[Federal Register Volume 65, Number 93 (Friday, May 12, 2000)]
[Proposed Rules]
[Pages 30550-30553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11955]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Proposed 
Rules  

[[Page 30550]]



NUCLEAR REGULATORY COMMISSION

10 CFR Part 50

[Docket No. PRM-50-70]


Eric Joseph Epstein; Receipt of Petition for Rulemaking

AGENCY: Nuclear Regulatory Commission.

ACTION: Petition for rulemaking; Notice of receipt.

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SUMMARY: The Nuclear Regulatory Commission (NRC) has received and 
requests public comment on a petition for rulemaking filed by Mr. Eric 
Joseph Epstein. The petition, docketed on January 3, 2000, has been 
assigned Docket No. PRM-50-70. The petitioner requests that NRC amend 
its financial assurance requirements for decommissioning nuclear power 
reactors to: (1) Require uniform reporting and recordkeeping for all 
``proportional owners'' of nuclear generating stations (defined by the 
petitioner as partial owners of nuclear generating stations who are not 
licensees); (2) modify and strengthen current nuclear decommissioning 
accounting requirements for proportional owners; and (3) require 
proportional owners to conduct a prudency review to determine a 
balanced formula for decommissioning funding that includes not only 
ratepayers and taxpayers but shareholders and board members of rural 
electric cooperatives as well. The petitioner believes that the 
proposed amendments would eliminate the funding gap for decommissioning 
between nuclear power licensees and proportional owners of nuclear 
generating stations.

DATES: Submit comments by July 26, 2000. Comments received after this 
date will be considered if it is practical to do so, but the Commission 
is able to assure consideration only for comments received on or before 
this date.

ADDRESSES: Mail comments to: Secretary, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001, Attention: Rulemakings and 
Adjudications Staff.
    Deliver comments to: 11555 Rockville Pike, Rockville, Maryland, 
between 7:30 a.m. and 4:15 p.m. on Federal workdays.
    For a copy of the petition, write to David L. Meyer, Chief, Rules 
and Directives Branch, Division of Administrative Services, Office of 
Administration, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001.
    You may also provide comments via the NRC's interactive rulemaking 
website at http://ruleforum.llnl.gov. This site allows you to upload 
comments as files in any format, if your web browser supports the 
function. For information about the interactive rulemaking website, 
contact Carol Gallagher, (301) 415-5905 e-mail:[email protected].
    The petition and copies of comments received may be inspected and 
copied for a fee at the NRC Public Document Room, 2120 L Street, NW. 
(Lower Level), Washington, DC.

FOR FURTHER INFORMATION CONTACT: David L. Meyer, Chief, Rules and 
Directives Branch, Division of Administrative Services, Office of 
Administration, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001, Telephone: 301-415-7162 or Toll Free: 1-800-368-5642 or e-
mail:[email protected].

SUPPLEMENTARY INFORMATION:

The Petitioner

    The petitioner, Eric Joseph Epstein, has been actively involved 
since 1985 in testifying, filing, and intervening on nuclear 
decommissioning and radioactive waste isolation issues before the NRC 
and the Pennsylvania Public Utility Commission. The petitioner's 
research and testimony have focused on Peach Bottom, Units 1, 2, and 3; 
the Saxton Experimental Reactor; Shippingport Atomic Power Station; the 
Susquehanna Steam Electric Station (SSES), Units 1 and 2; and Three 
Mile Island (TMI), Units 1 and 2. The petitioner states that he and 
General Public Utilities Nuclear (GPUN) sponsored and invested $890,000 
in remote robotics research relating to nuclear decommissioning.

Petitioner's Concern

    Mr. Epstein submitted his petition for rulemaking because he 
believes the funding component for decommissioning provided by 
proportional owners of nuclear generating stations, including rural 
electric cooperatives (RECs), is fatally flawed and likely to 
contribute to inadequate funding.
    The petitioner states that proportional owners are not required to 
submit periodic cost projections, conduct site-specific studies, or 
coordinate with the power reactor licensee. Also, the petitioner states 
that proportional owners are not mandated by the NRC to verify, report, 
or monitor recordkeeping relating to nuclear decommissioning funding 
mechanisms.
    The petitioner believes it is grossly unfair and inequitable to 
require Federal taxpayers and State ratepayers to provide a financial 
safety net for the nuclear investments of proportional owners. The 
petitioner offers the following reasons to support his belief: (1) 
Proportional owners, including RECs, aggressively supported 
construction, licensing, and operation of nuclear generating stations; 
(2) they were fully cognizant that no commercial nuclear reactor had 
been decommissioned, and that a solution to nuclear waste disposal did 
not exist; (3) neither the utility, industry, proportional owners, nor 
RECs, have actively sponsored decommissioning research or sought good 
faith solutions to the permanent storage and isolation of low-level and 
high-level radioactive waste; and (4) proportional owners and RECs, 
willfully pursued a financial investment in nuclear energy which they 
knew was fraught with huge uncertainties.

