[Federal Register Volume 69, Number 137 (Monday, July 19, 2004)]
[Notices]
[Pages 43278-43282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16302]



[[Page 43277]]

-----------------------------------------------------------------------

Part V





Nuclear Regulatory Commission





-----------------------------------------------------------------------



Issuance of Draft Supplement Standard Review Plan; Notices

Federal Register / Vol. 69, No. 137 / Monday, July 19, 2004 / 
Notices

[[Page 43278]]


-----------------------------------------------------------------------

NUCLEAR REGULATORY COMMISSION


Issuance of Draft Supplement Standard Review Plan

AGENCY: Nuclear Regulatory Commission.

ACTION: Issuance of draft supplement to Standard Review Plan for public 
comment.

-----------------------------------------------------------------------

SUMMARY: The Nuclear Regulatory Commission (NRC) is issuing a draft 
supplement to the Standard Review Plan (SRP) which expands NUREG-1577, 
Rev. 1, ``Standard Review Plan on Power Reactor Licensee Financial 
Qualifications and Decommissioning Funding Assurance.'' The proposed 
draft supplement to the SRP provides criteria for evaluating the use of 
an insurance policy to provide decommissioning funding assurance under 
10 CFR 50.75. The NRC finds that the proposed criteria will enable the 
staff to determine whether through the use of an insurance policy, 
there is reasonable assurance of providing decommissioning funding to 
ensure adequate protection of public health and safety. The NRC is 
interested in stakeholder comments that will improve the safety 
benefits, effectiveness, and efficiency of the review of insurance 
policies to provide decommissioning funding assurance.

DATES: Submit comments by August 18, 2004. Comments received after this 
date will be considered if it is practical to do so, but the NRC is 
able to assure consideration only for the comments received before this 
date.

ADDRESSES: You may submit comments by any one of the following methods. 
Please include the following reference, NUREG-1577, Rev. 1, in the 
subject line of your comments. Comments on the draft supplement in 
writing or in electronic form will be available for public inspection. 
Because your comments will not be edited to remove identifying or 
contact information, the NRC cautions you against including any 
information in your submission that you do not want to be publicly 
disclosed.
    Mail comments to: Chief, Rules and Directives Branch, Mail Stop TG-
D59, Nuclear Regulatory Commission, Washington, DC 20555-0001.
    E-mail comments to: [email protected]. You may also submit comments 
via the NRC's rulemaking Web site at http://ruleforum.llnl.gov. This 
site provides the capability to upload comments as files (any format), 
if your Web browser supports that function. Address questions about the 
rulemaking Web site to Carol Gallagher at (301) 415-5905; e-mail 
[email protected].
    Hand deliver comments to: One White Flint North, 11555 Rockville 
Pike, Rockville, Maryland, 20852, between 7:30 a.m. and 4:15 p.m. on 
Federal workdays, telephone (301) 415-1966.
    Fax comments to: Chief, RDB, Nuclear Regulatory Commission at (301) 
415-5144.
    Copies of the draft supplement specified in this notice and other 
publicly available documents related to this draft supplement, 
including public comments received, can be viewed electronically on 
public computers in the NRC Public Document Room (PDR), located at One 
White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852, 
Room O-1F21, and open to the public on Federal workdays from 7:45 a.m. 
until 4:15 p.m. The PDR reproduction contractor will make copies of 
documents for a fee. Selected documents, including public comments on 
the draft supplement, can be viewed and downloaded electronically via 
the NRC's rulemaking Web site at http://ruleforum.llnl.gov.
    Publicly available NRC documents created or received in connection 
with this draft supplement are also available electronically via the 
NRC's Electronic Reading Room at http://www.nrc.gov/reading-rm/adams.html. From this site, the public can gain entry into the NRC's 
Agencywide Document Access and Management System (ADAMS), which 
provides text and image files of NRC's public documents. If you do not 
have access to ADAMS, or if there are problems in accessing the 
documents located in ADAMS, contact NRC PDR Reference staff at (800) 
397-4209, (301) 415-4737 or by e-mail at [email protected].

FOR FURTHER INFORMATION CONTACT: Michael A. Dusaniwskyj, Office of 
Nuclear Reactor Regulation, Mail Stop O-12D3, United States Nuclear 
Regulatory Commission, Washington, DC 20555-0001, telephone (301) 415-
1260, or e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Abstract

    The NRC is issuing this draft supplement to the SRP to provide 
criteria that will be used to review the insurance method of providing 
decommissioning funding assurance. This draft supplement reflects 
current regulations and policy, and will be updated for any future 
initiatives.

