[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Proposed Rules]
[Pages 75076-75100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29434]


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DEPARTMENT OF ENERGY

10 CFR Part 951

[Docket Number: DOE-HQ-2014-0021]
RIN 1990-AA39


Convention on Supplementary Compensation for Nuclear Damage 
Contingent Cost Allocation

AGENCY: Office of General Counsel, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The U.S. Department of Energy (DOE or the Department) proposes 
to issue regulations under section 934 of the Energy Independence and 
Security Act of 2007. These regulations will establish a retrospective 
risk pooling program by which nuclear suppliers are expected to provide 
funds in the same amount as what the United States government would be 
obligated to contribute to an international supplementary fund under 
the Convention on Supplementary Compensation for Nuclear Damage in the 
event of certain nuclear incidents not covered by the Price-Anderson 
Act. The risk pooling program will involve a premium to be assessed 
retrospectively (i.e., a deferred payment made only if a nuclear 
incident occurs) based on a risk-informed assessment formula taking 
into account specified risk factors and exclusionary criteria to 
provide a fair and equitable proration of costs among U.S. nuclear 
suppliers benefited by the Convention on Supplementary Compensation for 
Nuclear Damage.

DATES: Meeting: DOE will hold an information session open to the public 
on January 7, 2015, from 10:00 a.m. to 12:00 noon in Washington, DC.
    Comments: DOE will accept comments, data, and information

[[Page 75077]]

regarding this notice of proposed rulemaking (NOPR) before and after 
the public meeting(s), but no later than March 17, 2015.

ADDRESSES: The information session will be held at the U.S. Department 
of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue 
SW., Washington, DC 20585-0121. To attend, please notify Ms. Brenda 
Edwards at (202) 586-2945 or by email: [email protected]. See 
section IV, ``Public Participation,'' for additional information and 
participant instructions. Additionally, DOE intends to conduct public 
workshop(s) on the proposed rulemaking. The date, time and place of 
such workshop(s) will be announced in subsequent Federal Register 
notice(s).
    Interested persons are encouraged to submit comments using the 
Federal eRulemaking Portal at http://www.regulations.gov. Follow the 
instructions for submitting comments. Alternatively, interested persons 
may submit comments, identified by RIN 1990-AA39, by either of the 
following methods:
     Email: [email protected].
     Mail: Ms. Sophia Angelini, U.S. Department of Energy, 
Office of the General Counsel, Mailstop GC-72, Section 934 Rulemaking, 
1000 Independence Avenue SW., Washington, DC 20585. Please submit one 
signed original and three copies of all comments submitted by mail.
    Instructions: All submissions received must include the agency 
name, docket number (DOE-HQ-2014-0021), and the RIN for this 
rulemaking. Note that all comments received will be posted without 
change, including personal information.
    Docket: For access to the docket to read background documents or 
comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov, or the Web site specifically established for this 
proceeding at http://www.energy.gov/gc/convention-supplementary-compensation-rulemaking.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Sophia Angelini (see contact 
information above) and by email to [email protected].

FOR FURTHER INFORMATION CONTACT: Sophia Angelini, Attorney-Advisor, 
Office of the General Counsel for Civilian Nuclear Programs, GC-72, 
U.S. Department of Energy, 1000 Independence Avenue SW., Washington, DC 
20585; telephone (202) 586-0319.

SUPPLEMENTARY INFORMATION: 
I. Authority and Background
II. Summary of the Proposed Rule
    A. Overview of the Proposed Rule
    B. Section-by-Section Analysis and Discussion of Response to 
Comments Received on the Notice of Inquiry
III. Issues on Which DOE Seeks Comment
IV. Public Participation
V. Regulatory Review Requirements
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under Executive Order 12630
    I. Review Under Executive Order 13211
VI. Approval of the Office of the Secretary

I. Authority and Background

    On December 19, 2007, the President signed into law the Energy 
Independence and Security Act of 2007 (the Act) (Pub. L. 110-140). 
Section 934 of the Act, ``Convention on Supplementary Compensation 
Contingent Cost Allocation,'' addresses how the United States will meet 
its obligation under the Convention on Supplementary Compensation for 
Nuclear Damage (CSC or Convention), adopted in Vienna on September 12, 
1997 at the International Atomic Energy Agency (IAEA) to pay into a 
supplementary compensation fund created by the Convention. The 
Convention provides the basis for a global nuclear liability regime 
where victims of nuclear incidents are provided prompt and meaningful 
compensation and suppliers in the nuclear energy industry are provided 
consistent rules for dealing with legal liability. The Convention 
provides an umbrella instrument that can accommodate both countries 
that belong to an existing nuclear liability treaty, such as the Paris 
Convention on Third Party Liability in the Field of Nuclear Energy of 
29 July 1960 (Paris Convention), or the Vienna Convention on Civil 
Liability for Nuclear Damage of 21 May 1963 (Vienna Convention), and 
countries that do not now belong to any nuclear liability treaty but 
accept the basic principles of nuclear liability law embodied in those 
treaties. At present, the Convention has been signed by 18 countries 
and ratified by 5 countries--Argentina, Morocco, Romania, United Arab 
Emirates, and the United States. With the recent approval of 
ratification of the Convention by the Japanese Diet, it is expected 
that Japan will deposit its instrument of ratification with the IAEA in 
the near future, and that the Convention will come into force and 
effect 90 days thereafter.
    A major feature of the Convention is the creation of an 
``international supplementary fund,'' which provides an additional 
(second) tier of compensation not otherwise available under a State's 
national law and to which each party to the Convention contributes. It 
is only this second tier of compensation that United States' nuclear 
suppliers would be required to fund.
    The first tier of compensation is provided by the State where the 
nuclear incident occurred \1\ (the installation state), and is set in 
the Convention at a minimum of 300 million Special Drawing Rights (SDRs 
\2\). If that amount is insufficient, a second tier of compensation--
the international supplementary fund--is available, funded by 
contributions from the CSC member States. The amount of the second tier 
compensation is determined by a formula prescribed in the Convention in 
Article IV. A CSC member State's contribution is the lower of the 
amount determined under Article IV.1(a) or Art. IV.1(c). The 
contribution amount under Article IV.1(a)is based on a CSC member 
State's: (1) Nuclear generating capacity (thermal power shown at the 
date of the nuclear incident in a list of nuclear installations 
established under Article VIII); and (2) the United Nations (UN) 
assessment rate. The United States' UN assessment rate for 2014-2015 is 
22%. In the alternative, Article IV.1(c) establishes a cap on the 
contribution amount owed by any one CSC member State (other than the 
installation state) per nuclear incident. The cap phases out as the 
collective installed nuclear capacity of countries covered by the 
Convention increases.
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    \1\ For nuclear incidents occurring in the United States, the 
Price-Anderson Act would provide the coverage required under the 
Convention for the first tier of compensation, to which United 
States' nuclear suppliers are not required to contribute.
    \2\ SDR is the unit of account defined by the International 
Monetary Fund (IMF) and used by the IMF for its own operations and 
transactions. In July, 2014, 1 SDR equaled about $1.54; therefore, 
300 million SDRs would equal roughly $462 million dollars. Current 
information on the SDR conversion rates can be found at http://www.imf.org/external/np/exr/facts/sdr.htm.
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    The United States could owe as little as approximately $70 million 
(plus a proportional amount of potential additional interest and costs 
awarded by a court as provide in Article III.4 of the Convention) when 
the Convention

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comes into force initially.\3\ Assuming for example the 30 countries 
that have nuclear operating capacity in 2014 joined the CSC,\4\ the 
United States would owe approximately $150 million.\5\
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    \3\ This amount is illustrative only and assumes the following: 
6 Contracting Parties to the CSC (Argentina, Canada, Japan, Morocco, 
Romania and the United States); one SDR equals $1.54; the United 
States UN assessment rate is 22%; the United States installed 
capacity is 307,000 MW thermal; and the aggregate installed capacity 
of all Contracting Parties is 450,000 MW thermal. Under Article 
IV.1(a) the contribution amount would be $154,308,000, under Article 
IV.1(c) $68,607,000; accordingly, the amount owed by the United 
States would be the lower amount, $68,607,000.
    The following provides additional information on how these 
amounts were calculated. The calculation under Article IV.1(a) is 
the sum of the amounts under 1(a)(i) and (ii): (i) $141,834,000 
[307,000 MW (U.S. installed capacity) x 300 SDRs ($462 per SDR) = 
$141,834,000] plus (ii) $12,474,000 [ratio of the U.S. UN rate (22%) 
to the total UN rate of all Contracting Parties (36.62%) = 60%; 
amount under (i) for all Contracting Parties = 450,000 MW x 300 SDRs 
($462 per SDR) = $207,900,000; 10% of that sum = $20,790,000; 60% of 
$20,790,000 = $12,474,000], which equals $154,308,000. The 
calculation under Article IV.1(c) is the product of (1) the U.S. UN 
rate of assessment plus 8 points, 30%, times (2) the total 
contributions of all Contracting Parties under subsection (b), 
$228,690,000 [$207,900,000 (450,000 MW x 300 SDRs ($462 per SDR)) + 
$20,790,000 (10% of 207,900,000) = $228,690,000], which equals 
$68,607,000.
    \4\ Information on the 30 countries with operable nuclear power 
capacity in 2014 can be found at the World Nuclear Association Web 
site, http://www.world-nuclear.org/info/Facts-and-Figures/World-Nuclear-Power-Reactors-and-Uranium-Requirements/.
    \5\ This amount is illustrative only and assumes the following: 
30 Contracting Parties to the CSC; one SDR equal $1.54; the United 
States UN assessment rate is 22%; the United States installed 
capacity is 307,000 MW thermal; and the aggregate installed capacity 
of all Contracting Parties is 1,000,000 MW thermal. Under Article 
IV.1(a), the contribution amount would be $154,770,000; under 
Article IV.1(c) the amount would be $182,952,000; accordingly, the 
amount owed by the United States would be the lower amount, 
$154,770,000.
    The following provides additional information on how these 
amounts were calculated. The calculation under Article IV.1(a) is 
the sum of the amounts under 1(a)(i) and (ii): (i) $141,834,000 
[307,000 MW (U.S. installed capacity) x 300 SDRs ($462 per SDR) = 
$141,834,000] plus (ii) $12,474,000 [ratio of the U.S. UN rate (22%) 
to the total UN rate of all Contracting Parties (79.64%) = 28%; 
amount under (i) for all Contracting Parties = 1,000,000 MW x 300 
SDRs ($462 per SDR) = $462,000,000; 10% of that sum = $46,200,000; 
28% of $46,200,000 = $12,936,000], which equals $154,770,000. The 
calculation under Article IV.1(c) is the product of (1) the U.S. UN 
rate of assessment plus 14 points, 36%, times (2) the total 
contributions of all Contracting Parties under subsection (b), 
$508,200,000 [$462,000,000 (1,000,000 MW x 300 SDRs ($462 per SDR)) 
+ $46,200,000 (10% of 462,000,000) = $508,200,000], which equals 
$182,952,000.
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    Section 934 of the Act establishes a retrospective risk pooling 
program by which United States nuclear suppliers are expected to 
provide funds in the same amount as what the United States government 
would be obligated to contribute as a CSC party, with respect to 
nuclear incidents not covered by the Price-Anderson Act, to the 
international supplementary fund created by the Convention. Section 934 
authorizes the Department to promulgate regulations to implement the 
retrospective risk pooling program. Section 934 also specifies risk 
factors to be considered by DOE in developing the risk-informed 
assessment formula, including criteria for excluding certain goods and 
services or nuclear suppliers from the formula. Section 934(e)(2)(C).
    On July 27, 2010, the Department published in the Federal Register 
a Notice of Inquiry (NOI) (75 FR 43945) and request for comment from 
the public on its development of regulations to implement section 934. 
In the NOI, the Department provided the public with a comprehensive 
background and explanation of the Convention, the scope, purpose and 
requirements of section 934, and the Department's deliberations on how 
to structure a draft regulation to effectuate the purposes and 
direction provided by Congress to the Department in section 934. The 
NOI may be referred to for additional background information on the 
Convention and section 934.
    The comment period on the NOI was extended twice (75 FR 51986, 
August 24, 2010 and 75 FR 64717, October 20, 2010) in response to 
requests from the public. The extended comment period provided the 
public with opportunity to review and provide detailed comments in 
response to the NOI. The Department received comments from eleven 
organizations representing various elements of the nuclear industry. 
All such comments were posted and are available for review at http://www.energy.gov/gc/convention-supplementary-compensation-rulemaking. In 
addition, summaries of meetings with individual commenters who provided 
further input are available at http://www.energy.gov/gc/ex-parte-communications. A summary of the major comments received and the 
Department's responses are provided herein under the section-by-section 
analysis of this proposed rule.

II. Summary of the Proposed Rule

A. Overview of the Proposed Rule

    This proposed rule establishes a new part 951 in Title 10 of the 
Code of Federal Regulations (CFR), which sets forth the requirements 
for U.S. nuclear suppliers to report on their nuclear export 
transactions and, if called upon, contribute a risk premium payment to 
the retrospective risk pooling program. The Department proposes two 
alternative formulas to calculate the risk premium payment of a nuclear 
supplier.
    Subpart A sets forth the purpose and scope of the regulation, as 
well as proposed definitions. The purpose and scope of the regulation 
follows the direction in section 934 that DOE establish a risk-informed 
assessment formula to be used in determining the risk premium payment 
due by a nuclear supplier in the event of a nuclear incident outside 
the United States that results in a request for funds under the 
Convention and is not a Price-Anderson incident. The definitions 
section includes definitions drawn directly from section 934 of the 
Act, as well as additional terms necessary to operation of the 
regulation.
    Subpart B sets forth provisions for establishment of the 
retrospective risk pooling program. Two alternative regulatory 
approaches are proposed for calculating the risk-informed assessment 
formula: (1) A risk-informed assessment formula by nuclear goods and 
services; or (2) a risk-informed assessment formula by nuclear sector. 
Both alternatives establish a risk-informed assessment formula to 
determine a nuclear supplier's retrospective risk premium payment. In 
addition, both alternatives provide criteria for exclusion of small 
nuclear suppliers, and a cap on the amount any one nuclear supplier 
would owe under the program. The primary difference in the alternatives 
rests with the method of expressing risk--where risk refers to the 
likelihood a nuclear supplier's goods or services would contribute to, 
and the nuclear supplier would be potentially liable for claims for 
damage resulting from, a nuclear incident at a covered installation 
resulting in a call for funds under the Convention--for purposes of 
calculating the retrospective risk premium. The first alternative 
expresses risk in terms of the specific goods or services provided by a 
nuclear supplier; the second alternative expresses risk in terms of the 
nuclear sector to which a nuclear supplier's goods or services are 
supplied. Regulatory text for both alternatives is set forth at the end 
of the proposal.
    Subpart C sets forth the timing and method for payments to be made 
to the United States in the event of a call for funds under the 
Convention. Nuclear suppliers may pay the full amount upon notification 
by the Department of a required risk premium payment, or prorate the 
full amount over a five-year period, including applicable interest on 
the unpaid balance. In addition, Subpart C establishes the penalty 
amount if a supplier does not make the required payment.

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    Subpart D sets forth the information collection requirements 
associated with the administration of the retrospective risk pooling 
program. Those requirements include an initial report six months after 
the effective date of the rule, in which respondents describe each 
reportable transaction that occurred prior to the date of the rule, and 
an annual report thereafter. The information to be provided by a 
nuclear supplier includes: (1) Description of the reportable 
transaction; (2) date of the transaction; (3) location of the nuclear 
installation(s) involved in the transaction; (4) volume or quantity of 
certain nuclear goods or services provided; and (5) value (in U.S. 
dollars) of the goods or services provided.
    The appendices to the rule, applicable only under Alternative 1, 
set forth the list of specific primary and secondary nuclear items that 
form the basis for calculating the risk premium payment. The items are 
ranked as primary or secondary, and weighted as 2 or 1, respectively, 
in accordance with the likelihood the good or service would provide the 
basis for a claim for damage resulting from a nuclear incident giving 
rise to a call for funds under the Convention. Alternative 2 does not 
reference a list of goods and services; however, this alternative is 
based on a similar weighting system to differentiate risk among the 
goods and services provided by a nuclear supplier within each nuclear 
sector.

