[Federal Register Volume 66, Number 76 (Thursday, April 19, 2001)]
[Proposed Rules]
[Pages 20099-20102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9731]


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NUCLEAR REGULATORY COMMISSION

10 CFR Part 30

[Docket No. PRM-30-64]


Charles T. Gallagher, Gammatron, 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) is denying a petition 
for rulemaking submitted by Charles T. Gallagher of Gammatron, Inc. 
(PRM-30-64). The petitioner requested that NRC amend its regulations 
regarding financial assurance for decommissioning funding. The NRC is 
denying the petition because the information presented in the petition 
does not support a basis for changing the existing regulations.

ADDRESSES: Copies of the petition for rulemaking, the public comments 
received, and the NRC's letter to the petitioner are available for 
public inspection or copying in the NRC Public Document Room, located 
at One White Flint North, 11555 Rockville Pike, Room O-1F23, Rockville, 
MD.
    These documents are available on NRC's rulemaking website at http://ruleforum.llnl.gov. For information about the interactive rulemaking 
website, contact Ms. Carol Gallagher, (301-415-5905 (e-
mail:[email protected]).

FOR FURTHER INFORMATION CONTACT: Clark Prichard, Office of Nuclear 
Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001, Telephone: (301) 415-6203, [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 20100]]

The Petition

    On August 11, 2000 (65 FR 49207), the NRC published a notice of 
receipt of a petition for rulemaking filed by Charles T. Gallagher, of 
Gammatron, Inc., Houston , Texas. The petitioner requested that NRC 
amend its financial assurance requirements for materials licensees.
    The petitioner requested that NRC amend its requirements in the 
following principal respects, or address the following issues:
    (1) NRC should provide a greater opportunity for comment to 
Agreement State licensees when new regulations are put in place. The 
petitioner states that Agreement state licensees were not provided 
adequate opportunity for comment when the financial assurance 
requirements were established.
    (2) The petitioner believes that NRC's financial assurance 
requirements are arbitrary. The petitioner advocates basing the amount 
of financial assurance required on other factors in addition to 
possession limits because safety programs in smaller licensees may be 
not as good as those carried out by larger licensees.
    (3) The petitioner wanted financial assurance to be required of all 
licensees, not just the larger licensees.
    (4) The petitioner believes that additional mechanisms for 
financial assurance should be established that impose less of a 
financial burden on small businesses. According to the petitioner, the 
NRC should add financial assurance mechanisms that allow the cost of 
financial assurance to be spread out over time.
    (5) Finally, the petitioner wanted the NRC regulations to exempt 
orphan sources from financial assurance requirements. The petitioner 
believes that there are no disposal facilities that accept this waste, 
so that requiring financial assurance for licensees possessing this 
type of waste is unnecessary.

Public Comments on the Petition

    Four comments were received, including one from the petitioner. The 
following is a summary of the comments received.

1. American College of Nuclear Physicians/ Society of Nuclear Medicine

    This comment opposes the portion of the petition requesting that 
NRC modify it's financial assurance regulations to require financial 
assurance of all licensees. The letter expresses no comment on the rest 
of the petition, but states that ample opportunity for comment on the 
financial assurance regulations was provided the petitioner.

2. State of Texas, Department of Health, Bureau of Radiation Control

    This comment states that the petitioner, along with other licensees 
in Texas, and the general public, had opportunity to comment on 
regulations established for financial assurance. The commenter does not 
agree that financial assurance should be required for all licensees. 
The letter also disagrees with the petitioner's belief that financial 
assurance should be provided by a small business licensee over a longer 
period of time, rather than all at one time upon licensing. The letter 
agrees with the petitioner's belief that it is impractical for 
regulatory agencies to determine the costs of disposal of orphan waste.

3. Nuclear Energy Institute

    The Nuclear Energy Institute (NEI) believes that Agreement States 
and their licensees had adequate opportunity for comment on the 
financial assurance regulations, and that licensed facilities had ample 
time to prepare for the funding requirement imposed by the regulations. 
NEI does not support the petitioner's request that all licensees have 
financial assurance. Some licensees handle materials that do not 
require a decommissioning fund, and other types of licensees should not 
be required to tie up capital as financial assurance that could be used 
for better purposes. NEI believes that current regulations allow a 
licensee to accumulate funds during the life of a facility, citing the 
example of a licensee initially posting a bond and retiring it with a 
sinking fund. NEI disagrees with the petitioner's point that licensees 
possessing greater than Class C waste be exempted from financial 
assurance requirements. NEI states that disposal is only one part of 
decommissioning. The licensee must have funding available to clean up a 
site and package the waste for disposal. NEI states that the Department 
of Energy (DOE) will currently accept greater than Class C waste if 
there is no alternative for storage or other facility that can accept 
the waste.

