[Federal Register Volume 62, Number 83 (Wednesday, April 30, 1997)]
[Proposed Rules]
[Pages 23394-23402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11203]
=======================================================================
-----------------------------------------------------------------------
NUCLEAR REGULATORY COMMISSION
10 CFR Parts 30, 40, 50, 70, and 72
RIN 3150-AF64
Self-Guarantee of Decommissioning Funding by Non-Profit and Non-
Bond Issuing Licensees
AGENCY: Nuclear Regulatory Commission.
[[Page 23395]]
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Nuclear Regulatory Commission is proposing to amend 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. The proposed rule
would allow non-profit licensees, such as colleges, universities, and
hospitals, and also some commercial licensees who do not issue bonds,
to self-guarantee funding, provided they meet similarly stringent
financial criteria. Allowing qualified non-profit and non-bond-issuing
licensees to use self-guarantee would reduce the costs of complying
with NRC financial assurance requirements while providing adequate
confidence to the NRC that funds for decommissioning will be available
when needed.
DATES: Submit comments by July 29, 1997. Comments received after this
date will be considered if it is practical to do so, but the NRC is
able to assure consideration only for comments received on or before
this date.
ADDRESSES: Comments may be sent to the Secretary, U.S. Nuclear
Regulatory Commission, Washington, DC 20555-0001, Attn: Docketing and
Service Branch. Hand deliver comments to 11545 Rockville Pike,
Rockville, Maryland, between 7:45 a.m. and 4:15 p.m. on Federal
workdays.
Single copies of this proposed rulemaking may be obtained by
written request to Distribution and Services Section, Printing,
Graphics and Mail Services Branch, Office of Administration, U.S.
Nuclear Regulatory Commission, Washington DC 20555-0001, or by telefax
to (301) 415-2260. For information on submitting comments
electronically see the discussion under Electronic Access in the
Supplementary Information section. Certain documents related to this
rulemaking, including comments received, may be examined at the NRC
Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC.
These same documents also may be viewed and downloaded electronically
via the Electronic Bulletin Board established by NRC for this
rulemaking as indicated in the discussion under Electronic Access.
FOR FURTHER INFORMATION CONTACT: Dr. Clark Prichard, Office of Nuclear
Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC
20555, 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).
---------------------------------------------------------------------------
\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 Advance Notice of
Proposed Rulemaking which addresses decommissioning funding
assurance issues associated with electric utility restructuring (see
Financial Assurance Requirements for Decommissioning Nuclear Power
Reactors--61 FR 15427 April 8, 1996).
---------------------------------------------------------------------------
Licensees currently using self-guarantee must pass a stringent
financial test that is given in Appendix C to 10 CFR Part 30. Self-
guarantee is currently not available to non-profit 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 its financial
resources and ability to fund decommissioning.
The NRC has determined that the use of self-guarantee, currently
limited to bond-issuing industrial corporations, could be made
available to additional categories of licensees without jeopardizing
the present high level of financial assurance that the decommissioning
obligation requires. Allowing qualified non-profit and non-bond issuing
licensees to use self-guarantee would reduce the costs of complying
with NRC financial assurance requirements for those who meet the
specified criteria.
I. 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 those licensees able to meet the stringent
financial test required. The NRC's self-guarantee procedure requires
licensees to pass the financial test annually. In addition, NRC's
requirements for self-guarantee provide for early reporting by
licensees of any deterioration in financial condition.
The NRC's decision to add self-guarantee by qualified licensees to
the list of approved financial assurance mechanisms 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 able to pass a stringent
financial test. The NRC published a notice of proposed rulemaking on
January 11, 1993 (58 FR 3515), in response to the petition. Several
comment letters were received from universities requesting that self-
guarantee also be applied to non-profit entities able to pass a
financial test. At that time, the NRC had not conducted an analysis of
the feasibility of applying self-guarantee to non-profit entities. In
the final rule, the NRC stated that ``In order to extend the use of
self-guarantee to non-profit entities, new criteria would have to be
developed to assess the financial strength of the non-profit licensees.
Development of financial criteria to assess the qualifications of a
non-profit entity to provide a self-guarantee is likely to require
detailed consideration of the different financial accounting methods
used by medical institutions. The financial accounting and reporting of
non-profit entities are unique and substantially different from the
accounting and reporting of for-profit entities'' (58 FR 68728).
