[Federal Register Volume 65, Number 147 (Monday, July 31, 2000)]
[Proposed Rules]
[Pages 46661-46666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19242]


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NUCLEAR REGULATORY COMMISSION

10 CFR Part 50

[Docket No. PRM-50-64]


Atlantic City Electric Company, Austin Energy, Central Maine 
Power Company, Delmarva Power & Light Company, South Mississippi 
Electric Power Association, and Washington Electric Cooperative, Inc.; 
Denial of Petition for Rulemaking

AGENCY: Nuclear Regulatory Commission.

ACTION: Denial of petition for rulemaking.

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SUMMARY: The Nuclear Regulatory Commission (NRC or ``Commission'') is 
denying a petition for rulemaking submitted by the Atlantic City 
Electric Company, Austin Energy, Central Maine Power Company, Delmarva 
Power & Light Company, South Mississippi Electric Power Association, 
and Washington Electric Cooperative, Inc. (PRM-50-64). The petitioners 
requested that the enforcement provisions of NRC regulations be amended 
to clarify NRC policy regarding the potential liability of joint owners 
if other joint owners become financially incapable of bearing their 
share of the burden for safe operation or decommissioning of a nuclear 
power plant.\1\ The Commission is denying the petition because the 
NRC's intent is not to impose responsibilities for operating or 
decommissioning costs pursuant to NRC regulatory requirements on co-
owners in a manner inconsistent with contractual ownership agreements, 
except, and only as a last resort, when highly unusual circumstances 
relating to the protection of the public's health and safety require 
it. Also, the petition would not improve the NRC's regulatory process 
and maintain the same level of protection of the public health and 
safety provided under current Commission regulations, legal precedent, 
and policies.
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    \1\ In the ``Final Policy Statement on the Restructuring and 
Deregulation of the Electric Utility Industry,'' published on August 
19, 1997 (62 FR 44071), the NRC referred to ``joint and several 
liability.'' As discussed subsequently in this notice, the NRC 
believes that ``joint and several regulatory responsibility'' more 
accurately reflects the concept intended in the final policy 
statement.

ADDRESSES: Copies of the petition for rulemaking, the public comments 
received, and the NRC's letter of denial to the petitioner are 
available for public inspection or copying in the NRC Public Document 
Room, 2120 L Street NW. (Lower Level), Washington, D.C. These documents 
are also available at the NRC's rulemaking website at http://
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ruleforum.llnl.gov.

FOR FURTHER INFORMATION CONTACT: Brian J. Richter, Office of Nuclear 
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001, telephone (301) 415-1978, [email protected].

SUPPLEMENTARY INFORMATION:

The Petition

    On January 5, 1999 (64 FR 432), the NRC published a notice of 
receipt of a petition for rulemaking (PRM) filed by the Atlantic City 
Electric Company, Austin Energy, Central Maine Power Company, Delmarva 
Power & Light Company, South Mississippi Electric Power Association, 
and Washington Electric Cooperative, Inc. The petitioners requested 
that the NRC amend the enforcement provisions of NRC regulations to 
clarify NRC policy regarding the potential liability of joint owners if 
other joint owners become financially incapable of bearing their share 
of the burden for safe operation or decommissioning of a nuclear power 
plant.
    The petitioners are concerned that the NRC's ``Final Policy 
Statement on the Restructuring and Economic Deregulation of the 
Electric Utility Industry'' (Policy Statement) published on August 19, 
1997 (62 FR 44071), has resulted in confusion among joint owners of 
nuclear power plants regarding the potential liability of the owner of 
a relatively small share of a nuclear power plant. In the Policy 
Statement, the Commission indicated that it ``reserves the right, in 
highly unusual situations where adequate protection of the public 
health and safety would be compromised, if such action were not taken, 
to consider imposing joint and several liability on co-owners of more 
than de minimis shares when one or more co-owners have defaulted.'' 
(This is as opposed to dividing costs by using a pro rata share 
approach.) The petitioners believe that a joint owner could incur the 
burden of all, or an excessive portion, of a plant's costs if other 
joint owners or the operators defaulted or became financially incapable 
of bearing their share of the burden. The petitioners believe that the 
NRC has changed its policy so that it would now ignore existing pro 
rata cost sharing arrangements that it had previously sanctioned. The 
petitioners stated that the NRC has published no information regarding 
what would constitute a de minimis share and that the particular 
circumstances under which the NRC might find the imposition of joint 
and several liability necessary to protect the public health and safety 
are not defined.
    The petitioners have concluded that these factors have caused much 
confusion and uncertainty about the potential liability of a joint 
owner, and can adversely affect the ability to raise capital in an 
uncertain market that is undergoing consolidation and restructuring.
    The petitioners requested that the issue of potential liability 
among joint owners be resolved by amending the regulations concerning 
enforcement in 10 CFR part 50. The petitioners proposed that the NRC's 
regulations be amended to provide that if the NRC

