[Federal Register Volume 73, Number 14 (Tuesday, January 22, 2008)]
[Proposed Rules]
[Pages 3812-3846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-574]



[[Page 3811]]

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

Part II





Nuclear Regulatory Commission





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



10 CFR Parts 20, 30, 40, et al.



Decommissioning Planning; Proposed Rule

  Federal Register / Vol. 73, No. 14 / Tuesday, January 22, 2008 / 
Proposed Rules  

[[Page 3812]]


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

NUCLEAR REGULATORY COMMISSION

10 CFR Parts 20, 30, 40, 50, 70 and 72

RIN 3150-AH45


Decommissioning Planning

AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

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

SUMMARY: The Nuclear Regulatory Commission (NRC) is proposing to amend 
its regulations to improve decommissioning planning, and thereby reduce 
the likelihood that any current operating facility will become a legacy 
site. The amended regulations would require licensees to conduct their 
operations to minimize the introduction of residual radioactivity into 
the site, including subsurface soil and groundwater. Licensees also 
would be required to survey certain quantities or concentrations of 
residual radioactivity, including in subsurface areas, and keep records 
of surveys of subsurface residual radioactivity identified at the site 
with records important for decommissioning. The amended regulations 
would require licensees to report additional details in their 
decommissioning cost estimates, would eliminate two currently approved 
financial assurance mechanisms, and would modify the parent company 
guarantee and self-guarantee financial assurance mechanisms to 
authorize the NRC to require that guaranteed funds be immediately due 
and payable to a standby trust if the guarantor is in financial 
distress. Finally, the amended regulations would require 
decommissioning power reactor licensees to report additional 
information on the costs of decommissioning and spent fuel management.

DATES: Submit comments on the proposed rule by April 7, 2008. Submit 
comments specific to the information collections aspects of this 
proposed rule by February 21, 2008. Comments received after these dates 
will be considered if it is practical to do so, but assurance of 
consideration cannot be given to comments received after these dates.

ADDRESSES: You may submit comments by any one of the following methods. 
Please include the number RIN 3150-AH45 in the subject line of your 
comments. Comments on rulemakings or petitions submitted in writing or 
electronic form will be made available to the public in their entirety 
on the NRC rulemaking Web site. Personal information, such as your 
name, address, telephone number, e-mail address, etc., will not be 
removed from your submission.
    Mail comments to: Secretary, U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff.
    E-mail comments to: [email protected]. If you do not receive a reply e-
mail confirming that we have received your comments, contact us 
directly at 301-415-1677. Comments can also be submitted via the 
Federal eRulemaking Portal http://www.regulations.gov.
    Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland 
20852, between 7:30 a.m. and 4:15 p.m. Federal workdays. (Telephone 
301-415-1966).
    Fax comments to: Secretary, U.S. Nuclear Regulatory Commission at 
301-415-1101.
    Selected documents and draft guidance related to this rulemaking, 
including comments, may be viewed and downloaded electronically via the 
Federal eRulemaking Portal http://www.regulations.gov, or may be viewed 
electronically on the public computers located at the NRC's Public 
Document Room (PDR), O1 F21, One White Flint North, 11555 Rockville 
Pike, Rockville, Maryland. The PDR reproduction contractor will copy 
documents for a fee.
    Publicly available documents created or received at the NRC after 
November 1, 1999, are available electronically at the NRC's Electronic 
Reading Room at http://www.nrc.gov/reading-rm/adams.html. From this 
site, the public can gain entry into ADAMS, which provides text and 
image files of NRC's public documents. The ADAMS accession number is 
ML073470819 for publicly available documents and draft guidance related 
to this rulemaking. If you do not have access to ADAMS or if there are 
problems in accessing the documents located in ADAMS, contact the PDR 
Reference staff at 1-800-397-4209, 301-415-4737 or by e-mail to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Kevin O'Sullivan, Office of Federal 
and State Materials and Environmental Management Programs, U.S. Nuclear 
Regulatory Commission, Washington, DC 20555-0001, telephone 301-415-
8112, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion
    A. What Action is the NRC Taking?
    B. Who Would This Action Affect?
    C. What Steps Did NRC Take to Prepare for This Rulemaking?
    D. What Alternatives Has NRC Considered?
    E. What Is a Legacy Site?
    F. What Are Financial Assurances?
    G. Why Might Some Materials Licensees Not Have Funds to 
Decommission Their Facility?
    H. Why Is 10 CFR 50.82 Being Amended?
    I. What Changes Are Being Proposed to 10 CFR 20.1406?
    J. What Surveys Are Required Under Proposed Changes to 10 CFR 
20.1501(a)?
    K. What Information Must the Licensee Collect Under Proposed 
Changes to 10 CFR 20.1501?
    L. How Would Licensees Report Required Information to the NRC?
    M. What Financial Assurance Information Must Licensees Currently 
Report to the NRC?
    N. What Are the Proposed Changes to the Financial Assurance 
Regulations?
    O. Will Some Licensees Who Currently Do Not Have Financial 
Assurance Need to Get Financial Assurance?
    P. What Is Changing With Respect to Materials Facilities' 
Decommissioning Funding Plan (DFP) and Decommissioning Cost Estimate 
(DCE)?
    Q. What Is Changing With Respect to License Transfer Regulations 
for Materials Licensees?
    R. What Is Changing With Respect to Permanently Shutdown Reactor 
Decommissioning Fund Status and Spent Fuel Management Plan 
Reporting?
    S. When Do These Proposed Actions Become Effective?
    T. Has NRC Prepared a Cost-Benefit Analysis of the Proposed 
Actions?
    U. Has NRC Evaluated the Additional Paperwork Burden to 
Licensees?
    V. What Should I Consider as I Prepare My Comments to NRC?
III. Discussion of Proposed Amendments by Section
IV. Criminal Penalties
V. Agreement State Compatibility
VI. Plain Language
VII. Voluntary Consensus Standards
VIII. Environmental Assessment and Finding of No Significant 
Environmental Impact
IX. Paperwork Reduction Act Statement
X. Public Protection Notification
XI. Regulatory Analysis
XII. Regulatory Flexibility Certification
XIII. Backfit Analysis

I. Background

    In 1988, NRC issued regulations in Title 10 Code of Federal 
Regulations (10 CFR) parts 30, 40, 50, 51, 70 and 72 establishing new 
financial criteria applicable to decommissioning licensed nuclear 
facilities (53 FR 24018; June 27, 1988). Planning, estimating costs, 
acceptable funding methods, and environmental review provisions were 
among the requirements established in 1988, and were designed to ensure 
that licensee funds would be available when needed to complete safe and 
timely decommissioning of all licensed facilities. Financial assurance 
regulations are part of NRC's overall strategy to maintain public 
health and

[[Page 3813]]

safety, and protection of the environment, during and after nuclear 
facility decommissioning. The NRC announced in 1988 that it intended to 
periodically assess the effectiveness of the funding methods permitted 
in the regulations. Since then, the NRC has issued several amendments 
to the financial criteria applied to decommissioning licensed nuclear 
facilities.
    After NRC published financial assurance regulations in 1988, a 
small number of sites were unable to fully comply with the financial 
assurance requirements. In some cases, these sites had large amounts of 
onsite residual contamination, remediation of which would exceed 
available funds. The Commission directed the staff, in Staff 
Requirements Memoranda (SRMs) dated August 22, 1989, and January 31, 
1990, to develop a strategy for resolving decommissioning issues and to 
develop a prioritized list of contaminated sites. In response, the Site 
Decommissioning Management Plan (SDMP) was developed, containing 
cleanup criteria based in part on residual radioactivity concentrations 
for sites with extensive uranium and thorium contamination.
    In 1993 (58 FR 68726), licensees that passed financial test 
criteria were allowed to use a self-guarantee to provide financial 
assurance for decommissioning. In 1996 (61 FR 39299; July 29, 1996), 
nuclear power reactor decommissioning procedures were clarified, while 
recognizing that the radioactivity resulting from contaminated 
materials and effluents (air and water) must be minimized and 
controlled. In 1998 (63 FR 29535; June 1, 1998), use of the self-
guarantee method was broadened to include some commercial licensees who 
do not issue bonds, as well as non-profit licensees, such as colleges, 
universities and hospitals. Also in 1998 (63 FR 50465; September 22, 
1998), NRC amended power reactor decommissioning financial assurance 
requirements in response to potential deregulation of the power 
generating industry. In 2003 (68 FR 57327; October 3, 2003), the set of 
materials licensees for which financial assurance is required was 
expanded to include all waste brokers. Additionally, large irradiators 
were required to prepare a site-specific decommissioning cost estimate 
as the basis of their financial assurance; decommissioning 
certification amounts were increased by 50 percent; and decommissioning 
cost estimates were required to be updated for certain licensees at 
least every 3 years.
    Apart from these changes in financial assurance requirements 
summarized above, more comprehensive and risk informed decommissioning 
regulations were issued in 1997 as Subpart E of 10 CFR part 20 (62 FR 
39058; July 21, 1997). This set of requirements is known as the License 
Termination Rule (LTR). The LTR is based on calculated doses, and it 
established specific radiological criteria for remediation of lands and 
structures to complete site decommissioning and successfully terminate 
the license. The LTR provides an overall approach for license 
termination for two different site conditions: unrestricted use and 
restricted conditions for use after license termination. The LTR 
applies to the decommissioning of facilities licensed under 10 CFR 
parts 30, 40, 50, 60, 61, 63, 70 and 72. In the Federal Register notice 
publishing the LTR final rule, in response to a public comment that the 
requirements of then-proposed 10 CFR 20.1406 should apply to all 
licensees, rather than only to applicants for new licenses, the 
Commission stated:
    Applicants and existing licensees, including those making 
license renewals, are already required by 10 CFR part 20 to have 
radiation protection programs aimed towards reducing exposure and 
minimizing waste. In particular, Sec. 20.1101(a) requires 
development and implementation of a radiation protection plan 
commensurate with the scope and extent of licensed activities and 
sufficient to ensure compliance with the provisions of 10 CFR part 
20. Section 20.1101(b) requires licensees to use, to the extent 
practicable, procedures and engineered controls to achieve public 
doses that are ALARA. In addition, lessons learned and documented in 
reports such as NUREG-1444 have focused attention on the need to 
minimize and control waste generation during operations as part of 
development of the required radiation protection plans. Furthermore, 
the financial assurance requirements issued in the January 27, 1988 
(53 FR 24018), rule on planning for decommissioning require 
licensees to provide adequate funding for decommissioning. These 
funding requirements create great incentive to minimize 
contamination and the amount of funds set aside and expended on 
cleanup. (62 FR 39082; July 21, 1997).

Current 10 CFR 20.1101(a) requires each licensee to implement a 
radiation protection program to ensure compliance with the regulations 
in 10 CFR part 20. Current Sec.  20.1101(b) requires each licensee to 
use, to the extent practical, procedures and engineering controls based 
upon sound radiation protection principles to achieve occupational 
doses and doses to members of the public that are as low as reasonably 
achievable (ALARA). Licensees need to apply operating procedures and 
controls to evaluate potential radiological hazards and methods to 
minimize and control waste generation during facility operations, to 
achieve doses that are ALARA.
    In SRM-SECY-01-0194, dated June 18, 2002, the Commission directed 
the staff to conduct an analysis of LTR issues. The staff conducted the 
analysis and presented results and recommendations to the Commission in 
SECY-03-0069 (http://www.nrc.gov/reading-rm/doc-collections/commission/srm/2003/2003-0069srm.pdf), (dated May 2, 2003, and known as the LTR 
Analysis). One of the recommendations was a set of ``measures to 
prevent future legacy sites.'' A legacy site is a facility that is in 
decommissioning status with complex issues and an owner who cannot 
complete the decommissioning work for technical or financial reasons 
(as discussed further in Section II.E of this document). The set of 
measures to prevent future legacy sites had two distinct parts: (1) The 
need for timely reporting during facility operations of subsurface 
contamination that has a potential to complicate future decommissioning 
efforts; and (2) The need for more detailed reporting of licensee 
financial assurance mechanisms to fund site decommissioning activities 
and protection of the committed funds in cases of financial distress. 
The need for timely reporting of subsurface contamination during 
facility operations was explained in Attachment 8 to SECY-03-0069. 
Attachment 8, under the heading ``chronic releases,'' recommended 
revising 10 CFR 20.1406 to extend its minimization of contamination 
requirements to cover licensees in addition to license applicants. 
Recommendations for more detailed decommissioning financial assurance 
requirements are set forth in Attachment 7 to SECY-03-0069.
    In SRM-SECY-03-0069 the Commission approved the staff's 
recommendations summarized above, and authorized this proposed 
rulemaking. As pertinent to the proposed 10 CFR 20.1406 and 10 CFR 
20.1501 revisions, the Commission's SRM states as follows:

    ``The Commission has approved the staff's recommendation related 
to changes in licensee operations as described in attachment 8. 
However, in addition to incorporating risk-informed approaches, the 
staff should ensure that they are performance-based. The staff will 
have to be very careful when crafting the guidance documents so that 
it is clear to the licensees and to the staff how much 
characterization information is enough. The staff should only ask 
for limited information. Licensees should

[[Page 3814]]

not be required to submit the equivalent of a full scale MARSSIM 
[Multi-Agency Radiation Survey and Site Investigation Manual] survey 
every year.''

    During 2003 and 2004, the NRC staff evaluated the decommissioning 
program and proposed other improvements to protect public health and 
safety beyond those identified in the LTR Analysis. To integrate and 
track regulatory improvements resulting from the LTR Analysis and the 
Decommissioning Program Evaluation, the NRC adopted an Integrated 
Decommissioning Improvement Plan (IDIP) for activities during FY 2004 
through 2007. Among other actions, the IDIP calls for publication of 
this proposed rule and written guidance describing changes in the 
regulations to prevent future legacy sites.
    In 2005 and 2006, the operators of several nuclear power plants 
reported that inadvertent and unmonitored radioactive liquid releases, 
primarily tritium contained in water, had occurred. In some instances, 
the release of radioactive liquid was not recognized by the licensee 
until years after the release apparently started. The NRC Executive 
Director for Operations chartered a Task Force to conduct a lessons-
learned review of these incidents. The Task Force final report dated 
September 1, 2006, concluded that the levels of tritium and other 
radionuclides measured thus far do not present a health hazard to the 
public, and presenting a list of findings and recommendations that the 
Task Force believed would improve plant operations and public 
confidence in nuclear plant operations. The findings and 
recommendations in the Task Force report identified the need to clarify 
existing licensee requirements to demonstrate that they have achieved 
public and occupational exposures that are ALARA, during the life cycle 
of the facility which includes the decommissioning phase.

II. Discussion

A. What Action Is the NRC Taking?

    The NRC is proposing changes to its regulations to improve 
decommissioning planning, and thereby reduce the likelihood that 
facilities under its jurisdiction will become legacy sites. To help 
achieve this goal, one set of complementary amendments have been 
proposed that would revise 10 CFR 20.1406 to make it applicable to 
licensees with operating facilities as well as to license applicants, 
and revise 10 CFR 20.1501(a) by replacing its undefined term 
``radioactive material'' with ``residual radioactivity,'' a term 
already defined in 10 CFR part 20. This defined term includes 
subsurface contamination within its scope. Both 10 CFR 20.1406(c) and 
20.1501(a) are being worded to include subsurface contamination within 
their scope by using the term ``residual radioactivity.'' These changes 
serve to reinforce the intended linkage between these provisions, and 
are consistent with NRC policy that licensees conduct operations to 
minimize the generation of waste, to facilitate later facility 
decommissioning. A second set of proposed changes to improve 
decommissioning planning addresses decommissioning financial assurance 
requirements.
    The proposed new 10 CFR 20.1406(c) states as follows:

    (c) Licensees shall, to the extent practical, conduct operations 
to minimize the introduction of residual radioactivity into the 
site, including the subsurface, in accordance with the existing 
radiation protection requirements in Subpart B and radiological 
criteria for license termination in Subpart E of this part.

    The proposed revised 10 CFR 20.1501(a) and (b) state as follows:

    (a) Each licensee shall make or cause to be made, surveys of 
areas, including the subsurface, that--
    (1) May be necessary for the licensee to comply with the 
regulations in this part; and
    (2) Are reasonable under the circumstances to evaluate--
    (i) The magnitude and extent of radiation levels; and
    (ii) Concentrations or quantities of residual radioactivity; and
    (iii) The potential radiological hazards of the radiation levels 
and residual radioactivity detected.
    (b) Records from surveys describing the location and amount of 
subsurface residual radioactivity identified at the site must be 
kept with records important for decommissioning.

    As indicated, use of the term ``residual radioactivity'' is a key 
component of the above proposed requirements, and this term is 
discussed below.
1. Residual Radioactivity
    As set forth in 10 CFR 20.1003:

    ``Residual radioactivity means radioactivity in structures, 
materials, soils, groundwater, and other media at a site resulting 
from activities under the licensee's control. This includes 
radioactivity from all licensed and unlicensed sources used by the 
licensee, but excludes background radiation. It also includes 
radioactive materials remaining at the site as a result of routine 
or accidental releases of radioactive material at the site and 
previous burials at the site, even if those burials were made in 
accordance with the provisions of 10 CFR part 20.''

    Certain operational events (e.g., slow, long-term leaks), 
particularly those that cause subsurface soil and ground-water 
contamination, can significantly increase the cost of decommissioning. 
To adequately assure that a decommissioning fund will cover the costs 
of decommissioning, the owner of a facility must have a reasonably 
accurate estimate of the extent to which residual radioactivity is 
present at the facility, particularly in the subsurface soil and ground 
water. As reflected above, the new 10 CFR 20.1406(c) would require that 
licensees conduct their operations in a manner that will minimize the 
introduction of residual radioactivity into the site.
    Section 20.1501(a) would be revised by replacing its undefined term 
``radioactive material'' with ``residual radioactivity.'' To some 
people, the phrase ``residual radioactivity'' may have a connotation 
implying radioactive material that is ``left over'' after operations. 
This is not the meaning. As reflected in its definition stated 
previously, this term includes everything that the term ``radioactive 
material'' implies in the current rule language as well as other 
radioactive material resulting from activities under the licensee's 
control, such as radioactive material in the subsurface. The use of the 
term ``residual radioactivity'' in Sec. 20.1501(a) also is intended to 
provide a link with new Sec.  20.1406(c). The amended Sec.  20.1501(a) 
would retain previous survey requirements, but would add that such 
requirements include consideration of waste in the form of residual 
radioactivity. Together, the amended Sec. Sec.  20.1501(a) and 
20.1406(c) specify that compliance with 10 CFR part 20 requirements is 
a necessary part of effectively planning for decommissioning. The new 
Sec. Sec.  20.1406(c) and 20.1501(a) provisions are discussed further 
in Sections II.I and J of this document. These activities, undertaken 
during facility operations, would provide a technical basis for 
licensees and NRC to understand the effects of significant residual 
radioactivity on decommissioning costs, and to determine whether 
existing financial assurance provided for site-specific decommissioning 
is adequate. By using the term ``residual radioactivity,'' the new 
Sec. Sec.  20.1406(c) and 20.1501(a) cover any licensed and unlicensed 
radioactive material that have been introduced to the site by licensee 
activities.
    The new paragraph 10 CFR 20.1501(b) would be revised to require 
licensees to keep records of surveys of subsurface residual 
radioactivity identified at the site with records important for 
decommissioning.

[[Page 3815]]

    During operations, residual radioactivity that would be significant 
for decommissioning planning would be a quantity of radioactive 
material that would later require remediation during decommissioning to 
meet the unrestricted use criteria of 10 CFR 20.1402. Significant 
residual radioactivity in subsurface media, such as soil, is a 
component of waste because it must be removed and disposed of to meet 
unrestricted use criteria in 10 CFR 20.1402.
    During decommissioning, the licensee must evaluate dose from 
residual radioactivity surveyed at its site using the radiological 
criteria in Subpart E to 10 CFR part 20. For contamination migrating 
offsite from previous leaks and spills into the subsurface, a licensee 
must comply with the applicable license conditions for its facility. 
Such offsite contamination, released as an effluent in quantities below 
annual regulatory limits, has been a factor in the decommissioning of a 
few NRC and Agreement State sites. However, the scope of this 
rulemaking does not include offsite contamination discovered during 
decommissioning, unless such contamination is an extension of onsite 
contamination (e.g., a contaminated ground water plume originating from 
the licensee's facility).
    NRC's technical basis for the effect that significant residual 
radioactivity in the subsurface has on decommissioning costs is based 
on a 2005 NRC staff study, ``General Guidance for Inspections and 
Enforcement to Prevent Future Legacy Sites and Indicators of Higher 
Risk of Subsurface Contamination'' [NRC ADAMS Accession Number 
ML052630421]. The purpose of this study was to evaluate experience at 
sites that have undergone, or were undergoing decommissioning to 
identify the types of events that have caused subsurface contamination. 
Associating these events with knowledge of currently operating sites 
provided a means for NRC staff to evaluate the potential for future 
subsurface contamination at currently operating facilities. This risk-
informed approach concluded that the sites with a higher likelihood of 
becoming legacy sites shared the following characteristics: relatively 
large volumes of low specific activity radioactively contaminated 
liquids; large volumes of long-lived radionuclides; large throughput; 
liquid processes; or processes that involve large quantities of solid 
radioactive material stored outdoors. The study identified a number of 
events that could increase decommissioning costs by increasing the 
possibility of soil or ground-water contamination, and concluded that 
these events should cause the licensee to reevaluate its 
decommissioning cost estimate. Additional discussion on this topic is 
in Sections II.G and II.H of this document.
    NRC considers proposed changes to 10 CFR 20.1406 and 20.1501 to be 
consistent with existing NRC policy for operating facilities. Under 10 
CFR 20.1101(b), licensees must use procedures and engineering controls 
to achieve occupational doses and doses to members of the public that 
are ALARA, during operations and during decommissioning. To accomplish 
this, licensees must be able to demonstrate their knowledge of residual 
radioactivity in the subsurface, including soil and ground-water 
contamination, particularly if the subsurface contamination is a 
significant amount that would require remediation during 
decommissioning to meet the unrestricted use criteria of 10 CFR 
20.1402. This is an extension of the requirements promulgated, with 
widespread agreement, in the 1997 LTR that were applicable only to 
license applicants. This action is needed because subsurface residual 
radioactivity at current operating facilities may be a potential 
radiological hazard, and a risk to fully fund decommissioning while the 
facility is in an operating mode. The linkage between new 10 CFR 
20.1406(c) and amended 10 CFR 20.1501(a) better institutes existing NRC 
policy with respect to subsurface contamination during facility 
operations, to achieve doses that are ALARA, and identifies to 
licensees that survey requirements may be a necessary part of 
effectively planning for decommissioning as well as to comply with dose 
limits.
2. Financial Assurance
    The proposed rule (amending Sec. Sec.  30.35, 40.36, 70.25 and 
72.30, and Criterion 9 of appendix A to part 40) would codify certain 
aspects of existing regulatory guidance to improve the quality of 
Decommissioning Funding Plans (DFP), and would apply NRC experience to 
increase the likelihood that adequate funds will be available when 
needed to complete the decommissioning process. The proposed rule 
amendments would allow materials licensees to base their financial 
assurance for decommissioning on a ``certification amount'' only if the 
licensee's site surveys do not indicate the presence of residual 
radioactivity in amounts that would prevent the site from meeting the 
unrestricted use criteria in Sec.  20.1402. The proposed rule would 
address the potential vulnerability of the parent company guarantee and 
the self-guarantee as the financial mechanism for decommissioning 
funding assurance during financial distress of the guarantor. Each of 
the licensees who use the guarantee mechanism would be required to 
establish a standby trust fund to receive the guaranteed financial 
assurance amount should that amount become immediately due and payable.
    Licensees with reactors in a decommissioning status would have 
additional reporting requirements for decommissioning fund status, 
spent fuel management costs, and estimated decommissioning costs. These 
proposed reporting requirements, in part, modify the existing Post 
Shutdown Decommissioning Activities Report requirements set forth in 10 
CFR 50.82(a)(4)(i). Additional reporting requirements would require 
each power reactor licensee undergoing decommissioning to thereafter 
submit an annual financial assurance status report, as set forth in new 
paragraphs (a)(8)(v)-(a)(8)(vii) of 10 CFR 50.82(a)(8).
    Under the proposed rule, all licensees decommissioning their 
facilities pursuant to 10 CFR 20.1403 restricted release criteria would 
be required to use a trust fund to meet the financial assurance 
requirements. A trust fund would be the only financial assurance 
mechanism allowed for the long term maintenance and surveillance of 
restricted release sites unless a government organization either 
provides a guarantee of funds or assumes custody and ownership of the 
site. This topic is discussed further in Sections II.M, N and O of this 
document.

