[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64212-64215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22486]


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

NUCLEAR REGULATORY COMMISSION

[Docket Nos. 50-327 and 50-328; NRC-2016-0199]


Tennessee Valley Authority; Sequoyah Nuclear Plant, Units 1 and 2

AGENCY: Nuclear Regulatory Commission.

ACTION: Exemption; issuance.

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

SUMMARY: The U.S. Nuclear Regulatory Commission (NRC) is issuing an 
exemption in response to a March 10, 2016, request, as supplemented by 
letter dated June 24, 2016, from the Tennessee Valley Authority (TVA or 
the licensee). The exemption permits a one-time reallocation of surplus 
funds from the nuclear decommissioning trust funds (DTFs) for the 
Sequoyah Nuclear Plant (SQN), Units 1 and 2, to the DTFs for the Browns 
Ferry Nuclear Plant (BFN), Units 1, 2, and 3, and the Watts Bar Nuclear 
Plant (WBN), Units 1 and 2.

DATES: This exemption was issued on September 9, 2016.

ADDRESSES: Please refer to Docket ID NRC-2016-0199 when contacting the 
NRC about the availability of information regarding this document. You 
may obtain publicly-available information related to this document 
using any of the following methods:
     Federal Rulemaking Web site: Go to http://www.regulations.gov and search for Docket ID NRC-2016-0199. Address 
questions about NRC dockets to Carol Gallagher; telephone: 301-415-
3463; email: [email protected]. For technical questions, contact 
the individual listed in the FOR FURTHER INFORMATION CONTACT section of 
this document.
     NRC's Agencywide Documents Access and Management System 
(ADAMS): You may obtain publicly-available documents online in the 
ADAMS Public Documents collection at http://www.nrc.gov/reading-rm/adams.html. To begin the search, select ``ADAMS Public Documents'' and 
then select ``Begin Web-based ADAMS Search.'' For problems with ADAMS, 
please contact the NRC's Public Document Room (PDR) reference staff at 
1-800-397-4209, 301-415-4737, or by email to [email protected]. The 
ADAMS accession number for each document referenced in this document 
(if that document is available in ADAMS) is provided the first time 
that a document is referenced.
     NRC's PDR: You may examine and purchase copies of public 
documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 
Rockville Pike, Rockville, Maryland 20852.

FOR FURTHER INFORMATION CONTACT: Andrew Hon, Office of Nuclear Reactor 
Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-
0001; telephone: 301-415-8480; email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    The Commission's regulations at Sec. Sec.  50.75 and 50.82 of title 
10 of the Code of Federal Regulations (10 CFR), provide that 
disbursements or payments from a DTF, other than for payment of 
ordinary administrative costs (including taxes) and other incidental 
expenses of the fund (including legal, accounting, actuarial, and 
trustee expenses) in connection with the operation of the DTF, are 
restricted to expenses for legitimate decommissioning activities 
consistent with the definition of decommissioning in 10 CFR 50.2 or 
transfer to another financial assurance method until final 
decommissioning has been completed. According to 10 CFR 50.2, 
``decommission'' means to remove a facility or site safely from service 
and reduce residual radioactivity to a level that permits release of 
the property for unrestricted use and termination of the license or 
release of the property under restricted conditions and termination of 
the license. A strict interpretation of this regulatory language would 
prohibit a licensee from transferring funds from the DTF for one 
facility to the DTF for another facility. Therefore, an exemption from 
10 CFR 50.75(h)(2) and 10 CFR 50.82(a)(8) is needed to allow TVA to 
reallocate surplus funds from the DTFs for SQN Units 1 and 2 to the 
DTFs for BFN Units 1, 2, and 3 and WBN Units 1 and 2.