[[Page 46662]]

imposes additional requirements to protect public health and safety, 
the NRC would look first to the entity licensed to operate a nuclear 
power plant to assume whatever costs are incurred in meeting those 
requirements. The petitioners also requested that the regulations be 
amended to provide that if the NRC imposes these additional 
requirements on co-owners (licensees) who are not licensed to operate 
the plant, the NRC would not impose upon any of those licensees a 
proportional responsibility greater than that reflected in contracts 
establishing the allocation of responsibility among the co-owners.

Public Comments on the Petition

    The NRC received 76 comments covering 20 topic areas from 16 
commenters, all of whom were licensees or groups representing 
licensees. Of the 16 commenters, 11 were electric utilities (including 
five cooperatives) and five comments were from industry groups. Of the 
industry groups, two represented electric cooperatives and three 
represented investor-owned electric utilities. Almost all of the 
commenters agreed with the petitioners that NRC should not impose joint 
and several liability on its licensees. The cooperative utilities also 
agreed with other issues and in general favored the petition. The 
investor-owned utilities disagreed with other issues and consequently 
were against the petition.
    The topic areas raised by the commenters follow (with the number of 
commenters making that statement appearing in parentheses). The NRC's 
responses are contained in the paragraphs after each comment.
    Comment 1. The Policy Statement is at odds with the pro rata share 
contractual agreements (reviewed and approved by the NRC). The 
Commission should clarify that it will not impose operating or 
decommissioning costs on co-owners greater than their contractual 
obligations. (10)
    Response: The Commission has decided against taking the requested 
action because it could adversely affect public health and safety in 
those highly unusual circumstances when public health and safety are at 
risk and all other remedies have been exhausted. Because all co-owners 
are co-licensees, each licensee is ultimately responsible for complying 
with the Commission's regulations and the terms of the license. 
Although, in virtually all situations, the Commission expects that 
obligations under a license will be handled on a pro rata basis among 
co-owners, it cannot rule out highly unusual situations in which it 
would seek a co-owner to pay more than its pro rata share when 
essential to protecting public health and safety, e.g., where one of 
the other co-owners is no longer capable of paying its pro rata share 
of costs. The rule change contemplated by the petition could prohibit 
the Commission from remedying such a situation. It would suggest that 
no matter how much a co-owner's financial outlook changes for the worse 
from the time of initial licensing, the Commission may not take all 
necessary action to ensure safe operation or decommissioning. Such a 
scheme would be inconsistent with the Commission's longstanding 
authority to take regulatory action in situations involving changed 
circumstances from initial licensing. See Atomic Energy Act Secs. 186, 
187, 42 U.S.C. 2236, 2237; 10 CFR 50.100; Cf., All Chemical Isotope 
Enrichment, Inc., LBP-90-26, 32 NRC 30 (1990) (Licensing Board 
sustained staff revocation of construction permits of a licensee that 
had failed to disclose its true financial condition during the original 
licensing proceeding).
    Comment 2. Non-operating co-owners should not be liable for more 
than their contractually agreed upon share of additional, Commission-
imposed requirements. (1)
    Response: See response to Comment 1.
    Comment 3. The Policy Statement has created uncertainty for 
minority owners because the Commission could impose operating or 
decommissioning costs on co-owners greater than their contractual 
obligations. This policy could affect the ability of co-owners to raise 
funds in financial markets. (6)
    Response: The Commission believes that, given the limitations of 
this policy to highly unusual circumstances and its inapplicability to 
those co-licensees with de minimis shares, minority licensees will not 
experience significant uncertainty. The Commission notes that comments 
on the petition from investor-owned utilities or their representatives 
did not express concern about the impact of raising funds in capital 
markets, even though investor-owned utilities must go to essentially 
the same capital markets as the minority owners.
    Comment 4. NRC imposition of joint and several liability on co-
licensees in a manner inconsistent with co-licensees' contractual 
agreements would constitute unlawful retroactive rulemaking (4) and is 
an unconstitutional impairment of contracts and a ``taking'' of 
property without compensation. The Atomic Energy Act of 1954, as 
amended, does not contain explicit authorization for the Commission to 
impose retroactive rules on the subject of joint and several liability, 
and therefore, the Commission does not possess authority to 
retroactively impose joint and several liability, citing Bowen v. 
Georgetown University Hospital, 488 US 205 (1988). (1)
    Response: Commission action ensuring that operating or 
decommissioning funds are available from co-applicants/co-licensees 
regardless of the contractual arrangements among co-owners for pro rata 
sharing of costs does not constitute a retroactive action. Contrary to 
the commenter's assumption, the Commission never ``approved'' the 
private contractual arrangements for the sharing of costs among co-
owners/co-licensees. The Commission's consideration of co-applicants'/
co-licensees' cost-sharing arrangements initially was solely for the 
purpose of determining, under 10 CFR 50.33, if the co-applicants/co-
licensees had the financial qualifications necessary to construct and 
operate the nuclear power plant. After the Commission assured itself 
that the co-applicants'/co-licensees' financial qualifications provided 
for reasonable assurance that co-applicants/co-licensees together would 
be able to pay for all necessary costs of construction and operation, 
the Commission's inquiry was satisfied and the appropriate finding 
could be made.\2\ The Commission has reviewed co-owners'/co-licensees' 
provisions for decommissioning financial assurance, pursuant to 10 CFR 
50.75 in a similar manner.
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    \2\ However, since 1984, the NRC has not required Operating 
License Stage review of the financial qualifications of ``electric 
utilities,'' as defined in the Commission's regulations (10 CFR 
50.2).
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    Staff guidance on financial qualifications discloses no intent to 
approve the specific cost-sharing arrangements made between licensees, 
as opposed to reviewing the arrangements to ensure that the licensees 
together possess the necessary financial qualifications. Although power 
reactor licenses frequently recite the ownership percentages of the co-
licensees, those percentages do not invariably reflect the allocation 
of decommissioning funding obligations. By reciting ownership 
percentages, the staff did not intend to make any finding about 
proportional allocation of decommissioning funding obligations. 
Therefore, the co-owners had no reasonable expectation that their 
regulatory obligations were limited by those arrangements. In the 
absence of any regulatory ``approval'' by the NRC of the private 
contractual arrangement by co-licensees with respect to pro rata cost 
sharing, there is no legal basis for a claim of retroactivity.

