Changes From the Proposed Rule
There are no changes from the proposed rule.
Section-by-Section Description of Changes
10 CFR Part 30
Section 30.35 is amended to permit self-guarantee for financial
assurance which can be used by qualified nonprofit licensees and non-
bond-issuing licensees.
Appendix D is added to 10 CFR Part 30 to establish requirements for
self-guarantee by non-bond-issuing commercial licensees. Appendix E is
added to 10 CFR Part 30 to establish requirements for self-guarantee
for nonprofit college, university, and hospital licensees.
10 CFR Part 40
Section 40.36 is amended to permit self-guarantee for financial
assurance which can be used by qualified nonprofit licensees and non-
bond-issuing licensees.
10 CFR Part 50
Section 50.75 is amended to permit self-guarantee for financial
assurance which can be used by qualified nonprofit licensees and non-
bond-issuing licensees.
10 CFR Part 70
Section 70.25 is amended to permit self-guarantee for financial
assurance which can be used by qualified nonprofit licensees and non-
bond issuing licensees.
10 CFR Part 72
Section 72.30 is amended to permit self-guarantee for financial
assurance which can be used by qualified non-bond issuing licensees.
Compatibility of Agreement State Regulations
The current NRC regulation which allows self-guarantee of certain
commercial corporate licensees who issue bonds if they meet stringent
financial criteria is designated as compatibility Category D. This
final rule change, which will extend the self-guarantee financial
assurance option to other material and non-electric utility reactor
licensees that meet certain financial criteria, is also designated as a
compatibility Category D. Category D means the agreement States do not
need to adopt a compatible rule. The Category D designation was
determined in accordance with the new ``Policy Statement on Adequacy
and Compatibility of Agreement State Programs,'' approved by the
Commission on June 30, 1997. The final rule change does not involve a
basic radiation protection standard, activities that have direct and
significant effects in multiple jurisdictions, or essential objectives
which an Agreement State should adopt to avoid conflicts, gaps, or
duplications in the regulation of agreement material on a nationwide
basis. Therefore, Category D has been assigned to these rule
provisions.
Finding of No Significant Environmental Impact: Availability
The amendments will allow qualified nonprofit and non-bond-issuing
licensees the option of using self-guarantee as a mechanism for
financial assurance for decommissioning. For-profit corporate licensees
that issue bonds are already allowed to use self-guarantee if they meet
the regulatory criteria. Other licensees currently may elect to use a
variety of financial assurance mechanisms, such as surety bonds,
letters of credit, and escrow accounts to comply with decommissioning
regulations. This action is intended to offer nonprofit and non-bond-
issuing nuclear materials licensees and non-electric utility reactor
licensees greater flexibility by allowing an additional mechanism for
licensees that meet the financial criteria for use of self-guarantee.
This revision to the NRC's regulations simply adds one more
financial assurance mechanism to the mechanisms currently available. It
does not affect the cost of decommissioning materials and non-power
reactor facilities. Allowing self-guarantee for additional types of
licensees does not lead to any increase in the effect on the
environment of the decommissioning activities considered in the final
rule published on June 27, 1988, (53 FR 24018), as analyzed in the
Final Generic Environmental Impact Statement on Decommissioning of
Nuclear Facilities (NUREG-0586, August 1988). 4 Promulgation
of this rule does not introduce any impacts on the environment not
previously considered by the NRC. Therefore, 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 would not be a major Federal action significantly
affecting the quality of the human environment, and therefore an
environmental impact statement is not required. No other agencies or
persons were contacted in making this determination. The NRC staff is
not aware of any other documents related to the environmental
[[Page 29541]]
impact of this action. The foregoing constitutes the environmental
assessment and finding of no significant impact for this rule.
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\4\ Copies are available at current rates from the U.S.
Government Printing Office, P.O. Box 37082, Washington, DC 20402-
9328 (telephone (202) 512-2249); or from the National Technical
Information Service by writing NTIS at 5285 Port Royal Road,
Springfield, VA 22161. Copies are available for inspection or
copying for a fee from the NRC Public Document Room at 2120 L Street
NW., Washington, DC; the PDR's mailing address is Mail Stop LL-6,
Washington, DC 20555; telephone (202) 634-3273; fax (202) 634-3343.
---------------------------------------------------------------------------
Paperwork Reduction Act Statement
This final rule amends information collection requirements that are
subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). These requirements were approved by the Office of Management and
Budget (OMB), approval number 3150-0017, -0020, -0011, -0009, and -
0132.
