[Federal Register Volume 73, Number 203 (Monday, October 20, 2008)]
[Proposed Rules]
[Pages 62220-62224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24897]


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NUCLEAR REGULATORY COMMISSION

10 CFR Part 50

[Docket No. PRM-50-88; NRC-2007-0017]


Thomas E. Magette on Behalf of EnergySolutions, LLC; Notice of 
Denial of Petition for Rulemaking

AGENCY: Nuclear Regulatory Commission.

ACTION: Petition for rulemaking; Denial.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is denying a petition 
for rulemaking submitted by Mr. Thomas E. Magette on behalf of 
EnergySolutions, LLC. The petitioner requested that the NRC's 
regulations governing domestic licensing of production and utilization 
facilities be amended to provide a regulatory framework that would 
allow funds from licensees' decommissioning trust funds to be used for 
the cost of disposal of ``major radioactive components'' (MRCs) that 
have been removed from reactors before the permanent cessation of 
operations.

DATES: The docket for the petition for rulemaking, PRM-50-88, is closed 
on October 20, 2008.

ADDRESSES: You can access publicly available documents related to this 
petition for rulemaking using the following methods:
    Federal e-Rulemaking Portal: Further NRC action on the issues 
raised by this petition will be accessible at the Federal rulemaking 
portal, http://www.regulations.gov, by searching on rulemaking docket 
ID: NRC-2007-0017. Address questions about NRC dockets to Carol 
Gallagher 301-415-5905; e-mail [email protected]. The NRC also 
tracks all rulemaking actions in the ``NRC Regulatory Agenda: 
Semiannual Report (NUREG-0936).''
    NRC's Public Document Room (PDR): The public may examine, and have 
copied for a fee, publicly available documents at the NRC's PDR, Public 
File Area O-1 F21, One White Flint North, 11555 Rockville Pike, 
Rockville, Maryland.
    NRC's Agencywide Document Access and Management System (ADAMS): 
Publicly available documents created or received at the NRC are 
available electronically at the NRC's Electronic Reading Room at http://www.nrc.gov/reading-rm/adams.html. From this page, the public can gain 
entry into ADAMS, which provides text and image files of NRC's public 
documents. If you do not have access to ADAMS or if there are any 
problems in accessing the documents located in ADAMS, contact the NRC 
PDR reference staff at 1-800-387-4209 or 301-415-4737, or by e-mail to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Harry S. Tovmassian, Office of Nuclear 
Reactor Regulation, NRC, Washington, DC 20555-0001, telephone 301-415-
3092, e-mail [email protected], or Steven R. Hom, Office of 
Nuclear Reactor Regulation, NRC, Washington, DC 20555-0001, telephone 
301-415-1537, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

The Petition

    On May 29, 2007, the NRC received a petition for rulemaking filed 
by Mr. Thomas E. Magette on behalf of EnergySolutions, LLC. The 
petitioner requested that the NRC amend its regulations to provide a 
regulatory framework that would allow funds from licensees' 
decommissioning trust funds to be used for the cost of disposal of MRCs 
that have been removed from reactors before the permanent cessation of 
operations. On August 21, 2007 [72 FR 46569], the NRC published a 
notice of receipt of the petition for rulemaking

[[Page 62221]]

and requested public comment. The petitioner stated that this 
rulemaking is needed because current regulations define decommissioning 
in 10 CFR 50.2 as not beginning until the site or facility ceases 
operation, and 10 CFR 50.82(a)(8) only allows withdrawals from 
decommissioning trust funds for decommissioning expenses. The 
petitioner asserted that he believes that such a regulatory framework 
is in the public interest.