[[Page 46663]]

    Furthermore, Commission action recognizing joint and several 
regulatory responsibility on co-licensees \3\, e.g., to ensure that 
operating or decommissioning funds are available from co-applicants/co-
licensees regardless of the contractual arrangements among co-owners 
for pro rata sharing of costs, does not alter and therefore leaves 
undisturbed the contractual rights of a co-owner to recover costs from 
another co-owner under their contractual agreements in a private cause 
of action or in a bankruptcy proceeding. The enforcement of those 
arrangements appropriately lies with the parties to those pro rata--
share contracts and the courts, not the NRC, which is neither a party 
to the contracts nor a tribunal with authority to enforce them. Because 
Commission action to impose joint and several responsibility has no 
legal effect upon the private contractual arrangements for cost sharing 
among co-licensees, it per se follows that this Commission action does 
not constitute an unconstitutional impairment of the contractual cost 
sharing agreements among co-licensees, nor does it constitute an 
unlawful ``taking.''
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    \3\ As discussed later in this notice, the NRC believes that the 
term, ``joint and several regulatory responsibility'' more 
accurately reflects the intent of the NRC's policy statement. Thus, 
the NRC will use the term ``joint and several regulatory 
responsibility'' in lieu of ``joint and several liability.''
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    In sum, the Commission never approved the private contractual 
arrangements among co-licensees/co-owners for sharing of costs. 
Therefore, Commission imposition of joint and several regulatory 
responsibility that may be inconsistent with these private contractual 
arrangements would not constitute retroactive rulemaking.
    Comment 5. If the Commission imposed an additional financial burden 
on the remaining owners of a nuclear power plant (NPP), and if the rate 
authorities would not allow additional costs into the rate base, the 
result would drive the co-owners into financial distress, creating 
further risks. This action would not only affect minority owners of 
NPPs, but also investors and State regulatory authorities. (6)
    Response: If a licensee experiences financial difficulties, the 
minority owners of NPPs as well as investors and State regulatory 
authorities would likely be affected whether or not the Commission 
imposed additional responsibilities on the minority owners above their 
pro rata share. Also, the Commission would consider imposing any 
additional burden only under highly unusual circumstances in which no 
other regulatory action would protect the public health and safety, 
such as through bankruptcy courts or financial markets. (Financial 
markets would come into play, for example, if a financially troubled 
licensee were to seek refinancing of its ownership share or if it were 
to sell its share to another party.)
    Comment 6. The NRC should clarify its intent with respect to 
potential financial obligations of nuclear power plant licensees. (3)
    Response: The Commission believes that it has already clearly 
stated its intent with respect to potential financial obligations of 
nuclear power plant licensees in the Policy Statement. To the extent 
that the petitioners are seeking clarification, the Commission trusts 
that the petitioners will find that clarification in this denial 
notice, including the Commission's response to these comments. The 
Commission notes that the term, ``joint and several liability,'' may 
have connotations for contract law that the Commission did not intend 
to convey and that the term ``joint and several regulatory 
responsibility'' more accurately reflects the intent of the 
Commission's policy statement. Commission guidance on financial 
obligations is also provided in the ``Standard Review Plan on Power 