4. Charles T. Gallagher, Gammatron, Inc.

    The petitioner sent in a comment responding to other comments that 
were posted on NRC's website. The petitioner notes that few comments 
were received and faults the regulatory agencies for not adopting a 
method to notify more of the public of regulatory actions, such as by 
e-mail. The petitioner responds to the American College of Nuclear 
Physicians/Society of Nuclear Medicine (ACNP/SNM) comment by stating 
that ample opportunity for comment on the financial assurance 
regulations was not provided. He also opposes the statement in the 
ACNP/SNM letter that nuclear medicine licensees provide a public 
benefit, stating that industrial licensees also provide a public 
benefit.

Reasons for Denial

    1. Issue--Agreement State Licensees Were not Provided Opportunity 
to Comment on the Original Financial Assurance Regulations. The 
petitioner states that Agreement State licensees were not provided an 
opportunity to comment on the original financial assurance regulations 
and that the NRC accepted comments only from NRC licensees and 
Agreement State regulatory personnel. The petitioner further states 
that Agreement State regulatory agencies did not request comments from 
their licensees, and that they did not recognize the impact that the 
rulemaking represented.
    Response. The financial assurance requirements for materials 
licensees were established as part of the decommissioning rule, 
``General Requirements for Decommissioning Nuclear Facilities'' 
promulgated in 1988. The proposed decommissioning rule was issued for 
public comment on February 11, 1985 (50 FR 5600). NRC received comments 
from 143 groups or individuals, including 10 comment letters from 
Agreement States on a variety of issues, including financial assurance. 
Comments were accepted from all groups and individuals; NRC did not 
impose any restrictions, such as accepting comments ``only from NRC 
licensees and from Agreement State regulatory personnel,'' as stated by 
the petitioner. Since that time, the financial assurance for 
decommissioning regulations have been amended several times. In each 
case, the proposed amendments were published for public comment, and 
comments were received from a wide range of State governments, trade 
associations, individuals, and businesses.
    There is no basis to the petitioner's argument that Agreement State 
licensees were not provided an opportunity to comment on the original 
financial assurance regulations by the NRC. The comment letter from the 
State of Texas indicates that Texas offered its licensees and the 
general public an opportunity to comment on Texas' equivalent financial 
assurance regulations, when they were published in 1993.
    2. Issue--Financial Assurance Should Not be Based on Amounts of 
Material Possessed. The petitioner states that current financial 
assurance requirements, which are based on the

[[Page 20101]]