II. Request/Action

    In accordance with 10 CFR 50.12, ``Specific exemptions,'' TVA has, 
by letter dated March 10, 2016 (ADAMS Accession No. ML16071A237), as 
supplemented by letter dated June 24, 2016 (ADAMS Accession No. 
ML16179A346), requested that the NRC grant it a one-time exemption from 
the requirements of 10 CFR 50.75(h)(2) and 10 CFR 50.82(a)(8) so that 
it may reallocate surplus funds from the DTFs for SQN Units 1 and 2 to 
the DTFs for BFN Units 1, 2, and 3 and WBN Units 1 and 2. TVA stated 
that the purpose of

[[Page 64213]]

the proposed reallocation of surplus funds is to proportionally balance 
the DTFs for all of its nuclear power reactor facilities. According to 
TVA, two events have occurred that prompted their request for the 
proposed reallocation of surplus funds: (1) The issuance of renewed 
operating licenses for SQN Units 1 and 2, authorizing their operation 
for an additional 20 years; and (2) the issuance of the operating 
license for WBN Unit 2. TVA stated that the issuance of the SQN Units 1 
and 2 renewed operating licenses resulted in an immediate projected 
overfunding of the DTFs for these units because they now have an 
additional 20 years to accrue earnings. Conversely, the DTF for WBN 
Unit 2, because of the recent issuance of an operating license for WBN 
Unit 2, currently requires annual contributions of approximately $3.5 
million. TVA claims that if an exemption allowing the reallocation of 
some of the surplus funds from the DTFs for SQN Units 1 and 2 to the 
DTF for WBN Unit 2 is not granted, then TVA and its ratepayers would 
bear unnecessary costs to augment the DTF for WBN Unit 2.
    The TVA asserted that special circumstances are present that 
warrant the grant of the requested exemption. Specifically, TVA stated, 
in part, that the reallocation of surplus funds from the DTFs for SQN 
Units 1 and 2 to the DTFs for BFN Units 1, 2, and 3 and WBN Units 1 and 
2 is consistent with the underlying purpose of the NRC's 
decommissioning rules, which is to provide reasonable assurance that 
adequate funds will be available to complete decommissioning and thus 
protect the public and the environment (61 FR 39278, 39281; July 29, 
1996). Additionally, TVA claimed that compliance with an interpretation 
of the regulations that would prohibit the proposed reallocation of 
surplus funds would result in undue hardship and other costs that are 
significantly in excess of those contemplated when the regulations were 
adopted. Finally, TVA stated that the requested exemption from 10 CFR 
50.75(h)(2) and 10 CFR 50.82(a)(8) would be a one-time exemption and 
that TVA will continue to comply with the external sinking fund method 
of decommissioning funding assurance in accordance with 10 CFR 
50.75(e)(1)(ii).\1\
---------------------------------------------------------------------------

    \1\ As support for its request, TVA cited a letter from NRC to 
Arizona Public Service Company, ``Palo Verde Nuclear Generating 
Station, Unit 1--Decommissioning Trust Fund Balance (TAC No. 
MB3158),'' December 11, 2001 (ADAMS Accession No. ML013340484) and a 
letter from NRC to Southern California Edison Company, ``San Onofre 
Nuclear Generating Station, Units 2 and 3--Exemptions from the 
Requirements of 10 CFR part 50, Sections 50.82(a)(8)(i)(A) and 
Section 50.75(h)(2) (TAC Nos. MF3544 and MF3545),'' September 5, 
2014 (ADAMS Accession No. ML14101A132).
---------------------------------------------------------------------------

III. Discussion

    In accordance with 10 CFR 50.12, the Commission may, upon 
application by any interested person or upon its own initiative, grant 
exemptions from the requirements of 10 CFR part 50 when (1) the 
exemptions are authorized by law, will not present an undue risk to the 
public health and safety, and are consistent with the common defense 
and security; and (2) any of the special circumstances listed in 10 CFR 
50.12(a)(2) are present. These special circumstances are:
    (i) Application of the regulation in the particular circumstances 
conflicts with other rules or requirements of the Commission; or
    (ii) Application of the regulation in the particular circumstances 
would not serve the underlying purpose of the rule or is not necessary 
to achieve the underlying purpose of the rule; or
    (iii) Compliance would result in undue hardship or other costs that 
are significantly in excess of those contemplated when the regulation 
was adopted, or that are significantly in excess of those incurred by 
others similarly situated; or
    (iv) The exemption would result in benefit to the public health and 
safety that compensates for any decrease in safety that may result from 
the grant of the exemption; or
    (v) The exemption would provide only temporary relief from the 
applicable regulation and the licensee or applicant has made good faith 
efforts to comply with the regulation; or
    (vi) There is present any other material circumstance not 
considered when the regulation was adopted for which it would be in the 
public interest to grant an exemption. If such condition is relied on 
exclusively for satisfying paragraph (a)(2) of this section, the 
exemption may not be granted until the Executive Director for 
Operations has consulted with the Commission.