Background

    On February 3, 1994 [59 FR 5216], the NRC published in the Federal 
Register a draft policy statement containing, among other things, 
criteria the NRC proposed to follow to respond to requests by licensees 
with permanently shut down plants to withdraw decommissioning trust 
funds before approval of a decommissioning plan submitted under 10 CFR 
50.82. On July 20, 1995 [60 FR 37374], the NRC published proposed 
amendments to the regulations that address decommissioning and license 
termination, incorporating the criteria from the draft policy 
statement. The NRC addressed comments that were received on the draft 
policy statement and proposed rules in the statement of considerations 
for the final rule [61 FR 39293; July 29, 1996]. One of the comments 
(by the Nuclear Energy Institute, joined by two licensees) was that the 
NRC should develop a policy for operating plants on withdrawing 
decommissioning funds, and ``should allow licensees to withdraw 
decommissioning trust funds to dispose of structures and equipment no 
longer being used for operating plants.'' The NRC responded as follows: 
``The NRC has concluded that allowing decommissioning trust fund 
withdrawals for disposals by nuclear power plants that continue to 
operate is not warranted. These activities are more appropriately 
considered operating activities and should be financed in that way.''
    On May 30, 2001 [66 FR 29244], the NRC published proposed 
amendments to 10 CFR 50.75 relating to increased oversight by the NRC 
of decommissioning trusts before decommissioning. One of the proposed 
changes to the rule required that trust agreements must contain a 
provision that disbursements from a trust are restricted to ordinary 
administrative expenses, decommissioning expenses, or transfer to 
another decommissioning funding assurance method until final 
decommissioning has been completed. Because these changes would not 
meet the definition of decommissioning in 10 CFR 50.2, under this 
provision disbursements from a trust could not be used before the start 
of decommissioning to dispose of large components that had been 
replaced at an operating plant. The amendments to the regulation became 
final at the end of 2002.

Discussion

    The EnergySolutions petition raises the following issue: Should the 
NRC undertake a rulemaking that is inconsistent with current Commission 
policies and regulations on the use of decommissioning trust funds 
before decommissioning?
    When the NRC articulated its policy against the use of 
decommissioning trust funds for the disposal of MRCs during operations, 
it did not suggest that MRCs should not, or could not be disposed of 
during operations using other sources of funding. In fact, the NRC 
considered this possibility, and stated that these disposals are 
considered operating activities and should be financed as such.
    The EnergySolutions petition claims that a change in the NRC's 
policy and regulations would yield the following benefits: (1) The 
radioactive source term associated with the contaminated components at 
reactor sites will be reduced; (2) Site workers will be exposed to less 
radiation; (3) Costs to store the MRCs and to provide protection to 
workers can be avoided; (4) The overall costs to decommission will be 
reduced (because the disposal of at least some MRCs will have already 
been completed); and (5) More funds will be available to decommission 
upon permanent cessation of operations.
    While the first four benefits asserted by the petitioner may result 
from the disposal of MRCs, these benefits do not depend upon the origin 
of the funds used to pay for such disposal (and the petition makes no 
such assertion). In other words, the same benefits could be achieved if 
licensees disposed of MRCs using operating revenues, special public 
utility commission collections from ratepayers, or any other sources of 
funds other than decommissioning trust funds. The petition does not 
contain evidence that a reversal of NRC policy and regulations, 
designed to protect decommissioning trust funds so that they will be 
available to complete decommissioning, would ensure that all MRCs will 
in fact be immediately disposed of offsite by all plants, thus 
eliminating the petition's stated concerns. On the contrary, a reversal 
could be expected to increase the likelihood that a shortage of 
decommissioning funds may occur at the time of license expiration, or 
if a plant unexpectedly shuts down early and generates no further 
operating revenues.
    With regard to the fifth asserted benefit, the petitioner 
essentially argues that more funds would be available to decommission 
the reactor upon permanent shutdown because investment returns on a 
trust fund will be less than the inflation of disposal costs; thus, 
licensees should spend funds now. This argument conflicts with the 
basis of the NRC's regulations at 10 CFR 50.75 that permit licensees to 
assume a 2 percent real rate of return earnings credit on 
decommissioning trust fund balances, which about 75 percent of plants 
use to meet minimum decommissioning funding assurance requirements. 
Allowing licensees to assume a 2 percent real rate of return presumes 
that over time, trust fund earnings after taxes will exceed the 
inflation of decommissioning costs, which include disposal costs, by a 
net 2 percent. To accept the petition's argument would require the NRC 
to accept the argument's premise that investment returns would not keep 
up with inflation. If this were the case, the NRC would need to rescind 
or at least scale back the regulatory earnings credit (lacking the 
original basis), for which there is no basis at this time.
    The petitioner raised several other observations in support of the 
proposed rulemaking. First, the petition states that a ``blanket 
prohibition on the use of decommissioning trust funds to dispose of 
[MRCs] is unnecessary to achieve the underlying purpose of the rule.'' 
The NRC has never issued a blanket prohibition against seeking an 
exemption from the provisions of 10 CFR 50.75 or 50.82. However, the 
NRC views decommissioning funding assurance policies and rules as of 
the utmost importance in ensuring that there will be sufficient funds 
to decommission a reactor upon permanent cessation of operations. 
Accordingly, the NRC expects that there would have to be extraordinary 
circumstances before any exemption request to withdraw funds early 
would be granted, particularly if there is no demonstration that there 
are no other sources of funds available to licensees to dispose of MRCs 
while a plant is operating.
    Second, the petitioner states that granting the petition would 
avoid a conflict with the NRC's ``philosophy'' underlying other rules 
governing materials sites to remove source terms from unused portions 
of operating materials sites. Thus, the NRC should not ``create 
economic barriers'' to