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 non-profit 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
[[Page 23396]]
Business Firms that Do Not Issue Bonds,'' NUREG/CR-6514,2
identified a variety of financial criteria that could be applied to
additional categories of licensees regarding the use of self-guarantee.
The financial criteria proposed here were selected by the NRC based on
information in this report. The NRC believes that the financial
criteria proposed in this notice would maintain the high level of
assurance of availability of decommissioning funding provided by the
present self-guarantee mechanism for bond-issuing licensees.
---------------------------------------------------------------------------
\2\ Copies are available for inspection or copying for a fee
from the NRC Public Document Room at 2120 L St. 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. Single copies
are available from the NRC contact.
---------------------------------------------------------------------------
II. Analysis of Financial Criteria
The NRC must have evidence of adequate financial strength on the
part of the licensee to ensure that decommissioning funding obligations
will be met when the need arises. If self-guarantee is permitted, the
applicant or licensee must submit a basis for concluding that
decommissioning financial assurance is still provided. Financial
strength does not necessarily depend on the type of licensee. Many
colleges and universities have very strong financial positions, with
large endowment funds that could be used, if needed, for
decommissioning funding. Some hospitals are also quite financially
strong. With respect to non-bond issuing commercial firms, their lack
of any bond issuance could reflect financial resources great enough to
preclude the need to issue debt.
If a college, university, or hospital has an A or better bond
rating, the financial assurance risk of allowing it to self-guarantee
decommissioning funding is comparable to the financial assurance risk
of institutions currently allowed to self-guarantee. This risk is also
based on an A or better bond rating. The risk of default of industrial
bond issuers with an A or better bond rating has been estimated at less
than 1 percent annually.3 An A or better bond rating
indicates that the issuer has passed a stringent review by the
independent ratings agencies of its ability to meet financial
obligations. Bond ratings are reviewed often and changed in response to
changes in the issuer's financial condition. The A or better bond
rating should be for uninsured bonds. As discussed in NUREG/CR-6514,
insured bond ratings are in fact the rating of the insuring company and
may not apply to the institution that holds the NRC license.
---------------------------------------------------------------------------
\3\ Corporate Bond Defaults and Default Rates, Moodys Special
Report, January 1991, p. 32.
---------------------------------------------------------------------------
Regarding financial criteria that are based on factors other than
bond ratings, quantitative estimates of financial assurance risk are
not available because of the lack of a large financial database such as
that maintained by the bond-rating agencies on bond-issuing entities.
The NRC has deliberately chosen non-bond rating financial criteria that
are conservative. The NRC regulations have included a self-guarantee
mechanism for only a few years. It seems prudent to set the threshold
financial criteria at a high level. At some future time, as more
experience is gained with self-guarantee, the financial criteria can be
reviewed, and appropriate revisions can be proposed.
A. Criteria for Colleges and Universities
Approximately 75 percent of NRC's college and university licensees
issue bonds and have bond ratings. Bond rating can thus be used as a
basis for financial criteria for most college and university licensees.
Note that many college or university licensees are public institutions
and a large portion of these can use a governmental statement of intent
that funds for decommissioning will be obtained when necessary, a
mechanism which does not involve any significant cost to the licensee.
The NRC believes that the A or better bond rating (for uninsured bonds)
criterion used in the existing self-guarantee financial test can also
be used as the criterion in a financial test for use by colleges and
universities. Even if an applicant or licensee were a non-profit entity
or a for-profit firm that does not issue bonds, it may obtain a bond
rating from one of the major ratings agencies. This option would be
allowed. Having obtained a bond rating, the licensee would be subject
to the same requirements as the bond-issuing institutions.
For licensees without a bond rating, a level of unrestricted
endowment of at least $50 million, or at least 30 times projected
decommissioning costs, whichever is larger, should be sufficient to
allow use of self-guarantee. This level of endowment is adequate to
generate annual income sufficient to cover the upper range of estimated
decommissioning costs. 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.
B. Criteria for Hospitals
Approximately 50 percent of hospital licensees issue bonds and have
bond ratings. For the same reasons outlined above, a criterion of an A
or better bond rating could be used for hospital licensees. The A or
better rating should be for unguaranteed, uninsured, or
uncollateralized bonds.