Proposed Supplement to Standard Review Plan: Decommissioning Funding 
Insurance for Power Reactors

I. Areas of Review

    The NRC is issuing this draft supplement to describe criteria that 
will be used by the staff to review power reactor license applicants' 
and licensees' insurance methods of providing required decommissioning 
funding assurance. This document provides detailed criteria with 
respect to section III.2(f)(4) of NUREG-1577, Rev. 1 and as such will 
supplement NUREG-1577, Rev. 1, ``Standard Review Plan on Power Reactor 
Licensee Financial Qualifications and Decommissioning Funding 
Assurance'' (October 2003).

II. Acceptance Criteria

    Decommissioning funding insurance may be referred to by different 
names such as ``decommissioning insurance,'' ``decommissioning 
liability insurance,'' ``decommissioning expense liability policy,'' 
etc. The label is much less important than (1) the terms and conditions 
of the policy relating to (a) the amount and scope of coverage and (b) 
the certainty of availability of funds, and (2) the qualifications of 
the issuer of the insurance policy. For these key elements, acceptance 
criteria are provided below.
Amount and Scope of Insurance Coverage
    1. Per 10 CFR 50.75(b)(1), Amount of Coverage Equal or Greater than 
Table of Minimum Amounts (Sec.  50.75(c)) for NRC Sec.  50.2 
Decommissioning Costs (e.g., excluding cost of removal and disposal of 
spent fuel and non-radioactive structures and materials beyond that 
necessary to terminate the license) or a Site-Specific Decommissioning 
Cost Estimate (Sec.  50.75(b)(4)).
    Confirm that the policy provides an adequate amount of coverage 
(``liability limit'') for NRC decommissioning costs, which is an amount 
not less than the table of minimum amounts (Sec.  50.75(b)(1)). 
Although the ``Declarations'' section of the policy (often the cover 
page) typically shows the ``limit of liability'' or ``face amount,'' it 
is important to review the entire policy. The amount of coverage should 
be a specific dollar number and not be a schedule or formula contingent 
on projected earnings under the policy. Coverage for amounts only in 
excess of the minimum amounts (or site-specific cost estimate) and up 
to the actual cost of decommissioning does not satisfy the regulations. 
The insurance policy should guarantee at least the total amount of 
currently estimated

[[Page 43279]]

