[Federal Register Volume 85, Number 245 (Monday, December 21, 2020)]
[Proposed Rules]
[Pages 82950-82952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27776]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 /
Proposed Rules
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NUCLEAR REGULATORY COMMISSION
10 CFR Parts 30, 40, 50, 70, and 72
[NRC-2017-0021]
RIN 3150-AJ92
Alternatives to the Use of Credit Ratings
AGENCY: Nuclear Regulatory Commission.
ACTION: Advance notice of proposed rulemaking; request for comment.
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SUMMARY: The U.S. Nuclear Regulatory Commission (NRC) is considering an
amendment to its regulations that would alter financial assurance
mechanisms approved by the NRC for the decommissioning of nuclear power
plants and other nuclear facilities. Specifically, this action would
amend provisions for parent company and self company guarantees that
require bond ratings issued by credit rating agencies. This action
would implement the provisions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, which directed agencies to amend their
regulations to remove any reference to or reliance on credit ratings.
Applicants and licensees who are required to provide decommissioning
financial assurance may be affected. The NRC is soliciting public
comment on potential approaches for amending the regulations and
invites stakeholders and interested persons to participate. The NRC
plans to hold a public meeting during the comment period to facilitate
stakeholder participation.
DATES: Submit comments by March 8, 2021. Comments received after this
date will be considered if it is practical to do so, but the Commission
is able to ensure consideration only for comments received before this
date.
ADDRESSES: You may submit comments by any of the following methods:
Federal Rulemaking website: Go to https://www.regulations.gov and search for Docket ID NRC-2017-0021. Address
questions about NRC dockets to Dawn Forder; telephone: 301-415-3407;
email: [email protected]. For technical questions contact the
individual listed in the FOR FURTHER INFORMATION CONTACT section of
this document.
Email comments to: [email protected]. If you do
not receive an automatic email reply confirming receipt, then contact
us at 301-415-1677.
Mail comments to: Secretary, U.S. Nuclear Regulatory
Commission, Washington, DC 20555-0001, ATTN: Rulemakings and
Adjudications Staff.
For additional direction on obtaining information and submitting
comments, see ``Obtaining Information and Submitting Comments'' in the
SUPPLEMENTARY INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Gregory Trussell, Office of Nuclear
Material Safety and Safeguards, U.S. Nuclear Regulatory Commission,
Washington, DC 20555-0001; telephone: 301-415-6244, email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Obtaining Information and Submitting Comments
A. Obtaining Information
B. Submitting Comments
II. Background
III. Regulatory Objectives
IV. Specific Considerations
V. Public Meeting
VI. Plain Writing
VII. Rulemaking Process
I. Obtaining Information and Submitting Comments
A. Obtaining Information
Please refer to Docket ID NRC-2017-0021 when contacting the NRC
about the availability of information for this action. You may obtain
publicly-available information related to this action by any of the
following methods:
Federal Rulemaking website: Go to https://www.regulations.gov and search for Docket ID NRC-2017-0021.
NRC's Agencywide Documents Access and Management System
(ADAMS): You may obtain publicly-available documents online in the
ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, 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, at 301-415-4737,
or by email to [email protected].
Attention: The PDR, where you may examine and order copies
of public documents, is currently closed. You may submit your request
to the PDR via email at [email protected] or call 1-800-397-4209
between 8:00 a.m. and 4:00 p.m. (EST), Monday through Friday, except
Federal holidays.
B. Submitting Comments
Please include Docket ID NRC-2017-0021 in your comment submission.
The NRC cautions you not to include identifying or contact
information that you do not want to be publicly disclosed in your
comment submission. The NRC will post all comment submissions at
https://www.regulations.gov as well as enter the comment submissions
into ADAMS. The NRC does not routinely edit comment submissions to
remove identifying or contact information.
If you are requesting or aggregating comments from other persons
for submission to the NRC, then you should inform those persons not to
include identifying or contact information that they do not want to be
publicly disclosed in their comment submission. Your request should
state that the NRC does not routinely edit comment submissions to
remove such information before making the comment submissions available
to the public or entering the comment into ADAMS.