B. Who Would This Action Affect?

    Based on the Regulatory Analysis for this proposed rule, NRC 
estimates that a small number of materials licensees (a total of about 
5 NRC and Agreement State licensees) would need to perform additional 
site surveys due to the presence of significant residual radioactivity. 
The licensees who will need to perform additional surveys were modeled 
in the Regulatory Analysis as rare metal extraction facilities with 
uranium as a soil contaminant. Although the number of licensees 
affected by the proposed rule is small, the cost to States or the 
Federal Government to enforce and then fully decommission a single 
legacy site is much higher than the cost to prevent the occurrence of a 
legacy site through amended regulations.
    For NRC licensees who have subsurface residual radioactivity with 
no ground water implications, a minimal, routine monitoring plan may 
remain in effect through license

[[Page 3816]]

termination. The routine monitoring plan is described in draft 
regulatory guidance released concurrently with this proposed rule. 
Application of a minimal, routine monitoring plan at sites with no 
ground water implications is meant to improve licensee decommissioning 
planning and the basis used for decommissioning cost estimates.
    The large majority of NRC and Agreement State licensees are not 
expected to have residual radioactivity because they possess small 
amounts of short-lived byproduct material or byproduct material that is 
encased in a capsule designed to prevent leakage or escape of the 
byproduct material (i.e., a sealed source). This set of licensees is 
expected to include the non-fuel-cycle nuclear facilities, which either 
have no significant residual radioactive contamination to be cleaned 
up, or, if there is contamination, it is localized or will be quickly 
reduced to low levels by radioactive decay. Licensees who do not have 
residual radioactivity and do not have an obligation to set aside funds 
for decommissioning financial assurance would not be affected by this 
proposed rule. Draft regulatory guidance released concurrently with 
this proposed rule describes an acceptable method for these licensees 
to confirm the absence of subsurface residual radioactivity at their 
facilities.
    Approximately 300 NRC materials licensees and over 1,000 Agreement 
State licensees have an obligation to set aside funds for 
decommissioning financial assurance. Of these, approximately 50 percent 
use a certified amount, specified in regulations, with the remaining 50 
percent using a site-specific DFP or License Termination Plan to meet 
the decommissioning financial assurance requirements. If there is 
significant residual radioactivity at the site, the changes in 
Sec. Sec.  30.35, 40.36, 70.25, and 72.30 would require a licensee to 
switch out of its certified funding amount, and replace the certified 
amount with a DFP. In preparing this proposed rule, NRC staff was not 
aware of any licensees using certified amounts for decommissioning that 
would need to switch to a DFP because of significant residual 
radioactivity.
    Licensees using a site-specific DFP or License Termination Plan to 
meet decommissioning financial assurance requirements would have 
additional reporting requirements based on changes in Sec. Sec.  30.35, 
40.36, 50.82, 70.25, and 72.30. The materials licensees under 10 CFR 
part 30, 40, 70 and 72 would need to provide more details to support 
their decommissioning cost estimate, such as the assumed cost of an 
independent contractor to perform all decommissioning activities. The 
power reactor licensees under 10 CFR part 50 would need to provide more 
details to support their decommissioning schedule, cost estimates for 
managing irradiated fuel, and annual financial assurance status report.
    The proposed changes to 10 CFR 50.82(a) affect the 12 power reactor 
licensees undergoing decommissioning. Such licensees would need to 
provide more details regarding their decommissioning cost estimates, 
including those for managing irradiated fuel. More specifically, 
licensees who have submitted a certification of permanent cessation of 
operations under 10 CFR 50.82(a) would thereafter be subject to annual 
financial assurance reporting requirements similar to those imposed on 
operating reactors under existing 10 CFR 50.75(f). The annual reports 
would identify yearly decommissioning expenditures, the remaining 
balance of decommissioning funds, and would contain a cost estimate to 
complete decommissioning. Similar to the one-time reports required by 
10 CFR 50.54(bb), the proposed annual reports to be required under 10 
CFR 50.82(a)(8) would identify the amount of funds accumulated to 
manage irradiated fuel, and the projected cost of managing the 
irradiated fuel until title and possession is transferred to the 
Secretary of Energy.
    Approximately 20 licensees who use an escrow account as a 
prepayment financial mechanism would be affected by proposed changes in 
Sec. Sec.  30.35, 40.36, 70.25, and 72.30 (which would eliminate the 
escrow account as a prepayment financial assurance method). No 
licensees are using a line of credit as a financial mechanism; both the 
escrow account and the line of credit are proposed for elimination as 
acceptable financial assurance instruments.
    Approximately 45 NRC licensees use a parent company guarantee or 
self-guarantee as a financial assurance mechanism. These licensees may 
be affected by proposed changes in 10 CFR part 30, appendices A, C, D, 
and E, which would require establishment of a standby trust fund before 
the guarantee becomes effective. The standby trust fund would be set up 
for receipt of funds in the case of financial distress by the 
guarantor. In the Regulatory Analysis and Paperwork Reduction Act 
burden estimate, NRC has assumed that a total of 25 of these licensees 
would need to establish a trust fund to comply with the amended 
regulations with the other 20 already having an established trust fund.
    The Regulatory Analysis for this proposed rule, referenced in 
Section X of this document, has detailed cost-benefit estimates 
regarding the licensees who would be affected by the amended 
regulations.

C. What Steps Did NRC Take To Prepare for This Rulemaking?

    The NRC took several initiatives to enhance stakeholder involvement 
and to improve efficiency during the rulemaking process. On May 28, 
2004, the NRC staff issued Regulatory Information Summary (RIS) 2004-
08, ``Results of the License Termination Rule Analysis.'' This RIS was 
the first follow-up action taken in response to SRM-SECY-03-0069. The 
purpose of the RIS was to inform licensees and stakeholders of NRC's 
analysis of the issues associated with implementing the LTR, the 
Commission's direction to resolve these issues, the schedule for future 
actions, and opportunities for stakeholder comment. The RIS noted that 
stakeholder involvement would be an important part of developing the 
planned rulemaking and guidance.
    In April 2005, the NRC conducted a two-day decommissioning workshop 
examining a number of LTR topics, including potential changes in 
facility operating requirements and changes to financial assurance to 
prevent legacy sites. Stakeholders addressed the issues and potential 
resolutions included in this proposed rule. Since then, NRC has 
maintained a series of web pages with information (http://www.nrc.gov/about-nrc/regulatory/decommissioning.html) including draft guidance 
documents, Commission papers, and a variety of decommissioning program 
documents. NRC presented papers on the scope of this proposed 
rulemaking at American Nuclear Society conferences in 2004, 2005 and 
2006 and other stakeholder forums.
    In June 2006, the NRC formed a proposed rule Working Group of NRC 
staff and one Agreement State representative from the Organization of 
Agreement States (OAS). The NRC has held discussions with State and 
Federal agencies on their experience with trust funds for long-term 
financial assurance, including a discussion with the U.S. Environmental 
Protection Agency (EPA) on October 6, 2006.
    In January 2007, the NRC held a public roundtable meeting that was 
attended by about 70 stakeholders. The meeting was held to solicit 
input from stakeholders and interested members of the public regarding 
the issues of licensee control and identification of

[[Page 3817]]

subsurface residual radioactivity, and proposed changes to 
decommissioning financial assurance requirements. The Summary Notes and 
transcript of this public meeting are posted on: http://www.nrc.gov/about-nrc/regulatory/decommissioning/public-involve.html.

D. What Alternatives Has NRC Considered?

    The rulemaking Working Group considered different alternatives for 
the proposed rule and agreed on the following for analysis in the 
Environmental Assessment (see Section VIII of this preamble) and the 
Regulatory Analysis (see Section XI of this preamble):
    Alternative 1: No Action.
    This alternative provides a baseline to assess the other two 
alternatives. It assumes that if no changes are made to the 
regulations, there will be additional legacy sites from currently 
operating facilities licensed by NRC and Agreement States.
    Alternative 2: Monitoring with proposed changes to financial 
assurance.
    This alternative would implement the proposed changes in 10 CFR 
20.1406(c) and 20.1501, and the proposed changes to decommissioning 
planning and financial assurance requirements.
    Alternative 3: Monitoring with proposed changes to financial 
assurance, and collateral.
    This alternative would implement the proposed changes in 
Alternative 2, and one additional requirement for a security interest 
in collateral to support the decommissioning assurance pledged in the 
parent company guarantee and self-guarantee financial assurance 
mechanisms.
    NRC considered two other alternatives, beyond the three noted 
previously, but did not analyze them in as much detail. One alternative 
was to require that materials licensees obtain accidental property 
damage insurance to cover the reasonable costs of decontaminating its 
facility and site and disposing of contaminated materials in the event 
of a large, sudden and accidental onsite release of radioactive 
material. This was prompted, in part, by the objective to apply 
consistent financial assurance standards to reactors and materials 
facilities. The NRC requires reactor licensees, under 10 CFR 50.54(w), 
to obtain insurance to pay for cleaning up an accidental release of 
radioactive material that causes a present danger of release offsite 
that would pose a threat to public health and safety. NRC staff 
evaluated whether it would be appropriate to require onsite property 
damage insurance for materials facilities to pay costs associated with 
cleaning up a sudden and accidental event that could, if the operators 
needed to shut down the facility, overwhelm the decommissioning fund. 
This issue has been addressed before. On June 7, 1985 (50 FR 23960), 
the NRC published an advanced notice of proposed rulemaking requesting 
comments on requiring financial assurance for the cleanup of accidental 
or unexpected contamination, both onsite or offsite. After several 
technical studies were conducted, the NRC concluded in 1995 that no 
such rulemaking was necessary. The NRC has revisited this issue and has 
found that there have been no significant changes affecting the 1995 
conclusion. Accidents at materials facilities that require expensive 
cleanup continue to be rare, with annual costs of cleanup small. The 
reportable radioactive material spills and releases from materials 
facilities over the 15-year period since 1991, as documented in the 
Nuclear Materials Events Database, have been about 2 events per year. 
Those events were primarily one-time small spills caused by mechanical 
failure of a valve, pump or pipe or in a few cases from human error. In 
the early 1990s there were several reportable events of contaminated 
drain lines or leakage from a storage pond, but these types of low-
level chronic contaminating events have not been reported at facilities 
since then.
    NRC determined that materials licensees are not able to obtain, at 
reasonable cost, environmental impairment liability insurance, 
including nuclear contamination events from both sudden and gradual 
accidental releases. American Nuclear Insurers (ANI), an agent for 
multiple insurance companies, provides non-reactor nuclear liability 
policies that provide coverage for third party claims made to cover 
off-site liability damages. The policies do not cover onsite damages 
nor do the policies cover the cost of environmental cleanup that would 
exceed the actual damages to the third party. NRC had determined that 
non-reactor property insurance is available, but this insurance would 
exclude ``gradual contamination'' and cover only damages caused by a 
``sudden and accidental'' event. Because the events occur only rarely 
and on a small scale, NRC has decided not to propose amendments to 
require materials licensees to obtain environmental cleanup insurance.
    The occurrence of ``gradual contamination,'' such as leakage 
outside the licensee's buildings, is intended to be addressed by the 
proposed changes to Sec. Sec.  20.1406(c) and 20.1501. Funding to 
remediate the leakage would be addressed by changes in the requirements 
for reporting decommissioning fund status and decommissioning cost 
estimates.
    Another alternative considered by NRC is the use of licensee 
incentives to facilitate decommissioning planning and reduce the 
likelihood of future legacy sites. In Section II.V of this document, 
NRC seeks public comments on this topic. The Advisory Committee on 
Nuclear Waste (ACNW) recommended, in a December 27, 2006, letter to 
Chairman Klein, that NRC staff should consider offering financial 
incentives to certain licensees to encourage their use of integrated 
monitoring and modeling approaches to demonstrate compliance with 
regulations and to apply site characterization data in a conceptual 
site model maintained during the facility lifetime. The regulations in 
10 CFR 171.11(b) allow the Commission to grant an exemption in a 
licensee fee that it determines is authorized by law or otherwise in 
the public interest. NRC staff is not aware of any time the Commission 
has used a 10 CFR part 171 annual fee exemption for this purpose. NRC 
staff was aware of 10 CFR part 170 fee exemptions, or fee waivers, for 
plants to ``pilot'' a new license amendment process. In practice, fee 
waivers are given very sparingly and only with convincing evidence that 
there is a public benefit to the waiver. The cost of a fee waiver would 
have to be paid through annual fees from other NRC licensees.

E. What Is a Legacy Site?

    A legacy site is a facility that is in decommissioning status with 
complex issues and an owner who cannot complete the decommissioning 
work for technical or financial reasons. These sites have been 
materials facilities, not reactor facilities.
    The purpose of this proposed rulemaking is to improve 
decommissioning planning and thereby reduce the likelihood that a site 
will become a legacy site, thus avoiding unnecessary expense and 
promoting more timely return of licensed sites to other productive 
uses.
    NRC terminates several hundred materials licenses each year. Most 
of these are routine actions, and the sites require little, if any, 
remediation to meet NRC's unrestricted use criteria. There are other 
sites where more complex decommissioning actions are needed. These 
complex decommissioning sites are described, along with the objectives 
of NRC decommissioning activities, in the ``Status of Decommissioning

[[Page 3818]]

Program 2006 Annual Report'' available at: http://www.nrc.gov/about-nrc/regulatory/decommissioning/program-docs.html. This report 
identifies and describes the status of 32 complex materials sites 
undergoing decommissioning. Of the total 32 complex sites, NRC 
considers 8 of these to be legacy sites as of December 31, 2006. 
Residual radioactivity at the complex decommissioning sites is 
primarily from the following radionuclides: U-235, U-238, Th-232, Ra-
226, Cs-137, Am-241, Sr-90, and H-3. Public or occupational exposure to 
these radionuclides may be a radiological hazard.

F. What Are Financial Assurances?

    Financial assurances are financial arrangements provided by a 
licensee, whereby funds for decommissioning will be available when 
needed. Each NRC licensee has a regulatory obligation to properly 
decommission its facility. However, only licensees whose 
decommissioning cost is likely to exceed a threshold amount must 
provide financial assurance. All nuclear power reactors and about 7 
percent of NRC materials licensees must provide decommissioning 
financial assurance. This financial assurance may be funds set aside by 
the licensee or a guarantee that funds will be available when needed. 
The guarantee may be provided by a qualified third party or, upon 
passage of a financial test by the licensee. The third party may be the 
parent company of the licensee, which is the case for about 10 percent 
of the NRC materials licensees who are obligated to have 
decommissioning financial assurance.
    Nuclear power reactors have financial assurance obligations that 
are different from materials licensees. The minimum amount of financial 
assurance for reactors is defined in 10 CFR 50.75, and the acceptable 
financial assurance mechanisms are defined in Sec.  50.75(e)(1). An 
external sinking fund is used to provide financial assurance for about 
90 percent of the reactors. The remaining 10 percent of reactors have 
assurance through prepaid funds and/or guarantees. No changes in these 
requirements are planned for power reactor licensees.
    As of December 31, 2006, there are about 300 NRC materials 
licensees that have a regulatory obligation to provide approved 
financial assurance mechanisms. An acceptable financial assurance 
mechanism for unrestricted use decommissioning is any of the following 
four types of financial instruments:
     A prepayment of the applicable decommissioning costs;
     A guarantee to pay the decommissioning costs issued by a 
qualified third party or the licensee;
     A statement of intent from a Federal, state or local 
government licensee; or
     An external sinking fund.
    The prepayment method is full payment in advance of decommissioning 
using an account segregated from licensee assets and outside the 
licensee's administrative control. About 11 percent of current 
financial assurance mechanisms for materials licensees are prepayment 
methods, with most of these being escrow accounts. Currently accepted 
prepayment mechanisms include escrow accounts (8 percent), trust funds 
(2 percent), certificates of deposit (1 percent), government funds (0 
percent), and deposits of government securities (0 percent). The 
proposed rule would eliminate all prepayment mechanisms except the 
trust fund, for reasons discussed under Section II.N.2 of this 
document.
    The guarantee method can be used by licensees that demonstrate 
adequate financial strength through their annual completion of 
financial tests contained in appendices A, C, D, and E of 10 CFR part 
30. About 51 percent of current financial assurance mechanisms for 
materials licensees are guarantee methods. Currently accepted guarantee 
mechanisms include letters of credit (28 percent), parent company 
guarantees (8 percent), licensee self-guarantees (7 percent), surety 
bonds (8 percent), lines of credit (0 percent), and insurance policies 
(0 percent). The proposed rule would eliminate the line of credit as an 
acceptable mechanism, for reasons discussed under Section II.N.10 of 
this document.
    The statement of intent is a commitment from a Federal, state or 
local government licensee that it will request and obtain 
decommissioning funds from its funding body, when necessary for 
decommissioning an NRC licensed site. It is available for use only by 
governmental entities. Approximately 38 percent of the NRC materials 
licensees with financial assurance use the statement of intent as a 
means to provide financial assurance.
    The external sinking fund allows the licensee to gradually prepay 
the decommissioning cost estimate, with the amount that is not prepaid 
covered by a surety mechanism or insurance, for materials licensees, or 
by surety, insurance, or a guarantee method for power reactor 
licensees. In a final rulemaking for power reactor financial assurance, 
the NRC allowed use of a parent company guarantee or self-guarantee 
with an external sinking fund (63 FR 50465; September 22, 1998). 
Analogous reasoning applies to materials licensees. The proposed rule 
amendments would make conforming changes in the financial assurance 
requirements for materials licensees (10 CFR 30.35, 40.36, 70.25, and 
72.30) to provide greater consistency with the 10 CFR part 50 
regulations. None of the NRC materials licensees that have an 
obligation to provide decommissioning financial assurance currently use 
an external sinking fund.
    The previous discussion was for financial assurance to decommission 
a site for unrestricted use under 10 CFR 20.1402. If a licensee can 
demonstrate its ability to meet the provisions of 10 CFR 20.1403 for 
restricted use, financial assurance for long-term surveillance and 
control may be provided by a trust fund or by a government entity 
assuming ownership and custody of the site.

G. Why Might Some Materials Licensees Not Have Funds To Decommission 
Their Facility?

    In SECY-03-0069, NRC evaluated licensee decommissioning experience 
and identified the following five reasons why some licensees may not 
have enough funds to complete their decommissioning activities.
    1. Licensees at complex sites may underestimate decommissioning 
costs, if the assumption that the site will qualify for a restricted 
release proves incorrect. The cost for a restricted release is usually 
significantly lower than unrestricted release given the high offsite 
disposal costs of licensed material when compared to the cost of onsite 
controls. If it turns out that the licensee cannot meet the 10 CFR 
20.1403 criteria for restricted conditions, the licensee may then not 
be able to meet its decommissioning financial obligations. To address 
this problem, the NRC proposes to amend 10 CFR 30.35, 40.36, 70.25 and 
72.30 to require licensees to obtain NRC approval of their DFP based on 
a decommissioning cost estimate for unrestricted release, unless the 
ability to meet the restricted release criteria can be adequately 
shown.
    2. Certain operational events, particularly those that cause soil 
or ground-water contamination, can increase decommissioning costs if 
not addressed during the life of the facility. If the licensee does not 
identify these events, assess the problem in a timely manner, and 
update its decommissioning cost estimate based on new conditions, the 
licensee may find it

[[Page 3819]]

difficult to later meet its decommissioning obligations. To address 
this problem, the NRC proposes to amend 10 CFR 20.1406 as discussed in 
Section II.A above. Licensees also would be required, in proposed 
amendments to 10 CFR 30.35, 40.36, 70.25 and 72.30, to factor in 
residual radioactivity information in arriving at decommissioning cost 
estimates.
    3. Certain financial assurance methods may not be effective in 
bankruptcy situations, given that funds held in them may be accessible 
to creditors. For example, title to property held in escrow remains 
with the licensee, making the property potentially vulnerable to claims 
by creditors. Another example is the parent and self-guarantees. The 
guarantees promise performance rather than payment. In the past, two 
companies used corporate reorganization to isolate the decommissioning 
obligations with the subsidiary company, but with insufficient funds to 
perform the work. In one case, the parent company reorganized without 
NRC approval and transferred to the subsidiary few assets and low 
levels of operating profits, so that the subsidiary was able to fund 
only a small portion of its decommissioning costs. In the second case, 
the parent company purchased the licensee before the time the financial 
assurance regulations were in effect. The licensee was permanently shut 
down after the purchase and was unable to provide full financial 
assurance. To address this problem, the NRC proposes to amend 10 CFR 
30.35, 40.36, 70.25, 72.30, and 10 CFR part 30 appendices A, C, D, and 
E by eliminating the use of an escrow account as a financial assurance 
option, and requiring a guarantor, as a condition of using the parent 
company guarantee and self-guarantee financial assurance options, to 
establish a standby trust fund and to submit to a Commission order, if 
the guarantor is in financial distress, to immediately pay the 
guaranteed funds into the standby trust.
    4. The funds set aside by licensees to carry out decommissioning 
may decline in value over time. To address this problem, the NRC 
proposes to amend 10 CFR 30.35(h), 40.36(f), 70.25(h), and 72.30(g) to 
require that licensees monitor the status of its decommissioning funds 
and, if necessary, add funds if the balance falls below the estimated 
cost of decommissioning.
    5. The initial funding of a trust fund to cover the recurring costs 
of long-term surveillance and control for license termination under 
restricted release criteria may be inadequate if it is based on a high 
assumed rate of return for the trust fund. To address this problem, the 
NRC proposes to amend 10 CFR 20.1403 to require that licensees assume 
only a 1 percent real rate of return in establishing the initial 
funding amount.

H. Why Is 10 CFR 50.82 Being Amended?

    Several power reactor licensees have successfully decommissioned 
their reactor sites consistent with 10 CFR part 20 requirements. In 
some cases, reactor decommissioning costs have exceeded the initial 
decommissioning cost estimate. For example, the Connecticut Yankee 
Nuclear Plant experienced higher decommissioning costs than planned, 
due in part to a larger volume of contaminated soil than was identified 
in the initial site characterization.
    In the past, NRC has not required licensees to submit details of 
decommissioning costs on grounds that the typical reactor licensee was 
part of a public utility with access to substantial assets and revenues 
and that the minimum required amount for decommissioning financial 
assurance was adequate. A licensee's status as a regulated public 
utility provided access to cost of service rate recovery to help 
provide additional funds. A public utility had access to sales revenues 
to fund its obligations, even if rate recovery was limited.
    Deregulation of the electric industry now permits a reactor 
licensee to operate as a merchant plant not subject to rate regulation 
or rate recovery of costs of service. When it ceases operation, it may 
have no sales revenues. The licensee may be organized as a separate 
company or a subsidiary of a holding company to isolate the risks and 
rewards of selling electricity on the open market. Without access to 
rate relief, no sales revenues, and with the licensee's owner protected 
by limited liability, shortfalls in decommissioning funding may 
jeopardize timely completion of decommissioning. Additional oversight 
is necessary to assure that the licensee anticipates potential 
shortfalls and takes steps to control costs to stay within its budget 
or obtain additional funds.

I. What Changes Are Being Proposed to 10 CFR 20.1406?

    New 10 CFR 20.1406(c) states as follows:

    (c) Licensees shall, to the extent practical, conduct operations 
to minimize the introduction of residual radioactivity into the 
site, including the subsurface, in accordance with the existing 
radiation protection requirements in Subpart B and radiological 
criteria for license termination in Subpart E of this part.

    The term ``to the extent practical'' is intended to limit the scope 
of this provision to actions that are already manifested in practice or 
action. The same phrase is used in existing 10 CFR 20.1101(b), which 
requires that licensees keep occupational and public radiological doses 
to ALARA levels. Draft regulatory guidance released with this proposed 
rule specifies that the intent of the proposed rule is to address 
amounts of residual radioactivity at a site that are significant to 
achieve effective decommissioning planning. For operating facilities, 
these events result in residual radioactivity in a quantity that would 
later require remediation during decommissioning to meet the 
unrestricted use criteria of 10 CFR 20.1402.
    The current 10 CFR 20.1101 requirements are related to those in 
proposed 10 CFR 20.1406(c). Section 20.1101(a) requires each licensee 
to implement a radiation protection program to ensure compliance with 
the regulations in 10 CFR part 20. The current 10 CFR 20.1101(b) 
requires each licensee to use, to the extent practical, procedures and 
engineering controls based upon sound radiation protection principles 
to achieve occupational doses and doses to members of the public that 
are ALARA. To achieve doses that are ALARA during facility operations 
and decommissioning, the Sec.  20.1101(b) operating procedures and 
controls must apply to potential radiological hazards and to methods 
used by the licensee to minimize and control waste generation.
    In furtherance of these existing requirements, the new 10 CFR 
20.1406(c) includes the term ``residual radioactivity,'' as discussed 
previously in Section II.A. This new section would apply to current 
licensee operations, in contrast to the Sec.  20.1406(a) and (b) 
requirements which are imposed on license applicants. Residual 
radioactivity excludes background radiation. All licensees with 
operating facilities must have performed an assessment of background 
radiation prior to operating their facility, to be compliant with the 
requirements in 10 CFR 20.1301(a)(1).
    The proposed rule's use of the term ``subsurface'' designates the 
area below the surface by at least 15 centimeters, as defined in NUREG-
1575, ``Multi-Agency Radiation Survey and Site Investigation Manual.'' 
Under current regulations, residual radioactivity that enters the 
ground at a site may go undetected because there are generally no NRC 
requirements to monitor the

[[Page 3820]]

ground water onsite for contamination. Based on past NRC experience, 
significant concentrations or quantities of undetected and unmonitored 
contamination, caused primarily by subsurface migration or ground 
water, has been a major contributor to a site becoming a legacy site 
and a potential radiological hazard.
    Several hundred NRC materials licensees possess radioactive 
material and have liquid processes that could cause subsurface 
contamination. These licensees generally are compliant with regulations 
that limit effluent release to the environment over a specified time. 
Some of these licensees may not have documented onsite residual 
radioactivity, such as spills, leaks and onsite burials that may be 
costly to remediate during decommissioning and should be considered in 
arriving at an accurate decommissioning cost estimate. There have been 
instances of previously unidentified soil and ground-water 
contamination at uranium recovery and rare earth sites undergoing 
decommissioning in several states, notably Colorado and Pennsylvania. 
Two contributing factors to the accumulation of unidentified subsurface 
contamination is reluctance among some licensees to spend funds during 
operations to perform surveys and document spills and leaks that may 
affect site characterization, and to implement procedures for waste 
minimization.
    The vast majority of NRC materials licensees do not have processes 
that would cause subsurface contamination. NRC's expectation is that 
these licensees, including those that release and monitor effluents of 
short-lived radionuclides to municipal sewer systems, will not be 
impacted by 10 CFR 20.1406(c). The accumulation of radionuclides at 
municipal waste treatment facilities was the subject of an Interagency 
Steering Committee on Radiation Standards (ISCORS) study (NUREG-1775, 
November 2003, ADAMS accession number ML033140171), which concluded 
that these facilities do not have significant concentrations of long-
lived radionuclides. Other classes of licensees that are, in general, 
not expected to introduce significant residual radioactivity into the 
subsurface include broad scope academic, broad scope medical, and small 
research and test reactors (less than 1 MWt). The draft regulatory 
guidance released concurrently with this proposed rule describes an 
acceptable method for these licensees to confirm the absence of 
subsurface contamination at their facility.
    Power reactor licensees have exhibited a high level of ALARA 
discipline with respect to effluent release and known spills and leaks. 
Current NRC regulations in Sec. Sec.  20.1301, 20.1302 and 50.36a 
ensure that power reactor licensees maintain adequate monitoring and 
surveys of radioactive effluent discharges, with annual reporting 
requirements outlined in Sec.  50.36a(2) that are made available to the 
public on the NRC web site at http://www.reirs.com/effluent/. Several 
nuclear power plants recently reported abnormal releases of liquid 
tritium, which resulted in ground-water contamination. To address this 
issue, the Nuclear Energy Institute (NEI) developed voluntary guidance 
for licensees in the Industry Ground Water Protection Initiative (GPI). 
The voluntary GPI, planned for implementation by all licensed power 
reactors as of September 2008, is a site-specific ground water 
protection program to manage situations involving inadvertent releases 
of licensed material to ground water and to provide informal 
communication to appropriate State/Local officials, with follow-up 
notification to the NRC as appropriate. On May 5, 2006, the NRC staff 
issued a revised baseline inspection module (Procedure 71122.01) used 
to inspect leaks and spills at power reactor sites.