The public reporting burden for this information collection is
estimated to average 9 to 14 hours per response, including time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
information collection. Send comments on any aspect of this information
collection, including suggestions for reducing the burden, to the
Information and Records Management Branch (T-6 F33), U.S. Nuclear
Regulatory Commission, Washington, DC 20555-0001, or by Internet
electronic mail at [email protected]; and to the Desk Officer, Office of
Information and Regulatory Affairs, NEOB-10202, (3150-0017), Office of
Management and Budget, Washington, DC 20503.
Public Protection Notification
If a document used to impose an information collection does not
display a currently valid OMB control number, the NRC may not conduct
or sponsor, and a person is not required to respond to, the information
collection.
Regulatory Analysis
The NRC has prepared a regulatory analysis on this regulation. The
analysis examines the costs and benefits of the alternatives considered
by the NRC. The analysis is available for inspection in the NRC Public
Document Room, 2120 L Street NW (Lower Level), Washington, DC. Single
copies of the analysis may be obtained from Clark Prichard, Office of
Nuclear Materials Safety and Safeguards, U.S. Nuclear Regulatory
Commission, Washington, DC 20555, telephone (301) 415-6203.
Small Business Regulatory Enforcement Fairness Act
In accordance with the Small Business Regulatory Enforcement
Fairness Act of 1996, the NRC has determined that this action is not a
``major rule'' and has verified this determination with the Office of
Information and Regulatory Affairs, Office of Management and Budget.
Regulatory Flexibility Certification
In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C.
605(b)), the Commission certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
This rule would expand the number of options available to licensees to
comply with the Commission's financial assurance requirements, thus
enhancing the flexibility of these regulations. It is estimated that
this rule would result in significant cost savings to qualifying
licensees.
Backfit Analysis
The NRC has determined that backfitting provisions (10 CFR 50.109
and 72.62) in the parts of the Commission's regulations that are being
amended by this rulemaking do not apply to this rule because the rule
does not impose a backfit as defined in 10 CFR 50.109(a)(1) or
72.62(a). The rule extends the self-guarantee alternative for
demonstrating decommissioning financial assurance to qualified non-
profit and non-bond-issuing licensees. Extending the availability of
this option does not impose a new burden on licensees of commercial
power reactors or independent spent fuel storage installations
(ISFSI's). Accordingly, the rulemaking does not constitute a backfit
and a backfit analysis was not prepared for this final rule.
List of Subjects
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
Manpower training programs, Nuclear materials, Occupational safety
and health, Reporting and recordkeeping requirements, Security
measures, Spent fuel.
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 adopting the
following amendments to 10 CFR Parts 30, 40, 50, 70, and 72.
PART 30--RULES OF GENERAL APPLICABILITY TO DOMESTIC LICENSING OF
BYPRODUCT MATERIAL
1. 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).
Section 30.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 (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).
2. In Sec. 30.8, paragraph (b) is revised to read as follows:
Sec. 30.8 Information collection requirements: OMB approval.
* * * * *
(b) The approved information collection requirements contained in
this part appear in Secs. 30.9, 30.11, 30.15, 30.19, 30.20, 30.32,
30.34, 30.35, 30.36, 30.37, 30.38, 30.50, 30.51, 30.55, 30.56, and
Appendices A, C, D, and E of this part.
* * * * *
3. In Sec. 30.35, the introductory text of paragraph (f)(2) is
revised to read as follows:
Sec. 30.35 Financial assurance and recordkeeping for decommissioning.
* * * * *
(f) * * *
(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, letter of credit, or line
of credit. A parent company guarantee of funds for decommissioning
costs based on a
[[Page 29542]]
financial test may be used if the guarantee and test are as contained
in appendix A to this part. A parent company guarantee may not be used
in combination with other financial methods to satisfy the requirements
of this section. 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. 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 or 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:
* * * * *
4. New Appendices D and E to Part 30 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
I. Introduction
An applicant or licensee may provide reasonable assurance of the
availability of funds for decommissioning based on furnishing its
own guarantee that funds will be available for decommissioning costs
and on a demonstration that the company passes the financial test of
Section II of this appendix. The terms of the self-guarantee are in
Section III of this appendix. This appendix establishes criteria for
passing the financial test for the self-guarantee and establishes
the terms for a self-guarantee.