decommissioning costs (NUREG-1577, Rev. 1 Sec.  III.2.f(2)).
    Determine whether the amount of coverage includes both NRC and non-
NRC costs. If a policy covers both NRC and non-NRC costs, they should 
be separately identified and only NRC-required costs should be assessed 
as equal to or greater than the minimum amount. See Sec. Sec.  2.1.2 
and 2.1.7 NUREG 1.159 Rev. 1 and NUREG-1577, Rev. 1 Sec.  III.2.a(3). 
The same approach should be used if the amount of coverage includes 
costs for onsite spent fuel management (see NUREG-1700, Rev. 1).
    Evaluate whether there are any stated sublimits. In particular, a 
policy containing a sublimit for NRC costs lower than the minimum 
amount may render the policy non-compliant, even if the sublimit 
applies only in the event of premature closure or only in the event of 
cancellation, termination, non-renewal or rescission of the policy.
    Different limits for decommissioning that occur during the initial 
license period or during the period of license renewal are acceptable 
if they are for amounts not less than the NRC minimum amounts.
    The amount of coverage should be capable of being adjusted (Sec.  
50.75(b)(2) and Sec.  2.1.5, Reg. Guide 1.159, Rev. 1). The policy 
language may not be clear on whether and how the limits of liability 
may be adjusted. Typically, this is done through ``endorsement.'' Find 
any ``changes'' clause (see 14 below). A policy with limits 
that can be adjusted down but not upwards would require that another 
financial assurance mechanism make up the difference.
    Determine whether there are any ``deductibles.'' A deductible may 
be called a ``retention,'' a ``self-insured retention,'' ``self-
insurance,'' or other euphemism. Typically, the deductible is expressed 
as a flat dollar amount that must be paid by the insured before the 
insurer's liability under the policy is triggered. A deductible is 
acceptable if the policy provides ``first dollar coverage'' of the 
deductible by the insurer. First dollar coverage means that the insurer 
is responsible for paying the deductible amount (e.g., into the standby 
trust fund), while the insured is separately responsible for 
reimbursing the insurer for the amount of the deductible. Another type 
of deductible involves the insured sharing in some defined proportion 
of the decommissioning expenses from a dollar starting point (termed 
the ``attachment point'') until some defined dollar ending point. 
Absent first dollar coverage expressly provided by the policy, the 
licensee must provide another assurance mechanism in combination with 
insurance to cover deductible amounts or demonstrate that its sinking 
funds can cover the deductible(s) (Sec.  50.75(e)(1)(vi)). The combined 
amount should at least equal currently estimated decommissioning costs 
(NUREG-1577, Rev. 1 Sec.  111.2.f(2)).
    2. Annual Adjustment of Minimum Amount of Coverage (Sec.  
50.75(c)(2)).
    If this is not the first year the policy is used, determine whether 
the amount of coverage provided satisfies the adjusted required minimum 
amount.
    3. Scope of Coverage (Sec.  50.2).
    Verify the scope of coverage, which should be for NRC (Sec.  50.2) 
defined decommissioning costs. Relevant language defining the scope may 
appear in different sections of the policy, such as under ``Insuring 
Agreement, Definitions, Exclusions, Conditions, and Declarations.''
    Review any policy language that defines covered decommissioning 
costs only as those incurred by reason of work performed during the 
policy period; such a limit is inconsistent with the payment of funds 
into the standby trust prior to decommissioning costs being incurred by 
the licensee by reason of work actually performed.
    If the scope of the policy covers non-NRC (i.e., greenfield costs) 
costs as well as NRC costs, verify that coverage of non-NRC costs is 
limited in amount so that those costs do not draw on money intended for 
NRC costs. Similarly, if the policy covers spent fuel management 
financial assurance (Sec.  50.54(bb)), verify that coverage of these 
costs will not draw on money intended for coverage under Sec.  50.75 
(see C.11 ``Use of Funds'' NUREG 1.184).
    Determine if the scope of coverage has been unduly restricted by 
any ``exclusions'' written into the policy. Exclusions of costs not 
intended to be covered under decommissioning, not appropriate for 
coverage under decommissioning insurance, and costs covered under other 
insurance programs should be acceptable.
    Costs NOT intended to be covered under decommissioning include:
     Operational expenses.
     Accident response (see Sec.  50.54(w)).
     Repair or replacement of damaged property.
     On-site spent nuclear fuel management (see Sec.  
50.54(bb)).
     Decontamination or cleanup prior to permanent cessation of 
operations.
     Transportation and disposal of spent fuel.
    Costs not appropriate under insurance for decommissioning funding:
     Costs due to fraudulent, dishonest, or criminal acts, 
unless such acts result in decommissioning.
     Fines, penalties, etc. imposed for violation of Federal or 
State law.
     Intentional, willful, or deliberate non-compliance, unless 
such acts result in decommissioning.
     Bodily injury/property damage*.
     Workers compensation, disability benefits, unemployment 
compensation*.
     Post-accident decommissioning*.

    Note: *Costs covered under other insurance.

    It is common to find legal fees excluded from insurance coverage in 
liability policies. However, such costs related to decommissioning must 
be covered by decommissioning insurance if incurred.
    NRC review should be based on the entire policy and all 
endorsements and not solely on any Certificate of Insurance provided or 
solely on the Declarations page.
Certainty of Coverage: Issuer Qualifications
    4. Issuer Qualifications.
    Determine the identity of the issuer of the policy (not to be 
confused with any broker or agent involved in the transaction). The 
name and address of the issuer should be included in the policy (Sec.  
A.12.3, NUREG-1757).
    Determine the ``domicile'' of the insurer, which may be a U.S. 
state or a foreign country where the insurer is incorporated. Special 
terms and conditions are appropriate for insurers domiciled outside of 
the U.S.
    The insurer must be ``licensed'' by authorities of the State where 
the relevant nuclear plant is located to transact the business of 
insurance, (Sec.  2.3.3, NUREG 1.159 Rev. 1). One can verify that the 
insurer is licensed by checking with the insurance commission or agency 
in that state; many states provide on-line directories of their 
licensed insurers.
    Where practical, review databases or reference documents to 
determine whether the insurer is a commercial firm capable of selling 
policies to anyone or is instead an organization-- termed a 
``captive,'' a ``risk retention group (RRG),'' or ``mutual'' insurer--
that can sell insurance only to one or a limited number of reactor 
owners.
    A policy issued by a captive insurer that covers only a single 
owner's reactor(s), often termed a ``pure captive,'' will be 
problematic. Such a policy is synonymous to self-insurance, which NRC 
regulations do not permit.
    A mutual, captive, or RRG that can insure more than a single 
owner's reactors also may be problematic unless the insurer covers a 
relatively large number of owners and reactors.

