[Federal Register Volume 78, Number 217 (Friday, November 8, 2013)]
[Proposed Rules]
[Pages 67225-67252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-25617]


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NUCLEAR REGULATORY COMMISSION

10 CFR Parts 40, 70, 72, 74, and 150

[NRC-2009-0096]
RIN 3150-AI61


Amendments to Material Control and Accounting Regulations

AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

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SUMMARY: The U.S. Nuclear Regulatory Commission (NRC) is proposing to 
amend its regulations for material control and accounting (MC&A) of 
special nuclear material (SNM). The goal of this rulemaking is to 
revise and consolidate the MC&A requirements in order to update, 
clarify, and strengthen them. The proposed amendments add new 
requirements that would apply to NRC licensees who are authorized to 
possess SNM in a quantity greater than 350 grams.

DATES: Submit comments on the rule by February 18, 2014. Submit 
comments specific to the information collections aspects of this rule 
by December 9, 2013. Comments received after these dates will be 
considered if it is practical to do so, but the NRC is able to assure 
consideration only for comments received on or before these dates.

ADDRESSES: You may submit comments by any of the following methods 
(unless this document describes a different method for submitting 
comments on a specific subject):
     Federal Rulemaking Web site: Go to http://www.regulations.gov and search for Docket ID NRC-2009-0096. Address 
questions about NRC dockets to Carol Gallagher; telephone: 301-287-
3422; email: [email protected]. For technical questions, contact 
the individual listed in the FOR FURTHER INFORMATION CONTACT section of 
this document.
     Email comments to: [email protected]. If you do 
not receive an automatic email reply confirming receipt, then contact 
us at 301-415-1677.
     Fax comments to: Secretary, U.S. Nuclear Regulatory 
Commission at 301-415-1101.
     Mail comments to: Secretary, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001, ATTN: Rulemakings and 
Adjudications Staff.
     Hand deliver comments to: 11555 Rockville Pike, Rockville, 
Maryland 20852, between 7:30 a.m. and 4:15 p.m. (Eastern Time) Federal 
workdays; telephone: 301-415-1677.
    For additional direction on accessing information and submitting 
comments, see ``Accessing Information and Submitting Comments'' in the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Thomas Young, Office of Federal and 
State Materials and Environmental Management Programs, U.S. Nuclear 
Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-
5795, email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Accessing Information and Submitting Comments
II. Introduction and Summary of Proposed Revisions to MC&A 
Regulations
III. Specific Request for Comments on the Proposed New Requirements
IV. Discussion
    A. Whom would this action affect?
    B. Why are the requirements being revised?
    C. When would these actions become effective?
    D. How does the NRC use a graded approach for MC&A?
    E. What are the changes to the general performance objectives?
    F. Are sealed sources included in the general performance 
requirements for Category II and III facilities?
    G. Why would newly defined terms be added to 10 CFR 74.4?
    H. Why would the term, ``effective kilograms of special nuclear 
material,'' be removed from 10 CFR part 74?
    I. Why would appendix A to 10 CFR part 74 be added?
    J. Why would references to the MC&A ``system'' be changed to the 
MC&A ``program,'' and why would ``MC&A plan'' replace ``FNMC plan?''
    K. What would change in the reporting requirements to the NMMSS, 
including those that ISFSIs are subject to?
    L. Is a two-person rule included as part of this proposed rule?
    M. Why would requirements be added to designate material balance 
areas, item control areas, and custodians?
    N. Why would calendar days be inserted into 10 CFR part 74?
    O. Would the implementation guidance documents be updated for 
the MC&A program?
    P. Would there be changes for item controls or physical 
inventories?
    Q. Why would an exception be added to 10 CFR 74.15(b)(2)?
    R. Are there any cumulative effects of regulation associated 
with this rule?
    S. What should I consider as I prepare my comments to the NRC?
V. Discussion of Proposed Amendments by Section
VI. Availability of Documents
VII. Criminal Penalties
VIII. Agreement State Compatibility
IX. Plain Writing
X. Voluntary Consensus Standards
XI. Environmental Assessment and Finding of No Significant 
Environmental Impact: Availability
XII. Paperwork Reduction Act Statement
XIII. Regulatory Analysis
XIV. Regulatory Flexibility Certification
XV. Backfitting and Issue Finality

[[Page 67226]]

I. Accessing Information and Submitting Comments

A. Accessing Information

    Please refer to Docket ID NRC-2009-0096 when contacting the NRC 
about the availability of information for this proposed rule. You may 
access publicly available information related to this proposed rule by 
any of the following methods:
     Federal Rulemaking Web site: Go to http://www.regulations.gov and search for Docket ID NRC-2009-0096.
     NRC's Agencywide Documents Access and Management System 
(ADAMS): You may access publicly available documents online in the NRC 
Library at http://www.nrc.gov/reading-rm/adams.html. To begin the 
search, select ``ADAMS Public Documents'' and then select ``Begin Web-
based ADAMS Search.'' For problems with ADAMS, please contact the NRC's 
Public Document Room (PDR) reference staff at 1-800-397-4209, 301-415-
4737, or by email to [email protected]. The ADAMS accession number 
for each document referenced in this document (if that document is 
available in ADAMS) is provided the first time that a document is 
referenced. In addition, for the convenience of the reader, the ADAMS 
accession numbers are provided in a table in the section of this 
document entitled, ``Availability of Documents.''
     NRC's PDR: You may examine and purchase copies of public 
documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 
Rockville Pike, Rockville, Maryland 20852.

B. Submitting Comments

    Please include Docket ID NRC-2009-0096 in the subject line of your 
comment submission, in order to ensure that the NRC is able to make 
your comment submission available to the public in this docket.
    The NRC cautions you not to include identifying or contact 
information that you do not want to be publicly disclosed in your 
comment submission. The NRC will post all comment submissions at http://www.regulations.gov as well as enter the comment submissions into 
ADAMS. The NRC does not routinely edit comment submissions to remove 
identifying or contact information.
    If you are requesting or aggregating comments from other persons 
for submission to the NRC, then you should inform those persons not to 
include identifying or contact information that they do not want to be 
publicly disclosed in their comment submission. Your request should 
state that the NRC does not routinely edit comment submissions to 
remove such information before making the comment submissions available 
to the public or entering the comment submissions into ADAMS.

II. Introduction and Summary of Proposed Revisions to MC&A Regulations

    The NRC's regulations specify requirements for control and 
accounting of SNM that is held by a licensee. The MC&A regulations 
ensure that the information about SNM is accurate, authentic, and 
sufficiently detailed to enable a licensee to maintain current 
knowledge of its SNM and manage its program for securing and protecting 
SNM. The MC&A, together with physical protection of facilities and 
information security requirements, make up the primary elements of the 
NRC's SNM safeguards program. The MC&A component of the larger 
safeguards program helps ensure that SNM within a fuel cycle facility 
is not stolen or otherwise diverted from the facility and promotes the 
NRC's strategic goal of maintaining adequate protection over the use 
and management of radioactive materials.
    The MC&A requirements for an independent spent fuel storage 
installation (ISFSI) would be consolidated with MC&A regulations 
applicable to other types of facilities authorized to possess SNM. 
General performance objectives (GPOs) would be made applicable to an 
additional set of NRC licensees who are authorized to possess more than 
350 grams of SNM. Some current exemptions in the MC&A regulations would 
be removed or modified to strengthen the requirements, and defined 
terms would be added to clarify the regulations. Plain language 
revisions would also be made. Guidance documents would be updated as 
necessary to reflect these proposed changes. Concurrently with this 
proposed rule, in this issue of the Federal Register, the NRC published 
a document (NRC-2013-0195) requesting comment on the following draft 
NUREGs: NUREG-1280, Revision 2, ``Acceptable Standard Format and 
Content for the Material Control and Accounting (MC&A) Plan Required 
for Strategic Special Nuclear Material;'' NUREG-2159, ``Acceptable 
Standard Format and Content for the Material Control and Accounting 
(MC&A) Plan Required for Special Nuclear Material of Moderate Strategic 
Significance;'' NUREG-1065, Revision 3, ``Acceptable Standard Format 
and Content for the Material Control and Accounting (MC&A) Plan 
Required for Special Nuclear Material of Low Strategic Significance;'' 
NUREG-2158 (formerly NUREG/CR-5734), ``Acceptable Standard Format and 
Content for the Material Control and Accounting (MC&A) Plan Required 
for Low Enriched Uranium Enrichment Facilities;'' and NUREG/BR-0096, 
Revision 2, ``Instructions and Guidance for Completing Physical 
Inventory Summary Reports.''
    The NRC seeks input on several specific aspects of the proposed 
rule, including the appropriate threshold amount of SNM on which item 
control requirements should be imposed. With respect to these and other 
proposed requirements that go beyond consolidation and clarification of 
existing requirements, the NRC seeks input on the need for the 
requirements in relation to the proportionate levels of risk 
represented by the processes and material quantities and forms that are 
used at different types of licensee facilities. The NRC also seeks 
input on whether there are less burdensome alternatives to the proposed 
requirements that would still ensure the adequate control and accurate 
accounting of SNM.
    In a future rulemaking, the NRC will consider a two-person rule to 
verify the accuracy of MC&A information within a fuel cycle facility. 
Interested stakeholders will then have the opportunity to comment 
regarding a two-person rule.
    The NRC plans to amend Title 10 of the Code of Federal Regulations 
(10 CFR) to consolidate the MC&A provisions in 10 CFR part 74. 
Conforming changes would be made to 10 CFR parts 40, 70, 72 and 150. 
The changes are intended to update, clarify, and strengthen MC&A 
requirements.
    The existing 10 CFR part 74 regulations contain subparts A through 
F, and the MC&A requirements are organized in a graded fashion with 
subpart E containing the most rigorous set of MC&A requirements. 
General MC&A reporting and recordkeeping requirements in subpart B 
apply to all materials licensees authorized to possess SNM under 10 CFR 
part 70, reactor licensees under 10 CFR parts 50 or 52, and ISFSI 
licensees under 10 CFR part 72. Licensees authorized to possess SNM of 
``low strategic significance'' (defined in 10 CFR 74.4) are subject to 
the more rigorous MC&A requirements in subpart C. Such licensees 
operate what are known as Category III facilities, which include 
licensed uranium enrichment facilities and the three fuel fabrication 
facilities supplying fresh fuel assemblies (containing low enriched 
uranium) to commercial power reactors.

[[Page 67227]]

Licensees authorized to possess SNM of ``moderate strategic 
significance'' (defined in 10 CFR 74.4) are subject to the MC&A 
requirements in subpart D, and are authorized to operate Category II 
facilities (no such facilities currently operate). The most rigorous 
MC&A requirements are in subpart E, and apply to licensees authorized 
to possess a ``formula quantity'' (defined in 10 CFR 74.4) of strategic 
special nuclear material (SSNM). Such 10 CFR part 70 licensees operate 
what are known as Category I facilities. Only two such facilities now 
operate, and they fabricate fuel (containing high enriched uranium) for 
use by the U.S. Navy and in research and test reactors. One potential 
Category I facility may operate in the future as a mixed oxide fuel 
fabrication facility.
    Table 1 shows the location of the proposed MC&A requirements within 
10 CFR part 74 and the types of facilities that are licensed to possess 
SNM. A list of specific questions about the proposed requirements is 
provided in Section III of this document.

                                     Table 1--Location of Proposed MC&A Requirements for Certain Types of Facilities
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                                                                  Location in proposed 10 CFR part 74 by type of facility
                                 -----------------------------------------------------------------------------------------------------------------------
                                                       Subparts A and B
         New requirement         ------------------------------------------------------------
                                    Part 70 license                                                Subpart C           Subpart D           Subpart E
                                   authorizing > 350     Part 50 or 52       Part 72 ISFSI
                                         grams         reactor facility
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                                                  Part 70 Fuel Cycle Facility
                                                                                             -----------------------------------------------------------
                                                                                                 Category III         Category II         Category I
                                                                                             -----------------------------------------------------------
General performance objectives..                             74.3                             modified the        modified the        modified the
                                                                                               existing            existing            existing
                                                                                               requirements in     requirement in      requirement in
                                                                                               74.31(a) and        74.41(a) to refer   74.51(a) to refer
                                                                                               74.33(a) to refer   to 74.3.            to 74.3 and
                                                                                               to 74.3; retained                       retain unique
                                                                                               the unique                              performance
                                                                                               performance                             objectives
                                                                                               objectives in                           74.51(a).
                                                                                               74.33(a) for an
                                                                                               enrichment
                                                                                               facility.
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Item control system.............  no requirement....                 74.19(d)                 modified the        modified the        no modification
                                                                                               existing            existing            would be needed
                                                                                               requirements in     requirement in      for existing
                                                                                               74.31(c)(6) and     74.43(b)(5) to     74.55, Item
                                                                                               74.33(c)(6) to      remove some         Monitoring.
                                                                                               remove some         exemptions.
                                                                                               exemptions.
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Tamper-safing of containers or                          no requirement                        74.31(c)(9).......  clarified the       clarified the
 vaults.                                                                                      74.33(c)(9).......   existing            existing
                                                                                                                   requirement in      requirement in
                                                                                                                   74.43(c)(3).        74.59(f)(2)(i).
--------------------------------------------------------------------------------------------------------------------------------------------------------
MBA/ICA and custodians..........                        no requirement                        74.31(c)(10)......  74.43(c)(9).......  74.59(h)(5).
                                                                                              74.33(c)(10)......
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In 2008, the NRC developed an MC&A rulemaking plan (SECY-08-0059, 
Rulemaking Plan: Part 74--Material Control and Accounting of Special 
Nuclear Material, ADAMS Accession No. ML080580307) and submitted it to 
the Commission for its consideration. In accordance with the 
Commission's approval of the rulemaking plan's Option 4 in the Staff 
Requirements Memorandum (SRM) for SECY-08-0059 (ADAMS Accession No. 
ML090360473), various changes would be made to 10 CFR part 74. The 
considerations on which this rulemaking action are based, and the 
proposed substantive changes to the MC&A requirements, may be 
summarized as follows:
General Performance Objectives
    The existing GPO requirements are set forth for each type of 
facility in 10 CFR 74.31(a), 74.33(a), 74.41(a), and 74.51(a). Building 
on these existing GPOs, the NRC proposes to list five GPOs in a new 10 
CFR 74.3 that would apply to all licensees authorized to possess more 
than 350 grams of SNM--a set of licensees that includes power reactors 
and ISFSIs. The 10 CFR 74.3 GPOs would largely replace the existing 
GPOs for Category I, II, and III facilities. Some GPOs that are unique 
to the Category III enrichment facilities, and to the Category I fuel 
fabrication facilities, would remain in revised 10 CFR 74.33(a) and 
74.51(a), respectively. The NRC does not expect that Category I, II, 
and III licensees would need to alter their MC&A programs in response 
to the 10 CFR 74.3 GPOs, because these GPOs are similar to the existing 
GPOs.
    Proposed 10 CFR 74.3(e) would require that information related to 
MC&A be stored in a locked file cabinet or office.
    Licensees authorized to possess 350 grams of SNM or less would not 
be made subject to the GPO requirements, because such licensees are not 
required to implement a formal MC&A program. These licensees are 
subject to the existing reporting requirements in 10 CFR 74.11, 74.13, 
and 74.15, which are applicable to licensees authorized to possess 1 
gram or more of SNM. Agreement State licensees are similarly subject to 
the corresponding reporting requirements in 10 CFR 150.16 and 150.17.
Item Control System
    Existing subparts C and D of 10 CFR part 74 contain item control 
provisions applicable to Category III and II facilities, respectively, 
that would be modified. The NRC additionally proposes to add clarifying 
definitions of two related terms to 10 CFR 74.4. Item

[[Page 67228]]

control system would be defined as a system for tracking the creation, 
identity, element and isotopic content, location, and disposition of 
all items, which would enable the licensee to maintain current 
knowledge of each item in its possession. Item control area (ICA) would 
be defined as a designated administrative area within the controlled 
access area, in which SNM would be maintained in such a way that, at 
any time, a count of the items and the related material quantities can 
be obtained using the accounting system. Control of items moving into, 
out of, and within an ICA would be indicated by the identity of an item 
and its assigned material quantity.
    As is the case for the GPO requirements previously discussed, 
licensees authorized to possess 350 grams of SNM or less would not be 
subject to item control requirements. Starting in 2009, such licensees 
were required to submit material balance and physical inventory reports 
on an annual basis under 10 CFR 74.13 (or 10 CFR 150.17 for Agreement 
State licensees). As there have been no reports of lost SNM items from 
these licensees, the NRC's view is that imposing item control 
requirements on them is not necessary.
    In a new 10 CFR 74.19(d), the NRC is proposing to expand the 
requirement to establish an item control system to include reactor 
facilities licensed under 10 CFR part 50 or 52, and ISFSIs licensed 
under 10 CFR part 72. This requirement is consistent with guidance 
developed for the reactor industry by the American National Standards 
Institute (ANSI) in ANSI N15.8 (``Methods of Nuclear Material Control--
Material Control Systems--Special Nuclear Material Control and 
Accounting Systems for Nuclear Power Plants''), dated February 18, 
2009. In June 2013, the NRC published Regulatory Guide (RG) 5.29, 
``Nuclear Material Control Systems for Nuclear Power Plants'' (Revision 
2), which endorses use of the ANSI N15.8 guidance. Requiring item 
control systems at reactors and ISFSIs would ensure that SNM is 
adequately accounted for at these sites.
    Licensed Category III fuel fabrication and uranium enrichment 
facilities are already subject to item control requirements under 10 
CFR 74.31(c)(6) and 74.33(c)(6), respectively. Similarly, licensees of 
Category II facilities are subject to item control requirements under 
10 CFR 74.43(b)(6). These requirements are being modified, in part, by 
removing the exemption provisions for items existing for less than 14 
days. These exemptions date from when most facilities did not have, as 
part of their MC&A programs, automated tracking systems and computer-
based accounting systems to help track SNM items. Today, licensees have 
the ability to track items immediately upon creation instead of waiting 
for hand-written ledgers to be updated. Removing these exemptions will 
require tracking of items that could contain large quantities of SNM 
but are not now subject to a facility's item control system.
    The 10 CFR 74.31(c)(6) and 74.33(c)(6) requirements would further 
be modified by removing the exemptions for individual items containing 
less than 500 grams of uranium-235, which may contain up to a 
cumulative total of 50 kilograms of uranium-235. Similarly, for a 
Category II facility, the exemption (in 10 CFR 74.43(b)(6)) for 
individual items containing less than 200 grams of plutonium or 
uranium-233; or 300 grams or more of uranium-235 up to a cumulative 
total of one formula kilogram of strategic SNM; or 17 kilograms of 
uranium-235 contained in uranium enriched to 10 percent or more but 
less than 20 percent in the uranium-235 isotope, would be removed. By 
not allowing large quantities of SNM to be exempt from a Category II or 
Category III facility's item control system, a more complete and 
comprehensive inventory would be achieved. Further, since all licensees 
are required by existing 10 CFR 74.11 to report the loss of 1 gram or 
more of SNM, removing these item control exemptions increases the 
internal consistency of the MC&A requirements.
    Category I facilities are subject to the item monitoring 
requirements in 10 CFR 74.55, which are not being changed in this 
rulemaking. Consistent with the present graded approach, these subpart 
E item monitoring requirements are part of the more stringent MC&A 
program that applies to Category I facilities. Item monitoring differs 
significantly from item control. As compared to the item control 
requirements applicable to Category II and III facilities, the item 
monitoring requirements in 10 CFR 74.55 are more stringent and rigorous 
with respect to the scope of item test frequencies, statistical 
sampling plans, and detection limits. The NRC has found no problems 
with the item monitoring programs used by Category I licensees, and 
therefore no changes to 10 CFR 74.55 are proposed.
Tamper-Safing
    The NRC proposes to strengthen the existing MC&A requirements 
related to tamper-safing containers and vaults that contain SNM. The 
term tamper-safing would be defined as the use of devices on containers 
or vaults in a manner and at a time that ensures a clear indication of 
any violation of the integrity of previously made measurements of SNM 
within the container or vault.
    Category I and II facilities are required to follow tamper-safing 
requirements by existing 10 CFR 74.59(f)(2)(i) and 10 CFR 74.43(c)(3), 
respectively. By adding 10 CFR 74.31(c)(9) and 74.33(c)(9), the NRC 
proposes to make tamper-safing requirements applicable to licensed 
Category III fuel fabrication and uranium enrichment facilities as 
well. Such licensees would be required to develop tamper-safing 
procedures and use tamper-safing devices on containers or vaults 
holding SNM. These procedures must ``include control of access to, and 
distribution of, unused seals and records.'' The quoted language is 
part of existing 10 CFR 74.43(c)(3), and would be added to existing 10 
CFR 74.59(f)(2)(i) so that the tamper-safing requirements in subparts 
C, D, and E of 10 CFR part 74 would be similarly worded. As the intent 
of the tamper-safing requirement remains the same, the changes in 
wording are not expected to affect the MC&A programs at Category I and 
II facilities.
    The proposed 10 CFR 74.31(c)(9) and 74.33(c)(9) would incorporate 
as requirements common practices and procedures already used at 
Category III facilities, and would supplement and strengthen their 
existing SNM item control and inventory programs that help to protect 
against the unauthorized and unrecorded removal of SNM. All Category 
III facilities routinely tamper-safe containers of SNM, so this 
regulatory change is not expected to be a burden for the affected 
licensees.
    The use of tamper-safing procedures would not be required at other 
types of NRC-licensed facilities, since SNM at such facilities is 
generally not in forms where tamper-safing seals can be applied. At 
reactors, for example, fuel assemblies are not amenable to tamper-
safing because the fuel assemblies are not stored in containers where 
unauthorized opening of a container could be detected with a tamper-
safing device. Containers for spent fuel at ISFSIs are welded shut and 
are sufficiently difficult to open that tamper-safing is not required. 
At facilities where only sealed sources are used (e.g., at industrial, 
academic, and research facilities authorized to possess 350 grams or 
less of SNM), tamper-safing is not required because the manner in which 
the sealed sources are manufactured and sealed adequately prevents 
removal of the SNM.