II. Financial Test
A. To pass the financial test a company must meet the following
criteria:
(1) Tangible net worth greater than $10 million, or at least 10
times the total current decommissioning cost estimate (or the
current amount required if certification is used), whichever is
greater, for all decommissioning activities for which the company is
responsible as self-guaranteeing licensee and as parent-guarantor.
(2) Assets located in the United States amounting to at least 90
percent of total assets or at least 10 times the total current
decommissioning cost estimate (or the current amount required if
certification is used) for all decommissioning activities for which
the company is responsible as self-guaranteeing licensee and as
parent-guarantor.
(3) A ratio of cash flow divided by total liabilities greater
than 0.15 and a ratio of total liabilities divided by net worth less
than 1.5.
B. In addition, to pass the financial test, a company must meet
all of the following requirements:
(1) The company's independent certified public accountant must
have compared the data used by the company in the financial test,
which is required to be derived from the independently audited year
end financial statement based on United States generally accepted
accounting practices for the latest fiscal year, with the amounts in
such financial statement. In connection with that procedure, the
licensee shall inform NRC within 90 days of any matters that may
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 repeat
passage of the test within 90 days after the close of each
succeeding fiscal year.
(3) If the licensee no longer meets the requirements of
paragraph II.A of this appendix, the licensee must send notice to
the NRC of intent to establish alternative financial assurance as
specified in NRC regulations. The notice must be sent by certified
mail, return receipt requested, within 90 days after the end of the
fiscal year for which the year end financial data show that the
licensee no longer meets the financial test requirements. The
licensee must provide alternative financial assurance within 120
days after the end of such fiscal year.
III. Company Self-Guarantee
The terms of a self-guarantee which an applicant or licensee
furnishes must provide that:
A. The guarantee shall remain in force unless the licensee sends
notice of cancellation by certified mail, return receipt requested,
to the NRC. Cancellation may not occur until an alternative
financial assurance mechanism is in place.
B. The licensee shall provide alternative financial assurance as
specified in the regulations within 90 days following receipt by the
NRC of a notice of cancellation of the guarantee.
C. The guarantee and financial test provisions must remain in
effect until the Commission has terminated the license or until
another financial assurance method acceptable to the Commission has
been put in effect by the licensee.
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 set up and fund a trust in the amount
of the current cost estimates for decommissioning.
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
I. Introduction
An applicant or licensee may provide reasonable assurance of the
availability of funds for decommissioning based on furnishing its
own guarantee that funds will be available for decommissioning costs
and on a demonstration that the applicant or licensee passes the
financial test of Section II of this appendix. The terms of the
self-guarantee are in Section III of this appendix. This appendix
establishes criteria for passing the financial test for the self-
guarantee and establishes the terms for a self-guarantee.
II. Financial Test
A. For colleges and universities, to pass the financial test a
college or university must meet either the criteria in Paragraph
II.A.(1) or the criteria in Paragraph II.A.(2) of this appendix.
(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 as issued by Standard
and Poors (S&P) or Aaa, Aa, or A as issued by Moodys.
(2) For applicants or licensees that do not issue bonds,
unrestricted endowment consisting of assets located in the United
States of at least $50 million, or at least 30 times the total
current decommissioning cost estimate (or the current amount
required if certification is used), whichever is greater, for all
decommissioning activities for which the college or university is
responsible as a self-guaranteeing licensee.
B. For hospitals, to pass the financial test a hospital must
meet either the criteria in Paragraph II.B.(1) or the criteria in
Paragraph II.B.(2) of this appendix:
(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 as issued by Standard
and Poors (S&P) or Aaa, Aa, or A as issued by Moodys.
(2) For applicants or licensees that do not issue bonds, all the
following tests must be met:
(a) (Total Revenues less total expenditures) divided by total
revenues must be equal to or greater than 0.04.
(b) Long term debt divided by net fixed assets must be less than
or equal to 0.67.
(c) (Current assets and depreciation fund) divided by current
liabilities must be greater than or equal to 2.55.
(d) Operating revenues must be at least 100 times the total
current decommissioning cost estimate (or the current amount
required if certification is used) for all decommissioning
activities for which the hospital is responsible as a self-
guaranteeing license.
C. In addition, to pass the financial test, a licensee must meet
all the following requirements:
[[Page 29543]]
(1) The licensee's independent certified public accountant must
have compared the data used by the licensee in the financial test,
which is required to be derived from the independently audited year
end financial statements, based on United States generally accepted
accounting practices, for the latest fiscal year, with the amounts
in such financial statement. In connection with that procedure, the
licensee shall inform NRC within 90 days of any matters coming to
the attention of the auditor that 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 within 90 days after the close of each
succeeding fiscal year.