Reactor Financial Qualifications and Decommissioning Funding 
Assurance'' NUREG-1577, Rev. 1 (March 1999).
    Comment 7. The NRC should define or clarify ``de minimis share'' 
and ``joint and several liability'' in ``highly unusual 
circumstances.'' (5)
    Response: As referenced in the Policy Statement, ``de minimis 
share'' means a level of plant ownership below which, even in highly 
unusual circumstances where recourse to all other potential remedies 
(e.g., rate regulators, bankruptcy proceedings) has failed, the 
Commission would not attempt to impose joint and several regulatory 
responsibility on minority co-owners of a plant. The Commission did not 
specify a numerical value in the Policy Statement for ``de minimis 
share.'' The Commission recognizes that a licensee with a relatively 
small percentage of plant ownership is unlikely in most circumstances 
to have sufficient resources available to assume responsibility for 
significantly more than its pro rata share if a co-owner defaults. For 
example, relatively small portions of nuclear units may be owned by 
small rural electric cooperatives or small municipal electric systems. 
In addition, ownership arrangements and percentages vary substantially 
from plant to plant. Given this variation, the Commission believes that 
it is appropriate to evaluate the imposition of joint and several 
responsibility on a case-by-case basis, when this consideration becomes 
necessary in highly unusual circumstances after all other remedies have 
failed. A unit-by-unit listing of plant ownership percentages is 
contained in NUREG/CR-6500, Rev. 1, ``Owners of Nuclear Power Plants'' 
(March 2000).
    The Commission does not intend to impose inordinate financial 
stress on its licensees by seeking their payment of additional safety-
related costs above their normal pro rata share as a result of default 
by a co-owner. The Commission recognizes that, particularly for smaller 
municipal and cooperative entities, requiring them to pay for more than 
their pro rata share (an already substantial sum, particularly for a 
smaller entity) could be counterproductive by potentially causing 
additional defaults by those entities. In practice, it is unlikely that 
the Commission would be able to obtain additional funds from a 
seriously financially stressed smaller licensee to cover a defaulting 
licensee's safety expenses. As indicated, the Commission would only 
consider imposing a joint and several regulatory responsibility in 
highly unusual and, presumably, quite rare circumstances after all 
other feasible remedies have been exhausted.
    In any event, the Commission does not find it advisable to 
establish what would constitute a de minimis share of plant ownership 
applicable to all circumstances. If the Commission were to establish a 
numerical de minimis threshold of general applicability, it would 
likely do so by a process that provides an opportunity for public 
comment on the proposed numerical threshold. However, the Commission 
does not believe that establishing a numerical de minimis threshold is 
appropriate; the Commission needs to retain flexibility to respond to 
particular circumstances.
    As noted above, the Commission intends to use the term ``joint and 
several regulatory responsibility'' in place of ``joint and several 
liability.'' With regard to Commission regulations regarding NPPs, the 
obligations for which the co-owners/co-licensees could be jointly and 
severally responsible are those in the Commission's regulations or 
identified in the license. (See also the response to Comment 1.) By 
``highly unusual circumstances'' we mean circumstances when the public 
health and safety may be at risk because of lack of appropriate action 
by licensees. The Commission would consider requiring other co-owners/
co-licensees to assume additional health and safety expenditures in 
excess of their pro rata