[[Page 67229]]

Material Balance Areas, Item Control Areas, and Custodians
    As previously discussed, the NRC proposes to add a definition of an 
ICA to 10 CFR 74.4. Similarly, the NRC proposes to add a definition of 
an MBA to 10 CFR 74.4. The term material balance area would be defined 
as a designated contiguous area in which the control of SNM is such 
that the quantity of material being moved into, out of, and within the 
MBA is an assigned value based on measurements of both the element 
content and the isotopic content, if known.
    The proposed rule adds requirements that all Category I, II, and 
III licensees must designate ICAs and MBAs at their facilities, and 
identify custodians who would be responsible for monitoring these 
areas. The proposed requirements are set forth in 10 CFR 74.59(h)(5), 
74.43(c)(9), 74.31(c)(10), and 74.33(c)(10). These required areas form 
the basis for nuclear material accounting and control of all SNM within 
a Category I, II, or III facility's boundaries, and these new 
requirements are expected to enhance the capability of licensees to 
detect the unauthorized removal of SNM. In general, smaller accounting 
areas make control of SNM easier, and reduce the size of the area in 
which detected losses of SNM can be attributed.
    All Category I and III facilities (there are no operating Category 
II facilities) are voluntarily using MBAs and ICAs and have designated 
custodians assigned to them, so these proposed regulations are not 
expected to result in significant operating changes.
    The rule change would require future facilities to follow this best 
practice for ensuring that timely and accurate information is kept 
within a designated area to adequately account for and control SNM.
    Licensees at other types of NRC-licensed facilities do not use 
complex processing operations involving large quantities of SNM in 
multiple forms and their operations do not involve moving SNM 
frequently throughout the facility. Accordingly, the NRC is proposing 
to make these MBA, ICA, and custodian requirements applicable only to 
licensed Category I, II, and III facilities.
Other Proposed Changes to the Material Control and Accounting 
Requirements
    Other proposed changes to the MC&A requirements are considered to 
be non-substantive (in that they are either plain language revisions to 
improve clarity, conforming changes, or are otherwise organizational or 
administrative in nature) are summarized as follows:
     The MC&A requirements for ISFSIs that are currently 
located in 10 CFR part 72 would be relocated to 10 CFR part 74, 
including requirements for reporting to the Nuclear Materials 
Management and Safeguards System (NMMSS). These 10 CFR part 72 
requirements duplicate reporting requirements in existing subpart B of 
10 CFR part 74 and duplicate similar reporting requirements applicable 
to certain types of source material as specified in 10 CFR 40.64. The 
following list shows how 10 CFR part 74 requirements relate to the 10 
CFR part 72 requirements being removed:
     The requirement for recordkeeping at 10 CFR 72.72(a) would 
be covered in proposed 10 CFR 74.19(d).
     The requirement for physical inventory at 10 CFR 72.72(b) 
would be covered in 10 CFR 74.19(c).
     The requirement for written MC&A procedures at 10 CFR 
72.72(c) would be covered in 10 CFR 74.19(b).
     The requirement for recordkeeping at 10 CFR 72.72(d) would 
be removed.
     The requirement to report loss of SNM at 10 CFR 72.74 
would be covered in 10 CFR 74.11.
     The requirement for submitting material status reports to 
NMMSS at 10 CFR 72.76 would be covered in 10 CFR 74.13.
     The requirement for submitting nuclear material 
transaction reports to NMMSS at 10 CFR 72.78 would be covered in 10 CFR 
74.15.
     Revisions are proposed to 10 CFR 72.72 and 72.74, and 10 
CFR 72.76 and 72.78 would be deleted. Revisions would be made to 10 CFR 
40.64 and 150.17(b) to remove their references to 10 CFR part 72 
material status reports.
     Because some licensees have expressed confusion as to what 
MC&A requirements apply to a particular facility, the NRC proposes to 
revise the 10 CFR part 74 definitions of formula quantity, special 
nuclear material of moderate strategic significance, and special 
nuclear material of low strategic significance by conforming them to 
the existing definitions in 10 CFR parts 70 and 73, making clear that 
these classes of SNM are what is referred to, respectively, as Category 
I, II, and III quantities of material. Licensees authorized to possess 
Category I material are subject to the 10 CFR part 74 subpart E 
requirements, while licensees authorized to possess Category II and III 
material are subject to the subpart D and C requirements, respectively. 
To further clarify these divisions, the staff proposes to add appendix 
A (``Categories of SNM'') to 10 CFR part 74. Also for purposes of 
clarification, the NRC proposes to add defined terms for accounting and 
material control and accounting.
    Plain language revisions are reflected in the proposed regulations, 
and include replacing the existing references to the fundamental 
nuclear material control (FNMC) plan with references to an MC&A plan. 
The staff's view is that FNMC is an outdated term and does not include 
``accounting;'' thus, it does not fully describe the accounting aspects 
of an MC&A program. Licensees would not be required to change the name 
of their FNMC plans to MC&A plans.
    The defined term effective kilograms of special nuclear material 
(and references to it in several provisions) would be removed from 10 
CFR part 74. Quantities of SNM would instead be expressed in gram units 
to simplify the accounting requirements in 10 CFR part 74 and provide 
consistency with the existing 10 CFR part 74 definitions of the various 
types of SNM, all of which specify quantities in gram units. This 
proposed change would also correct an inconsistency within the current 
10 CFR 74.19 provisions. Existing 10 CFR 74.19(b) refers to a quantity 
of SNM ``exceeding one effective kilogram'' in specifying the set of 
licensees that must establish written MC&A procedures. Existing 10 CFR 
74.19(c) refers to a quantity of SNM ``greater than 350 grams'' in 
specifying the set of licensees that must conduct physical inventories. 
Removing effective kilograms of special nuclear material from 10 CFR 
part 74 would also eliminate confusion caused by a conflict between the 
regulatory thresholds for the SNM categories (Category I, Category II, 
and Category III) and an effective kilogram of SNM. Effective kilograms 
of special nuclear material would remain as a defined term in 10 CFR 
parts 40, 70, 75, 76, and 110, to ensure the continued effective 
implementation of the U.S./International Atomic Energy Agency (IAEA) 
Safeguards Agreement.
    Other proposed changes include revising 10 CFR 150.17(a) to conform 
with the proposed plain language revisions to 10 CFR 74.13. The 
instructions for material status reporting would be clarified in 10 CFR 
74.13. The intervals and due dates for each type of facility would also 
be clarified in 10 CFR 74.13. No substantive changes are being proposed 
in this regard and licensees authorized to possess SNM under a license 
from an Agreement State would continue to submit material status 
reports to the NRC via the NMMSS. References to due dates and reporting 
frequencies would be made more uniform by expressing most timeframes in 
terms of calendar days (e.g., 7, 30, 60, 65, 95, 185, or 370

[[Page 67230]]

calendar days). The interval for the number of months assigned to a 
licensee`s assessment of the MC&A program would be retained (e.g., 12 
months, 18 months, or 24 months). The retention period for records 
would be retained (e.g., 3 years). An appendix A, ``Categories of 
Special Nuclear Material,'' would be added to 10 CFR part 74. The 
appendix would be based on existing appendix M to 10 CFR part 110, and 
would show the SNM quantity limits for Category I, Category II, and 
Category III facilities. The new appendix would also show the 
corresponding subpart in 10 CFR part 74 for each category, and the 
formulae to calculate any combination of SSNM within the quantity 
limits for a category. A conforming change would be made to replace the 
reference to 10 CFR 74.51(c) with 10 CFR 74.51(b) because the paragraph 
designation regarding implementation of an MC&A plan would then be 
consistent with the other citations listed in 10 CFR 70.32(c)(1)(i) and 
(iii) that refer to paragraph (b) in 10 CFR 74.31, 74.33, and 74.41.
    The SECY-09-0082 (``Update on Reprocessing Regulatory Framework--
Summary of Gap Analysis,'' ADAMS Accession No. ML091520280), dated May 
28, 2009, included the NRC staff's recommendation that the existing 10 
CFR 74.51(a) exemption for an irradiated fuel reprocessing plant be 
removed as part of this rulemaking. Proposed 10 CFR 74.51(a)(2) 
reflects the removal of this exemption.
    The NRC placed on www.regulations.gov a preliminary version of the 
proposed rule language to inform stakeholders of the status of the 
proposed rulemaking and invited stakeholders to provide informal 
comments by June 30, 2011. Thirteen comment letters were received by 
this date, and were considered. Public input at this stage helped to 
develop the proposed rule in its current form.

III. Specific Request for Comments on the Proposed New Requirements

    In addition to the general opportunity to submit comments on the 
proposed rule, the NRC also requests comments on the following 
questions about the proposed new requirements:
    General Performance Objectives:
    In 10 CFR 74.3, the NRC proposes GPOs that would apply to all 
licensees authorized to possess greater than 350 grams of SNM. Are 
there other GPOs that the NRC should consider adding? Do the proposed 
GPOs impose unnecessary expenses or burdens on licensees? Should the 
regulatory threshold for GPOs be higher or lower than 350 grams, and if 
so, why? If this threshold amount is lower than 350 grams, the NRC 
would add a similar set of GPO requirements to 10 CFR part 150 to apply 
to Agreement State licensees. If that were done, how could the NRC best 
ensure compliance with the GPOs in Agreement States?
    Item Control System:
    In 10 CFR 74.19(d), the NRC proposes to make item control 
requirements applicable to licensed reactors and ISFSIs. Licensees of 
fuel cycle facilities authorized to possess Category III amounts of SNM 
are subject to existing item control requirements in subpart C of 10 
CFR part 74, and subpart D of 10 CFR part 74 contains item control 
requirements that would be applicable to any future fuel cycle facility 
that may be authorized to possess Category II amounts of SNM. Are such 
requirements necessary at reactor and ISFSI sites? Are there 
alternatives that should be considered? Should other types of licensees 
be required to have an item control system? What is the appropriate 
regulatory threshold for requiring an item control system under 10 CFR 
part 74? Should there be a threshold for the amount of material that is 
required to be tracked under an item control system?
    Tamper-Safing:
    In 10 CFR 74.31(c)(9) and 74.33(c)(9), the NRC proposes a new 
requirement for tamper-safing containers and vaults. The NRC also 
proposes clarifying the existing requirements for tamper-safing in 10 
CFR 74.43(c)(3) and 74.59(f)(2)(i) to provide a consistent approach for 
all Category I, II, and III licensees. Should tamper-safing be required 
for Category III licensees? Are there alternative measures that should 
be considered?
    Material Balance Areas, Item Control Areas, and Custodians:
    In 10 CFR 74.31(c)(10), 74.33(c)(10), and 74.43(c)(9), the NRC 
proposes a new requirement to identify specific MBAs and ICAs, and to 
designate custodians for these areas. The NRC also proposes that the 
existing requirement for custodians in 10 CFR 74.59(h)(5) be revised to 
match the new language to provide a consistent approach for all 
Category I, II, and III licensees. Should use of MBAs and ICAs be 
required? Should other facilities be required to have MBAs and ICAs? 
Are there alternatives that should be considered?
    Alternatives resulting in equivalent outcome and less burden:
    Throughout this proposed rule, the NRC is proposing measures that 
would strengthen MC&A requirements at licensee sites. Are there 
alternative ways to strengthen existing MC&A requirements that would 
impose less burden on NRC licensees while still maintaining adequate 
control and accounting of SNM? What specific alternatives should be 
considered? For the proposed requirements that go beyond consolidation 
and clarification, the NRC is seeking input on the need for such 
requirements in relation to the proportionate levels of risk 
represented by the processes and material quantities and forms of SNM 
that are used at different types of licensee facilities.

IV. Discussion

    To further describe this proposed rulemaking the following series 
of questions and answers is set forth.

A. Whom would this action affect?

    Licensees authorized by the NRC to possess SNM in a quantity 
greater than 350 grams would be affected by the proposed rule. For 
example, the proposed 10 CFR 74.3 would require a licensee authorized 
to possess a quantity of SNM greater than 350 grams to implement and 
maintain a material control and accounting program that enables the 
licensee to achieve the GPOs provided in the new 10 CFR 74.3.
    Agreement State licensees authorized to possess SNM are subject to 
the 10 CFR 150.17 material status reporting requirements. The proposed 
changes to these requirements are plain language revisions, and conform 
with the proposed plain language revisions to the 10 CFR 74.13 material 
status reporting requirements. These changes do not require any action 
by the Agreement State licensees.

B. Why are the requirements being revised?

    Many of the current MC&A requirements were developed over 20 years 
ago and need to be updated to include commonly used terms. Item control 
system requirements would be strengthened by including items that are 
currently exempted from these requirements. The requirements for 
general performance objectives to deter, detect, or aid in responding 
to any loss, theft, diversion or misuse of SNM need to be extended to 
NRC licensees who are not authorized to possess Category I, II, or III 
amounts of material, but who are authorized to possess SNM in a 
quantity greater than 350 grams. The NRC's view is that all MC&A 
regulations governing SNM held by NRC licensees should be in 10 CFR 
part 74 in order to provide a focal point and a complete framework/
umbrella for controlling and accounting for all SNM under NRC 
oversight.

[[Page 67231]]

C. When would these actions become effective?

    The NRC expects that the final rule would be published within 12 
months of the publication of the proposed rule for comment. The 
revisions to the regulations would become effective 90 days after the 
publication of the final rule. Question R in this section requests 
comments on the cumulative effects of this rulemaking and specifically 
asks whether an effective date of 6 months from the date the final rule 
is published in the Federal Register would provide sufficient time to 
implement the new proposed requirements.

D. How does NRC use a graded approach for MC&A?

    The NRC currently uses a graded, risk-informed approach for MC&A. 
Based on the quantity and form of material a licensee possesses, the 
licensee is subject to specific requirements that increase with the 
amount of SNM the licensee is authorized to possess. Table 2 shows the 
requirements that apply to various types of licensed facilities based 
on their possession limits and how the NRC proposes to strengthen 
requirements through this rulemaking.

                Table 2--NRC's Graded, Risk-Informed Approach to Material Control and Accounting
----------------------------------------------------------------------------------------------------------------
    Grams of SNM the licensee is      Current MC&A requirements in  10 CFR   Proposed changes to strengthen MC&A
        authorized to possess                        Part 74                   requirements in 10 CFR Part 74
----------------------------------------------------------------------------------------------------------------
1 gram or more of SNM (all            74.11/150.16 Reporting loss and       Existing 74.19(d) would be moved to
 licensees, including part 70          theft.                                74.19(e) to accommodate a new item
 licensees authorized to possess 350  74.13/150.17 Material status reports   control requirement for reactors
 grams or less and licensees           for NMMSS.                            and ISFSIs.
 authorized by an Agreement State).   74.15/150.16 Material transaction
                                       reports for NMMSS.
                                      74.19(a) Recordkeeping.
                                      74.19(d) Retention of records.
----------------------------------------------------------------------------------------------------------------
>350 grams of SNM (part 70 licensees  74.11 Reporting loss and theft.       New GPOs in 74.3.
 authorized for industrial,           74.13 Material status reports for     To replace the term ``one effective
 academic, and research types of       NMMSS.                                kilogram,'' 74.19(b) would apply to
 use.                                 74.15 Material transaction reports     licensees possessing greater than
                                       for NMMSS.                            350 grams of SNM.
                                      74.19(a) Recordkeeping.               Existing 74.19(d) would be moved to
                                      74.19(b) Written procedures.           74.19(e) to accommodate a new item
                                      74.19(c) Physical inventory.           control requirement for reactors
                                      74.19(d) Retention of records.         and ISFSIs.
----------------------------------------------------------------------------------------------------------------
Reactors licensed under part 50 or    74.11 Reporting loss and theft.       New GPOs in 74.3.
 part 52 and ISFSIs licensed under    74.13 Material status reports for     New requirement for item control in
 part 72.                              NMMSS.                                74.19(d).
                                      74.15 Material transaction reports    Existing 74.19(d) would be
                                       for NMMSS.                            designated as 74.19(e).
                                      74.19(a) Recordkeeping.
                                      74.19(b) Written procedures.
                                      74.19(c) Physical inventory.
                                      74.19(d) Retention of records.
----------------------------------------------------------------------------------------------------------------
>350 grams of SNM of low strategic    74.11 Reporting loss and theft.       74.31(a)(1)-(3) GPOs would be
 significance (also known as          74.13 Material status reports for      revised and relocated to 74.3.
 Category III facilities).             NMMSS.                               74.31(b) Replace FNMCP with MC&A
Current threshold of one effective    74.15 Material transaction reports     Plan.
 kilogram would be replaced with 350   for NMMSS.                           Remove two exemptions related to
 grams.                               74.17 Physical inventory summary       item control in 74.31(c)(6).
                                       report.                              New requirement for tamper-safing in
                                      74.31:                                 74.31(c)(9).
                                      (a) GPOs.                             New requirement for MBAs and ICAs
                                      (b) FNMCP.                             and for custodians in 74.31(c)(10).
                                      (c)(1) Management and procedures.
                                      (c)(2) Measurement.
                                      (c)(3) Measurement control.
                                      (c)(4) SEID.
                                      (c)(5) Physical inventory.
                                      (c)(6) Item control.
                                      (c)(7) Shipper-receiver differences.
                                      (c)(8) Assessments.
                                      (d) Recordkeeping and retention.
----------------------------------------------------------------------------------------------------------------

[[Page 67232]]