J. What Surveys Are Required Under Proposed Changes to 10 CFR 
20.1501(a)?

    Existing Sec.  20.1501(a) requires licensees to perform surveys 
necessary to comply with part 20 requirements, including surveys 
reasonable under the circumstances to evaluate potential radiological 
hazards. Slow and long-lasting leaks of radioactive material into the 
onsite subsurface may eventually produce radiological hazards and pose 
a risk for creation of a legacy site if contaminant characteristics are 
not identified when the facility is operating. The staff views 
radiological hazards as including those resulting from subsurface 
contaminating events, when these events produce subsurface residual 
radioactivity that would later require remediation during 
decommissioning to meet the unrestricted use criteria of 10 CFR 
20.1402. An effective approach to understand the extent of subsurface 
residual radioactivity is through the use of radiological surveys.
    Appropriate surveys are essential for determining the adequacy of 
financial assurance for materials licensees, and need to be done 
periodically on a limited basis during operations when the DFP and 
financial assurance can be adjusted while the licensee is still 
generating revenue. This is far superior to the current practice at 
some facilities to delay even limited survey work of the site until 
after the facility has been shut down.
    Facilities that process large quantities of licensed material, 
especially in liquid form, have the potential for causing significant 
environmental contamination. Leaks from these facilities can lead to 
large amounts of radioactive contamination entering the subsurface 
environment over an extended period of time. The estimated doses from 
this contamination are below the limits in 10 CFR part 20 that would 
initiate immediate regulatory action. Another factor the staff has 
considered in this rulemaking is the high cost to dispose of 
radioactive materials offsite. These costs are a concern even when the 
material contains relatively low concentrations of radioactivity. A 
continued trend of high disposal costs could increase the number of 
environmental contamination incidents at operating facilities, 
resulting in substantially higher decommissioning costs. A third factor 
that could cause future legacy sites is the delayed identification of 
contamination on the site. Over a long time, contamination that 
migrates in subsurface soil or ground water does not cause immediate 
exposure to either workers or the public that approach the limits 
specified in 10 CFR part 20. It is only after operations have ceased 
when the possible results of unlimited access to the site, and 
associated exposure pathways (i.e., ingestion and inhalation) are being 
evaluated, that the extent of contamination has become apparent.
    As discussed previously in Section II.A, in accordance with 
proposed changes to 10 CFR 20.1501(a), licensees would be required to 
perform contamination surveys to comply with current 10 CFR part 20 
requirements, and the new Sec.  20.1406(c). The magnitude and extent of 
radiation levels are typically defined in units of radioactivity 
measurement, such as in micro-rem per hour ([mu]rem/hr). The 
concentrations or quantities of residual radioactivity are typically 
defined in units of radioactivity associated with a specific 
radionuclide, for example picocurie per liter of tritium (pCi/L of H-
3).
    The amended Sec.  20.1501(a) would retain previous survey 
requirements and would specify that such requirements include 
consideration of subsurface residual radioactivity. Survey requirements 
may include ground-water monitoring if reasonable under the site 
specific conditions. Soil sampling also

[[Page 3821]]

may be warranted based on site specific conditions, for example if 
there is no ground-water monitoring at the site or if known subsurface 
contamination has not migrated to the ground water wells. Draft 
regulatory guidance released concurrently with the proposed rule 
describes a variety of acceptable methods to evaluate subsurface 
characteristics. The NRC recognizes that ground-water monitoring may be 
a surrogate for subsurface monitoring at some sites, that soil sampling 
may be appropriate at other sites, and that there are sites with no 
subsurface residual radioactivity where the existing monitoring method 
is appropriate. Also, the NRC recognizes that an area within the 
footprint of a building, during licensed operations, may not be a 
suitable area for subsurface residual radioactivity surveys if the 
process of sampling would have an adverse impact on facility 
operations. The decision to perform subsurface residual radioactivity 
sampling in a particular area should be balanced against the potential 
to jeopardize the safe operation of the facility. The purpose of 
amended 10 CFR 20.1501(a) and 20.1406(c) is to specify that compliance 
with 10 CFR part 20 survey and recordkeeping requirements is necessary 
to demonstrate compliance with existing regulations and to plan 
effectively for decommissioning, including effects from subsurface 
contamination.
    Other proposed amendments (revised 10 CFR 30.35(e)(2), 40.36(d)(2), 
70.25(e)(2), and 72.30(c)) would require licensees who have a DFP or a 
License Termination Plan to factor in the results of surveys, performed 
under Sec.  20.1501(a), in estimating decommissioning costs. This new 
requirement would apply only to licensees who are required to have a 
DFP, and would assure that these licensees properly consider the extent 
of subsurface residual radioactivity in their decommissioning cost 
estimates, thus improving decommissioning planning and helping to 
reduce the likelihood of future legacy sites.
    For the materials licensees with a certified amount as 
decommissioning financial assurance, NRC assumes their current 
monitoring methods are adequate. If these licensees detect onsite 
contamination that would later require remediation during 
decommissioning to meet the unrestricted use criteria of 10 CFR 
20.1402, the licensees would be required to submit a decommissioning 
cost estimate.
    For the materials licensees who are not required to have financial 
assurance for decommissioning based on a license possession limit that 
is below the financial assurance threshold values in appendix B of 10 
CFR part 30, NRC's expectation is that the monitoring performed under 
proposed Sec.  20.1501(a) would be of a simple form, as discussed in 
draft regulatory guidance released with this proposed rule. Simple form 
monitoring is a method that confirms the absence of leaks or spills to 
the subsurface. The risk is low that any of these sites would cause 
contamination to create a potential radiological hazard or a future 
legacy site.
    NRC's expectation is that no additional surveys will be required of 
power reactor licensees and fuel cycle facilities. For power reactors, 
NRC staff concludes that the monitoring and survey processes and 
related reports prepared at power reactor sites likely would contain 
sufficient information to satisfy the proposed Sec. Sec.  20.1406(c) 
and 20.1501 requirements. NRC is not requiring licensees to submit 
reports, but the information must be kept onsite in records that are 
available for review. It is not expected that power reactor licensees 
would need to install additional monitoring equipment or modify 
existing operating procedures to satisfy the proposed 20.1501(a) 
requirements. But, it may be necessary for such licensees to take these 
actions if, for example, significant residual radioactivity is 
identified at a power reactor site at a level higher than had been 
previously identified. In any such situations, the need for additional 
monitoring would be determined on a case-by-case basis.
    Fuel cycle facilities, such as uranium fuel fabrication plants, the 
gaseous diffusion enrichment plants, and the dry process natural 
uranium conversion/de-conversion facility, also perform surveys to 
detect radioactive release to the ground water. NRC staff concludes 
that the monitoring and survey processes and related reports prepared 
at these facilities likely would contain sufficient information to 
satisfy the proposed Sec. Sec.  20.1406(c) and 20.1501 requirements. A 
high level of ALARA discipline for onsite spills and leaks is expected 
of the centrifuge enrichment plants and mixed oxide fabrication plant 
based on the information in their license applications (these 
facilities have not begun operations).

K. What Information Must the Licensee Collect Under Proposed Changes to 
10 CFR 20.1501?

    NRC is proposing, at certain facilities that have significant 
subsurface contamination, licensee documentation of contaminating 
events and survey results, including ground water monitoring surveys, 
and the retention of survey records until license termination, to 
facilitate later decommissioning of the facility.
    For 10 CFR 20.1501(a), licensees must be able to demonstrate 
compliance with the regulations in part 20 through surveys that 
evaluate the magnitude and extent of radiation levels, and 
concentrations or quantities of residual radioactivity including that 
in the subsurface, and any potential radiation hazards of the radiation 
levels and residual radioactivity detected. The sampling results would 
include the date, time, location, contaminants of interest and 
contamination levels, and the concentrations at which action is 
required to comply with regulations. The contaminants of interest are 
those used within the facility with half-lives long enough that they 
would require remediation during decommissioning to meet the 
unrestricted use criteria under 10 CFR 20.1402. Contaminants may also 
include both chemicals and radionuclides in the ground water from 
sources upstream of the NRC-licensed site because of the potential for 
interaction with releases from other sites. When ground water is being 
monitored, the surveys conducted by the licensee also would include 
hydro-geologic evaluations that lead to a determination of effective 
sampling and analysis, including accurate placement and installation of 
the wells, and well locations to determine the nominal ground water 
flow direction and preferential flow paths for each ``aquifer'' 
underlying the site. Licensees may need to perform surveys to 
demonstrate compliance with the new proposed paragraph 10 CFR 
20.1406(c).
    For 10 CFR 20.1501(b), licensees would document the records from 
surveys of subsurface residual radioactivity at the site as records 
important for decommissioning, under the requirements of Sec. Sec.  
30.35(g), 40.36(f), 50.75(g), 70.25(g), and 72.30(d). These records can 
be as simple as a description of the event, to include date, time, 
location, and the estimated quantities and activity levels of 
radioactive materials that were spilled or leaked. The documentation 
may describe the activation of a moisture alarm system used to indicate 
the presence of liquid in an area that is supposed to be dry. 
Contamination survey results must be included in these records if the 
surveys are considered important for decommissioning planning. The 
intent of 10 CFR 20.1501(b) recordkeeping is to address onsite 
subsurface residual radioactivity that would later require remediation 
during decommissioning to meet the

[[Page 3822]]

unrestricted use criteria of 10 CFR 20.1402.

L. How Would Licensees Report Required Information to the NRC?

    There are no reporting requirements for licensees under proposed 
changes to 10 CFR 20.1406(c) and 20.1501.
    Instead, NRC would require licensees to collect information and to 
have that information available for review. The information would need 
to be retained by licensees in records important for decommissioning 
under Sec. Sec.  30.35(g), 40.36(f), 50.75(g), 70.25(g), and 72.30(d).
    Under changes proposed to financial assurance regulations, under 
Sec. Sec.  30.35(e), 40.36(d), Part 40 Appendix A Criterion 9(b), 
70.25(e), and 72.30, reporting requirements would increase for 
materials licensees who must prepare a detailed cost estimate for 
decommissioning. Reporting requirements also would increase under Sec.  
50.82(a) for power reactor licensees who prepare a post-shutdown 
decommissioning activities report (PSDAR) or an annual financial 
assurance status report.
    Under changes proposed to 10 CFR part 30, appendix A, licensees who 
use the parent company guarantee as financial assurance for 
decommissioning will have increased reporting requirements in proposed 
changes to the paragraph A.1 financial test, and in reporting of off-
balance sheet transactions and verification of bond ratings, and in 
annual documentation of continuing eligibility to use the parent 
company guarantee. Licensees who use the self-guarantee as financial 
assurance for decommissioning under 10 CFR part 30, appendices C, D and 
E, also would have increased reporting requirements in proposed changes 
to report off-balance sheet transactions and annual documentation of 
continuing eligibility to use the self-guarantee.
    Licensees would continue to submit information to the NRC by 
certified mail or through approved Electronic Information Exchange 
(EIE) methods. NRC requests comments regarding licensee reporting using 
a secure Web site accessible by licensees from the NRC public Web site. 
This would include submittal and updating of the DFP, decommissioning 
cost estimates, information in the financial tests for the parent 
company guarantee and self-guarantees, decommissioning power reactor 
annual financial assurance status report, and other information for 
which licensees believe the use of a secure Web site would reduce their 
labor hours in responding to reporting requirements. Section IX of this 
document, Paperwork Reduction Act Statement, provides an estimate of 
the hours needed annually for licensees to complete the reporting 
requirements for each part with amended regulations.

M. What Financial Assurance Information Must Licensees Currently Report 
to the NRC?

    Materials licensees with a license possession limit that is below 
the financial assurance threshold in 10 CFR part 30, appendix B, are 
not required to have financial assurance for decommissioning. For the 
licensees under 10 CFR parts 30, 40 and 70 with a license possession 
limit above the financial assurance threshold in 10 CFR part 30, 
appendix B, but below the threshold requiring a DFP, these licensees 
have an option of providing financial assurance based on an amount 
specified by regulation or based on a DFP with a site-specific cost 
estimate. Materials licensees with a license possession limit above the 
financial assurance threshold, and all 10 CFR part 72 licenses, must 
submit at intervals not exceeding 3 years, a DFP which includes a site-
specific cost estimate, a description of the methods used to assure the 
funds, and a description of the means of adjusting the cost estimate.
    Except for 10 CFR part 72 licensees, materials licensees must also 
provide the original of the financial instrument obtained to satisfy 
the financial assurance requirement.
    For materials licensees, Chapter 4 in NUREG-1757, Volume 3, 
``Consolidated NMSS Decommissioning Guidance,'' provides details on 
information necessary to satisfy their financial assurance 
requirements. This document is available on the NRC Web site at: http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1757/.
    Power reactor licensees, as required by 10 CFR 50.75(f)(1), must 
report on the status of their decommissioning funds at 2-year 
intervals. A power reactor licensee that is within 5 years of the end 
of its projected life, or will close within 5 years (before the end of 
its licensed life), or has already closed, must submit the report of 
funds status on an annual basis.
    Applicants for power reactor and non-power reactor licenses, and 
reactor license holders, must submit a decommissioning report as 
required by 10 CFR 50.33(k). The decommissioning report is submitted 
once, and contains information indicating how reasonable assurance will 
be provided that funds will be available to decommission the facility, 
the method used to provide funds for decommissioning, and the means for 
adjusting periodically the amount to be provided.
    For nuclear power reactor licensees, Chapter 2 in Regulatory Guide 
1.159, ``Assuring the Availability of Funds for Decommissioning Nuclear 
Reactors,'' provides details on the information necessary to satisfy 
their financial assurance requirements. This document is available on 
the NRC Web site at: http://www.nrc.gov/reading-rm/doc-collections/reg-guides/power-reactors/active/.

N. What Are the Proposed Changes to the Financial Assurance 
Regulations?

    Most of the proposed amendments are changes to financial assurance 
regulations for materials licensees. A few changes apply to 
decommissioning financial assurance for power reactor licensees. The 
proposed changes to financial assurance regulations are discussed in 
this section, under the following headings:

N.1 Require a trust fund for decommissioning under restricted 
release.
N.2 Require a trust fund for the prepayment option.
N.3 Require an upfront standby trust fund for the parent guarantee 
and self-guarantee options.
N.4 Require parent company to inform NRC of financial distress and 
submit to an Order.
N.5 Require guarantor payment immediately due to standby trust.
N.6 Allow intangible assets, with an investment grade bond, to meet 
some financial tests.
N.7 Increase the minimum tangible net worth for the guarantees' 
financial tests.
N.8 Clarify guarantees' bond ratings and annual demonstration 
submittals.
N.9 Invalidate the use of certification for financial assurance if 
there is contamination.
N.10 Other changes to financial assurance regulations.

    Many of the proposed changes are currently in NRC guidance and are 
being codified in this proposed rule. The proposed amendments 
strengthen and clarify the financial assurance requirements. The NRC 
seeks to improve decommissioning planning and reduce the number of 
funding shortfalls caused in the past by: (1) Overly optimistic 
decommissioning assumptions; (2) Lack of adequate updating of cost 
estimates during operation; and (3) Licensees falling into financial 
distress with financial assurance funds unavailable for 
decommissioning. The proposed changes increase licensee reporting 
requirements. The added reporting burden is estimated as part of the 
Paperwork Reduction Act Statement (Section IX of this document). The 
costs

[[Page 3823]]

and benefits of other aspects of these proposed amendments are 
evaluated in the Regulatory Analysis in Section X of this document.
N.1 Require a Trust Fund for Decommissioning Under Restricted Release
    NRC is proposing changes to the regulations related to 
decommissioning financial assurance applied to planned restricted 
release sites.
    The proposed rule would require, under Sec.  20.1403(c), that the 
funds for financial assurance of long-term care and maintenance of a 
restricted release site must be placed into a trust segregated from the 
licensee's assets and outside the licensee's administrative control. 
Section 20.1403(c)(1) currently contains a cross reference to Sec.  
30.35(f)(1) that allows use of any of the financial instruments listed 
in Sec.  30.35(f)(1) for providing financial assurance for long-term 
care and maintenance. The proposed rule would eliminate the reference 
to Sec.  30.35(f)(1).
    The effect of this change would be to eliminate, as prepayment 
options, the escrow account, sureties and insurance, and the parent 
company and self-guarantee methods at restricted release sites. To 
date, no licensee has chosen to use, at a restricted release site, the 
options that the NRC is now proposing to eliminate. These options that 
would no longer be allowed possess characteristics that make their use 
inadvisable in the types of long-term care and maintenance situations 
involved in restricted release sites. The proposed rule would continue 
to permit government entities to use a statement of intent or to assume 
custody and ownership of a site.
    Escrow accounts are not well suited to the protection of funds over 
a long term. The purpose normally served by an escrow is to collect or 
hold funds for an expense to be paid in the relatively near future 
(e.g., property tax escrows). The EPA concluded that a trust was more 
protective of funds because, under trust law, the title to property in 
a trust is transferred to the trustee (46 FR 2802, 2827; January 12, 
1981). In an escrow account, title to the property remains with the 
grantor. Thus, escrow property is more likely to be subject to a 
creditor's claim than property held in trust. In addition, the law of 
trusts places obligations on the trustee to act in the interest of the 
beneficiary. In contrast, an escrow agent is responsible only for what 
is specified in the escrow agreement. The EPA concluded that it would 
be extremely difficult to draft an escrow agreement that adequately 
specifies all the actions that an escrow agent would need to take in 
all situations to assure the instrument served its intended purpose.
    The surety methods and insurance also are not well suited to 
protect funds over the long term because these depend on contracts made 
by the former licensee. There are no actual funds set aside for future 
costs, rather, the methods are promises made by the issuer to pay at a 
future time. These methods require renewal to remain effective. They 
depend on the former licensee continuing to exist to make renewal 
payments for the surety or insurance instruments. The instrument lapses 
if the payments are not made. Under the existing rule, NRC may require 
the issuer to pay the face amount before the lapse occurs. However, 
issuers may resist making the payment, which could delay obtaining and 
possibly reduce the amount of funds for long-term care and maintenance. 
Whether making the payment is resisted or not, when the funds are paid 
for the face amount, the funds will be placed in a trust account. That 
is, the response to the non-renewal of a surety is to create a trust to 
hold funds. The long-term nature of the obligation increases the 
possibility that circumstances may arise that would require a demand 
for payment. In view of the potential difficulties and delays, and 
recognizing that a trust fund is the preferred long-term instrument for 
holding funds, the surety and insurance methods of financial assurance 
for long-term maintenance and control would be eliminated.
    Likewise, the parent company and self-guarantee mechanisms are not 
well suited for providing financial assurance at restricted release 
sites because these were designed to assure funding for the relatively 
limited time needed to complete most decommissioning projects under 10 
CFR 20.1402. The former licensee, or its parent, must continue to exist 
to pay for long-term control and maintenance costs. If the former 
licensee, or its parent, ceases to exist, the self-guarantee or parent 
company guarantee have no source of funds to pay the costs. In 
addition, these guarantees presume the existence of a licensee subject 
to NRC authority. However, when the license is terminated, the NRC has 
no regulatory authority over the former licensee. Therefore, the self-
guarantee and parent company guarantee would be eliminated as a 
financial assurance options at restricted release sites.
    In contrast, the trust fund is best suited as a financial mechanism 
to assure the necessary long-term care and maintenance at restricted 
release sites. The trust fund can exist for long periods without need 
for renewal. It exists independently of the former licensee, and can 
continue to serve the purposes of control and maintenance even if the 
former licensee ceases to exist. The trustee has a fiduciary duty to 
serve the beneficiaries of the trust. The funds placed in the trust 
become property of the trust, and generally cannot be reached by 
creditors of the former licensee. Trust funds have traditionally been 
used to provide for the long-term care and maintenance of parks and 
other public facilities, to care for cemeteries, and for similar 
purposes. The NRC is proposing to require the use of trust funds for 
the financial assurance for long-term care and maintenance at 
restricted release sites, unless a government entity provides long-term 
funding or assumes custody and ownership of the site.
    A further change to 10 CFR 20.1403(c)(1) would be the addition of a 
requirement that the initial amount of the trust fund established for 
long-term care and maintenance be based on a 1 percent annual real rate 
of return on investment. A similar provision is currently contained in 
10 CFR part 40, appendix A, Criterion 10, which provides that if a 
site-specific evaluation shows that a sum greater than the minimum 
amount specified in the rule is necessary for long-term surveillance 
following decontamination and decommissioning of a uranium mill site, 
the total amount to cover the cost of long-term surveillance must be 
that amount that would yield interest in an amount sufficient to cover 
the annual costs of site surveillance, assuming a 1 percent annual real 
rate of interest.
    The NRC has concluded that a conservative estimate of the annual 
real rate of return is justified in the case of financial assurance for 
long-term care and maintenance under Sec.  20.1403(c)(1). Although the 
NRC in 10 CFR 50.75(e)(1)(ii) allows a licensee of a nuclear power 
reactor that is using an external sinking fund to take credit for 
projected earnings on the external sinking funds (using up to a 2 
percent annual real rate of return from the time of the future fund's 
collection through the decommissioning period), the reactor situation 
is distinguished by the continuing presence of the reactor licensee, 
who is obligated to provide additional funds if necessary. Long-term 
trust funds for surveillance and control are created when license 
termination relieves the licensee of any further obligation regarding 
the site. Therefore, no licensee is available to make up shortfalls in 
the fund, which reduces the likelihood that funds will be available

[[Page 3824]]

when needed. A long period of low returns could deplete a trust fund so 
that later higher returns would be insufficient to return the fund to 
the value needed to permit earnings to cover the recurring long-term 
costs. Consequently, a conservative rate of return is necessary to 
assure that funds will be available when needed. Over the past 30 
years, 1975-2005, the annual real rate of return is 1.58 for U.S. 
Treasury Bills and 4.87 for government bonds. Thus, a 1 percent real 
rate of return is appropriate for assuring funds under the proposed 
Sec.  20.1403(c)(1). The actual rate of return may exceed the 1 percent 
real rate. The trust agreement may contain provisions to return excess 
funds to the trust grantor if the fund balance significantly exceeds 
the amount needed to cover the recurring costs at the 1 percent rate.
    The proposed rule would add a new Sec.  20.1404(a)(5) specifying 
that one of the factors that the Commission must consider in 
determining whether to terminate a license under alternate criteria is 
whether the licensee has provided sufficient financial assurance to 
enable an independent third party (including a government custodian of 
a site) to assume and carry out responsibilities for any necessary 
control and maintenance of the site. This new section also would 
require that the financial assurance must be in the form of a trust 
fund, as specified in Sec.  20.1403(c). Although a requirement to 
supply financial assurance can be inferred from the current rule, this 
requirement is not stated explicitly.
N.2 Require a Trust Fund for the Prepayment Option
    The proposed rule would amend the list of prepayment financial 
methods that may be used to provide financial assurance for 
decommissioning to provide that prepayment shall only be in the form of 
a trust established for decommissioning costs (Sec. Sec.  30.35(f)(1), 
40.36(e)(1), 70.25(f)(1), and 72.30(c)(1)). The proposed rule would 
eliminate the four other prepayment options currently listed in those 
sections (i.e., the escrow account, government fund, certificate of 
deposit, and deposit of government securities). Three of these options 
(the government fund, certificate of deposit, and deposit of government 
securities) initially were authorized for use to provide alternatives 
to licensees that elected not to use a trust fund as their prepayment 
mechanism, even though the NRC recognized that in the event of the 
licensee's bankruptcy, they provided somewhat less assurance that the 
funds would remain available to pay for decommissioning. However, no 
licensees have elected to use the government fund and deposit of 
government securities options, and only two have used a certificate of 
deposit. Because of their relative risk in bankruptcy and their non-use 
by licensees, the NRC has decided to eliminate them as alternatives for 
providing financial assurance for decommissioning.
    The NRC recognizes that elimination of the escrow account option 
would affect some licensees who currently use escrows. The latest data 
compiled from the NRC's License Tracking System (LTS) indicates that 
approximately 25 escrows are in use. Because some licensees use more 
than one escrow, the number of licensees using escrows is slightly less 
than the number of escrows.
    The staff has reviewed several studies of the situation of escrows 
in bankruptcy, and has concluded that the most accurate summary of the 
various assessments is as follows. The funds contained in escrows that 
are set up correctly before a licensee's entry into bankruptcy will 
likely be secure from transfer into the bankruptcy estate as assets of 
the debtor and they will not be reachable by the bankruptcy trustee 
using doctrines of fraudulent conveyance or voidable preference. 
However, correctly setting up an escrow is difficult, as noted in 
Section II.N.1 of this document. The NRC also is concerned that a 
determination of the legal status of an escrow may be subject to 
considerable delay. In addition to the time necessary to carry out a 
legal standing analysis, a bankruptcy trustee could attempt to use the 
automatic stay provisions of the bankruptcy code to stop payment by an 
escrow agent under the escrow, if that payment is occurring following 
the commencement of the bankruptcy action. While this attempt may fail, 
it could postpone the NRC's access to the funds held in the escrow and 
thereby preclude the prompt commencement of decommissioning. Finally, 
the administrative costs of a trust fund are comparable to an escrow, 
so there is little economic benefit to using the escrow.
    Elimination of the use of escrow accounts was discussed at the 
public stakeholder meeting held January 10, 2007. No stakeholders 
objected to the elimination of the escrow as a financial assurance 
method. Therefore, the proposed rule would eliminate the escrow as a 
method to provide financial assurance.
N.3 Require an Upfront Standby Trust Fund for Parent Guarantee and 
Self-Guarantee Options
    The proposed rule would amend appendices A, C, D, and E to 10 CFR 
part 30 (amend Section III.D of appendix A; amend Section III.F and add 
a new Section III.G to appendix C; amend Section III.D and add a new 
Section III.E to appendix D; and add a new Section III.F to appendix 
E). The amendments would clarify that a parent company providing a 
parent company guarantee and a licensee providing a self-guarantee are 
required to set up a standby trust before they may rely on the 
guarantee for financial assurance, and would add criteria for selecting 
an acceptable trustee.
    The existing regulations do not require the guarantor to set up a 
standby trust before it provides a parent company or self-guarantee. 
Instead, a standby trust must be set up and used to hold funds for 
decommissioning only in the event the NRC requires the guarantor to 
provide such funding for decommissioning. Setting up a standby trust at 
the time the guarantee is drawn upon could lead to a significant delay, 
and therefore creation of a standby trust at the commencement of the 
guarantee is recommended in regulatory guidance. A standby trust is 
necessary because the NRC cannot accept decommissioning funds directly. 
Under the ``miscellaneous receipts'' statute, 31 U.S.C. 3302(b), the 
NRC must turn over all payments received to the U.S. Treasury. 
Therefore, a standby trust is necessary to receive funds in the event 
the NRC requires the guarantor to put the funds into a segregated 
account. Creating a standby trust before the guarantee is provided will 
avoid potential delays in initiating decommissioning that may be caused 
by delays in setting up the trust at a later date. In addition, the use 
of a trust protects the funds from creditors' claims, which may be 
necessary in the event the guarantor faces financial distress. 
Therefore, the proposed rule would require that the guarantor set up a 
standby trust. In addition, the proposed rule would provide that the 
Commission has the right to change the trustee. That power is necessary 
to assure that the trustee will faithfully execute its duties. Finally, 
to assure the trust agreement is adequate, the proposed rule would 
specify that an acceptable trust is one that meets the regulatory 
requirements of the Commission.