[[Page 46664]]

share only after all other remedies have been exhausted (e.g., rate 
regulators, bankruptcy courts).\4\
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    \4\ The Commission recognizes that if there are inadequate funds 
to operate the facility safely, the appropriate action would be for 
the Commission to order the plant to cease operation. Thus, it would 
be highly unusual for the Commission to require operation under 
these circumstances. However, should a co-licensee or co-owner 
default on its decommissioning funding obligation, and, in turn, 
create a health and safety problem and no other recourse were 
available, the Commission would be more likely to seek to impose a 
joint and several regulatory responsibility for decommissioning 
funding on the remaining owners/licensees.
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    Comment 8. NRC's rule on Financial Assurance Requirements for 
Decommissioning Nuclear Power Plants (September 22, 1998; 63 FR 50465), 
identified problems that could result from trying to impose joint and 
several liability. The Policy Statement does not explain why it takes a 
position different from the rule. (3)
    Response: The Commission does not believe that the Policy Statement 
takes a position different from the final rule on Financial Assurance 
Requirements for Decommissioning Nuclear Power Plants, but supplements 
it. The Commission addressed ``joint liability'' in some detail in the 
proposed rule, published in the Federal Register on September 10, 1997 
(62 FR 47588). Both the rule and the Policy Statement stated that under 
virtually all circumstances, pro rata division of decommissioning is 
acceptable, although the rule did not explicitly address financial 
assurance in ``highly unusual circumstances.''
    Comment 9. The Commission should focus its authority on the 
defaulting co-owner and its customers, not the other co-owners and 
their customers. (1)
    Response: The Commission intends to focus on those licensees that 
are not fulfilling their obligations under the license to protect 
public health and safety. This would include a focus on the defaulting 
licensee and, as necessary to protect public health and safety in 
highly unusual circumstances, on the other non-de minimis licensees.
    Comment 10. The Commission does not have the legal authority to 
impose joint and several liability. (10) Joint and several liability is 
neither necessary nor proper, and should be promptly removed by an 
appropriate rule. (1)
    Response: The imposition of a regulatory obligation of joint and 
several responsibility for the costs of operation and decommissioning 
among co-licensees of a NPP is neither expressly authorized nor 
prohibited under the Atomic Energy Act of 1954, as amended (AEA) or 
related case law. However, the Commission has broad statutory authority 
under the AEA to take necessary actions to protect public health and 
safety. See AEA section 161 b & i, 42 U.S.C. 2201 b & i. In fact-
specific circumstances joint and several regulatory responsibility has 
been imposed. See Public Service Company of New Hampshire (Seabrook 
Station, Units 1 and 2), CLI-88-10, 28 NRC 573 (1988); Order against 
Safety Light Corporation, its predecessor corporation, and several 
wholly-owned subsidiaries of the predecessor (54 FR 12035-38, 1989). 
Although joint and several regulatory responsibility has only been 
imposed in compelling circumstances where such action was necessary to 
protect public health and safety, the Commission believes it has this 
authority. Further, it would be inconsistent with the Commission's 
overriding mission to protect public health and safety for the 
Commission to remove its flexibility to impose joint and several 
regulatory responsibility in those highly unusual circumstances where 
this action is warranted. That position is reflected in the Policy 
Statement (see 62 FR 44074) and the Commission rejects the petitioners' 