Background

Definition of an Electric Utility

    The petitioner states that utility deregulation has caused concern 
regarding future rate recovery for the nuclear industry. The petitioner 
explains that NRC had anticipated the nuclear industry's financial 
apprehension and acted accordingly by promulgating regulations to 
resolve the industry's concern. The petitioner notes that the NRC 
published proposed amendments on September 10, 1997 (62 FR 47588), in 
response to the potential deregulation of the power generating

[[Page 30551]]

industry and to questions as to whether it should modify its current 
regulations concerning decommissioning funds and their financial 
mechanisms. The proposed rule was issued as a final rule on September 
22, 1998 (63 FR 50465), a fact not indicated by the petitioner.
    The petitioner states that the NRC extended the definition of an 
``electric utility'' to include:

    An entity whose rates are established by a regulatory authority 
by mechanisms that cover only a portion of the costs collected in 
this manner. Public utility districts, municipalities, rural 
electric cooperatives and State and Federal agencies, including 
associations of any of the foregoing, that establish their own rates 
are included within the meaning of ``electric utility.'' (Section 
50.2, Definitions, [September 10, 1997; 62 FR 47605].)

    However, according to the petitioner, the NRC created a legal 
loophole for proportional owners and RECs, by limiting reporting and 
recordkeeping requirements to ``power reactor licensees,'' thus 
enabling partial owners to be free from NRC scrutiny. The petitioner 
recommends that NRC mandate that all partial owners of nuclear 
generating stations, including RECs, be subject to reporting and 
recordkeeping requirements and pre-funding thresholds and timetables in 
Section 50.75 (a) through (e).

Current Problems Associated With Cost Estimates for Radiological 
Decommissioning

    The petitioner questions the reliability of nuclear decommissioning 
cost projections provided by industry consultant, Thomas LaGuardia, and 
TLG, Inc. The petitioner states that TLG-based decommissioning 
estimates on flawed and specious field studies extrapolated from small, 
minimally contaminated, and prematurely shut-down nuclear reactors.
    The petitioner states that wild fluctuation in the cost estimates 
for radiological decommissioning are attributable to the lack of actual 
decommissioning experience at large nuclear generating stations, over 
1000 megawatts electric (MWe), or at plants that have operated for 
their full, planned lifespan. The petitioner indicates that the largest 
nuclear power plant to be fully decommissioned was Shippingport Atomic 
Power Station, a 72 MWe light-water breeder reactor that is 
substantially smaller than SSES, Units 1 and 2 (1050 MWe for each 
unit).
    The petitioner states that TLG, Inc., admitted that Shippingport 
was ``almost like a pilot plant.'' The petitioner believes that the 
immense differences between Shippingport and the SSES make any 
financial comparison between the two inadequate and baseless. The 
petitioner states that although several other nuclear reactors are 
being prepared for decommissioning, they provide little meaningful 
decommissioning experience that could be used to reliably predict the 
decommissioning costs of SSES. As examples, the petitioner provides 
detailed discussions regarding the decommissioning cases of Yankee Rowe 
and Shoreham.
    The petitioner states that no commercial nuclear power plant has 
been decommissioned, decontaminated, and returned to free-release. 
According to the petitioner, nuclear decontamination and 
decommissioning technologies are in their infancy. The petitioner 
characterizes the NRC's treatment of prematurely shutdown reactors as 
follows: (1) There is a reluctance to undertake, initiate or finance 
decommissioning research; (2) prematurely shutdown reactors place an 
additional financial strain on the licensee; and (3) these reactors 
have been retired for mechanical or economic reasons. [United States 
Nuclear Regulatory Commission, Advisory Panel for the Decommissioning 
of Three Mile Island Unit-2, September 23, 1993].
    The petitioner states that Pennsylvania Power and Light, Inc. 
(PP&L) contracted with TLG to construct decommissioning cost estimates 
based on work completed at Shippingport, Shoreham, Yankee Rowe, and 
small prototype reactors such as: BONUS (17 MWe), Elk River (20 MWe), 
and Pathfinder (60 MWe). The petitioner asserts that TLG's estimates 
relied on: (1) The development of nonexistent technologies; (2) 
anticipated projected cost of radioactive disposal; and (3) the 
assumption that costs for decommissioning small and short-lived 
reactors can be accurately extrapolated to apply to large commercial 
reactors operating for 40 years.
    The petitioner indicates that in 1981, PP&L predicted that its 
share to decommission SSES would be between $135 and $191 million. The 
petitioner notes that estimate has increased by at least 553 percent in 
the last 19 years.