B. Section-by-Section Analysis and Discussion of Response to Comments 
Received on the Notice of Inquiry

Subpart A--General Provisions

Section 951.1 and 951.2--Purpose and Scope

    The Department is proposing these regulations to implement a 
retrospective risk pooling program in accordance with section 934 of 
the Act. Section 934 calls for establishment of a retrospective risk 
pooling program in which United States nuclear suppliers are required 
to participate and cover their allocated share of the contingent costs 
resulting from a covered incident that is not a Price-Anderson 
incident. (A Price-Anderson incident is defined at subsection 934(b)(8) 
to mean a covered incident for which the Price-Anderson Act (section 
170 of the Atomic Energy Act of 1954) would make funds available to 
compensate for public liability). The amount each nuclear supplier is 
required to contribute is determined by application of a risk-informed 
assessment formula developed by the Department. The program is 
retrospective, i.e., payment by a nuclear supplier is deferred and not 
due unless and until the United States is called upon to contribute to 
the international supplementary fund. The deferred payment is, in 
essence, the nuclear supplier's premium for insurance against the 
potential liability for nuclear damage covered by the Convention. The 
regulations only cover the retrospective premium a nuclear supplier 
would be obligated to pay in the case of a nuclear incident outside the 
United States and not a Price-Anderson incident (a Price-Anderson 
incident may occur outside the United States if it arises from U.S.-
owned nuclear material and involves activities conducted by or on 
behalf of DOE). The retrospective risk pooling program is not invoked 
where a nuclear incident occurs inside the United States.
    All of the comments received by the Department on the NOI expressed 
support for the Convention and ratification of this international 
convention by the United States. The commenters supported the goal of 
adherence to a global nuclear liability regime to provide a predictable 
legal framework for international nuclear energy projects. This legal 
framework has the effect of providing United States nuclear suppliers 
with insurance for liability that arises out of any covered incident 
outside the United States that is not a Price-Anderson incident, and 
that without the Convention would be unlimited. While acknowledging the 
benefits of the Convention and the express mandate of section 934 that 
U.S. nuclear suppliers should pay the United States' contributions 
under the Convention, several commenters nonetheless expressed concerns 
about the policy of imposing this financial burden on nuclear suppliers 
and the ability of the Department to allocate the cost among suppliers 
in a defensible and equitable manner. Commenters noted that the 
financial burden imposed on the nuclear supplier industry might 
negatively impact the competitiveness of the United States nuclear 
industry in international markets, contrary to the President's goals in 
the National Export Initiative. In that regard, the comment was made 
that DOE should recommend to Congress that the Act be amended to 
eliminate the burden on industry and the rulemaking deferred to allow 
DOE to conduct in-depth discussions with industry to evaluate the 
impact on domestic jobs and gather data and information to support a 
risk-based allocation system. Many commenters noted that current 
information and data was lacking on how to assess nuclear risks for the 
development of a risk-based formula, and/or to support the operation of 
such a formula in the event of an incident.
    In response, the Department notes that section 934 requires the 
Department develop and implement regulations to establish the 
retrospective risk pooling program to be funded by U.S. nuclear 
suppliers. Moreover, recent events with the tsunami and earthquake 
affecting nuclear reactors in Fukushima, Japan underscore the 
importance of a robust legal system to promptly and meaningfully 
compensate victims of nuclear incidents and provide consistent rules 
for dealing with legal liability.\6\ The Department believes that 
sufficient information and data are available to develop a formula and 
that a data collection system can be implemented to support the 
operation of such a formula if it needs to be used in the future. 
Nonetheless, the Department seeks additional commentary and specific 
information from the nuclear industry on the potential impacts to U.S. 
competitiveness in the nuclear export arena and the President's 
National Export Initiative. The Department is also interested in 
receiving comment on which alternative regulation, the first or the 
second, is better suited to mitigate the impacts, if any, on United 
States' competitiveness in the nuclear export arena.
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    \6\ In response to the accident at TEPCO's Fukushima Daiichi 
Nuclear Power Station, the IAEA issued its Action Plan on Nuclear 
Safety (Plan), approved by the Board of Governors and endorsed by 
the IAEA General Conference in September 2011, calling upon its 
members to strengthen nuclear safety through measures proposed in 
the Plan. http://ola.iaea.org/ola/documents/ActionPlan.pdf. One of 
those measures is for members to support efforts to establish and 
promote a global nuclear liability regime, such as the CSC.
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    The Department has proposed two alternative methods of calculating 
the retrospective premium payment to provide the public with a set of 
options and a range of alternatives to review and assess. As explained 
in greater detail in the following sections, the proposed regulation 
addresses many of the commenters' concerns and adopts many of the 
safeguards suggested, while fulfilling DOE's obligation to implement 
section 934.

Section 951.3--Definitions

    The terms that are defined in the Act are so defined in this 
proposed regulation; however, DOE has added other terms as necessary to 
establish the retrospective risk pooling program and the risk-informed 
assessment formula. The following describes specific terms (not in 
alphabetical order) key to understanding the overall structure and

[[Page 75080]]

operation of the retrospective risk pooling program under either 
Alternative 1 or 2; other terms are explained in connection with the 
subpart to which they specifically apply.
    Nuclear supplier. This term is defined in the Act, and would be 
adopted verbatim in the regulation. The term nuclear supplier as 
defined in the Act means a covered person (or a successor in interest 
of a covered person) that--(A) supplies facilities, equipment, fuel, 
services, or technology pertaining to the design, construction, 
operation, or decommissioning of a covered installation; or (B) 
transports nuclear materials that could result in a covered incident. 
Section 934(b)(7). In light of the statutory definition which includes 
a successor in interest to a covered person, the term ``nuclear 
supplier'' would encompass an entity that merged with another having 
reportable transactions. Therefore, the merged company, as successor in 
interest, would also have reportable transactions. The Department 
sought comment in the NOI on whether further interpretation of this 
definition was necessary, noting its importance in the regulatory 
scheme but that it is ``potentially very broad in scope, complex, and 
subject to interpretation.'' 75 FR 43946-43947, 43949. The Department 
received several comments echoing the importance of this term to the 
operation of the Act, the need for clarification of the term, and 
provisions excluding certain nuclear suppliers from operation of the 
Act. In this proposed rule, the Department maintains the statutory 
definition of nuclear supplier, and addresses any uncertainty regarding 
inclusion or exclusion of a nuclear supplier from the retrospective 
risk pooling program through other provisions in the regulation, 
explained below.
    Covered nuclear supplier and reportable transaction. To address the 
concerns of commenters regarding the definition of nuclear supplier and 
to add certainty to the rule, the proposed rule introduces the concept 
of a ``covered nuclear supplier.'' A covered nuclear supplier is a 
nuclear supplier (as defined in the Act) whose goods or services, if 
supplied in the United States, would be required to comply with the 
requirements of 10 CFR part 21. Part 21 requires suppliers of basic 
components to any facility or activity licensed or otherwise regulated 
by the NRC to report any defects or noncompliance with their product. 
This NRC regulation acts as a safeguard to ensure that basic components 
of a nuclear facility are designed and manufactured to operate as 
intended, in a safe manner and without defect. If a good or service is 
subject to the part 21 requirements, it is more likely to be safety-
related, or may be dedicated as safety-related by the NRC licensee if 
used in a safety-related function, and therefore provide the basis for 
a claim against its supplier in the event of a nuclear incident. 
Conversely, if a good or service is not subject to the part 21 
requirements, it is less likely to provide a basis for a claim. This 
method of differentiating nuclear items is clear and certain within the 
nuclear industry, and provides a reasonable basis for allocating risk 
among nuclear suppliers.
    As explained in the NOI, the Department believes that the statutory 
risk factors to be considered in developing the risk-informed 
assessment formula (see section 934(e)(2)(C)(i)) indicate that only 
nuclear suppliers of goods or services most likely to be exposed to 
significant potential liability in the event of a covered incident 
would be included in the retrospective risk pooling program. 75 FR 
43950. Those types of suppliers are best represented as the suppliers 
of goods or services specifically intended for use in structures, 
systems, and components related to safety at a nuclear installation. 75 
FR 43951. Further, the concept of limiting the application of the rule 
to only those suppliers of items related to safety would operate to 
eliminate from consideration nuclear suppliers of goods or services 
that do not contribute significantly to the risk of a nuclear incident 
in accordance with the exclusion factors in subsection 
934(e)(2)(C)(ii)(I), such as classes of goods and services with 
negligible risk and goods and services not intended specifically for 
use in a nuclear installation in accordance with subsection 
934(e)(2)(C)(ii)(I)(aa), (bb). 75 FR 43950-43951. The majority of the 
commenters agreed that this approach would be a reasonable 
implementation of the statutory risk factors, specifically, the 
direction to DOE to consider factors such as the nature and intended 
purpose of the goods and services (934(e)(2)(C)(i)(I)) and the hazards 
associated with such goods and services should they fail to achieve the 
intended purposes (934(e)(2)(C)(i)(III)).
    In addition, this approach provides an objective benchmark for 
nuclear suppliers. Nuclear suppliers whose goods and services, if 
supplied in the United States, would be subject to the NRC's part 21 
requirements can be certain what goods or services they supply abroad 
are subject to reporting requirements of the proposed rule. As 
discussed further below, only covered nuclear suppliers (or their 
successors in interest) are required to report to the Department their 
prior and annual reportable transactions for purposes of applying the 
risk-informed assessment formula in the event of a request for funds. 
Not all transactions by a covered nuclear supplier are a reportable 
transaction, however. A ``reportable transaction'' means any 
transaction by a covered nuclear supplier involving the supply of items 
specified in appendices A and B (Alternative 1) or the items identified 
in the definition of ``reportable transaction'' in section 951.3 
(Alternative 2). Accordingly, an entity may be a nuclear supplier as 
defined under the Act and regulation, but only subject to the reporting 
requirements of the proposed rule if it is a covered nuclear supplier 
engaged in reportable transactions as defined in the regulation. 
Further, a nuclear supplier may have reportable transactions, but would 
only be assessed a risk premium payment on the basis of its ``covered 
transactions.''
    The Department seeks comment on whether NRC's part 21 regulations, 
or some other regulatory requirement or concept such as the quality 
assurance requirements in 10 CFR part 50, appendix B, are appropriate 
criteria to determine which nuclear suppliers should be defined as a 
covered nuclear supplier.
    Covered transaction and final nuclear supplier. A ``covered 
transaction'' is a reportable transaction where a nuclear supplier is 
the final nuclear supplier to a covered installation. The term ``final 
nuclear supplier'' is defined in the proposed rule as: the nuclear 
supplier that obtains, where required, an NRC general or specific 
license under 10 CFR part 110, Department of Commerce export license 
under 15 CFR part 734, or DOE authorization under 10 CFR part 810 for 
the export of the item(s) involved in a reportable transaction. The 
terms ``covered transaction'' and ``final nuclear supplier'' are 
proposed to identify which nuclear suppliers are obligated to pay a 
risk premium with respect to what type of good or service.
    The Department received numerous comments on the dynamic nature of 
the nuclear industry both domestically and abroad, and the difficulty 
many suppliers would have in tracking with certainty whether their good 
or service were supplied to a foreign nuclear installation. For 
example, many commenters noted that their goods may be incorporated 
into other nuclear goods which ultimately may or may not be exported, 
and that it is impossible to ascertain whether their good has been 
supplied to a covered installation for

[[Page 75081]]

reporting purposes or otherwise. Commenters argued against imputing to 
nuclear suppliers an intent to export a good or service when none can 
be shown or known, and argued for certainty in identifying the pool of 
nuclear suppliers that are supplying goods or services to foreign 
nuclear installations. One commenter suggested using export licenses, 
authorizations, or other such approvals as criteria.
    Recognizing these concerns on a practical and policy level, the 
Department is proposing that only final nuclear suppliers, i.e., the 
nuclear suppliers that obtain the applicable export license or 
authorization, be the nuclear supplier covered by the retrospective 
risk pooling program. A final nuclear supplier is proposed to be 
defined in effect as a covered person who obtains or relies on licenses 
from the Department of Commerce under 15 CFR part 734 or NRC under 10 
CFR part 110, or authorizations from DOE under 10 CFR part 810 to 
manufacture, provide or produce facilities, equipment, fuel or services 
specifically for use in covered installations outside the United 
States. Only the final nuclear supplier can report with certainty on 
the timing, destination, value and quantity of exported goods or 
services. This information is essential in developing and implementing 
any risk-informed assessment formula. The Department believes that this 
is a fair and equitable approach to allocate risk among United States 
nuclear suppliers. The final nuclear supplier will have the ability, if 
desired, to negotiate with its suppliers to recuperate any potential 
costs or liability it will bear under the proposed rule. Such cost and 
risk allocation among nuclear suppliers is best left to the industry to 
manage on its own terms as a business arrangement, rather than by the 
Department through regulation. Also, the final nuclear supplier is the 
person most identifiable to the covered installation at which the 
nuclear incident occurs, and therefore the person most likely to be 
subject to potential liability in the event of a covered incident. 
Precisely because of this fact, it is the final nuclear supplier that 
is most in need of and benefitted by the protections of the Convention. 
Limiting the transactions covered by the regulation to those of a final 
nuclear supplier represents the most reasonable, fair and manageable 
approach available to the Department and responds to concerns expressed 
by commenters on the NOI.
    In sum, under either Alternative 1 or 2, a nuclear supplier would 
be part of the retrospective risk pooling program and obligated to make 
a risk premium payment if the nuclear supplier: (1) Supplied goods or 
services specified in the appendices (Alternative 1) or included in the 
nuclear sector (Alternative 2) that, if supplied in the United States, 
would be subject to the requirements of 10 CFR part 21; (2) obtained 
the necessary export licenses or authorizations to supply those goods 
or services; and (3) supplied those goods or services to nuclear 
installations that are covered by the CSC, i.e., covered installations.
    Covered installation. The Department proposes to define the term 
``covered installation'' as it is in the Act. A ``covered 
installation'' is a nuclear installation at which the occurrence of a 
nuclear incident could result in a request for funds under the 
Convention. Such a nuclear incident would be an incident that exceeds 
the amount available under the first tier of compensation, equivalent 
to roughly 300 million SDRs, or about $460 million, and occurred in a 
State that is a Contracting Party (CSC member State) to the Convention. 
(If the incident were to occur in the United States, the first tier of 
compensation would be covered by the Price-Anderson Act.) Several 
commenters noted that the rule should make clear that the term 
``covered installation'' means only nuclear installations in a CSC 
member State. One commenter noted that the legislative history of 
section 934 suggests the Department is not limited to only countries 
that have ratified the Convention, but should also include countries 
that have signed the Convention or are likely to join in a reasonable 
period of time. After considering these comments, the Department is 
proposing that a covered installation is a nuclear installation in a 
CSC member State at the time of the nuclear incident for which the 
contribution to the international supplementary fund is made. While 
flexibility and breadth of application may be desirable in some 
respects, in the end the United States would only be called upon to 
contribute to a nuclear incident in a CSC member State, and therefore 
the risk premium--and potential liability avoided by operation of the 
Convention--should be calculated based upon transactions with nuclear 
installations only in CSC member States.
    Comments also were received that the Convention definition of 
``nuclear installation'' was not sufficiently explicit to allow nuclear 
suppliers to identify the covered installations outside the U.S. to 
which the Convention would apply. It was suggested that DOE post a list 
of those covered installations in member countries, so that only those 
facilities would be provided Convention protection. The Convention 
provides for a list of nuclear installations at Article VIII, which 
requires that each Contracting State communicate to the Depositary a 
complete listing of all nuclear installations referred to in Article 
IV.3, meaning a list of all nuclear reactor installations in the member 
country. Further, the Convention definition is sufficiently explicit as 
to the type of facilities that would qualify for coverage, and CSC 
member States would be a matter of public record (http://www.iaea.org/Publications/Documents/Conventions/supcomp_status.pdf), such that U.S. 
nuclear suppliers are reasonably able to determine the type of facility 
at which a nuclear incident may result in a request for funds. The 
Department does not believe that another list is necessary or 
appropriate to implement the rule but seeks comment from the public on 
this suggestion.
    Nuclear installation. ``Nuclear installation'' is not defined in 
the Act; however, as noted above, it is defined in the Convention. The 
Convention has differing definitions of ``nuclear installation;'' the 
applicable definition depends upon the installation state where the 
incident occurs and the nuclear liability instrument in effect in that 
State, e.g., the Vienna or Paris Convention, or, if a Contracting Party 
does not belong to either of those Conventions, then the definition in 
Article 1.1(b) of the Annex to the Convention (Annex). For the United 
States, there is an additional option for defining a nuclear 
installation under Annex Article 2.3. As noted previously in the NOI, 
DOE intends to apply the Annex Article 2.3 definition of ``nuclear 
installation'' for covered incidents within the United States. However, 
for covered incidents outside the United States, the Department would 
apply the Annex Article 1.1(b) definition as the retrospective risk 
pooling program applies only to covered incidents outside the United 
States. Thus, the appropriate reference point for the type of nuclear 
installation that constitutes a covered installation would be the Paris 
Convention, Vienna Convention or Annex Article 1.1(b), depending on 
whether the Paris Convention, Vienna Convention, or the Annex was the 
applicable law for the country where the nuclear incident occurred. As 
a practical matter, these definitions are essentially the same.
    In this proposed rule, the definition of ``nuclear installation'' 
closely mirrors that in Article 1.1(b) of the Annex. Some