[[Page 43280]]

    A group captive, RRG, or mutual insurer is acceptable if:
    (a) The Internal Revenue Service has issued a letter ruling finding 
that premiums paid to the insurer will be considered deductible for tax 
purposes, and
    (b) The issuer of the insurance policy has received a financial 
strength or safety rating of A-or better from A.M. Best, A-or better 
from Standard & Poor's, A-3 or better from Moody's, A-or better from 
Fitch, or B-or better from Weiss Rating, as its most recent, issuer-
specific rating.

    Note: The issuer of the policy must be acceptable to the NRC. As 
required for nuclear energy liability insurance, the Commission may 
require proof that the organization or organizations which have 
issued policies are legally authorized to issue them and do business 
in the United States and have clear ability to meet their 
obligations (Sec.  140.18(a)).

    5. The Trustee of the Standby Trust Must Be Acceptable to NRC 
(Sec.  50.75(e)(1)(iii)(A)(2)).
    An acceptable trustee includes (1) an appropriate State or Federal 
government entity or (2) an entity that has the authority to act as a 
trustee and whose trust operations are regulated and examined by a 
Federal or State Agency (Sec.  50.75(e)(1)(iii)(A)(2)). See Sec.  2.2.6 
of NUREG 1.159 Rev. 1 for information on verifying the acceptability of 
financial institutions as trustees. One can also use Sec.  4.3.2.15 of 
NUREG-1757, Vol. 3 to determine the acceptability of a non-government 
trustee.
Certainty of Coverage: Terms and Conditions of Policy
    6. Covered Licensee(s).
    The policy must include the name and address of the covered 
licensee(s), their NRC license number(s), and the name(s) and 
address(es) of the covered facility(ies), (Sec.  A.12.3, NUREG-1757).
    7. Licensee's Regulatory Obligations.
    The policy should contain a statement of the licensee(s)' 
regulatory obligations as the reason for the policy.
    8. Duration/Term of Coverage (Sec.  50.75(e)(1)(iii)(A)(1)).
    The policy must state an ``effective date'' (or ``inception date'') 
and may state an expiration or termination date.
    Verify that the term of coverage either is open-ended, or, if 
written for a specified term ending on a particular date, that the 
policy is automatically renewed, unless the issuer notifies NRC, the 
beneficiary, and the licensee of its intent not to renew; as stated by 
Sec.  50.75(e)(1)(iii)(A)(1), such a provision must require notice at 
least 90 days prior to the renewal date, which is best evidenced by 
return receipts.
    9. Cancellation/Termination and Non-Renewal.
    The policy should require a minimum of 90 days prior notice to NRC, 
as evidenced by return receipts, of the insurer's or the insured's 
intent to cancel, non-renew, or terminate the policy (Sec.  A.12.3, 
NUREG-1757, Vol. 3, & Sec.  50.75(e)(1)(iii)(A)(1) (for non-renewal 
only)).
    It is acceptable if the policy states that the insurer may cancel 
or terminate the policy if the premium is not paid. Some policies may 
provide only a short period (e.g., 10 days) prior to cancellation/
termination in the event of non-payment of premium or 
misrepresentation/fraud.\1\ Such a short period is not acceptable, 
because it does not allow sufficient time for the licensee to arrange 
alternative coverage or for NRC to take appropriate action prior to its 
cancellation/termination if the licensee fails to provide an acceptable 
substitute. A period of 90 days should be the minimum following notice 
to NRC and the insured. A provision stating that the insurer may not 
cancel, terminate, or non-renew the policy if the licensee is named as 
a ``debtor in bankruptcy proceedings'' is desirable.
---------------------------------------------------------------------------