Proportional Confusion: The Case of the Allegheny Electric Cooperative 
and Pennsylvania Power and Light, Inc.

    The petitioner questions Allegheny Electric Cooperative's 
(Allegheny) method for calculating decommissioning cost. The petitioner 
states that Allegheny owns 10 percent of the SSES, while PP&L owns 90 
percent. The petitioner states that Allegheny is responsible for 10 
percent of the projected funding target for decommissioning. The 
petitioner states that PP&L's consultant, TLG, estimates PP&L's share 
for decommissioning SSES to be $724 million. Therefore, according to 
the petitioner, Allegheny's share would be $79 million of the $804 
million projected cost for decommissioning. However, the petitioner 
asserts that Allegheny has set aside only 5 percent (rather than 10 
percent) of its projected share of the cost of decommissioning. 
According to the petitioner, the Allegheny's Director of Finance and 
Administrative Service states that Allegheny is basing its 
decommissioning estimates on data provided by PP&L ( i.e., Allegheny's 
portion of the estimated cost of decommissioning SSES is approximately 
$37.8 million and is being accrued over the estimated useful life of 
the plant). The petitioner asserts that Allegheny does not know what 
method it is employing to calculate decommissioning cost. In addition, 
PP&L does not actively monitor Allegheny's obligations.
    The petitioner characterizes the uncertainty between 
decommissioning partners as crucial and potentially debilitating and 
believes that the question of financial responsibility is increasingly 
important since PP&L has no enforcement mechanism to compel Allegheny 
to fund 10 percent of the decommissioning cost. The petitioner adds 
that Allegheny is owned and controlled by 14 distribution cooperatives. 
Allegheny is not regulated by the Public Utility Commission (PUC) and 
does not have publicly traded stock. Therefore, the petitioner assets 
there is no behavior modifying mechanism to allow State regulators or 
PP&L shareholders to oversee Allegheny's contributions.
    The petitioner believes that Allegheny's tenuous financial position 
regarding decommissioning savings will place a greater fiscal burden on 
PP&L by: (1) Creating further uncertainties about PP&L's ability to 
meet its financial commitments to decommission SSES; (2) undermining 
TLG's net decommissioning estimates; and (3) radically skewing TLG's 
contingency factor. The petitioner asserts that if this scenario is 
realized by other power reactor licensees and their proportional 
partners, the ripple effect could be staggering and could potentially 
expose ratepayers and taxpayers to billions of dollars in nuclear 
decommissioning shortfalls. In addition, the petitioner states that 
although the NRC requires that all nuclear power plants be returned to 
greenfield, i.e., the original environmental status of the facilities

[[Page 30552]]

prior to construction, it does not mandate cost estimates for non-
radiological decommissioning. Furthermore, the petitioner asserts that 
greenfield has not been achieved by any large commercial nuclear plant, 
and utilities are not required to save for the mandated restoration; 
therefore, placing additional strain on the companies' ability to 
finance radiological and non-radiological decommissioning.