[[Page 75082]]

revisions were made to the definition for simplicity and clarity, e.g., 
the word ``factory'' used in the Annex, was replaced with the somewhat 
broader or more commonly used phrase ``facility or plant'' to ensure 
all nuclear installations are covered. More simply put, the Department 
interprets the definition of ``nuclear installation'' in the 
Convention, and in the proposed rule, to mean the following types of 
nuclear installations: civilian nuclear power reactors, civilian 
nuclear research or test reactors, nuclear fuel fabrication facilities, 
spent or used nuclear fuel reprocessing facilities, uranium enrichment 
facilities, and storage facilities for ``nuclear materials'' as defined 
in the Convention, which would include storage facilities for spent 
nuclear fuel and radioactive wastes (except for storage of nuclear 
materials incidental to the transport of such materials). In addition, 
as the definition provides, where there are several nuclear 
installations of one operator at a single site, for example, a single 
site with multiple reactor units, the installation state would 
determine whether this represents a single nuclear installation or 
multiple nuclear installations. In the case of the United States as the 
Installation State, a single site with multiple reactor units would be 
considered a single nuclear installation.
    Commenters argued for the exclusion of certain nuclear facilities 
from the definition of a ``nuclear installation,'' and the Department 
independently considered what installations properly fit within the 
definition of a nuclear installation. One commenter noted that DOE 
should expressly exclude from the definition of ``covered 
installation'' nuclear waste disposal facilities, e.g., low-level waste 
disposal facilities, on the basis that disposal facilities are distinct 
from storage facilities, and only the latter facilities are included in 
the Convention definition of a ``nuclear installation.'' Other 
commenters from the uranium mining, milling and conversion industries 
noted that they are not nuclear suppliers under the Act because their 
products and services--natural uranium concentrates and conversion of 
natural uranium to uranium hexaflouride--are not nuclear ``fuel'' and 
require several intervening and separate actions to be transformed into 
a form that can be used as fuel for a reactor. Commentors also noted 
that natural uranium as mined or converted into uranium hexafluoride 
presents negligible risk to a covered facility, and could not 
reasonably be considered a proximate cause or contribution to a nuclear 
incident giving rise to a call for funds under the Convention. Further, 
the Department notes that natural uranium is excluded from the 
definitions in the Convention of ``nuclear fuel'' and ``nuclear 
material''.
    Based on the foregoing, the Department concludes that the 
definition of ``nuclear installation'' does not include radioactive 
waste disposal facilities or uranium mining, milling and conversion 
facilities. Uranium mining, milling and conversion facilities do not 
fall within the definition of ``nuclear installation'' as they do not 
involve the use of nuclear fuel or nuclear material as defined in the 
Convention. In addition, DOE agrees that suppliers of natural or 
depleted uranium or uranium conversion services are not suppliers of 
fuel and thus not nuclear suppliers that would be subject to the 
requirements of this proposed rule. Finally, we agree that the 
definition of ``nuclear installation'' does not cover radioactive waste 
disposal facilities which are distinct from storage facilities. NRC 
treats storage and disposal activities under separate regulations 
(e.g., 10 CFR parts 60, 61, and 72), as does DOE in regard to 
requirements for its activities (e.g., DOE Manual 435.1, where disposal 
is defined as ``emplacement of waste in a manner that ensures 
protection from the public, workers, and the environment with no intent 
of retrieval and that requires deliberate action to regain access to 
the waste'' and storage means ``the holding of radioactive waste for a 
temporary period, at the end of which the waste is treated, disposed 
of, or stored elsewhere.''). This distinction is also recognized on the 
international level, in the Joint Convention on Safety of Spent Fuel 
Management and on the Safety of Radioactive Waste Management, to which 
the United States is a party, in the differing definition and treatment 
of those concepts in practice. Accordingly, radioactive waste disposal 
facilities are not a covered installation, and suppliers of goods or 
services to radioactive disposal facilities are not subject to the 
requirements of this proposed rule.
    Nuclear material. The Department defines ``nuclear material'' as it 
is defined in the Convention. The Convention, Annex Article 1, includes 
a definition of ``nuclear material'' that specifies nuclear material 
means nuclear fuel, other than natural uranium and depleted uranium, 
capable of producing energy by a self-sustaining chain process of 
nuclear fission outside a nuclear reactor, and radioactive products or 
waste. ``Radioactive products or waste'' has its own definition in the 
Convention, which is incorporated verbatim in this proposed rule. 
``Radioactive products or waste'' are defined as radioactive material 
produced in, or any material made radioactive by exposure to the 
radiation incidental to the production or utilization of nuclear fuel. 
However, radioactive material does not include radioisotopes, which 
have been fabricated and are usable in any scientific, medical, 
agricultural, commercial or industrial purpose.
    The Department interprets the Convention definition of ``nuclear 
material'' to include nuclear materials such as enriched uranium, 
nuclear fuel, irradiated (spent) nuclear fuel, and radioactive wastes, 
and to exclude as nuclear materials natural uranium, depleted uranium, 
and radioisotopes in usable form.
    Covered person. The definition of ``covered person'' is significant 
in that a nuclear supplier, as defined in the Act, is a covered person 
or a successor in interest to a covered person. The Department defines 
``covered person'' as it is defined in the Act. A covered person 
includes any United States person, or any individual or entity 
(including an agency or instrumentality of a foreign country) that is 
located in the United States or carries out an activity in the United 
States. DOE interprets this definition broadly. For example, a foreign 
company that carries out any activity in the United States and exports 
from the United States nuclear goods or services would be a covered 
person. On the other hand, an example of an entity that is not a 
covered person would be a U.S. company that provides goods or services 
to a foreign nuclear installation but does so under contract to the 
United States government. The statutory definition of ``covered 
person'' excludes ``(i) the United States; or (ii) any agency or 
instrumentality of the United States.'' Section 934(b)(6)((B). Under 
such circumstances, a U.S. company would not be considered a covered 
person for purposes of that activity and therefore would not be 
included within the retrospective risk pooling program. DOE notes that 
a company may provide goods and services to a foreign installation both 
on its own account (i.e., not for the United States government), and 
for the United States government; such company would be considered a 
``covered person'' for its private transactions only.

Subpart B--Retrospective Risk Pooling Program

    Alternatives 1 and 2 are described separately in the following 
discussion of Subpart B, with the exception of the role

[[Page 75083]]

of the Department and the retrospective risk premium payment cap. Both 
of these topics are presented in the discussion of Alternative 1 but 
are the same under both alternatives.\7\ The role of the Department is 
set forth at section 951.4 under both alternatives, while the 
retrospective risk premium payment cap is set forth at section 951.10 
in Alternative 1 and section 951.16 in Alternative 2. As noted 
previously, Alternative 1 would establish a risk-assessment formula 
based on goods or services provided by a nuclear supplier, while 
Alternative 2 would establish a risk-assessment formula based on 
nuclear sectors.
---------------------------------------------------------------------------

    \7\ DOE notes that Subparts A (except for the definitions of 
covered transaction and reportable transaction), C and D, are also 
the same for Alternative 1 and 2.
---------------------------------------------------------------------------

Alternative 1--Risk-Informed Assessment Formula by Nuclear Goods and 
Services

Section 951.4--Role of the Department

    Section 951.4 provides for the role of the Department in the event 
there is a request of the United States for funds under the Convention. 
The amount requested of the United States, that is, the contingent 
cost, will be based on the rules and formula in the Convention for 
allocating costs among CSC member States (Article IV). The contingent 
cost will be a fixed amount, e.g., $150 million.\8\ DOE's role is to 
allocate that amount among the U.S. nuclear suppliers based upon the 
risk-informed assessment formula set forth in the rule.
---------------------------------------------------------------------------

    \8\ The numbers provided in the text and as parentheticals are 
examples only, and not intended to represent an actual case.
---------------------------------------------------------------------------

    Within 60 days of a request for funds under the Convention, the 
Department will calculate the retrospective premium payment owed by 
each nuclear supplier based upon the risk-informed assessment formula. 
Notification to nuclear suppliers will be provided in the Federal 
Register. Payment requirements for nuclear suppliers are set forth in 
subpart C of this proposed rule.

Section 951.5--Retrospective Premium Payment

    A nuclear supplier's retrospective premium payment will be 
calculated based on the nuclear supplier's share of the contingent cost 
owed by the United States under the Convention. Each nuclear supplier 
will be assessed a pro-rata share of the costs based on its share of 
the risk. The risk share, which is a function of the supplier's risk 
exposure, is expressed as a percentage of the contingent cost, so that 
the retrospective premium for each nuclear supplier is its risk share 
(e.g., 2%) multiplied by the contingent cost (e.g., $150 million), 
resulting in the amount of the retrospective premium payment (e.g., $3 
million).\9\ The ``risk'' that is the subject of this risk-informed 
assessment formula, and the basis for the risk premium payment, is the 
risk that a nuclear supplier's goods or services would provide the 
basis for a claim against the supplier in the event of a nuclear 
incident at a covered installation that would give rise to a call for 
funds under the Convention.
---------------------------------------------------------------------------

    \9\ The numbers provided in the text and as parentheticals are 
examples only, and not intended to represent an actual case. The 
following hypothetical amounts illustrate how the formula would 
work, where it is assumed that: contingent cost = $150 million; 
aggregate risk exposure = $500 million; nuclear supplier's covered 
transactions = $4 million from Appendix A, and $2 million from 
Appendix B.
    Retrospective Premium Payment = risk share [.02] x contingent 
cost [$150,000,000] = $3,000,000
    Risk share = risk exposure [$10,000,000]/aggregate risk exposure 
[$500,000,000] = .02 or 2%
    Risk exposure = (value of covered transactions from Appendix A x 
2) [$4,000,000 x 2] + (value of covered transactions from Appendix B 
x 1) [$2,000,000 x 1] = $8,000,000 + $2,000,000 = $10,000,000
---------------------------------------------------------------------------

Section 951.6--Risk Share, Section 951.7--Risk Exposure, and Section 
951.8--Aggregate Risk Exposure

    A nuclear supplier's risk share is their relative risk exposure 
compared to the aggregate risk exposure of all U.S. nuclear suppliers. 
Based upon the information gathered under subpart D for reporting 
transactions, the Department would calculate the amount of each nuclear 
supplier's risk exposure and the overall or aggregate risk exposure of 
U.S. nuclear suppliers. The aggregate risk exposure is simply the sum 
of all nuclear suppliers' risk exposure. The risk exposure of a nuclear 
supplier is the adjusted value of all covered transactions of that 
nuclear supplier, weighted as either 2 (items listed in appendix A) or 
1 (items listed in appendix B) in accordance with the risk associated 
with the goods or services provided. Appendix A contains a list of 
primary nuclear items, meaning items with a greater likelihood of 
contributing to a nuclear incident resulting in a call for funds, and 
therefore such items are given twice the weight as items listed in 
appendix B. Appendix B contains a list of secondary nuclear items, 
meaning items with less likelihood of contributing to a nuclear 
incident resulting in a call for funds. Each nuclear supplier's risk 
exposure is calculated as the sum of the adjusted value of all their 
covered transactions, appropriately weighted. The aggregate risk 
exposure is the sum of all nuclear suppliers' risk exposures. A nuclear 
supplier's risk share is then calculated, i.e., the nuclear supplier's 
risk exposure divided by the aggregate risk exposure.
    The most important variable in the equation is the nuclear 
suppliers' covered transactions. A covered transaction under 
Alternative 1 is defined as ``any reportable transaction by which a 
nuclear supplier is the final nuclear supplier to provide any of the 
items listed in appendix A or B for use in the design, construction, 
operation or decommissioning of any covered installation or in the 
transportation of material to or from a covered installation.'' Section 
951.3. The definition of covered transaction provides important 
indicators of what nuclear suppliers will have covered transactions 
(only those that are reportable and made by final nuclear suppliers).
    First, the transactions used in the risk-informed assessment 
formula must be reportable transactions. Reportable transactions are 
transactions of a ``covered nuclear supplier,'' engaged in after a 
certain date as specified in the rule, to provide any of the items 
listed in the appendices for use in the design, construction, 
operation, or decommissioning of any nuclear installation outside the 
United States or in the transportation outside the United States of 
nuclear material to or from a nuclear installation. Accordingly, not 
every transaction of a nuclear supplier is a reportable transaction. 
Reportable transactions are those transactions: (1) Made by a covered 
nuclear supplier, meaning a nuclear supplier that supplies goods or 
services, if supplied in the United States, that would be subject to 
the requirements of 10 CFR part 21; (2) occurring after 1959 (i.e., 
starting January 1, 1960) for items listed in appendix A, and after 
2007 (i.e., starting January 1, 2008) for items listed in appendix B; 
(3) for items listed in the appendices, rather than all nuclear goods 
or services. The transactions must also be for items used in: (1) 
Nuclear installations outside the United States, so that nuclear items 
supplied to domestic nuclear installations are not included; or (2) the 
transportation outside the United States of nuclear material to or from 
a nuclear installation, so that transport transactions are limited to 
transport of nuclear material outside the United States, and between 
nuclear installations outside the United States.
    Second, the transactions used in the risk assessment formula must 
be made by a ``final nuclear supplier.'' As previously explained, many 
commenters noted that it can be very

[[Page 75084]]

difficult to determine whether a nuclear item has been exported and 
used in a foreign nuclear installation, as many items are sold directly 
to other entities within the United States, who may export them as is 
or in combination with other items, and their ultimate end use 
destination is not known. On the other hand, the entity that exports 
the nuclear item (i.e., the final nuclear supplier) whether as a single 
item or in combination with other items, will know that the item is 
being exported for use in a nuclear installation outside the United 
States. By limiting covered transactions to those involving final 
nuclear suppliers, the rule operates to encompass those nuclear 
suppliers for which records can be reliably kept and maintained on 
nuclear items supplied to foreign nuclear installations, or nuclear 
materials transported between foreign nuclear installations. Further, 
this approach addresses the concern expressed by some commenters that 
the rule should be clear that it applies only to suppliers of goods or 
services to foreign installations, and does not apply to suppliers of 
goods or services solely to domestic installations.
    Further, the time period of reference in calculating the risk 
premium is the period starting from the date of reportable transactions 
(either after 2007 or 1959 for certain suppliers) until the date of the 
nuclear incident. Several commenters noted that the period of 
assessment should be on a rolling basis, for example a five-year 
period, prior to the nuclear incident. The Department believes this 
formulation may be too restrictive and fail to cover nuclear suppliers 
whose goods or services may have contributed to a nuclear incident and 
therefore should be liable for their share of the contingent costs. 
Except for nuclear suppliers of items in appendix A (and suppliers to 
the facility sector in Alternative 2, discussed below), all other 
nuclear suppliers would have reportable transactions after 2007, when 
section 934 was enacted. Suppliers of items in appendix A would have 
reportable transactions after 1959, when many of the foreign nuclear 
installations that would be covered installations under the CSC were 
constructed and began operations. Development of a risk-assessment 
formula equitable to all nuclear suppliers requires looking back to 
1960 for nuclear suppliers who would have been the most likely to have 
supplied goods or services to nuclear installations at which a nuclear 
incident may occur, and who would benefit from the protections of the 
Convention. To do otherwise would improperly place the majority of the 
burden of the contingent costs on nuclear suppliers with more recent 
transactions that may have little or no relation back to those nuclear 
installations. Nonetheless, the Department recognizes that 
recordkeeping back to 1960 may be challenging, and seeks comment from 
the public on the probability and feasibility of collecting information 
from that timeframe.
    In developing the risk-informed assessment formula, the Department 
considered the risk factors set forth in section 934 along with its own 
experience and expertise to arrive at a quantifiable formula and 
develop the appendices to the rule. Section 934(e)(2)(C). As explained 
in the NOI, DOE interpreted these risk factors to support an approach 
that focuses on goods or services specifically intended for use in 
structures, systems, and components important to safety at a nuclear 
installation as the goods and services to be ranked and used in 
calculating the risk premium. 75 FR 43950-43951. Following this 
approach, the appendices identify particular nuclear goods and services 
and assigns to those goods or services a risk rating or ranking--
primary or secondary--and a corresponding weight--2 or 1--that is then 
multiplied by the adjusted value of the goods or services exported and 
added together to equal a nuclear supplier's risk exposure.
    The Department received many comments on how it must develop 
additional information to adequately assess and assign the risk 
factors. Few of the commenters, however, provided explicit 
recommendations on risk ratings for specific categories or types of 
nuclear goods or services. Most commenters expressed doubt that the 
Department could objectively establish a risk ranking for specific 
nuclear goods and services with sufficient support to provide a 
credible basis for the rule. While the Department acknowledges the 
difficulty of the task, the Department believes it has proposed a rule 
that fulfills the statutory mandate in an equitable manner.
    The Department believes the items defined in appendix A are the 
primary components, equipment, systems, and structures that, by their 
design, are intended to protect the public health and safety from 
operational events and plant transients (design basis or beyond design 
basis events) that could cause nuclear incidents within the purview of 
the Convention. These items were drawn from DOE's knowledge and 
experience in the history and operation of various nuclear facilities, 
as well as the NRC regulatory structure and emphasis on the importance 
of safety in nuclear operations. In addition, the Department recognizes 
that other nuclear items identified in appendix B may also cause a 
covered event but considers the likelihood and severity of those events 
to be secondary to, or of lower risk, than, those items in appendix A. 
Hence, the items are weighted differently to reflect this risk 
allocation. The Department seeks public input on the risk sharing 
classification of covered items in the appendices, and suggestions for 
additions or deletions from the list and the supporting bases for those 
suggestions as available.

Section 951.9--Small Nuclear Supplier Exclusion

    Section 951.9 proposes an exclusion from payment of the 
retrospective risk premium for small nuclear suppliers. All commenters 
supported such an exclusion, and section 934 expressly provides for DOE 
to exclude nuclear suppliers with a de minimis share of the contingent 
costs. 934(e)(2)(C)(ii). In this proposed rule, the Department proposes 
two alternatives for determining whether a nuclear supplier is excluded 
from payment as a ``small'' supplier. First, DOE proposes to determine 
a small nuclear supplier based on an amount of risk exposure that is 
``de minimis,'' such as $1 million. One commentor suggested nuclear 
suppliers with less than $1 million in annual total sales to covered 
nuclear installations may be considered ``de minimis.'' DOE seeks 
public comment on this and other potential amounts. The amount 
established in the rule must take into account the consideration that 
it not be set too low, as risk exposure may be based on many years of 
transactions, or too high, as the intent is to focus the application of 
the rule on nuclear suppliers that are the most likely to be subject to 
claims for damage resulting from a nuclear incident giving rise to 
nuclear damage in excess of 300 million SDRs. In the alternative, the 
Department proposes excluding all suppliers that qualify as ``a small 
business'' in accordance with size standards established by the Small 
Business Administration (SBA), on the basis that such suppliers are 
unlikely to be subject to claims for damage. The Department welcomes 
additional comment and feedback from the public on what dollar amount 
or other criterion, such as classification as a ``small business'' 
under SBA size standards, is reasonable to use for the exclusion of 
small nuclear suppliers.