(3) If the licensee no longer meets the requirements of Section
I of this appendix, the licensee must send notice to the NRC of its
intent to establish alternative financial assurance as specified in
NRC regulations. The notice must be sent by certified mail, return
receipt requested, within 90 days after the end of the fiscal year
for which the year end financial data show that the licensee no
longer meets the financial test requirements. The licensee must
provide alternate financial assurance within 120 days after the end
of such fiscal year.
III. Self-Guarantee
The terms of a self-guarantee which an applicant or licensee
furnishes must provide that--
A. The guarantee shall remain in force unless the licensee sends
notice of cancellation by certified mail, and/or return receipt
requested, to the Commission. Cancellation may not occur unless an
alternative financial assurance mechanism is in place.
B. The licensee shall provide alternative financial assurance as
specified in the Commission's regulations within 90 days following
receipt by the Commission of a notice of cancellation of the
guarantee.
C. The guarantee and financial test provisions must remain in
effect until the Commission has terminated the license or until
another financial assurance method acceptable to the Commission has
been put in effect by the licensee.
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 set up and
fund a trust in the amount of the current cost estimates for
decommissioning.
E. 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 Poors or Moodys, the licensee shall provide notice in
writing of such fact to the Commission within 20 days after
publication of the change by the rating service.
PART 40--DOMESTIC LICENSING OF SOURCE MATERIAL
5. 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).
Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 (42 U.S.C. 5851). 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).
6. In Sec. 40.36, the introductory text of paragraph (e)(2) is
revised to read as follows:
Sec. 40.36 Financial assurance and recordkeeping for decommissioning.
* * * * *
(e) * * *
(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, letter of credit, or line
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. A parent company guarantee
may not be used in combination with other financial methods to satisfy
the requirements of this section. 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. 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. 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 part
30. 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 or 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:
* * * * *
PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION
FACILITIES
7. The authority citation for Part 50 continues to read as follows:
Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68
Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234,
83 Stat. 1244, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201,
2232, 2233, 2236, 2239, 2282); secs. 201, as amended, 202, 206, 88
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846).
Section 50.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 (42 U.S.C. 5851). Section 50.10 also issued under secs. 101,
185, 68 Stat. 936, 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).
8. In Sec. 50.75, the introductory text of paragraph (e)(2)(iii) is
revised to read as follows:
Sec. 50.75 Reporting and recordkeeping for decommissioning planning.
* * * * *
(e) * * *
(2) * * *
(iii) 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, letter of credit, or line
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. A parent company guarantee
may not be used in combination with other financial methods to satisfy
the requirements of this section. For commercial corporations that
issue bonds, a
[[Page 29544]]
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. 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. 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 part 30. 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 or
in any situation where the applicant or licensee has a parent company
holding majority control of the voting stock of the company.
* * * * *
PART 70--DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL
9. 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); secs. 201, as amended, 202,
204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42 U.S.C.
5841, 5842, 5845, 5846).
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 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 (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 70.61 also issued under secs. 186, 187, 68
Stat. 955 (42 U.S.C. 2236, 2237). Section 70.62 also issued under
sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138).
10. In Sec. 70.25, the introductory text of paragraph (f)(2) is
revised to read as follows:
Sec. 70.25 Financial assurance and recordkeeping for decommissioning.
* * * * *
(f) * * *
(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, letter of credit, or line
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. A parent company guarantee
may not be used in combination with other financial methods to satisfy
the requirements of this section. 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. 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. 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 part
30. 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 or 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:
* * * * *
PART 72--LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF
SPENT NUCLEAR FUEL AND HIGH-LEVEL RADIOACTIVE WASTE
11. 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 (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).
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, 2244 (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).
12. In Sec. 72.30, the introductory text of paragraph (c)(2) is
revised to read as follows:
Sec. 72.30 Financial assurance and recordkeeping for decommissioning.
* * * * *
(c) * * *
(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, letter of credit, or line
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. A parent company guarantee
may not be used in combination with other financial methods to satisfy
the requirements of this section. 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. For
commercial corporations 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. 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 or 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:
* * * * *
Dated at Rockville, Maryland, this 22nd day of May, 1998.
For the Nuclear Regulatory Commission.
John C. Hoyle,
Secretary of the Commission.
[FR Doc. 98-14385 Filed 5-29-98; 8:45 am]
BILLING CODE 7590-01-P