 
>350 grams of SNM of low strategic    74.11 Reporting loss and theft.       74.33(a)(1)-(9) GPOs revised and
 significance for uranium enrichment  74.13 Material status reports for      relocated to 74.3, except for five
 facilities, (also known as Category   NMMSS.                                retained in proposed 74.33(a)(1)-
 III enrichment facilities).          74.15 Material transaction reports     (5).
Current threshold of one effective     for NMMSS.                           74.33(b) Replace FNMCP with MC&A
 kilogram would be replaced with 350  74.17 Physical inventory summary       Plan.
 grams.                                report.                              Remove two exemptions related to
                                      74.33:                                 item control in 74.33(c)(6).
                                      (a) GPOs.                             New requirement for tamper-safing in
                                      (b) FNMCP.                             74.33(c)(9).
                                      (c)(1) Management and procedures.     New requirement for MBAs and ICAs
                                      (c)(2) Measurement.                    and custodians in 74.33(c)(10).
                                      (c)(3) Measurement control.
                                      (c)(4) Physical inventory.
                                      (c)(5) Detection program.
                                      (c)(6) Item control.
                                      (c)(7) Shipper-receiver differences.
                                      (c)(8) Assessments.
                                      (d) Recordkeeping and retention.
----------------------------------------------------------------------------------------------------------------
>1000 grams of SNM of moderate        74.11 Reporting loss and theft.       74.41(a)(1)-(4) GPOs revised and
 strategic significance (there is     74.13 Material status reports for      relocated to 74.3.
 currently no operating Category II    NMMSS.                               74.41(b) Replace FNMCP with MC&A
 facility or applicant for such a     74.15 Material transaction reports     Plan.
 license).                             for NMMSS.                           Remove two exemptions related to
Current threshold of one effective    74.17 Physical inventory summary       item control in 74.43(b)(6).
 kilogram would be replaced with       report.                              Reword the requirement for tamper-
 1000 grams.                          74.41:                                 safing in 74.43(c)(3).
                                      (a) GPOs.                             New requirement for MBAs and ICAs
                                      (b) FNMCP.                             and custodians in 74.43(c)(9).
                                      (c) Checks and balances.
                                      74.43:
                                      (b)(1)-(4) Management and
                                       procedures.
                                      (b)(5)-(6) Item control.
                                      (b)(7) Shipper-receiver differences.
                                      (b)(8) Assessments.
                                      (c)(1) Identification of items.
                                      (c)(2) Documenting transfers.
                                      (c)(3) Tamper-safing.
                                      (c)(4) Validity of prior
                                       measurements.
                                      (c)(5)-(8) Physical inventory.
                                      (d) Recordkeeping and retention.
                                      74.45:
                                      (b) Measurements.
                                      (c) Measurement control.
----------------------------------------------------------------------------------------------------------------
>5000 grams of formula quantities of  74.11 Reporting loss and theft.       74.51(a)(1)-(5) GPOs revised and
 strategic SNM (also known as         74.13 Material status reports for      relocated to 74.3, except for three
 Category I facilities).               NMMSS.                                retained in proposed 74.33(a)(1)(i)-
Current threshold of five formula     74.15 Material transaction reports     (iii).
 kilograms would be replaced with      for NMMSS.                           Removed the exemption for irradiated
 5000 grams.                          74.17 Physical inventory summary       fuel reprocessing plants in
                                       report.                               74.51(a).
                                      74.51:                                Switching 74.51(b) and (c) for
                                      (a) GPOs.                              consistency with other sections of
                                      (b) Checks and balances.               part 74.
                                      (c) FNMCP.                            New 74.51(b) Replace FNMCP with MC&A
                                      (d) Bimonthly physical inventory.      Plan.
                                      74.53 Process monitoring.             Reword the requirement for tamper-
                                      74.55 Item monitoring.                 safing in 74.59(f)(2)(i).
                                      74.57 Alarm resolution.               Revise the requirement for
                                      74.59:                                 custodians to include new
                                      (a) Quality assurance.                 requirement for MBAs and ICAs in
                                      (b) Management and procedures.         74.59(h)(5).
                                      (c) Qualification and training.
                                      (d) Measurements.
                                      (e) Measurement control.
                                      (f) Physical inventory.
                                      (f)(2)(i) Tamper-safing.
                                      (g) Accounting records retention.
                                      (h)(1) Shipper-receiver differences.
                                      (h)(2) Scrap control.
                                      (h)(3) Checks and balances for human
                                       error.
                                      (h)(4) Assessments.
                                      (h)(5) Custodians.
----------------------------------------------------------------------------------------------------------------


[[Page 67233]]

E. What are the changes to the general performance objectives?

    The existing GPOs in 10 CFR 74.31(a) and 74.33(a) (applicable to 
licensees of Category III facilities), 74.41(a) (applicable to 
licensees of Category II facilities), and 74.51(a) (applicable to 
licensees of Category I facilities) would be revised by consolidating 
their common provisions into a new 10 CFR 74.3. In addition to being 
applicable to Category I, II, and III facilities, the 10 CFR 74.3 GPOs 
would be applicable to reactor licensees and two NRC materials 
licensees that are authorized to hold more than 350 grams of SNM, but 
are not Category I, II, or III facilities. The proposed 10 CFR 74.3 
GPOs describe activities to deter, detect, or aid in responding to any 
loss, theft, diversion or misuse of SNM. The existing GPO provisions in 
10 CFR 74.31, 74.33, 74.41, and 74.51 would be revised to refer to 10 
CFR 74.3, but GPOs that are unique to uranium enrichment facilities and 
Category I fuel fabrication facilities would be retained in 10 CFR 
74.33 and 74.51.

 F. Are sealed sources included in the general performance objectives 
for Category II and III facilities?

    Yes. The current exclusion for sealed sources in the 10 CFR 74.31 
and 74.41 GPO provisions would be relocated to appendix A (Note 1) to 
clarify that the sealed sources would not be considered for determining 
whether a facility is a Category III facility or a Category II 
facility, respectively. The change would be consistent with the current 
requirements, which were intended to exclude sealed sources from the 
material quantity calculations used to determine whether a facility is 
a Category III facility subject to subpart C requirements, or a 
Category II facility subject to the subpart D requirements of 10 CFR 
part 74. However, sealed sources would be within the scope of the 
proposed 10 CFR 74.3 GPOs. Sealed sources would continue to be subject 
to a licensee's MC&A program.

G. Why would newly defined terms be added to 10 CFR 74.4?

    Certain terms are commonly used by licensees in their internal 
procedures implementing their MC&A systems, plans and programs, 
including accounting, custodian, material control and accounting. 
Defining these terms in the NRC's regulations would clarify the 
requirements and improve under- standing of the regulations. Other 
newly defined terms (material balance area and item control area) and 
their related requirements are deemed necessary to strengthen the MC&A 
requirements at facilities holding significant amounts of SNM, thereby 
making diversion or misuse of SNM at such facilities less likely.

H. Why would the term ``effective kilograms of special nuclear 
material'' be removed from 10 CFR part 74?

    Doing so would allow quantities of SNM specified in 10 CFR part 74 
to be expressed in gram units, which would simplify the accounting 
requirements and provide consistency with the existing definitions of 
formula quantity, special nuclear material of low strategic 
significance, and special nuclear material of moderate strategic 
significance, which specify quantities in gram units. The reference to 
one effective kilogram in the 10 CFR 74.19(b) written MC&A procedures 
provision would be replaced with a reference to a quantity of SNM 
greater than 350 grams. This 350-gram amount is referenced in existing 
10 CFR 74.19(c) regarding the physical inventory provisions stated 
there. References to one effective kilogram in the GPO provisions of 10 
CFR 74.31, 74.33, and 74.41 would be revised to reference gram units of 
material. The new appendix A would also use gram units. The effective 
kilogram term would remain in 10 CFR parts 40, 70, 75, 76, and 110, to 
ensure the continued effective implementation of the U.S./IAEA 
Safeguards Agreement.

I. Why would appendix A to 10 CFR part 74 be added?

    Appendix A would be added to clarify the definitions and quantities 
and units of the various categories of SNM. Similar information is 
provided in existing appendix M to 10 CFR part 110 and would be 
appended to 10 CFR part 74 as well for the convenience of licensees, 
the NRC staff, and members of the public. Appendix A would clarify the 
elements, isotopic composition, and quantities of material that 
Category I, Category II, and Category III facilities are authorized to 
possess. Notes would be included to clarify that sealed sources are 
excluded from the quantity limits that are used to determine the 
category of a facility. An additional note is included to clarify that 
spent nuclear fuel is reduced one category level during the period of 
time that the radiation exposure exceeds 1 Sievert (Sv) per hour (100 
rads per hour) at 1 meter, unshielded. Formulae are included to 
calculate a quantity of material for Category I, Category II, or 
Category III.

J. Why would references to the MC&A ``system'' be changed to the MC&A 
``program,'' and why would ``MC&A plan'' replace ``FNMC plan?''

    Portions of existing 10 CFR part 74 that refer to the MC&A 
``system'' (e.g., 10 CFR 74.31(c), 74.33(a), and 74.51(a)) would be 
revised to instead refer to the MC&A ``program.'' The term ``program'' 
better describes the over-arching, comprehensive set of methods 
licensees use to control and track SNM, and using ``program'' avoids 
confusion with the required material measurement systems (e.g., 10 CFR 
74.31(c)(2), 74.33(c)(3), and 74.59(d)) that are part of the overall 
MC&A program. Similarly, existing references to the overall ``system'' 
capabilities would be changed to ``program'' capabilities. The existing 
requirements referring to an item control program (e.g., 10 CFR 
74.31(c)(6), 74.33(c)(6) and 74.43(b)(5)) would be revised to instead 
refer to an item control system.
    Replacing the existing references to the ``FNMC plan'' with 
references to an ``MC&A plan'' is necessary in the NRC staff's view 
because FNMC is an outdated term and does not include accounting. It 
does not fully describe the accounting aspects of the MC&A program, and 
is not consistent with the general title of 10 CFR part 74 (``Material 
Control and Accounting of Special Nuclear Material''). The term MC&A 
plan is not intended to be an exact name that licensees are required to 
use and licensees will not be required to change the names of their 
existing plans.

K. What would change in the reporting requirements to NMMSS, including 
those that ISFSIs are subject to?

    The proposed addition of numbered subsections to 10 CFR 74.13(a) 
would make these reporting requirements easier to read and understand. 
The plain language revisions would make no substantive changes to the 
existing requirements.
    The NMMSS reporting requirements for an ISFSI currently in Sec.  
72.76 for material status reports and in Sec.  72.78 for nuclear 
material transaction reports are duplicated in Sec. Sec.  74.13 and 
74.15, respectively. Proposed 10 CFR 74.2 would include existing ISFSIs 
within the scope of 10 CFR part 74. Accordingly, Sec. Sec.  72.76 and 
72.78 would be removed from 10 CFR part 72. The requirements in Sec.  
72.72 for storage of source material (SM) and SNM would be revised to 
direct a licensee to refer to Sec. Sec.  40.61 and 40.64 for SM and to 
subparts A and B in 10 CFR part 74 for SNM.

[[Page 67234]]

 L. Is a two-person rule included as part of this proposed rule?

    No. Earlier in this rulemaking process, the NRC staff developed 
proposed provisions that would have required Category I, II, and III 
licensees to have two qualified and authorized individuals present 
when--
     Tamper-safing devices are applied to SNM containers,
     physical inventories are performed,
     SNM is transferred, and
     SNM that is not under an active control measure is 
handled.
    The Commission in its May 10, 2013, SRM, disapproved publishing the 
proposed requirements. The SRM stated that the staff could conduct a 
backfit analysis on the proposed two-person rule or, to avoid a 
significant delay in publishing this MC&A rule for comment, remove 
these provisions and consider a two-person rule in a separate future 
MC&A rulemaking effort. Interested members of the public will have the 
opportunity to comment on a two-person rule in any such future 
rulemaking.

M. Why would requirements be added to designate material balance areas, 
item control areas, and custodians?

    The added MC&A requirements would strengthen and specifically 
define the terms for MBA, ICA, and custodians. The added requirements 
would be consistent in requiring licensees under subparts C, D, and E 
to designate MBAs and ICAs and custodians for these areas. The terms 
are widely used in the regulated community and 10 CFR part 74 would be 
clarified by setting forth the specific definition for the terms in 10 
CFR 74.4. A licensee would be required to designate MBAs, ICAs, and 
assign custodial responsibilities for these areas to provide internal 
controls to deter or detect any diversion or misuse of SNM at the 
licensee's facility.

N. Why would calendar days be inserted into 10 CFR part 74?

    To clarify 10 CFR part 74, references to due dates and reporting 
frequencies would be made more uniform by expressing most timeframes in 
calendar days. Using calendar days avoids the existing uncertainty over 
whether weekends and holidays are counted in determining whether or not 
a licensee has taken timely action. The proposed clarifications are 
intended to make 10 CFR part 74 more internally consistent with 
existing 10 CFR 74.33(c)(4), which requires that annual static physical 
inventories be taken ``at least every 370 calendar days.'' Existing 10 
CFR part 74 provisions referencing 6-month intervals would be changed 
to ``185 calendar days.''

O. Would the implementation guidance documents be updated for the MC&A 
program?

    The following guidance documents would be revised and updated in 
conjunction with the rulemaking effort. In addition, a guidance 
document for Category II facilities (SNM of Moderate Strategic 
Significance) would be updated and issued with the following existing 
guidance documents. All revised NUREG guidance documents will be 
available for public comment in parallel with the scheduled publication 
of the proposed rule.
    i. NUREG-1280, ``Standard Format and Content Acceptance Criteria 
for the MC&A Reform Amendment,''
    ii. NUREG-1065, ``Acceptable Standard Format and Content for the 
Fundamental Nuclear Material Control (FNMC) Plan Required for Low-
Enriched Uranium Facilities,''
    iii. NUREG/CR-5734, ``Recommendations to the NRC on Acceptable 
Standard Format and Content for the Fundamental Nuclear Material 
Control (FNMC) Plan Required for Low-Enriched Uranium Enrichment 
Facilities,''
    iv. NUREG/BR-0096, ``Instructions and Guidance for Completing 
Physical Inventory Summary Report.''

 P. Would there be changes for item controls or physical inventories?

    Subpart B in 10 CFR part 74 would be revised to include a new 
requirement in 10 CFR 74.19(d) that licensees of power reactors and 
ISFSIs must establish, document, implement, and maintain an item 
control system (as would be defined in 10 CFR 74.4).
    Some of the current exemption provisions for item controls would be 
removed. Specifically, the exemption provisions in 10 CFR 74.31(c)(6), 
74.33(c)(6)(ii) and 74.43(b)(6) for items existing 14 days or less in 
Category III and II facilities would be removed. The 14-day exemption 
was put in the current regulations at a time when most Category III 
licensees did not have computer inventory controls and instead relied 
on manual ledger entries. In other words, the current regulation 
aligned the risk with what the licensees could do in a production 
environment.
    However, over the last several years, licensees have implemented 
business systems that track SNM containing items through the use of bar 
codes and entries to computer systems. This has had the secondary 
benefit of giving these licensees the ability to track individual items 
and total inventory in near real time. Licensees have demonstrated this 
ability numerous times during inspections by the NRC staff.
    Current requirements in 10 CFR part 74 recognize the importance of 
conducting timely inventories and reporting the results by requiring 
the reporting of shipments and receipts of a gram or more of material 
in 10 days (see 10 CFR 74.15) and through the reporting of lost, 
stolen, or diverted SNM of a gram or more within one hour (10 CFR 
74.11). Inspections performed by the NRC have identified cases where 
there were ``near-misses'' associated with current exemptions. Removal 
of the exemptions from the item control requirements would align this 
regulation with other requirements in 10 CFR part 74 to better ensure 
accurate SNM item bearing inventories. These proposed regulatory 
changes are not expected to impact licensees significantly since 
licensees have in-house systems that track such items in near real 
time.
    Additionally, for Category III facilities, the exemption provisions 
(in 10 CFR 74.31(c)(6) and 74.33(c)(6)(ii)) for individual items each 
containing less than 500 grams of uranium-235, up to a total of 50 
kilograms of uranium-235, would be removed. For a Category II facility, 
the exemption (in 10 CFR 74.43(b)(6)) for individual items containing 
less than 200 grams of plutonium or uranium-233; or 300 grams or more 
of uranium-235 up to a cumulative total of one formula kilogram of 
strategic SNM; or 17 kilograms of uranium-235 contained in uranium 
enriched to 10 percent or more but less than 20 percent in the uranium-
235 isotope, would be removed. These exemptions were identified for 
removal in SECY-08-0059. Item control requirements that exclude 
kilogram amounts of SNM are not consistent with protection of the 
common defense and security.

Q. Why would an exception be added to 10 CFR 74.15(b)(2)?

    The exception from performing independent tests when receiving 
unirradiated fuel rods or unirradiated fuel assemblies would be 
included to clarify the requirement for licensees under 10 CFR part 50 
or 52. Similarly the requirement would be clarified for a licensee 
under 10 CFR part 70 receiving SNM contained in a sealed source that 
will not be opened. The NRC inspection program has indicated that a 
licensee will typically verify the contents of such shipments by 
reviewing the shipping papers and visual inspection of the

[[Page 67235]]

material because independent testing (e.g., destructive testing or 
sampling) is impractical for determining the contents of the shipment 
being received.

R. Are there any cumulative effects of regulation associated with this 
rule?

    Cumulative effects of regulation (CER) describe the challenges that 
licensees or other impacted entities (such as State partners) face 
while implementing new regulatory positions, programs, or requirements 
(e.g., rules, generic letters, backfits, inspections). The CER are 
organizational effectiveness challenges that result from a licensee or 
impacted entity implementing a number of complex regulatory positions, 
programs or requirements within a limited implementation period and 
with available resources (which may include limited available expertise 
to address a specific issue). The CER can potentially distract licensee 
or entity staff from executing other primary duties that ensure safety 
or security.
    The NRC is specifically requesting comment on the cumulative 
effects of this rulemaking. In developing comments on CER, consider the 
following questions:
    i. In light of any current or projected CER challenges, would an 
effective date 6 months from the date the final rule is published in 
the Federal Register provide sufficient time to implement the new 
proposed requirements?
    ii. If current or projected CER challenges exist, what should be 
done to address this situation (e.g., if more time is required to 
implement the new requirements, what period of time would be 
sufficient)?
    iii. Do other regulatory actions (e.g., orders, generic 
communications, license amendment requests, and inspection findings of 
a generic nature) influence the implementation of the proposed 
requirements?
    iv. Are there unintended consequences? Does the proposed rule 
create conditions that would be contrary to the proposed rule's 
purposes and objectives? If so, what are the unintended consequences 
and how should they be addressed?
    v. Please comment on the NRC's cost and benefit estimates in the 
regulatory analysis that supports this proposed rule.

 S. What should I consider as I prepare my comments to the NRC?

    When submitting your comments, remember to:
    i. Identify the rulemaking (RIN 3150-AI61; NRC-2009-0096).
    ii. Explain why you agree or disagree; suggest alternatives and 
substitute language.
    iii. Describe any assumptions and include technical information or 
data that you used.
    iv. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    v. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    vi. Explain your views as clearly as possible.
    vii. Submit your comments by the comment period deadline 
identified.
    viii. The NRC is particularly interested in your comments 
concerning the issues in Sections Il and III of this document about 
item controls, designating MBAs, ICAs and custodial responsibilities 
for these areas. Section VIII, Agreement State Compatibility, of this 
document contains a request for comment on the compatibility 
designations for the proposed rule; Section IX, Plain Writing, contains 
a request for comments on the use of plain language; Section XI, 
Environmental Assessment and Finding of No Significant Environmental 
Impact Availability, contains a request for comments on the draft 
environmental assessment; Section XII, Paperwork Reduction Act 
Statement, contains a request for comments on the information 
collection requirements; Section XIII, Regulatory Analysis, contains a 
request for comments on the draft regulatory analysis; and Section XIV, 
Regulatory Flexibility Certification, contains a request for comments 
on the impact of the proposed rule on small businesses.