[[Page 3825]]

N.4 Require Parent Company To Inform NRC of Financial Distress and 
Submit to an Order
    Because a parent company is not usually an NRC licensee subject to 
the NRC's authority, the parent company guarantee option will include a 
contractual agreement by the parent company to submit to NRC payment 
orders (10 CFR part 30, appendix A, Section III.F).
    The parent company has no present requirement to inform the NRC of 
financial distress that may adversely affect its ability to meet its 
guarantee obligations. Because the NRC needs to know if the parent 
guarantor is in financial distress to take steps to protect the funds 
guaranteed for decommissioning, the proposed rule would require the 
parent guarantor to notify the NRC in case of its financial distress, 
and its plan to transfer the guaranteed amount to the standby trust. In 
these situations, payments from the parent company will be immediately 
due and payable to the standby trust pursuant to an acceleration 
clause, discussed in Section II.N.5 of this document. A similar 
notification requirement is not necessary for a licensee guarantor 
because NRC regulations under 10 CFR 30.34(h), 40.41(f), 70.32(a)(9), 
and 72.44(a)(6) already require licensees to notify NRC of bankruptcy 
proceedings.
N.5 Require Guarantor Payment Immediately Due to Standby Trust
    The existing regulations do not address the possibility that the 
guarantor of the parent guarantee or self-guarantee may be in financial 
distress when it is required to provide alternate financial assurance. 
In cases where decommissioning is not being conducted at the time of an 
insolvency proceeding, creditors could argue that the debtor owes 
performance of decommissioning in the future, not money at the present 
time. That argument could potentially support a finding that no payment 
is owed to the standby trust. In that event, a division of assets to 
satisfy creditors' claims may not adequately protect resources needed 
to fund decommissioning. To provide a money claim on the assets of the 
guarantor that would cover the cost of decommissioning at the time of a 
division of assets, the proposed rule would authorize the Commission to 
make the amount guaranteed immediately due and payable to the standby 
trust (i.e., an acceleration clause).
    The proposed rule would clarify that the guarantor's obligation is 
not capped at the guaranteed amount, but include costs in excess of the 
guaranteed amount if additional funds are required to complete 
decommissioning and termination of the license.
N.6 Allow Intangible Assets, With an Investment Grade Bond, To Meet 
Some Financial Tests
    The existing regulations allow guarantees to be used as financial 
assurance for decommissioning by companies whose financial statements 
demonstrate a low risk of default for corporate obligations. A set of 
financial tests are prescribed in 10 CFR part 30, appendices A, C, D 
and E for companies who may qualify to use the guarantee methods. A 
requirement to use the parent company guarantee or self-guarantee as a 
financial assurance option is passing the tests on an annual basis. 
Some of the financial tests in 10 CFR part 30, appendices A, C, and E 
are done using bond valuations. In the past, only tangible assets were 
considered within the calculations performed under the financial tests. 
In response to an inquiry during the public stakeholder meeting on 
January 10, 2007, NRC staff considered whether allowing the use of 
intangible assets would materially increase the risk of a shortfall in 
decommissioning funds. Staff concluded the risk of a shortfall in 
funding would not materially increase under the amendments in this 
proposed rule.
    Financial accounting standards issued since the original 
decommissioning regulations were issued in 1988 now provide objective 
methods to value intangible assets. The change in accounting standards 
provides assurance that intangible asset valuation is reasonable. In 
addition, bond rating agencies include intangible assets in their 
evaluation of the financial stability of a company's bonds. This 
provides an independent check of the reasonableness of the company's 
valuation of its assets. The default rate remains low for bonds rated 
investment grade. To further assure a current bond rating adequately 
reflects the company's financial stability, amendments in the proposed 
rule would specify that the bond must be uninsured, uncollateralized, 
and unencumbered to be used in the financial test. Finally, the value 
of the nuclear facilities, both as tangible and intangible assets, are 
excluded from the calculation of net worth on grounds that those assets 
would not be available to produce funds for decommissioning after the 
facility is shut down. The staff concluded that permitting the use of 
intangible assets in conjunction with an investment grade bond rating 
would not materially increase the risk of a shortfall in 
decommissioning funding.
    In addition, the guarantee methods require annual repassage of the 
test. Historical trends in bond ratings show that the time between 
receiving a rating that is below investment grade to the time of 
default is five years, on the average. The annual repassage requirement 
will normally provide adequate time for the guarantor to obtain 
alternative financial assurance. For the few cases where a default may 
occur in a short time, the acceleration clause discussed in N.4 and N.5 
of this document, will provide a method to obtain funds in situations 
of financial distress.
    Therefore, the proposed rule would allow the use of intangible 
assets, used in conjunction with an investment grade bond rating, to 
meet specified criteria in the financial tests for parent company and 
self-guarantees.
N.7 Increase the Minimum Tangible Net Worth for the Guarantees' 
Financial Tests
    The current regulations require the entity seeking to pass the 
relevant financial test to have tangible net worth of at least $10 
million. The proposed rule amendments would require tangible net worth 
of at least $19 million.
    The $10 million in tangible net worth requirement was first adopted 
by the EPA in 1981, and the financial test adopted by the NRC in 1988 
used the same criterion. The NRC believes that the criterion should be 
adjusted to represent the value in current dollars of $10 million in 
1981. Therefore, it has calculated the new proposed tangible net worth 
amount using the most recent Implicit Price Deflator for Gross Domestic 
Product published by the Department of Commerce in its Survey of 
Current business, and the equivalent Implicit Price Deflator for 1981, 
by dividing the 2005 Implicit Price Deflator by the 1981 Implicit Price 
Deflator and multiplying the product times $10 million, as follows: 
(112.134 / 59.119) = 1.897 x $10 million = $19 million.
    The proposed rule also would add a requirement in Section II.A.(1) 
of appendix C to 10 CFR part 30 for tangible net worth of at least $19 
million. Currently, that component of the financial test for self-
guarantee specifies only that the applicant or licensee must have 
tangible net worth at least 10 times the current decommissioning cost 
estimate or certification amount. The proposed amendment would specify 
tangible net worth of $19 million and 10 times the

[[Page 3826]]

amount required. This proposed amendment would make the self-guarantee 
financial test in appendix C to 10 CFR part 30 consistent with the 
tests in appendices A and D to 10 CFR part 30.
N.8 Clarify Guarantees' Bond Ratings and Annual Demonstration 
Submittals
    The proposed rule amendments would specify that the current rating 
of the most recent bond issuance of AAA, AA, or A by Standard and 
Poor's could include adjustments of + or - (i.e., AAA+, AA+, or A+ and 
AAA-, AA-, and A- would meet the criterion) and the current rating of 
Aaa, Aa, or A by Moody's could include adjustments of 1, 2, or 3.
    Standard and Poor's and Moody's have introduced the plus or minus 
and numerical adjustments to refine the precision of their ratings. As 
a result, licensees have been uncertain whether a rating that includes 
these adjustments, and in particular ratings that might be considered 
below the unadjusted ratings specified in the appendices (e.g., A-) 
could be used. Based on the minimal difference in default rate 
associated with the qualifiers, the proposed rule would state that all 
the bonds within a specified rating level meet the regulatory standard.
    In addition, the proposed rule would amend Section II.A.2.(i) of 
appendix A to 10 CFR part 30 and Section II.A.(3) of appendix C to 10 
CFR part 30 to require the bond to be the most recent ``uninsured, 
uncollateralized, and unencumbered'' bond issuance. This amendment 
would make the bond criterion in appendix A to 10 CFR part 30 and 
appendix C to 10 CFR part 30 consistent with the bond criterion in 
appendix E to 10 CFR part 30. As explained in NUREG/CR-6514, where a 
rated bond has insurance or pledged assets to provide additional 
security, the bond rating may not directly reflect the creditworthiness 
of the bond issuer. Therefore, the proposed rule would add the 
requirement that the bond rating used to pass the financial test must 
be uninsured, uncollateralized, and unencumbered.
    The proposed rule would make a conforming change in Section III.E. 
of appendix E to 10 CFR part 30 to provide that if, at any time, the 
licensee's most recent bond issuance ceases to be rated in any category 
of A or above by both Standard and Poor's and Moody's, the licensee no 
longer would meet the requirements of the financial test.
    The proposed amendments to the bond rating criterion in appendices 
A and C to 10 CFR part 30 are intended to clarify the intent of the 
rule, eliminate an unintended apparent inconsistency among the 
different financial tests that may be used, and to make administration 
of the financial assurance requirements more efficient by eliminating 
recurring questions.
    The proposed rule would require a certified public accountant to 
verify that a bond rating, if used to demonstrate passage of the 
financial test, meets the requirements. Some financial tests received 
by the NRC did not apply the requirement correctly. Requiring an audit 
of the bond rating would minimize the potential that an error would be 
made.
    The existing regulations require the licensee to repeat passage of 
the financial test each year, but do not explicitly state that the 
licensee must annually submit documentation to the NRC to verify its 
passage of the test. However, the parent company and self-guarantee 
agreements illustrated in regulatory guidance include a provision that 
the licensee will annually submit to NRC revised financial statements, 
financial test data, and an auditor's special report. Submittal of the 
documents permits NRC to verify the licensee's continuing eligibility 
to use the parent company guarantee without incurring the expense of an 
onsite inspection. Therefore, the proposed rule would codify the 
regulatory guidance to require annual submittal of documentation that 
the guarantor passed the financial test.
    The existing regulations are unclear in stating that the parent 
company guarantee and financial test remain in effect until the license 
is terminated. The proposed regulations would clarify that the NRC's 
written acceptance of an alternate financial assurance by the parent 
company or licensee would allow the guarantee and financial test to 
lapse.
N.9 Invalidate the Use of Certification for Financial Assurance if 
There Is Contamination
    NRC is proposing additions to the regulations related to 
decommissioning financial assurance as applied to certifications. The 
proposed changes affect Sec. Sec.  30.35(c)(6), 40.36(c)(5), and 
70.25(c)(5).
    The existing rule prescribes specific amounts of financial 
assurance for licensees that are authorized to possess relatively small 
amounts of radioactive material. Licensees authorized to possess 
radioactive materials in higher amounts must submit a DFP, which 
includes a site-specific cost estimate for decommissioning. The site-
specific cost estimate is almost always higher than the prescribed 
certification amounts.
    The proposed rule would require licensees who qualify to use the 
certification amounts to submit a DFP in the event that survey results 
detect significant residual radioactivity within the site boundary, 
including the subsurface. A significant amount would be residual 
radioactivity that would, if left uncorrected, prevent the site from 
meeting the criteria for unrestricted use. Remediating subsurface 
contamination can be very expensive. However, licensees that qualify to 
use the certification amounts have no regulatory requirement to 
increase the amount of financial assurance to cover subsurface 
remediation costs. In the event subsurface contamination occurred at 
such a site, there would be no regulatory basis to require the licensee 
to increase its financial assurance to cover the potentially higher 
decommissioning cost. The proposed rule would provide the regulatory 
basis to require these licensees to cover the full cost, not just the 
certification amount.
N.10 Other Changes to Financial Assurance Regulations
    The proposed regulations would eliminate the line of credit option 
from 10 CFR 30.35(f), 40.36(e), 70.25(f), and 72.30(e) from the list of 
surety, insurance, or other guarantee methods that may be used to 
provide financial assurance for decommissioning. Although the line of 
credit was initially authorized for use to provide an alternative to 
licensees that elected not to use a surety or letter of credit, the NRC 
recognized that it posed a greater risk than the other two surety 
methods, because it might be subject to underlying loan covenants that 
could make it more vulnerable to cancellation if the licensee 
experienced financial difficulties. However, since 1988, no licensees 
have elected to use a line of credit to provide financial assurance for 
decommissioning. Because of its greater risk of cancellation and its 
non-use by licensees, the NRC has decided to eliminate the line of 
credit as an alternative for providing financial assurance for 
decommissioning.
    The proposed rule would exclude, in the financial tests for the 
parent guarantee and self-guarantee, the net book value of the nuclear 
facility and site from the calculation of tangible net worth. The 
existing rule requires that the calculation of tangible net worth must 
exclude the book value of the ``nuclear units.'' That requirement may 
lead to confusion because it implies that it applies to nuclear reactor 
units, and not other kinds of nuclear facilities. However, other kinds 
of nuclear facilities should be excluded from the

[[Page 3827]]

tangible net worth calculation because they are unlikely to provide 
funds for decommissioning. The existing rule does not specify whether 
the nuclear site, as distinguished from the facility, may be included 
in the calculation of tangible net worth. The value of the site is 
likely to depend on the probability that the decommissioning will be 
completed, and is subject to some degree of uncertainty. Therefore, the 
calculation of tangible net worth would be changed to exclude the net 
book value of the nuclear facility and site.
    The proposed rule would require a certified public accountant to 
include an evaluation of off-balance sheet transactions, for the parent 
guarantee and self-guarantee. Generally accepted accounting principles 
(GAAP) permit certain kinds of transactions to be accounted for off the 
company's balance sheet. Many companies, as a means of managing risk 
and/or taking advantage of legitimate tax minimization opportunities, 
create off-balance-sheet transactions. It is important to understand 
the nature and the reason for each off-balance-sheet item, and ensure 
that any such relationships are adequately disclosed. (Management's 
Summary of Off-Balance Sheet Transactions, American Institute of 
Certified Public Accountants, http://www.aicpa.org, last visited 
February 8, 2007). The volume and risk of the off-balance-sheet 
activities need to be considered. (Risk Management Manual of 
Examination Policies, Federal Deposit Insurance Corporation, http://www.fdic.gov, last visited February 8, 2007). The existing rule does 
not require the independent certified public accountant's special 
report to examine off-balance sheet transactions. However, these 
transactions have the potential to materially affect the guarantor's 
ability to fund decommissioning obligations. Therefore, the proposed 
rule would require the auditor to include an evaluation of off-balance 
sheet transactions.

O. Will Some Licensees Who Currently Do Not Have Financial Assurance 
Need To Get Financial Assurance?

    No. Licensees who are not required to provide financial assurance 
for decommissioning will not have to obtain financial assurance as a 
result of amendments in this proposed rule.
    The decommissioning planning and financial assurance amendments in 
this proposed rule only apply to licensees who currently have, or will 
have in the future, decommissioning financial assurance requirements 
under 10 CFR 30.35, 40.36, 50.75, 70.25, and 72.30.
    If a licensee has survey records of residual radioactivity under 
the proposed new requirements in Sec.  20.1501(b) or in an application 
for license transfer consistent with the proposed language in 
Sec. Sec.  30.34(b)(2), 40.46(a)(2), or 70.36(a)(2), and the licensee 
has a possession and use quantity that is below the possession limit 
thresholds for financial assurance, then no decommissioning financial 
assurance is required.
    All operating power reactor licensees are required to have 
financial assurance, consistent with 10 CFR 50.75(c), and all licensees 
with an independent spent fuel storage installation regulated under 10 
CFR part 72 must have financial assurance for decommissioning in 
accordance with 10 CFR 72.30(c).

P. What is Changing With Respect to Materials Facilities' 
Decommissioning Funding Plan (DFP) and Decommissioning Cost Estimate 
(DCE)?

    The proposed rule would require certain licensees under 10 CFR part 
72 to adjust their DCE within 3 years of the previous DCE. This was 
done by final rule on October 3, 2003 (68 FR 57327) for licensees under 
10 CFR parts 30, 40 and 70. This provision in the proposed rule would 
make the timing basis for DCE adjustments consistent among all 
materials facilities.
    Regarding DFPs, the proposed rule would make changes in Sec. Sec.  
30.35(e), 40.36(d), 70.25(e), and 72.30(b) to require additional 
information from licensees. NRC's experience indicates that 
underestimation of decommissioning costs can occur when the licensee 
assumes it will qualify for a restricted site release by meeting all of 
the 10 CFR 20.1403 requirements. If it turns out that these 
requirements cannot be met, and that an unrestricted site release under 
10 CFR 20.1402 will be required, the licensee may not have the ability 
to fund a potentially more expensive cleanup. For example, if instead 
of leaving large volumes of slightly contaminated soil onsite in a 
restricted release decommissioning, the licensee must ship this 
material offsite for disposal to support an unrestricted site release, 
the decommissioning will typically be much more expensive due to high 
offsite disposal costs. Therefore, the proposed rule would require the 
licensee to estimate and cover the costs to decommission the facility 
to meet unrestricted use criteria. The option of meeting the 10 CFR 
20.1403 restricted release requirements will be available, but the 
licensee would have to demonstrate it can meet those criteria before a 
cost estimate based on that assumption would be acceptable.
    In addition, certain operational events can increase 
decommissioning costs above the original estimate. These events include 
spills, increases in onsite waste inventory, increases in waste 
disposal costs, facility modifications, changes in authorized 
possession limits, actual remediation costs that exceed the initial 
cost estimate, onsite disposal, and use of settling ponds. The proposed 
amendments to 10 CFR 30.35(e)(2), 40.36(d)(2), 70.25(e)(2), and 
72.30(b) would require the 3 year update of the DFP to consider these 
events for the effect, if any, they may have on the estimated cost of 
decommissioning. Subsurface contamination can be very expensive to 
remediate. The new regulations would require the licensee to estimate 
the volume of contaminated subsurface material that would require 
remediation, and provide financial assurance for the estimated cost of 
remediation. Early consideration and funding arrangements to cover 
increased costs will improve decommissioning planning and increase the 
likelihood that funds will be available when needed for site 
decommissioning.
    Existing regulatory guidance identifies recommended methods for 
arriving at decommissioning cost estimates, and the NRC is codifying 
some of these recommended methods. To assure that funds will be 
adequate to complete decommissioning in the event the licensee is 
unable to do so, cost estimates would be required to include contractor 
overhead and profit. An adequate contingency factor is necessary to 
cover unanticipated costs that can arise after the decommissioning 
project begins. The key assumptions underlying the cost estimate would 
have to be identified to aid the staff in evaluating the adequacy of 
the estimate. Codification of these recommendations is expected to 
improve the quality of DFP submittals, facilitate the staff's review of 
these submittals, and result in regulatory efficiencies.
    NRC is aware of the records important for decommissioning reporting 
requirements licensees have under Sec. Sec.  30.36(g)(1), 40.36(f)(1), 
50.75(g)(1), 70.25(g)(1), and 72.30(d)(1). The proposed additional 
reporting requirements are designed to foster a better understanding of 
the impact the spill or contaminating event has on the decommissioning 
cost estimate.

Q. What is Changing With Respect to License Transfer Regulations for 
Materials Licensees?

    The NRC proposes to make a set of parallel changes to Sec. Sec.  
30.34(b)(2), 40.46(a)(2), and 70.36(a)(2). This would codify NRC 
regulatory guidance to

[[Page 3828]]

require the licensee to provide information on the proposed 
transferee's technical and financial qualifications, and to provide 
decommissioning financial assurance as a condition for approval of the 
transfer if the licensee is required to have financial assurance. The 
information and financial assurance are necessary to evaluate the 
adequacy of the proposed transferee. Placing these provisions in the 
regulation, rather than keeping them in regulatory guidance, will 
improve regulatory efficiency by improving the quality of license 
transfer requests. It also will ensure that a prospective license 
transferee provides to the NRC the information necessary to determine 
that public health and safety are not compromised by the transfer and 
that the radiation safety aspects of the program are not degraded.

R. What Is Changing With Respect to Permanently Shutdown Reactor 
Decommissioning Fund Status and Spent Fuel Management Plan Reporting?

    The proposed rule would revise Sec.  50.82(a)(4)(i), and add three 
new provisions (v-vii) to Sec.  50.82(a)(8). The revised Sec.  
50.82(a)(4)(i) would require that the post-shutdown decommissioning 
activities report (PSDAR) include, if applicable, a cost estimate for 
managing irradiated fuel. Currently, the PSDAR must include a 
description of the planned decommissioning activities, a schedule for 
their accomplishment, and an estimate of expected costs.
    The proposed additions to Sec.  50.82(a)(8) would require each 
power reactor licensee undergoing decommissioning to submit, in the 
form of an annual financial assurance status report, information 
(specified below) regarding its decommissioning funds. Currently, under 
Sec.  50.75(f)(1), the information reported to NRC by power reactor 
licensees is focused on collection of funds before permanent shutdown, 
and does not require information on the actual funds spent. To assess 
the adequacy of power reactor decommissioning funding after permanent 
shutdown, NRC needs to know the actual costs being incurred at 
decommissioned facilities. To obtain this information, the annual 
report would be required to include, among other things, the amount 
spent on decommissioning over the previous calendar year; the remaining 
balance of any decommissioning funds; and an estimate of the costs to 
complete decommissioning. If the annual report reveals a projected 
funding shortfall, additional financial assurance to cover the cost to 
complete decommissioning will have to be provided. These proposed 
changes are expected to improve NRC oversight of decommissioning 
planning and increase the likelihood that funds for decommissioning 
will be available when needed. In Section II.V of this document, NRC 
seeks public comment on this topic.
    Under proposed Sec.  50.82(a)(8)(vii), the annual financial 
assurance status report must also include the status of funds to manage 
irradiated fuel. Due to the cessation of operating revenues, spent fuel 
management and related funding are a concern after the reactor is 
permanently shut down. Therefore, the proposed rule would require that 
the amount of funds accumulated to cover the cost of managing the spent 
fuel be specified; and that an estimate of the projected costs of spent 
fuel management until the Department of Energy takes title to the spent 
fuel be provided; and that a plan to obtain additional funds if the 
accumulated funds do not cover the projected cost be identified. These 
proposed changes are expected to increase the likelihood that funds for 
spent fuel management will be available when needed. In Section II.V of 
this document, NRC seeks public comment on this topic.

S. When Do These Proposed Actions Become Effective?

    The new regulations would become effective 60 days after the final 
rule is published in the Federal Register. The NRC estimates that, at 
the earliest, the final rule will be published in October 2008.

T. Has NRC Prepared a Cost-Benefit Analysis of the Proposed Actions?

    NRC staff has prepared a draft Regulatory Analysis for this 
rulemaking. The analysis examines the costs and benefits of the 
proposed action and two alternatives. Under the proposed action, the 
estimated total costs (2007$) are $109 million and $77 million over a 
15-year analysis period at 3 percent and 7 percent discount rates, 
respectively. The estimated total costs were higher for each of the two 
alternatives. The cost (2007$) of implementing the proposed rule over 
the 15-year analysis period is about $43 million at 3 percent discount 
rate, with NRC licensee costs at $6 million, Agreement State licensee 
costs at $22 million, NRC administrative costs at $3 million, and 
Agreement State administrative costs at $12 million. The primary 
benefits of the proposed rule are due to reduction in the number of 
legacy sites and higher reliability of obtaining sufficient funds 
pledged for decommissioning financial assurance to complete the 
decommissioning work through license termination. The NRC seeks public 
comment on the draft Regulatory Analysis. For example, the NRC and 
Agreement States are aware of the existence of facilities and sites 
which have the potential to become contaminated with significant 
amounts of radium-226 from past practices or operations, or from the 
accumulation of radium-226 sources. Do members of the public have 
information about these sites to include them in the Regulatory 
Analysis as licensees affected by this proposed rule?
    More information on this subject is in Section XI of this document.
    The Backfit Analysis is included in the Regulatory Analysis, and is 
discussed in Section XIII of this document. The NRC seeks public 
comment on the Backfit Analysis.

U. Has NRC Evaluated the Additional Paperwork Burden to Licensees?

    This proposed rule contains new or amended information collection 
requirements that are subject to the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq). NRC staff has estimated the impact this 
proposed rule would have on reporting and recordkeeping requirements of 
NRC and Agreement State licensees. The NRC seeks public comment on 
these estimates of additional burden to licensees from the proposed 
rule. More information on this subject is in Section IX, Paperwork 
Reduction Act Statement, of this document.

V. What Should I Consider as I Prepare My Comments to NRC?

    When submitting your comments on this proposed rule:
    1. Identify the rulemaking (RIN 3150-AH45).
    2. Explain why you agree or disagree with the NRC proposal; suggest 
alternatives and substitute language for your requested changes.
    3. Describe any assumptions and provide any technical information 
and/or data that you used.
    4. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow NRC to reproduce 
your results.
    5. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    6. Explain your views as clearly as possible.
    7. Submit your comments by the comment period deadline.
    8. NRC has specifically requested comments regarding the following 
items:
    (a) Can ``fee incentives'' be used, as permitted in 10 CFR 
171.11(b), to

[[Page 3829]]

induce licensees to characterize subsurface residual radioactivity 
while their facility is operating instead of waiting until the facility 
is in decommissioning?
    (b) Should NRC investigate the use of a secure Web site for use by 
licensees to submit and update decommissioning reporting requirements, 
information in the financial tests for parent guarantees and self-
guarantees, and other information that licensees believe will improve 
the efficiency of the decommissioning planning and reporting process?
    (c) Can the additional details that would be required of 
decommissioned power reactor licensees in the PSDAR under proposed 10 
CFR 50.82(a)(4)(i), and reporting of the actual costs of 
decommissioning before license termination as proposed under 10 CFR 
50.82(a)(8)(v), be provided to NRC accurately without reference to 
confidential information so that NRC may apply the information in 
reviewing similar decommissioning activities that are planned or in 
progress?
    (d) Are the input assumptions, methodology and results in the draft 
Regulatory Analysis correct, including the Backfit Analysis? Is the 
conclusion in the draft Environmental Assessment correct of no 
significant environmental impact from the proposed rule?
    (e) The NRC and Agreement States are aware of the existence of 
facilities and sites which have the potential to become contaminated 
with significant amounts of radium-226 from past practices or 
operations, or from the accumulation of radium-226 sources. Do members 
of the public have information about these sites to include them in the 
Regulatory Analysis as licensees affected by this proposed rule?

III. Discussion of Proposed Amendments by Section

    As stated previously, the Commission approved the staff's 
recommendation to proceed with a proposed rulemaking in SRM-SECY-03-
0069 dated November 17, 2003. Staff's recommendations for changes in 
licensee operations to prevent future legacy sites were described in 
attachment 8 to the SECY. Two factors that were common among the 
existing legacy sites were: (1) They had chronic releases of 
radioactive material to the subsurface environment, and (2) NRC did not 
recognize the extent of this contamination until near cessation of 
operations. To address the problem of chronic releases, staff 
recommended a revision to Sec.  20.1406 to make it applicable to 
current licensees. Staff recommended that it would emphasize procedural 
changes for existing licensees, and that physical changes to the 
facility only would be warranted when procedures fail to reduce 
releases. These recommendations are proposed for implementation in 
Sec.  20.1406(c). To address the reporting deficiencies, staff 
recommended a risk-informed approach to require sites that experience 
events that contaminate the subsurface to perform surveys to 
characterize the extent and migration of resultant plume(s), based on 
site conditions, and to record the survey information in records 
important for decommissioning. These are proposed for implementation in 
Sec. Sec.  20.1501(a) and 20.1501(b).
    SRM-SECY-03-0069 also approved staff's plans to add new, and amend 
existing financial assurance regulations, including the preparation of 
decommissioning cost estimates, the contents of DFPs, and acceptable 
financial assurance instruments used to support the DFP or the 
certification of funds used only by materials facilities. The 
recommended changes to financial assurance regulations and reporting 
requirements were described in attachment 7 to the SECY. Following 
analysis by NRC staff and input from stakeholders during public 
meetings, changes are proposed for implementation in 10 CFR parts 30, 
40, 50, 70, and 72 to require more detailed reporting of 
decommissioning financial assurance information and to provide greater 
certainty to the NRC that adequate financial assurance will be 
available at the start of decommissioning activities.
    The proposed amendments are discussed in numerical order below.