[[Page 75085]]

Section 951.10--Retrospective Premium Payment Cap

    Section 951.10 proposes a cap on the retrospective premium payment 
for any one nuclear supplier, to be specified in the rule as a specific 
dollar limit or a percentage of the contingent cost. All commenters 
supported a cap on premiums, arguing that a cap would provide 
predictability to the program thereby allowing nuclear suppliers to 
plan and potentially insure themselves against the risk of a premium 
payment in the future. Also, many commenters believed a cap was a means 
to equitably apportion the contingent costs and insure no one supplier 
was unduly burdened with the majority of the cost.
    In response to these comments, the Department is proposing to 
include such a cap in the rule. DOE seeks comment on the amount or 
percentage of the contingent cost that is appropriate as a cap on any 
one supplier's premium payment. As a basis for additional comment from 
the public, the Department is considering amounts such as 5%, or 25%, 
of the contingent cost, or a specific dollar amount, e.g., $25,000,000, 
as suggested by several commenters.
    While the Department supports a cap, it is required that the United 
States government be paid in full by nuclear suppliers the same amount 
as the United States government is obligated to contribute as a CSC 
party under the Convention. Accordingly, the proposed rule provides for 
assessing additional premium payments from the nuclear suppliers that 
have not reached the cap on payments in the event there is a shortfall 
in payments from suppliers with respect to the United States' 
obligation. The additional payments would be allocated on a pro rata 
basis, consistent with each nuclear supplier's share of risk as 
calculated under the rule, and shall operate until a nuclear supplier 
reaches the cap or the shortfall is met, whichever occurs first. In the 
unlikely event this process results in each nuclear supplier reaching 
the cap on payments and the shortfall is not met, then all nuclear 
suppliers will be assessed a pro rata share of the remaining shortfall 
until funds in the amount of the United States' contribution have been 
paid to the Treasury. The Department welcomes additional comment and 
feedback from the public on the process for ensuring the United States 
is fully paid by nuclear suppliers the amount it is obligated to 
contribute under the Convention.
Alternative 2--Risk-Informed Assessment Formula by Nuclear Sector

Section 951.5--Nuclear Supplier Sectors

    Section 951.5 groups nuclear suppliers in accordance with the 
sector of the nuclear industry to which they provide goods or services. 
This approach groups suppliers based on the commonality of the type of 
goods or services they supply and the risk that those goods or services 
would contribute to a nuclear incident. The Department believes 
categorizing nuclear suppliers in this manner is a useful and equitable 
mechanism to reflect the allocation of risk among nuclear suppliers. 
Also, this approach is consistent with the concept suggested by several 
commenters that DOE assign risk by looking at the stages of the nuclear 
fuel cycle, where each stage would be grouped in accordance with its 
relative risk as a contributor to a nuclear incident. The nuclear 
supplier sectors are: (1) Facility; (2) equipment and technology; (3) 
nuclear material and nuclear material transportation; and (4) services. 
The Department believes it has defined nuclear sectors in a reasonable 
and workable manner but welcomes suggestions from the public on other 
ways to define nuclear sectors, e.g., defining the sectors based upon 
the stages of the fuel cycle or by installation type.
    As described in the rule, the first sector is the facility sector, 
which encompasses nuclear suppliers that are the lead suppliers 
involved in the development and deployment of nuclear installations. 
The term ``lead supplier'' is defined in the proposed rule as a nuclear 
supplier whose adjusted value of reportable transactions for the period 
from January 1, 1960 through 2007 exceeds $500 million, or some other 
amount to be determined by DOE based on consideration of public 
comment. By establishing as the benchmark for defining a lead nuclear 
supplier a dollar value of reportable transactions of that supplier 
over the period 1960 through 2007, the Department intends to capture in 
this sector those suppliers that could have been characterized as the 
primary supplier to a nuclear installation. For example, many of the 
reactors in existence today were constructed and installed several 
decades ago and, at that time, there was a single nuclear supplier that 
led in the design, component, equipment and technology supply of the 
reactor. In essence, the lead supplier is the nuclear supplier that 
supplied the nuclear installation as a whole, and not merely individual 
components or parts that make up the whole.
    The Department recognizes that there has been a shift in the 
nuclear industry, and current business arrangements among suppliers and 
nuclear installation operators are not necessarily structured as in the 
past. For this reason, the facility sector is backward looking (that 
is, looking back from 2007 when section 934 was enacted), and only 
comprises those nuclear suppliers that qualify as a lead supplier of a 
nuclear installation for the period 1960 through 2007. Nuclear 
suppliers that fit within the facility sector would only report 
transactions for the period from January 1, 1960 through December 31, 
2007; for transactions after 2007 (the year of enactment) it is 
expected that nuclear suppliers would fit into one or more of the other 
nuclear sectors. Limiting the time period for operation of the facility 
sector reflects the structure of the nuclear industry in the past and 
present, while allocating the costs equitably among nuclear suppliers 
based on the likelihood their goods or service would contribute to a 
nuclear incident occurring at a nuclear installation.
    Moreover, this approach is reasonable in terms of recordkeeping and 
transaction reporting. It is less likely that a nuclear supplier, other 
than the lead supplier, would have records of their transactions dating 
back to the initial operation of most of the nuclear installations in 
existence today--precisely the installations at which a nuclear 
incident may occur. Therefore, the lead suppliers of those 
installations should be assessed a proportionate share of the 
contingent costs. Further, it is most likely that the lead supplier to 
a nuclear installation built decades ago would also be the final 
nuclear supplier, i.e., the nuclear supplier that obtained the 
necessary licenses and/or authorizations for the export of the nuclear 
goods and services comprising the nuclear installation. In sum, the 
facility sector represents the group of nuclear suppliers operating in 
the 1960 through 2007 time period, a period in which most nuclear 
installations were developed and deployed and were in large part 
supplied by a single nuclear supplier of significant resources and 
expertise, and for which records of the supply transactions would exist 
today and form an equitable basis to allocate risk and costs among 
them. The Department seeks comment on what other descriptors of a lead 
supplier would be appropriate to be included in the proposed rule to 
further clarify the definition of facility sector nuclear suppliers.

[[Page 75086]]

    The remaining three nuclear sectors are the equipment and 
technology sector, the nuclear material and nuclear material 
transportation sector, and the nuclear services sector. These sectors 
cover only reportable transactions of a nuclear supplier occurring from 
January 1, 2008 onward. These sectors reflect the more current business 
structure of the nuclear supplier industry, with suppliers specializing 
in specific goods or services and managing risks and costs among the 
suppliers as part of their business arrangement. The equipment and 
technology sector encompasses nuclear suppliers of equipment, 
components and technology used in a nuclear installation. This sector 
captures the nuclear suppliers that provide the multitude of equipment, 
component parts and technology to a nuclear installation, but would not 
be a lead supplier. The nuclear material and nuclear material 
transportation sector encompasses suppliers of nuclear material to a 
nuclear installation and the suppliers that transport nuclear material 
between installations. This sector captures suppliers such as those 
that furnish fresh fuel to a reactor, or irradiated nuclear fuel to a 
reprocessing facility, as well as the suppliers that provide 
transportation of fresh fuel or irradiated fuel between nuclear 
installations. The nuclear services sector encompasses suppliers of 
services to a nuclear installation for the design, construction, 
operation or decommissioning of a nuclear installation. This sector 
captures suppliers of services to a nuclear installation, such as 
operating services, and architecture, engineering and construction 
services.
    DOE notes that although there may be overlap among these three 
sectors (e.g., a nuclear supplier may supply both nuclear equipment and 
services), each sector was developed because it can be reasonably 
distinguished from the other sectors in terms of the nuclear items 
supplied and the relative risk of those items. As previously noted, the 
sectors are based on the expectation that the nuclear suppliers falling 
within each sector would be similarly situated in terms of the relative 
risk of their goods or services contributing to a claim for damages 
related to a covered incident, and their capacity to have reliable and 
extant records of their transactions to support an allocation of cost 
among them. If a supplier provides goods or services to more than one 
sector, the supplier would calculate their risk premium payment for 
covered transactions within each sector, with the total payment the sum 
of the premium for each sector.
    The Department believes the four nuclear sectors fairly represent 
the nuclear supplier industry as a whole and the suppliers to the 
nuclear industry that should be part of the retrospective risk pooling 
program. The Department also believes the nuclear sectors are similar 
to an approach proposed by some commenters to categorize suppliers in 
relation to their place within the fuel cycle (e.g. front-end or back-
end suppliers), but welcomes additional comment from the nuclear 
industry on whether this approach is appropriately structured and 
alternative suggestions.

Section 951.6--Retrospective Premium Payment

    A nuclear supplier's retrospective premium payment will be 
calculated based on the nuclear supplier's risk share of the contingent 
costs allocated to the nuclear sector in which the supplier is grouped. 
Each nuclear supplier will be assessed a pro-rata share of the 
allocated costs within their nuclear sector based on their share of 
risk within that sector. The risk share by sector is expressed as a 
percentage, and the allocated cost is a fixed number, so that the 
retrospective premium for each nuclear supplier is their risk share by 
sector (e.g., 4%) multiplied by the allocated cost by sector (e.g., $75 
million), resulting in the amount of the retrospective premium payment 
(e.g., $3 million).\10\ Suppliers may be grouped in multiple sectors in 
accordance with the goods or services they supplied, and the 
retrospective premium would be the sum of the risk premium for each 
sector. As in Alternative 1, the ``risk'' that is the subject of this 
risk-informed assessment formula, and the basis for the risk premium 
payment, is the risk that a nuclear supplier's goods or services would 
provide the basis for a claim for damage resulting from a nuclear 
incident at a covered installation that would give rise to a call for 
funds under the Convention.
---------------------------------------------------------------------------

    \10\ The numbers provided in the text and as parentheticals are 
examples only, and not intended to represent an actual case. The 
following hypothetical amounts illustrate how the formula would 
work, where it is assumed that: Contingent cost = $150 million; 
nuclear supplier's covered transactions = 1 nuclear reactor; 
allocated risk for facility sector = 50%; and aggregate risk 
exposure of the facility sector = 50.
    Retrospective Premium Payment = risk share [.04] x allocated 
cost facility sector [$75,000,000] = $3,000,000
    Risk share = risk exposure of nuclear supplier [2]/aggregate 
risk exposure of facility sector [50] = .04 or 4%
    Allocated cost facility sector = allocated risk by sector [50%] 
x contingent cost [$150,000,000] = $75,000,000
    Risk exposure of nuclear supplier = quantity of all covered 
transaction of nuclear supplier [1] x 2 = 2.
---------------------------------------------------------------------------

Section 951.8--Allocated Risk by Sector and Section 951.9--Allocated 
Cost by Sector

    Each nuclear sector has an allocated risk based upon the relative 
risk that the goods or services supplied within that sector would 
contribute to a nuclear incident that could result in a call for funds. 
Each nuclear sector also would have an allocated cost, which is the 
product of the allocated risk of the sector multiplied by the 
contingent cost. For example, the facility sector has an allocated risk 
of 50 percent, meaning that that sector has been determined to be 
likely to contribute 50 percent, or half, of the risk of a nuclear 
incident at a covered installation giving rise to a call for funds 
under the Convention. If the contingent cost is $150 million, the 
allocated cost to the facility sector is $75 million. The same logic 
follows with the other sectors: The equipment and technology sector has 
an allocated risk of 25 percent; the nuclear materials and nuclear 
material transportation sector has an allocated risk of 15 percent; and 
the services sector has an allocated risk of 10 percent. The Department 
derived the allocated risk amounts based on its knowledge of the 
history and experience in the nuclear industry and the likelihood of 
the goods and services within a nuclear sector contributing to a 
nuclear incident of the kind for which the United States government 
would be required to make a payment under the Convention. In the NOI, 
commenters were reluctant to attribute a specified amount of risk to 
any given nuclear supplier sector or good or service. Because 
quantifiable risk amounts are essential for the risk-assessment 
formula, however, the Department has proposed amounts it believes 
appropriate and reasonable. Commenters are encouraged to propose 
alternative amounts and provide any and all supporting information and 
data for those amounts for consideration by the Department. Further, 
section 934(e)(2)(C)(i) requires DOE to determine the risk-based 
formula, by rule, every 5 years after it is originally established by 
regulation. Therefore, the Department notes that if this risk 
allocation becomes inequitably weighted because of the passage of time 
and other circumstances, the risk allocation for each nuclear sector 
would be revised as appropriate to match the relative risks among the 
nuclear sectors at that time.

[[Page 75087]]

Section 951.7--Risk Share by Sector and Section 951.10-951.14--Risk 
Exposure by Sectors

    The risk share of a nuclear supplier is expressed in terms of its 
relative risk exposure within a sector. A nuclear supplier's risk 
exposure is a function of the nuclear supplier's proportional share of 
the aggregate risk exposure of all nuclear suppliers within the sector, 
weighted as a 2 or 1 in accordance with the risk associated with the 
good or service supplied. Each nuclear sector has its own risk exposure 
calculation. The aggregate risk exposure by sector is the sum of the 
risk exposure of all nuclear suppliers within that sector.
    The risk exposure of a nuclear supplier to the facility sector is 
derived by first determining the quantity of all covered transactions 
by the nuclear supplier of a nuclear plant or a facility for the 
reprocessing of irradiated nuclear fuel, multiplying that number by 2, 
and second determining the quantity of all covered transactions of the 
supplier of facilities or plants for the processing of nuclear material 
(except facility for reprocessing irradiated nuclear fuel), or 
facilities where nuclear material is stored, multiplying that number by 
1. The products of these two determinations are added together, and the 
resulting sum is then used to calculate the risk exposure of the 
nuclear supplier within the facility sector by comparing that number to 
the aggregate risk exposure of all nuclear suppliers (derived in the 
same manner as the risk exposure of a single nuclear supplier) in that 
sector. A very similar calculation is used to derive the risk exposure 
in the other three sectors. In each sector, a weighting of 2 is 
allocated to the facilities, equipment, technology, nuclear material 
storage facilities, nuclear material transportation and services that 
are associated with nuclear installations that are either a nuclear 
plant or a facility for the reprocessing of irradiated nuclear fuel. 
This weighting reflects the Department's judgment, based on its 
experience and expertise that those types of nuclear installations have 
a higher probability of experiencing a nuclear incident resulting in a 
call for funds under the Convention than other nuclear installations, 
and thus the nuclear goods or services supplied to them have a higher 
probability of contributing to such an incident. A weighting of 1 is 
allocated to the facilities, equipment, technology, nuclear material 
storage facilities, nuclear material transportation and services that 
are associated with nuclear installations that are a nuclear material 
processing facility, a nuclear material storage facility, or associated 
with nuclear material transportation. This weighting reflects the 
Department's judgment, based on its experience and expertise, that 
those types of nuclear installations have a lower probability of 
experiencing a nuclear incident resulting in a call for funds under the 
Convention than other nuclear installations, and thus the nuclear goods 
or services supplied to them have a lower probability of contributing 
to such a nuclear incident.
    The main difference in the calculation of the risk exposure between 
the sectors is the way covered transactions are accounted for: The 
facility sector and the nuclear materials and nuclear transportation 
sector calculate risk exposure as a function of the quantity of the 
goods supplied in a covered transaction; the equipment and technology 
and services sectors calculate exposure as a function of the adjusted 
value of the goods or services supplied in a covered transaction. The 
Department proposes this distinction as a better means of calculating 
the relative share of a supplier's exposure within each sector. In the 
former two sectors, the quantity of nuclear installations supplied and 
the quantity of nuclear material supplied or transported better 
represent the market share and associated risk exposure of that nuclear 
supplier than the value of the good or service provided. For example, a 
nuclear supplier that supplied 10 nuclear reactors versus a nuclear 
supplier of 5 nuclear reactors would be expected, generally speaking, 
to have doubled the risk exposure of contributing to a nuclear incident 
regardless of the value of the nuclear reactors supplied. On the other 
hand, for the latter two sectors, the adjusted value of a supplier's 
covered transactions would be a better representation of its market 
share and associated risk exposure than the quantity supplied. For 
example, a nuclear supplier of equipment and technology may supply an 
item in a large quantity but of small value and vice versa. In such 
cases, the supplier's proportionate share of the market in that sector 
and associated risk is better represented by the value of its covered 
transactions than the quantity. This is particularly true of nuclear 
services, which is not a discrete item that can be quantified as such.
    Some commenters on the NOI noted the complexity of identifying an 
appropriate metric to use in apportioning the contingent cost among 
nuclear suppliers either individually or as a group. Nevertheless, one 
way identified by commenters is to use the value or revenue from a 
nuclear supplier's covered transactions; this is the approach proposed 
in Alternative 1. Alternative 2 identifies the two ways discussed in 
the preceding paragraphs, recognizing the differences in the nature of 
the transactions by nuclear suppliers in the different sectors. The 
Department believes the approaches in Alternative 1 and 2 have merit, 
and requests comment on the metrics presented for both of these 
alternatives.

Section 951.15--Small Nuclear Supplier Exclusion

    The exclusion for small nuclear suppliers is in concept the same in 
Alternative 2 as in Alternative 1, with some differences resulting from 
approaches taken in the alternatives (i.e., goods and services in 
Alternative 1 and nuclear sectors in Alternative 2). The first 
difference lies in the method of assessing the risk exposure of a 
nuclear supplier that forms the basis for the exclusion. In Alternative 
2, a small nuclear supplier may be excluded based on a risk exposure of 
less than a dollar amount, e.g., $1,000,000, for nuclear suppliers in 
the equipment and technology sector and the services sector, or a risk 
exposure less than a quantity amount, e.g., 1,000 MT of nuclear 
material, for nuclear suppliers in the nuclear materials and nuclear 
materials transportation sector. This is consistent with the method for 
calculating risk exposure under Alternative 2. As in Alternative 1, the 
Department is open to comment on what dollar amounts or quantity 
amounts are an appropriate basis for exclusion, as well as whether 
exclusion on the basis of being defined as a small business under SBA 
size standards is appropriate.
    The second difference pertains to nuclear suppliers in the facility 
sector: The Department is not proposing a small nuclear supplier 
exception for nuclear suppliers in the facility sector. Given the 
composition of nuclear suppliers in that sector, the Department does 
not believe there are any nuclear suppliers--even suppliers of only one 
nuclear installation--that warrant treatment as a small nuclear 
supplier. The Department seeks comment on this aspect of its proposed 
rule for small nuclear supplier exception.