quantity of licensed material possessed, are arbitrary. The petitioner 
disputes the premise that risk is greater for licensees that possess 
larger quantities of materials on the basis that these larger licensees 
often have more extensive safety programs and more careful handling 
procedures. According to the petitioner, the amount of financial 
assurance required should not be based on possession limits.
    Response. The basis for NRC's financial assurance requirements is 
not arbitrary. Quantities and types of materials are considered. Larger 
amounts of materials used by a licensee generally require larger 
amounts of financial assurance. Possession of an equivalent amount of 
radioactive material in the form of sealed sources has lower financial 
assurance amount requirements than if the material is in unsealed form. 
The NRC stated its belief in the general principle of basing financial 
assurance on type and quantity of material in an amendment to the 
decommissioning requirements published in 1995. Addressing the 1988 
decommissioning rule, the NRC said ``The rule established a graded 
structure for financial assurance that is based on the assumption that 
the kinds and quantities of radioactive materials authorized in the 
license provide a reasonably good correlation to the amount of 
contamination that has to be remediated.'' (60 FR 38235; July 26, 
1995--final rule ``Clarification of Decommissioning Funding 
Requirements''). The NRC continues to support this view. NRC's 
experience to date with the financial assurance program for materials 
licensees does not indicate that a change in emphasis away from 
possession limits is needed.
    The petition does not recognize that a licensee has the option 
under current NRC regulations of not using the certification amounts, 
which are based on possession limits, as a basis for financial 
assurance. The regulations on financial assurance in Parts 30, 40, and 
70 allow licensees (except for licensees using very large quantities of 
materials) to use one of two methods for determining the amount of 
financial assurance required. The methods are either: to submit a 
decommissioning plan with a cost estimate, or use one of the 
certification amounts. A licensee may submit a decommissioning plan 
that includes a decommissioning cost estimate. This estimate may take 
into account other factors in addition to type and amount of material 
possessed. The estimate, when approved by NRC, becomes the basis for 
the amount of financial assurance required. Most materials licensees 
that are required to have financial assurance choose to use one of the 
certification amounts, instead of submitting a facility-specific 
decommissioning cost estimate.
    The State of Texas comment letter notes that the petition appears 
to ignore potential costs of disposal of materials, focusing only on 
decontamination costs. Decommissioning costs associated with disposal 
depend directly on the quantity of material possessed by a licensee. 
From this perspective, basing financial assurance on possession limits 
is a sound method of ensuring that decommissioning costs are fully 
covered.
    Regarding the petitioner's argument that larger licensees have more 
extensive safety programs and more careful handling procedures, the 
petitioner has not set forth any supporting material for this assertion 
and, therefore, has not provided a basis in this respect for a 
rulemaking to amend the regulations.
    The petition does not provide sufficient information on 
decommissioning costs or how to establish a new financial assurance 
system to provide a basis for the NRC to consider changing to an 
alternative method for establishing financial assurance requirements.
    3. Issue--Require Financial Assurance for All Materials Licensees. 
The petitioner states that financial assurance should be required of 
all licensees.
    Response. The decommissioning rule required financial assurance 
only of large licensees because the NRC considered that the risks 
involved when adequate funds are not available for timely 
decommissioning vary according to the amount and type of radioactive 
materials that a licensee may possess. Financial assurance, except for 
instances where a letter of intent or parent or self guarantee is 
used,\1\ is a cost burden on a licensee. In deciding what licensees 
should be required to have financial assurance, NRC must weigh the 
potential decommissioning costs that might be required for categories 
of licensees against the cost burden on licensees to provide that 
financial assurance. The majority of licensees do not possess a 
quantity of radioactive materials likely to pose significant risks to 
public health and safety. Therefore, financial assurance would be an 
unnecessary burden for these licensees. Type of licensed material 
possessed is also a factor, as the risks from sealed sources were 
considered lower than material in unsealed form.
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    \1\ A government operated licensee may use a statement from an 
official of that government that decommissioning costs will be 
covered. A qualifying parent company may guarantee that 
decommissioning costs of a subsidiary will be covered. A company or 
nonprofit institution may ``self-guarantee'' decommission 
obligations if it passes a rigorous financial test.
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    The petitioner has not provided a sufficient basis for changing 
this approach. The comment from the Society of Nuclear Medicine and 
American College of Radiology states that imposing financial assurance 
on smaller licensees would be an unnecessary burden on these licensees. 
There is inadequate information in the petition to justify imposing the 
burden of financial assurance on all NRC licensees.
    4. Issue--Spreading Over Time the Funding of Financial Assurance. 
The petitioner states that financial assurance requirements are too 
burdensome for small business. Licensees should not be required to 
provide financial assurance at one time, upon licensing, but should be 
allowed to fund it over the life of the licensed facility. The 
Environmental Protection Agency (EPA) and its designated State agencies 
allow this type of funding. Large businesses and public institutions 
are the only types of licensee that can obtain surety bonds, parent 
company guarantees, etc. If the purpose of financial assurance 
regulations is to require licensee cleanup of their facilities, rather 
than taxpayer funded cleanup, the regulations must allow a method of 
providing financial assurance that does not force the small business 
licensee out of business.
    Response. This issue was considered in the decommissioning 
rulemaking (50 FR 5600; February 11, 1985). The types of financial 
assurance mechanisms required of licensees take into account the 
stability of the source of revenues to the licensee. In the NRC's 
financial assurance regulations, only electric utilities, as defined in 
10 CFR 50.2, were provided an opportunity to use sinking funds.\2\ 
Under a regulated electric utility system where a utility is granted a 
monopoly in providing electric service, revenues would be stable and 
thus sources of funding were reasonably predictable. The regulator 
could adjust the price of electric service so that a utility would have 
revenues sufficient for decommissioning. Even premature shutdown of a 
plant, before the sinking fund fully covered decommissioning costs, 
could be accommodated by a regulatory authority that allowed the