For hospital licensees without a bond rating, three financial
ratios are identified as most accurate indicators of financial
strength: (1) liquidity--(current assets and depreciation fund, divided
by current liabilities), (2) net revenue--(total revenue less total
expenses, divided by total revenue), and (3) leverage--(ratio of long
term debt to net fixed assets). Numerical values for these ratios have
been developed by reviewing the financial characteristics of hospitals.
The licensee must meet all three ratios. The proposed values are as
follows, and based upon the analysis performed for the NRC, represent a
level of financial risk comparable to an A bond rating:
(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 .04.
(c) Leverage--(Long term debt divided by net fixed assets) less
than or equal to .67.
In addition, a hospital must be of a minimum size relative to
estimated decommissioning costs. The financial test calls for hospital
operating revenues to be at least 100 times decommissioning costs.
C. Criteria For Non-Bond Issuing Industrial Corporations
A financial ratios test is an alternative to bond rating which is
currently allowed by NRC regulations. The NRC parent guarantee test in
Appendix A to 10 CFR Part 30 includes a ratio test as an alternative to
a bond rating test. The proposed criterion is Cash Flow divided by
Total Liabilities greater than 0.15, Total Liabilities divided by Net
Worth less than 1.5, and Net Worth greater than $10 million or at least
10 times decommissioning costs, whichever is greater. The financial
assurance risk of using such a criterion is estimated to be comparable
to the risk associated with current regulations.4
---------------------------------------------------------------------------
\4\ ``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, 1995, p. 47.
---------------------------------------------------------------------------
D. Cost Savings
Cost savings would result because qualifying licensees would not
have to purchase other types of financial assurance instruments such as
letters of
[[Page 23397]]
credit or surety bonds. These types of financial assurance instruments
typically cost a licensee approximately 1.5 percent per annum of the
amount of financial assurance purchased.
Estimates of the numbers of NRC licensees who could qualify for
self-guarantee under the proposed financial criteria and estimated
total cost savings on an annual basis are as follows, and for colleges
and universities includes estimates for the reactors licensed to them
as well as materials licenses:
------------------------------------------------------------------------
Total annual
Type of licensee Number cost savings
qualifying (thousands)
------------------------------------------------------------------------
College and University.................. 25-30 $350--$400
Hospital................................ 10-14 $120--$150
Non-Bond Issuing Industrial............. 2-4 $20--$40
------------------------------------------------------------------------
The total cost savings for all licensees estimated to qualify for
self-guarantee could range from approximately $500K to $600K per annum.
Greater cost savings would result if Agreement States allow self-
guarantee for their licensees.
There would be no significant cost impact on NRC as review time for
the various financial assurance mechanisms is essentially the same.
III. 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 non-profit 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 non-profit 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 non-profit 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 non-profit 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 non-profit 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.
IV. Issues for Public Comment
(A) Agreement State Implementation Issues
Financial assurance mechanisms are a Division II compatibility
item. Agreement States may adopt regulations of equal or greater
stringency. States would therefore have the option to allow self-
guarantee. An Agreement State does not need to change its financial
assurance regulations if this proposed rule becomes final. The existing
Agreement State regulations on financial assurance do not have to
include self-guarantee as a financial assurance mechanism. Agreement
States have the flexibility to allow self-guarantee as a financial
assurance mechanism or not to allow it. The NRC invites comments on the
general issue of the compatibility status of its financial assurance
regulations.
(B) Financial Criteria for Non-Bond Issuing Entities
As discussed, substantial data exist on the default risks
associated with various levels of bond rating. However, a quantitative
estimate is not available for the financial assurance risk associated
with the non-bond rating criteria proposed here. The NRC invites
comment on whether these proposed criteria are sufficiently rigorous
with respect to financial assurance risk, or conversely, whether they
are so stringent as to exclude licensees who should not be excluded
because their financial position is such that the financial assurance
risk is acceptable.
Electronic Access
Comments may be submitted electronically, in either ASCII text or
WordPerfect format (version 5.1 or later), by calling the NRC
Electronic Bulletin Board (BBS) on FedWorld. The bulletin board may be
accessed using a personal computer, a modem, and one of the commonly
available communications software packages, or directly via Internet.