Planned Operating Life for Nuclear Generating Stations

    The petitioner states that experience at large commercial nuclear 
power plants over 200 MW has clearly demonstrated that TLG's assumption 
that nuclear units will operate for 40 years contradicts existing 
nuclear experience. The petitioner has identified and provided detailed 
information on 13 nuclear power plants that have shut down prematurely. 
The petitioner states that a sense of fair play, intergenerational 
equity, and fiduciary accountability should direct proportional owners, 
including RECs, to plan for decommissioning on the basis of the 
assumption that their nuclear units will prematurely shut down. The 
petitioner adds that operating capacity and historical evidence from 
commercial nuclear power plants do not indicate that nuclear power 
plants will operate for 40 years. The petitioner assesses that there 
are chronic shortfalls between targeted funding levels and actual costs 
for nuclear decommissioning. The petitioner asserts that the burden of 
proof lies with the power reactor licensees and their partners to 
demonstrate that the 40-year lifespan that they predicate their 
financial planning upon is realistic. The petitioner believes the 
nuclear industry has exacerbated this problem by refusing to provide 
adequate funding for nuclear decontamination and decommissioning.

Spent Fuel Isolation

    The petitioner states that a significant problem for nuclear 
generating stations is that the fuel storage capacity will be exhausted 
before the plant license expires. The petitioner states that because 
there is no location to store spent fuel permanently, nuclear 
facilities have become de facto high-level, radioactive waste sites, 
and many are currently proposing to increase the capacity to store this 
waste using an untested, commercial waste technology (dry cask 
storage). The petitioner contends that the additional cost of 
increasing the capacity of spent fuel will have a significant effect on 
decommissioning. The petitioner notes that at SSES, spent fuel costs 
were omitted from TLG's decommissioning estimate. The petitioner 
explains that: (1) Isolation of high-level radioactive waste, which is 
primarily composed of spent nuclear fuel, cannot be separated from 
nuclear decommissioning; (2) at the earliest, Yucca Mountain, the 
designated repository for the storage of nuclear waste, will be 
available in 2010; (3) nuclear generating stations cannot be 
immediately decontaminated and decommissioned with spent fuel on site 
or inside the vessel; (4) aggressive and destructive decontamination 
cleanup processes will be unavailable until spent fuel is removed from 
the nuclear plant's temporary storage facilities; (5) front-end 
decommissioning tasks require skilled workers for site-specific tasks; 
and (6) labor costs are erratic and should be linked to inflationary 
indices.
    The petitioner charges that NRC and the nuclear industry devote 
scant resources to decommissioning research and development. The 
petitioner believes that this laissez-faire approach should not be 
rewarded by financially penalizing ratepayers and taxpayers. The 
petitioner warns that if a long-term solution to spent fuel isolation 
is not found in the near future, many nuclear generating stations will 
be shut down prematurely because of a lack of storage space. Therefore, 
the petitioner believes that cost projections by proportional owners 
and RECs, must include variable funding scenarios in the event a high-
level radioactive isolation site is not available during a premature 
shutdown, or at the end of a plant's planned 40-year operating life 
span.

Low-Level Radioactive Waste Isolation

    The petitioner states that TLG provided nuclear waste storage and 
nuclear decommissioning cost estimates for all Pennsylvania utilities 
regulated by the PUC. The petitioner states that TLG's representative 
based his cost estimates for low-level radioactive waste (LLRW) 
disposal on the assumption that the Appalachian Compact would be 
available when SSES closes (1995 PP&L Base Rate Case, Page 1034, Lines 
17-20). The petitioner states that the representative concluded that 
the disposal of LLRW is the most expensive component in the 
decommissioning formula (Page 2091, Lines 21-25); however, the 
representative conceded that it may be necessary to recompute cost 
estimates for disposal because the Barnwell storage facility for LLRW 
will be open for 7 to 10 years for all states except North Carolina 
(Page 2108, Lines 4-9). The petitioner notes that PP&L has not 
reconfigured the cost of LLRW disposal since Barnwell opened July 5, 
1995.
    The petitioner asserts that in addition to recomputing the cost of 
LLRW disposal, the reopening of Barnwell has definitely postponed the 
siting of a waste facility in Pennsylvania. The petitioner notes the 
Appalachian States LLRW Commission Executive Director observed: ``If 
Barnwell's going to be open to the entire country for at least the next 
10 years, is there really a pressing need to continue work on regional 
disposal facilities?'' The petitioner states that on June 18, 1998, the 
Appalachian States LLRW Commission voted to support the Pennsylvania 
Department of Environmental Protection's suspension of the siting 
process for an LLRW disposal facility.