[[Page 20102]]

utility to recover decommissioning costs from utility service area 
ratepayers. For other licensees, it is the NRC's position that the 
required amount of financial assurance for decommissioning must be 
available when operations commence. Revenues are not stable and 
predictable, and there is a possibility that the licensee could cease 
operations prior to the sinking fund being fully funded. To guard 
against this possibility, the full amount of financial assurance 
required to decommission a facility was required ``up front''.
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    \2\ NRC does allow materials licensees to use a sinking fund, 
but only in combination with another type of financial assurance 
mechanism so that the decommissioning obligation is always fully 
funded at any time during licensed operations.
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    The Commission further recognized this principle in the recent 
rulemaking on financial assurance for power reactor licensees 
(Financial Assurance Requirements for Decommissioning Nuclear Power 
Reactors--63 FR 50465; September 22, 1998). Under the new requirements, 
designed to address potential electric utility deregulation, when a 
reactor licensee loses its regulated monopoly status, it is no longer 
allowed to use a sinking fund, and must provide the full amount of 
financial assurance up front.
    This does not mean that licensees not using a sinking fund cannot 
pay for financial assurance over a long time frame. Several financial 
assurance mechanisms permit this approach. A surety bond or letter of 
credit can be used to provide financial assurance; the cost of these 
mechanisms is on a yearly or multi-yearly basis. A licensee may use a 
sinking fund, in combination with a surety bond or another mechanism 
that covers the portion of required financial assurance not covered by 
accumulated funds in the sinking fund. Also, several financial 
assurance mechanisms--statement of intent, and parent and self 
guarantee--do not impose any direct costs on the licensee. However, it 
is true that these guarantee mechanisms are not likely to be available 
to most small business licensees.
    EPA does allow a graduated trust to be used for financial assurance 
under several of its regulations applicable to solid waste management, 
hazardous waste management, and other types of facilities. For example, 
EPA's regulations at 40 CFR 264.143, ``Financial assurance for 
closure,'' allow financial assurance to be provided by annual payments 
into a trust fund over a period that is the shorter of (1) the term of 
the initial RCRA permit, or (2) the remaining life of the facility. 
However, these EPA financial assurance regulations generally apply to 
all regulated facilities, even the smallest. In contrast, NRC's 
financial assurance regulations apply only to the largest licensees; 
less than 15 percent of NRC materials licensees are required to provide 
financial assurance. NRC's financial assurance requirements thus pose 
less of a regulatory burden on smaller licensees.
    The petitioner does not present sufficient information to warrant a 
change by NRC in its regulations.
    5. Issue--Financial Assurance for Orphan Sources. The petitioner 
states that orphan waste (waste which has no disposal ``home'') should 
be exempted from financial assurance requirements because the DOE is 
responsible for disposal of this category of waste. A licensee that has 
this type of waste should not be required to calculate and fund its 
disposal when there is no disposal site that will accept it. An example 
cited by the petitioner where DOE has taken steps to implement the 
responsibility that the petitioner addresses, is americium-241. The DOE 
is compiling a list of unwanted or abandoned sources for the ultimate 
recovery of the americium-241.
    Response: Orphan sources do pose a significant problem for a 
licensee. DOE, NRC, EPA, and State regulatory agencies are all working 
to address this issue, and ensure that proper disposition is provided 
for orphan sources. DOE has initiated a pilot program, working with 
NRC, to identify orphan sources. However, this program is in the pilot 
stage, and DOE does not now have a program in place to accept all 
orphan sources. Moreover, DOE is required by law to recover costs of 
any program that is established by charging a disposal fee to accept 
orphan sources.
    Financial assurance is especially important for orphan sources. 
Many of these sources are accepted by waste brokers either for reuse or 
for storage. However, the cost of using these services can be very 
high. Using the example of americium-241, costs are significantly 
higher relative to other isotopes.
    In addition to funding of disposal costs, there are other 
decommissioning cost concerns involved in this issue, as noted in the 
Nuclear Energy Institute comment. A damaged/leaking source could cause 
contamination at a licensee's facility, which would need remediation. 
Waste packaging would also require funding. Thus, the rationale for 
requiring financial assurance would remain, even if disposal were 
assured by DOE. It is premature to change NRC's financial assurance 
regulations until a national orphan source recovery program is fully 
implemented. At that time, a review of financial assurance amounts 
required for these types of sources may be warranted.
    For reasons cited in this document, the NRC denies the petition.

    Dated at Rockville, Maryland, this 28 day of March, 2001.

For the Nuclear Regulatory Commission.
William D. Travers,
Executive Director for Operations.
[FR Doc. 01-9731 Filed 4-18-01; 8:45 am]
BILLING CODE 7590-01-P