II. Background
Congress passed the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the Dodd-Frank Act or the Act) to ``promote the
financial stability of the United States by improving accountability
and transparency in the financial system.'' \1\ In the Act, Congress
found that ``ratings on structured financial products have proven to be
inaccurate'' and that ``[t]his inaccuracy contributed significantly to
the mismanagement of risks by financial institutions and investors,
which in turn adversely impacted the health of the economy.'' \2\ In
section 939A of the Act, Congress directed each Federal agency to
``review any regulation issued by such agency that requires the use of
an
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assessment of the credit-worthiness of a security or money market
instrument and any references to or requirements in such regulations
regarding credit ratings.'' \3\ Section 939A further directed each such
agency to ``modify any such regulations identified by the review . . .
to remove any reference to or requirement of reliance on credit ratings
and to substitute in such regulations such standard of credit-
worthiness as each respective agency shall determine as appropriate for
such regulations.'' \4\
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\1\ Public Law 111-203, Preamble.
\2\ Public Law 111-203, Sec. 931(5).
\3\ Public Law 111-203, Sec. 939A(a)(1)-(2).
\4\ Public Law 111-203, Sec. 939A(b).
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As directed by section 939A of the Dodd-Frank Act, the NRC has
reviewed its regulations for any references to or requirements of
reliance on credit ratings. Appendices A, C, and E to part 30 of title
10 of the Code of Federal Regulations (10 CFR) provide methods for
licensees and applicants to demonstrate that a self-guarantee or parent
company guarantee provides a reasonable assurance of adequate funding
for decommissioning. Those appendices provide an option based in part
on specified bond ratings from Moody's or Standard and Poor's credit
rating agencies. Absent the use of credit ratings, current NRC
financial test criteria located at 10 CFR part 30, appendices A, D, and
E, for use of parent company guarantees and self-guarantees, rely in
part on working capital liability-based test criteria. In accordance
with the Dodd-Frank Act, the NRC is considering amending these
appendices to remove reliance on credit rating criteria. Other
regulations that cite or reference these appendices may also be
affected by a proposed rule. The other potentially affected regulations
include Sec. 30.35(f)(2); Sec. 40.36(e)(2); 10 CFR part 40, criterion
9 of appendix A; Sec. 50.75(e)(1)(iii)(c); Sec. 70.25(f)(2); and
Sec. 72.30(e)(2).
The NRC held a public meeting on October 30, 2019 (ADAMS Accession
No. ML19276F107), where the NRC staff presented an analysis of the
Dodd-Frank Act and its impact on the NRC regulations. The NRC staff
also discussed the alternatives for implementing the requirements of
the Dodd-Frank Act, the NRC staff's recommendation for a proposed
rulemaking, and the rulemaking timeline for the proposed rule. The
proposed rulemaking would have removed the provisions in Part 30
appendices A, C, and E providing the option to demonstrate the
sufficiency of a guarantee based in part on a credit rating; thus, only
the method based in part on financial ratios would have remained.
Industry participants shared a view that the staff's initial rulemaking
approach would have a substantial negative impact on the availability
of parent company guarantees and self-guarantees (Public Meeting
Summary, ADAMS Accession No. ML19322A692). Participants recommended
that the NRC examine approaches taken by other Federal agencies for
implementing the Dodd-Frank Act requirements, which could help identify
alternative approaches for assessing a licensee's credit-worthiness. In
evaluating potential approaches, the NRC determined that it would be
beneficial to solicit early stakeholder views on the approaches being
considered before developing the proposed rule.
III. Regulatory Objectives
Under current regulations, applicants and licensees must
demonstrate reasonable assurance that funds will be available when
needed for decommissioning in order to obtain and maintain a reactor
license and certain materials licenses.\5\ Such a demonstration may be
made by prepayment of funds, payment of funds into an external sinking
fund, use of a surety method, insurance, or other guarantee method
including a letter of credit, a parent company guarantee, or a self-
guarantee.\6\ The only financial assurance mechanisms in NRC
regulations that rely, in part, on credit ratings are parent company
guarantees and self-guarantees. The NRC is considering amendments to
current regulations that would remove reliance on and reference to
credit rating criteria for these mechanisms.
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\5\ Section 182.a. of the Atomic Energy Act of 1954, as amended,
provides, ``Each application for a license . . . shall specifically
state such information as the Commission, by rule or regulation, may
determine to be necessary to decide such of the technical and
financial qualifications of the applicant . . . as the Commission
may deem appropriate for the license.''