request that this position be modified.
    Comment 11. The Commission has more than sufficient safeguards to 
ensure adequate funding for NPP operations and decommissioning, even if 
one of the licensees experiences financial distress. (1)
    Response: The Commission believes the statement to be generally 
true, but considers that there could be circumstances under which 
recourse to the financial resources of all joint owners that exceed a 
de minimis ownership level might be needed for the particular plant 
involved.
    Comment 12. Private mechanisms are sufficient without reallocation 
by the Commission. There is no basis to believe that the Commission is 
better informed or better able to resolve financial arrangements than 
the parties and the relevant capital markets. (3)
    Response: The Commission agrees with the commenters that, in 
general, it is not better informed nor better able to resolve financial 
arrangements than the parties and the relevant capital markets. 
However, the Commission's charge is to protect the public health and 
safety. When the Commission finds that a licensee's financial distress 
is such that it cannot fulfill its obligations under the license, and, 
as a result, the public's health and safety may be affected, the 
Commission is obligated to address this situation with whatever 
remedies it is authorized to use. Also, as indicated above, the 
Commission would only intervene as a last resort when the financial 
markets, rate regulators, or bankruptcy courts were unable to solve the 
problem.
    Comment 13. If the Commission does not act early (in identifying 
and acting on a licensee having deteriorating financial circumstances) 
and fails to track the actual performance of an operator, because it 
could act late in any event, the Commission runs the risk of tolerating 
a deteriorating performer, rather than imposing the discipline of more 
rigorous regulatory attention. (3)
    Response: The Commission believes that it has the means at its 
disposal to identify and respond to a poor performer. Through onsite 
inspections, the biennial decommissioning funding status reports 
required to be filed by NRC power reactor licensees under 10 CFR 
50.75(f)(1), and other actions, the Commission is able to keep track of 
the performance of an operator. The Commission expects that these 
mechanisms would identify performance problems and problems with 
respect to the adequacy of financial assurance before extraordinary 
measures would need to be taken.
    Comment 14. The Commission should amend its regulations to provide 
that, in imposing new arrangements, it will look first to the entity 
having the operating responsibility, and allow the existing contractual 
arrangements to work in how that operator passes through the additional 
costs. The Commission should not impose obligations beyond the pro rata 
or other contractual arrangements in place. (3)
    Response: The commenters suggested that the Commission initiate a 
rulemaking that would require the NRC to look first at the plant 
operator for financial responsibility. The Commission does not intend 
to initiate this action because the plant operator may not have 
majority, or even any, ownership of the facility in many cases. The 
Commission also believes that it should retain flexibility in those 
highly unusual circumstances when pro rata responsibility would 
endanger public health and safety. With respect to the commenters' 
position on contractual arrangements, the NRC has addressed that point 
in its responses to Comments 1 and 4.
    Comment 15. The Commission's assertion that the policy statement 
``expressed no change in prior NRC practice or policy'' is 
``inexplicable and insupportable.'' Also, the commenter says that the 
Commission should provide for a full hearing if it considers a change 
in these policies in the future. (1)
    Response: The NRC policy statement in question was published in the 
Federal Register as a proposed policy