Subpart C--Payments to the United States

General Rule--Section 951.11 (Alternative 1)-951.17 (Alternative 2)
    The requirements of subpart C are prescribed in section 934(h)(1) 
of the Act. This section states the general rule

[[Page 75088]]

that nuclear suppliers are required to pay the entire risk premium 
within 60 days of receipt of notification from the Department that 
payment is due, unless they elect to prorate their payment in 5 equal 
annual payments. The payment is to be made to the general fund of the 
U.S. Treasury. The amount is calculated in accordance with the formula 
in subpart B.
    In the event amounts provided by the nuclear suppliers are 
insufficient to cover the United States' full contribution at the time 
it is due, for example, if suppliers elect to prorate their payments 
over 5 years in accordance with section 934(h)(1)(B)(ii), the United 
States may be required to seek an appropriation in order to meet its 
full contribution requirement. In the event such an appropriation is 
enacted, as in the example noted in the preceding sentence, the funds 
appropriated would be used to pay United States' government obligations 
and would be reimbursed by nuclear suppliers' prorated payments per 
section 934(h)(1)(B)(ii). The Department seeks comment on several 
facets of a nuclear supplier's obligation and options to fulfill the 
risk premium payment requirement. For example, the Department is 
interested in comments on the proposed payment plans and any 
alternative options for payment plans that meet the United States 
government's obligations under the CSC and are consistent with section 
934. In addition, the Department seeks comment on whether nuclear 
suppliers should be required to demonstrate that they have an adequate 
financial mechanism (such as a state-administered fund, bond, private 
insurance, or certificate of deposit) to ensure the availability of 
financial resources sufficient to cover the risk premium payment to 
ensure full and timely payment to the United States government. DOE is 
also seeking comment on the feasibility, cost and necessity of 
demonstrating the adequate availability of funds, and whether such a 
financial demonstration, if appropriate, should be a mandatory or 
discretionary requirement for suppliers.
Annual Payments--Section 951.12 (Alternative 1)-Section 951.18 
(Alternative 2)
    This section implements section 934(h)(1)(B)(ii) of the Act, which 
permits a nuclear supplier to prorate their payment into 5 equal 
payments due annually. The 5 annual payments must include interest on 
the unpaid balance at the prime rate prevailing at the time the first 
payment is due.
Vouchers--Section 951.13 (Alternative 1)-Section 951.19 (Alternative 2)
    This section implements section 934(h)(1)(C) of the Act, which 
requires a nuclear supplier to submit payment certification vouchers to 
the Secretary of Treasury in accordance with 31 U.S.C. 3325. To fulfill 
the requirement of section 934, nuclear suppliers would submit a 
voucher to the Secretary of Treasury consistent with 31 U.S.C. 3325 in 
regard to: Proper form; certified and approved; and computed correctly 
based on the facts. Nuclear suppliers would submit the voucher to the 
Secretary of Treasury concurrent with the payment to the general fund. 
The voucher would be in the form of a letter signed by an official with 
authority to bind the company that certifies the payment made to the 
general fund of the Treasury is made pursuant to the Department's 
notification under section 951.4, the amount is computed correctly, and 
the specifics of the payment plan, e.g., the amount paid, the date of 
payment, and details of the payment plan: One-time, or in 5 equal 
amounts annually.
Failure to Pay--Section 951.14 (Alternative 1)-Section 951.20 
(Alternative 2)
    As permitted under section 934(h)(3), the Department may penalize a 
nuclear supplier for failure to pay the required risk premium. This 
section of the proposed rule states that the Department shall recover 
from a nuclear supplier that does not pay the risk premium no later 
than 60 days after receipt of a notification: (1) The amount of the 
payment due; (2) any applicable interest on the payment at the prime 
rate prevailing at the time the first payment is due; and (3) a penalty 
of not more than twice the amount of the payment due from the nuclear 
supplier.
    The Department has made the penalty payment mandatory in the 
proposed rule. Payment by nuclear suppliers on a timely basis is 
critical to the proper functioning of the regulation and the ability of 
the United States to timely meet its international commitments. The 
penalty provisions of section 934(h)(3) indicate Congressional intent 
to hold nuclear suppliers to their obligation to fully fund payments 
due from the United States under the CSC, with interest added to late 
payments and a penalty imposed--in addition to the premium payment--of 
up to double the amount of the premium payment due for suppliers that 
fail to pay on time and in the amounts required. Accordingly, the 
Department proposes the penalties for failure to pay the risk premiums 
on time and in full be mandatory, strictly enforced, and assessed in 
full, except in the case of extraordinary circumstances. The Department 
seeks comment on whether the penalty payment due should be 
discretionary, and what factors may be appropriate and considered by 
the Department to mitigate the penalties or support a claim of 
extraordinary circumstances in the case of a delinquent supplier.

Subpart D--Information Collection

Reporting Requirements for Prior Transactions--Section 951.15 
(Alternative 1)-Section 951.21 (Alternative 2)--Reporting Requirements 
for Prior Transactions
    Section 934(f) of the Act permits the Department to collect 
information from nuclear suppliers as necessary to develop and 
implement the formula for calculating the risk premium payments. This 
section requires a report, within 6 months of the effective date of the 
regulation, from nuclear suppliers regarding each reportable 
transaction they have had prior to the effective date of any final 
regulations. The report must be certified and signed by an official 
with authority to bind the company. The information necessary for the 
Department to calculate the risk premium includes: The date and 
description of each reportable transaction; the location of the nuclear 
installations involved in each transaction; identification of the 
volume or quantity of each item involved in a reportable transaction; 
the value of each identified item, and the total value for each 
reportable transaction.
    Importantly, the information to be reported pertains only to 
``reportable transactions'' as defined in the proposed rule, and 
therefore not all transactions and not all nuclear suppliers are 
subject to the reporting requirements. As previously described, a 
reportable transaction is a transaction by a covered nuclear supplier 
that: (1) Occurred after a certain date as specified in Alternative 1 
or 2; and (2) involves only those items or nuclear sectors identified 
in the proposed rule. The transaction must also involve nuclear goods 
or services supplied to a foreign nuclear installation or 
transportation outside the United States of nuclear material to or from 
a nuclear installation.
    The Department received several comments about reporting 
requirements under the rule. Most commenters believed the existing 
reporting on nuclear exports was inadequate to provide the information 
required for implementation of section 934, and that

[[Page 75089]]

additional reporting by nuclear supplier would be necessary although 
not desirable. The Department is aware that existing reporting 
mechanisms may not be sufficient to meet its needs and therefore 
proposes in this rule to require the necessary information be provided 
by nuclear suppliers. DOE notes, however, that many of the 
qualifications in the rule regarding who needs to report and what 
transactions need to be reported operate to, among other things, 
minimize the impact of reporting requirements on nuclear suppliers. Not 
all transactions of all nuclear suppliers are required to be reported. 
The Department believes that the rule is structured such that the 
reporting requirements for nuclear suppliers are circumscribed and 
manageable, and would not cause undue burden on the nuclear industry. 
The Department seeks comment from the public on several aspects of its 
reporting requirements: Whether the 6 month period for reporting on 
prior transactions is adequate; the number of nuclear suppliers 
affected by the reporting requirements; the impact of the requirements 
on those nuclear suppliers in terms of burden hours, capital/start-up 
costs and competitiveness; and suggestions for alternative methods or 
criteria to streamline the reporting requirements while achieving the 
objectives of the law.
Annual Reporting Requirements--Section 951.16 (Alternative 1)-Section 
951.23 (Alternative 2)
    In addition to a one-time report on prior transactions, this 
section institutes an annual reporting requirement due by March 15th of 
each year for transactions in the prior year. The same information 
required for prior transactions would be required on an annual basis. 
The annual reporting requirement enables the Department to maintain and 
compile records on reportable transactions that can be readily accessed 
in the event there is a nuclear incident and a call for funds under the 
Convention.
Disclosure Requirements--Section 951.17 (Alternative 1)-Section 951.23 
(Alternative 2)
    This section provides the disclosure requirements for information 
provided to the Department under the reporting requirements of this 
subpart. Information reported to the Department may be subject to 
public disclosure unless the information is protected from disclosure 
under the Freedom of Information Act and DOE implementing regulations. 
While the Department does not believe the reporting requirements 
involve information that would be trade secrets or other proprietary 
information, the proposed rule provides protection from disclosure for 
such information that is appropriately marked and upon a satisfactory 
showing to the Department that the information should not be disclosed 
under applicable law.
Appendices
    The appendices to Alternative 1 of the proposed rule contain the 
lists of nuclear goods and services that form the basis for determining 
the risk premium payment, and are subject to reporting by nuclear 
suppliers as reportable transactions. The Department reviewed available 
and relevant data and information on nuclear goods and services, in 
particular those nuclear goods and services that are important to 
safety, to determine the risk or the likelihood that each such good or 
service would contribute to legal liability for a nuclear incident that 
would require a call for funds under the Convention.
    The items in the appendices were derived from information and data 
in NRC regulations and associated guidance, the Commerce Control List 
(CCL), and relevant international guidance documents. The NRC 
regulations and guidance relied upon include: Regulatory Guide 1.26, 
``Quality Group Classifications and Standards for Water-, Steam-, and 
Radioactive-Waste-Containing Components of Nuclear Power Plants,'' 
Revision 4 (March 2007); NUREG 0800 Standard Review Plan, Revision 2 
(March 2007) (e.g., section 3.2.2); 10 CFR part 50, ``Domestic 
Licensing of Production and Utilization Facilities,'' (e.g., subsection 
50.2, 50.55a, and Appendices A and B); 10 CFR part 21; and 10 CFR part 
110, ``Export and Import of Nuclear Equipment and Material (e.g., 
Appendix A). In particular, appendix A to 10 CFR part 110, which 
provides an illustrative list of nuclear reactor equipment for export 
licensing authority, was a useful reference point for compiling the 
list of primary nuclear items for appendix A to the proposed rule. 
Several of the items in appendix A to this rule, and 10 CFR part 110, 
appendix A, also appear in the CCL, 15 CFR 774.2, Supplement 1, 
``Category 0--Nuclear Materials, Facilities and Equipment'', although 
export of these items is subject to regulation by NRC, not Commerce. 
Several commenters recommended 10 CFR part 110 to the Department for 
consideration of nuclear items that could reasonably be assigned the 
highest level of responsibility and liability for contingent costs.
    In addition, items on the list were derived from relevant 
international references, such as the IAEA Information Circulars 
INFCIRC/254/Part 1 as revised and INFCIRC/209 as revised. The IAEA 
Information Circulars are the Nuclear Suppliers Group and Zangger 
Committee Guidelines and technical annexes. These technical annexes 
comprise the list of nuclear materials, equipment, facilities, and 
technologies that are controlled by the members of the Nuclear 
Suppliers Group and Zangger Committee. The United States is a founding 
member of both export control regimes and the lists are the basis of 
the DOE's and NRC's export control regulations.
    The following provides a description of each appendix and the items 
contained therein. The Department welcomes comments and suggestions 
from the nuclear industry on other sources not addressed here that are 
relevant and supportive of the items listed in the appendices.
Appendix A--List of Primary Nuclear Items
    This list contains items the Department deemed most likely to 
contribute to a nuclear incident that would result in a call for funds, 
taking into account the risk factors identified in section 934 and 
other relevant data and information. The list includes safety-related 
systems, structures and components subject to QA requirements (Quality 
groups A, B and C), and that are relied upon to mitigate the 
consequences of nuclear plant events or accidents.
Appendix B--List of Secondary Nuclear Items
    This list contains the items the Department deemed secondarily 
likely to contribute to a nuclear incident that would result in a call 
for funds, taking into account the risk factors identified in section 
934 and other relevant data and information. The items listed include 
systems, structures and components of a nuclear installation that are 
subject to QA requirements and perform a nuclear function albeit not a 
direct safety function, for example, waste processing or fuel handling. 
The list of items does not include balance-of-plant equipment; \11\ 
however, as such

[[Page 75090]]

items perform no nuclear or safety-related function.
---------------------------------------------------------------------------

    \11\ Balance-of-plant equipment generally refers to plant 
structures, systems and components used to generate electricity but 
not part of the nuclear and safety systems. Such systems are 
typically comprised of the turbine-generator and associated control 
lubricating oil and cooling systems; main condenser, condensate and 
condensate polishing; condenser cooling water, steam and feedwater; 
auxiliary boilers ventilation; fire protection and associated 
electrical, instrumentation and control systems; electrical 
transformers; and building structures.
---------------------------------------------------------------------------

III. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    National Export Initiative. The Department seeks additional 
commentary and specific information from the nuclear industry on the 
potential impacts to U.S. competitiveness in the nuclear export arena 
and the President's National Export Initiative. The Department is also 
interested in receiving comment on which alternative regulation, the 
first or the second, is better suited to mitigate the impacts, if any, 
on United States' competitiveness in the nuclear export arena.
    Covered nuclear supplier. The Department seeks comment on whether 
NRC's part 21 regulations, or some other regulatory requirement or 
concept such as the quality assurance requirements in 10 CFR part 50, 
Appendix B, are appropriate criteria to determine which nuclear 
suppliers should be defined as a covered nuclear supplier.
    List of covered installations. The Department seeks additional 
commentary from the public on the suggestion that it produce a list of 
the nuclear installations outside the United States that would be 
covered installations under the Convention.
    Alternative 1--risk ranking in appendices. The appendices in the 
proposed rule identify particular nuclear goods and services to which 
they assign a risk rating or ranking- primary or secondary- and a 
corresponding weight--2 or 1. The Department seeks comment from the 
public on the risk sharing classification of covered items in the 
appendices and suggestions, with supporting bases, for additions or 
deletions from the list.
    Alternative 1--small nuclear supplier exclusion. The Department 
seeks comment on what dollar amount or other criterion, such as 
classification as a ``small business'' under SBA size standards, is 
reasonable to use for exclusion of small nuclear suppliers.
    Alternative 2--small nuclear supplier exclusion. The Department 
seeks comment from the public on what dollar or quantity amounts are an 
appropriate basis for exclusion, as well as whether exclusion on the 
basis of being defined as a ``small business'' under SBA size standards 
is appropriate. The Department also seeks comment on whether there are 
any nuclear suppliers in the facility sector that would or should 
qualify for the small nuclear supplier exception.
    Retrospective premium payment cap. The Department proposes a cap on 
the retrospective premium payment for any one nuclear supplier. The 
Department seeks comment from the public on a specific amount, such as 
$25 million, or percentage of contingent cost, such as 5% or 25%, that 
is appropriate as a cap on any one supplier's premium payment. The 
Department welcomes additional comment and feedback from the public on 
the process for ensuring the United States' is paid in full by nuclear 
suppliers for its contributions under the Convention.
    Alternative 2--nuclear supplier sectors. The nuclear supplier 
sectors proposed in the rule are: (1) Facility; (2) equipment and 
technology; (3) nuclear material and nuclear material transportation; 
and (4) services. The Department seeks comment on other ways to define 
nuclear sectors (e.g., defining the sectors based upon the stages of 
the fuel cycle or by installation type).
    Alternative 2--lead nuclear supplier. The Department seeks comment 
on the descriptor of a lead nuclear supplier appropriate for inclusion 
in the rule to further clarify the definition of facility sector 
nuclear suppliers.
    Alternative 2--nuclear sectors. The Department seeks comment from 
the nuclear industry on whether the nuclear sector approach is 
appropriately structured, should be defined in the rule, and 
alternative suggestions.
    Alternative 2--allocated risk by sector. Each nuclear sector has an 
allocated risk based upon the relative risk that the goods or services 
supplied within that sector would contribute to a nuclear incident that 
could result in a call for funds. The Department encourages commenters 
to propose alternative risk allocation amounts per sector, accompanied 
by any and all supporting information and data for those amounts.
    Risk share calculation. The Department seeks comment on the metrics 
proposed in Alternatives 1 and 2 associated with the calculation of a 
supplier's risk share.
    Payments to the United States. The Department seeks comments from 
the public on the proposed payment plans whereby, in accordance with 
section 934(h)(1)(B)(i) and (ii), nuclear suppliers must pay the 
required deferred payment to the general fund of the Treasury within 60 
days after notification by the Secretary, or elect to prorate payment 
in 5 equal annual payments (including interest on the unpaid balance at 
the prime rate prevailing at the time the first payment is due). The 
Department seeks comment on the proposed payment plans and any 
alternative options for payment plans that meet the United States 
government's obligations under the CSC and are consistent with section 
934. The Department is also seeking comment on whether nuclear 
suppliers should be required to demonstrate that they have an adequate 
financial mechanism (such as a state-administered fund, bond, private 
insurance, or certificate of deposit) to ensure the availability of 
financial resources sufficient to cover the risk premium payment to 
ensure full and timely payment to the United States government. 
Comments may address the feasibility, cost and necessity of 
demonstrating the adequate availability of funds, and whether such a 
financial demonstration, if appropriate, should be a mandatory or 
discretionary requirement for suppliers.
    Failure to pay. The Department has proposed a mandatory penalty 
payment. The Department seeks comment on whether the penalty payment 
should be discretionary, and what factors may be appropriate and 
considered by the Department to mitigate the penalties or support a 
claim of extraordinary circumstances in the case of a delinquent 
supplier.
    Appendices. The Department welcomes comments and suggestions from 
the nuclear industry on other sources not addressed here that are 
relevant and supportive of the items listed in the appendices.
    Reporting requirements. The Department seeks comment from the 
public on several aspects of its reporting requirements: Whether the 6 
month period for reporting on prior transactions is adequate; the 
number of nuclear suppliers affected by the reporting requirements; the 
impact of the requirements on those nuclear suppliers in terms of 
burden hours, capital/start-up costs, and competitiveness; and 
suggestions for alternative methods or criteria to streamline the 
reporting requirements while achieving the objectives of the law. In 
addition, the Department requests comment on the probability of a 
nuclear supplier having records of transactions dating back to 1960, 
the feasibility of supplier's meeting the reporting requirements for 
those transactions, and appropriate mechanisms for DOE to determine the

[[Page 75091]]

information submitted is complete and accurate.
    Impact on small entities. DOE has proposed two alternative-risk-
assessment methods and requests comment on whether either alternative 
would result in a lower impact on small entities. The Department 
requests comment from the public on any other alternatives that could 
minimize impacts on small entities.
    Collection of information. The Department seeks comment on: (a) 
Whether the proposed collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (c) ways to enhance the quality, utility, and clarity of 
information to be collected; (d) ways to minimize the burden of the 
collection of information, including the use of automated collection 
techniques or other forms of technology; and (e) ways to determine the 
information collected is complete and accurate.

