[Federal Register Volume 59, Number 23 (Thursday, February 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2391]
[[Page Unknown]]
[Federal Register: February 3, 1994]
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NUCLEAR REGULATORY COMMISSION
Use of Decommissioning Trust Funds Before Decommissioning Plan
Approval; Draft Policy Statement
AGENCY: Nuclear Regulatory Commission.
ACTION: Draft policy statement.
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SUMMARY: This draft policy statement presents the criteria the U.S.
Nuclear Regulatory Commission (NRC) proposes to follow in addressing
requests from power reactor licensees that have permanently shut down
their power reactors to make withdrawals from external decommissioning
sinking funds to pay for the removal of components and other
decommissioning-related activities before the NRC approves these
licensees' decommissioning plans submitted pursuant to 10 CFR 50.82.
This draft policy statement also covers de minimis withdrawals from
external decommissioning sinking funds to pay for developing the 10 CFR
50.82 decommissioning plan and for other post-shutdown administrative
expenses.
DATE: Comment period expires April 19, 1994. Comments received after
this date will be considered if it is practical to do so, but the
Commission is able to ensure consideration only for comments received
on or before this date.
ADDRESSES: Mail written comments to: Secretary, U.S. Nuclear Regulatory
Commission, Washington, DC 20555, Attention: Docketing and Service
Branch.
Deliver comments to: 11555 Rockville Pike, Rockville, Maryland,
between 7:45 am and 4:15 pm on Federal workdays.
FOR FURTHER INFORMATION CONTACT:
Robert Wood, Office of Nuclear Reactor Regulation, U.S. Nuclear
Regulatory Commission, Washington, DC 20555, telephone: (301) 504-1255.
SUPPLEMENTARY INFORMATION:
Background
The NRC decommissioning regulations in 10 CFR 50.75 and 50.82 are
silent on whether approval of the decommissioning plan must precede
withdrawals from the decommissioning trust fund. Appendix B.3.1, p. B-
12 of Regulatory Guide 1.159, ``Assuring the Availability of Funds for
Decommissioning Nuclear Reactors,'' contains sample trust language that
indicates that the fund trustee should only release funds upon
certification ``that decommissioning is proceeding pursuant to an NRC-
approved plan.'' However, not all licensees have used this sample
language. When the NRC evaluated trust funds as part of the initial
certification required by 10 CFR 50.75(b) and submitted in July 1990,
it found trusts acceptable if, along with other provisions, they
contained language limiting trust fund withdrawals to legitimate
decommissioning purposes. Thus, many licensees have acceptable trusts
that nevertheless do not expressly limit the withdrawal of trust funds
before NRC approves a decommissioning plan.
Because of a request by Yankee Atomic Electric Company (YAEC)1
and in anticipation of future requests by other power reactor licensees
of permanently shutdown facilities, the Commission directed the NRC
staff to provide an analysis and recommendation to the Commission on
permitting licensees to use their decommissioning funds for
decommissioning activities prior to approval of the decommissioning
plans. The Commission approved the criteria developed by the staff to
evaluate early withdrawals from external decommissioning sinking funds
and directed the staff to publish the details of this policy in the
Federal Register for information and public comment.2 This
proposed policy and implementing criteria are provided below:
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\1\In a letter to the Commission dated November 25, 1992, YAEC
stated its intention to use its decommissioning trust funds to
remove reactor core internals, steam generators and the pressurizer
from Yankee-Rowe before the NRC approves YAEC's decommissioning
plan. (YAEC plans to submit its decommissioning plan for NRC review
in late 1993.) By letter dated April 16, 1993, the NRC did not
object to YAEC's proposed use of decommissioning trust funds before
NRC approval of the Yankee-Rowe decommissioning plan, using criteria
consistent with those discussed in this policy statement.
2This policy statement does not apply to licensees with
operating nuclear reactors. The staff is separately evaluating the
issue of whether and under what circumstances the NRC should allow
licensees of operating plants to withdraw decommissioning trust
funds.
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Statement of Policy
If a licensee of a permanently shutdown facility spends
decomissioning trust funds on legitimate decommissioning activities,
the timing of these expenditures, either before or after NRC approves a
licensee's decommissioning plan, should not adversely affect public
health and safety, provided adequate funds are maintained to restore
the facility to a safe storage configuration in case decommissioning
activities are interrupted unexpectedly. Consequently, the timing of
the NRC review of a licensee's decommissioning plan in relation to
withdrawals from trust funds is not as important as the purpose of
those withdrawals.