[[Page 62222]]

prevent reactor licensees from disposing of MRCs during operations. 
While the petition's assertion that ``experience with non-reactor 
decommissioning sites indicates that clean-up costs can escalate 
significantly when unmanaged contamination is left on-site for long 
periods of time'' may be valid, the petition deals with reactor sites 
and MRCs that are of a different nature than many materials that may be 
able to migrate into the ground if ``unmanaged.'' The petition 
acknowledges that current Commission regulations and policy allow the 
SAFSTOR option for reactors (i.e., the facility is maintained and 
monitored to allow decay of radioactivity, after which it is 
decommissioned), and that ``reactor licensees are not subject to'' the 
same rules governing materials licensees. Thus, any ``conflict'' with a 
so-called philosophy that may apply to a different category of 
licensees because they have characteristics distinguishable from 
reactor licensees warrants limited consideration here, particularly 
when licensees are free to use non-decommissioning trust funds to 
dispose of MRCs.
    Third, the petitioner states that the proposed amendment to 10 CFR 
50.82 does not depend on the adequacy of the minimum formula amount 
calculated under 10 CFR 50.75. The petition states that the NRC's 
Inspector General and the Government Accountability Office have raised 
questions concerning the sufficiency of formula decommissioning cost 
estimates and funding assurance based on them. These questions, 
according to the petition, should not affect consideration of the 
proposed amendment because the proposal would require site-specific, 
rather than formula, cost estimates for the staff's analysis of a 
withdrawal request. However, even site-specific estimates become 
inherently more unreliable the further they are done from permanent 
shutdown. (The earliest a licensee must perform any type of site-
specific decommissioning cost estimate under current NRC regulations is 
five years from permanent shutdown.) Therefore, cost estimate 
reliability issues are not rendered moot simply because the proposal 
would require an analysis based on a site-specific cost estimate versus 
a formula cost estimate.
    Fourth, the petition states that granting the petition would 
prevent unnecessary regulatory burdens. The petition blames the current 
policy restricting the use of decommissioning trust funds for causing 
some licensees to spend funds to build storage structures to house 
MRCs, maintain them, and monitor releases. Also, these structures 
purportedly take up limited space. The petition notes that ``in many 
cases licensees commingle'' radiological decommissioning funds with 
other funds, and states that preventing the use of the funds ``solely 
because they are commingled creates an unnecessary regulatory burden as 
it does not have a corresponding safety benefit if the licensee has 
sufficient funds in its decommissioning trust funds to meet the 
provisions of'' 10 CFR 50.82(a)(8)(i)(B) and (C). As discussed earlier, 
determining whether a licensee has sufficient funds to meet those 
provisions of 10 CFR 50.82, which are proposed by the petition to be 
the criteria to judge whether decommissioning funds should be released, 
becomes much more speculative the further from permanent shutdown a 
plant is. Whatever test might be used to gauge whether disbursements 
from a decommissioning trust should be allowed, the issue would not be 
before the NRC if licensees who desired to withdraw funds for MRC 
disposal had sub-accounts or established specific accounting that 
certain funds were earmarked for such purpose and were not relied upon 
to meet decommissioning funding assurance regulations. In connection 
with the 2002 final rule amending 10 CFR 50.75 regarding 
decommissioning trust provisions (which, among other things, confirmed 
the limitations on the use of decommissioning trust funds), the 
Commission stated that commingling of trust funds is not objectionable 
``as long as the licensees are able to provide a separate accounting 
showing the amount of funds earmarked'' for other uses not subsumed 
under the NRC's definition of decommissioning, [See 67 FR 78339; 
December 24, 2002]. The notion of licensees establishing sub-accounts 
``that clearly delineate the purpose of the sub-account'' was discussed 
as early as 1996 in an advance notice of proposed rulemaking [See 61 FR 
15427, footnote 2; April 8, 1996]. If minimum required amounts are 
maintained for radiological decommissioning, sub-accounts for other 
activities are not prohibited by the NRC, [See 61 FR 39285; July 29, 
1996]. Thus, licensees have had full notice that sub-accounts for the 
disposal of MRCs during operations could be established as long as 
decommissioning funding assurance requirements are met. In view of the 
foregoing, the NRC believes that licensees have had alternatives to 
address funding the disposal of MRCs during operations, and that the 
argument that current policy poses ``unnecessary regulatory burdens'' 
is not compelling.
    Notwithstanding the arguments contained in the petition, the NRC 
believes that existing policy and rules continue to be sound. However, 
the NRC takes this opportunity to note that it has been and will 
continue to entertain very limited exceptions, as appropriate. Under 10 
CFR 50.12, a licensee can request an exemption from 10 CFR 50.82(a)(8) 
to use decommissioning trust funds to dispose of MRCs before 
decommissioning, which the NRC will review on a case-by-case basis in 
extraordinary circumstances.
    The NRC believes there would be no practical difference between the 
showings necessary under an exemption request and those showings that 
would be necessary under the petition's proposed rule. Exemptions are 
decided on a case-by-case basis. Under the rule proposed by the 
petition, the NRC would also have to make decisions whether to approve 
withdrawals on a case-by-case basis. In both situations, the NRC would 
have to factor in, among other things, site specific costs, individual 
trust balances and the prospect of future contributions, market and 
cost fluctuations, years left to operate, and any other considerations 
that might bear on the likelihood of a licensee being able to make up 
shortfalls in assured decommissioning funds, such as operational issues 
that could affect anticipated revenues. Because the NRC does not 
believe there would be significant processing distinctions between the 
existing exemption regime and the petition's, there is no processing 
advantage weighing in favor of the rulemaking proposed by the petition.