V. Discussion of Proposed Amendments by Section

    Section 40.64 Reports.
    Paragraphs (b)(1) and (2) would be revised to remove the reference 
to 10 CFR part 72.
    Section 70.32 Conditions of licenses.
    Paragraphs (c)(1)(i) and (iii) would be revised to replace the 
reference to Sec.  74.51(c) with Sec.  74.51(b). These sections were 
revised to provide consistent organization for subparts C, D, and E in 
10 CFR part 74 and a conforming change would be completed in 10 CFR 
70.32(c)(1)(i) and (iii).
    Section 72.9 Information collection requirements: OMB approval.
    The NRC proposes to remove Sec. Sec.  72.76 and 72.78 from the list 
of approved information collections in Sec.  72.9.
    Section 72.72 Material control and accounting requirements for 
source material and special nuclear material.
    The title of the section would be revised from ``Material balance, 
inventory, and records requirements for stored materials'' to 
``Material control and accounting requirements for source material and 
special nuclear material.'' Paragraph (a) would be revised to only 
reference requirements for source material, and would reference 
Sec. Sec.  40.61 and 40.64 in this regard. The remainder of existing 
Sec.  72.72 (a), (b), (c), and (d) would be removed because these 
requirements are duplicated in 10 CFR part 74. As previously discussed, 
the Sec.  74.2 scoping provisions would be revised to include ISFSIs.
    New paragraph (b) would reference MC&A requirements for SNM in 10 
CFR part 74.
    Section 72.74 Reports of accidental criticality.
    The title of this section would be revised from ``Reports of 
accidental criticality or loss of special nuclear material'' to 
``Reports of accidental criticality.'' Paragraph (a) would be revised 
to remove the requirement that any loss of SNM be reported within 1 
hour of discovery. The ISFSIs would be subject to 10 CFR 74.11(a) with 
regard to any loss of SNM that must be reported within 1 hour of 
discovery. Section 72.74 would retain its reporting requirement for 
accidental criticality.
    Paragraph (b) would be revised to state that required one-hour 
notifications be made to the NRC Headquarters Operations Center via any 
available telephone system. The outdated reference to the Emergency 
Notification System would be removed.
    Section 72.76 Material status reports.
    This section would be removed and reserved, and Sec.  72.9 would be 
changed accordingly.
    Section 72.78 Nuclear material transaction reports.
    This section would be removed and reserved, and Sec.  72.9 would be 
changed accordingly.
    Section 74.2 Scope.
    The last sentence of paragraph (a) would be revised to bring 
licensees who possess spent nuclear fuel at ISFSIs within the scope of 
the MC&A reporting and recordkeeping requirements in 10 CFR part 74.
    Section 74.3 General performance objectives.
    This section would be added to require a licensee authorized by the 
NRC to possess SNM in a quantity greater than 350 grams to implement 
and maintain an MC&A program that achieves the general performance 
objectives listed in paragraphs (a) through (e).
    Section 74.4 Definitions.

[[Page 67236]]

    This section would be revised to remove the definition, Effective 
kilograms of special nuclear material. This section would be revised to 
add, in alphabetical order, definitions for the following terms: 
Accounting, Custodian, Item control area, Item control system, Material 
balance area, and Material control and accounting. The definitions of 
the following terms would be revised to conform with the existing 
definitions of these terms in 10 CFR parts 70 and 73, and to refer to 
appendix A of this part: Formula quantity, Special nuclear material of 
low strategic significance, and Special nuclear material of moderate 
strategic significance.
    Section 74.11 Reports of loss or theft or attempted theft or 
unauthorized production of special nuclear material.
    Paragraph (b) would be revised to state that required licensee 
notifications be made to the NRC Headquarters Operations Center via any 
available telephone system within 1 hour of the event, and an outdated 
reference to the Emergency Notification System would be removed.
    Section 74.13 Material status reports.
    As discussed further in the following paragraph, plain language 
revisions would be made to paragraph (a) by specifying eight numbered 
requirements, and new paragraphs (b), (c), and (e) would be added. 
Existing paragraph (b) would be designated as paragraph (d).
    Paragraph (a)(1) through (8) would specify deadlines by which 
various sets of licensees would be required to submit their material 
balance reports and physical inventory listing reports.
    Paragraph (b) would include the reporting instructions that are in 
existing Sec.  74.13(a), and would include references to the reporting 
forms (NUREG/BR-0007 and NMMSS Report D-24, ``Personal Computer Data 
Input for NRC Licensees'') referenced in existing Sec.  74.13(a).
    Paragraph (c) would retain the provision in existing Sec.  74.13(a) 
that the reports may be submitted at other times for good cause with 
prior NRC approval.
    As indicated previously, paragraph (d) restates the existing Sec.  
74.13(b) provision regarding reports required under section 75.35 of 
this chapter (pertaining to implementation of the U.S./IAEA Safeguards 
Agreement).
    Paragraph (e) would retain the requirement in existing Sec.  
74.13(a) regarding the resolution of any discrepancies identified 
during the report review.
    Section 74.15 Nuclear material transaction reports.
    Paragraph (b)(2) would be revised by adding an exception that 
independent testing is not required for receipt of unirradiated fuel 
rods, unirradiated fuel assemblies, or sealed sources containing SNM 
that will not be opened.
    Section 74.19 Recordkeeping, procedures, item controls, and 
physical inventories.
    This section's title would be revised to reference written MC&A 
procedures, item controls, and physical inventories.
    As previously discussed, paragraph (b) would be revised to replace 
its reference to a quantity of SNM ``exceeding one effective kilogram'' 
with ``a quantity greater than 350 grams of contained uranium-235, 
uranium-233, or plutonium, or any combination thereof.''
    Paragraph (d) would be re-designated as paragraph (e) and a new 
paragraph (d) would be added to require reactor facilities licensed 
under 10 CFR part 50 or 52 and ISFSIs licensed under 10 CFR part 72 to 
establish, document, implement, and maintain an item control system. A 
definition of the term item control system would be added to 10 CFR 
part 74.4.
    Section 74.31 Nuclear material control and accounting for special 
nuclear material of low strategic significance.
    The general performance objectives applicable to licensees of 
Category III fuel fabrication facilities would be set forth in proposed 
Sec.  74.3 as previously discussed. Revised Sec.  74.31(a)(1) would 
incorporate the Sec.  74.3 performance objectives by reference, thereby 
replacing the performance objectives set forth in existing Sec.  
74.31(a)(1)-(3). Proposed paragraph (a)(2) would retain elements of the 
exemption in existing Sec.  74.31(a) applicable to production or 
utilization facilities, and any licensee operations involving waste 
disposal. Proposed paragraph (a)(2) would add an exemption for ISFSIs, 
thereby making it consistent with existing Sec.  74.51(a).
    Paragraph (b) would be revised by replacing the reference to ``a 
fundamental nuclear material control (FNMC) plan'' with a reference to 
``a MC&A plan.'' The plan would need to achieve the general performance 
objectives in Sec.  74.3, and meet the program capability requirements 
set forth in revised Sec.  74.31(c).
    The introductory language of paragraph (c) would be revised to 
state that the MC&A plan must: Include the capabilities described in 
paragraphs (c)(1) through (10); and achieve the performance objectives 
in Sec.  74.3. The title of paragraph (c) would be changed from 
``System capabilities'' to ``Program capabilities.'' Grammatical errors 
in existing paragraphs (c)(1) through (3) would be corrected. Paragraph 
(c)(4) would be clarified to state the standard error as the standard 
error of the inventory difference (SEID). The paragraph (c)(5) physical 
inventory timing provisions would be clarified by changing ``60 days'' 
to ``60 calendar days,'' and grammatical errors in the existing text 
would be corrected. Paragraph (c)(6) would be revised by referencing 
the item control system defined in Sec.  74.4. The 14-day provision in 
the first sentence of the existing requirement would be removed. The 
reference to detecting ``unauthorized removals of substantial 
quantities of material from items'' in the second sentence would be 
changed to require detecting the removal of ``any quantity of 
material.'' In the third sentence, the existing exemption from the 
detection requirements for ``items individually containing less than 
500 grams of uranium-235 up to a total of 50 kilograms of uranium-235'' 
would be removed. The wording of paragraph (c)(7) would be revised to 
state as follows: ``Conduct and document shipper-receiver difference 
comparisons for all SNM receipts on a total shipment basis, and on an 
individual batch basis when required by 10 CFR part 75 of this chapter, 
and ensure that any shipper-receiver difference that is statistically 
significant and exceeds twice the estimated standard deviation of the 
difference estimator and 500 grams of uranium-235 is investigated and 
resolved.'' Paragraph (c)(8) would be revised by referencing the MC&A 
``program'' rather than the MC&A ``system.'' Paragraphs (c)(9) and (10) 
would be added to require that the MC&A program include, respectively, 
tamper-safing procedures and the designation of material balance areas, 
item control areas, and custodians responsible for these areas.
    Section 74.33 Nuclear material control and accounting for uranium 
enrichment facilities authorized to produce special nuclear material of 
low strategic significance.
    The general performance objectives applicable to Category III 
uranium enrichment facilities would be set forth in proposed Sec.  74.3 
as previously discussed, and revised Sec.  74.33(a) would reflect this. 
The general performance objectives stated in existing paragraphs (a)(1) 
through (9) would be replaced by new paragraphs (a)(1) through (4), 
which would only reference source material. These general performance 
objectives would parallel those set forth in proposed Sec.  74.3, which 
would apply only to SNM. New paragraph (a)(5) retains elements of 
existing paragraph

[[Page 67237]]

(a)(8), and retains the exemption for centrifuge enrichment facilities 
stated in existing (a)(5).
    Paragraph (b) would be revised by replacing the reference to ``a 
fundamental nuclear material control (FNMC) plan'' with a reference to 
``an MC&A plan.'' The plan would need to achieve the general 
performance objectives in Sec.  74.3, the performance objectives in 
paragraph (a) as previously discussed, and meet the program capability 
requirements set forth in revised Sec.  74.33(c).
    The introductory language of paragraph (c) would be revised to 
state that the MC&A plan must: Include the capabilities described in 
paragraphs (c)(1) through (10); and achieve the performance objectives 
(as previously referenced). The title of paragraph (c) would be changed 
from ``System features and capabilities'' to ``Program capabilities.'' 
Existing paragraphs (c)(1) through (2) would remain unchanged. 
Paragraph (c)(3)(ii) would be clarified to include the acronym SEID in 
a parenthetical. Paragraph (c)(4)(i) would be clarified by changing 
``65 days'' to ``65 calendar days.'' Paragraph (c)(4)(ii) would be 
clarified by changing ``60 days'' to ``60 calendar days,'' and a 
grammatical correction to the existing regulatory text would be made. 
Paragraph (c)(5) would be revised by adding ``resolving'' at the end of 
the introductory sentence, to read, ``A detection program, independent 
of production, that provides high assurance of detecting and 
resolving.'' Paragraph (c)(6) would be revised by deleting (c)(6)(i) 
and (ii). Paragraph (c)(6) would instead reference the item control 
system defined in Sec.  74.4. The requirement to have such an item 
control system replaces the existing Sec.  74.33(c)(6)(i) requirement. 
The reference to detecting the ``unauthorized removal of 500 grams or 
more of uranium-235'' in existing Sec.  74.33(c)(6)(ii) would be 
changed to require detecting the removal of ``any quantity of uranium-
235.'' The existing exemption in Sec.  74.33(c)(6)(ii) from the 
detection requirements for items containing ``less than 500 grams of 
uranium-235 up to a cumulative total of 50 kilograms of uranium-235,'' 
and for items that ``exist for less than 14 calendar days,'' would be 
removed. This exemption would be replaced with a provision exempting 
items in solution with a concentration of less than 5 grams per liter, 
and waste items destined for burial or incineration (the proposed 
wording here tracks the portion of the Sec.  74.31(c)(6) exemption that 
is being retained). Paragraph (c)(7) would be clarified to state the 
requirements to conduct and document shipper-receiver difference 
comparisons for all SM and SNM receipts on a total shipment basis and 
on an individual batch basis when required by 10 CFR part 75 of this 
chapter, and that any shipper-receiver difference that is statistically 
significant and exceeds twice the estimated standard deviation of the 
difference and 500 grams of uranium-235 must be investigated and 
resolved. Paragraph (c)(8) would be revised by referencing the MC&A 
``program'' rather than the MC&A ``system.'' Paragraphs (c)(9) and (10) 
would be added to require that the MC&A program include, respectively, 
tamper-safing procedures and the designation of MBAs, ICAs, and 
custodians responsible for these areas.
    Section 74.41 Nuclear material control and accounting for special 
nuclear material of moderate strategic significance.
    The general performance objectives applicable to Category II 
facilities would be set forth in proposed Sec.  74.3 as previously 
discussed. Revised Sec.  74.41(a)(1) would incorporate the Sec.  74.3 
performance objectives by reference, thereby replacing the performance 
objectives set forth in existing Sec.  74.41(a)(1) through (4). 
Proposed paragraph (a)(2) would retain elements of the exemption in 
existing Sec.  74.41(a) applicable to production or utilization 
facilities, licensees using reactor irradiated fuels for research 
purposes, and any licensee operations involving waste disposal.
    Paragraph (b) would be revised by replacing the reference to ``a 
fundamental nuclear material control (FNMC) plan'' with a reference to 
``an MC&A plan.'' The plan would need to achieve the general 
performance objectives in Sec.  74.3, meet the program capability 
requirements set forth in Sec.  74.41(c), and the requirements of 
Sec. Sec.  74.43 and 74.45 as previously discussed. The title of 
paragraph (b) would be changed from ``Implementation schedule'' to 
``Implementation,'' and the existing paragraphs (b)(1) and (2) would be 
consolidated into a single paragraph consistent with the format used in 
existing Sec.  74.31(b).
    Paragraph (c) would be revised by changing its title from ``System 
capabilities'' to ``Program capabilities.'' The reference in existing 
Sec.  74.41(c) to the ``MC&A system'' would be changed to the ``MC&A 
plan,'' which must achieve the performance objectives in Sec.  74.3, 
and include the capabilities described in Sec. Sec.  74.43 and 74.45. 
The existing Sec.  74.41(c)(1) and (2) checks and balances requirements 
remain the same.
    Section 74.43 Internal controls, inventory, and records.
    Paragraph (b)(3) would be revised to replace the title, ``FNMC 
plan'' with ``MC&A plan.'' Paragraph (b)(5) would be revised by 
replacing the term ``item control program'' with ``item control 
system'' as newly defined in Sec.  74.4. The current paragraphs 
(b)(5)(i) and (b)(5)(ii) would be consolidated into proposed paragraph 
(b)(5). The current detection requirement in paragraph (5)(ii) would be 
revised to require the detection of ``unauthorized removals of 
individual items or any quantity of material (as defined in Sec.  74.4) 
from items,'' replacing the existing reference to the ``unauthorized 
removal of 200 grams or more of plutonium or uranium-233 or 300 grams 
or more of uranium-235, as one or more whole items and/or as SNM 
removed from containers.'' Paragraph (b)(6) would be revised to replace 
the exemptions stated in the current requirement. Only ``items in 
solution with a concentration of less than 5 grams of U-235 per liter, 
and items of waste destined for burial or incineration'' would be 
exempt from the detection requirements described previously. The 
reference to ``shipper-receiver comparisons'' in existing paragraph 
(b)(7) would be clarified to state ``shipper-receiver difference 
comparisons.''
    Paragraph (c)(3) would be clarified by removing the phrases, ``if 
tamper-safe seals are to be used for assuring the validity of prior 
measurements,'' and ``showing the date and time of seal application.'' 
These changes are proposed so that the tamper-safing requirements in 
subparts C, D, and E of 10 CFR part 74 will be worded in a consistent 
manner. Paragraph (c)(9) would be added to provide requirements that 
the MC&A plan capabilities must include the designation of MBAs, ICAs, 
and assigning custodial responsibilities for these areas.
    Paragraph (d)(5) would be revised to refer to the performance 
objectives of proposed Sec. Sec.  74.3 and 74.41(a)(1), as its current 
reference to Sec.  74.41(a)(1) through (4) would no longer be accurate 
if the proposed changes to Sec.  74.41(a) are made.
    Section 74.45 Measurements and measurement control.
    Paragraph (c)(4) would be clarified by spelling out the acronym 
SEID as the ``standard error of the inventory difference.''
    Section 74.51 Nuclear material control and accounting for strategic 
special nuclear material.
    The general performance objectives applicable to Category I 
facilities would

[[Page 67238]]

be set forth, in part, in proposed Sec.  74.3 as previously discussed. 
Revised Sec.  74.51(a)(1) would incorporate the Sec.  74.3 performance 
objectives by reference. Additionally, proposed Sec.  74.51(a)(1)(i) 
through (iii) would set forth the performance objectives stated in 
existing Sec.  74.51(a)(2) through (4).
    Proposed paragraph (a)(2) would retain the exemptions in existing 
Sec.  74.51(a) applicable to production or utilization facilities, 
ISFSIs, and any licensee operations involving waste disposal, but would 
remove the exemption for an irradiated fuel reprocessing plant. The 
removal of this exemption is in accordance with the NRC staff's 
recommendation in its regulatory framework gap analysis for irradiated 
fuel reprocessing documented in SECY-09-0082. The licensee of any 
future irradiated fuel reprocessing facility would likely be authorized 
to possess quantities of strategic SNM that need to be subject to the 
highest level of MC&A safeguards and security requirements, to ensure 
that this material would be adequately protected.
    To make the organization of requirements for Category I and 
Category III fuel fabrication facilities more consistent, changes in 
existing 10 CFR 74.51(b) and (c) are proposed, which would align the 
format with that used in existing 10 CFR 74.31(b) and (c). Thus, 10 CFR 
74.51(b) would be retitled, ``Implementation,'' and would contain 
elements of existing 10 CFR 74.51(c). Proposed 10 CFR 74.51(b) would 
refer to an ``MC&A plan'' rather than a ``FNMC plan,'' for the reasons 
previously discussed. The MC&A plan would need to achieve the general 
performance objectives in Sec. Sec.  74.3 and 74.51(a), and meet the 
requirements of Sec. Sec.  74.53, 74.55, 74.57, and 74.59.
    Proposed 10 CFR 74.51(c) would be retitled, ``Program 
capabilities,'' and would contain elements of existing Sec.  74.51(b). 
In addition to the MC&A plan requirements discussed in revised 10 CFR 
74.51(b), 10 CFR 74.51(c) would require that the plan incorporate 
checks and balances that are sufficient to detect falsification of data 
and reports that could conceal diversion of SNM or strategic SNM 
(SSNM). A plain language change to simplify paragraph (c)(1) would 
revise ``An individual'' to ``A single individual.'' A plain language 
change to simplify paragraph (c)(2) would revise ``Collusion between an 
individual with MC&A responsibilities and another individual who has 
responsibility or control within both the physical protection and the 
MC&A systems'' to ``Collusion between two individuals, one or both of 
whom have authorized access to SNM or SSNM.''
    Section 74.51(d) would be revised to replace ``FNMC'' plan with 
``MC&A'' plan. Additionally, the times to perform physical inventories 
would be expressed in terms of calendar days.
    Section 74.53 Process monitoring.
    Paragraph (a)(3) would be clarified to replace ``a consecutive 
three-month period'' with ``a period of 95 calendar days.''
    Paragraph (a)(4) would be clarified to replace ``any seven-
consecutive-day period'' with ``a period of 7 calendar days.''
    Paragraph (c)(1) would be clarified to replace ``monthly'' with 
``at intervals not to exceed 30 calendar days.''
    Section 74.57 Alarm resolution.
    Paragraph (c) would be revised to replace ``fundamental nuclear 
material control plan'' with ``MC&A plan.''
    Section 74.59 Quality assurance and accounting requirements.
    In paragraph (e)(7), the requirement to correct SSNM measurement 
differences ``accumulated over a six-month period'' would be clarified 
to instead reference ``a period not to exceed 185 calendar days.''
    In paragraph (f)(1), the requirement to perform a physical 
inventory ``every six calendar months'' would be clarified to instead 
reference ``every 185 calendar days,'' and ``45 days'' would be 
clarified to specify ``45 calendar days.'' The paragraph (f)(2)(i) 
tamper-safing provision would be revised by adding at its end the 
phrase ``and that include control of access to, and distribution of, 
unused seals and records,'' in order to make this provision consistent 
across subparts C, D, and E of 10 CFR part 74.
    With respect to required internal controls regarding how frequently 
scrap material must be measured, paragraph (h)(2)(ii) would be 
clarified by replacing ``six months'' with ``185 calendar days.'' 
Paragraph (h)(5) would be revised by adding at its beginning a 
requirement to designate MBAs and ICAs, in order to make this provision 
consistent across subparts C, D, and E of 10 CFR part 74.
    Appendix A to 10 CFR Part 74--Categories of Special Nuclear 
Material.
    Appendix A would be added to provide a table stating the elements, 
isotopic composition, and quantities of material that Category I, 
Category II, and Category III facilities are authorized to possess. 
Notes are included to state that sealed sources are excluded from the 
quantity limits in the table and that spent nuclear fuel is reduced one 
category level during the period of time that the radiation exposure 
exceeds 1 Sv per hour (100 rads per hour) at 1 meter, unshielded. 
Formulae are included to calculate a quantity of SSNM for Category I, 
Category II, or Category III.
    Section 150.17 Submission to Commission of nuclear material status 
reports.
    The requirements in paragraph (a) would be clarified by arranging 
the requirements into numbered subsections (a)(1), (2), (3), and (4). 
The revised introductory paragraph would clarify the requirement to 
submit both a Material Balance Report and a Physical Inventory Listing 
Report to the NMMSS in accordance with the instructions in paragraph 
(a)(1). The reports would be due between January 1 and March 31 of each 
year.
    Paragraph (a)(1) would include the reporting instructions that are 
in the current requirements in paragraph (a) and would state that 
individual reports must be prepared for each Reporting Identification 
Symbol account using the information in NUREG/BR-0007 and NMMSS Report 
D-24, ``Personal Computer Data Input for NRC Licensees.'' Paragraph 
(a)(2) would include the provision that is currently in paragraph (a) 
stating that the NRC may permit reports to be submitted at other times 
for good cause. Paragraph (a)(3) would include the statement in 
existing paragraph (b) regarding the submittal of reports under 10 CFR 
75.35 (pertaining to implementation of the U.S./IAEA Safeguards 
Agreement). Paragraph (a)(4) would include the requirement that is 
currently in paragraph (a) that a licensee must resolve any 
discrepancies identified during the report review and reconciliation 
process within 30 calendar days of being notified of a discrepancy 
identified by the NRC.
    Paragraph (b)(1) would be revised to remove the reference to 10 CFR 
part 72, and paragraph (b)(2) would also be revised to remove the 
reference to 10 CFR part 72.