    \1\ Misrepresentation/fraud is a basis for declaring an 
insurance policy null and void through the legal process of 
rescission.
---------------------------------------------------------------------------

    10. Automatic Payment Prior to Cancellation/Termination/Non-renewal 
(Sec.  50.75(e)(1)(iii)(A)(1)).
    The insurance policy must provide that the full ``face amount'' for 
NRC decommissioning costs be paid to the beneficiary (i.e., 
decommissioning trust) automatically prior to policy cancellation/
termination/non-renewal ``without proof of forfeiture'' if the licensee 
fails to provide a replacement acceptable to the NRC within 30 days 
after the licensee or NRC receives notice of cancellation/termination/
non-renewal, as evidenced by return receipts (Sec.  
50.75(e)(1)(iii)(A)(1) provides 30 days after notice of intent to 
cancel).
    11. Beneficiary.
    The ``beneficiary'' should be the standby trust, but may be defined 
as the licensee of the covered facility. A policy should be acceptable 
even if it does not designate a beneficiary, so long as it guarantees 
that funds drawn from the policy must be paid into the standby trust 
(see 20 below).
    12. Bankruptcy or Insolvency of the Insured.
    The policy should contain a provision to the effect that bankruptcy 
or insolvency (a condition of financial distress) of the insured does 
not relieve the insurer of any of its obligations.
    13. Primary Not Excess Insurance.
    The policy should not contain a clause to the effect that if the 
licensee has other valid and collectible insurance applicable to 
decommissioning, then the decommissioning insurance under review shall 
be ``excess insurance'' over such other coverage. Because licensee 
property insurance (e.g., Nuclear Electric Insurance Limited) may cover 
decommissioning in certain situations, certainty and timeliness of 
decommissioning coverage may be impeded by having to resolve which 
insurance coverage is primary or excess.
    14. Changes.
    The policy should state that its terms shall not be waived or 
changed except by written ``endorsement'' \2\ issued to form a part of 
the policy and unless sixty days prior written notice has been given to 
the NRC, and the NRC has not objected within that time. A clause that 
permits the insurer and the insured to agree to changes in the policy 
against the disapproval of the NRC is not acceptable.
---------------------------------------------------------------------------

    \2\ An ``endorsement'' is a document that is treated as an 
integral part of the policy although it typically is issued later. 
Endorsements will be labeled as such and numbered.
---------------------------------------------------------------------------

    15. Designated Agent.
    The policy should identify an agent of the insurer who is to 
receive all notices and other required communications and whose 
requests, demands, and agreements are deemed to have been made directly 
by the insurer (see, for example, clause 16 in 10 CFR 140.91). Complete 
contact information should be provided in the policy.
    16. Authorized Signatories (Sec.  2.1.3, NUREG 1.159, Rev. 1).
    The policy must be signed and dated. The parties signing the policy 
must be authorized to act for the licensee and the insurer in the 
transactions. A duly authorized representative may be either a named 
individual or any individual occupying a named position. All required 
signatures should be notarized. For a licensee that is a corporation or 
limited liability company, a principal executive officer of at least 
the level of vice president should sign; for a licensee that is a 
municipality, State, Federal, or other public agency, either a 
principal executive officer or ranking elected official should sign. A 
person is deemed to be a duly authorized representative if the person 
is authorized in writing by an individual described above, and the 
authorization specifies either an individual or a position having 
responsibility for the overall operation of the reactor or power 
company, such as the position of plant manager, a superintendent, or 
person of equivalent responsibility.

[[Page 43281]]