Section 20.1403 Criteria for License Termination Under Restricted 
Conditions

    The proposed rule would amend Sec.  20.1403(c)(1) to require 
financial assurance funds to be placed into a trust segregated from the 
licensee's assets and outside the licensee's administrative control. 
The proposed rule would eliminate the licensee's option to use other 
prepayment financial mechanisms, such as the escrow account, government 
fund, certificate of deposit, or deposit of government securities. No 
licensee to date has used these other prepayment mechanisms to provide 
financial assurance for a restricted release site.
    Amended Sec.  20.1403(c)(1) would require that the initial amount 
of the trust fund established for long-term care and maintenance be 
based on a conservative assumption of a 1 percent annual real rate of 
return on investment.
    The current Sec.  20.1403(c)(2) would be deleted. This would remove 
the licensee's option to use a surety method, insurance, or other 
guarantee method to provide financial assurance for a restricted 
release site. The NRC has concluded that these mechanisms are more 
suitable for short-term rather than long-term investments, and are not 
well adapted to provide assurance that an independent third party will 
have the requisite funds to carry out necessary control and maintenance 
of the site following license termination. No licensee has to date used 
these financial mechanisms to provide financial assurance for long-term 
care of a restricted release site. The provisions for government 
entities to provide financial assurance for long term control and 
maintenance contained in existing Sec. Sec.  20.1403(c)(3) and (4) 
would be retained but redesignated as Sec. Sec.  20.1403(c)(2) and (3). 
Section II.N.1 of this document has more information on this proposed 
amendment.

Section 20.1404 Alternate Criteria for License Termination

    The proposed rule would add a new Sec.  20.1404(a)(5) specifying a 
fifth criterion that the NRC must consider in determining whether to 
terminate a license under alternate site release criteria. This new 
fifth criterion is if the licensee has provided sufficient financial 
assurance in the form of a trust fund to enable an independent third 
party, including a government custodian of a site, to assume and carry 
out responsibilities for any necessary control and maintenance of the 
site.

Section 20.1406 Minimization of Contamination

    The proposed addition of a new Sec.  20.1406(c) is an extension of 
the policy articulated by the Commission in 1997, when the LTR was 
established (62 FR 39082; July 21, 1997). This policy is that licensees 
must conduct their operations to minimize waste during facility 
operations to facilitate later decommissioning and to achieve 
occupational and public doses that are ALARA. The term ``residual 
radioactivity,'' as already defined in 10 CFR part 20, best identifies 
the type and scope of radioactive material that must be considered by 
licensees to effectively plan for decommissioning activities during 
facility operations. The term includes licensed and unlicensed 
radioactive material. Section II.A of this document has more 
information on the proposed addition of Sec.  20.1406(c).

[[Page 3830]]

Section 20.1501 General

    The 10 CFR 20.1501 survey requirements were added to the 
regulations in 1991, when 10 CFR part 20 was substantially revised (56 
FR 23360; May 21, 1991). To date, these surveys have been done 
primarily to demonstrate compliance with occupational and public 
exposure limits, and effluent release regulations.
    The current Sec.  20.1501(a) requires licensees to perform surveys 
of potential radiological hazards. Subsurface contaminating events are 
not often a risk to occupational or public health and safety; however, 
experience has shown that these events, because they are not obvious or 
evident, are a risk for creation of a legacy site if contaminant 
characteristics are not addressed early when the facility is operating. 
A legacy site is a potential radiological hazard.
    The proposed changes to Sec.  20.1501(a) specify that these survey 
requirements include consideration of residual radioactivity, 
conforming to the new Sec.  20.1406(c). The linkage between new Sec.  
20.1406(c) and amended Sec.  20.1501(a) will require that surveys be 
performed if there is reason to believe that significant subsurface 
contamination is present which constitutes a potential radiological 
hazard. Section II.A describes these survey requirements in more 
detail.
    The proposed new Sec.  20.1501(b) would require licensees to 
maintain records from surveys describing the location and amount of 
subsurface residual radioactivity identified at the site with records 
important for decommissioning. Existing Sec.  20.1501(b) would be 
designated as (c) and existing Sec.  20.1501(c) would be designated as 
(d).

Section 30.34 Terms and Conditions of Licenses

    Section 30.34(b) pertains to license transfers. Existing Sec.  
30.34(b) would be designated as (b)(1) and a new paragraph (b)(2) would 
be added to require that an application for license transfer must 
include the proposed transferee's identity, its technical and financial 
qualifications, and a showing that it will be able to provide adequate 
financial assurance for decommissioning.
    Existing Sec. Sec.  40.46 and 70.36 contain parallel provisions to 
those in Sec.  30.34(b). Sections 40.46 and 70.36 would be re-
designated as Sec. Sec.  40.46(a) and 70.36(a). New Sec. Sec.  40.46(b) 
and 70.36(b) will parallel the new Sec.  30.34(b)(2) provisions 
described previously.

Section 30.35 Financial Assurance and Recordkeeping for Decommissioning

    Several changes would be made to these requirements, and parallel 
changes would be made in Sec. Sec.  40.36(c) and 70.25(c). These 
proposed changes are discussed below.
    A new paragraph (c)(6) would be added to 10 CFR 30.35 [and parallel 
Sec. Sec.  40.36(c)(5) and 70.25(c)(5)], to reflect the proposed 
changes being made to the Sec.  20.1501(a) survey requirements. If 
these surveys detect residual radioactivity at a site at levels that 
would, if left uncorrected, prevent the site from meeting the Sec.  
20.1402 criteria for unrestricted use, the licensee must submit a DFP 
within one year of when the survey is complete.
    Existing Sec.  30.35(e) [and in parallel add Sec. Sec.  40.36(d)(1) 
and (d)(2), part 40 Appendix A, 70.25(e)(1) and (e)(2), and 72.30(b) 
and (c)] would be amended to contain new paragraphs (e)(1) and (e)(2). 
Section 30.35(e)(1) would require that each DFP submitted for review 
and approval must contain a DCE based on three cost components. Two of 
the cost components (a dollar amount adequate to cover the cost of an 
independent contractor to perform all decommissioning activities, and 
an adequate contingency factor) are described in existing guidance. The 
new cost component is an estimate of the volume of onsite subsurface 
material containing residual radioactivity that will require 
remediation to meet the decommissioning criteria. Additionally, the DCE 
must be based on the cost of meeting the Sec.  20.1402 criteria for 
unrestricted use unless it can be adequately shown that the 
requirements of Sec.  20.1403 will be met.
    A new provision, Sec.  30.35(e)(1)(ii), would require the licensee 
to identify and justify the basis for all key assumptions underlying 
the DCE.
    Section 30.35(e)(1)(iii) retains the existing Sec.  30.35(e) 
provision requiring a description of the method of assuring funds for 
decommissioning. Section 30.35(e)(1)(iv) retains the existing Sec.  
30.35(e) provision requiring a certification by the licensee that 
financial assurance for decommissioning has been provided in the amount 
of the DCE. Section 30.35(e)(1)(v) retains the existing Sec.  30.35(e) 
requirement that the DFP include ``a signed original of the financial 
instrument'' being used to provide financial assurance, if it has not 
been previously submitted and accepted as the financial instrument to 
cover the cost estimate for decommissioning.
    New Sec.  30.35(e)(2) would require that the DFP be submitted at 
the time of license renewal, and at intervals not exceeding 3 years 
with adjustments as necessary to account for changes in costs and the 
extent of contamination. The updated DFP must specifically consider the 
effect of the following events on the cost of decommissioning:
     Spills of radioactive material producing additional 
residual radioactivity in onsite subsurface material;
     Waste inventory increasing above the amount previously 
estimated;
     Waste disposal costs increasing above the amount 
previously estimated;
     Facility modifications;
     Changes in authorized possession limits;
     Actual remediation costs that exceed the previous cost 
estimate;
     Onsite disposal; and
     Use of a settling pond.
    As discussed below, the proposed rule would amend the introductory 
language in 10 CFR 30.35(f), and amend paragraphs (f)(1) through 
(f)(3). Parallel changes would be made in Sec. Sec.  40.36(e), 
40.36(e)(1), (e)(2) and (e)(3), 70.25(f), 70.25(f)(1), (f)(2) and 
(f)(3), 72.30(e), 72.30(e)(1), (e)(2) and (e)(3)].
    Section 30.35(f) would be amended to require that the financial 
instrument used for decommissioning funding assurance include the 
licensee's name, license number, and docket number, and the name, 
address, and other contact information of the issuer, and, if a trust 
is used, the trustee. If there are any changes to this information, the 
licensee must submit financial instruments reflecting these changes 
within 30 days.
    Revised Sec.  30.35(f)(1) requires that the prepayment financial 
method be in the form of a trust. This parallels the rule text change 
in Sec.  20.1403, eliminating the four other prepayment mechanisms 
(i.e., the escrow account, government fund, certificate of deposit, and 
deposit of government securities). No byproduct material licensees have 
elected to use the government fund and deposit of government securities 
mechanisms, and only 2 have used a certificate of deposit. Because of 
their relative risk in bankruptcy and their lack of use by licensees, 
the NRC has decided to eliminate them as alternatives for providing 
financial assurance for decommissioning. Approximately 25 byproduct 
material licensees use escrow accounts.
    In Sec.  30.35(f)(2), the proposed rule would eliminate the 
existing line of credit option as a guarantee method for financial 
assurance. No licensees have elected to use a line of credit to provide

[[Page 3831]]

financial assurance for decommissioning.
    In Sec.  30.35(f)(3), the proposed rule would require an external 
sinking fund to be in the form of a trust, eliminating the escrow 
account, government fund, certificate of deposit, and deposit of 
government securities because of their relative risk of loss during 
bankruptcy.
    A new Sec.  30.35(h) [and in parallel new Sec. Sec.  40.36(f), 
70.25(h), and 72.30(g)] would be added, specifying that each licensee 
must use its financial assurance funds only for decommissioning 
activities. The new section also would require monitoring by the 
licensee of its investment balance in the decommissioning trust 
account. Conservative investments are expected in the trust account. If 
the investment balance in the trust account is below the estimated cost 
of decommissioning, but is not below 75 percent of the cost, then the 
licensee must, within 5 days after the end of the calendar quarter, 
deposit funds into the trust account to fully cover the estimated cost. 
If the loss results in a balance that is below 75 percent of the amount 
necessary to cover the decommissioning cost, the licensee must, within 
5 days of such occurrence, deposit funds into the trust account to 
fully cover the estimated cost. The licensee must report taking such 
actions to the NRC within 30 days.

Part 30 Appendices A, C, D, and E

    The proposed rule would make a set of parallel amendments to 10 CFR 
part 30, appendices A, C, D, and E. More information on these proposed 
changes is discussed in Sections II.N.3 through II.N.8 of this 
document. The types of guarantors for which the financial tests in 
these appendices apply are:
     Appendix A, Parent company guarantees;
     Appendix C, Self-guarantees;
     Appendix D, Self-guarantees by companies that have no 
rated commercial bonds;
     Appendix E, Self-guarantees by non-profit colleges, 
universities and hospitals.
    In the financial test in section II.A in appendices A, C and D of 
part 30, the proposed rule would add language to allow the inclusion of 
intangible assets in the determination of net worth. Net worth is 
defined to exclude the net book value and goodwill of the nuclear 
facility and site. Tangible net worth is defined to exclude all 
intangible assets and the net book value of the nuclear facility and 
site. In appendix A, section II.A.2.(ii) would be revised to require 
the licensee to perform a net worth calculation instead of a tangible 
net worth calculation.
    In the financial test in section II.A in appendices A, C and D of 
part 30, the proposed rule would require that the guarantor's tangible 
net worth be at least $19 million to pass one of the criteria for that 
financial test. The current rule requires the company seeking to pass 
the Section II.A financial test to have tangible net worth of at least 
$10 million.
    Each set of changes to Appendices A, C, D, and E would require the 
independent certified public accountant (who compares the data used in 
the financial tests against data in year-end financial statements) to 
evaluate the guarantor's off-balance sheet transactions regarding the 
impact these transactions may have on the guarantor's ability to pay 
decommissioning costs. The accountant would also have to verify bond 
ratings if these are used to pass the financial test.
    For those licensees or guarantors that issue bonds and use the 
financial test under section II.B of appendices A, C and E of part 30, 
the proposed rule would specify that the current rating of the most 
recent bond issuance of AAA, AA, or A by Standard and Poor's could 
include adjustments of + or-(i.e., AAA+, AA+, or A+ and AAA-, AA-, and 
A- would meet the criterion) and the current rating of Aaa, Aa, or A by 
Moody's could include adjustments of 1, 2, or 3. In each of these 
appendices, the proposed rule also would require the bond to be the 
most recent ``uninsured, uncollateralized, and unencumbered'' bond 
issuance.
    In each appendix A, C, D, and E of part 30, the proposed rule would 
make changes to the 90-day test to show continued eligibility for the 
licensee and guarantor. The current rule requires only the licensee to 
repeat passage of the test within 90 days after the close of each 
succeeding fiscal year. The proposed rule would apply the same 
requirement to the guarantor.
    In each appendix A, C, D, and E to part 30, the proposed rule would 
amend section III to clarify that the guarantor would be required to 
set up a standby trust, with new criteria for selecting an acceptable 
trustee.
    In appendix A to part 30, the proposed rule would amend section III 
to require that the parent company guarantor agree to make itself 
subject to Commission orders (e.g., order to make payments under the 
guarantee agreement). The parent company guarantor also would have to 
agree to make itself jointly and severally liable with the licensee for 
the full cost of decommissioning with any additional costs not paid by 
the licensee to be paid by the parent company guarantor.
    In each appendix A, C, D, and E to part 30, the proposed rule would 
amend section III to allow the Commission, in cases of the guarantor 
company's financial distress, to declare the financial assurance 
guaranteed by the guarantor to be immediately due and payable to the 
standby trust. The guarantor companies also would be required to notify 
the NRC, in writing, immediately following the occurrence of events 
signifying financial distress.

Section 40.36 Financial Assurance and Recordkeeping for Decommissioning

    The proposed rule would amend Sec.  40.36(c)(5) in changes that are 
parallel to those described under Sec.  30.35(c)(6); would amend Sec.  
40.36(d)(1) and (d)(2) in changes that are parallel to those described 
under Sec.  30.35(e)(1) and (e)(2); would amend Sec.  40.36(e) in 
changes that are parallel to those described under Sec.  30.35(f); and 
would amend Sec.  40.36(f) in changes that are parallel to those 
described under Sec.  30.35(h).

Section 40.46 Inalienability of Licenses

    The proposed rule would amend Sec.  40.46. The proposed changes are 
described under the section for Sec.  30.34, above.

Part 40 Appendix A

    The proposed rule would amend Appendix A, Criterion 9, to part 40. 
The proposed changes are parallel to those described under Sec. Sec.  
30.35(e)(1) and 30.35(e)(2).

Section 50.75 Reporting and Recordkeeping for Decommissioning Planning

    The proposed rule would eliminate the line of credit in Sec.  
50.75(e)(1)(iii)(A) as a guarantee method for financial assurance. No 
reactor licensees have elected to use a line of credit to provide 
financial assurance for decommissioning.

Section 50.82 Termination of License

    The proposed rule would revise Sec.  50.82(a)(4)(i) requiring that 
additional details be included in the PSDAR. The PSDAR must now include 
a description of the planned decommissioning activities, a schedule for 
their accomplishment, and an estimate of expected costs. The proposed 
revision specifies that the PSDAR cost estimates include those for 
managing irradiated fuel.
    The proposed rule also would add paragraphs (v) through (vii) to 
existing Sec.  50.82(a)(8). New paragraph (v) would

[[Page 3832]]

require that a power reactor licensee, that has submitted its 
certification of permanent cessation of operation, must report annually 
on the status of its radiological decommissioning funding on a 
calendar-year basis. The information contained in this financial 
assurance status report is discussed in Section II.R of this document.
    New paragraph (vi) would require that if funds reported in the 
financial assurance status report are below the estimated cost to 
complete the decommissioning, the licensee would have to make up the 
difference.
    New paragraph (vii) would require an annual report on the status of 
funds for managing irradiated fuel. This report would include the 
accumulated amount, the projected costs until title to the fuel is 
transferred to the Secretary of Energy, and the plan to obtain the 
necessary additional funds if the total projected cost is higher than 
the accumulated amount.

Section 70.25 Financial Assurance and Recordkeeping for Decommissioning

    The proposed rule would amend Sec.  70.25. The proposed changes are 
parallel to those described under Sec.  30.35.

Section 70.36 Inalienability of Licenses

    The proposed rule would amend Sec.  70.36. The proposed changes are 
parallel to those described under Sec.  30.34.

Section 72.13 Applicability

    References in Sec.  72.13(c) to Sec.  72.30 are corrected to 
conform with the proposed changes to Sec.  72.30, whereby Sec.  
72.30(c) would become Sec.  72.30(e), and Sec.  72.30(d) would become 
Sec.  72.30(f).

Section 72.30 Financial Assurance and Recordkeeping for Decommissioning

    The proposed rule would amend Sec.  72.30. The proposed changes are 
similar to those described under Sec.  30.35(e), and two existing 
paragraphs are redesignated.

Section 72.50 Transfer of License

    The proposed rule would amend Sec.  72.50 by adding a new paragraph 
(b)(3), requiring that the license transfer application describe the 
financial assurance that will be provided for the decommissioning under 
Sec.  72.30.

IV. Criminal Penalties

    For the purpose of Section 223 of the Atomic Energy Act (AEA), the 
Commission is proposing to amend 10 CFR parts 20, 30, 40, 50, 70, and 
72 under one or more of Sections 161b, 161i, or 161o of the AEA. 
Willful violations of the rule would be subject to criminal 
enforcement.

V. Agreement State Compatibility

    Under the ``Policy Statement on Adequacy and Compatibility of 
Agreement State Programs'' approved by the Commission on June 30, 1997, 
and published in the Federal Register on September 3, 1997 (62 FR 
46517), this proposed rule would be a matter of compatibility between 
the NRC and the Agreement States, thereby providing consistency among 
the Agreement States and the NRC requirements. The NRC staff analyzed 
the proposed rule in accordance with the procedure established within 
Part III, ``Categorization Process for NRC Program Elements,'' of 
Handbook 5.9 to Management Directive 5.9, ``Adequacy and Compatibility 
of Agreement State Programs'' (a copy of which may be viewed at http://www.nrc.gov/reading-rm/doc-collections/management-directives/).
    NRC program elements (including regulations) are placed into four 
compatibility categories (See the Draft Compatibility Table in this 
section). In addition, the NRC program elements also can be identified 
as having particular health and safety significance or as being 
reserved solely to the NRC. Compatibility Category A establishes 
program elements that are basic radiation protection standards and 
scientific terms and definitions that are necessary to understand 
radiation protection concepts. An Agreement State should adopt Category 
A program elements in an essentially identical manner to provide 
uniformity in the regulation of agreement material on a nationwide 
basis. Compatibility Category B establishes program elements that apply 
to activities that have direct and significant effects in multiple 
jurisdictions. An Agreement State should adopt Category B program 
elements in an essentially identical manner. Compatibility Category C 
establishes program elements that do not meet the criteria of Category 
A or B, but the essential objectives of which an Agreement State should 
adopt to avoid conflict, duplication, gaps, or other conditions that 
would jeopardize an orderly pattern in the regulation of agreement 
material on a nationwide basis. An Agreement State should adopt the 
essential objectives of the Category C program elements. Compatibility 
Category D establishes program elements that do not meet any of the 
criteria of Category A, B, or C, above, and, thus, do not need to be 
adopted by Agreement States for purposes of compatibility.
    Health and Safety (H&S) are program elements that are not required 
for compatibility but are identified as having a particular health and 
safety role (i.e., adequacy) in the regulation of agreement material 
within the State. Although not required for compatibility, the State 
should adopt program elements in this H&S category based on those of 
the NRC that embody the essential objectives of the NRC program 
elements, because of particular health and safety considerations. 
Compatibility Category NRC establishes program elements that address 
areas of regulation that cannot be relinquished to Agreement States 
under the Atomic Energy Act, as amended, or provisions of Title 10 of 
the Code of Federal Regulations. These program elements are not adopted 
by Agreement States.
    The following table lists the parts and sections that would be 
revised and their corresponding categorization under the ``Policy 
Statement on Adequacy and Compatibility of Agreement State Programs.''

                         Compatibility Table for Decommissioning Planning Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                                         Compatibility
            Section                    Change                Subject         -----------------------------------
                                                                                  Existing            New *
----------------------------------------------------------------------------------------------------------------
20.1403(c)(1)..................  Amend.............  Trust fund for           C...............  C
                                                      restricted use.
20.1403(c)(2)..................  Deleted...........  Acceptable financial     C...............  C
                                                      assurance methods.
20.1403(c)(3) & (4)............  Redesignated......  Government entity        C...............  C
                                                      financial assurance.
20.1404(a)(5)..................  Add...............  Trust fund for           ................  C
                                                      alternate criteria.
20.1406(c).....................  Add...............  Minimize residual        ................  C
                                                      radioactivity.
20.1501(a).....................  Amend.............  Surveys and monitoring.  H&S.............  H&S
20.1501(b).....................  Add...............  Records from surveys...  ................  H&S

[[Page 3833]]

 
30.34(b)(1)....................  Redesignated......  License transfer         C...............  C
                                                      requirements.
30.34(b)(2)....................  Add...............  License transfer         ................  C
                                                      requirements.
30.35(c)(6)....................  Add...............  Assess subsurface        ................  D
                                                      contamination.
30.35(d).......................  No change.........  Certification amounts    H&S **..........  D
                                                      financial assurance.
30.35(e)(1)....................  Amend.............  Contents of              D ***...........  H&S
                                                      decommissioning
                                                      funding plan.
30.35(e)(2)....................  Amend.............  Updates of               D ***...........  H&S
                                                      decommissioning
                                                      funding plan.
30.35(f).......................  Amend.............  Methods for financial    D...............  D
                                                      assurance.
30.35(h).......................  Add...............  Monitor the balance of   ................  D
                                                      funds.
30 Appendix A..................  Amend.............  Parent company           D...............  D
                                                      guarantee.
30 Appendix C..................  Amend.............  Self-guarantee with      D...............  D
                                                      bonds.
30 Appendix D..................  Amend.............  Self-guarantee without   D...............  D
                                                      bonds.
30 Appendix E..................  Amend.............  Self-guarantee           D...............  D
                                                      nonprofits.
40.36(c)(5)....................  Add...............  Assess subsurface        ................  D
                                                      contamination.
40.36(d)(1)....................  Amend.............  Contents of              H&S.............  H&S
                                                      decommissioning
                                                      funding plan.
40.36(d)(2)....................  Amend.............  Updates of               H&S.............  H&S
                                                      decommissioning
                                                      funding plan.
40.36(e).......................  Amend.............  Methods for financial    D...............  D
                                                      assurance.
40.36(g).......................  Add...............  Monitor the balance of   ................  D
                                                      funds.
40.46(a).......................  Redesignated......  License transfer         C...............  C
                                                      requirements.
40.46(b).......................  Add...............  License transfer         ................  C
                                                      information
                                                      requirements.
40 Appendix A Criterion 9(b)...  Amend.............  Decommissioning cost     C...............  C
                                                      estimates and
                                                      financial surety [with
                                                      11e.(2)].
40 Appendix A Criterion 9(b)...  Amend.............  Decommissioning cost     NRC.............  NRC
                                                      estimates and
                                                      financial surety
                                                      [without 11e.(2)].
50.75(e)(1)....................  Amend.............  Surety as bond or        NRC.............  NRC
                                                      letter of credit.
50.82(a)(4)....................  Amend.............  Cost information in the  NRC.............  NRC
                                                      PSDAR.
50.82(a)(8)(v), (vi) & (vii)...  Add...............  Cost information in the  ................  NRC
                                                      annual financial
                                                      assurance status
                                                      report.
70.25(c)(5)....................  Add...............  Assess subsurface        ................  D
                                                      contamination.
70.25(d).......................  No change.........  Certification amounts    H&S **..........  D
                                                      financial assurance.
70.25(e)(1)....................  Amend.............  Contents of              D ***...........  H&S
                                                      decommissioning
                                                      funding plan.
70.25(e)(2)....................  Amend.............  Updates of               D ***...........  H&S
                                                      decommissioning
                                                      funding plan.
70.25(f).......................  Amend.............  Methods for financial    D...............  D
                                                      assurance.
70.25(h).......................  Add...............  Monitor the balance of   ................  D
                                                      funds.
70.36(b).......................  Add...............  License transfer         ................  C
                                                      requirements.
72.30(b).......................  Amend.............  Contents of              NRC.............  NRC
                                                      decommissioning
                                                      funding plan.
72.30(c).......................  Add...............  Updates of               ................  NRC
                                                      decommissioning
                                                      funding plan.
72.30(d).......................  Add...............  Assess subsurface        ................  NRC
                                                      contamination.
72.30(e).......................  Amend.............  Methods for financial    NRC.............  NRC
                                                      assurance.
72.30(g).......................  Add...............  Monitor the balance of   ................  NRC
                                                      funds.
72.50(b)(3)....................  Add...............  License transfer         ................  NRC
                                                      requirements.
----------------------------------------------------------------------------------------------------------------
* Proposed compatibility category.
** The compatibility category for Sec.  Sec.   30.35(d) and 70.25(d) were incorrectly specified in the 68 FR
  57334, October 3, 2003, Financial Assurance for Materials Licensees final rule. The correct category for both
  of these sections is D.
*** The compatibility category for Sec.  Sec.   30.35(e) and 70.25(e) were incorrectly specified in the 68 FR
  57334. The correct category for both of these sections is H&S.

VI. Plain Language

    The Presidential memorandum dated June 1, 1998, entitled ``Plain 
Language in Government Writing'' directed that the Government's writing 
be in plain language. The NRC requests comments specifically with 
respect to the clarity of the language used in the proposed rule. 
Comments should be sent to the address listed under the ADDRESSES 
caption of the preamble.

VII. Voluntary Consensus Standards

    The National Technology Transfer and Advancement Act of 1995, 
Public Law 104-113, requires that Federal agencies use technical 
standards developed or adopted by voluntary consensus standards bodies 
unless the use of such a standard is inconsistent with applicable law 
or otherwise impractical. There are no consensus standards regarding 
the methods for preparing decommissioning cost estimates or providing 
financial assurance for decommissioning that would apply to the 
requirements that would be imposed by this rule. Thus, the provisions 
of the Act do not apply to this rule.