VI. Availability of Documents

    The following table indicates the proposed rule and some related 
background documents that are available to the public and how they may 
be obtained. See the information contained in the Accessing Information 
and Submitting Comments section of SUPPLEMENTARY INFORMATION on the 
physical locations and Web sites where the documents may be accessed.

[[Page 67239]]



------------------------------------------------------------------------
           Document                PDR       Web     NRC Library (ADAMS)
------------------------------------------------------------------------
``Draft Environmental                 X         X   ML13228A222
 Assessment and Finding of No
 Significant Impact for the
 Proposed Rule Amending 10 CFR
 Parts 40, 70, 72, 74, and
 150; Amendments to Material
 Control and Accounting
 Regulations''.
``Draft Regulatory Analysis           X         X   ML13228A223
 for Proposed Rule: Amendments
 to Material Control and
 Accounting Regulations (10
 CFR part 74)''.
SECY-08-0059, ``Rulemaking            X         X   ML080580307
 Plan: Party 74--Material
 Control and Accounting of
 Special Nuclear Material''.
Staff Requirements Memorandum         X         X   ML090360473
 (SRM) for SECY-08-0059.
SECY-09-0082, ``Update on             X         X   ML091520280
 Reprocessing Regulatory
 Framework--Summary of Gap
 Analysis''.
------------------------------------------------------------------------

VII. Criminal Penalties

    For the purpose of Section 223 of the Atomic Energy Act of 1954, as 
amended (AEA), the Commission is proposing to amend 10 CFR parts 40, 
70, 72, 74, and 150 under one or more of Sections 161b, 161i, or 161o 
of the AEA. Willful violations of the rule would be subject to criminal 
enforcement.

VIII. Agreement State Compatibility

    Under the ``Policy Statement on Adequacy and Compatibility of 
Agreement States Programs,'' approved by the Commission on June 20, 
1997, and published in the Federal Register (62 FR 46517; September 3, 
1997), the regulations affected by this rulemaking are classified as 
compatibility Category ''NRC.'' The NRC program elements in this 
category are those that relate directly to areas of regulation reserved 
to the NRC by the AEA, or the provisions of 10 CFR, and cannot be 
relinquished to the Agreement States. Thus, States should not adopt 
these program elements.

IX. Plain Writing

    The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal 
agencies to write documents in a clear, concise, and well-organized 
manner. The NRC has written this document to be consistent with the 
Plain Writing Act as well as the Presidential Memorandum, ``Plain 
Language in Government Writing,'' published June 10, 1998 (63 FR 
31883). The NRC requests comment on the proposed rule with respect to 
the clarity and effectiveness of the language used.

X. Voluntary Consensus Standards

    The National Technology Transfer and Advancement Act of 1995 (Pub. 
L. 104-113) requires that Federal agencies use technical standards that 
are developed or adopted by voluntary consensus standards bodies unless 
the use of such a standard is inconsistent with applicable law or 
otherwise impractical. In this proposed rule, the NRC would revise and 
consolidate requirements for MC&A in 10 CFR part 74. The NRC is not 
aware of any comprehensive voluntary consensus standards that address 
the proposed subject matter of this proposed rule. The NRC will 
consider using a voluntary consensus standard if an appropriate 
standard is identified. If a voluntary consensus standard is identified 
for consideration, the submittal should explain why the standard should 
be used.

XI. 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. 
The proposed rule pertains to MC&A program requirements, which consist 
of administrative procedures and operations to track and control SNM 
and related information, in order to deter and detect any loss, theft, 
diversion, or unauthorized production of nuclear material. As the 
proposed amendments pertain to information collection and reporting 
requirements, adopting them would have no significant impact on the 
quality of the human environment. The draft environmental assessment, 
entitled ``Draft Environmental Assessment and Finding of No Significant 
Impact for the Proposed Rule Amending 10 CFR Parts 40, 70, 72, 74, And 
150; Amendments to Material Control and Accounting Regulations,'' can 
be found at ADAMS Accession No. ML12291A792.

XII. Paperwork Reduction Act Statement

    This proposed rule amends information collection requirements 
contained in 10 CFR parts 72 and 74 that are subject to the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq). These information 
collection requirements have been submitted to the Office of Management 
and Budget (OMB) for review and approval. The proposed changes to 10 
CFR parts 40, 70, and 150 do not contain new or amended information 
collection requirements. Existing requirements were approved by the 
OMB, approval numbers 3150-0132 and 3150-0123.
    Type of submission, new or revision: Revision.
    The title of the information collection: 10 CFR part 72, 
``Licensing Requirements for the Independent Storage of Spent Nuclear 
Fuel, High-Level Radioactive Waste, and Reactor-Related Greater than 
Class C Waste'' and 10 CFR part 74, ``Material Control and Accounting 
of Special Nuclear Material.''
    The form number if applicable: U.S. Department of Energy (DOE)/NRC 
Form 741, ``Nuclear Material Transaction Report,'' DOE/NRC Form 742, 
``Material Balance Report,'' and DOE/NRC Form 742C, ``Physical 
Inventory Listing.''
    How often the collection is required: Licensee timeframes for 
reporting to the NRC have not changed for NRC Forms 741, 742, and 742C. 
Licensees under subparts B and C of 10 CFR part 74 would submit reports 
within 60 calendar days after the start of the physical inventory 
covered by the reports, at intervals not to exceed 370 calendar days or 
12 months. Licensees under subpart D of 10 CFR part 74 would submit 
reports within 60 calendar days after the start of the physical 
inventory covered by the reports, at intervals not to exceed 9 months. 
Licensees under subpart E of 10 CFR part 74 would be required to submit 
reports within 30 calendar days after the start of the physical 
inventory covered by the reports, at intervals not to exceed 65 
calendar days until performance acceptable to the NRC has been 
demonstrated and the Commission has issued formal approval to perform 
physical inventories at intervals not to exceed 185 calendar days. 
Forms are also submitted when a nuclear material transaction is made.
    Who will be required or asked to report: Persons licensed under 10 
CFR parts 50, 52, 70, 72, and 76 who possess and use certain forms and 
quantities of SNM.
    An estimate of the number of annual responses: 68 responses (0 
reporting responses + 68 record keepers).

[[Page 67240]]

    The estimated number of annual respondents: 68.
    An estimate of the total number of hours needed annually to 
complete the requirement or request: 1,213 hours (0 hours reporting 
plus 1,213 hours recordkeeping).
    Abstract: The NRC is proposing to amend its regulations to revise 
and consolidate the requirements for MC&A of SNM in 10 CFR part 74. The 
proposed amendments relocate the NMMSS-related reporting requirements 
for a licensee operating an ISFSI from 10 CFR part 72 to 10 CFR part 
74; however, no changes have been made to the reporting requirements 
for NRC Forms 741, 742, or 742C. The proposed rule would change 
recordkeeping requirements in subparts B, C, and D. The reactor 
licensees have already implemented item control systems to document, 
control, and account for discrete items and thus would not be impacted 
by the proposed requirement. The ISFSI licensees would be impacted by 
the proposed item control requirement. Licensees under subpart C would 
include currently exempted items in their item controls. Currently 
there is no licensee operating a facility under subpart D.
    The NRC is seeking public comment on the potential impact of the 
information collections contained in this 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?
    The public may examine and have copied, for a fee, publicly 
available documents, including the OMB supporting statement, at the 
NRC's PDR, One White Flint North, 11555 Rockville Pike, Room O-1 F21, 
Rockville, MD 20852. The OMB clearance package and rule are available 
on the NRC's Web site, http://www.nrc.gov/public-involve/doc-comment/omb/index.html, for 60 days after the signature date of this document.
    Send comments on any aspect of these proposed regulations related 
to information collections, including suggestions for reducing the 
burden and on the previously stated issues, by December 9, 2013 to the 
Information Services Branch (T-5 F53), U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001, or by Internet electronic mail 
to [email protected] and to the Desk Officer, Chad 
Whiteman, Office of Information and Regulatory Affairs, NEOB-10202 
(3150-0132 and 3150-0123), Office of Management and Budget, Washington, 
DC 20503. Comments can also be emailed to [email protected] 
or submitted by telephone to (202) 395-4718. Comments on the proposed 
information collections may also be submitted via the Federal 
rulemaking Web site http://www.regulations.gov, Docket ID NRC-2009-
0096. 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.

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.

XIII. Regulatory Analysis

    The Commission has prepared a draft regulatory analysis on this 
proposed regulation. The analysis examines the costs and benefits of 
the alternatives considered by the Commission. The Commission requests 
public comment on the draft regulatory analysis (RA), which can be 
found at ADAMS Accession No. ML13228A223.

XIV. 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. The majority of companies that own these plants do 
not fall within the scope of the definition of ''small entities'' set 
forth in the Regulatory Flexibility Act or the size standards 
established by the NRC (10 CFR 2.810).
    The NRC is seeking public comment on the potential impact of the 
proposed rule on small entities. The NRC particularly desires comment 
from licensees who qualify as small businesses, specifically as to how 
the proposed regulation will affect them and how the regulation may be 
tiered or otherwise modified to impose less stringent requirements on 
small entities while still adequately protecting the public health and 
safety and common defense and security. Comments on how the regulation 
could be modified to take into account the differing needs of small 
entities should specifically discuss:
    (a) The size of the business and how the proposed regulation would 
result in a significant economic burden upon it as compared to a larger 
organization in the same business community;
    (b) How the proposed regulation could be further modified to take 
into account the business' differing needs or capabilities;
    (c) The benefits that would accrue, or the detriments that would be 
avoided, if the proposed regulation was modified as suggested by the 
commenter;
    (d) How the proposed regulation, as modified, would more closely 
equalize the impact of the NRC's regulations as opposed to providing 
special advantages to any individuals or groups; and
    (e) How the proposed regulation, as modified, would still 
adequately protect the public health and safety and common defense and 
security.

XV. Backfitting and Issue Finality

    The NRC has determined that the NRC's backfitting and issue 
finality regulations in 10 CFR 50.109, 70.76, 72.62, 76.76, and in 10 
CFR part 52, do not apply to this proposed rule because this amendment 
would not involve any provisions that are subject to these backfitting 
and issue finality provisions. The proposed rule addresses MC&A 
programs, which consist of administrative procedures and operations to 
track and control SNM and related information to deter and detect any 
loss, theft, diversion, or unauthorized production of nuclear material. 
The NRC regards MC&A requirements as constituting information 
collection and reporting requirements. The NRC has long taken the 
position that information collection and reporting requirements are not 
subject to the NRC's backfitting and issue finality regulations, as 
reflected in past MC&A rulemakings published in the Federal Register 
(e.g., 56 FR 55991; October 31, 1991, 67 FR 78130; December 23, 2002, 
and 73 FR 32453; June 9, 2008). The remainder of this section discusses 
the NRC's bases for determining that MC&A activities are information 
collection and reporting requirements.
    There are several bases for the NRC's determination that MC&A 
activities required by 10 CFR part 74 are information collection and 
reporting requirements. First, several of the existing general 
provisions in 10 CFR part 74, subpart A, indicate that 10 CFR part 74 
includes information collection and reporting requirements. For 
example, 10 CFR 74.1, Purpose, states

[[Page 67241]]

that the requirements in 10 CFR part 74 address ``the control and 
accounting of special nuclear material at fixed sites and for 
documenting the transfer of special nuclear material,'' and include 
general ``reporting requirements'' (emphases added). This focus on 
information collection and reporting requirements is further emphasized 
by the current language of paragraph (a) of 10 CFR 74.2, Scope, which 
states, ``The general reporting and recordkeeping requirements of 
subpart B . . . apply to each person licensed under this chapter . . . 
(emphasis added).'' Similarly, Sec.  74.2(c) states that the 
regulations in 10 CFR part 74 ``establish procedures and criteria for 
material control and accounting for the issuance of a certificate of 
compliance or the approval of a compliance plan'' (emphasis added).
    The proposed revisions to 10 CFR part 74 subpart A do not change 
the purpose and scope of 10 CFR part 74. The proposed addition to 10 
CFR 74.2(a) states that the general reporting and recordkeeping 
requirements of subpart B of this part also apply to licensees who 
possess spent nuclear fuel at independent spent fuel storage 
installations [emphasis added]. Paragraph (b) of proposed Sec.  74.3 
states, ``In addition, specific control and accounting requirements are 
included in subparts C, D and E for certain licensees. . .'' (emphasis 
added).
    Given the language in the preceding paragraphs referencing the 
existing and proposed provisions of 10 CFR part 74, the NRC believes 
that the primary issue--from the standpoint of backfitting and issue 
finality--is whether MC&A requirements may reasonably be deemed 
``information collection and reporting'' requirements. In the NRC's 
view, the answer is in the affirmative. Required MC&A actions represent 
a systematic approach for ensuring that information about SNM at a 
facility is accurate, which in turn, helps achieve the objective of 
ensuring that items containing SNM are not lost, stolen, diverted, or 
misused through human error, or because of deliberate acts of 
malfeasance. Item is a defined term in 10 CFR part 74, and means ``any 
discrete quantity or container of SNM or source material, not 
undergoing processing, having an unique identity and also having an 
assigned element and isotope quantity.'' The systematic approach for 
managing items under 10 CFR part 74 has two aspects: accounting for 
items of material; and maintaining control over such items.
    The concept of material accounting is reflected in the proposed 
definition of accounting that would be added to 10 CFR 74.4 to read as 
follows: Accounting means a system that documents the quantities of SNM 
held on current inventory by the licensee, and includes tracking of 
receipts, shipments, and measured discards, and transfers of SNM. 
Material accounting constitutes the principles, processes and 
procedures for collecting and maintaining accurate information and 
records on the nature and quantities of SNM within the licensee's 
control. By accurate information and records, the NRC means that the 
information has been collected and maintained in a manner that 
minimizes the possibility of human error or deliberate acts of 
malfeasance affecting the accuracy and quality of the information.
    The concept of material control is reflected in the proposed 
definitions that would be added to 10 CFR 74.4 and that read as 
follows. Item control area means a designated administrative area 
within the controlled access area, in which SNM is maintained in such a 
way that, at any time, a count of the items and the related material 
quantities can be obtained using the accounting system. Control of 
items moving into, out of, and within an ICA is by the identity of an 
item and its assigned material quantity. Item control system means a 
system tracking the creation, identity, element and isotopic content, 
location, and disposition of all items, which enables the licensee to 
maintain current knowledge of each item.
    Material control constitutes the administrative processes and 
procedures that a holder of SNM employs to control the location and 
accounting of items containing SNM, by applying appropriate material 
accounting principles, processes and procedures. These processes and 
procedures for controlling the quantities, location, storage, 
transportation and use of items containing SNM support the accuracy of 
the material accounting information each time it is collected, and 
ensure that the information remains accurate throughout the period of 
time that the items are in the possession of the licensee. This concept 
of control is reflected in the proposed definition that would be added 
to 10 CFR 74.4: Material control and accounting means a program to 
control and account for certain types of nuclear material used at a 
licensed facility, including SNM and source material, and which 
controls and accounts for unauthorized use of equipment capable of 
producing enriched uranium. The purpose of an MC&A program is to deter 
and detect any loss, theft, diversion, misuse, or unauthorized 
production of nuclear material.
    Material accounting and material control, properly integrated, 
ensure that accurate information (i.e., information that is not 
inaccurate due to human error or deliberate acts of malfeasance) is 
developed and maintained on items of SNM in the licensee's possession. 
By doing so, the NRC's regulatory objective (of ensuring that SNM is 
not lost, stolen, diverted, or misused through human error or because 
of deliberate acts of malfeasance) is achieved.
    The performance requirements for the MC&A program, set forth in 
proposed 10 CFR 74.3, General Performance Requirements, demonstrate 
that such a program represents a system of information collection and 
reporting requirements directed at achieving the NRC's regulatory 
objective of ensuring that SNM is not lost, stolen, diverted, or 
misused. Proposed 10 CFR 74.3 would require licensees to implement an 
MC&A program to achieve five general performance objectives. The nature 
of the five objectives (shown in Table 3) includes maintaining 
accurate, current, and reliable information to confirm quantities and 
locations of SNM. The information would enable a licensee to detect, 
respond and resolve any anomaly concerning SNM being held by the 
licensee and would enable the licensee to make a rapid determination of 
the actual situation. A licensee would be able to provide reliable 
information to aid in the investigation and recovery of SNM. A licensee 
would be expected to control access to MC&A information and prevent 
unauthorized use of the information by adversaries.
    The NRC notes that nothing in the current provisions of part 74, or 
in the proposed amendments to part 74, precludes affected licensees 
from possessing or using SNM. Such substantive health and safety or 
common defense and security requirements are set forth in other parts 
of 10 CFR parts 20, 70, 71, 72, 73, 75, 76, 95, and 110. A review of 
the substantive provisions of the proposed rule (i.e., those proposed 
changes to the regulations other than conforming changes, plain 
language revisions, and other changes of an administrative or 
organizational nature) confirms that the overall character of the 
rulemaking is one of information collection and reporting.
    Table 3 summarizes the key substantive provisions of the proposed 
rule, together with a short explanation why the provision includes an 
information collection and reporting requirement.

