[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