VIII. Environmental Assessment and Finding of No Significant 
Environmental Impact: Availability

    The Commission has determined under the National Environmental 
Policy Act of 1969, as amended, and the Commission's regulations in 
Subpart A of 10 CFR part 51, that this rule, if adopted, would not have 
any significant environmental impacts, and therefore this rulemaking 
does not warrant the preparation of an environmental impact statement.
    A copy of the Environmental Assessment and rule are available at 
the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the signature date of this 
notice.
    The proposed rule would require licensees to conduct their 
operations so as to identify the occurrence of residual radioactivity 
at their sites, particularly in the subsurface soil and ground water, 
and minimize the introduction of additional residual radioactivity. 
There are a variety of monitoring methods to evaluate subsurface 
characteristics, and these are highly site specific with

[[Page 3834]]

respect to their effectiveness. One or more of the licensees affected 
by this proposed rulemaking may find that compliance with the 
monitoring requirements will mean the installation of ground water 
monitoring wells and surface monitoring devices at their sites. The 
installation of these monitoring devices and wells is generally 
expected to result in small environmental impacts due to their very 
localized nature.
    During sampling and testing, the proposed rule introduces the 
potential for a small amount of increased occupational exposures. These 
exposures are expected to remain within 10 CFR part 20 limits and to be 
ALARA. If subsurface contamination is detected, licensees may choose to 
remediate when contamination levels are lower and more manageable, 
which could result in reduced future occupational exposure rates than 
if the contamination conditions were allowed to remain and become 
increasingly more hazardous. Licensees may alternatively choose to 
provide adequate funding in response to their knowledge of the extent 
of any subsurface contamination, which will better ensure that the area 
is remediated following decommissioning to a degree that supports 
public health and safety, and protection of the environment.
    If significant onsite residual radioactivity in the subsurface is 
found due to the monitoring imposed by this rulemaking, such knowledge 
will better ensure the protection of public health and safety, and 
protection of the environment. Identifying and resolving the source of 
the contamination will better ensure that waste is not allowed to 
migrate offsite. Early identification also provides more time to plan 
waste remediation strategies that are both safe and cost effective.
    The NRC finds that this proposed rulemaking will not have a 
significant environmental impact. Comments on the draft Environmental 
Assessment may be submitted to the NRC as indicated under the ADDRESSES 
heading.

IX. Paperwork Reduction Act Statement

    This proposed rule contains new or amended information collection 
requirements that are subject to the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.). This rule has been submitted to the Office of 
Management and Budget for review and approval of the information 
collection requirements.
    Type of submission, new or revision: Revision.
    The title of the information collection: 10 CFR parts 20, 30, 40, 
50, 70 and 72, Decommissioning Planning, Proposed Rule.
    The form number if applicable: Not applicable.
    How often the collection is required: Initially, periodically based 
on regulated activity, quarterly, annually, and at license termination.
    Who will be required or asked to report: Licensees and applicants 
for nuclear power plants and research and test facilities; applicants 
for and holders of NRC licenses authorizing receipt, possession, use or 
transfer of radioactive source and byproduct material.
    An estimate of the number of annual responses: 239 responses (10 
CFR 20--0 responses; 10 CFR 30--151 responses; 10 CFR 40--29 responses; 
10 CFR 50--9 responses; 10 CFR 70--49 responses; 10 CFR 72--1 
response).
    The estimated number of annual respondents: 227 (10 CFR 20--0 
respondents; 10 CFR 30--139 respondents; 10 CFR 40--29 respondents; 10 
CFR 50--9 respondents; 10 CFR 70--49 respondents; and 10 CFR 72--1 
respondent).
    An estimate of the total number of hours needed annually to 
complete the requirement or request: The total burden increase for this 
rulemaking is 1,210.5 hours (10 CFR 20--0 hours; 10 CFR 30--853.5 
hours; 10 CFR 40--132.5 hours; 10 CFR 50--48 hours; 10 CFR 70--172.5 
hours; 10 CFR 72--4 hour).
    Abstract: The NRC is proposing to amend its regulations to improve 
decommissioning planning by its licensees who have operating facilities 
or who are required to have decommissioning financial assurance. A new 
section in 10 CFR 20.1406(c) and an amended Sec.  20.1501(a) would 
require licensees to conduct their operations to minimize waste and to 
perform surveys of subsurface contamination. The amended regulations 
also would require licensees to report additional details in their 
decommissioning cost estimates, would eliminate two currently approved 
financial assurance mechanisms, and would modify the parent company 
guarantee and self-guarantee financial assurance mechanisms to 
authorize the Commission to make the amount guaranteed immediately due 
and payable to a standby trust if the guarantor is in financial 
distress. Finally, the amended regulations would require 
decommissioning power reactor licensees to report additional 
information on the costs of decommissioning and spent fuel management.
    The U.S. Nuclear Regulatory Commission is seeking public comment on 
the potential impact of the information collections contained in the 
proposed rule and on the following issues:

    1. Is the proposed information collection necessary for the 
proper performance of the functions of the NRC, including whether 
the information will have practical utility?
    2. Is the estimate of burden accurate?
    3. Is there a way to enhance the quality, utility, and clarity 
of the information to be collected?
    4. How can the burden of the information collection be 
minimized, including the use of automated collection techniques?

    A copy of the OMB clearance package may be viewed free of charge at 
the NRC Public Document Room, One White Flint North, 11555 Rockville 
Pike, Room O-1 F21, Rockville, MD 20852. The OMB clearance package and 
rule are available at the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the 
signature date of this notice.
    Send comments on any aspect of these proposed information 
collections, including suggestions for reducing the burden and on the 
above issues, by February 21, 2008 to the Records and FOIA/Privacy 
Services Branch (T-5 F52), U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001, or by Internet electronic mail to 
[email protected] and to the Desk Officer, Nathan Frey, Office of 
Information and Regulatory Affairs, NEOB-10202 (3150-0014; 0017; 0020; 
0011; 0009; and 0132), Office of Management and Budget, Washington, DC 
20503. Comments received after this date will be considered if it is 
practical to do so, but assurance of consideration cannot be given to 
comments received after this date. You may also e-mail comments to 
[email protected] or comment by telephone at (202) 395-4650.

X. Public Protection Notification

    The NRC may not conduct or sponsor, and a person is not required to 
respond to, a request for information or an information collection 
requirement unless the requesting document displays a currently valid 
OMB control number.

XI. Regulatory Analysis

    The Commission has prepared a draft regulatory analysis on this 
proposed rulemaking. An analysis of the proposed rule was performed 
comparing it against two other alternatives over a 15-year analysis 
period, using 3 percent and 7 percent real discount rates. The NRC 
considers the costs of the proposed rule justified in view of the 
benefits. The primary benefit is a reduction in the number of legacy 
sites that may occur in the future. The baseline of the analysis 
assumes No Action is taken and five additional legacy sites require

[[Page 3835]]

government assistance to achieve completion of decommissioning 
consistent with unrestricted use criteria. The estimated cost of the 
proposed rule, with amended regulations as presented in Section III of 
this document, is about 40 percent lower than if No Action is taken. A 
third alternative was evaluated that would provide a higher level of 
assurance than the proposed rule of obtaining funds guaranteed for 
decommissioning financial assurance, but this requirement of collateral 
for the guaranteed amount was too costly in relation to the added level 
of assurance it would provide.
    The estimated cost to implement the proposed rule is about $43 
million (2007$) at 3 percent discount rate, of which NRC licensee costs 
are about $6 million, Agreement State licensee costs are about $22 
million, NRC administrative costs are about $3 million, and Agreement 
State administrative costs are about $12 million. The Regulatory 
Analysis provides a cost breakdown for activities related to 
implementation of the proposed rule by 10 CFR parts 20, 30, 40, 50, 70 
and 72.
    The Commission requests public comment on the draft Regulatory 
Analysis. A copy of the Regulatory Analysis and rule are available at 
the NRC worldwide Web site: http://www.nrc.gov/public-involve/doc-comment/omb/index.html for 75 days after the signature date of this 
notice.

XII. Regulatory Flexibility Certification

    In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 
605(b)), the Commission certifies that this rule would not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities. Only about 300 NRC materials licensees are required 
to have decommissioning financial assurance and the large majority of 
these organizations do not fall within the scope of the definition of 
``small entities'' set forth in the Regulatory Flexibility Act or the 
Small Business Size Standards set out in regulations issued by the 
Small Business Administration at 13 CFR part 121.

XIII. Backfit Analysis

    As discussed more fully in the draft Regulatory Analysis, the NRC 
has determined that the NRC's rules on backfitting, 10 CFR 50.109, 
70.76, 72.62, and 76.76, do not require the preparation of a backfit 
analysis for this proposed rule. A backfit is the modification of 
equipment or procedures required to operate a facility resulting from 
new or amended NRC regulations, or the imposition of a regulatory staff 
position interpreting the Commission rules that is either new or 
different from a previously applicable staff position. The new or 
amended regulations in this proposed rule either clarify existing 
requirements, or require the collection and reporting of information 
using existing equipment and procedures. The proposed changes to 
requirements are not regulatory actions to which the backfit rule 
applies. The new and amended NRC regulations being proposed in this 
rulemaking are summarized below.
    The ``Minimization of contamination'' requirements in 10 CFR 
20.1406 would be amended by adding a new paragraph (c) to read as 
follows:

    (c) Licensees shall, to the extent practical, conduct operations 
to minimize the introduction of residual radioactivity into the 
site, including the subsurface, in accordance with existing 
radiation protection requirements in Subpart B and radiological 
criteria for license termination in Subpart E of this part.

    This is not a backfit because it clarifies licensee requirements 
under two existing regulations applicable to licensed operations. To 
comply with the current ALARA dose requirements in 10 CFR 20.1101(b) 
and 10 CFR 20.1402 (within existing subparts B and E, respectively), 
licensees must have operating procedures to minimize the introduction 
of residual radioactivity into their site, including the subsurface. 
Otherwise, licensees may lack information to provide a basis to 
demonstrate that they have achieved--during the life cycle of the 
facility which includes the decommissioning phase--public and 
occupational exposures that are ALARA. Licensees should already have 
these procedures in place as part of their radiation protection 
program, and the proposed 20.1406(c) clarifies this requirement.
    Existing 10 CFR 20.1501(a) is being revised by replacing its 
undefined phrase ``radioactive material'' with a defined term 
``residual radioactivity.'' As defined in existing 10 CFR 20.1003, 
residual radioactivity includes subsurface contamination within its 
scope, and the word ``subsurface'' is being added to 10 CFR 20.1501(a). 
This regulation (10 CFR 20.1501(a)(2)(iii)) already requires the 
evaluation of potential radiological hazards. Thus, as amended, 10 CFR 
20.1501(a) makes clear that subsurface residual radioactivity is a 
potential radiological hazard, and that the radiological surveys 
required by this section must address subsurface residual 
radioactivity. This clarification of existing requirements does not 
require the preparation of a backfit analysis.
    Another proposed amendment would add a new paragraph (b) to 10 CFR 
20.1501, requiring that survey records describing the location and 
amount of subsurface residual radioactivity identified at a licensed 
site be kept with records important for decommissioning.
    Regulatory changes imposing information collection and reporting 
requirements do not constitute regulatory actions to which the backfit 
rule applies. Additionally, NRC licensees are already required to keep 
records important for decommissioning. See, e.g., 10 CFR 50.75(g), 
70.25(g), and 72.30(d). Moreover, the new 10 CFR 20.1501(b) is not 
intended to require recordkeeping of any and all amounts of subsurface 
residual radioactivity, but only amounts that are significant to 
achieve effective decommissioning planning and ALARA dose requirements. 
For operating facilities, significant residual radioactivity is a 
quantity of radioactive material that would later require remediation 
during decommissioning to meet the unrestricted use criteria of 10 CFR 
20.1402. Significant residual radioactivity in subsurface media, such 
as soil, is a component of waste because it must be removed and 
disposed of to meet unrestricted use criteria.
    The proposed rule also revises decommissioning planning and 
financial assurance requirements in 10 CFR parts 30, 40, 50, 70 and 72. 
These revisions do not entail modifying any equipment or procedures 
required to operate the types of NRC-licensed facilities governed by 10 
CFR Parts 50, 70 or 72. The proposed changes concern administrative 
matters which are outside the scope of protection afforded by the NRC's 
backfitting rules (10 CFR 50.109, 70.76, and 72.62). Therefore, 
preparation of a backfit analysis is not required for the proposed 
revisions to the decommissioning planning and financial assurance 
requirements.
    Accordingly, the proposed rule's provisions do not constitute a 
backfit and a backfit analysis need not be performed. The draft 
regulatory analysis identifies the benefits and costs of the proposed 
rule, discusses the voluntary GPI, and evaluates other options for 
addressing the identified issues. The draft regulatory analysis 
constitutes a ``disciplined approach'' for evaluating the merits of the 
proposed rule and is consistent with the intent of the backfit rule.
    The Commission requests public comment on the backfit issues 
summarized above and as set forth more fully in the draft Regulatory 
Analysis

[[Page 3836]]

(which is available as discussed under the ADDRESSES heading). Single 
copies may be obtained from the contact listed under the FOR FURTHER 
INFORMATION CONTACT heading. Comments on the draft Backfit Analysis may 
be submitted to the NRC as indicated under the ADDRESSES heading.

List of Subjects

10 CFR Part 20

    Byproduct material, Criminal penalties, Licensed material, Nuclear 
materials, Nuclear power plants and reactors, Occupational safety and 
health, Packaging and containers, Radiation protection, Reporting and 
recordkeeping requirements, Source material, Special nuclear material, 
Waste treatment and disposal.

10 CFR Part 30

    Byproduct material, Criminal penalties, Government contracts, 
Intergovernmental relations, Isotopes, Nuclear materials, Radiation 
protection, Reporting and recordkeeping requirements.

10 CFR Part 40

    Criminal penalties, Government contracts, Hazardous materials 
transportation, Nuclear materials, Reporting and recordkeeping 
requirements, Source material, Uranium.

10 CFR Part 50

    Antitrust, Classified information, Criminal penalties, Fire 
protection, Intergovernmental relations, Nuclear power plants and 
reactors, Radiation protection, Reactor siting criteria, Reporting and 
recordkeeping requirements.

10 CFR Part 70

    Criminal penalties, Hazardous materials transportation, Material 
control and accounting, Nuclear materials, Packaging and containers, 
Radiation protection, Reporting and recordkeeping requirements, 
Scientific equipment, Security measures, Special nuclear material.

10 CFR Part 72

    Administrative practice and procedure, Criminal penalties, Manpower 
training programs, Nuclear materials, Occupational safety and health, 
Penalties, Radiation protection, Reporting and recordkeeping 
requirements, Security measures, Spent fuel, Whistleblowing.

    For the reasons set out in the preamble and under the authority of 
the Atomic Energy Act of 1954, as amended; the Energy Reorganization 
Act of 1974, as amended; and 5 U.S.C. 553, the NRC is proposing to 
adopt the following amendments to 10 CFR parts 20, 30, 40, 50, 70, and 
72.

PART 20--STANDARDS FOR PROTECTION AGAINST RADIATION

    1. The authority citation for part 20 continues to read as follows:

    Authority: Secs. 53, 63, 65, 81, 103, 104, 161, 182, 186, 68 
Stat. 930, 933, 935, 936, 937, 948, 953, 955, as amended, sec. 1701, 
106 Stat. 2951, 2952, 2953 (42 U.S.C. 2073, 2093, 2095, 2111, 2133, 
2134, 2201, 2232, 2236, 2297f), secs. 201, as amended, 202, 206, 88 
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); 
sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note), Energy Policy Act 
of 2005, Pub. L. 109-58, 119 Stat. 594 (2005).

    2. In Sec.  20.1403, paragraph (c)(2) is removed, paragraph (c)(3) 
is redesignated as paragraph (c)(2), and paragraph (c)(4) is 
redesignated as paragraph (c)(3), and paragraph (c)(1) is revised to 
read as follows:


Sec.  20.1403  Criteria for license termination under restricted 
conditions.

* * * * *
    (c) * * *
    (1) Funds placed into a trust segregated from the licensee's assets 
and outside the licensee's administrative control, and in which the 
adequacy of the trust funds is to be assessed based on an assumed 
annual 1 percent real rate of return on investment;
* * * * *
    3. In Sec.  20.1404, paragraph (a)(5) is added to read as follows:


Sec.  20.1404  Alternate criteria for license termination.

    (a) * * *
    (5) Has provided sufficient financial assurance to enable an 
independent third party, including a governmental custodian of a site, 
to assume and carry out responsibilities for any necessary control and 
maintenance of the site. Acceptable financial assurance mechanisms are 
specified in Sec.  20.1403(c) of this part.
* * * * *
    4. In Sec.  20.1406, paragraph (c) is added to read as follows:


Sec.  20.1406  Minimization of contamination.

* * * * *
    (c) Licensees shall, to the extent practical, conduct operations to 
minimize the introduction of residual radioactivity into the site, 
including the subsurface, in accordance with the existing radiation 
protection requirements in Subpart B and radiological criteria for 
license termination in Subpart E of this part.
    5. In Sec.  20.1501, paragraph (b) is redesignated as paragraph (c) 
and paragraph (c) is redesignated as paragraph (d), the introductory 
text of paragraphs (a) and (a)(2) and paragraphs (a)(2)(ii) and 
(a)(2)(iii) are revised, and a new paragraph (b) is added to read as 
follows:


Sec.  20.1501  General.

    (a) Each licensee shall make or cause to be made, surveys of areas, 
including the subsurface, that--
* * * * *
    (2) Are reasonable under the circumstances to evaluate --
* * * * *
    (ii) Concentrations or quantities of residual radioactivity; and
    (iii) The potential radiological hazards of the radiation levels 
and residual radioactivity detected.
    (b) Records from surveys describing the location and amount of 
subsurface residual radioactivity identified at the site must be kept 
with records important for decommissioning.
* * * * *

PART 30--RULES OF GENERAL APPLICABILITY TO DOMESTIC LICENSING OF 
BYPRODUCT MATERIAL

    6. The authority citation for part 30 continues to read as follows:

    Authority: Secs. 81, 82, 161, 182, 183, 186, 68 Stat. 935, 948, 
953, 954, 955, as amended, sec. 234, 83 Stat. 444, as amended (42 
U.S.C. 2111, 2112, 2201, 2232, 2233, 2236, 2282); secs. 201, as 
amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 
5841, 5842, 5846); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
    Section 30.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42 
U.S.C. 5851). Section 30.34(b) also issued under sec. 184, 68 Stat. 
954, as amended (42 U.S.C. 2234). Section 30.61 also issued under 
sec. 187, 68 Stat. 955 (42 U.S.C. 2237).

    7. In Sec.  30.34, paragraph (b) is redesignated as paragraph 
(b)(1) and a new paragraph (b)(2) is added to read as follows:


Sec.  30.34  Terms and conditions of licenses.

* * * * *
    (b) * * *
    (2) An application for transfer of license must include:
    (i) The identity, technical and financial qualifications of the 
proposed transferee; and
    (ii) Financial assurance for decommissioning information required 
by Sec.  30.35.
* * * * *
    8. In Sec.  30.35, a new paragraph (c)(6) is added, and paragraph 
(e), the

[[Page 3837]]

introductory text in paragraph (f), paragraph (f)(1), the introductory 
text of paragraph (f)(2) and paragraph (f)(3) are revised, and a new 
paragraph (h) is added to read as follows:


Sec.  30.35  Financial assurance and recordkeeping for decommissioning.

* * * * *
    (c) * * *
    (6) If, in surveys made under Sec.  20.1501(a), residual 
radioactivity in the facility and environment, including the 
subsurface, is detected at levels that would, if left uncorrected, 
prevent the site from meeting the 10 CFR 20.1402 criteria for 
unrestricted use, the licensee must submit a decommissioning funding 
plan within one year of when the survey is completed.
* * * * *
    (e)(1) Each decommissioning funding plan must be submitted for 
review and approval and must contain--
    (i) A detailed cost estimate for decommissioning, in an amount 
reflecting:
    (A) The cost of an independent contractor to perform all 
decommissioning activities;
    (B) The cost of meeting the 10 CFR 20.1402 criteria for 
unrestricted use, provided that, if the applicant or licensee can 
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the 
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
    (C) The volume of onsite subsurface material containing residual 
radioactivity that will require remediation to meet the criteria for 
license termination; and
    (D) An adequate contingency factor.
    (ii) Identification of and justification for using the key 
assumptions contained in the decommissioning cost estimate;
    (iii) A description of the method of assuring funds for 
decommissioning from paragraph (f) of this section, including means for 
adjusting cost estimates and associated funding levels periodically 
over the life of the facility;
    (iv) A certification by the licensee that financial assurance for 
decommissioning has been provided in the amount of the cost estimate 
for decommissioning; and
    (v) A signed original of the financial instrument obtained to 
satisfy the requirements of paragraph (f) of this section (unless a 
previously submitted and accepted financial instrument continues to 
cover the cost estimate for decommissioning).
    (2) At the time of license renewal and at intervals not to exceed 3 
years, the decommissioning funding plan must be re-submitted with 
adjustments as necessary to account for changes in costs and the extent 
of contamination. If the amount of financial assurance will be 
adjusted, this can not be done until the updated decommissioning 
funding plan is approved. The decommissioning funding plan must update 
the information submitted with the original or prior approved plan, and 
must specifically consider the effect of the following events on 
decommissioning costs:
    (i) Spills of radioactive material producing additional residual 
radioactivity in onsite subsurface material;
    (ii) Waste inventory increasing above the amount previously 
estimated;
    (iii) Waste disposal costs increasing above the amount previously 
estimated;
    (iv) Facility modifications;
    (v) Changes in authorized possession limits;
    (vi) Actual remediation costs that exceed the previous cost 
estimate;
    (vii) Onsite disposal; and
    (viii) Use of a settling pond.
    (f) The financial instrument must include the licensee's name, 
license number, and docket number, and the name, address, and other 
contact information of the issuer, and, if a trust is used, the 
trustee. When any of the foregoing information changes, the licensee 
must, within 30 days, submit financial instruments reflecting such 
changes. The financial instrument submitted must be a signed original 
or signed original duplicate, except where a copy of the signed 
original is specifically permitted. Financial assurance for 
decommissioning must be provided by one or more of the following 
methods:
    (1) Prepayment. Prepayment is the deposit before the start of 
operation into an account segregated from licensee assets and outside 
the licensee's administrative control of cash or liquid assets such 
that the amount of funds would be sufficient to pay decommissioning 
costs. Prepayment must be made into a trust account, and the trustee 
and the trust must be acceptable to the Commission.
    (2) A surety method, insurance, or other guarantee method. These 
methods guarantee that decommissioning costs will be paid. A surety 
method may be in the form of a surety bond, or letter of credit. A 
parent company guarantee of funds for decommissioning costs based on a 
financial test may be used if the guarantee and test are as contained 
in appendix A to this part. For commercial corporations that issue 
bonds, a guarantee of funds by the applicant or licensee for 
decommissioning costs based on a financial test may be used if the 
guarantee and test are as contained in appendix C to this part. For 
commercial companies that do not issue bonds, a guarantee of funds by 
the applicant or licensee for decommissioning costs may be used if the 
guarantee and test are as contained in appendix D to this part. For 
nonprofit entities, such as colleges, universities, and nonprofit 
hospitals, a guarantee of funds by the applicant or licensee may be 
used if the guarantee and test are as contained in appendix E to this 
part. Except for an external sinking fund, a parent company guarantee 
or a guarantee by the applicant or licensee may not be used in 
combination with any other financial methods used to satisfy the 
requirements of this section. A guarantee by the applicant or licensee 
may not be used in any situation where the applicant or licensee has a 
parent company holding majority control of the voting stock of the 
company. Any surety method or insurance used to provide financial 
assurance for decommissioning must contain the following conditions:
* * * * *
    (3) An external sinking fund in which deposits are made at least 
annually, coupled with a surety method, insurance, or other guarantee 
method, the value of which may decrease by the amount being accumulated 
in the sinking fund. An external sinking fund is a fund established and 
maintained by setting aside funds periodically in an account segregated 
from licensee assets and outside the licensee's administrative control 
in which the total amount of funds would be sufficient to pay 
decommissioning costs at the time termination of operation is expected. 
An external sinking fund must be in the form of a trust. If the other 
guarantee method is used, no surety or insurance may be combined with 
the external sinking fund. The surety, insurance, or other guarantee 
provisions must be as stated in paragraph (f)(2) of this section.
* * * * *
    (h) In providing financial assurance under this section, each 
licensee must use the financial assurance funds only for 
decommissioning activities and each licensee must monitor the balance 
of funds held to account for market variations. The licensee must 
replenish the funds, and report such actions to the NRC, as follows:
    (1) If, at the end of a calendar quarter, the fund balance is below 
the amount necessary to cover the cost of decommissioning, but is not 
below 75 percent of the cost, the licensee must increase the balance to 
cover the cost, and must do so within 5 days after the end of the 
calendar quarter.