    17. Original, Conformed Copy, or Photocopy of Original (Sec.  
2.1.4, NUREG 1.159, Rev. 1).
    NRC may review the original, a conformed copy, or a photocopy of 
the original policy. A conformed copy is a word for word copy of a 
document, which may be marked ``conformed copy.'' A conformed copy may 
substitute the printed or typewritten name of each signatory in place 
of each signature. If the copies are not signed, they should be 
accompanied by a declaration signed by an officer authorized to sign 
for the organization, certifying that they are ``complete and accurate 
copies'' of the original document. A photocopy is produced by a process 
that accurately reproduces the original and is marked as a ``copy.'' An 
originally signed duplicate is a conformed copy or photocopy that bears 
originally handwritten signatures.
    18. Policy Must Conform to Applicable State Law (Sec.  2.3.1, NUREG 
1.159, Rev. 1).
    A determination that the policy conforms to applicable state law 
can be based on opinion letters, which are best provided by an 
independent law firm or lawyer that practices insurance law and/or by 
an insurance broker's in-house counsel. The opinion letter should 
identify the state whose law is applicable (e.g., the state where the 
reactor is located, the state where the policy is issued) and should 
state that the policy conforms to the laws of that state. The counsel 
signing the letter should be admitted to the bar of the state whose law 
is at issue and the letter should so state; NRC can confirm the 
lawyer's qualifications by contacting the state bar association or by 
checking with legal reference books (e.g., Martindale-Hubbell Law 
Directory).
    19. State Public Utility Commission Approval or Non-objection.
    For electric utility licensees with access to non-bypassable 
charges, the licensee's State public utility commission must have 
approved the use of the insurance policy or raised no objection to the 
use of the particular policy. There should be some documentation of 
such approval or non-objection (e.g., correspondence between the 
licensee and Public Utility Commission).
    20. Assignment.
    The policy should contain a provision allowing ``assignment'' 
(i.e., transfer) of the policy to a successor licensee. The policy may 
specify that the assignment is conditional upon the consent of the 
insurer so long as the policy also states that such consent ``will not 
be unreasonably refused.'' Right of assignment enables a licensee to 
redeem value from the policy if ownership or operation of the covered 
facility is transferred to a new party. The insurer may want the right 
to consent to or refuse assignment in order to protect itself against 
transfers of ownership or operation that would unfairly prejudice the 
interests of the insurer in a manner not contemplated originally (e.g., 
transfer of the facility to an insolvent owner). Refusal to consent to 
assignment would be ``unreasonable'' where the interests of the insurer 
are not prejudiced by a successor licensee replacing the original 
insured party.
    21. Proceeds Payable to a Decommissioning Trust Fund (Sec.  
50.75(e)(1)(iii)(A)(2)).
    The insurance policy must be payable to a trust established for 
decommissioning costs (Sec.  50.75(e)(1)(iii)(A)(2)). The trust may or 
may not be identified in the policy as the ``beneficiary'' of the 
insurance.
    If there are any conditions or limitations in the policy regarding 
payments to the trust fund, these should be assessed for their impact 
on availability and certainty of financial assurance. For example, it 
is preferable that the policy does not state that payments shall be 
made only on the ``default'' of the licensee to satisfy decommissioning 
requirements.
    A policy may identify several different parties to whom proceeds 
are payable, and these will need to be reviewed and clarified; NRC 
should expect that improvements in drafting can eliminate any 
ambiguities and inconsistencies in the policy.
    Although the regulations clearly state that the insurance must be 
payable to a decommissioning trust, they do not state when or how to 
make the payments. Any policy terms that would impact the timing and 
amount of payments into the trust fund should be reviewed from the 
point of view of the guiding principle of having reasonable assurance 
of having funds when needed. The NRC's decommissioning regulations 
contemplate that decommissioning payments will be made from the trust 
and not by the insurer, so the insurer must timely transfer ample funds 
to the trust, if not all the funds covered by the policy at once, on a 
schedule consistent with access to funds allowed by Sec.  50.82(a)(8). 
For funds not required to meet near term pay-out needs, it is 
acceptable if the policy offers the option of retaining those funds in 
the insurance mechanism.
    22. Role and Rights of the Insurer.
    The insurer must invest all NRC decommissioning funds transferred 
from prepaid funds or an external sinking fund, and all earnings 
thereon, consistent with the prudent investor standard set forth in 18 
CFR part 35 subpart E. This should be stated as a condition in the 
policy.
    The policy may give the insurer the right to monitor all aspects of 
decommissioning to which the policy applies, and the right of 
reasonable access to the site. Moreover, the insured may be required to 
seek the insurer's review and approval of individuals and firms under 
consideration to perform decommissioning. Such provisions are subject 
to negotiation between the insurer and the insured and are problematic 
only if they interfere with NRC's regulatory controls and oversight of 
decommissioning or the decommissioning flexibility granted by Sec.  
50.59.
    The staff shall evaluate whether there are policy provisions 
relating to ``claims procedures'' or ``claims management,'' which 
indicate that the insurer will be involved directly in the review, 
adjustment, approval, and payment of claims for decommissioning 
expenses. These provisions are subject to negotiation between the 
insurer and the insured; however, actual payment of claims (i.e., 
cutting and sending checks) may best be performed through the trust. 
These provisions are problematic if they undermine the system of 
financial controls established under Sec.  50.82(a)(8), or if they 
interfere with the insured's ability to complete decommissioning in a 
timely manner and/or to perform decommissioning activities under plans 
approved by the NRC or orders issued by the NRC.