\6\ 10 CFR 30.35(f), 40.36(e), 50.75(e), 70.25(f), and 72.30(e).
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IV. Specific Considerations
The NRC is seeking stakeholders' input on the following specific
areas related to its regulations covering parent company guarantees and
self-guarantees partially based on bond ratings issued by credit rating
agencies. The NRC asks that commenters provide the bases for their
comments (i.e., the underlying rationale for the position stated in the
comment) to enable the agency to have a complete understanding of the
comments.
Absent the use of credit ratings, alternate NRC financial test
criteria located at 10 CFR part 30, appendices A, D, and E rely in part
on working capital liability-based test criteria, which certain
licensees, including potentially credit-worthy power reactor licensees,
may have difficulty meeting. The NRC is considering additional
alternative approaches for determining the ability of a company or its
parent to guarantee decommissioning funds based on an evaluation of a
licensee's creditworthiness. The NRC is seeking input from the public
on this matter to inform the development of a proposed rule. The NRC is
particularly interested in comments and supporting rationale on the
following:
(Question 1) Are there licensees that meet the current credit
rating-based financial test for a guarantee that would not be able to
meet the alternate working capital and liability-based financial tests
currently presented in 10 CFR part 30 appendices? Would such licensees
be able to meet the decommissioning funding assurance requirements
using one or more other funding assurance methods allowed for by
regulation (i.e., prepayment, surety bond, insurance, external sinking
fund)?
(Question 2) Modified or new financial metrics for assessing
creditworthiness: Please provide your views on financial statement
metrics or other quantifiable financial characteristics that could be
reported by licensees to assess a licensee's creditworthiness and
hence, its ability to use a parent company guarantee or self-guarantee
mechanism for providing reasonable assurance that decommissioning
funding will be available (see Sec. 50.75, ``Reporting and
recordkeeping for decommissioning planning''). Suggested metrics should
differ from the current working capital and liability-based metrics
currently presented in 10 CFR part 30 appendices cited in the
Background to this notice and include pass or fail criteria limits.
(Question 3) Independent agency determination: Please provide your
views on the NRC performing an independent, risk-informed, performance-
based determination of a licensee's credit-worthiness. The NRC would
seek to determine the licensee's risk of default based on its review of
financial data while providing some degree of flexibility on the part
of licensees as to the type of financial data submitted. This could
include evaluation of financial data available from the licensee, open-
sources, and from third parties, including credit ratings.
(Question 4) Should the NRC consider other alternative financial
test criteria not presented above to assess an applicant's or
licensee's use of a guarantee to provide reasonable
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assurance of funds for decommissioning? If yes, please provide details
of the alternative criteria and the financial data needed for its use.
Commenters are encouraged to provide specific suggestions and
support for them. Comments received in response to this request will be
considered in the development of any subsequent proposed rule. The NRC
will provide another opportunity for public comment on any subsequent
proposed rule.
V. Public Meeting
During the comment period, the NRC will conduct a public meeting to
discuss the rulemaking and answer questions. The NRC will publish a
notice of the location, time, and agenda of the meeting on the NRC's
public meeting website at least 10 calendar days before the meeting.
Stakeholders should monitor the NRC's public meeting website for
information about the public meeting at: https://www.nrc.gov/pmns/mtg.
In addition, the meeting information will be posted on https://www.regulations.gov/ under Docket ID NRC-2017-0021.
VI. Plain Writing
The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal
agencies to write documents in a clear, concise, and well-organized
manner. The NRC has written this document to be consistent with the
Plain Writing Act as well as the Presidential Memorandum, ``Plain
Language in Government Writing,'' published June 10, 1998 (63 FR
31885). The NRC requests comment on this document with respect to the
clarity and effectiveness of the language used.
VII. Rulemaking Process
The NRC does not intend to provide a detailed response to
individual comments submitted on this advance notice of proposed
rulemaking; however, the NRC will evaluate all public input in the
development of a proposed rule on financial assurance mechanisms
approved by NRC for the decommissioning of nuclear power plants and
other nuclear facilities. If NRC determines a need for supporting
guidance, NRC will also issue the draft guidance for public comment.
Dated: December 14, 2020.
For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 2020-27776 Filed 12-18-20; 8:45 am]
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