Authorized by Law

    In accordance with 10 CFR 50.12, the NRC may grant an exemption 
from the requirements of 10 CFR part 50, if the exemption is authorized 
by law. The exemption requested in this instance is authorized by law 
because no other prohibition of law exists to preclude the activities 
which would be authorized by the exemption. Specifically, the requested 
exemption would allow the one-time reallocation of surplus funds from 
the DTFs for SQN Units 1 and 2 to the DTFs for BFN Units 1, 2, and 3 
and WBN Units 1 and 2 such that each fund would separately satisfy the 
NRC's minimum funding assurance requirements with a projected excess 
available to address site-specific costs to decommission the facility. 
In addition to the NRC's regulations at 10 CFR 50.75 and 10 CFR 50.82, 
from which TVA is requesting an exemption, the regulations of the 
Federal Energy Regulatory Commission (FERC) at 18 CFR 35.32 and 18 CFR 
35.33 also address the use of nuclear power plant DTFs. It states in 18 
CFR 35.32(a)(6), in pertinent part, that ``[a]bsent the express 
authorization of the [FERC], no part of the assets of the [DTF] may be 
used for, or diverted to, any purpose other than to fund the costs of 
decommissioning the nuclear power plant to which the [DTF] relates, and 
to pay administrative costs and other incidental expenses, including 
taxes, of the Fund.'' It states in 18 CFR 35.33, in pertinent part, 
that the trustee of the DTF may use the DTF assets only to ``[s]atisfy 
the liability of a utility for decommissioning costs of the nuclear 
power plant to which the [DTF] relates as provided by [18 CFR] 35.32; 
and [p]ay administrative costs and other incidental expenses, including 
taxes, of the [DTF] as provided by [18 CFR] 35.32.'' \2\ By prohibiting 
the use of the assets of a DTF to fund the costs of decommissioning 
nuclear power plants other than the nuclear power plant to which the 
DTF relates, these regulations would preclude the reallocation of 
surplus funds that is proposed by TVA with its requested exemption. 
TVA, though, as a Federally owned corporation, is exempt from these 
regulations (16 U.S.C. 824(f)). Therefore, the requested exemption is 
not precluded by any other prohibition of law and is, thus, authorized 
by law.
---------------------------------------------------------------------------

    \2\ The NRC's regulations recognize the applicability of such 
non-NRC rules to power reactor licensees by stating in 10 CFR 
50.75(a) that, ``[f]unding for the decommissioning of power reactors 
may also be subject to the regulation of Federal or State Government 
agencies (e.g., Federal Energy Regulatory Commission (FERC) and 
State Public Utility Commissions) that have jurisdiction over rate 
regulation. The requirements of this section . . . are in addition 
to, and not substitution for, other requirements, and are not 
intended to be used by themselves or by other agencies to establish 
rates.''
---------------------------------------------------------------------------

No Undue Risk to the Public Health and Safety

    The underlying purpose of the NRC's decommissioning rules is to 
provide reasonable assurance that adequate funds will be available to 
complete decommissioning and thus protect the

[[Page 64214]]