Public Comments

    The notice of receipt of the petition for rulemaking invited 
interested persons to submit their comments. Six public comments were 
filed in response to the petition within the public comment period. 
Licensees submitted four comments, the Nuclear Energy Institute 
submitted one comment, and Talisman International, LLC, which employs 
one or more individuals who represent EnergySolutions, submitted one 
comment. All of the comments were supportive of the petition. On June 
20, 2008, a seventh public comment was received from Mr. Barry T. 
Smitherman, Chairman, Public Utility Commission of Texas, commenting on 
his own behalf. Although this comment was received after the close of 
the public comment period, the NRC reviewed the letter and finds that 
it raises no issues that have not been previously considered by the

[[Page 62223]]

Commission and that no further resolution is called for.
    1. Comment: One commenter stated that the proposed rule change 
would provide ``reactor licensees the needed flexibility'' to use 
decommissioning trust funds to dispose of MRCs. Another commenter 
stated that the needed flexibility would provide a framework ``that 
would allow the NRC on a case-by-case basis to authorize the use of 
[decommissioning trust funds] for the disposal of MRCs prior to the 
cessation of reactor operations * * *.''
    NRC Response: The NRC already has a framework in place at 10 CFR 
50.12 to permit, on a case-by-case basis, some limited flexibility 
regarding the use of decommissioning trust funds to dispose of MRCs 
during operations.
    2. Comment: A commenter opined that the current rule [10 CFR 50.82] 
poses an unreasonable burden not accompanied by any benefit. The 
financial burden to construct and maintain storage facilities to house 
MRCs until the cessation of operations could be avoided according to a 
commenter.
    NRC Response: There is a significant benefit to restricting the use 
of decommissioning trust funds for MRC disposals, namely to ensure that 
there are enough funds to decommission a reactor shut down permanently 
either at the end of its licensed life or any time before that date for 
reasons unforeseen today. Furthermore, there are sources of funds other 
than decommissioning trust funds to dispose of MRCs. Any burdens from 
constructing and maintaining storage facilities can be avoided at the 
licensee's option by using operating funds to dispose of MRCs, or for 
regulated licensees by using assessments properly accounted for from 
rate regulators who approve the use of ratepayer funds to dispose of 
MRCs.
    3. Comment: One commenter stated that granting the petitioner's 
proposal would facilitate the disposal of MRCs.
    NRC Response: Nothing in the NRC's regulations prohibits licensees 
from disposing of MRC's before the cessation of operations using non-
decommissioning funds. These non-decommissioning funds would facilitate 
the disposal of MRCs similar to the use of decommissioning trust funds, 
but without creating the additional risk that reduced decommissioning 
trust funds will be insufficient.
    4. Comment: One commenter stated that the removal of MRCs before 
decommissioning is cost-effective, delaying the use of decommissioning 
funds or delaying disposal could result in higher costs and less funds 
available at decommissioning.
    NRC Response: As discussed before, the NRC's rules are based on an 
assumption that investment earnings from decommissioning trust funds 
left intact will surpass the inflation of decommissioning costs in the 
long run. Licensees may use other funds to dispose of MRCs if they 
believe current disposal costs warrant and there will be insufficient 
decommissioning funds available at decommissioning.
    5. Comment: One commenter stated that one of the reasons that 
disposing of these components is in the interest of his ``Company, its 
customers, and the public'' is that the source term for the site would 
be reduced.
    NRC Response: Any reduction in the source term due to the removal 
of MRC's would not depend upon the origin of the funds used to 
accomplish the removal. This argument does not support the petition's 
proposal for NRC to amend its regulations.
    6. Comment: One commenter stated that licensees take all measures 
necessary to protect public health and safety and the environment and 
will continue to do so, notwithstanding leaving MRCs onsite.
    NRC Response: This comment was made in response to the petition's 