[[Page 46665]]

statement with a request for public comment on the issue of the 
allocation of responsibility of co-owners (61 FR 49711, 49713 (1996)). 
The Commission responded to the comments it received on joint and 
several liability in publishing the final policy statement (62 FR 
49071, 49074 (1997)). Moreover, because all co-owners are co-licensees 
under NRC legal precedent, See Public Service Co. of Indiana, Inc. 
(Marble Hill Nuclear Generating Station, Units 1 and 2), ALAB-459, 7 
NRC 179, 198-201 (1978), the Commission does not believe that the 
policy statement represents a change in previous policy. In addition, 
as described above (Comments 1 and 7), under virtually all 
circumstances short of the highly unusual, the Commission will continue 
to defer to co-owners' contractually determined divisions of 
responsibility. Also, see the response to Comment 10.
    Comment 16. If the rulemaking continues, it is important that the 
PRM be more closely aligned and consistent with the existing financial 
assurance requirements. (1)
    Response: The Commission does not intend to initiate a rulemaking 
in response to the PRM. Hence, the point raised by the commenter is 
moot.
    Comment 17. The PRM should not be granted because commenters 
disagree with the petitioners' proposed solution, that would establish 
an artificial distinction between the operator, operating owner, and 
non-operating owners that would shift the financial burden to the 
operator or operating owner. The PRM would not improve the NRC's 
regulatory process, or benefit the industry, and could be subject to 
misinterpretation. The proposed change would unfairly and 
inappropriately burden the licensed operator, who could be a minority 
co-owner, an entity the petition is attempting to protect. Further, the 
petitioners do not cite any statutes, regulations, etc. that justify 
the proposed rule. (5)
    Response: The Commission agrees that granting the PRM would 
establish an artificial (and unwarranted for purposes of financial 
assurance for operations and decommissioning) distinction between 
operating and non-operating owners. The petitioners' attempt to 
establish this artificial distinction is counter to NRC legal precedent 
referred to in the response to Comment 15 (i.e., that all co-owners are 
co-licensees). Further, the petitioners' position here appears to be 
contrary to the petitioner's position as discussed in Comment 1 (i.e., 
NRC should clarify that it will not impose operating or decommissioning 
costs on co-owners greater than their contractual obligations). The 
petitioners also do not provide any evidence as to how the granting of 
the petition would improve the NRC's regulatory process by continuing 
to ensure that the NRC may take any necessary steps within its 
statutory authority to assure protection of the public health and 
safety.
    Comment 18. The NRC's existing financial assurance regulations are 
clear regarding a licensee's and operator's responsibility for ensuring 
safe operation and that decommissioning costs are available for a NPP. 
(5) The commenters fail to see what extraordinary circumstances could 
arise that would allow NRC to consider implementing joint and several 
liability, given their view that decommissioning funding levels are 
adequate. (2)
    Response: See responses to Comments 6 and 7.
    Comment 19. The petitioners misconstrue the plain language of the 
NRC Policy Statement. (4)
    Response: The Commission agrees with the comment, because the 
policy statement discussion and the response to Comment 15 have 
indicated that under virtually all circumstances short of the rare and 
highly unusual, the NRC will continue to defer to co-owners' 
contractually determined divisions of funding responsibility. However, 
as one commenter noted, ``The petition appears to assume that the NRC 
will impose joint and several liability at the first sign of financial 
difficulty or insolvency.'' This is not the Commission's intent.
    Comment 20. The commenter is opposed to the petitioners' position 
that the Commission should require the entity (the co-owner and also 
the licensed operator of the plant) to be the first imposed upon by the 
Commission if additional requirements are needed. There is no basis for 
singling out the operating co-owner for this extra burden. (1)
    Response: The Commission agrees with the comment, because the 
petitioners' position appears to be contrary to the position the 
petitioners presented in Comment 1 (i.e., NRC should clarify that it 
will not impose operating or decommissioning costs on co-owners greater 
than their contractual obligations). Also, as noted in the response to 
Comment 1, ``* * * NRC expects that obligations under a license will be 
handled on a pro rata basis among co-owners * * *'' Nevertheless, the 
Commission considers it necessary to maintain the flexibility it has to 
consider the circumstances regarding assurance of operations and 
decommissioning funds on a case-by-case basis. The Commission does not 
find merit in a regulation that would require it to impose the 
requirements and attendant financial demands first on the co-owner 
licensed to operate the NPP if financial problems affect one or more of 
the licensees of an NPP.