public and the environment (61 FR 39278, 39281; July 29, 1996). The NRC 
has determined by rule at 10 CFR 50.75 that, for power reactor 
licensees, reasonable assurance of funds for decommissioning is 
demonstrated when a power reactor licensee covers, using one of the 
methods of 10 CFR 50.75(e), including the external sinking fund method 
used by TVA, an amount which may be more, but not less, than the amount 
stated in the table in 10 CFR 50.75(c)(1) adjusted using a rate at 
least equal to that stated in 10 CFR 50.75(c)(2). This is known as the 
formula amount. This reasonable assurance is then maintained by the 
requirement that each power reactor licensee report to the NRC every 
two years on, among other things, the updated formula amount, the 
amount of decommissioning funds accumulated to the end of the calendar 
year, the schedule of the annual amounts remaining to be collected, 
and, if necessary, plans for adjusting levels of funds assured for 
decommissioning to demonstrate that a reasonable level of assurance 
will be provided that funds will be available when needed to cover the 
cost of decommissioning. Reasonable assurance is also maintained by 
restricting disbursements or payments from a DTF, other than for 
payment of ordinary administrative costs (including taxes) and other 
incidental expenses of the fund (including legal, accounting, 
actuarial, and trustee expenses) in connection with the operation of 
the fund, to expenses for legitimate decommissioning activities. Based 
on this regulatory structure, there is no undue risk to the public 
health and safety when a power reactor licensee covers by the external 
sinking fund method an amount greater than or equal to the formula 
amount.
    The requested exemption to allow a one-time reallocation of surplus 
funds from the DTFs for SQN Units 1 and 2, to the DTFs for BFN Units 1, 
2, and 3 and WBN Units 1 and 2 will not present an undue risk to the 
public health and safety because, as reallocated, each of these DTFs 
would separately satisfy the minimum formula amount with a projected 
excess available to address site-specific costs to decommission the 
facility. This was verified by the NRC staff, which independently 
performed a decommissioning funding assurance analysis for each unit, 
using the proposed DTF reallocation amounts. The analysis included an 
independent calculation of the formula amount for each unit using the 
equation and adjustment factor in 10 CFR 50.75(c) and the most recent 
labor and energy and waste burial data available from the U.S. 
Department of Labor, Bureau of Labor Statistics, and NUREG-1307, 
``Report on Waste Burial Charges'' (ADAMS Accession No. ML13023A030), 
respectively, and an independent fund growth analysis through the 
permanent termination of operations (assuming an annual real rate of 
return of 5%, as allowed by 10 CFR 50.75(e)(1)(ii) and authorized by 
the TVA Board of Directors, TVA's rate-setting authority). In each 
calculation, the NRC staff found that the projected fund balance for 
each of the reallocated DTFs exceeded the NRC's formula amount, which 
is, by rule, the minimum requirement to demonstrate reasonable 
assurance of funds for decommissioning. Moreover, TVA has rate-setting 
authority and the requested exemption does not foreclose the option for 
ratepayer contributions in order to fund any potential future 
shortfalls. Therefore, the NRC staff concludes that there is reasonable 
assurance that the bulk amount of the funds necessary to complete 
radiological decommissioning will be available for each unit after the 
proposed reallocation and, thus, that the requested exemption will not 
present an undue risk to the public health and safety.

Consistent With the Common Defense and Security

    The requested exemption would grant a one-time exemption from the 
requirements of 10 CFR 50.75(h)(2) and 10 CFR 50.82(a)(8) to allow the 
reallocation of surplus funds from the DTFs for SQN Units 1 and 2 to 
the DTFs for BFN Units 1, 2, and 3 and WBN Units 1 and 2. Neither the 
regulation nor the proposed exemption has any relation to security 
issues. Therefore, the common defense and security is not impacted by 
the requested exemption.

Special Circumstances

    Special circumstances, in accordance with 10 CFR 50.12(a)(2)(ii), 
are present whenever application of the regulation in the particular 
circumstances would not serve the underlying purpose of the rule or is 
not necessary to achieve the underlying purpose of the rule. As 
explained above, the underlying purpose of the NRC's decommissioning 
rules is to provide reasonable assurance that adequate funds will be 
available to complete decommissioning. This underlying purpose is 
achieved by requiring power reactor licensees to cover, using one of 
the methods of 10 CFR 50.75(e), an amount which may be more, but not 
less, than the formula amount, to report biennially regarding the 
amount covered and whether adjustment is necessary, and to make 
disbursements or payments from a DTF only for decommissioning 
activities. Under the particular circumstances, however, prohibiting 
the proposed reallocation of funds is not necessary to achieve the 
underlying purpose of the decommissioning regulations of maintaining 
reasonable assurance that adequate funds will be available to complete 
decommissioning.
    The TVA proposed to reallocate funds from the DTFs for SQN Units 1 
and 2 to the DTFs for BFN Units 1, 2, and 3 and WBN Units 1 and 2. 
Although this would be prohibited by a strict interpretation of the 
NRC's decommissioning rules, such a prohibition is not necessary to 
achieve the underlying purpose of those rules because, as reallocated, 
each of the DTFs would separately satisfy the minimum formula amount 
with a projected excess available to address site-specific costs to 
decommission the facility. As discussed above, this was verified by the 
NRC staff, which independently performed a decommissioning funding 
assurance analysis for each unit, using the proposed DTF reallocation 
amounts, and found that the projected fund balance for each DTF, as 
reallocated, would exceed the NRC minimum funding assurance 
requirements. Therefore, the NRC staff concludes that prohibiting the 
proposed reallocation of funds through the application of 10 CFR 
50.75(h)(2) and 10 CFR 50.82(a)(8) would not be necessary to achieve 
the underlying purpose of these regulations; instead, the proposed 
reallocation would provide reasonable assurance that adequate funds 
will be available for the radiological decommissioning of the reactors.