assertion that leaving MRCs onsite ``can give rise to adverse 
environmental impacts if not properly managed.'' The NRC has not found 
that storing MRCs onsite creates a health and safety issue that can 
only be resolved by the immediate removal of MRCs. If it does create a 
health and safety issue, the Commission will address this issue 
directly, rather than by reversing financial policy that may or may not 
result in the actual disposal of MRCs.
    7. Comment: Some commenters cited the burden placed on licensees to 
develop and submit exemption requests, and on the NRC staff to process 
them as problematic. They believe that the proposal provides a 
standardized approach which presumably would be less burdensome.
    NRC Response: The NRC would not anticipate any reduction in burden 
on licensees or the staff under the petitioner's proposal. Any request 
to withdraw funds, whether under 10 CFR 50.12 or 10 CFR 50.82 as 
proposed to be amended, would have to be submitted and decided on a 
case-by-case basis and would not be susceptible to generic processing.
    8. Comment: A commenter stated that the petition, if granted, would 
provide an opportunity to obtain rate regulator views.
    NRC Response: The requirement that licensees provide copies of 
withdrawal requests to rate regulators would be of value if these 
regulators actually provided their views, particularly because they, 
and not the NRC, are principally responsible for economic matters 
affecting licensees.
    9. Comment: A commenter stated that current regulations do not 
consider that MRCs would need to be replaced during operations and do 
not address the significant burden on licensees to store MRCs until 
decommissioning.
    NRC Response: The 1996 statement of considerations [61 FR 39293; 
July 29, 1996], discussing a comment that the NRC ``should allow 
licensees to withdraw decommissioning trust funds to dispose of 
structures and equipment no longer being used for operating plants,'' 
cited by the petition itself, clearly demonstrates that the Commission 
was aware that some MRCs would need to be replaced during operations. 
Whether current regulations address the purported ``significant burden 
on licensees to store MRCs'' is of no bearing, because regulations do 
not require such storage, and licensees have never asserted that they 
are financially incapable of disposing of MRCs during operations 
without withdrawing decommissioning trust funds.
    10. Comment: One commenter stated that licensees with at least 20 
years remaining on their licenses should be able to use decommissioning 
trust funds for the disposal of MRCs before decommissioning (without 
specific NRC approval) upon providing notice to the NRC with a copy to 
the rate regulator and providing an estimate of the costs for the 
disposal. The commenter asserted that there will be ample time to 
accumulate funds and early disposal will allow more funds to be 
available in the future.
    NRC Response: This ``comment'' is actually a proposal that goes 
beyond the proposal made by the petition. The key feature is that no 
NRC approval would be required. A major necessary assumption underlying 
the comment is that any plant with at least 20 years left to operate 
would continue to do so notwithstanding the possibility of a crippling 
accident or adverse economic conditions, and continue to be able to 
accumulate funds. This comment is outside the scope of the petition's 
proposal, and therefore is accorded no further consideration.

Reason for Denial

    The NRC concludes that the arguments made by the petitioner and the 
commenters are not sufficiently

[[Page 62224]]

persuasive to support the proposed rulemaking. The NRC's policy on not 
using decommissioning trust funds for the early disposal of MRCs during 
operations is prudent and necessary generically to preserve and protect 
such funds. Other sources of funds can be used to dispose of MRCs 
during operations. Furthermore, under 10 CFR 50.12, licensees may 
request an exemption to permit withdrawal of decommissioning trust 
funds to dispose of MRC's, which will be reviewed on a case-by-case 
basis in extraordinary circumstances. Therefore, the Commission denies 
PRM-50-88 filed by EnergySolutions.

    For the Nuclear Regulatory Commission.

    Dated at Rockville, Maryland, this 3rd day of October, 2008.
Bruce S. Mallett,
Acting Executive Director for Operations.
 [FR Doc. E8-24897 Filed 10-17-08; 8:45 am]
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