Reasons for Denial

    The Commission is denying the petition for the following reasons:
    1. The Commission has already publicly articulated its policy not 
to impose operating or decommissioning costs on co-owners in a manner 
inconsistent with their agreed-upon pro rata shares, except when highly 
unusual circumstances relating to the protection of the public's health 
and safety require this action. Further, the Commission has publicly 
articulated its policy that it would not seek more than pro rata shares 
from co-owners with de minimis ownership of the NPP.
    2. The PRM would require the licensed operator of a plant to be the 
first imposed upon by the Commission should additional requirements be 
needed. This unnecessarily limits the Commission's flexibility when 
highly unusual circumstances affecting the protection of public health 
and safety would require action by the Commission.
    3. The petitioners' attempt to establish an artificial distinction 
between the operator, operating owner, and non-operating owner would be 
counter to Commission legal precedent within the context of Commission 
consideration of the imposition of joint and several regulatory 
responsibility.
    4. Further, the petitioners contradict themselves by claiming that 
the Commission should not impose operating or decommissioning costs on 
co-owners greater than their contractual obligations. However, the 
petitioners also stated that the financial burden should be shifted to 
the operator or operating owner (with no reference to the contractual 
obligations).
    5. Commission action ensuring that operating or decommissioning 
funds are available from co-applicants/co-licensees regardless of the 
contractual arrangements among co-owners for pro rata sharing of costs 
does not constitute a retroactive action. Contrary to the petitioners' 
assertion, the Commission never ``approved'' the private contractual 
arrangements for the sharing of costs among co-owners. The Commission's 
consideration of co-applicants' or co-licensees' cost-sharing 
arrangements initially was solely for the purpose of determining, under 
10 CFR 50.33, if the co-applicants/co-licensees, as a group, had the 
financial qualifications necessary to construct and operate the nuclear 
power plant.

[[Page 46666]]

Subsequently, the Commission also considered cost-sharing arrangements 
with respect to decommissioning financial assurance, but did not 
``approve'' the contractual arrangements in that context either. 
Accordingly, Commission action to recognize joint and several 
regulatory responsibility on co-licensees does not constitute 
retroactive regulatory action.
    6. Commission action ensuring that operating or decommissioning 
funds are available from co-licensees regardless of the contractual 
arrangements among co-owners for pro rata sharing of costs does not 
alter, and therefore leaves undisturbed, the contractual rights of a 
co-owner to recover costs from another co-owner under their contractual 
agreements in a private cause of action or in a bankruptcy proceeding.
    7. Lastly, the PRM does not show how the proposed rule would 
improve the NRC's regulatory process and maintain the same level of 
protection of public health and safety provided under current 
Commission regulations, legal precedent, and policies.
    For reasons cited in this document, the Commission denies the 
petition.

    Dated at Rockville, Maryland, this 25th day of July, 2000.

    For the Nuclear Regulatory Commission.
Annette Vietti-Cook,
Secretary of the Commission.
[FR Doc. 00-19242 Filed 7-28-00; 8:45 am]
BILLING CODE 7590-01-P