IV. Public Participation

 A. Information Session

    DOE will hold an information session open to the public on January 
7, 2015, from 10:00 a.m. to 12:00 noon in Washington, DC. The 
information session will be held at the U.S. Department of Energy, 
Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585-0121. To attend, please notify Ms. Brenda Edwards 
at (202) 586-2945 or by email: [email protected].
    The session will be conducted by DOE to provide interested parties 
with an overview and description of the proposed rulemaking to 
facilitate review and comment by the public. Members of the public are 
welcome to attend the meeting, and, if time allows, a question and 
answer may be held. DOE does not expect participants to be prepared to 
offer substantive comments on the proposed rulemaking before or at the 
information session. DOE plans to hold public workshop(s) on the 
proposed rulemaking at a later date within the comment period that will 
provide the public with an expanded opportunity to comment orally and 
in writing on the proposed rulemaking. The date, time and place of such 
workshops will be announced in subsequent Federal Register notice(s).

 B. Attendance at the Information Session

    The information session will be conducted in an informal style by 
DOE. There shall be no discussion of proprietary information, costs or 
prices, market shares, or other commercial matters. A court reporter 
will record the proceedings of the public meeting, and a transcript 
will be posted on the DOE Web site at http://www.energy.gov/gc/convention-supplementary-compensation-rulemaking.
    Please note that foreign nationals participating in the information 
session are subject to advance security screening procedures which 
require advance notice prior to attendance at the information session. 
If a foreign national wishes to participate in the public meeting, 
please inform DOE of this fact as soon as possible by contacting Ms. 
Brenda Edwards at (202) 586-2945 or by email to 
[email protected] so that the necessary procedures can be 
completed.
    DOE requires visitors with laptop computers to be checked upon 
entry into the building. Any person wishing to bring these devices into 
the Forrestal Building will be required to obtain a property pass. 
Visitors should avoid bringing these devices, or allow an extra 45 
minutes to check in. Please report to the Visitors' Desk to have 
devices checked before proceeding through security.
    Due to the REAL ID Act, implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding ID 
requirements for individuals wishing to enter Federal buildings from 
specific states and U.S. Territories. Drivers' licenses from the 
following states or territory will not be accepted for building entry 
and one of the alternate forms of ID listed below will be required. DHS 
has determined that regular driver's licenses (and ID cards) from the 
following jurisdictions are not acceptable for entry into DOE 
facilities: Alaska, American Samoa, Arizona, Louisiana, Maine, 
Massachusetts, Minnesota, New York, Oklahoma, and Washington. 
Acceptable alternate forms of Photo-ID include: U.S. Passport or 
Passport Card; and Enhanced Driver's License or Enhanced ID-Card issued 
by the states of Minnesota, New York, or Washington (Enhanced licenses 
issued by these states are clearly marked Enhanced or Enhanced Driver's 
License) or military ID or other Federal government issued Photo-ID 
card.

V. Regulatory Review Requirements

A. Review Under Executive Order 12866

    The Department has determined that this regulatory action is an 
``economically significant action'' under Executive Order 12866, 
``Regulatory Planning and Review'' (58 FR 51735, October 4, 1993), as 
amended by Executive Order 13258 (67 FR 9385, February 26, 2002). 
Accordingly, the Department submitted this NOPR to the Office of 
Information and Regulatory Affairs in the Office of Management and 
Budget, which has completed its review under E.O. 12866.
    This discussion assesses the potential costs and benefits of this 
notice of proposed rulemaking. This regulation affects United States 
nuclear suppliers that meet the requirements for contribution to the 
retrospective risk pooling program established by the proposed 
regulation. U.S. nuclear suppliers that qualify for participation in 
the retrospective risk pooling program would be assessed a pro-rata 
share of the contingent cost the United States government is required 
to contribute to the international supplementary fund under the 
Convention in the event of a covered nuclear incident. The United 
States government's cost (to be funded by U.S. nuclear suppliers) would 
be determined pursuant to the rules of the Convention and, though the 
amount is dependent on external factors such as the nuclear rated 
capacity of a CSC member state, could be in the range of $150 million. 
Any single U.S. nuclear supplier's cost, referred to as the 
retrospective premium payment, is dependent upon application of the 
risk-informed assessment formula. DOE proposes two alternative formulas 
for calculating the retrospective premium payment. Under either 
formula, a U.S. nuclear supplier's premium payment is a function of the 
risk share of the nuclear supplier relative to other nuclear suppliers; 
a nuclear supplier's risk share (e.g., 2%) is multiplied by the 
contingent cost (e.g., $150 million) to derive the premium payment owed 
by the nuclear supplier (e.g., $3 million). While the exact number of 
U.S. nuclear suppliers potentially affected by this rule and the amount 
they would owe is not specifically known, the proposed rule is 
structured to exclude certain nuclear suppliers (e.g., small nuclear 
suppliers), and impose a cap on costs to any one nuclear supplier 
(e.g., $25 million). These and other measures in the proposed rule are 
intended to limit the population of nuclear suppliers affected by the 
rule to those suppliers most likely to be exposed to claims for

[[Page 75092]]

damage resulting from a nuclear incident and therefore are most likely 
to benefit from the rule.
    The benefits of the proposed rule to a U.S. nuclear supplier far 
outweigh the costs of the rule. Outside of the Convention, U.S. nuclear 
suppliers are not covered by a global nuclear liability regime that 
provides consistent rules for dealing with legal liability. U.S. 
nuclear suppliers are faced with a multitude of legal regimes in a 
variety of foreign countries to which they supply nuclear goods or 
services, creating potential legal liabilities in uncertain forums and 
in amounts that could reach many millions or tens of millions and well 
above the costs contemplated in the proposed rule. As a CSC member 
state, the United States and its nuclear suppliers benefit from the 
principles of nuclear liability law followed by all CSC member states, 
such as channeling legal claims to the nuclear operator and limiting 
litigation to the courts in the member state where the nuclear incident 
occurred. These principles not only operate to provide prompt and 
equitable compensation to victims of a nuclear incident, they provide 
stability and, in effect, insurance to U.S. nuclear suppliers when 
engaging in commercial transactions with nuclear installations abroad. 
The potential cost to a nuclear supplier is relatively small by 
comparison to these benefits. Indeed, the potential cost to a nuclear 
supplier may never even accrue and would be zero, as the premium 
payment is deferred and not owed unless and until a covered incident 
occurs, while the benefits of the Convention would accrue as soon as it 
goes into effect and are not dependent on payment of the premium.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) 
requires that an agency prepare an initial regulatory flexibility 
analysis for any regulation for which a general notice of proposed 
rulemaking is required, unless the agency certifies that the rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities (5 U.S.C. 605(b)). As required by 
Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site (http://energy.gov/gc/guidance-opinions-0). DOE reviewed the 
proposed rule under the provisions of the RFA and the procedures and 
policies published on February 19, 2003.
    As a result of this review, DOE has prepared an IRFA for small 
nuclear suppliers, a copy of which DOE will transmit to the Chief 
Counsel for Advocacy for the Small Business Administration (SBA) for 
review under 5 U.S.C. 605(b). As presented and discussed below, the 
IFRA describes potential impacts on small nuclear suppliers and 
discusses alternatives that could minimize these impacts. A statement 
of the reasons, objectives and legal basis for the proposed rule is set 
forth elsewhere in the preamble and is not detailed here. The other 
requirements of section 5 U.S.C. 603(b) are addressed below.
 1. Description and Estimated Number of Small Entities Regulated
    DOE used the SBA's small business size standards to determine 
whether any small entities may be subject to the requirements of the 
rule. See 13 CFR part 121. The size standards are listed by North 
American Industry Classification System (NAICS) code and industry 
description and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Given the variety and differences 
in goods and services that U.S. nuclear suppliers may supply to foreign 
nuclear installations, DOE estimates that U.S. nuclear suppliers may 
fit within one or more sectors and codes listed in the NAICS, including 
but not limited to: 1) manufacturing sector, NAICS 238990, ``All Other 
Specialty Trade Contractors'' (size limit of $14 million), NAICS 
332996, ``Fabricated Pipe and Pipe Fitting Manufacturing'' (size limit 
500 employees), NAICS 332999 ``All Other Miscellaneous Fabricated Metal 
Product Manufacturing'' (size limit 500 employees), NAICS 336999, ``All 
Other Transportation Equipment Manufacturing'' (size limit 500 
employees), and NAICS 33999, ``All Other Miscellaneous Manufacturing'' 
(size limit 500 employees); retail trade sector, NAICS 454319, ``Other 
Fuel Dealers'' (size limit $7 million); and professional, scientific 
and technical services sector, NAICS 541690 ``Other Scientific and 
Technical Consulting Services'' (size limit $7 million).
    Given the variety and differences among goods and services provided 
by U.S. nuclear suppliers, and the possibility that some nuclear 
suppliers would not fall within the exclusions in the proposed rule for 
small nuclear suppliers, DOE assumes that some nuclear suppliers may 
meet the SBA's definition of a small business whose goods or services 
may be covered by this rulemaking. DOE notes that it is considering 
exclusion of small nuclear suppliers that meet the SBA size standard 
for a small business. Under this approach, small businesses would not 
be impacted by the rule.
 2. Description and Estimate of Compliance Requirements
    The proposed rulemaking requires a nuclear supplier subject to the 
retrospective risk pooling program make one initial and thereafter 
annual reports to the Department regarding its reportable transactions 
of exported nuclear goods or services to foreign installations. In the 
event of a nuclear incident at a covered nuclear installation, nuclear 
suppliers would be required to make a retrospective premium payment to 
provide funds totaling in the aggregate the amount of the United States 
government's contribution under the Convention. The retrospective 
premium payment would entail the primary costs to a small nuclear 
supplier under the rule (assuming for analysis purposes they are a 
small nuclear supplier that has not been excluded from operation of the 
rule); it is not expected that reporting costs would be substantial for 
a small business. These compliance requirements do not require any 
capital investments, improvements, or other production costs or changes 
to small business operations.
    The cost of compliance, or the premium payment, owed by a nuclear 
supplier is prorated based on its risk exposure and risk share relative 
to other nuclear suppliers. Because risk exposure and risk share are a 
function of the value and/or volume of goods or services exported by a 
nuclear supplier, as calculated under either Alternative 1 or 2 in the 
preamble discussion of Subpart B above, it is expected that a small 
nuclear supplier's prorated share of the total contingent cost--
estimated to be at most approximately $150 million--would be small 
relative to other nuclear suppliers with more significant transactions 
in value or quantity. In any event, the amount owed by any one nuclear 
supplier would be limited, as the proposed rule also includes a 
proposed cap on premium payments. This proposed rule suggests a cap of 
$5 million or some other amount or percentage of the total contingent 
cost, with a request for comment and alternative suggestions on the 
amount of this cap. The combination of these factors ensures that small 
businesses would be minimally impacted by the

[[Page 75093]]

proposed rule and the cost of compliance, consistent with the 
requirements of section 934.
 3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being considered today.
 4. Significant Alternatives to the Proposed Rule
    As discussed in this section and elsewhere in this proposed 
rulemaking, DOE is required under section 934 of the Act to promulgate 
a rule establishing a retrospective risk pooling program for U.S. 
nuclear suppliers that obligates such suppliers to provide funds in the 
same amount as the United States government's contingent costs for 
contributions under to the supplementary fund the Convention. DOE has 
proposed two alternative risk-assessment methods and seeks comment on 
whether either of those alternatives would result in a lower impact on 
small entities. This proposed rule also includes mitigating and 
potentially exclusionary factors specifically for small businesses. 
This proposed rule would exclude small nuclear suppliers, which can be 
defined in various ways including that a nuclear supplier qualifies as 
a small business under the SBA regulations. This proposed rule also 
operates in such a manner that, if it applies, a nuclear supplier's 
premium payment is prorated based upon their risk share and exposure, 
measured in terms of value or quantity of goods sold, relative to other 
nuclear suppliers. Further, this proposed rule includes a cap on 
premium payments by any one nuclear supplier. DOE believes that this 
proposed rule has been structured to minimize its applicability to 
small businesses and, where it applies, to minimize the costs to any 
small nuclear supplier. DOE seeks comment on any other alternatives 
that could minimize the impacts on small businesses.

C. Review Under the Paperwork Reduction Act

    Section 951, subpart D, contains information collection 
requirements pertaining to a nuclear supplier's reportable 
transactions, as defined in the proposed rule, involving exports of 
nuclear goods or services. This information collection is authorized 
under section 934(f), which permits the Secretary to collect 
information from nuclear suppliers as necessary to develop and 
implement the formula for calculating the deferred payment under the 
retrospective risk pooling program, and requires nuclear suppliers to 
make available such information, reports, records, documents and other 
data as the Secretary determines necessary and appropriate to develop 
and implement the formula. This proposed rule requires a one-time 
report, within 6 months of the effective date of the rule, and annually 
thereafter, from nuclear suppliers regarding each reportable 
transaction they have had either since 1960 or 2007, depending upon the 
type of transaction. The information to be collected pertains to a 
nuclear supplier's export transactions involving nuclear goods or 
services, including information on: description of the transaction; 
date of the transaction; location of the nuclear installation to which 
the exported item was provided; quantity of the exported item(s); and 
value of the exported item(s).
    These provisions will not become effective until the Office of 
Management and Budget (OMB) has approved them pursuant to the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and the procedures 
implementing that Act, 5 CFR 1320.1 et seq.
    The Department has submitted to OMB for clearance the collection of 
information in subsection D, under the provisions of the Paperwork 
Reduction Act of 1995. This information collection request contains: 
(1) OMB Number: New; (2) Information Collection Request Title: 
Convention on Supplementary Compensation for Nuclear Damage Contingent 
Cost Allocation; (3) Type of Request: New; (4) Purpose: The information 
to be collected is critical to implementation of the risk-assessment 
formula and calculation of the retrospective risk premium due by a 
nuclear supplier under the retrospective risk pooling program, and will 
require the collection and submission of information on reportable 
transactions by nuclear suppliers covered under the retrospective risk 
pooling program; (5) Annual estimated number of Respondents: 25; (6) 
Annual Estimated Number of Total Responses: 25; (7) Annual Estimated 
Number of Burden Hours: 25 hours annually, and a one-time reporting 
requirement totaling 100 hours; (8) Annual Estimated Reporting and 
Recordkeeping Cost Burden: $8,000 annually, and a one-time reporting 
requirement cost of $32,000.
    The Department invites public comment on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimate of 
the number of estimated respondents and the burden of the proposed 
collection of information, including the validity of the methodology 
and assumptions used; (c) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (d) ways to minimize 
the burden of the collection of information on respondents, including 
through the use of automated collection techniques or other forms of 
information technology. Written comments may be sent to Sophia Angelini 
(see ADDRESSES) and by email to [email protected].
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act

    DOE has reviewed these proposed regulations pursuant to the 
National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et 
seq.), the Council on Environmental Quality's regulations (40 CFR parts 
1500-08), and DOE's implementing regulations (10 CFR part 1021). 
Categorical Exclusion A6 (in Appendix A to Subpart D of 10 CFR part 
1021) applies to rulemakings that are strictly procedural, and thus 
applies to this rulemaking. DOE has determined that there are no 
extraordinary circumstances related to this proposal that may affect 
the significance of the environmental effects of the proposal. 
Accordingly, DOE has determined that this action is categorically 
excluded from the need to prepare an environmental impact statement or 
an environmental assessment pursuant to NEPA.

E. Review Under Executive Order 13132

    Executive Order 13132 ``Federalism,'' 64 FR 43255 (August 10, 
1999), requires agencies to develop an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have ``federalism 
implications.'' Policies that have federalism implications are defined 
in the Executive Order to include regulations that have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.
    This regulatory action has been determined not to be a ``policy 
that has federalism implications;'' that is, it does not have 
substantial direct effects on the

[[Page 75094]]

States, on the relationship between the national government and the 
States, nor on the distribution of power and responsibilities among 
various levels of government under Executive Order 13132, 64 FR 43255 
(August 10, 1999).

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4779, February 7, 1996) imposes on 
Federal agencies the general duty to adhere to the following 
requirements: eliminate drafting errors and needless ambiguity, write 
regulations to minimize litigation, provide a clear legal standard for 
affected conduct rather than a general standard, and promote 
simplification and burden reduction. Section 3(b) requires Federal 
agencies to make every reasonable effort to ensure that a regulation, 
among other things: clearly specifies the preemptive effect, if any, 
adequately defines key terms, and addresses other important issues 
affecting the clarity and general draftsmanship under guidelines issued 
by the Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive Agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. The 
Department has completed the required review and determined that, to 
the extent permitted by law this final rule meets the relevant 
standards of Executive Order 12988.
    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4779, February 7, 1996) imposes on 
Federal agencies the general duty to adhere to the following 
requirements: Eliminate drafting errors and needless ambiguity, write 
regulations to minimize litigation, provide a clear legal standard for 
affected conduct rather than a general standard, and promote 
simplification and burden reduction. Section 3(b) requires Federal 
agencies to make every reasonable effort to ensure that a regulation, 
among other things: clearly specifies the preemptive effect, if any, 
adequately defines key terms, and addresses other important issues 
affecting the clarity and general draftsmanship under guidelines issued 
by the Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. The 
Department has completed the required review and determined that, to 
the extent permitted by law; this final rule meets the relevant 
standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA) requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, or Tribal governments and the 
private sector. Pub. L. 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal government, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted for inflation), section 202 of UMRA requires a Federal 
agency to publish a written statement that estimates the resulting 
costs, benefits, and other effects on the national economy. (2 U.S.C. 
1532(a), (b)). The UMRA also requires a Federal agency to develop an 
effective process to permit timely input by elected officers of State, 
local and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820; also available 
at http://energy.gov/gc/guidance-opinions-0.
    Although this proposed rule does not contain a Federal 
intergovernmental mandate, it may impose expenditures of $100 million 
or more on the private sector. Specifically, the final rule could 
impose expenditures of $100 million or more for a nuclear supplier in 
the event that nuclear supplier's covered transactions result in a risk 
premium payment owed by the supplier exceeding $100 million.
    Section 202 of UMRA authorizes an agency to respond to the content 
requirements of UMRA in any other statement or analysis that 
accompanies the proposed rule. 2 U.S.C. 1532(c). The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under Executive Order 12866. The SUPPLEMENTARY INFORMATION 
section of this proposed rule and the analysis under Executive Order 
12866 respond to those requirements.

H. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, ``Government 
Actions and Interference with Constitutionally Protected Property 
Right,'' 53 FR 8859 (March 18, 1988) that this regulation would not 
result in any takings which might require compensation under the Fifth 
Amendment to the U.S. constitution.

I. Review Under Executive Order 13211

    Executive Order 13211 (``Actions Concerning Regulations That 
Significantly Affect Energy, Supply, Distribution, or Use''), 66 FR 
28355 (May 22, 2001) requires Federal agencies to prepare and submit to 
OMB a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy; or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use. This regulatory 
action would not have a significant adverse effect on the supply, 
distribution, or use of energy and is, therefore, not a significant 
energy action. Accordingly, DOE has not prepared a Statement of Energy 
Effects.

VI. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this NOPR.

List of Subjects in 10 CFR Part 951

    Nuclear energy, Nuclear power plants and reactors, Nuclear 
materials, Treaties.

    Issued in Washington, DC, on December 10, 2014.
Steven P. Croley,
General Counsel.
    For the reasons set forth in the preamble, the Department of Energy 
proposes to amend Chapter III of title 10 of the Code of Federal 
Regulations by adding a new part 951 to read as follows:

[[Page 75095]]

Alternative 1--Risk-Informed Assessment Formula by Nuclear Goods and 
Services

PART 951--CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR 
DAMAGE CONTINGENT COST ALLOCATION

Subpart A--General Provisions
Sec.
951.1 Purpose.
951.2 Scope.
951.3 Definitions.
Subpart B--Retrospective Risk Pooling Program
951.4 Role of the Department.
951.5 Retrospective premium payment.
951.6 Risk share.
951.7 Risk exposure.
951.8 Aggregate risk exposure.
951.9 Small nuclear exclusion.
951.10 Retrospective premium payment cap.
Subpart C--Payments to the United States
951.11 General rule.
951.12 Annual payments.
951.13 Vouchers.
951.14 Failure to pay.
Subpart D--Information Collection
951.15 Reporting requirements for prior transactions.
951.16 Annual reporting requirements.
951.17 Disclosure requirements.
Appendix A to Part 951- List of Primary Nuclear Items
Appendix B to Part 951- List of Secondary Nuclear Items

    Authority: 42 U.S.C. 2201, 42 U.S.C. 17373.

Subpart A--General Provisions


Sec.  951.1  Purpose.

    This part establishes the regulations for the implementation of 
section 934 (42 U.S.C. 17373) of the Energy Independence and Security 
Act of 2007 (Pub. L. 110-140), which provides for the proration of a 
retrospective premium among nuclear suppliers for the insurance against 
potential liability for nuclear damage provided by the adherence of the 
United States to the Convention.


Sec.  951.2  Scope.

    This part covers nuclear incidents that occur outside the United 
States that result in a request for funds and that are not a Price-
Anderson incident.


Sec.  951.3  Definitions.

    For purposes of this part, words shall be defined as provided for 
in the Atomic Energy Act and in section 934 of the Act and as follows--
    Act means the Energy Independence and Security Act of 2007 (Pub. L. 
110-140).
    Adjusted value means the value (expressed in U.S. dollars) received 
by a nuclear supplier for an item, adjusted to reflect inflation from 
the date of the covered transaction involving the item to the date of 
the nuclear incident for which the retrospective premium payment of the 
supplier is being calculated.
    Aggregate risk exposure means the sum of the risk exposures for all 
nuclear suppliers.
    Contingent cost means the cost to the United States in the event of 
a covered incident the amount of which is equal to the amount of funds 
the United States is obligated to make available under paragraph 1(b) 
of Article III of the Convention.
    Convention means the Convention on Supplementary Compensation for 
Nuclear Damage, done at Vienna on September 12, 1997.
    Covered incident means a nuclear incident the occurrence of which 
results in a request for funds under the Convention.
    Covered installation means a nuclear installation at which the 
occurrence of a nuclear incident could result in a request for funds 
under the Convention.
    Covered nuclear supplier means a nuclear supplier whose goods or 
services, if supplied in the United States, would be subject to the 
requirements of 10 CFR part 21.
    Covered person means--
    (1) A United States person; or
    (2) An individual or entity (including an agency or instrumentality 
of a foreign country) that is located in the United States, or carries 
out an activity in the United States; but
    (3) Does not include the United States or any agency or 
instrumentality of the United States.
    Covered transaction means any reportable transaction by which a 
nuclear supplier is the final nuclear supplier to provide any item 
listed in appendix A or B of this part for use in the design, 
construction, operation, or decommissioning of any covered installation 
or in the transportation of material to or from a covered installation.
    Department means the United States Department of Energy.
    Final nuclear supplier means the nuclear supplier that obtains, 
where required, an NRC general or specific license under 10 CFR part 
110, Department of Commerce export license under 15 CFR part 734, or 
DOE authorization under 10 CFR part 810, for the export of the item(s) 
involved in a reportable transaction.
    Nuclear installation means:
    (1) Any nuclear reactor facility or plant other than one with which 
a means of sea or air transport is equipped for use as a source of 
power, whether for propulsion thereof or for any other purpose;
    (2) Any facility or plant using nuclear fuel for production of 
nuclear material, or any facility or plant for the processing of 
nuclear material, including any facility or plant for the reprocessing 
of irradiated nuclear fuel; and
    (3) Any facility or plant where nuclear material is stored, other 
than storage incidental to the carriage of such material; provided that 
the Installation State may determine that several nuclear installations 
of one operator which are located at the same site shall be considered 
a single nuclear installation.
    Nuclear material means nuclear fuel, other than natural or depleted 
uranium, capable of producing energy by a self-sustaining chain process 
of nuclear fission outside a nuclear reactor, either alone or in 
combination with some other material, and radioactive products or 
waste, where radioactive products or waste means any radioactive 
material produced in, or any material made radioactive by exposure to 
the radiation incidental to the production or utilization of nuclear 
fuel, but does not include radioisotopes which have reached the final 
stage of fabrication so as to be usable for any scientific, medical, 
agricultural, commercial or industrial purpose.
    Nuclear supplier means a covered person (or a successor in interest 
of a covered person) that--
    (1) Supplies facilities, equipment, fuel, services, or technology 
pertaining to the design, construction, operation, or decommissioning 
of a covered installation, or
    (2) Transports nuclear materials that could result in a covered 
incident.
    Price-Anderson incident means a covered incident for which section 
170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) would make funds 
available to compensate for public liability (as defined in section 11 
of that Act (42 U.S.C. 2014)).
    Reportable transaction means any transaction by a covered nuclear 
supplier after 1959 to provide any item listed in appendix A of this 
part, or after 2007 for items listed in appendix B of this part, for 
use in the design, construction, operation, or decommissioning of any 
nuclear installation outside the United States or in the transportation 
outside the United States of nuclear material to or from a nuclear 
installation.

[[Page 75096]]

    Request for funds means a request for funds pursuant to Article VII 
of the Convention.
    Secretary means the Secretary of Energy.
    United States means, when used in a geographic sense, the same as 
the definition of the term in section 11 of the Atomic Energy Act of 
1954 and includes the Commonwealth of Puerto Rico, any other territory 
or possession of the United States, and the waters of the United States 
territorial sea under Presidential Proclamation Number 5928, dated 
December 27, 1988 (43 U.S.C. 1331 note).
    United States person means--
    (1) Any individual who is a resident, national, or citizen of the 
United States (other than an individual residing outside of the United 
States and employed by a person who is not a United States person); and
    (2) Any corporation, partnership, association, joint stock company, 
business trust, unincorporated organization, or sole proprietorship 
that is organized under the laws of the United States.

Subpart B--Retrospective Risk Pooling Program


Sec.  951.4  Role of the Department.

    Within 60 calendar days of a request for funds, the Department 
shall calculate the retrospective premium payment for each nuclear 
supplier in accordance with the rules set forth in this subpart and 
notify each nuclear supplier though publication in the Federal 
Register.


Sec.  951.5  Retrospective premium payment.

    The retrospective premium payment for a nuclear supplier shall be 
the product of the risk share of the nuclear supplier and the 
contingent cost.


Sec.  951.6  Risk share.

    The risk share of a nuclear supplier shall be the quotient of the 
risk exposure of the nuclear supplier divided by the aggregate risk 
exposure.


Sec.  951.7  Risk exposure.

    The risk exposure of a nuclear supplier shall be the sum of the 
following products:
    (a) The adjusted value of all covered transactions by the nuclear 
supplier to the extent such transaction involve items listed in 
appendix A of this part multiplied by 2; and
    (b) The adjusted value of all covered transactions by the nuclear 
supplier to the extent such transactions involve items listed in 
appendix B of this part multiplied by 1.


Sec.  951.8  Aggregate risk exposure.

    The aggregate risk exposure is the sum of the risk exposure of all 
nuclear suppliers.


Sec.  951.9  Small nuclear supplier exclusion.

    A nuclear supplier with a risk exposure of less than [amount, e.g., 
$1,000,000 or some other amount, or exclusion for a nuclear supplier 
that qualifies as a ``small business'' under Small Business 
Administration codes] shall not be assessed a retrospective premium 
payment and shall not be included in the aggregate risk exposure and 
calculation of retrospective premium payments for other nuclear 
suppliers.


Sec.  951.10  Retrospective premium payment cap.

    (a) The retrospective premium payment of a nuclear supplier shall 
not exceed [insert amount, e.g., 5%, 25%, or some other percentage; or 
a dollar amount, e.g., $25,000,000, or some other dollar amount] of the 
contingent cost, except as provided in paragraph (c) of this section.
    (b) In the event the retrospective premium payments assessed from 
all nuclear suppliers subject to this subpart does not equal the 
contingent cost owed by the United States, the difference shall be 
assessed on a pro rata basis consistent with the process in this 
subpart against those nuclear suppliers that have not reached the cap 
on premium payments established under paragraph (a) of this section.
    (c) If the retrospective premium payments assessed from all nuclear 
suppliers pursuant to paragraphs (a) and (b) of this section does not 
equal the contingent cost owed by the United States, then the 
difference shall be assessed as an additional premium payment on a pro 
rata basis consistent with the process in this subpart against all 
nuclear suppliers in an amount necessary to cover the United States' 
contingent cost in full.

Subpart C--Payments to the United States


Sec.  951.11  General rule.

    Except as provided in Sec.  951.12, not later than 60 calendar days 
after receipt of a notification from the Department under Sec.  951.4, 
a nuclear supplier shall pay to the general fund of the Treasury the 
retrospective premium payment calculated under subpart B of this part.


Sec.  951.12  Annual payments.

    A nuclear supplier may elect to prorate the retrospective premium 
payment calculated under subpart B of this part in 5 equal annual 
payments (including interest on the unpaid balance at the prime rate 
prevailing at the time the first payment is due, no later than 60 days 
after receipt of a notification from the Department under Sec.  951.4).


Sec.  951.13  Vouchers.

    A nuclear supplier shall make payments required under this Part by 
submitting a letter, concurrent with payment to the general fund under 
Sec.  951.11, signed by an official with authority to bind the company 
to the Secretary of the Treasury that certifies--
    (a) The amount paid is made pursuant to the Department's 
notification under Sec.  951.4;
    (b) The amount paid is correctly computed; and
    (c) The specific payment plan chosen by the nuclear supplier, 
either a one-time payment or 5 equal annual payments (including 
interest on the unpaid balance at the prime rate prevailing at the time 
the first payment is due, no later than 60 days after receipt of a 
notification from the Department under Sec.  951.4).


Sec.  951.14  Failure to pay.

    If a nuclear supplier fails to make a payment required under this 
part, the Secretary shall take appropriate action to recover from the 
nuclear supplier--
    (a) The amount of the payment due from the nuclear supplier;
    (b) Any applicable interest on the payment; and
    (c) A penalty of not more than twice the amount of the payment due 
from the nuclear supplier.

Subpart D--Information Collection


Sec.  951.15  Reporting requirements for prior transactions.

    Not later than six months after the effective date of this subpart, 
a nuclear supplier shall submit electronically a report to the 
Department signed by an official with authority to bind the company 
that certifies the following information with respect to each 
reportable transaction prior to the effective date of this subpart;
    (a) Description of the transaction;
    (b) Date of the transaction;
    (c) Location of nuclear installation(s) involved in the 
transaction;
    (d) Identification of the volume or quantity of each item listed in 
appendix A or B of this part involved in the transaction; and
    (e) Value (expressed in U.S. dollars) of each identified item, and 
the total value for each reportable transaction.


Sec.  951.16  Annual reporting requirements.

    By March 15 of each year after the effective date of this subpart, 
a nuclear

[[Page 75097]]

supplier shall submit electronically a report to the Department signed 
by an official with authority to bind the company that certifies the 
following information with respect to each reportable transaction 
during the prior calendar year:
    (a) Description of the transaction;
    (b) Date of the transaction;
    (c) Location of the nuclear installation(s) involved in the 
transaction;
    (d) Identification of the volume or quantity of each item listed in 
appendix A or B of this part involved in the transaction; and
    (e) Value (expressed in U.S. dollars) of each identified item.


Sec.  951.17  Disclosure requirements.

    Information received from a nuclear supplier by the Department may 
be available to the public subject to the provision of 5 U.S.C. 552, 18 
U.S.C. 1905 and 10 CFR part 1004, provided that:
    (a) Subject to the requirements of law, information such as trade 
secrets, commercial and financial information that a nuclear supplier 
may submit to the Department in writing shall not be disclosed in 
accordance with Department regulations concerning the public disclosure 
of information. Any nuclear supplier asserting that the information is 
privileged and confidential should appropriately identify and mark such 
information when submitting to the Department.
    (b) Upon a showing satisfactory to the Department that any 
information or portion thereof obtained under this regulation would, if 
made public, divulge trade secrets or other proprietary information, 
the Department will not disclose such information.

Appendix A to Part 951--List of Primary Nuclear Items

    The following are the primary nuclear items to be used in the 
calculation of the risk exposure of a nuclear supplier. The scope of 
this appendix includes services for the design, construction, 
operation, and decommissioning of the nuclear installations identified 
below, in addition to the supply of the identified components, systems 
and structures.

1. Nuclear Plant Steam Supply Systems

    (a) Reactor pressure vessels, internals, and associated piping, 
pressure tubes and components, pressurizer, primary steam generators 
and coolant pumps or circulators.
    (b) Nuclear fuel.
    (c) On-line reactor fuel charging and discharging machines.
    (d) Reactor control rod system, drive mechanisms and rod position 
indication systems.
    (e) Detection, measurement and control equipment to determine 
neutron flux, temperature and pressure levels of nuclear steam supply 
systems.
    (f) Other components especially designed or prepared for use in a 
nuclear reactor.

2. Nuclear Plant Safety Systems

    (a) Mechanical equipment (e.g., pumps, piping, automatic valves, 
tanks and heat exchangers).
    (b) Emergency electrical equipment including diesel generators, 
batteries, switchgear and motor control centers.
    (c) Associated process monitoring and control equipment.

3. Nuclear Plant Containment

    Material and components used to prevent the release of radiation 
and contamination from the structures housing the nuclear reactor 
(e.g., in primary containment or confinement buildings).

Appendix B to Part 951--List of Secondary Nuclear Items

    The following are secondary nuclear items to be used in the 
calculation of the risk exposure of a nuclear supplier. The scope of 
this appendix includes services for the design, construction, 
operation, and decommissioning of the nuclear installations identified 
below, in addition to the supply of the identified components, systems 
and structures.

1. Nuclear Plants

    (a) Mechanical equipment including pumps, valves, heat exchangers, 
cranes, casks, compactors, demineralizers, filters, and tanks.
    (b) Electrical equipment including motors, switchgear and motor 
control centers and batteries.
    (c) Process monitoring, detection and control systems.
    (d) Structures used for nuclear fuel storage (e.g. spent fuel pool 
and storage racks; dry storage casks and facilities).

2. Enrichment and Fuel Fabrication Facilities

    (a) Mechanical equipment including pumps, valves, heat exchangers, 
cranes, casks, compactors, demineralizers, filters, and tanks.
    (b) Electrical equipment including motors, switchgear and motor 
control centers and batteries.
    (c) Process monitoring, detection and control systems.
    (d) Gas centrifuges and assemblies and components.
    (e) Specially designed or prepared systems, equipment and 
components for use in various types (gaseous diffusion, centrifuge or 
laser, etc.) of enrichment plants.
    (f) Tanks, casks and structures specifically designed for the 
storage of nuclear materials.
    (g) Nuclear fuel materials (e.g., enriched uranium, plutonium, 
thorium or mixed oxide fuel).
    (h) Fabricated nuclear fuel components (e.g., fuel pellets, fuel 
pins, fuel assemblies).

3. Irradiated Nuclear Fuel Reprocessing Facility

    (a) Mechanical equipment including pumps, valves, heat exchangers, 
cranes, casks, compactors, demineralizers, filters, and tanks.
    (b) Electrical equipment including motors, switchgear and motor 
control centers and batteries;
    (c) Process monitoring, detection and control systems.
    (d) Fuel chopping machines (tools intended to cut, chop or shear 
irradiated fuel).
    (e) Dissolvers/Chemical holding or storage tanks.
    (f) Solvent extractors/extraction equipment.
    (g) Plutonium nitrate to plutonium oxide conversion systems.
    (h) Plutonium metal production system.
    (i) Tanks, casks and structures specifically designed for the 
storage of irradiated and separated nuclear material.