[[Page 3838]]

    (2) If, at any time, the fund balance falls below 75 percent of the 
amount necessary to cover the cost of decommissioning, the licensee 
must increase the balance to cover the cost, and must do so within 5 
days of the occurrence.
    (3) Within 30 days of taking the actions required by paragraphs 
(h)(1) or (h)(2) of this section, the licensee must report such actions 
to the NRC, and state the new balance of the fund.
    9. In appendix A to part 30, section II, the introductory text of 
paragraph A, paragraphs A.1.(ii), A.1.(iii), A.2.(i), A.2.(ii), 
A.2.(iii), B and C.1. are revised, in section III paragraphs B, C and D 
are revised, and new paragraphs E, F, G and H are added to read as 
follows:

Appendix A to Part 30--Criteria Relating to Use of Financial Tests and 
Parent Company Guarantees for Providing Reasonable Assurance of Funds 
for Decommissioning

* * * * *
II. Financial Test
    A. To pass the financial test, the parent company must meet the 
criteria of either paragraph A.1 or A.2 of this section. For 
purposes of applying the appendix A criteria, tangible net worth 
must be calculated to exclude all intangible assets and the net book 
value of the nuclear facility and site, and net worth must be 
calculated to exclude the net book value and goodwill of the nuclear 
facility and site.
* * * * *
    (1) * * *
    (ii) Net working capital and tangible net worth each at least 
six times the amount of decommissioning funds being assured by a 
parent company guarantee for the total of all nuclear facilities or 
parts thereof (or prescribed amount if a certification is used); and
    (iii) Tangible net worth of at least $19 million; and
* * * * *
    (2) * * *
    (i) A current rating for its most recent uninsured, 
uncollateralized, and unencumbered bond issuance of AAA, AA, A, or 
BBB (including adjustments of + and -) as issued by Standard and 
Poor's or Aaa, Aa, A, or Baa (including adjustment of 1, 2, or 3) as 
issued by Moody's; and
    (ii) Net worth at least six times the amount of decommissioning 
funds being assured by a parent company guarantee for the total of 
all nuclear facilities or parts thereof (or prescribed amount if a 
certification is used); and
    (iii) Tangible net worth of at least $19 million; and
* * * * *
    B. The parent company's independent certified public accountant 
must compare the data used by the parent company in the financial 
test, which is derived from the independently audited, year-end 
financial statements for the latest fiscal year, with the amounts in 
such financial statement. The accountant must evaluate the parent 
company's off-balance sheet transactions and provide an opinion on 
whether those transactions could materially adversely affect the 
parent company's ability to pay for decommissioning costs. The 
accountant must verify that a bond rating, if used to demonstrate 
passage of the financial test, meets the requirements of paragraph A 
of this section. In connection with the auditing procedure, the 
licensee must inform NRC within 90 days of any matters coming to the 
auditor's attention which cause the auditor to believe that the data 
specified in the financial test should be adjusted and that the 
company no longer passes the test.
    C.(1) After the initial financial test, the parent company must 
annually pass the test and provide documentation of its continued 
eligibility to use the parent company guarantee to the Commission 
within 90 days after the close of each succeeding fiscal year.
* * * * *

III. Parent Company Guarantee

* * * * *
    B. If the licensee fails to provide alternate financial 
assurance as specified in the Commission's regulations within 90 
days after receipt by the licensee and Commission of a notice of 
cancellation of the parent company guarantee from the guarantor, the 
guarantor will provide alternative financial assurance that meets 
the provisions of the Commission's regulations in the name of the 
licensee.
    C. The parent company guarantee and financial test provisions 
must remain in effect until the Commission has terminated the 
license, accepted in writing the parent company's alternate 
financial assurances, or accepted in writing the licensee's 
financial assurances.
    D. A standby trust to protect public health and safety and the 
environment must be established for decommissioning costs before the 
parent company guarantee agreement is submitted. The trustee and 
trust must be acceptable to the Commission. An acceptable trustee 
includes an appropriate State or Federal Government agency or an 
entity which has the authority to act as a trustee, whose trust 
operations are regulated and examined by a Federal or State agency. 
The Commission has the right to change the trustee. An acceptable 
trust will meet the regulatory criteria established in these 
regulations that govern the issuance of the license for which the 
guarantor has accepted the obligation to pay for decommissioning 
costs.
    E. The guarantor must agree that it is jointly and severally 
liable with the licensee for the full cost of decommissioning, and 
that if the costs of decommissioning and termination of the license 
exceed the amount guaranteed, the guarantor will pay such additional 
costs that are not paid by the licensee.
    F. The guarantor must agree that it would be subject to 
Commission orders to make payments under the guarantee agreement.
    G. The guarantor must agree that if the guarantor admits in 
writing its inability to pay its debts generally, or makes a general 
assignment for the benefit of creditors, or any proceeding is 
instituted by or against the guarantor seeking to adjudicate it as 
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or 
composition of it or its debts under any law relating to bankruptcy, 
insolvency, or reorganization or relief of debtors, or seeking the 
entry of an order for relief or the appointment of a receiver, 
trustee, custodian, or other similar official for the guarantor or 
for any substantial part of its property, or the guarantor takes any 
action to authorize or effect any of the actions stated in this 
paragraph, then the Commission may:
    (1) Declare that the financial assurance guaranteed by the 
parent company guarantee agreement is immediately due and payable to 
the standby trust set up to protect the public health and safety and 
the environment, without diligence, presentment, demand, protest or 
any other notice of any kind, all of which are expressly waived by 
guarantor; and
    (2) Exercise any and all of its other rights under applicable 
law.
    H. (1) The guarantor must agree to notify the NRC, in writing, 
immediately following the filing of a voluntary or involuntary 
petition for bankruptcy under any chapter of title 11 (Bankruptcy) 
of the United States Code, or the occurrence of any other event 
listed in paragraph G of this Appendix, by or against:
    (i) The guarantor;
    (ii) The licensee;
    (iii) An entity (as that term is defined in 11 U.S.C. 101(14)) 
controlling the licensee or listing the license or licensee as 
property of the estate; or
    (iv) An affiliate (as that term is defined in 11 U.S.C. 101(2)) 
of the licensee.
    (2) This notification must include:
    (i) A description of the event, including major creditors, the 
amounts involved, and the actions taken to assure that the amount of 
funds guaranteed by the parent company guarantee for decommissioning 
will be transferred to the standby trust as soon as possible;
    (ii) If a petition of bankruptcy was filed, the identity of the 
bankruptcy court in which the petition for bankruptcy was filed; and
    (iii) The date of filing of any petitions.

    10. In appendix C to part 30, in section II paragraphs A., B.(2) 
and B.(3) are revised, in section III paragraphs E and F are revised, 
and paragraphs G, H and I are added to read as follows:

Appendix C to Part 30--Criteria Relating to Use of Financial Tests and 
Self Guarantees for Providing Reasonable Assurance of Funds for 
Decommissioning

* * * * *

II. Financial Test

    A. To pass the financial test a company must meet all of the 
criteria set forth below. For purposes of applying the appendix C 
criteria, tangible net worth must be calculated to exclude all 
intangible assets and the net book value of the nuclear facility

[[Page 3839]]

and site, and net worth must be calculated to exclude the net book 
value and goodwill of the nuclear facility and site. These criteria 
include:
    (1) Tangible net worth of at least $19 million, and net worth at 
least 10 times the amount of decommissioning funds being assured by 
a self-guarantee, for all decommissioning activities for which the 
company is responsible as self-guaranteeing licensee and as parent-
guarantor for the total of all nuclear facilities or parts thereof 
(or the current amount required if certification is used).
    (2) Assets located in the United States amounting to at least 90 
percent of total assets or at least 10 times the amount of 
decommissioning funds being assured by a self-guarantee, for all 
decommissioning activities for which the company is responsible as 
self-guaranteeing licensee and as parent-guarantor for the total of 
all nuclear facilities or parts thereof (or the current amount 
required if certification is used).
    (3) A current rating for its most recent uninsured, 
uncollateralized, and unencumbered bond issuance of AAA, AA, or A 
(including adjustments of + and -) as issued by Standard and Poor's, 
or Aaa, Aa, or A (including adjustments of 1, 2, or 3) as issued by 
Moody's.
    B. * * *
    (2) The company's independent certified public accountant must 
compare the data used by the company in the financial test, which is 
derived from the independently audited, year-end financial 
statements for the latest fiscal year, with the amounts in such 
financial statement. The accountant must evaluate the company's off-
balance sheet transactions and provide an opinion on whether those 
transactions could materially adversely affect the company's ability 
to pay for decommissioning costs. The accountant must verify that a 
bond rating, if used to demonstrate passage of the financial test, 
meets the requirements of section II paragraph A of this appendix. 
In connection with the auditing procedure, the licensee must inform 
NRC within 90 days of any matters coming to the auditor's attention 
which cause the auditor to believe that the data specified in the 
financial test should be adjusted and that the company no longer 
passes the test.
    (3) After the initial financial test, the company must annually 
pass the test and provide documentation of its continued eligibility 
to use the self-guarantee to the Commission within 90 days after the 
close of each succeeding fiscal year.
* * * * *

III. Company Self-Guarantee

* * * * *
    E. (1) If, at any time, the licensee's most recent bond issuance 
ceases to be rated in any category of ''A'' or above by either 
Standard and Poor's or Moody's, the licensee will notify the 
Commission in writing within 20 days after publication of the change 
by the rating service.
    (2) If the licensee's most recent bond issuance ceases to be 
rated in any category of A or above by both Standard and Poor's and 
Moody's, the licensee no longer meets the requirements of section 
II.A. of this appendix.
    F. The applicant or licensee must provide to the Commission a 
written guarantee (a written commitment by a corporate officer) 
which states that the licensee will fund and carry out the required 
decommissioning activities or, upon issuance of an order by the 
Commission, the licensee will fund the standby trust in the amount 
guaranteed by the self-guarantee agreement.
    G. (1) A standby trust to protect public health and safety and 
the environment must be established for decommissioning costs before 
the self-guarantee agreement is submitted.
    (2) The trustee and trust must be acceptable to the Commission. 
An acceptable trustee includes an appropriate State or Federal 
Government agency or an entity which has the authority to act as a 
trustee and whose trust operations are regulated and examined by a 
Federal or State agency. The Commission has the right to change the 
trustee. An acceptable trust will meet the regulatory criteria 
established in these regulations that govern the issuance of the 
license for which the guarantor has accepted the obligation to pay 
for decommissioning costs.
    H. The guarantor must agree that if the guarantor admits in 
writing its inability to pay its debts generally, or makes a general 
assignment for the benefit of creditors, or any proceeding is 
instituted by or against the guarantor seeking to adjudicate it as 
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or 
composition of it or its debts under any law relating to bankruptcy, 
insolvency, or reorganization or relief of debtors, or seeking the 
entry of an order for relief or the appointment of a receiver, 
trustee, custodian, or other similar official for the guarantor or 
for any substantial part of its property, or the guarantor takes any 
action to authorize or effect any of the actions stated in this 
paragraph, then the Commission may:
    (1) Declare that the financial assurance guaranteed by the 
parent company guarantee agreement is immediately due and payable to 
the standby trust set up to protect the public health and safety and 
the environment, without diligence, presentment, demand, protest or 
any other notice of any kind, all of which are expressly waived by 
guarantor; and
    (2) Exercise any and all of its other rights under applicable 
law.
    I. The guarantor must notify the NRC, in writing, immediately 
following the occurrence of any event listed in paragraph H of this 
appendix, and must include a description of the event, including 
major creditors, the amounts involved, and the actions taken to 
assure that the amount of funds guaranteed by the self-guarantee 
agreement for decommissioning will be transferred to the standby 
trust as soon as possible.

    11. In appendix D to part 30 in section II, the introductory text 
of paragraph A., paragraphs A.(1), B.(1), and B.(2) are revised, in 
section III paragraph D is revised and paragraphs E, F and G are added 
to read as follows:

Appendix D to Part 30--Criteria Relating to Use of Financial Tests and 
Self-Guarantee for Providing Reasonable Assurance of Funds for 
Decommissioning by Commercial Companies That Have No Outstanding Rated 
Bonds

* * * * *

II. Financial Test

    A. To pass the financial test a company must meet all of the 
criteria set forth below. For purposes of applying the appendix D 
criteria, tangible net worth must be calculated to exclude all 
intangible assets and the net book value of the nuclear facility and 
site.
    (1) Tangible net worth greater than $19 million, or at least 10 
times the amount of decommissioning funds being assured by a self-
guarantee, whichever is greater, for all decommissioning activities 
for which the company is responsible as self-guaranteeing licensee 
and as parent-guarantor for the total of all nuclear facilities or 
parts thereof (or the current amount required if certification is 
used).
* * * * *
    B. * * *
    (1) The company's independent certified public accountant must 
compare the data used by the company in the financial test, which is 
derived from the independently audited, year-end financial 
statements for the latest fiscal year, with the amounts in such 
financial statement. The accountant must evaluate the company's off-
balance sheet transactions and provide an opinion on whether those 
transactions could materially adversely affect the company's ability 
to pay for decommissioning costs. In connection with the auditing 
procedure, the licensee must inform NRC within 90 days of any 
matters coming to the auditor's attention which cause the auditor to 
believe that the data specified in the financial test should be 
adjusted and that the company no longer passes the test.
    (2) After the initial financial test, the company must annually 
pass the test and provide documentation of its continued eligibility 
to use the self-guarantee to the Commission within 90 days after the 
close of each succeeding fiscal year.
* * * * *

III. Company Self-Guarantee

* * * * *
    D. The applicant or licensee must provide to the Commission a 
written guarantee (a written commitment by a corporate officer) 
which states that the licensee will fund and carry out the required 
decommissioning activities or, upon issuance of an order by the 
Commission, the licensee will fund the standby trust in the amount 
of the current cost estimates for decommissioning.
    E. A standby trust to protect public health and safety and the 
environment must be established for decommissioning costs before the 
self-guarantee agreement is submitted. The trustee and trust must be 
acceptable to

[[Page 3840]]

the Commission. An acceptable trustee includes an appropriate State 
or Federal Government agency or an entity which has the authority to 
act as a trustee and whose trust operations are regulated and 
examined by a Federal or State agency. The Commission will have the 
right to change the trustee. An acceptable trust will meet the 
regulatory criteria established in the part of these regulations 
that governs the issuance of the license for which the guarantor has 
accepted the obligation to pay for decommissioning costs.
    F. The guarantor must agree that if the guarantor admits in 
writing its inability to pay its debts generally, or makes a general 
assignment for the benefit of creditors, or any proceeding is 
instituted by or against the guarantor seeking to adjudicate it as 
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or 
composition of it or its debts under any law relating to bankruptcy, 
insolvency, or reorganization or relief of debtors, or seeking the 
entry of an order for relief or the appointment of a receiver, 
trustee, custodian, or other similar official for the guarantor or 
for any substantial part of its property, or the guarantor takes any 
action to authorize or effect any of the actions stated in this 
paragraph, then the Commission may:
    (1) Declare that the financial assurance guaranteed by the self-
guarantee agreement is immediately due and payable to the standby 
trust set up to protect the public health and safety and the 
environment, without diligence, presentment, demand, protest or any 
other notice of any kind, all of which are expressly waived by 
guarantor; and
    (2) Exercise any and all of its other rights under applicable 
law.
    G. The guarantor must notify the NRC, in writing, immediately 
following the occurrence of any event listed in paragraph H of this 
appendix, and must include a description of the event, including 
major creditors, the amounts involved, and the actions taken to 
assure that the amount of funds guaranteed by the self-guarantee 
agreement for decommissioning will be transferred to the standby 
trust as soon as possible.

    12. In appendix E to part 30, in section II, paragraphs A.(1), 
B.(1), C.(1), and C.(2) are revised, in section III paragraphs D and E 
are revised and paragraphs F, G and H are added to read as follows:

Appendix E to Part 30--Criteria Relating to Use of Financial Tests and 
Self-Guarantee for Providing Reasonable Assurance of Funds for 
Decommissioning by Nonprofit Colleges, Universities, and Hospitals

* * * * *

II. Financial Test

    A. * * *
    (1) For applicants or licensees that issue bonds, a current 
rating for its most recent uninsured, uncollateralized, and 
unencumbered bond issuance of AAA, AA, or A (including adjustments 
of + or -) as issued by Standard and Poor's (S&P) or Aaa, Aa, or A 
(including adjustments of 1, 2, or 3) as issued by Moody's.
    B. * * *
    (1) For applicants or licensees that issue bonds, a current 
rating for its most recent uninsured, uncollateralized, and 
unencumbered bond issuance of AAA, AA, or A (including adjustments 
of + or -) as issued by Standard and Poor's or Aaa, Aa, or A 
(including adjustments of 1, 2, or 3) as issued by Moody's.
* * * * *
    C. * * *
    (1) The licensee's independent certified public accountant must 
compare the data used by the licensee in the financial test, which 
is derived from the independently audited, year-end financial 
statements for the latest fiscal year, with the amounts in such 
financial statement. The accountant must evaluate the licensee's 
off-balance sheet transactions and provide an opinion on whether 
those transactions could materially adversely affect the licensee's 
ability to pay for decommissioning costs. The accountant must verify 
that a bond rating, if used to demonstrate passage of the financial 
test, meets the requirements of section II of this appendix. In 
connection with the auditing procedure, the licensee must inform NRC 
within 90 days of any matters coming to the auditor's attention 
which cause the auditor to believe that the data specified in the 
financial test should be adjusted and that the licensee no longer 
passes the test.
    (2) After the initial financial test, the licensee must repeat 
passage of the test and provide documentation of its continued 
eligibility to use the self-guarantee to the Commission within 90 
days after the close of each succeeding fiscal year.
* * * * *

III. Self-Guarantee

* * * * *
    D. The applicant or licensee must provide to the Commission a 
written guarantee (a written commitment by a corporate officer or 
officer of the institution) which states that the licensee will fund 
and carry out the required decommissioning activities or, upon 
issuance of an order by the Commission, the licensee will fund the 
standby trust in the amount of the current cost estimates for 
decommissioning.
    E. (1) If, at any time, the licensee's most recent bond issuance 
ceases to be rated in any category of ``A'' or above by either 
Standard and Poor's or Moody's, the licensee shall notify the 
Commission in writing within 20 days after publication of the change 
by the rating service.
    (2) If the licensee's most recent bond issuance ceases to be 
rated in any category of A or above by both Standard and Poor's and 
Moody's, the licensee no longer meets the requirements of section 
II.A. of this appendix.
    F. (1) A standby trust to protect public health and safety and 
the environment must be established for decommissioning costs before 
the self-guarantee agreement is submitted.
    (2) The trustee and trust must be acceptable to the Commission. 
An acceptable trustee includes an appropriate State or Federal 
Government agency or an entity which has the authority to act as a 
trustee and whose trust operations are regulated and examined by a 
Federal or State agency. The Commission has the right to change the 
trustee. An acceptable trust will meet the regulatory criteria 
established in the part of these regulations that governs the 
issuance of the license for which the guarantor has accepted the 
obligation to pay for decommissioning costs.
    G. The guarantor must agree that if the guarantor admits in 
writing its inability to pay its debts generally, or makes a general 
assignment for the benefit of creditors, or any proceeding is 
instituted by or against the guarantor seeking to adjudicate it as 
bankrupt or insolvent, or seeking dissolution, liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief or 
composition of it or its debts under any law relating to bankruptcy, 
insolvency, or reorganization or relief of debtors, or seeking the 
entry of an order for relief or the appointment of a receiver, 
trustee, custodian, or other similar official for guarantor or for 
any substantial part of its property, or the guarantor takes any 
action to authorize or effect any of the actions stated in this 
paragraph, then the Commission may:
    (1) Declare that the financial assurance guaranteed by the self-
guarantee agreement is immediately due and payable to the standby 
trust set up to protect the public health and safety and the 
environment, without diligence, presentment, demand, protest or any 
other notice of any kind, all of which are expressly waived by 
guarantor; and
    (2) Exercise any and all of its other rights under applicable 
law.
    H. The guarantor must notify the NRC, in writing, immediately 
following the occurrence of any event listed in paragraph G of this 
appendix, and must include a description of the event, including 
major creditors, the amounts involved, and the actions taken to 
assure that the amount of funds guaranteed by the self-guarantee 
agreement for decommissioning will be transferred to the standby 
trust as soon as possible.

PART 40--DOMESTIC LICENSING OF SOURCE MATERIAL

    13. The authority citation for part 40 continues to read as 
follows:

    Authority: Secs. 62, 63, 64, 65, 81, 161, 182, 183, 186, 68 
Stat. 932, 933, 935, 948, 953, 954, 955, as amended, secs. 11e(2), 
83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended, 3039, sec. 234, 
83 Stat. 444, as amended (42 U.S.C. 2014(e)(2), 2092, 2093, 2094, 
2095, 2111, 2113, 2114, 2201, 2232, 2233, 2236, 2282); sec. 274, 
Pub. L. 86-373, 73 Stat. 688 (42 U.S.C. 2021); secs. 201, as 
amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 
5841, 5842, 5846); sec. 275, 92 Stat. 3021, as amended by Pub. L. 
97-415, 96 Stat. 2067 (42 U.S.C. 2022); sec. 193, 104 Stat. 2835, as 
amended by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C. 
2243); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
    Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 (42 U.S.C. 5851).

[[Page 3841]]

Section 40.31(g) also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 
2152). Section 40.46 also issued under sec. 184, 68 Stat. 954, as 
amended (42 U.S.C. 2234). Section 40.71 also issued under sec. 187, 
68 Stat. 955 (42 U.S.C. 2237).

    14. In Sec.  40.36, a new paragraph (c)(5) is added, paragraph (d), 
the introductory text in paragraph (e), and paragraphs (e)(1), the 
introductory text of paragraph (e)(2) and paragraph (e)(3) are revised, 
and a new paragraph (g) is added to read as follows:


Sec.  40.36  Financial assurance and recordkeeping for decommissioning.

* * * * *
    (c) * * *
    (5) If, in surveys made under 10 CFR 20.1501(a), residual 
radioactivity in the facility and environment, including the 
subsurface, is detected at levels that would, if left uncorrected, 
prevent the site from meeting the 10 CFR 20.1402 criteria for 
unrestricted use, the licensee must submit a decommissioning funding 
plan within one year of when the survey is completed.
    (d)(1) Each decommissioning funding plan must be submitted for 
review and approval and must contain--
    (i) A detailed cost estimate for decommissioning, in an amount 
reflecting:
    (A) The cost of an independent contractor to perform all 
decommissioning activities;
    (B) The cost of meeting the 10 CFR 20.1402 criteria for 
unrestricted use, provided that, if the applicant or licensee can 
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the 
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
    (C) The volume of onsite subsurface material containing residual 
radioactivity that will require remediation; and
    (D) An adequate contingency factor.
    (ii) Identification of and justification for using the key 
assumptions contained in the decommissioning cost estimate;
    (iii) A description of the method of assuring funds for 
decommissioning from paragraph (e) of this section, including means for 
adjusting cost estimates and associated funding levels periodically 
over the life of the facility;
    (iv) A certification by the licensee that financial assurance for 
decommissioning has been provided in the amount of the cost estimate 
for decommissioning; and
    (v) A signed original, or if permitted, a copy, of the financial 
instrument obtained to satisfy the requirements of paragraph (e) of 
this section (unless a previously submitted and accepted financial 
instrument continues to cover the cost estimate for decommissioning).
    (2) At the time of license renewal and at intervals not to exceed 3 
years, the decommissioning funding plan must be re-submitted with 
adjustments as necessary to account for changes in costs and the extent 
of contamination. If the amount of financial assurance will be 
adjusted, this can not be done until the updated decommissioning 
funding plan is approved. The decommissioning funding plan must update 
the information submitted with the original or prior approved plan, and 
must specifically consider the effect of the following events on 
decommissioning costs:
    (i) Spills of radioactive material producing additional residual 
radioactivity in onsite subsurface material;
    (ii) Waste inventory increasing above the amount previously 
estimated;
    (iii) Waste disposal costs increasing above the amount previously 
estimated;
    (iv) Facility modifications;
    (v) Changes in authorized possession limits;
    (vi) Actual remediation costs that exceed the previous cost 
estimate;
    (vii) Onsite disposal; and
    (viii) Use of a settling pond.
    (e) The financial instrument must include the licensee's name, 
license number, and docket number; and the name, address, and other 
contact information of the issuer, and, if a trust is used, the 
trustee. When any of the foregoing information changes, the licensee 
must, within 30 days, submit financial instruments reflecting such 
changes. The financial instrument submitted must be a signed original 
or signed original duplicate, except where a copy is specifically 
permitted. Financial assurance for decommissioning must be provided by 
one or more of the following methods:
    (1) Prepayment. Prepayment is the deposit before the start of 
operation into an account segregated from licensee assets and outside 
the licensee's administrative control of cash or liquid assets such 
that the amount of funds would be sufficient to pay decommissioning 
costs. Prepayment must be made into a trust account, and the trustee 
and the trust must be acceptable to the Commission.
    (2) A surety method, insurance, or other guarantee method. These 
methods guarantee that decommissioning costs will be paid. A surety 
method may be in the form of a surety bond, or letter of credit. A 
parent company guarantee of funds for decommissioning costs based on a 
financial test may be used if the guarantee and test are as contained 
in appendix A to this part. For commercial corporations that issue 
bonds, a guarantee of funds by the applicant or licensee for 
decommissioning costs based on a financial test may be used if the 
guarantee and test are as contained in appendix C to this part. For 
commercial companies that do not issue bonds, a guarantee of funds by 
the applicant or licensee for decommissioning costs may be used if the 
guarantee and test are as contained in appendix D to this part. For 
nonprofit entities, such as colleges, universities, and nonprofit 
hospitals, a guarantee of funds by the applicant or licensee may be 
used if the guarantee and test are as contained in appendix E to this 
part. Except for an external sinking fund, a parent company guarantee 
or guarantee by the applicant or licensee may not be used in 
combination with any other financial methods used to satisfy the 
requirements of this section. A guarantee by the applicant or licensee 
may not be used in any situation where the applicant or licensee has a 
parent company holding majority control of the voting stock of the 
company. Any surety method or insurance used to provide financial 
assurance for decommissioning must contain the following conditions:
* * * * *
    (3) An external sinking fund in which deposits are made at least 
annually, coupled with a surety method, insurance, or other guarantee 
method, the value of which may decrease by the amount being accumulated 
in the sinking fund. An external sinking fund is a fund established and 
maintained by setting aside funds periodically in an account segregated 
from licensee assets and outside the licensee's administrative control 
in which the total amount of funds would be sufficient to pay 
decommissioning costs at the time termination of operation is expected. 
An external sinking fund must be in the form of a trust. If the other 
guarantee method is used, no surety or insurance may be combined with 
the external sinking fund. The surety, insurance, or other guarantee 
provisions must be as stated in paragraph (e)(2) of this section.
* * * * *
    (g) In providing financial assurance under this section, each 
licensee must use the financial assurance funds only for 
decommissioning activities and each licensee must monitor the balance 
of funds held to account for market variations. The licensee must 
replenish the funds, and report such actions to the NRC, as follows:
    (1) If, at the end of a calendar quarter, the fund balance is below 
the amount necessary to cover the cost of decommissioning, but is not 
below 75

[[Page 3842]]

percent of the cost, the licensee must increase the balance to cover 
the cost, and must do so within 5 days after the end of the calendar 
quarter.
    (2) If, at any time, the fund balance falls below 75 percent of the 
amount necessary to cover the cost of decommissioning, the licensee 
must increase the balance to cover the cost, and must do so within 5 
days of the occurrence.
    (3) Within 30 days of taking the actions required by paragraphs 
(g)(1) or (g)(2) of this section, the licensee must report such actions 
to the NRC, and state the new balance of the fund.
    15. In Sec.  40.46, the current paragraph is designated as 
paragraph (a) and a new paragraph (b) is added to read as follows:


Sec.  40.46  Inalienability of licenses.