In its decommissioning plan reviews, the NRC evaluates proposed
licensee activities in the planned decommissioning process to determine
whether the proposed plan adequately ensures protection of public
health and safety. The NRC will also assess a licensee's overall
decommissioning fund balance in relation to total cost. The NRC review
of decommissioning costs is focused on seeing that they fall within a
normal range of costs and is not focused on examining the timing,
scope, and cost of specific component removal or other decommissioning
activities. Therefore, although the NRC believes that it should guard
against misuse or waste of decommissioning trust funds by licensees, it
is not clear that prior NRC review of the decommissioning plan would
identify such misuse or waste unless it resulted in costs far higher
than would normally be expected. The NRC would find it difficult to
identify the misuse of funds if a licensee's estimates were within a
reasonable range of the costs estimated for similar facilities.
Further, the NRC does not supervise or review the actual expenditure of
funds during decommissioning and would not have an opportunity to
identify serious cost overruns that might jeopardize the adequacy of
funding available for remaining decommissioning activities.
However, there appears to be little motivation for utilities to
misuse these funds. Most NRC power reactor licensees are subject to
rate regulation by State public utility commissions (PUCs) or the
Federal Energy Regulatory Commission (FERC). Utilities are normally
allowed to earn a return on assets, including nuclear plants, once they
are determined to be ``used and useful'' and placed in the rate base.
Decommissioning costs, however, are normally treated by PUCs and FERC
as non-rate-base expenses. They are passed on to ratepayers as
expenses, but the utility and its stockholders do not earn a return on
these collections. Consequently, there is little financial incentive
for a licensee to ``pad'' or dissipate collected decommissioning funds
to increase the rate base, because the stockholders would not benefit.
Further, PUCs and FERC are unlikely to allow utilities under their
jurisdictions to squander funds obtained from ratepayers. Rate
regulators hold prudency reviews to determine whether utilities have
spent funds properly throughout all aspects of plant operation, from
initial planning to final decommissioning. The NRC expects that PUCs
and FERC will continue to exercise their oversight of utilities'
expenditures, including those being paid from decommissioning trust
funds, throughout the decommissioning process. A utility has an
incentive to spend decommissioning funds prudently if it knows that its
stockholders will be liable for decommissioning costs in excess of
those already collected from ratepayers.
Although NRC approval of the decommissioning plan does not ensure
prevention of misuse or waste of decomissioning funds, the NRC believes
that withdrawal of funds for decommissioning activities before a
decommissioning plan is developed and approved should require NRC
review. This is consistent with Commission guidance which provided that
the staff may permit licensees to use their decommissioning funds for
the decommissioning permitted above (as the term decommission is
defined in 10 CFR 50.2), notwithstanding the fact that their
decommissioning plans have not yet been approved by the NRC.
Criteria
The criteria and supporting rationale developed to evaluate
licensee proposals for early withdrawals from external decommissioning
sinking funds are as follows:
1. The withdrawals are for expenses for legitimate decommissioning
activities as defined in 10 CFR 50.2 that would necessarily occur under
most reasonable decommissioning scenarios. Section 10 CFR 50.2 defines
``decommission'' as meaning ``to remove (as a facility) safely from
service and reduce residual radioactivity to a level that permits
release of the property for unrestricted use and termination of
licensee.''
This criterion calls for a licensee to demonstrate that the early
withdrawal is for activities that would occur under reasonable
decommissioning scenarios and would prevent funds being used for
activities that do not reduce radioactivity at the site and ultimately
permit release of the property for unrestricted use. A licensee that
has already prepared its Sec. 50.82 decommissioning plan (which must be
submitted within 2 years after a permanent cessation of operations)
could reference the appropriate part of this plan. A licensee that has
not yet completed its Sec. 50.82 decommissioning plan would have to
provide other documentation to demonstrate that its proposed activities
were clearly decommissioning activities.
2. The expenditures would not reduce the value of the
decommissioning trust below an amount necessary to place and maintain
the licensee's reactor in a safe storage (SAFSTOR) condition if
unforeseen conditions or expenses arise. (For example, if the waste
shipments were rejected by the disposal site because of lack of storage
space or legal impediments, a licensee would have to show it had the
funds to return and store any affected components on site and to store
any radioactive components and materials that had remained on-site.)
Consistent with the purpose of the decommissioning funding
regulations, assurance of availability of funds to safely decommission
a facility, and the principle that a preapproval activity does not
foreclose the release of the site for possible unrestricted use, this
criterion calls for a licensee to show that it can maintain the status
quo at a facility and that the proposed activities will not preclude
the ultimate unrestricted use of the site. A licensee would have to
document the rationale for the minimum amount estimated to be needed to
return to a safe storage condition if decontamination or removal
activities are interrupted and the components and equipment involved
have to be stored safely at the site. Such on-site storage after
shipment could, in the worst case, require construction of a storage
facility. This criterion ensures that decommissioning activities that
occur before approval of the Sec. 50.82 decommissioning plan do not
reduce funds below a level that would ensure continued maintenance of
safety at a defueled, shutdown facility until the decommissioning plan
is reviewed and approved. A licensee could satisfy this criterion by
demonstrating that it has sufficient funds in either its
decommissioning fund or other available funds to maintain the status
quo at the facility, that is, maintain safety in the defueled, shutdown
condition. It should be noted that this criterion is also pertinent to
the normal, end-of-life decommissioning; licensees are to accommodate
the possibility of unforeseen occurrences by providing for
contingencies. (See Regulatory Guide 1.159 at 1.159-10, Item 1.4.4.3.