[[Page 67242]]



  Table 3--Characterization of Proposed Substantive Amendments to 10 CFR Part 74 as Information Collection and
                                             Reporting Requirements
----------------------------------------------------------------------------------------------------------------
                                                                               Explanation of why the proposed
       Proposed rule citation         Description of proposed requirement     requirement would be information
                                                                                  collection and reporting
----------------------------------------------------------------------------------------------------------------
74.3 General performance objectives  This section would require a licensee  The proposed general performance
                                      authorized by the NRC to possess SNM   objectives in Sec.   74.3 are
                                      in a quantity greater than 350 grams   directed at maintaining knowledge
                                      to implement and maintain an MC&A      of SNM which is done through
                                      program that achieves the five         collection and recording of
                                      general performance objectives, as     information. Loss of material is
                                      follows:                               detected through activities such as
                                     (a) Maintain accurate, current, and     physical inventory that provide
                                      reliable information on, and confirm   information to verify the accuracy
                                      the quantities and locations of SNM    of the MC&A records at a site. MC&A
                                      in its possession;.                    information is essential to
                                     (b) Detect, respond to, and resolve     detecting and resolving any actual
                                      any anomaly indicating a possible      or potential loss, theft,
                                      loss, theft, diversion, or misuse of   diversion, or misuse. Finally,
                                      SNM;.                                  restricting access to MC&A records
                                     (c) Permit rapid determination of       reduces the likelihood that these
                                      whether an actual loss, theft,         records could be tampered with in a
                                      diversion, or misuse of SNM has        manner that would invalidate the
                                      occurred;.                             information they contain (i.e.,
                                     (d) Provide information to aid in the   concealing the loss, theft or
                                      investigation and recovery of          diversion of SNM).
                                      missing SNM in the event of an
                                      actual loss, theft, diversion, or
                                      misuse; and.
                                     (e) Control access to MC&A
                                      information that might assist
                                      adversaries to carry out acts of
                                      theft, diversion, misuse, or
                                      radiological sabotage involving SNM.
74.19 Recordkeeping, procedures,     Paragraph (d) would require            The reactor and ISFSI licensees
 item controls, and physical          production or utilization facilities   would be required to periodically
 inventories.                         licensed under 10 CFR part 50 or 52    collect and verify the MC&A
                                      of this chapter and independent        information recorded on site.
                                      spent fuel storage installations
                                      licensed under 10 CFR part 72 of
                                      this chapter to establish, document,
                                      implement, and maintain an item
                                      control system as defined in Sec.
                                      74.4.
74.31 Nuclear material control and   To achieve the general performance     Removing some of the currently
 accounting for special nuclear       objectives, a licensee's MC&A plan     allowed exemptions for item control
 material of low strategic            would include the capabilities         for Category III licensees would
 significance.                        described in paragraph (c).            require these licensees to collect
                                     In paragraph (c)(6) a licensee would    and maintain additional MC&A
                                      be required to establish, document,    information on these types of items
                                      implement, and maintain an item        and verify the information
                                      control system as defined in Sec.      periodically.
                                      74.4 to ensure that items are stored
                                      and handled or subsequently measured
                                      in a manner such that unauthorized
                                      removals of individual items or any
                                      quantity of SNM from items would be
                                      detected. Items in solution with a
                                      concentration of less than 5 grams
                                      of uranium-235 per liter and items
                                      of waste destined for burial or
                                      incineration would continue to be
                                      exempted from the item control.
                                     In paragraph (c)(9) a licensee would   Tamper-safing as defined in Sec.
                                      be required to maintain and follow     74.4, increases the integrity of
                                      procedures for tamper-safing (as       MC&A information collected and
                                      defined in Sec.   74.4) of             maintained by the licensee. This
                                      containers or vaults (as defined in    reduces the likelihood that these
                                      Sec.   74.4) containing SNM, which     records could be tampered with in a
                                      include control of access to, and      manner that would invalidate the
                                      distribution of, unused seals and      information they contain (i.e.,
                                      records.                               concealing the loss, theft or
                                                                             diversion of SNM).
                                     In paragraph (c)(10) a licensee would  The use of MBAs, ICAs, and
                                      be required to designate material      designated custodians provides a
                                      balance areas and item control areas   means of tracking SNM at a more
                                      and assign custodial responsibility    localized level than the entire
                                      for each of these areas in a manner    site. These areas and their
                                      that ensures that such                 custodians help to collect MC&A
                                      responsibility can be effectively      information on the movement of SNM
                                      executed for all SNM possessed under   through the facility.
                                      the license.

[[Page 67243]]

 
74.33 Nuclear material control and   To achieve the general performance     Removing some of the currently
 accounting for uranium enrichment    objectives, a licensee's MC&A plan     allowed exemptions for item control
 facilities authorized to produce     would include the capabilities         for Category III licensees would
 special nuclear material of low      described in paragraph (c).            require these licensees to maintain
 strategic significance.             In paragraph (c)(6) a licensee would    additional MC&A information on
                                      be required to establish, document,    these types of items and verify the
                                      implement, and maintain an item        information periodically.
                                      control system as defined in Sec.
                                      74.4 to ensure that items are stored
                                      and handled or subsequently measured
                                      in a manner such that unauthorized
                                      removal of any quantity of
                                      U[dash]235, as individual items or
                                      as uranium contained in items, will
                                      be detected. Items in solution with
                                      a concentration of less than 5 grams
                                      of uranium[dash]235 per liter and
                                      items of waste destined for burial
                                      or incineration would be exempted
                                      from the item control.
                                     In paragraph (c)(9) a licensee would   Tamper-safing, as defined in Sec.
                                      be required to maintain and follow     74.4, increases the integrity of
                                      procedures for tamper-safing (as       MC& A information collected and
                                      defined in Sec.   74.4) of             maintained by the licensee. This
                                      containers or vaults (as defined in    reduces the likelihood that these
                                      Sec.   74.4) containing SNM, which     records could be tampered with in a
                                      include control of access to, and      manner that would invalidate the
                                      distribution of, unused seals and      information they contain (i.e.,
                                      records.                               concealing the loss, theft or
                                                                             diversion of SNM).
                                     In paragraph (c)(10) a licensee would  The use of MBAs, ICAs, and
                                      be required to designate material      designated custodians provides a
                                      balance areas and item control areas   means of tracking SNM at a more
                                      and assign custodial responsibility    localized level than the entire
                                      for each of these areas in a manner    site. Collecting information on SNM
                                      that ensures that such                 movements within specific areas of
                                      responsibility can be effectively      the plant provides increased
                                      executed for all SNM possessed under   knowledge of the quantities and
                                      the license.                           movement of SNM through the
                                                                             facility. By increasing the number
                                                                             of data collection areas, and the
                                                                             need to reconcile inventory
                                                                             statements for different areas,
                                                                             this reduces the likelihood that
                                                                             these records could be tampered
                                                                             with in a manner that would
                                                                             invalidate the information they
                                                                             contain (i.e., concealing the loss,
                                                                             theft or diversion of SNM).
74.43 Internal controls, inventory,  Paragraph (b)(5) would require a       Removing some of the currently
 and records.                         licensee to establish, document,       allowed exemptions for item control
                                      implement, and maintain an item        for Category II licensees would
                                      control system as defined in Sec.      require these licensees to maintain
                                      74.4 to ensure that items are stored   additional MC&A information on
                                      and handled or subsequently measured   these types of items and verify the
                                      in a manner such that unauthorized     information periodically.
                                      removals of individual items or any
                                      quantity of material (as defined in
                                      Sec.   74.4) from items will be
                                      detected.
                                     Paragraph (b)(6) would exempt from
                                      the requirements of paragraph (b)(5)
                                      an item in solution with a
                                      concentration of less than 5 grams
                                      of U[dash]235 per liter, and items
                                      of waste destined for burial or
                                      incineration.
                                     In paragraph (c)(3) a licensee would   Tamper-safing, as defined in Sec.
                                      be required to maintain and follow     74.4, increases the integrity of
                                      procedures for tamper-safing (as       MC& A information collected and
                                      defined in Sec.   74.4) of             maintained by the licensee. This
                                      containers or vaults (as defined in    reduces the likelihood that these
                                      Sec.   74.4) containing SNM, which     records could be tampered with in a
                                      include control of access to, and      manner that would invalidate the
                                      distribution of, unused seals and      information they contain (i.e.,
                                      records.                               concealing the loss, theft or
                                                                             diversion of SNM).
                                     In paragraph (c)(9) a licensee would   The use of MBAs, ICAs, and
                                      be required to designate material      designated custodians provides a
                                      balance areas and item control areas   means of tracking SNM at a more
                                      and assign custodial responsibility    localized level than the entire
                                      for each of these areas in a manner    site. Collecting information on SNM
                                      that ensures that such                 movements within specific areas of
                                      responsibility can be effectively      the plant provides increased
                                      executed for all SNM possessed under   knowledge of the quantities and
                                      the license.                           movement of SNM through the
                                                                             facility. By increasing the number
                                                                             of data collection areas, and the
                                                                             need to reconcile inventory
                                                                             statements for different areas,
                                                                             this reduces the likelihood that
                                                                             these records could be tampered
                                                                             with in a manner that would
                                                                             invalidate the information they
                                                                             contain (i.e., concealing the loss,
                                                                             theft or diversion of SNM).

[[Page 67244]]

 
74.59 Quality assurance and          Paragraph (f)(2)(i) would require a    Tamper-safing, as defined in Sec.
 accounting requirements.             licensee to develop procedures for     74.4, increases the integrity of
                                      tamper-safing of containers or         MC& A information collected and
                                      vaults containing SSNM not in          maintained by the licensee. This
                                      process that include adequate          reduces the likelihood that these
                                      controls to assure the validity of     records could be tampered with in a
                                      assigned SSNM values and which         manner that would invalidate the
                                      include control of access to, and      information they contain (i.e.,
                                      distribution of, unused seals and      concealing the loss, theft or
                                      records.                               diversion of SNM).
                                     Paragraph (h)(5) would require a       The use of MBAs, ICAs, and
                                      licensee to designate material         designated custodians provides a
                                      balance areas and item control areas   means of tracking SNM at a more
                                      and assign custodial responsibility    localized level than the entire
                                      for each of these areas in a manner    site. Collecting information on SNM
                                      that ensures that such                 movements within specific areas of
                                      responsibility can be effectively      the plant provides increased
                                      executed for all SSNM possessed        knowledge of the quantities and
                                      under the license.                     movement of SNM through the
                                                                             facility. By increasing the number
                                                                             of data collection areas, and the
                                                                             need to reconcile inventory
                                                                             statements for different areas,
                                                                             this reduces the likelihood that
                                                                             these records could be tampered
                                                                             with in a manner that would
                                                                             invalidate the information they
                                                                             contain (i.e., concealing the loss,
                                                                             theft or diversion of SNM).
----------------------------------------------------------------------------------------------------------------

    In as much as the MC&A provisions constitute requirements to 
collect and report information, they are not subject to backfitting and 
issue finality requirements. Accordingly, the NRC did not prepare a 
backfit analysis for the proposed rulemaking. This conclusion is 
consistent with the NRC's position on the applicability of backfitting 
to past MC&A rulemakings published in the Federal Register (e.g., 56 FR 
55991; October 31, 1991, 67 FR 78130; December 23, 2002, and 73 FR 
32453; June 9, 2008).

List of Subjects

10 CFR Part 40

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

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.

10 CFR Part 74

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

10 CFR Part 150

    Criminal penalties, Hazardous materials transportation, 
Intergovernmental relations, Nuclear materials, Reporting and 
recordkeeping requirements, Security measures, Source material, SNM.

    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 40, 70, 72, 74, and 150.

0
1. The authority citation for part 40 continues to read as follows:

PART 40--DOMESTIC LICENSING OF SOURCE MATERIAL

    Authority: Atomic Energy Act secs. 11(e)(2), 62, 63, 64, 65, 81, 
161, 181, 182, 183, 186, 193, 223, 234, 274, 275 (42 U.S.C. 
2014(e)(2), 2092, 2093, 2094, 2095, 2111, 2113, 2114, 2201, 2231, 
2232, 2233, 2236, 2243, 2273, 2282, 2021, 2022); Energy 
Reorganization Act secs. 201, 202, 206 (42 U.S.C. 5841, 5842, 5846); 
Government Paperwork Elimination Act sec. 1704 (44 U.S.C. 3504 
note); Energy Policy Act of 2005, Pub. L. No. 109-59, 119 Stat. 594 
(2005).
    Section 40.7 also issued under Energy Reorganization Act sec. 
211, Pub. L. 95-601, sec. 10, as amended by Pub. L. 102-486, sec. 
2902 (42 U.S.C. 5851). Section 40.31(g) also issued under Atomic 
Energy Act sec. 122 (42 U.S.C. 2152). Section 40.46 also issued 
under Atomic Energy Act sec. 184 (42 U.S.C. 2234). Section 40.71 
also issued under Atomic Energy Act sec. 187 (42 U.S.C. 2237).

0
2. In Sec.  40.64, revise paragraphs (b)(1) and (2) to read as follows:


Sec.  40.64  Reports.

* * * * *
    (b) * * *
    (1) Possesses, or had possessed in the previous reporting period, 
at any one time and location, one kilogram or more of uranium or 
thorium source material with foreign obligations as defined in this 
part, shall document holdings as of September 30 of each year and 
submit to the Commission within 30 days, a statement of its source 
material inventory with foreign obligations as defined in this part. 
Alternatively, this information may be submitted with the licensee's 
material status reports on SNM filed under part 74 of this chapter, as 
a statement of its source material inventory with foreign obligations 
as defined in this part. This statement must be submitted to the 
address specified in the reporting instructions in NUREG/BR-0007, and 
include the Reporting Identification Symbol (RIS) assigned by the 
Commission to the licensee.
    (2) Possesses, or had possessed in the previous reporting period, 
one kilogram or more of uranium or thorium source material pursuant to 
the operation of

[[Page 67245]]

enrichment services, downblending uranium that has an initial 
enrichment of the U-235 isotope of 10 percent or more, or in the 
fabrication of mixed-oxide fuels shall complete and submit, in 
computer-readable format, Material Balance and Physical Inventory 
Listing Reports concerning all source material that the licensee has 
received, produced, possessed, transferred, consumed, disposed of, or 
lost. Reports must be submitted for each RIS account including all 
holding accounts. Each licensee shall prepare and submit these reports 
as specified in the instructions in NUREG/BR-0007 and NMMSS Report D-
24, ``Personal Computer Data Input for NRC Licensees.'' These reports 
must document holdings as of September 30 of each year and must be 
submitted to the Commission within 30 days. Alternatively, these 
reports may be submitted with the licensee's material status reports on 
special nuclear material filed under part 74 of this chapter. Copies of 
the reporting instructions may be obtained either by writing to the 
U.S. Nuclear Regulatory Commission, Division of Fuel Cycle Safety and 
Safeguards, Washington, DC 20555-0001, or by email to 
[email protected]. Each licensee required to report 
material balance, inventory, and/or foreign obligation information, as 
detailed in this part, shall resolve any discrepancies identified 
during the report review and reconciliation process within 30 calendar 
days of notification of a discrepancy identified by the NRC.
* * * * *
0
3. The authority citation for part 70 continues to read as follows:

PART 70--DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL

    Authority: Atomic Energy Act secs. 51, 53, 161, 182, 183, 193, 
223, 234 (42 U.S.C. 2071, 2073, 2201, 2232, 2233, 2243, 2273, 2282, 
2297f); secs. 201, 202, 204, 206, 211 (42 U.S.C. 5841, 5842, 5845, 
5846, 5851); Government Paperwork Elimination Act sec. 1704 (44 
U.S.C. 3504 note); Energy Policy Act of 2005, Pub. L. No. 109-58, 
119 Stat. 194 (2005).
    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 70.21(g) also issued under Atomic Energy Act sec. 122 
(42 U.S.C. 2152). Section 70.31 also issued under Atomic Energy Act 
sec. 57(d) (42 U.S.C. 2077(d)). Sections 70.36 and 70.44 also issued 
under Atomic Energy Act sec. 184 (42 U.S.C. 2234). Section 70.81 
also issued under Atomic Energy Act secs. 186, 187 (42 U.S.C. 2236, 
2237). Section 70.82 also issued under Atomic Energy Act sec. 108 
(42 U.S.C. 2138).


0
4. In Sec.  70.32, revise paragraphs (c)(1)(i), (ii), and (iii) to read 
as follows:


Sec.  70.32  Conditions of licenses.

* * * * *
    (c)(1) * * *
    (i) The program for control and accounting of uranium source 
material at a uranium enrichment facility and SNM at all applicable 
facilities as implemented pursuant to Sec.  70.22(b), or Sec. Sec.  
74.31(b), 74.33(b), 74.41(b), or 74.51(b) of this chapter, as 
appropriate;
    (ii) The measurement control program for uranium source material at 
a uranium enrichment facility and for SNM at all applicable facilities 
as implemented pursuant to Sec. Sec.  74.31(b), 74.33(b), 74.45(c), or 
74.59(e) of this chapter, as appropriate; and
    (iii) Other material control procedures as the Commission 
determines to be essential for the safeguarding of uranium source 
material at a uranium enrichment facility or of SNM and providing that 
the licensee shall make no change that would decrease the effectiveness 
of the material control and accounting program implemented pursuant to 
Sec.  70.22(b), or Sec. Sec.  74.31(b), 74.33(b), 74.41(b), or 74.51(b) 
of this chapter, and the measurement control program implemented 
pursuant to Sec. Sec.  74.31(b), 74.33(b), 74.41(b), or 74.59(e) of 
this chapter without the prior approval of the Commission. A licensee 
desiring to make changes that would decrease the effectiveness of its 
material control and accounting program or its measurement control 
program shall submit an application for amendment to its license 
pursuant to Sec.  70.34.
* * * * *
0
5. The authority citation for part 72 continues to read as follows:

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

    Authority: Atomic Energy Act secs. 51, 53, 57, 62, 63, 65, 69, 
81, 161, 182, 183, 184, 186, 187, 189, 223, 234, 274 (42 U.S.C. 
2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 
2234, 2236, 2237, 2238, 2273, 2282, 2021); Energy Reorganization Act 
sec. 201, 202, 206, 211 (42 U.S.C. 5841, 5842, 5846, 5851); National 
Environmental Policy Act sec. 102 (42 U.S.C. 4332); Nuclear Waste 
Policy Act secs. 131, 132, 133, 135, 137, 141 148 (42 U.S.C. 10151, 
10152, 10153, 10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 
(44 U.S.C. 3504 note); Energy Policy Act of 2005, Pub. L. No. 109-
58, 119 Stat. 549 (2005).
    Section 72.44(g) also issued under secs. Nuclear Waste Policy 
Act 142(b) and 148(c), (d) (42 U.S.C. 10162(b), 10168(c), (d)). 
Section 72.46 also issued under Atomic Energy Act sec. 189 (42 
U.S.C. 2239); Nuclear Waste Policy Act sec. 134 (42 U.S.C. 10154). 
Section 72.96(d) also issued under Nuclear Waste Policy Act sec. 
145(g) (42 U.S.C. 10165(g)). Subpart J also issued under Nuclear 
Waste Policy Act secs. 117(a), 141(h) (42 U.S.C. 10137(a), 
10161(h)). Subpart K is also issued under sec. 218(a) (42 U.S.C. 
10198).

0
6. In Sec.  72.9, revise paragraph (b) to read as follows:


Sec.  72.9  Information collection requirements: OMB approval.

* * * * *
    (b) The approved information collection requirements contained in 
this part appear in Sec. Sec.  72.7, 72.11, 72.16, 72.22 through 72.34, 
72.42, 72.44, 72.48 through 72.56, 72.62, 72.70 through 72.75, 72.77, 
72.79, 72.80, 72.90, 72.92, 72.94, 72.98, 72.100, 72.102, 72.103, 
72.104, 72.108, 72.120, 72.126, 72.140 through 72.176, 72.180 through 
72.186, 72.192, 72.206, 72.212, 72.218, 72.230,72.232, 72.234, 72.236, 
72.240, 72.242, 72.244, 72.248.
* * * * *
0
7. Revise Sec.  72.72 to read as follows:


Sec.  72.72  Material control and accounting requirements for source 
material and special nuclear material.

    (a) Each licensee shall follow the requirements of Sec.  40.61 and 
Sec.  40.64 of this chapter for source material.
    (b) Each licensee shall follow the requirements of 10 CFR part 74, 
subparts A and B, for special nuclear material.
0
8. Revise Sec.  72.74 to read as follows:


Sec.  72.74  Reports of accidental criticality.

    (a) Each licensee shall notify the NRC Headquarters Operations 
Center within one hour of discovery of accidental criticality.
    (b) Each licensee shall make the notifications required by 
paragraph (a) of this section to the NRC Headquarters Operations Center 
via any available telephone system to ensure that a report is received 
within one hour.
    (c) Reports required under Sec.  73.71 of this chapter need not be 
duplicated under the requirements of this section.
0
9. Remove and reserve Sec. Sec.  72.76 and 72.78.