Background documents on the rulemaking are also available, as
practical, for downloading and viewing on the bulletin board.
If using a personal computer and modem, the NRC rulemaking
subsystem on FedWorld can be accessed directly by dialing the toll free
number (800) 303-9672. Communication software parameters should be set
as follows: parity to none, data bits to 8, and stop bits to 1 (N,8,1).
Using ANSI or VT-100 terminal emulation, the NRC rulemaking subsystem
can be accessed by selecting the ``Rules Menu'' option from the ``NRC
Main Menu.'' Users will find the ``FedWorld Online User's Guides''
particularly helpful. Many NRC subsystems and data bases also have a
``Help/Information Center'' option that is tailored to the particular
subsystem.
The NRC subsystem on FedWorld can also be accessed by a direct dial
phone number for the main FedWorld BBS, (703) 321-3339, or by using
Telnet via Internet: fedworld.gov. If using (703) 321-3339 to contact
FedWorld, the NRC subsystem will be accessed from the main FedWorld
menu by selecting the ``Regulatory, Government Administration and State
Systems,'' then selecting ``Regulatory Information Mall.'' At that
point, a menu will be displayed that has an option ``U.S. Nuclear
Regulatory Commission'' that will take the user to the NRC online main
menu. The NRC online area also can be accessed directly by typing ``/go
NRC'' at a FedWorld command line. If the user accesses NRC from
FedWorld's main menu, he or she may return to FedWorld by selecting the
``Return to FedWorld'' option from the NRC online Main Menu. However,
if the user accesses NRC at FedWorld by using NRC's toll-free number,
he or she will have full access to all NRC systems but will not have
access to the main FedWorld system.
If the user contacts FedWorld using Telnet, he or she will see the
NRC area and menus, including the Rules Menu. Although the user will be
able to download documents and leave
[[Page 23398]]
messages, he or she will not be able to write comments or upload files
(comments). If the user contacts FedWorld using FTP, all files can be
accessed and downloaded but uploads are not allowed; all the user will
see is a list of files without descriptions (normal Gopher look). An
index file is available listing and describing all files within a
subdirectory. There is a 15-minute time limit for FTP access.
Although FedWorld also can be accessed through the World Wide Web,
like FTP that mode only provides access for downloading files and does
not display the NRC Rules Menu.
For more information on NRC bulletin boards call Mr. Arthur Davis,
Systems Integration and Development Branch, NRC, Washington, DC 20555,
telephone (301) 415-5780; e-mail AXD3@nrc.gov.
Finding of No Significant Environmental Impact: Availability
The proposed amendments would allow qualified non-profit 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 may
currently elect to use a variety of financial assurance mechanisms,
such as surety bonds, letters of credit, and escrow accounts to comply
with decommissioning regulations. The proposed action is intended to
offer non-profit and non-bond-issuing nuclear materials licensees and
non-power reactor licensees greater flexibility by allowing an
additional mechanism for licensees that meet the financial criteria for
use of self-guarantee.
This proposed revision to the NRC's regulations simply would add
one more financial assurance mechanism to the mechanisms currently
available. It would not affect the cost of decommissioning materials
and non-power reactor facilities. Allowing self-guarantee for
additional types of licensees would 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). 5
Promulgation of this rule would 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 proposed 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,
and the NRC staff is not aware of any other documents related to the
environmental impact of this action. The foregoing constitutes the
environmental assessment and finding of no significant impact for this
proposed rule.
---------------------------------------------------------------------------
\5\ Copies of NUREG-0586 are available for inspection or
copying for a fee from the NRC Public Document Room at 2120 L Street
NW (Lower Level), Washington, DC 20555-0001; telephone (202)634-
3273; fax (202)634-3343. Copies may be purchased at current rates
from the U.S. Government Printing Office, P.O. Box 370892,
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.
---------------------------------------------------------------------------
Paperwork Reduction Act Statement
This proposed rule amends 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.
The public reporting burden for this collection of information is
estimated to average 9-14 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. The U.S. Nuclear Regulatory Commission is
seeking public comment on the potential impact of the collection of
information contained in the proposed rule and on the following issues:
1. Is the proposed collection of information necessary for the
proper performance of the functions of the NRC, including whether the
information will have practical utility?
2. Is the estimate of the burden correct?
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 collection of information be
minimized, including the use of automated collection techniques?