* * * * *
    (b) An application for transfer of license must include:
    (1) The identity, technical and financial qualifications of the 
proposed transferee; and
    (2) Financial assurance for decommissioning information required by 
Sec.  40.36 or appendix A to this part, as applicable.
    16. In appendix A to part 40, section II Criterion 9 is revised to 
read as follows:

Appendix A to Part 40--Criteria Relating to the Operation of Uranium 
Mills and the Disposition of Tailings or Wastes Produced by the 
Extraction or Concentration of Source Material From Ores Processed 
Primarily for Their Source Material Content

* * * * *

II. Financial Criteria

    Criterion 9--(a) Financial surety arrangements must be 
established by each mill operator before the commencement of 
operations to assure that sufficient funds will be available to 
carry out the decontamination and decommissioning of the mill and 
site and for the reclamation of any tailings or waste disposal 
areas. The amount of funds to be ensured by such surety arrangements 
must be based on Commission-approved cost estimates in a Commission-
approved plan, or a proposed revision to the plan submitted to the 
Commission for approval, if the proposed revision contains a higher 
cost estimate, for
    (1) Decontamination and decommissioning of mill buildings and 
the milling site to levels which allow unrestricted use of these 
areas upon decommissioning, and
    (2) The reclamation of tailings and/or waste areas in accordance 
with technical criteria delineated in Section I of this appendix.
    (b) Each cost estimate must contain--
    (1) A detailed cost estimate for decontamination, 
decommissioning, and reclamation, in an amount reflecting:
    (i) The cost of an independent contractor to perform the 
decontamination, decommissioning and reclamation activities; and
    (ii) An adequate contingency factor;
    (2) An estimate of the amount of residual radioactive material 
in onsite subsurface material;
    (3) Identification of and justification for using the key 
assumptions contained in the decommissioning cost estimate; and
    (4) A description of the method of assuring funds for 
decontamination, decommissioning, and reclamation.
    (c) The licensee shall submit this plan in conjunction with an 
environmental report that addresses the expected environmental 
impacts of the milling operation, decommissioning and tailings 
reclamation, and evaluates alternatives for mitigating these 
impacts. The plan must include a signed original of the financial 
instrument obtained to satisfy the surety arrangement requirements 
of this criterion (unless a previously submitted and approved 
financial instrument continues to cover the cost estimate for 
decommissioning). The surety arrangement must also cover the cost 
estimate and the payment of the charge for long-term surveillance 
and control required by Criterion 10 of this section.
    (d) To avoid unnecessary duplication and expense, the Commission 
may accept financial sureties that have been consolidated with 
financial or surety arrangements established to meet requirements of 
other Federal or state agencies and/or local governing bodies for 
decommissioning, decontamination, reclamation, and long-term site 
surveillance and control, provided such arrangements are considered 
adequate to satisfy these requirements and that the portion of the 
surety which covers the decommissioning and reclamation of the mill, 
mill tailings site and associated areas, and the long-term funding 
charge is clearly identified and committed for use in accomplishing 
these activities.
    (e) The licensee's surety mechanism will be reviewed annually by 
the Commission to assure that sufficient funds would be available 
for completion of the reclamation plan if the work had to be 
performed by an independent contractor.
    (f) The amount of surety liability should be adjusted to 
recognize any increases or decreases resulting from:
    (1) Inflation;
    (2) Changes in engineering plans;
    (3) Activities performed;
    (4) Spills, leakage or migration of radioactive material 
producing additional residual radioactivity in onsite subsurface 
material that must be remediated to meet license termination 
criteria;
    (5) Waste inventory increasing above the amount previously 
estimated;
    (6) Waste disposal costs increasing above the amount previously 
estimated;
    (7) Facility modifications;
    (8) Changes in authorized possession limits;
    (9) Actual remediation costs that exceed the previous cost 
estimate;
    (10) Onsite disposal; and
    (11) Any other conditions affecting costs.
    (g) Regardless of whether reclamation is phased through the life 
of the operation or takes place at the end of operations, an 
appropriate portion of surety liability must be retained until final 
compliance with the reclamation plan is determined.
    (h) The appropriate portion of surety liability retained until 
final compliance with the reclamation plan is determined will be at 
least sufficient at all times to cover the costs of decommissioning 
and reclamation of the areas that are expected to be disturbed 
before the next license renewal. The term of the surety mechanism 
must be open ended, unless it can be demonstrated that another 
arrangement would provide an equivalent level of assurance. This 
assurance would be provided with a surety instrument which is 
written for a specified period of time (e.g., 5 years) that which 
must be automatically renewed unless the surety notifies the 
beneficiary (the Commission or the State regulatory agency) and the 
principal (the licensee) with reasonable time (e.g., 90 days) before 
the renewal date of their intention not to renew. In such a 
situation the surety requirement still exists and the licensee would 
be required to submit an acceptable replacement surety within a 
brief period of time to allow at least 60 days for the regulatory 
agency to collect.
    (i) Proof of forfeiture must not be necessary to collect the 
surety. In the event that the licensee cannot provide an acceptable 
replacement surety within the required time, the surety shall be 
automatically collected before its expiration. The surety instrument 
must provide for collection of the full face amount immediately on 
demand without reduction for any reason, except for trustee fees and 
expenses provided for in a trust agreement, and that the surety will 
not refuse to make full payment. The conditions described previously 
would have to be clearly stated on any surety instrument which is 
not open-ended, and must be agreed to by all parties. Financial 
surety arrangements generally acceptable to the Commission are:
    (1) Trust funds.
    (2) Surety bonds.
    (3) Irrevocable letters or credit.
    (4) Parent company guarantee under appendix A to 10 CFR part 40.
    (iv) Combinations of the above or other types of arrangements as 
may be approved by the Commission. If a trust is not used, then a 
standby trust must be set up to receive funds in the event the 
Commission or State regulatory agency exercises its right to collect 
the surety. The surety arrangement and the surety or trustee, as 
applicable, must be acceptable to the Commission. Self insurance, or 
any arrangement which essentially constitutes self insurance (e.g., 
a contract with a State or Federal agency), will not satisfy the 
surety requirement because this provides no additional assurance 
other than that which already exists through license requirements.

PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION 
FACILITIES

    17. The authority citation for part 50 continues to read as 
follows:


[[Page 3843]]


    Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 
Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234, 
83 Stat. 444, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 
2232, 2233, 2236, 2239, 2282); secs. 201, as amended, 202, 206, 88 
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); 
sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
    Section 50.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 (42 U.S.C. 5841). Section 50.10 also issued under secs. 101, 
185, 68 Stat. 955, as amended (42 U.S.C. 2131, 2235); sec. 102, Pub. 
L. 91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.13, 50.54(dd), 
and 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 
U.S.C. 2138).
    Sections 50.23, 50.35, 50.55, and 50.56 also issued under sec. 
185, 68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a, 50.55a and 
Appendix Q also issued under sec. 102, Pub. L. 91-190, 83 Stat. 853 
(42 U.S.C. 4332). Sections 50.34 and 50.54 also issued under sec. 
204, 88 Stat. 1245 (42 U.S.C. 5844). Sections 50.58, 50.91, and 
50.92 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 U.S.C. 
2239). Section 50.78 also issued under sec. 122, 68 Stat. 939 (42 
U.S.C. 2152). Sections 50.80-50.81 also issued under sec. 184, 68 
Stat. 954, as amended (42 U.S.C. 2234). Appendix F also issued under 
sec. 187, 68 Stat. 955 (42 U.S.C. 2237).

    18. In Sec.  50.75, the introductory text of paragraph 
(e)(1)(iii)(A) is revised to read as follows:


Sec.  50.75  Reporting and recordkeeping for decommissioning planning.

* * * * *
    (e) * * *
    (1) * * *
    (iii) * * *
    (A) These methods guarantee that decommissioning costs will be 
paid. A surety method may be in the form of a surety bond, or letter of 
credit. Any surety method or insurance used to provide financial 
assurance for decommissioning must contain the following conditions:
* * * * *
    19. In Sec.  50.82, paragraph (a)(4)(i) is revised, and paragraphs 
(a)(8)(v), (a)(8)(vi), and (a)(8)(vii) are added to read as follows:


Sec.  50.82  Termination of license.

* * * * *
    (a) * * *
    (4)(i) Within 2 years following permanent cessation of operations, 
the licensee shall submit a post-shutdown decommissioning activities 
report (PSDAR) to the NRC, and a copy to the affected State(s). The 
PSDAR must contain a description of the planned decommissioning 
activities along with a schedule for their accomplishment, a discussion 
that provides the reasons for concluding that the environmental impacts 
associated with site-specific decommissioning activities will be 
bounded by appropriate previously issued environmental impact 
statements, and a site-specific decommissioning cost estimate, 
including the projected cost of managing irradiated fuel.
* * * * *
    (8) * * *
    (v) After submitting its site-specific decommissioning cost 
estimate required by paragraph (a)(4)(i) of this section, and until the 
licensee has completed its final radiation survey and demonstrated that 
residual radioactivity has been reduced to a level that permits 
termination of its license, the licensee must annually submit to the 
NRC, by March 31, a financial assurance status report. The report must 
include the following information, current through the end of the 
previous calendar year:
    (A) The amount spent on decommissioning, both cumulative and over 
the previous calendar year, the remaining balance of any 
decommissioning funds, and the amount provided by other financial 
assurance methods being relied upon;
    (B) An estimate of the costs to complete decommissioning, 
reflecting any difference between actual and estimated costs for work 
performed during the year, and the decommissioning criteria upon which 
the estimate is based;
    (C) Any modifications occurring to a licensee's current method of 
providing financial assurance since the last submitted report; and
    (D) Any material changes to trust agreements or financial assurance 
contracts.
    (vi) If the sum of the balance of any remaining decommissioning 
funds, plus earnings on such funds calculated at not greater than a 2 
percent real rate of return, together with the amount provided by other 
financial assurance methods being relied upon, does not cover the 
estimated cost to complete the decommissioning, the financial assurance 
status report must include additional financial assurance to cover the 
estimated cost of completion.
    (vii) After submitting its site-specific decommissioning cost 
estimate required by paragraph (a)(4)(i) of this section, the licensee 
must annually submit to the NRC, by March 31, a report on the status of 
its funding for managing irradiated fuel. The report must include the 
following information, current through the end of the previous calendar 
year:
    (A) The amount of funds accumulated to cover the cost of managing 
the irradiated fuel;
    (B) The projected cost of managing irradiated fuel until title to 
the fuel and possession of the fuel is transferred to the Secretary of 
Energy; and
    (C) If the funds accumulated do not cover the projected cost, a 
plan to obtain additional funds to cover the cost.
* * * * *

PART 70--DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL

    20. The authority citation for part 70 continues to read as 
follows:

    Authority: Secs. 51, 53, 161, 182, 183, 68 Stat. 929, 930, 948, 
953, 954, as amended, sec. 234, 83 Stat. 444, as amended (42 U.S.C. 
2071, 2073, 2201, 2232, 2233, 2282, 2297f); secs. 201, as amended, 
202, 204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42 
U.S.C. 5841, 5842, 5845, 5846). Sec. 193, 104 Stat. 2835, as amended 
by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C. 2243); sec. 
1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
    Sections 70.1(c) and 70.20a(b) also issued under secs. 135, 141, 
Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). 
Section 70.7 is also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42 
U.S.C. 5851). Section 70.21(g) also issued under sec. 122, 68 Stat. 
939 (42 U.S.C. 2152). Section 70.31 also issued under sec. 57d, Pub. 
L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44 
also issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 
2234). Section 70.81 also issued under secs. 186, 187, 68 Stat. 955 
(42 U.S.C. 2236, 2237). Section 70.82 also issued under sec. 108, 68 
Stat. 939, as amended (42 U.S.C. 2138).

    21. In Sec.  70.25, a new paragraph (c)(5) is added, paragraph (e), 
the introductory text in paragraph (f), and paragraph (f)(1), the 
introductory text of paragraph (f)(2) and paragraph (f)(3) are revised, 
and a new paragraph (h) is added to read as follows:


Sec.  70.25  Financial assurance and recordkeeping for decommissioning.

* * * * *
    (c) * * *
    (5) If, in surveys made under 10 CFR 20.1501(a), residual 
radioactivity in the facility and environment, including the 
subsurface, is detected at levels that would, if left uncorrected, 
prevent the site from meeting the 10 CFR 20.1402 criteria for 
unrestricted use, the licensee must submit a decommissioning funding 
plan within one year of when the survey is completed.
* * * * *
    (e)(1) Each decommissioning funding plan must be submitted for 
review and approval and must contain--
    (i) A detailed cost estimate for decommissioning, in an amount 
reflecting:
    (A) The cost of an independent contractor to perform all 
decommissioning activities;

[[Page 3844]]

    (B) The cost of meeting the 10 CFR 20.1402 criteria for 
unrestricted use, provided that, if the applicant or licensee can 
demonstrate its ability to meet the provisions of 10 CFR 20.1403, the 
cost estimate may be based on meeting the 10 CFR 20.1403 criteria;
    (C) The volume of onsite subsurface material containing residual 
radioactivity that will require remediation; and
    (D) An adequate contingency factor.
    (ii) Identification of and justification for using the key 
assumptions contained in the decommissioning cost estimate;
    (iii) A description of the method of assuring funds for 
decommissioning from paragraph (f) of this section, including means for 
adjusting cost estimates and associated funding levels periodically 
over the life of the facility;
    (iv) A certification by the licensee that financial assurance for 
decommissioning has been provided in the amount of the cost estimate 
for decommissioning; and
    (v) A signed original, or, if permitted, a copy, of the financial 
instrument obtained to satisfy the requirements of paragraph (f) of 
this section (unless a previously submitted and accepted financial 
instrument continues to cover the cost estimate for decommissioning).
    (2) At the time of license renewal and at intervals not to exceed 3 
years, the decommissioning funding plan must be re-submitted with 
adjustments as necessary to account for changes in costs and the extent 
of contamination. If the amount of financial assurance will be 
adjusted, this cannot be done until the updated decommissioning funding 
plan is approved. The decommissioning funding plan must update the 
information submitted with the original or prior approved plan, and 
must specifically consider the effect of the following events on 
decommissioning costs:
    (i) Spills of radioactive material producing additional residual 
radioactivity in onsite subsurface material;
    (ii) Waste inventory increasing above the amount previously 
estimated;
    (iii) Waste disposal costs increasing above the amount previously 
estimated;
    (iv) Facility modifications;
    (v) Changes in authorized possession limits;
    (vi) Actual remediation costs that exceed the previous cost 
estimate;
    (vii) Onsite disposal; and
    (viii) Use of a settling pond.
    (f) The financial instrument must include the licensee's name, 
license number, and docket number; and the name, address, and other 
contact information of the issuer, and, if a trust is used, the 
trustee. When any of the foregoing information changes, the licensee 
must, within 30 days, submit financial instruments reflecting such 
changes. Financial assurance for decommissioning must be provided by 
one or more of the following methods:
    (1) Prepayment. Prepayment is the deposit before the start of 
operation into an account segregated from licensee assets and outside 
the licensee's administrative control of cash or liquid assets such 
that the amount of funds would be sufficient to pay decommissioning 
costs. Prepayment must be made into a trust account, and the trustee 
and the trust must be acceptable to the Commission.
    (2) A surety method, insurance, or other guarantee method. These 
methods guarantee that decommissioning costs will be paid. A surety 
method may be in the form of a surety bond, or letter of credit. A 
parent company guarantee of funds for decommissioning costs based on a 
financial test may be used if the guarantee and test are as contained 
in appendix A to this part. For commercial corporations that issue 
bonds, a guarantee of funds by the applicant or licensee for 
decommissioning costs based on a financial test may be used if the 
guarantee and test are as contained in appendix C to this part. For 
commercial companies that do not issue bonds, a guarantee of funds by 
the applicant or licensee for decommissioning costs may be used if the 
guarantee and test are as contained in appendix D to this part. For 
nonprofit entities, such as colleges, universities, and nonprofit 
hospitals, a guarantee of funds by the applicant or licensee may be 
used if the guarantee and test are as contained in appendix E to this 
part. Except for an external sinking fund, a parent company guarantee 
or a guarantee by the applicant or licensee may not be used in 
combination with any other financial methods used to satisfy the 
requirements of this section. A guarantee by the applicant or licensee 
may not be used in any situation where the applicant or licensee has a 
parent company holding majority control of the voting stock of the 
company. Any surety method or insurance used to provide financial 
assurance for decommissioning must contain the following conditions:
* * * * *
    (3) An external sinking fund in which deposits are made at least 
annually, coupled with a surety method, insurance, or other guarantee 
method, the value of which may decrease by the amount being accumulated 
in the sinking fund. An external sinking fund is a fund established and 
maintained by setting aside funds periodically in an account segregated 
from licensee assets and outside the licensee's administrative control 
in which the total amount of funds would be sufficient to pay 
decommissioning costs at the time termination of operation is expected. 
An external sinking fund must be in the form of a trust. If the other 
guarantee method is used, no surety or insurance may be combined with 
the external sinking fund. The surety, insurance, or other guarantee 
provisions must be as stated in paragraph (f)(2) of this section.
* * * * *
    (h) In providing financial assurance under this section, each 
licensee must use the financial assurance funds only for 
decommissioning activities and each licensee must monitor the balance 
of funds held to account for market variations. The licensee must 
replenish the funds, and report such actions to the NRC, as follows:
    (1) If, at the end of a calendar quarter, the fund balance is below 
the amount necessary to cover the cost of decommissioning, but is not 
below 75 percent of the cost, the licensee must increase the balance to 
cover the cost, and must do so within 5 days after the end of the 
calendar quarter.
    (2) If, at any time, the fund balance falls below 75 percent of the 
amount necessary to cover the cost of decommissioning, the licensee 
must increase the balance to cover the cost, and must do so within 5 
days of the occurrence.
    (3) Within 30 days of taking the actions required by paragraphs 
(h)(1) or (h)(2) of this section, the licensee must report such actions 
to the NRC, and state the new balance of the fund.
    22. In Sec.  70.36, the current paragraph is designated as 
paragraph (a) and a new paragraph (b) is added to read as follows:


Sec.  70.36  Inalienability of licenses.

* * * * *
    (b) An application for transfer of license must include:
    (1) The identity, technical and financial qualifications of the 
proposed transferee; and
    (2) Financial assurance for decommissioning information required by 
Sec.  70.25.

[[Page 3845]]

PART 72--LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF 
SPENT NUCLEAR FUEL, HIGH-LEVEL RADIOACTIVE WASTE, AND REACTOR-
RELATED GREATER THAN CLASS C WASTE

    23. The authority citation for part 72 continues to read as 
follows:

    Authority: Secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 
184, 186, 187, 189, 68 Stat. 929, 930, 932, 933, 934, 935, 948, 953, 
954, 955, as amended; sec. 234, 83 Stat. 444, as amended (42 U.S.C. 
2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 
2234, 2236, 2237, 2238, 2282); sec. 274, Pub. L. 86-373, 73 Stat. 
688, as amended (42 U.S.C. 2021); sec. 201, as amended; 202, 206, 88 
Stat. 1242, as amended; 1244, 1246 (42 U.S.C. 5841, 5842, 5846); 
Pub. L. 95-601, sec. 10, 92 Stat. 2951, as amended by Pub. L. 102-
486, sec. 7902, 106 Stat. 3123 (42 U.S.C. 5851); sec. 102, Pub. L. 
91-190, 83 Stat. 853 (42 U.S.C. 4332); secs. 131, 132, 133, 135, 
137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230, 2232, 2241; sec. 148, 
Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10151, 10152, 10153, 
10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 (44 U.S.C. 
3504 note); sec. 651(e), Pub. L. 109-58, 119 Stat. 806-10 (42 U.S.C. 
2014, 2021, 2021b, 2111).
    Section 72.44(g) also issued under secs. 142(b) and 148(C), (d), 
Pub. L. 100-203, 101 Stat. 1330-232, 1330-236 (42 U.S.C. 10162(b), 
10168(c), (d)). Section 72.46 also issued under sec. 189, 68 Stat. 
955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 
U.S.C. 10154). Section 72.96(d) also issued under sec. 145(g), Pub. 
L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10165(g)). Subpart J also 
issued under secs. 2(2), 2(15), 2(19), 117(a), 141(h), Pub. L. 97-
425, 96 Stat. 2202, 2203, 2204, 2222, 2224 (42 U.S.C. 10101, 
10137(a), 10161(h)). Subparts K and L are also issued under sec. 
133, 98 Stat. 2230 (42 U.S.C. 10153) and sec. 218(a), 96 Stat. 2252 
(42 U.S.C. 10198).

    24. In Sec.  72.13, paragraph (c) is revised to read as follows:


Sec.  72.13  Applicability.

* * * * *
    (c) The following sections apply to activities associated with a 
general license: Sec. Sec.  72.1; 72.2(a)(1), (b), (c), and (e); 72.3 
through 72.6(c)(1); 72.7 through 72.13(a) and (c); 72.30(e) and (f); 
72.32(c) and (d); 72.44(b) and (f); 72.48; 72.50(a); 72.52(a), (b), 
(d), and (e); 72.60; 72.62; 72.72 through 72.80(f); 72.82 through 
72.86; 72.104; 72.106; 72.122; 72.124; 72.126; 72.140 through 72.176; 
72.190; 72.194; 72.210 through 72.220, and 72.240(a).
* * * * *
    25. In Sec.  72.30, paragraph (b) is revised, paragraph (c) is 
redesignated as paragraph (e) and the introductory text of the newly 
redesignated paragraph (e), paragraphs (e)(1), the introductory text of 
paragraph (e)(2) and paragraph (e)(3) are revised, paragraph (d) is 
redesignated as paragraph (f), and new paragraphs (c), (d), and (g) are 
added to read as follows:


Sec.  72.30  Financial assurance and recordkeeping for decommissioning.

* * * * *
    (b) Each holder of, or applicant for, a license under this part 
must submit for NRC review and approval a decommissioning funding plan 
that must contain:
    (1) Information on how reasonable assurance will be provided that 
funds will be available to decommission the ISFSI or MRS.
    (2) A detailed cost estimate for decommissioning, in an amount 
reflecting:
    (i) The cost of an independent contractor to perform all 
decommissioning activities;
    (ii) An adequate contingency factor; and
    (iii) The cost of meeting the Sec.  20.1402 of this chapter 
criteria for unrestricted use, provided that, if the applicant or 
licensee can demonstrate its ability to meet the provisions of Sec.  
20.1403, the cost estimate may be based on meeting the Sec.  20.1403 
criteria.
    (3) Identification of and justification for using the key 
assumptions contained in the decommissioning cost estimate.
    (4) A description of the method of assuring funds for 
decommissioning from paragraph (e) of this section, including means for 
adjusting cost estimates and associated funding levels periodically 
over the life of the facility.
    (5) The volume of onsite subsurface material containing residual 
radioactivity that will require remediation to meet the criteria for 
license termination.
    (6) A certification that financial assurance for decommissioning 
has been provided in the amount of the cost estimate for 
decommissioning.
    (c) At the time of license renewal and at intervals not to exceed 3 
years the decommissioning funding plan must be re-submitted with 
adjustments as necessary to account for changes in costs and the extent 
of contamination. If the amount of financial assurance will be 
adjusted, this cannot be done until the updated decommissioning funding 
plan is approved. The decommissioning funding plan must update the 
information submitted with the original or prior approved plan and must 
specifically consider the effect of the following events on 
decommissioning costs:
    (1) Spills of radioactive material producing additional residual 
radioactivity in onsite subsurface material.
    (2) Facility modifications.
    (3) Changes in authorized possession limits.
    (4) Actual remediation costs that exceed the previous cost 
estimate.
    (d) If, in surveys made under 10 CFR 20.1501(a), residual 
radioactivity in soils or ground water is detected at levels that would 
require such radioactivity to be reduced to a level permitting release 
of the property for unrestricted use under the decommissioning 
requirements in part 20 of this chapter, the licensee must submit a new 
or revised decommissioning funding plan (as described in paragraph (e) 
of this section) within one year of when the survey is completed.
    (e) The financial instrument must include the licensee's name, 
license number, and docket number; and the name, address, and other 
contact information of the issuer, and, if a trust is used, the 
trustee. When any of the foregoing information changes, the licensee 
must, within 30 days, submit financial instruments reflecting such 
changes. Financial assurance for decommissioning must be provided by 
one or more of the following methods:
    (1) Prepayment. Prepayment is the deposit before the start of 
operation into an account segregated from licensee assets and outside 
the licensee's administrative control of cash or liquid assets such 
that the amount of funds would be sufficient to pay decommissioning 
costs. Prepayment must be made into a trust account, and the trustee 
and the trust must be acceptable to the Commission.
    (2) A surety method, insurance, or other guarantee method. These 
methods guarantee that decommissioning costs will be paid. A surety 
method may be in the form of a surety bond, or letter of credit. A 
parent company guarantee of funds for decommissioning costs based on a 
financial test may be used if the guarantee and test are as contained 
in appendix A to part 30 of this chapter. For commercial corporations 
that issue bonds, a guarantee of funds by the applicant or licensee for 
decommissioning costs based on a financial test may be used if the 
guarantee and test are as contained in appendix C to part 30 of this 
chapter. For commercial companies that do not issue bonds, a guarantee 
of funds by the applicant or licensee for decommissioning costs may be 
used if the guarantee and test are as contained in appendix D to part 
30 of this chapter. Except for an external sinking fund, a parent 
company guarantee or a guarantee by the applicant or licensee may not 
be used in combination with

[[Page 3846]]

other financial methods to satisfy the requirements of this section. A 
guarantee by the applicant or licensee may not be used in any situation 
where the applicant or licensee has a parent company holding majority 
control of the voting stock of the company. Any surety method or 
insurance used to provide financial assurance for decommissioning must 
contain the following conditions:
* * * * *
    (3) An external sinking fund in which deposits are made at least 
annually, coupled with a surety method, insurance, or other guarantee 
method, the value of which may decrease by the amount being accumulated 
in the sinking fund. An external sinking fund is a fund established and 
maintained by setting aside funds periodically in an account segregated 
from licensee assets and outside the licensee's administrative control 
in which the total amount of funds would be sufficient to pay 
decommissioning costs at the time termination of operation is expected. 
An external sinking fund must be in the form of a trust. If the other 
guarantee method is used, no surety or insurance may be combined with 
the external sinking fund. The surety, insurance, or other guarantee 
provisions must be as stated in paragraph (e)(2) of this section.
* * * * *
    (g) In providing financial assurance under this section, each 
licensee must use the financial assurance funds only for 
decommissioning activities and each licensee must monitor the balance 
of funds held to account for market variations. The licensee must 
replenish the funds, and report such actions to the NRC, as follows:
    (1) If, at the end of a calendar quarter, the fund balance is below 
the amount necessary to cover the cost of decommissioning, but is not 
below 75 percent of the cost, the licensee must increase the balance to 
cover the cost, and must do so within 5 days after the end of the 
calendar quarter.
    (2) If, at any time, the fund balance falls below 75 percent of the 
amount necessary to cover the cost of decommissioning, the licensee 
must increase the balance to cover the cost, and must do so within 5 
days of the occurrence.
    (3) Within 30 days of taking the actions required by paragraphs 
(g)(1) or (g)(2) of this section, the licensee must report such actions 
to the NRC, and state the new balance of the fund.
    25. In Section 72.50, paragraph (b)(3) is added to read as follows:


Sec.  72.50  Transfer of license.

* * * * *
    (b) * * *
    (3) The application shall describe the financial assurance that 
will be provided for the decommissioning of the facility under Sec.  
72.30.
* * * * *

For the Nuclear Regulatory Commission.
    Dated at Rockville, Maryland, this 7th day of January 2008.
Annette Vietti-Cook,
Secretary for the Commission.
[FR Doc. E8-574 Filed 1-18-08; 8:45 am]
BILLING CODE 7590-01-P