The general guidance of Regulatory Guide 1.159 concerning provisions
for ``contingencies,'' however, does not explicitly identify the nature
of such contingencies. The NRC's proposed criterion is more explicit.)
The NRC notes that 10 CFR 50.82(c)(1) requires that, ``funds needed
to complete decommissioning be placed into an account segregated from
licensee assets and outside the licensee's administrative control
during the storage or surveillance period, or a surety method or fund
statement of intent be maintained in accordance with the criteria of
Sec. 50.75(e).'' Because the definition of decommissioning in 10 CFR
50.2 implicitly includes the costs of placing and maintaining a reactor
in safe storage, a licensee should continue to provide assurance of
adequate funds for these expenses at all times during the SAFSTOR
period. Thus, licensees are required to maintain this assurance both
before and after the NRC approves a licensee's Sec. 50.82
decommissioning plan.
3. The withdrawals would not inhibit the ability of the licensee to
complete funding of any shortfalls in the decommissioning trust needed
to ensure availability of funds to ultimately release the site for
unrestricted use.
This criterion encompasses the principle that activities allowed
before approval of the decommissioning plan do not significantly
increase decommissioning costs. A licensee would be required to
document the effect of the withdrawals on the decommissioning funding
plan, addressing the current fund balance and collection schedule, and
demonstrate that the use of funds before NRC approval of a
decommissioning plan for the facility would not impair the licensee's
ability to fully fund the plan submitted to the NRC (or, if no plan has
been filed, the actions necessary to permit release of the site for
unrestricted use). A licensee would, for example, have to show that the
decommissioning actions potentially taken out of sequence of any
decommissioning plan submitted (or reasonable decommissioning
alternatives if no plan has been submitted) would not significantly
increase decommissioning costs or impair its ability to obtain the
funds necessary to complete decommissioning.
4. Before the NRC approves a decommissioning plan, licensees can be
allowed to undertake any decommissioning activity (as the term
``decommission'' is defined in 10 CFR 50.2) that does not: (a)
Foreclose the release of the site for possible unrestricted use, (b)
significantly increase decommissioning costs, (c) cause any significant
environmental impact not previously reviewed, or (d) violate the terms
of the licensee's existing license (e.g., OL, POL, or OL with
confirmatory shutdown order) or 10 CFR 50.59 as applied to the existing
license.
This criterion seeks to ensure that funds are only used for those
decommissioning activities that would be allowed to proceed before the
NRC approves a decommissioning plan. Items (a) and (b) have already
been addressed by this policy statement. For items (c) and (d), a
licensee and the NRC would evaluate the proposed activity to ensure
that the activity may proceed under the current license and that the
proposed activity will not result in any significant environmental
impact not previously reviewed.
As stated above, the NRC may permit licensees to use their
decommissioning funds for the decommissioning activities permitted
above (as the term ``decommission'' is defined in 10 CFR 50.2),
notwithstanding the fact that their decommissioning plans have not yet
been approved by the NRC. After review of the licensee's proposed
activities and fund withdrawal using the above criteria, the NRC would
permit the licensee to use decommissioning funds and to undertake the
proposed activities by tacitly consenting to the proposed withdrawals
by not interposing, within a specified time, an objection to the
licensee's proposal. The NRC would need 60 days to complete an
effective review of a licensee's proposal and justification of how the
above criteria will be met.
Ancillary Issue
In the past, licensees have asked the NRC informally whether they
would be able to withdraw funds from their trusts to pay for developing
the Sec. 50.82 decommissioning plan and for other post-shutdown
administrative expenses. The NRC believes that these withdrawals should
be allowed before the NRC approves the final decommissioning plan,
provided the licensee meets the following guidelines:
1. The sum of withdrawals for such purposes should be de minimis, that
is, less than $5 million.\3\
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\3\In talking informally with several licensees, the NRC
understands that most licensees expect to spend from $1 million to
$3 million for completing decommissioning plans and for immediate
post-shutdown administrative expenses. The amount of $5 million,
therefore, is based on a ``best-guess'' estimated, but is small
enough not to significantly deplete the decommissioning trust.
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2. The decommissioning trust balance would not fall below an amount
needed for safe storage.
3. The licensee provided for these costs in its site-specific
decommissioning cost estimate and increased its overall trust fund
balances accordingly.
Dated at Rockville, Maryland, this 12th day of January, 1994.
For the Nuclear Regulatory Commission.
James L. Blaha,
Acting Executive Director for Operations.
[FR Doc. 94-2391 Filed 2-2-94; 8:45 am]
BILLING CODE 7590-01-M