Sec.  72.76  [Removed and Reserved]


Sec.  72.78  [Removed and Reserved]

0
10. The authority citation for part 74 continues to read as follows:

[[Page 67246]]

PART 74--MATERIAL CONTROL AND ACCOUNTING OF SPECIAL NUCLEAR 
MATERIAL

    Authority: Atomic Energy Act secs. 53, 57, 161, 182, 183, 223, 
234, 1701 (42 U.S.C. 2073, 2077, 2201, 2232, 2233, 2273, 2282, 
2297f); Energy Reorganization Act secs. 201, 202, 206 (42 U.S.C. 
5841, 5842, 5846); Government Paperwork Elimination Act sec. 1704 
(44 U.S.C. 3504 note).

0
11. In Sec.  74.2, revise the last sentence in paragraph (a) to read as 
follows:


Sec.  74.2  Scope.

    (a) * * * The general reporting and recordkeeping requirements of 
subpart B of this part also apply to licensees who possess spent 
nuclear fuel at independent spent fuel storage installations.
* * * * *
0
12. Add Sec.  74.3 to read as follows:


Sec.  74.3  General performance objectives.

    In addition to any other requirements in this part, each licensee 
who is authorized to possess or use SNM in a quantity greater than 350 
grams of contained uranium-235, uranium-233, or plutonium, or any 
combination thereof, at a fixed site, shall implement and maintain a 
material control and accounting program that enables the licensee to 
achieve the following general performance objectives in a timely 
manner:
    (a) Maintain accurate, current, and reliable information on, and 
confirm the quantities and locations of SNM in its possession;
    (b) Detect, respond to, and resolve any anomaly indicating a 
possible loss, theft, diversion, or misuse of SNM;
    (c) Permit rapid determination of whether an actual loss, theft, 
diversion, or misuse of SNM has occurred;
    (d) Provide information to aid in the investigation and recovery of 
missing SNM in the event of an actual loss, theft, diversion, or 
misuse; and
    (e) Control access to MC&A information that might assist 
adversaries to carry out acts of theft, diversion, misuse, or 
radiological sabotage involving SNM.
0
13. In Sec.  74.4:
0
a. Remove the definition for Effective kilograms of special nuclear 
material;
0
b. Add the definitions for Accounting, Custodian, Item control system, 
Item control area, Material balance area, and Material control and 
accounting in alphabetical order; and
0
c. Revise the definitions for Formula quantity, Special nuclear 
material of low strategic significance, and Special nuclear material of 
moderate strategic significance.
    The additions and revisions read as follows:


Sec.  74.4  Definitions.

* * * * *
    Accounting means a system that documents the quantities of special 
nuclear material (SNM) held on current inventory by the licensee, and 
includes tracking of receipts, shipments, and measured discards, and 
transfers of SNM.
* * * * *
    Custodian means an individual authorized and qualified by the 
licensee who is responsible for controlling the movement of all SNM 
into, out of, and within a material balance area.
* * * * *
    Formula quantity means strategic special nuclear material (SSNM) in 
any combination in a quantity of 5,000 grams or more computed by the 
formula, grams = (grams contained U-235) + 2.5 (grams U-233 + grams 
plutonium). This class of material is also referred to as a Category I 
quantity of material as shown in appendix A to this part.
* * * * *
    Item control area (ICA) means a designated administrative area 
within the controlled access area, in which SNM is maintained in such a 
way that, at any time, a count of the items and the related material 
quantities can be obtained using the accounting system. Control of 
items moving into, out of, and within an ICA is by the identity of an 
item and its assigned material quantity.
    Item control system means a system tracking the creation, identity, 
element and isotopic content, location, and disposition of all items, 
which enables the licensee to maintain current knowledge of each item.
* * * * *
    Material balance area (MBA) means a designated contiguous area in 
which the control of SNM is such that the quantity of material being 
moved into, out of, and within the MBA is an assigned value based on 
measurements of both the element content and the isotopic content.
    Material control and accounting (MC&A) means a program to control 
and account for certain types of nuclear material used at a licensed 
facility, including SNM and source material, and which controls and 
accounts for unauthorized use of equipment capable of producing 
enriched uranium. The purpose of an MC&A program is to deter and detect 
any loss, theft, diversion, misuse, or unauthorized production of 
nuclear material.
* * * * *
    Special nuclear material of low strategic significance means:
    (1)(i) Less than an amount of SNM of moderate strategic 
significance, but more than 15 grams of uranium-235 (contained in 
uranium enriched to 20 percent or more in the U-235 isotope) or 15 
grams of uranium-233 or 15 grams of plutonium or the combination of 15 
grams when computed by the equation, grams = grams contained U-235 + 
grams plutonium + grams U-233; or
    (ii) Less than 10,000 grams but more than 1,000 grams of uranium-
235 (contained in uranium enriched to 10 percent or more, but less than 
20 percent in the U-235 isotope); or
    (iii) 10,000 grams or more of uranium-235 contained in uranium 
enriched above natural, but less than 10 percent in the U-235 isotope.
    (2) This class of material is also referred to as a Category III 
quantity of material as shown in appendix A to this part.
    Special nuclear material of moderate strategic significance means:
    (1)(i) Less than a formula quantity of SSNM but more than 1,000 
grams of uranium-235 (contained in uranium enriched to 20 percent or 
more in the U-235 isotope) or more than 500 grams of uranium-233 or 
plutonium or in a combined quantity of more than 1,000 grams when 
computed by the equation, grams = (grams contained U-235) + 2 (grams U-
233 + grams plutonium); or
    (ii) 10,000 grams or more of uranium-235 (contained in uranium 
enriched to 10 percent or more but less than 20 percent in the U-235 
isotope).
    (2) This class of material is also referred to as a Category II 
quantity of material as shown in appendix A to this part.
* * * * *
0
14. In Sec.  74.11, revise paragraph (b) to read as follows:


Sec.  74.11  Reports of loss or theft or attempted theft or 
unauthorized production of special nuclear material.

* * * * *
    (b) Each licensee shall make the notifications required by 
paragraph (a) of this section to the NRC Headquarters Operations Center 
via any available telephone system to ensure that a report is received 
within 1 hour.
* * * * *
0
15. Revise Sec.  74.13 to read as follows:


Sec.  74.13  Material status reports.

    (a) All licensees who possess or who had possessed in the previous 
reporting period one gram or more of irradiated or

[[Page 67247]]

non-irradiated SNM are required to submit both a Material Balance 
Report and a Physical Inventory Listing Report of these materials to 
the NMMSS in accordance with the instructions in paragraph (b) of this 
section and according to the following schedule:
    (1) Commercial power reactor licensees, authorized under part 50 or 
part 52 of this chapter shall submit both reports within 60 calendar 
days of the beginning of the physical inventory covered by the reports;
    (2) Research and test reactors, authorized under part 50 of this 
chapter shall submit both reports within 60 calendar days of the 
beginning of the physical inventory covered by the reports;
    (3) Independent spent fuel storage licensees, authorized under part 
72 of this chapter shall submit both reports within 60 calendar days of 
the beginning of the physical inventory covered by the reports.
    (4) Licensees subject to Sec.  74.31 shall submit both reports 
within 60 calendar days of the beginning of the physical inventory 
covered by the reports;
    (5) Licensees operating uranium enrichment facilities shall submit 
both reports within 60 calendar days of the beginning of the physical 
inventory providing a total plant material balance as described in 
Sec.  74.33(c)(4)(i);
    (6) Licensees subject to subpart D of this part shall submit both 
reports within 60 calendar days of the beginning of the physical 
inventory covered by the reports;
    (7) Licensees subject to subpart E of this part shall submit both 
reports within 30 calendar days of the beginning of the physical 
inventory covered by the reports; and
    (8) All other licensees who possess, or had possessed in the 
previous reporting period, one gram or more of irradiated or non-
irradiated SNM shall submit both reports between January 1 and March 31 
of each year.
    (b) Each licensee shall prepare and submit the reports described in 
paragraph (a) of this section as follows:
    (1) Reports must be submitted for each Reporting Identification 
Symbol (RIS) account, including all holding accounts, concerning SNM 
that the licensee has received, produced, possessed, transferred, 
consumed, disposed, or lost.
    (2) Each licensee shall prepare and submit the reports described in 
this section as specified in the instructions in both NUREG/BR-0007 and 
NMMSS Report D-24 ``Personal Computer Data Input for NRC Licensees.''
    (i) This prescribed computer-readable report replaces the DOE/NRC 
Form 742, Material Balance Report, and DOE/NRC Form 742C, Physical 
Inventory Listing Report, which have been previously submitted in paper 
form.
    (ii) Copies of these instructions may be obtained from the U.S. 
Nuclear Regulatory Commission, Division of Fuel Cycle Safety and 
Safeguards, Washington, DC 20555-0001 or by email to 
[email protected].
    (c) The Commission may permit a licensee to submit the reports at 
other times for good cause. Such requests must be submitted in writing 
to Chief, Material Control and Accounting Branch, Division of Fuel 
Cycle Safety and Safeguards, Office of Nuclear Material Safety and 
Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555. 
The licensee must continue to report as required until such request is 
granted.
    (d) Any licensee who is required to submit routine Material Status 
Reports under Sec.  75.35 of this chapter (pertaining to implementation 
of the U.S./IAEA Safeguards Agreement) shall prepare and submit these 
reports only as provided in that section (instead of as provided in 
paragraphs (a) through (b) of this section).
    (e) Each licensee subject to the requirements of this section shall 
resolve any discrepancies identified during the report review and 
reconciliation process within 30 calendar days of notification of a 
discrepancy identified by the NRC.
0
16. In Sec.  74.15, revise paragraph (b)(2) to read as follows:


Sec.  74.15  Nuclear material transaction reports.

* * * * *
    (b) * * *
    (2) Perform independent tests to assure the accurate identification 
and measurement of the material received, including its weight and 
enrichment; except that a licensee authorized under parts 50 or 52 of 
this chapter receiving unirradiated fuel rods or unirradiated fuel 
assemblies or a licensee authorized under part 70 of this chapter 
receiving SNM contained in a sealed source that will not be opened need 
not perform such tests; and
* * * * *
0
17. In Sec.  74.19, revise the section heading, paragraph (b), 
redesignate paragraph (d) as paragraph (e), and add a new paragraph (d) 
to read as follows:


Sec.  74.19  Recordkeeping, procedures, item controls, and physical 
inventories.

* * * * *
    (b) Each licensee authorized to possess special nuclear material, 
at any one time and site location, in a quantity greater than 350 grams 
of contained uranium-235, uranium-233, or plutonium, or any combination 
thereof, shall establish, maintain, and follow written material control 
and accounting procedures that are sufficient to enable the licensee to 
account for the SNM in its possession under the license. The licensee 
shall retain these procedures until the Commission terminates the 
license that authorizes possession of the special nuclear material and 
retain any superseded portion of the procedures for 3 years after the 
portion is superseded.
* * * * *
    (d) Production or utilization facilities licensed under part 50 or 
52 of this chapter and independent spent fuel storage installations 
licensed under part 72 of this chapter shall establish, document, 
implement, and maintain an item control system as defined in Sec.  
74.4.
* * * * *
0
18. In Sec.  74.31, revise paragraphs (a), (b), and (c) to read as 
follows:


Sec.  74.31  Nuclear material control and accounting for special 
nuclear material of low strategic significance.

    (a) General performance objectives. (1) Each licensee who is 
authorized to possess and use a quantity greater than 350 grams of 
contained uranium-235 or SNM of low strategic significance (as defined 
in Sec.  74.4 and shown in appendix A to this part) at any site or 
contiguous sites subject to control by the licensee is subject to the 
performance objective requirements stated in Sec.  74.3.
    (2) Production or utilization facilities licensed under part 50 or 
52 of this chapter, independent spent fuel storage installations 
licensed under part 72 of this chapter, and operations involving waste 
disposal are not subject to the requirements of subpart C of this part.
    (b) Implementation. Each applicant for a license, and each licensee 
that, upon application for modification of its license, would become 
newly subject to paragraph (a) of this section shall submit for 
approval an MC&A plan describing how the performance objectives of 
Sec.  74.3 and the requirements of paragraph (c) of this section will 
be met. The MC&A plan shall be implemented when a license is issued or 
modified to authorize the activities being addressed in paragraph (a) 
of this section, or by the date specified in a license condition.
    (c) Program capabilities. To achieve the Sec.  74.3 performance 
objectives, the MC&A plan must include the capabilities described in 
paragraphs

[[Page 67248]]

(c)(1) through (10) of this section, and require the licensee to:
    (1) Establish, document, and maintain a management structure that 
assures clear overall responsibility for material control and 
accounting functions, independence from production responsibilities, 
separation of key responsibilities, and adequate review and use of 
critical material control and accounting procedures;
    (2) Establish and maintain a measurement system, which assures that 
all quantities in the material accounting records are based on measured 
values;
    (3) Follow a measurement control program, which assures that 
measurement bias is estimated and significant biases are eliminated 
from inventory difference values of record;
    (4) In each inventory period, control total material control and 
accounting measurement uncertainty so that twice its standard error of 
the inventory difference (SEID) is less than the greater of 9,000 grams 
of U-235 or 0.25 percent of the active inventory, and assure that any 
measurement performed under contract is controlled so that the licensee 
can satisfy this requirement;
    (5) Unless otherwise required to satisfy part 75 of this chapter, 
perform a physical inventory at least every 12 months and, within 60 
calendar days after the start of the inventory, reconcile and adjust 
the book inventory to the results of the physical inventory, and 
resolve, or report an inability to resolve, any inventory difference 
that is rejected by a statistical test that has a 90-percent power of 
detecting a discrepancy of a quantity of uranium-235 established by the 
NRC on a site-specific basis;
    (6) Establish, document, implement, and maintain an item control 
system as defined in Sec.  74.4. Store and handle or subsequently 
measure items in a manner such that unauthorized removals of individual 
items or any quantity of SNM from items will be detected. Exempted from 
this requirement are items in solution with a concentration of less 
than 5 grams of uranium-235 per liter and items of waste destined for 
burial or incineration;
    (7) Conduct and document shipper-receiver difference comparisons 
for all SNM receipts on a total shipment basis, and on an individual 
batch basis when required by part 75 of this chapter, and ensure that 
any shipper-receiver difference that is statistically significant and 
exceeds twice the estimated standard deviation of the difference 
estimator and 500 grams of uranium-235 is investigated and resolved;
    (8) Independently assess the effectiveness of the MC&A program at 
least every 24 months, and document management's action on prior 
assessment recommendations.
    (9) Maintain and follow procedures for tamper-safing (as defined in 
Sec.  74.4) of containers or vaults (as defined in Sec.  74.4) 
containing SNM, which include control of access to, and distribution 
of, unused seals and records;
    (10) Designate material balance areas and item control areas and 
assign custodial responsibility for each of these areas in a manner 
that ensures that such responsibility can be effectively executed for 
all SNM possessed under license.
* * * * *
0
19. Revise Sec.  74.33 to read as follows:


Sec.  74.33  Nuclear material control and accounting for uranium 
enrichment facilities authorized to produce special nuclear material of 
low strategic significance.

    (a) General performance objectives. Each licensee who is authorized 
to possess equipment capable of enriching uranium or operate an 
enrichment facility, and produce, possess, or use a quantity greater 
than 350 grams of contained uranium-235 or SNM of low strategic 
significance (as defined in Sec.  74.4 and shown in appendix A to this 
part) at any site or contiguous sites, subject to control by the 
licensee, is subject to the performance objective requirements stated 
in Sec.  74.3 and to the following performance objectives:
    (1) Maintain accurate, current, and reliable information on, and 
confirm the quantities and locations of source material (SM) in its 
possession;
    (2) Detect, respond to, and resolve any anomaly indicating a 
possible loss, theft, diversion, or misuse of SM;
    (3) Permit rapid determination of whether an actual loss, theft, 
diversion, or misuse of SM has occurred;
    (4) Provide information to aid in the investigation and recovery of 
missing SM in the event of an actual loss, theft, diversion, or misuse; 
and
    (5) Provide information to aid in the investigation of any 
unauthorized production of uranium, including unauthorized production 
of uranium enriched to 10 percent or more in the isotope U-235. (For 
centrifuge enrichment facilities this requirement does not apply to 
each cascade during its start-up process, not to exceed the first 24 
hours.)
    (b) Implementation. Each applicant for a license who would, upon 
issuance of a license under any part of this chapter, be subject to the 
requirements of paragraph (a) of this section shall:
    (1) Submit for approval an MC&A plan describing how the performance 
objectives of Sec. Sec.  74.3 and 74.33(a), the program capabilities of 
Sec.  74.33(c), and the recordkeeping requirements of Sec.  74.33(d) 
will be met; and
    (2) Implement the NRC-approved MC&A plan submitted under paragraph 
(b)(1) of this section prior to:
    (i) The cumulative receipt of 5,000 grams of U-235 contained in any 
combination of natural, depleted, or enriched uranium; or
    (ii) The NRC's issuance of a license to test or operate the 
enrichment facility, whichever occurs first.
    (c) Program capabilities. To achieve the general performance 
objectives stated and referenced in paragraph (a) of this section, the 
MC&A plan must include the capabilities described in paragraphs (c)(1) 
through (10) of this section. The licensee shall establish, document, 
implement and maintain:
    (1) A management structure that ensures:
    (i) Clear overall responsibility for MC&A functions;
    (ii) Independence of MC&A management from production 
responsibilities;
    (iii) Separation of key MC&A responsibilities from each other; and
    (iv) Use of approved written MC&A procedures and periodic review of 
those procedures;
    (2) A measurement program that ensures that all quantities of SM 
and SNM in the accounting records are based on measured values;
    (3) A measurement control program that ensures that:
    (i) Measurement bias is estimated and minimized through the 
measurement control program, and any significant biases are eliminated 
from inventory difference values of record;
    (ii) All MC&A measurement systems are controlled so that twice the 
standard error of the inventory difference (SEID), based on all 
measurement error contributions, is less than the greater of 5,000 
grams of U-235 or 0.25 percent of the U-235 of the active inventory for 
each total plant material balance; and
    (iii) Any measurements performed under contract are controlled so 
that the licensee can satisfy the requirements of paragraphs (c)(3)(i) 
and (ii) of this section;
    (4) A physical inventory program that provides for:
    (i) Performing, unless otherwise required to satisfy part 75 of 
this chapter, a dynamic (nonshutdown) physical inventory of in-process 
(e.g., in the enrichment equipment) uranium and U-235 at least every 65 
calendar days, and performing a static physical

[[Page 67249]]

inventory of all other uranium and total U-235 contained in natural, 
depleted, and enriched uranium located outside of the enrichment 
processing equipment at least every 370 calendar days, with static 
physical inventories being conducted in conjunction with a dynamic 
physical inventory of in-process uranium and U-235 so as to provide a 
total plant material balance at least every 370 calendar days; and
    (ii) Reconciling and adjusting the book inventory to the results of 
the static physical inventory and resolving, or reporting an inability 
to resolve, any inventory difference that is rejected by a statistical 
test that has a 90-percent power of detecting a discrepancy of a 
quantity of U-235, established by the NRC on a site-specific basis, 
within 60 calendar days after the start of each static physical 
inventory;
    (5) A detection program, independent of production, which provides 
high assurance of detecting and resolving:
    (i) Production of uranium enriched to 10 percent or more in the U-
235 isotope, to the extent that SNM of moderate strategic significance 
(as defined in Sec.  74.4) could be produced within any 370 calendar 
day period;
    (ii) Production of uranium enriched to 20 percent or more in the U-
235 isotope; and
    (iii) Unauthorized production of uranium of low strategic 
significance (as defined in Sec.  74.4);
    (6) An item control system (as defined in Sec.  74.4). The system 
must ensure that items are stored and handled or subsequently measured 
in a manner such that unauthorized removal of any quantity of U-235, as 
individual items or as uranium contained in items, will be detected. 
Exempted from this requirement are items in solution with a 
concentration of less than 5 grams of uranium-235 per liter and items 
of waste destined for burial or incineration;
    (7) A system for conducting and documenting shipper-receiver 
difference comparisons for all source material and SNM receipts on a 
total shipment basis, and on an individual batch basis when required by 
part 75 of this chapter, to ensure that any shipper-receiver difference 
that is statistically significant and exceeds twice the estimated 
standard deviation of the difference estimator and 500 grams of 
uranium-235 is investigated and resolved;
    (8) An assessment program that:
    (i) Independently assesses the effectiveness of the MC&A program at 
least every 24 months;
    (ii) Documents the results of the above assessment;
    (iii) Documents management's findings on whether the MC&A program 
is currently effective; and
    (iv) Documents any actions taken on recommendations from prior 
assessments;
    (9) Procedures for tamper-safing (as defined in Sec.  74.4) of 
containers or vaults (as defined in Sec.  74.4) containing SNM, which 
include control of access to, and distribution of, unused seals and 
records;
    (10) Material balance areas and item control areas, and shall 
assign custodial responsibility for each of these areas in a manner 
that ensures that such responsibility can be effectively executed for 
all SM and SNM possessed under license.
    (d) Recordkeeping.
    (1) Each licensee shall establish records that will demonstrate 
that the performance objectives stated and referenced in paragraph (a) 
of this section and the program capabilities of paragraph (c) of this 
section have been met and maintain these records in an auditable form, 
available for inspection, for at least 3 years, unless a longer 
retention time is required by part 75 of this chapter.
    (2) Records that must be maintained pursuant to this part may be 
the original or a reproduced copy or a microform if such reproduced 
copy or microform is duly authenticated by authorized personnel and the 
microform is capable of producing a clear and legible copy after 
storage for the period specified by Commission regulations. The record 
may also be stored in electronic media with the capability for 
producing, on demand, legible, accurate, and complete records during 
the required retention period. Records such as letters, drawings, and 
specifications must include all pertinent information such as stamps, 
initials, and signatures.
    (3) The licensee shall maintain adequate safeguards against 
tampering with and loss of records.
0
20. In Sec.  74.41, revise paragraphs (a), (b), and (c) to read as 
follows:


Sec.  74.41  Nuclear material control and accounting for special 
nuclear material of moderate strategic significance.