4. Nuclear Material Transportation

    Casks or canisters especially designed for nuclear material 
transport.

5. Nuclear Material Storage Facilities

    Tanks, casks, and structures specifically designed for the storage 
of nuclear materials.

Alternative 2--Risk-Informed Assessment Formula by Nuclear Sector

PART 951--CONVENTION ON SUPPLEMENTARY COMPENSATION FOR NUCLEAR 
DAMAGE CONTINGENT COST ALLOCATION

Subpart A--General Provisions
Sec.
951.1 Purpose.
951.2 Scope.
951.3 Definitions.
Subpart B--Retrospective Risk Pooling Program
951.4 Role of the Department.
951.5 Nuclear supplier sectors.
951.6 Retrospective premium payment.
951.7 Risk share by sector.
951.8 Allocated risk by sector.
951.9 Allocated cost by sector.

[[Page 75098]]

951.10 Risk exposure of nuclear supplier in facility sector.
951.11 Risk exposure of nuclear supplier in equipment and technology 
sector.
951.12 Risk exposure of nuclear supplier in nuclear materials and 
nuclear materials transportation sector.
951.13 Risk exposure of nuclear supplier in nuclear services sector.
951.14 Aggregate risk exposure by sector.
951.15 Small nuclear supplier exclusion.
951.16 Retrospective premium payment cap.
Subpart C--Payments to the United States
951.17 General rule.
951.18 Annual payments.
951.19 Vouchers.
951.20 Failure to pay.
Subpart D--Information Collection
951.21 Reporting requirements for prior transactions.
951.22 Annual reporting requirements.
951.23 Disclosure requirements.

    Authority: 42 U.S.C. 2201, 42 U.S.C. 17373.

Subpart A--General Provisions


Sec.  951.1  Purpose.

    This part establishes the regulations for the implementation of 
section 934 (42 U.S.C. 17373) of the Energy Independence and Security 
Act of 2007 (Pub. L. 110-140), which provides for the proration of a 
retrospective premium among nuclear suppliers for the insurance against 
potential liability for nuclear damage provided by the adherence of the 
United States to the Convention.


Sec.  951.2  Scope.

    This part covers nuclear incidents that occur outside the United 
States that result in a request for funds and that are not a Price-
Anderson incident.


Sec.  951.3  Definitions.

    For purposes of this part, words shall be defined as provided for 
in the Atomic Energy Act and in section 934 of the Act and as follows--
    Act means the Energy Independence and Security Act of 2007 (Pub. L. 
110-140).
    Adjusted value means the value (expressed in U.S. dollars) received 
by a nuclear supplier for an item, adjusted to reflect inflation from 
the date of the covered transaction involving the item to the date of 
the nuclear incident for which the retrospective premium payment of the 
supplier is being calculated.
    Contingent cost means the cost to the United States in the event of 
a covered incident the amount of which is equal to the amount of funds 
the United States is obligated to make available under paragraph 1(b) 
of Article III of the Convention.
    Convention means the Convention on Supplementary Compensation for 
Nuclear Damage, done at Vienna on September 12, 1997.
    Covered incident means a nuclear incident the occurrence of which 
results in a request for funds under the Convention.
    Covered installation means a nuclear installation at which the 
occurrence of a nuclear incident could result in a request for funds 
under the Convention.
    Covered nuclear supplier means a nuclear supplier whose goods or 
services, if supplied in the United States, would be subject to the 
requirements of 10 CFR part 21.
    Covered person means--
    (1) A United States person; or
    (2) An individual or entity (including an agency or instrumentality 
of a foreign country) that is located in the United States, or carries 
out an activity in the United States; but
    (3) Does not include the United States, or any agency or 
instrumentality of the United States.
    Covered transaction means any reportable transaction by which a 
nuclear supplier is the final nuclear supplier of a covered 
installation, equipment and technology for a covered installation, 
nuclear materials and transportation of nuclear materials to or from a 
covered installation, and nuclear services to a covered installation.
    Department means the United States Department of Energy.
    Final nuclear supplier means the nuclear supplier that obtains, 
where required, an NRC general or specific license under 10 CFR part 
110, Department of Commerce export license under 15 CFR part 734, or 
DOE authorization under 10 CFR part 810, for the export of the item(s) 
involved in a reportable transaction.
    Lead nuclear supplier means a nuclear supplier whose adjusted value 
of reportable transactions for the period 1960 through 2007 exceeds 
$500 million [or some other amount, e.g., $1 billion].
    Nuclear installation means:
    (1) Any nuclear reactor facility or plant other than one with which 
a means of sea or air transport is equipped for use as a source of 
power, whether for propulsion thereof or for any other purpose;
    (2) Any facility or plant using nuclear fuel for production of 
nuclear material, or any facility or plant for the processing of 
nuclear material, including any facility or plant for the reprocessing 
of irradiated nuclear fuel; and
    (3) Any facility or plant where nuclear material is stored, other 
than storage incidental to the carriage of such material; provided that 
the installation State may determine that several nuclear installations 
of one operator which are located at the same site shall be considered 
a single nuclear installation.
    Nuclear material means nuclear fuel, other than natural or depleted 
uranium, capable of producing energy by a self-sustaining chain process 
of nuclear fission outside a nuclear reactor, either alone or in 
combination with some other material, and radioactive products or 
waste, where radioactive products or waste means any radioactive 
material produced in, or any material made radioactive by exposure to 
the radiation incidental to the production or utilization of nuclear 
fuel, but does not include radioisotopes which have reached the final 
stage of fabrication so as to be usable for any scientific, medical, 
agricultural, commercial or industrial purpose.
    Nuclear supplier means a covered person (or a successor in interest 
of a covered person) that--
    (1) Supplies facilities, equipment, fuel, services, or technology 
pertaining to the design, construction, operation, or decommissioning 
of a covered installation, or
    (2) Transports nuclear materials that could result in a covered 
incident.
    Price-Anderson incident means a covered incident for which section 
170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) would make funds 
available to compensate for public liability (as defined in section 11 
of that Act (42 U.S.C. 2014)).
    Reportable transaction means any transaction by a covered nuclear 
supplier involving supply of the following items: A nuclear 
installation outside the United States between January 1, 1960 through 
2007; equipment, components or technology for a nuclear installation 
outside the United States after 2007; nuclear materials to a nuclear 
installation outside the United States after 2007; the transportation 
outside the United States of nuclear material to or from a nuclear 
installation after 2007; and the supply of services to a nuclear 
installation outside the United States after 2007.
    Request for funds means a request for funds pursuant to Article VII 
of the Convention.
    Secretary means the Secretary of Energy.
    United States means, when used in a geographic sense, the same as 
the definition of the term in section 11 of the Atomic Energy Act of 
1954 and includes the Commonwealth of Puerto Rico, any other territory 
or possession of

[[Page 75099]]

the United States, and the waters of the United States territorial sea 
under Presidential Proclamation Number 5928, dated December 27, 1988 
(43 U.S.C. 1331 note).
    United States person means--
    (1) Any individual who is a resident, national, or citizen of the 
United States (other than an individual residing outside of the United 
States and employed by a person who is not a United States person); and
    (2) Any corporation, partnership, association, joint stock company, 
business trust, unincorporated organization, or sole proprietorship 
that is organized under the laws of the United States.

Subpart B--Retrospective Risk Pooling Program


Sec.  951.4  Role of the Department.

    Within 60 calendar days of a request for funds, the Department 
shall calculate the retrospective premium payment for each nuclear 
supplier in accordance with the rules set forth in this subpart and 
notify each nuclear supplier through publication in the Federal 
Register.


Sec.  951.5  Nuclear supplier sectors.

    The Department shall calculate the retrospective premium payment 
for each nuclear supplier based upon the nuclear supplier's covered 
transactions in the following sectors:
    (a) Facility Sector, which consists of the suppliers that are the 
lead nuclear suppliers involved in the development and deployment of 
nuclear installations.
    (b) Equipment and Technology Sector, which consists of the 
suppliers of equipment, components or technology used in a nuclear 
installation.
    (c) Nuclear Material and Nuclear Material Transportation Sector, 
which consists of the suppliers of nuclear materials to a nuclear 
installation, or the transport of nuclear materials to or from a 
nuclear installation.
    (d) Services Sector, which consists of the suppliers of services to 
a nuclear installation for the design, construction, operation, or 
decommissioning of a nuclear installation.


Sec.  951.6  Retrospective premium payment.

    The retrospective premium payment for a nuclear supplier shall be 
the sum of the product of the risk share of the nuclear supplier by 
sector and the allocated cost by sector in which the supplier engaged 
in covered transactions.


Sec.  951.7  Risk share by sector.

    The risk share of a nuclear supplier shall be the quotient of the 
risk exposure of the nuclear supplier by sector divided by the 
aggregate risk exposure of all nuclear suppliers in the sector.


Sec.  951.8  Allocated risk by sector.

    The allocation of risk among each of the nuclear sectors is as 
follows:
    (a) Facility sector: 50 percent.
    (b) Equipment and Technology sector: 25 percent.
    (c) Nuclear Materials and Nuclear Material Transportation sector: 
15 percent.
    (d) Services sector: 10 percent.


Sec.  951.9  Allocated cost by sector.

    The allocated cost for each sector shall be the product of the 
allocated risk of each sector and the contingent cost.


Sec.  951.10  Risk exposure of nuclear supplier in facility sector.

    The risk exposure of a nuclear supplier in the facility sector 
shall be the sum of the following products:
    (a) The quantity of all covered transactions by the supplier of 
nuclear reactor facilities or plants or facilities or plants for the 
reprocessing of irradiated nuclear fuel multiplied by 2; and
    (b) The quantity of all covered transactions by the supplier of 
facilities or plants for the processing of nuclear material (excluding 
a nuclear reactor facility or plant or a facility or plant for the 
reprocessing of irradiated nuclear fuel), facilities or plants where 
nuclear material is stored (other than storage incidental to the 
carriage of such material), or nuclear materials transportation 
multiplied by 1.


Sec.  951.11  Risk exposure of nuclear supplier in equipment and 
technology sector.

    The risk exposure of a nuclear supplier in the equipment and 
technology sector shall be the sum of the following products:
    (a) The adjusted value of all covered transactions by the supplier 
of equipment, components or technology for nuclear reactor facilities 
or plants or facilities or plants for the reprocessing of irradiated 
nuclear fuel multiplied by 2; and
    (b) The adjusted value of all covered transactions by the supplier 
of equipment, components, or technology for facilities or plants for 
the processing of nuclear material (excluding a nuclear reactor 
facility or plant or a facility or plant for the reprocessing of 
irradiated nuclear fuel), facilities or plants where nuclear material 
is stored (other than storage incidental to the carriage of such 
material), or nuclear material transportation multiplied by 1.


Sec.  951.12  Risk exposure of nuclear supplier in nuclear materials 
and nuclear materials transportation sector.

    The risk exposure of a nuclear supplier in the nuclear materials 
and nuclear materials transportation sector shall be the sum of the 
following products:
    (a) The quantity in metric tonnage of all covered transactions by 
the supplier of nuclear materials or nuclear material transportation to 
nuclear reactor facilities or plants or facilities or plants for the 
reprocessing of irradiated nuclear fuel multiplied by 2; and
    (b) The quantity in metric tonnage of all covered transactions by 
the supplier of nuclear materials or nuclear material transportation to 
facilities or plants for the processing of nuclear material (excluding 
a nuclear reactor facility or plant or a facility or plant for the 
reprocessing of irradiated nuclear fuel), facilities or plants where 
nuclear material is stored (other than storage incidental to the 
carriage of such material), or nuclear material transportation 
multiplied by 1.


Sec.  951.13  Risk exposure of nuclear supplier in nuclear services 
sector.

    The risk exposure of a nuclear supplier in the services sector 
shall be the sum of the following products:
    (a) The adjusted value of all covered transactions by the supplier 
of services to nuclear reactor facilities or plants or facilities or 
plants for the reprocessing of irradiated nuclear fuel multiplied by 2;
    (b) The adjusted value of all covered transactions by the supplier 
of services to facilities or plants for the processing of nuclear 
material (excluding a nuclear reactor facility or plant or a facility 
or plant for the reprocessing of irradiated nuclear fuel), facilities 
or plants where nuclear material is stored (other than storage 
incidental to the carriage of such material), and nuclear material 
transportation multiplied by 1.


Sec.  951.14  Aggregate risk exposure by sector.

    The aggregate risk exposure by sector is the sum of the risk 
exposures for all nuclear suppliers in that sector.


Sec.  951.15  Small nuclear supplier exclusion.

    A nuclear supplier with a risk exposure of less than [amount, e.g., 
$1,000,000, or some other amount for covered transactions within the 
equipment and technology and services sector, and insert amount, e.g., 
1,000 MT of nuclear material or some other amount for covered 
transactions within the nuclear materials and nuclear materials 
transportation sector, or exclusion for a nuclear supplier that

[[Page 75100]]

qualifies as a ``small business'' under Small Business Administration 
codes] shall not be assessed a retrospective premium payment and shall 
not be included in the aggregate risk exposure and calculation of 
retrospective premium payments for other nuclear suppliers.


Sec.  951.16  Retrospective premium payment cap.

    (a) The retrospective premium payment of a nuclear supplier shall 
not exceed [amount, e.g., 5%, 25%, or some other percentage; or a 
dollar amount, e.g., $25,000,000, or some other dollar amount] of the 
contingent cost, except as provided in paragraph (c) of this section.
    (b) In the event the retrospective premium payments assessed from 
all nuclear suppliers subject to this subpart does not equal the 
contingent cost owed by the United States, the difference shall be 
assessed on a pro rata basis consistent with the process in this 
subpart against those nuclear suppliers that have not reached the cap 
on premium payments established under paragraph (a) of this section.
    (c) If the retrospective premium payments assessed from all nuclear 
suppliers pursuant to paragraphs (a) and (b) of this section does not 
equal the contingent cost owed by the United States, then the 
difference shall be assessed as an additional premium payment on a pro 
rata basis consistent with the process in this subpart against all 
nuclear suppliers in an amount necessary to cover the United States' 
contingent cost in full.

Subpart C--Payments to the United States


Sec.  951.17  General rule.

    Except as provided in Sec.  951.18, not later than 60 calendar days 
after receipt of a notification from the Department under Sec.  951.4, 
a nuclear supplier shall pay to the general fund of the Treasury the 
retrospective premium payment calculated under subpart B.


Sec.  951.18  Annual payments.

    A nuclear supplier may elect to prorate the retrospective premium 
payment calculated under subpart B in 5 equal annual payments 
(including interest on the unpaid balance at the prime rate prevailing 
at the time the first payment is due, no later than 60 days after 
receipt of a notification from the Department under Sec.  951.4).


Sec.  951.19  Vouchers.

    A nuclear supplier shall make payments required under this Part by 
submitting a letter, concurrent with payment to the general fund under 
Sec.  951.17, signed by an official with authority to bind the company 
to the Secretary of the Treasury that certifies -
    (a) The amount paid is made pursuant to the Department's 
notification under Sec.  951.4;
    (b) The amount is correctly computed; and
    (c) The specific payment plan, either a one-time payment or 5 equal 
annual payments (including interest on the unpaid balance at the prime 
rate prevailing at the time the first payment is due, no later than 60 
days after receipt of a notification from the Department under Sec.  
951.4).


Sec.  951.20  Failure to pay.

    If a nuclear supplier fails to make a payment required under this 
Part, the Secretary shall take appropriate action to recover from the 
nuclear supplier--
    (a) The amount of the payment due from the nuclear supplier;
    (b) Any applicable interest on the payment; and
    (c) A penalty of not more than twice the amount of the payment due 
from the nuclear supplier.

Subpart D--Information Collection


Sec.  951.21  Reporting requirements for prior transactions.

    Not later than six months after the effective date of this subpart, 
a nuclear supplier shall submit electronically a report to the 
Department signed by an official with authority to bind the company 
that certifies the following information with respect to each 
reportable transaction prior to the effective date of this subpart;
    (a) Description of the transaction;
    (b) Date of the transaction;
    (c) Location of nuclear installation(s) involved in the 
transaction;
    (d) Identification of the volume or quantity of each item involved 
in the transaction; and
    (e) Value (expressed in U.S. dollars) of each identified item, and 
the total value for each reportable transaction.


Sec.  951.22  Annual reporting requirements.

    By March 15 of each year after the effective date of this subpart, 
a nuclear supplier shall submit electronically a report to the 
Department signed by an official with authority to bind the company 
that certifies the following information with respect to each 
reportable transaction during the prior calendar year:
    (a) Description of the transaction;
    (b) Date of the transaction;
    (c) Location of the nuclear installation(s) involved in the 
transaction;
    (d) Identification of the quantity of each item involved in the 
transaction; and
    (e) Value (expressed in U.S. dollars) of each identified item 
involved in the transaction.


Sec.  951.23  Disclosure requirements.

    Information received from a nuclear supplier by the Department may 
be available to the public subject to the provision of 5 U.S.C. 552, 18 
U.S.C. 1905 and 10 CFR part 1004, provided that:
    (a) Subject to the requirements of law, information such as trade 
secrets, commercial and financial information that a nuclear supplier 
may submit to the Department in writing shall not be disclosed in 
accordance with Department regulations concerning the public disclosure 
of information. Any nuclear supplier asserting that the information is 
privileged and confidential should appropriately identify and mark such 
information when submitting the information to the Department.
    (b) Upon a showing satisfactory to the Department that any 
information or portion thereof obtained under this regulation would, if 
made public, divulge trade secrets or other proprietary information, 
the Department will not disclose such information.

[FR Doc. 2014-29434 Filed 12-16-14; 8:45 am]
BILLING CODE 6450-01-P