    Note: The terms and conditions of the policy must be acceptable 
to the NRC. The NRC reserves the right to take the following steps 
to ensure an acceptable policy: either independently or in 
cooperation with the Federal Energy Regulatory Commission and the 
licensee's state Public Utility Commission, take additional actions 
as appropriate on a case-by-case basis, including ensuring or 
directing the addition or removal of clauses through written 
endorsement.

    23. The Standby Trust Must Be Acceptable to NRC (Sec.  
50.75(e)(1)(iii)(A)(2)).
    The terms of an acceptable standby trust would be similar to the 
sample standby trust language contained in Appendix B-3.2 of NUREG 
1.159, Rev. 1. Licensees that are ``electric utilities'' (as defined in 
Sec.  50.2) that use prepayment or external sinking fund trusts must 
include the terms and conditions found in Sec.  50.75(h)(2) relating to 
disbursement or payments. Note that amended regulations applicable to 
decommissioning trusts of electric utility and non-electric utility

[[Page 43282]]

licensees became effective on December 24, 2003. Section 50.75 requires 
that licensees that are not ``electric utilities'' (as defined in Sec.  
50.2) must include in their trusts the terms and conditions found in 
Sec.  50.75(h)(1) relating to investment of funds (Sec.  
50.75(h)(1)(i)), management of funds (Sec.  50.75(h)(1)(ii)), amendment 
of trusts (Sec.  50.75(h)(1)(iii)), and disbursement or payments from 
trusts (Sec.  50.75(h)(1)(iv)).
    A tax-qualified decommissioning trust set up under 468A of the 
Internal Revenue Code and associated regulations is not likely capable 
of serving as a standby trust because the amounts that can be placed in 
such a trust are limited by the Commissioner of Internal Revenue.
    However, a non-tax qualified trust potentially could serve as a 
standby trust if it meets the requirements noted above.

III. Evaluation Findings

    The reviewer verifies that sufficient information has been provided 
to satisfy the requirements of this Standard Review Plan section and 
the underlying regulations, and concludes that his or her evaluation is 
sufficiently complete and adequate to support the conclusion to be 
included in the staff's safety evaluation report that the applicant has 
satisfied the NRC's decommissioning funding assurance requirements 
using insurance.

IV. Implementation

    The following is intended to provide guidance to applicants and 
licensees regarding the NRC staffs plans for using this SRP.
    Except in those cases in which the applicant proposes an acceptable 
alternative method for complying with specified portions of the NRC's 
regulations, the method described herein will be used by the staff in 
its evaluation of conformance with Commission regulations.

V. References

U.S. Nuclear Regulatory Commission, Standard Review Plan on Power 
Reactor Licensee Financial Qualifications and Decommissioning 
Funding Assurance, NUREG-1577, Rev. 1.
C.L. Pittiglio, Standard Review Plan for Evaluating Nuclear Power 
Reactor License Termination Plans, NUREG-1700, Rev. 1 (April 2000).
U.S. Nuclear Regulatory Commission, Assuring the Availability of 
Funds for Decommissioning Nuclear Reactors, Regulatory Guide 1.159, 
Rev. 1 (October 2003).
U.S. Nuclear Regulatory Commission, Decommissioning of Nuclear Power 
Reactors, Regulatory Guide 1.184 (July 2000).
U.S. Nuclear Regulatory Commission, Consolidated NMSS 
Decommissioning Guidance: Financial Assurance, Recordkeeping, and 
Timeliness (Vol. 3), NUREG-1757 (September 2003).


    Dated in Rockville, Maryland, this 12th day of July, 2004.

    For the Nuclear Regulatory Commission.
Catherine Haney,
Program Director, Policy and Rulemaking Program.
[FR Doc. 04-16302 Filed 7-16-04; 8:45 am]
BILLING CODE 7590-01-P