Court Cases

    The petitioner states that United States regulatory law has never 
recognized the right of utilities to recover imprudent, highly 
speculative utility expenditures, citing Bluefield Water Works & 
Improvement Company v. Public Service Commission of the State of West 
Virginia, 262 U.S. 668, 678 (1923) and State of Missouri ex rel. 
Southwestern Bell Telephone Company v. Public Service Commission of 
Missouri, 262 U.S. 276, 289 (1923).
    The petitioner has included detailed information from other court 
cases that recommend prudency review of requests by utilities for rate 
increases. The petitioner asserts that the concerns expressed in the 
various court cases discussed in this petition by the commissions 
vested with the responsibility of approving rate hike requests, tax 
increases, and recovery of new construction costs, are valid and 
applicable to the issue of imprudent ``stranded costs'' and grossly 
inadequate decommissioning projections. The petitioner recommends that 
an extensive prudency review of the costs incurred by power reactor 
licensees, their partners, and RECs, in the construction of nuclear 
power plants and subsequent decisions by the owners and operators in 
their continuing operation is mandated by the speculative and imprudent 
nature of corporate management.

Petitioner's Conclusion

    The petitioner states that data clearly demonstrate that the 
majority of commercial nuclear power plants will not operate through 
their planned operating life of 40 years. The petitioner believes that 
while the power reactor licensees are entitled to recover a portion of 
decommissioning funding

[[Page 30553]]

through the rate and tax relief processes, they are not entitled to a 
full and complete rebate on ``stranded investments'' and shortfalls 
that will arise because funding targets for decommissioning have been 
underfunded. The petitioner believes that shareholders and board 
members of electric utilities and RECs, must assume responsibility for 
their business decision. The petitioner adds that to allow artificial 
definitions concerning ownership of nuclear power plants to insulate 
those who cogently made capital investments is immoral, unethical, and 
an endorsement of corporate socialism. The petitioner asserts that 
shareholders profit from imprudent investment decisions and are 
accorded relief when error of mismanagement becomes manifest. The 
petitioner believes that society, the nuclear industry, proportional 
owners and RECs, must assume responsibility for their investment 
strategies.

Remedies

    The petitioner recommends the following remedies:
    1. RECs, and proportional partners of nuclear generating stations 
that are not specified as the power reactor licensee must conduct a 
revised and updated site-specific analysis biennially based on 
prevailing realities that include a recognition that the NRC is 
redefining the concept of ``electric utility'; scientifically 
verifiable cost projections for the nuclear decommissioning ``target'; 
premature shutdowns of a substantial number of commercial nuclear 
generating stations; dry cask storage planning and construction; the 
asserted indisputable fact that Yucca Mountain will not be available at 
the time the spent fuel capacity has been breached at many operating 
nuclear generating stations; and, the asserted reality that the concept 
of regional low-level waste facilities has been supplanted by the 
extended operating life of ``low-level'' radioactive waste facilities.
    2. Prevailing legal precedent undermines the notion that nuclear 
partnerships are entitled to full rate relief from present ratepayers 
and taxpayers for nuclear decommissioning costs. A sense of fair play, 
intergenerational equity, and risk sharing between ratepayers and 
taxpayers on one hand, and shareholders and board members on the other, 
necessitate that the NRC direct and extend the conditions and mandates 
promulgated in Section 50.75, Reporting and Recordkeeping for 
Decommissioning Planning, (a), (b), (c), (d), (e), and (f), to include 
all partners in nuclear generating stations, including board members of 
RECs; and,
    3. After implementing remedies (1) and (2), NRC must compel 
proportional owners of nuclear power generating stations, including 
RECs, to conduct prudency reviews.
    The petition, which consists of a 37-page brief, provides 
additional justification and support for the requested amendments not 
included in this Federal Register notice. The NRC requests that 
commenters consider, among other matters raised by petitioner, whether 
all of the remedies requested by petitioner are within the regulatory 
scope and jurisdiction of the NRC. By publishing this notice, the NRC 
is not concluding that it has jurisdiction over all of petitioner's 
requested remedies. Members of the public interested in filing comments 
on PRM-50-70 are urged to obtain a copy of the petition by writing to 
the address under ADDRESSES or by viewing the petition at the NRC 
website at http://ruleforum.llnl.gov.

    Dated at Rockville, Maryland this 8th date of May 2000.

    For the Nuclear Regulatory Commission.
Annette Vietti-Cook,
Secretary of the Commission.
[FR Doc. 00-11955 Filed 5-11-00; 8:45 am]
BILLING CODE 7590-01-P