Environmental Considerations

    With respect to its impact on the quality of the human environment, 
the NRC has determined that the issuance of the exemption discussed 
herein meets the eligibility criteria for categorical exclusion set 
forth in 10 CFR 51.22(c)(25). Under 10 CFR 51.22(c)(25), the granting 
of an exemption from the requirements of any regulation of 10 CFR 
Chapter I is an action that is a categorical exclusion provided that: 
(i) There is no significant hazards consideration; (ii) there is no 
significant change in the types or significant increase in the amounts 
of any effluents that may be released offsite; (iii) there is no 
significant increase in individual or cumulative public or occupational 
radiation exposure; (iv) there is no significant construction impact; 
(v)

[[Page 64215]]

there is no significant increase in the potential for or consequences 
from radiological accidents; and (vi) the requirements from which an 
exemption is sought involve those types of requirements identified in 
10 CFR 51.22(c)(25)(vi).
    The exemption allows the licensee to reallocate surplus funds from 
the DTFs for SQN Units 1 and 2 to the DTFs for BFN Units 1, 2, and 3 
and WBN Units 1 and 2. Neither the regulation nor the exemption has any 
relation to the operation of the facilities. Therefore, the Director, 
Division of Operating Reactor Licensing, Office of Nuclear Reactor 
Regulation, has determined that approval of the exemption request 
involves no significant hazards consideration because it does not (1) 
involve a significant increase in the probability or consequences of an 
accident previously evaluated; or (2) create the possibility of a new 
or different kind of accident from any accident previously evaluated; 
or (3) involve a significant reduction in a margin of safety. 
Similarly, as a result of the exemption, which is not related to 
facility operation, there is no significant change in the types or 
significant increase in the amounts of any effluents that may be 
released offsite and there is no significant increase in individual or 
cumulative public or occupational radiation exposure. The exempted 
regulation is not associated with construction, so there is no 
significant construction impact. The exempted regulation does not 
concern the source term (i.e., potential amount of radiation in an 
accident), nor mitigation. Therefore, there is no significant increase 
in the potential for or consequences from radiological accidents. 
Finally, the requirements for using DTFs for decommissioning activities 
from which the exemption is sought involve recordkeeping requirements, 
reporting requirements, or other requirements of an administrative, 
managerial, or organizational nature.
    Based on the above, the NRC staff concludes that the exemption 
meets the eligibility criteria for the categorical exclusion set forth 
in 10 CFR 51.22(c)(25). Therefore, in accordance with 10 CFR 51.22(b), 
no environmental impact statement or environmental assessment need be 
prepared in connection with the approval of this exemption request.

IV. Conclusions

    The NRC has determined that, pursuant to 10 CFR 50.12(a), the 
exemption is authorized by law, will not present an undue risk to the 
public health and safety, and is consistent with the common defense and 
security. Also, special circumstances pursuant to 10 CFR 
50.12(a)(2)(ii) are present. Therefore, the NRC hereby grants TVA a 
one-time exemption from the requirements of 10 CFR 50.75(h)(2) and 10 
CFR 50.82(a)(8) to allow the requested reallocation of surplus funds 
from the DTFs for SQN Units 1 and 2 to the DTFs for BFN Units 1, 2, and 
3 and WBN Units 1 and 2.

    Dated at Rockville, Maryland, this 9th day of September 2016.

    For the Nuclear Regulatory Commission.
Anne T. Boland,
Director, Division of Operating Reactor Licensing, Office of Nuclear 
Reactor Regulation.
[FR Doc. 2016-22486 Filed 9-16-16; 8:45 am]
 BILLING CODE 7590-01-P