Send comments on any aspect of this proposed collection of
information, 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, -0020, -
0011, -0009, and -01320, Office of Management and Budget, Washington,
DC 20503.
Comments to OMB on the collections of information or on the above
issues should be submitted by May 30, 1997. 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.
Public Protection Notification
The NRC may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number.
Regulatory Analysis
The NRC has prepared a draft regulatory analysis on this proposed
regulation. The analysis examines the costs and benefits of the
alternatives considered by the NRC. The draft 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 Regulatory Research, U.S.
Nuclear Regulatory Commission, Washington, DC 20555, telephone (301)
415-6203.
The NRC requests public comment on the draft analysis. Comments on
the draft analysis may be submitted to the NRC as indicated under the
ADDRESSES heading.
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, if
promulgated, have a significant economic impact on a substantial number
of small entities. This proposed 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 proposed rule, if
promulgated as final, would result in significant cost savings to
qualifying licensees.
Backfit Analysis
The NRC has determined that the backfit rule, 10 CFR 50.109, does
not apply to this proposed rule and, therefore, that a backfit analysis
is not
[[Page 23399]]
required for this proposed rule, because 10 CFR 50.109 addresses only
the process for controlling backfits of nuclear power reactors and this
proposed rule does not affect the Commission's decommissioning
financial assurance requirements regarding nuclear power reactors (see
Statement of Considerations: Final Rule--Revision of Backfitting
Process for Power Reactors, 50 FR 38097; September 20, 1985).
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 proposing to
adopt 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.
* * * * *
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 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
non-profit entities, such as colleges, universities, and non-profit
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
[[Page 23400]]
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 alternate 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. 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 alternate 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 Non-Profit 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 of
the following tests must be met:
(a) (Total Revenues less total expenditures) divided by total
revenues must be equal to or greater than .04.
(b) Long term debt divided by net fixed assets must be less than
or equal to .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 of the following requirements:
(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 alternate 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. 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
alternate 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).
[[Page 23401]]
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 non-
profit entities, such as colleges, universities, and non-profit
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 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 non-
profit entities, such as colleges, universities, and non-profit
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 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 USC
2071, 2073, 2201, 2232, 2233, 2282); secs. 201, as amended, 202,
204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42 USC 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 USC 10155, 10161). Section
70.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 (42
USC 5851). Section 70.21(g) also issued under sec. 122, 68 Stat. 939
(42 USC 2152). Section 70.31 also issued under sec. 57d, Pub. L. 93-
377, 88 Stat. 475 (42 USC 2077). Sections 70.36 and 70.44 also
issued under sec. 184, 68 Stat. 954, as amended (42 USC 2234).
Section 70.61 also issued under secs. 186, 187, 68 Stat. 955 (42 USC
2236, 2237). Section 70.62 also issued under sec. 108, 68 Stat. 939,
as amended (42 USC 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 non-
profit
[[Page 23402]]
entities, such as colleges, universities, and non-profit 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 USC
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 USC 2021); sec. 201, as amended, 202, 206, 88
Stat. 1242, as amended, 1244, 1246 (42 USC 5841, 5842, 5846); Pub.
L. 95-601, sec. 10, 92 Stat. 2951 (42 USC 5851); sec. 102, Pub. L.
91-190, 83 Stat. 853 (42 USC 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 USC 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 USC 10162(b),
10168(c), (d)). Section 72.46 also issued under sec. 189, 68 Stat.
955 (42 USC 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 USC
10154). Section 72.96(d) also issued under sec. 145(g), Pub. L. 100-
203, 101 Stat. 1330-235 (42 USC 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 USC 10101, 10137(a),
10161(h)). Subparts K and L are also issued under sec. 133, 98 Stat.
2230 (42 USC 10153) and sec. 218(a), 96 Stat. 2252 (42 USC 10198).
12. In Sec. 72.30 the introductory text of paragraph (c)(2) is
revised to read as follows:
Sec. 72.30 Decommissioning Planning including financing and
recordkeeping.
* * * * *
(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 24th day of April, 1997.
For the Nuclear Regulatory Commission.
John C. Hoyle,
Secretary of the Commission.
[FR Doc. 97-11203 Filed 4-29-97; 8:45 am]
BILLING CODE 7590-01-P