    (a) General performance objectives. (1) Each licensee who is 
authorized to possess and use SNM of moderate strategic significance 
(as defined in Sec.  74.4 and shown in appendix A of this part) or 1 
kilogram or more but less than 5 kilograms of SSNM (as defined in Sec.  
74.4 and shown in appendix A to this part) in irradiated fuel 
reprocessing operations at any site or contiguous sites subject to 
control by the licensee, is subject to the performance objective 
requirements stated in Sec.  74.3.
    (2) Production or utilization facilities licensed under part 50 or 
52 of this chapter; licensees using reactor irradiated fuels involved 
in research, development, and evaluation programs in facilities other 
than irradiated fuel reprocessing plants; and operations involving 
waste disposal, are not subject to the requirements of subpart D of 
this part.
    (b) Implementation. Each applicant for a license, and each licensee 
that, upon application for modification of its license, would become 
newly subject to paragraph (a) of this section shall submit for 
approval an MC&A plan describing how the performance objectives of 
Sec.  74.3 and the requirements of paragraph (c) of this section will 
be met. The MC&A plan shall be implemented when a license is issued or 
modified to authorize the activities being addressed in paragraph (a) 
of this section, or by the date specified in a license condition.
    (c) Program capabilities. To achieve the Sec.  74.3 performance 
objectives, the MC&A plan must include the capabilities described in 
Sec. Sec.  74.43 and 74.45, and must incorporate checks and balances 
that are sufficient to detect falsification of data and reports that 
could conceal diversion of SNM by:
    (1) A single individual, including an employee in any position; or
    (2) Collusion between two individuals, one or both of whom have 
authorized access to SNM.
0
21. In Sec.  74.43, revise paragraphs (b)(3), (b)(5), (b)(6), (b)(7), 
and (c)(3); add new paragraph (c)(9); and revise paragraph (d)(5) to 
read as follows:


Sec.  74.43  Internal controls, inventory, and records.

* * * * *
    (b) * * *
    (3) The licensee shall provide for the adequate review, approval, 
and use of written MC&A procedures that are identified in the approved 
MC&A plan as being critical to the effectiveness of the described 
system.
* * * * *
    (5) The licensee shall establish, document, implement, and maintain 
an item control system as defined in Sec.  74.4. The system must ensure 
that items are stored and handled or subsequently measured in a manner 
such that unauthorized removals of individual items or any quantity of 
material (as defined in Sec.  74.4) from items will be detected.
    (6) Exempted from the requirements of paragraph (b)(5) of this 
section are items in solution with a concentration

[[Page 67250]]

of less than 5 grams of U-235 per liter, and items of waste destined 
for burial or incineration.
    (7) Conduct and document shipper-receiver difference comparisons 
for all SNM receipts,
* * * * *
    (c) * * *
    (3) Maintain and follow procedures for tamper-safing (as defined in 
Sec.  74.4) of containers or vaults (as defined in Sec.  74.4) 
containing SNM which include control of access to, and distribution of, 
unused seals and records;
* * * * *
    (9) Designate material balance areas and item control areas, and 
assign custodial responsibility for each of these areas in a manner 
that ensures that such responsibility can be effectively executed for 
all SNM possessed under license.
* * * * *
    (d) * * *
    (5) Establish records that will demonstrate that the performance 
objectives of Sec.  74.3 and Sec.  74.41(a)(1), the system capabilities 
of paragraphs (b) and (c) of this section, and Sec.  74.45(b) and (c) 
have been met, and maintain these records in an auditable form, 
available for inspection, for at least 3 years, unless a longer 
retention time is specified by Sec.  74.19(b), part 75 of this chapter, 
or by a specific license condition.
0
22. In Sec.  74.45, revise paragraph (c)(4) to read as follows:


Sec.  74.45  Measurements and measurement control.

* * * * *
    (c) * * *
    (4) Establish and maintain a measurement control system so that for 
each inventory period the standard error of the inventory difference 
(SEID) is less than 0.125 percent of the active inventory, and assure 
that any MC&A measurements performed under contract are controlled so 
that the licensee can satisfy this requirement.
* * * * *
0
23. Revise Sec.  74.51 to read as follows:


Sec.  74.51  Nuclear material control and accounting for strategic 
special nuclear material.

    (a) General performance objectives. (1) Each licensee who is 
authorized to possess and use five or more formula kilograms of 
strategic special nuclear material (SSNM), as defined in Sec.  74.4 and 
shown in appendix A to this part, at any site or contiguous sites 
subject to control by the licensee is subject to the performance 
objective requirements stated in Sec.  74.3, and to the following 
performance objectives:
    (i) Ongoing confirmation of the presence of SSNM in assigned 
locations;
    (ii) Timely detection of the possible abrupt loss of five or more 
formula kilograms of SSNM from an individual unit process; and
    (iii) Rapid determination of whether an actual loss of five or more 
formula kilograms of SSNM occurred.
    (2) Production or utilization facilities licensed under part 50 or 
52 of this chapter, independent spent fuel storage installations 
licensed under part 72 of this chapter; and any licensee operations 
involving waste disposal, are not subject to the requirements of 
subpart E of this part.
    (b) Implementation. Each applicant for a license, and each licensee 
that, upon application for modification of its license, would become 
newly subject to paragraph (a) of this section shall submit for 
approval an MC&A plan describing how the performance objectives of 
Sec.  74.3 and paragraph (a) of this section will be achieved, and how 
the requirements of paragraph (c) of this section will be met. The MC&A 
plan shall be implemented when a license is issued or modified to 
authorize the activities being addressed in paragraph (a) of this 
section, or by the date specified in a license condition.
    (c) Program capabilities. To achieve the general performance 
objectives specified in Sec.  74.3 and paragraph (a) of this section, 
the MC&A plan must provide the capabilities described in Sec. Sec.  
74.53, 74.55, 74.57 and 74.59 and must incorporate checks and balances 
that are sufficient to detect falsification of data and reports that 
could conceal diversion of SNM or SSNM by:
    (1) A single individual, including an employee in any position; or
    (2) Collusion between two individuals, one or both of whom have 
authorized access to SNM or SSNM.
    (d) Inventories. Notwithstanding Sec.  74.59(f)(1), licensees shall 
perform at least 3 physical inventories at intervals not to exceed 65 
calendar days after implementation of the NRC-approved MC&A plan and 
shall continue to perform such inventories at intervals not to exceed 
65 calendar days until performance acceptable to the NRC has been 
demonstrated and the Commission has issued formal approval to perform 
physical inventories at intervals not to exceed 185 calendar days. 
Licensees who have prior experience with process monitoring and/or can 
demonstrate acceptable performance against all MC&A plan commitments 
may request authorization to perform inventories at intervals not to 
exceed 185 calendar days at an earlier date.
0
24. In Sec.  74.53, revise the introductory text of paragraph (a), and 
paragraphs (a)(3), (a)(4), and (c)(1) to read as follows:


Sec.  74.53  Process monitoring.

    (a) Licensees subject to Sec.  74.51 shall monitor internal 
transfers, storage, and processing of SSNM. The process monitoring must 
achieve the detection capabilities described in paragraph (b) of this 
section for all SSNM except:
* * * * *
    (3) SSNM with an estimated measurement standard deviation greater 
than 5 percent that is either input or output material associated with 
a unit that processes less than five formula kilograms over a period of 
95 calendar days; and
    (4) SSNM involved in research and development operations that 
process less than five formula kilograms during a period of seven 
calendar days.
* * * * *
    (c) * * *
    (1) Perform material balance tests on a lot or a batch basis, as 
appropriate, or at intervals not to exceed 30 calendar days, whichever 
is sooner, and investigate any difference greater than 200 grams of 
plutonium or U-233 or 300 grams of U-235 that exceeds three times the 
estimated standard error of the inventory difference;
* * * * *
0
25. In Sec.  74.57, revise the introductory text of paragraph (c) to 
read as follows:


Sec.  74.57  Alarm resolution.

* * * * *
    (c) Each licensee shall notify the NRC Headquarters Operations 
Center by telephone of any MC&A alarm that remains unresolved beyond 
the time period specified for its resolution in the licensee's MC&A 
plan. Notification must occur within 24 hours except when a holiday or 
weekend intervenes in which case the notification must occur on the 
next scheduled workday. The licensee may consider an alarm to be 
resolved if:
* * * * *
0
26. In Sec.  74.59, revise paragraph (e)(7), the introductory text of 
paragraph (f)(1), and paragraphs (f)(2)(i), (h)(2)(ii), and (h)(5) to 
read as follows:


Sec.  74.59  Quality assurance and accounting requirements.

* * * * *
    (e) * * *
    (7) Investigate and take corrective action, as appropriate, to 
identify and reduce associated measurement biases when, for like 
material types (i.e., measured by the same measurement system), the net 
cumulative shipper/

[[Page 67251]]

receiver differences accumulated over a period not to exceed 185 
calendar days results in a value greater than one formula kilogram or 
0.1 percent of the total amount received.
* * * * *
    (f) * * *
    (1) Except as required by part 75 of this chapter, perform a 
physical inventory at least every 185 calendar days and within 45 
calendar days after the start of the ending inventory:
* * * * *
    (2) * * *
    (i) Development of procedures for tamper-safing of containers or 
vaults containing SSNM not in process that include adequate controls to 
assure the validity of assigned SSNM values and that include control of 
access to, and distribution of, unused seals and records;
* * * * *
    (h) * * *
    (2) * * *
    (ii) Any scrap measured with a standard deviation greater than 5 
percent of the measured amount is recovered so that the results are 
segregated by inventory period and recovered within 185 calendar days 
of the end of the inventory period in which the scrap was generated 
except where it can be demonstrated that the scrap measurement 
uncertainty will not cause noncompliance with Sec.  74.59(e)(5).
* * * * *
    (5) Designate material balance areas and item control areas and 
assign custodial responsibility for each of these areas in a manner 
that ensures that such responsibility can be effectively executed for 
all SSNM possessed under license.
0
27. Add appendix A to part 74 to read as follows:

Appendix A to Part 74--Categories of Special Nuclear Material

    Notes:
    1. Sealed sources as defined in Sec.  74.4 are excluded from the 
quantities in the table.
    2. Irradiated fuel, which by virtue of its original fissile 
material content is included as Category I or II before irradiation, 
is reduced one category level, during the period of time that the 
radiation level from the fuel exceeds 1 Sv per hour (100 rads per 
hour) at 1 meter, unshielded.

----------------------------------------------------------------------------------------------------------------
                                 Isotopic        Category I  (Subpart       Category II          Category III
         Material               composition               E)                (Subpart D)          (Subpart C)
----------------------------------------------------------------------------------------------------------------
Plutonium................  All plutonium         2,000 grams or more.  Less than 2,000       500 grams or less,
                            (element).                                  grams, but more       but more than 15
                                                                        than 500 grams.       grams.
Uranium-233..............  All U-233             2,000 grams or more.  Less than 2,000       500 grams or less,
                            enrichments.                                grams, but more       but more than 15
                                                                        than 500 grams.       grams.
Uranium-235..............  Uranium enriched to   5,000 grams or more.  Less than 5,000       1,000 grams or
                            20% or more in                              grams, but more       less, but more
                            isotope U-235.                              than 1,000 grams.     than 15 grams.
                           Uranium enriched to   ....................  10,000 grams or more  Less than 10,000
                            10%, but less than                                                grams, but more
                            20%, in isotope U-                                                than 1,000 grams.
                            235.
                           Uranium enriched      ....................  ....................  10,000 grams or
                            above 0.711%, but                                                 more.
                            less than 10%, in
                            isotope U-235.
----------------------------------------------------------------------------------------------------------------

    The formulae to calculate a quantity of SSNM as defined in Sec.  
74.4 are as follows:

 Category I, 5000 grams or more of SSNM
    [cir] grams = grams contained U-235 + 2.5 (grams U-233 + grams 
Pu)
 Category II, less than 5000 grams but more than 1000 grams 
of SSNM
    [cir] grams = grams contained U-235 + 2 (grams U-233 + grams Pu)
 Category III, 1000 grams or less but more than 15 grams of 
SSNM
    [cir] grams = grams contained U-235 + grams U-233 + grams Pu.
0
28. The authority citation for part 150 continues to read as follows:

PART 150--EXEMPTIONS AND CONTINUED REGULATORY AUTHORITY IN 
AGREEMENT STATES AND IN OFFSHORE WATERS UNDER SECTION 274

    Authority:  Atomic Energy Act secs. 161, 181, 223, 234 (42 
U.S.C. 2201, 2021, 2231, 2273, 2282); Energy Reorganization Act sec. 
201 (42 U.S.C. 5841); Government Paperwork Elimination Act sec. 1704 
(44 U.S.C. 3504 note); Energy Policy Act of 2005, Public Law 109-58, 
119 Stat. 594 (2005).
    Sections 150.3, 150.15, 150.15a, 150.31, 150.32 also issued 
under Atomic Energy Act secs. 11e(2), 81, 83, 84 (42 U.S.C. 
2014e(2), 2111, 2113, 2114). Section 150.14 also issued under Atomic 
Energy Act sec. 53 (42 U.S.C. 2073).
    Section 150.15 also issued under Nuclear Waste Policy Act secs. 
135 (42 U.S.C. 10155, 10161). Section 150.17a also issued under 
Atomic Energy Act sec. 122 (42 U.S.C. 2152). Section 150.30 also 
issued under Atomic Energy Act sec. 234 (42 U.S.C. 2282).

0
29. In Sec.  150.17 revise paragraphs (a) and (b) to read as follows:


Sec.  150.17  Submission to commission of nuclear material status 
reports.

    (a) Except as specified in paragraph (d) of this section and Sec.  
150.17a, all licensees who possess or who had possessed in the previous 
reporting period, under an Agreement State license, one gram or more of 
irradiated or non-irradiated special nuclear material are required to 
submit both a Material Balance Report and a Physical Inventory Listing 
Report of these materials to the NMMSS in accordance with the 
instructions in paragraph (a)(1) of this section. Both reports shall be 
submitted between January 1 and March 31 of each year.
    (1) Each licensee shall prepare and submit the reports described in 
this section as follows:
    (i) Reports must be submitted for each Reporting Identification 
Symbol (RIS) account, including all special nuclear material that the 
licensee has received, produced, possessed, transferred, consumed, 
disposed, or lost.
    (ii) Each licensee shall prepare and submit the reports described 
in this section as specified in the instructions in both NUREG/BR-0007 
and NMMSS Report D-24, ``Personal Computer Data Input for NRC 
Licensees.''
    (iii) This prescribed computer-readable report replaces the DOE/NRC 
Form 742, Material Balance Report, and DOE/NRC Form 742C, Physical 
Inventory Listing Report, which have been previously submitted in paper 
form.
    (iv) Copies of these instructions may be obtained from the U.S. 
Nuclear Regulatory Commission, Division of Fuel Cycle Safety and 
Safeguards, Washington, DC 20555-0001 or by email to 
[email protected].
    (2) The Commission may permit a licensee to submit the reports at 
other times for good cause. Such requests must be submitted in writing 
to Chief, Material Control and Accounting Branch, Division of Fuel 
Cycle Safety

[[Page 67252]]

and Safeguards, Office of Nuclear Material Safety and Safeguards, U.S. 
Nuclear Regulatory Commission, Washington, DC 20555. The licensee must 
continue to report as required until such request is granted.
    (3) Any licensee who is required to submit routine Material Status 
Reports under Sec.  75.35 of this chapter (pertaining to implementation 
of the U.S./IAEA Safeguards Agreement) shall prepare and submit these 
reports only as provided in that section (instead of as provided in 
paragraphs (a) through (b) of this section).
    (4) Each licensee subject to the requirements of this section shall 
resolve any discrepancies identified during the report review and 
reconciliation process within 30 calendar days of notification of a 
discrepancy identified by the NRC.
    (b) Except as specified in paragraph (d) of this section and Sec.  
150.17a, each person possessing, or who had possessed in the previous 
reporting period, at any one time and location, under an Agreement 
State license:
    (1) One kilogram or more of uranium or thorium source material with 
foreign obligations, shall document holdings as of September 30 of each 
year and submit the material status reports to the Commission within 30 
days. Alternatively, these reports may be submitted with the licensee's 
material status reports on special nuclear material filed under part 74 
of this chapter. This statement must be submitted to the address 
specified in the reporting instructions in NUREG/BR-0007, and include 
the RIS assigned by the Commission.
    (2) One kilogram or more of uranium or thorium source material in 
the operation of enrichment services, down blending uranium that has an 
initial enrichment of the U-235 isotope of 10 percent or more, or in 
the fabrication of mixed-oxide fuels shall complete and submit, in 
computer-readable format, Material Balance and Physical Inventory 
Listing Reports concerning source material that the licensee has 
received, produced, possessed, transferred, consumed, disposed, or 
lost. Reports must be submitted for each RIS account including all 
holding accounts. Each licensee shall prepare and submit these reports 
as specified in the instructions in NUREG/BR-0007 and NMMSS Report D-
24, ``Personal Computer Data Input for NRC Licensees.'' These reports 
must document holdings as of September 30 of each year and be submitted 
to the Commission within 30 days. Alternatively, these reports may be 
submitted with the licensee's material status reports on special 
nuclear material filed under part 74 of this chapter. Copies of the 
reporting instructions may be obtained by writing to the U.S. Nuclear 
Regulatory Commission, Division of Fuel Cycle Safety and Safeguards, 
Washington, DC 20555-0001, or by email to 
[email protected]. Each licensee required to report 
material balance, and inventory information, as described in this part, 
shall resolve any discrepancies identified during the report review and 
reconciliation process within 30 calendar days of the notification of a 
discrepancy identified by the NRC.
* * * * *

    Dated at Rockville, Maryland, this October 23, 2013.

    For the Nuclear Regulatory Commission.
Annette Vietti-Cook,
Secretary of the Commission.
[FR Doc. 2013-25617 Filed 11-7-13; 8:45 am]
BILLING CODE 7590-01-P