Selected docket entries for case 11-3228 - NRC: Home Page · 2012-12-05 · Selected docket entries for case 11-3228 Generated: 08/30/2011 08:13:58 Filed Document Description Page

Selected docket entries for case 11-3228

Generated: 08/30/2011 08:13:58

Filed Document Description Page Docket Text

08/30/2011 j Appearance Form 2 ECF FILER: ENTRY OF APPEARANCE from Andrew D.Reese on behalf of Petitioner(s) State of New Jersey.(ADR)

08/30/2011 • Concise Summary of the Case 3 ECF FILER: Concise Summary of the Case filed byPetitioner State of New Jersey, received. (ADR)

08/30/2011 • Docketing/Information Statement 5 ECF FILER: AGENCY INFORMATION STATEMENTon behalf of Petitioner State of New Jersey, filed. (ADR)

08/30/2011 Lnj Certification of Service 6 ECF FILER: AGENCY INFORMATION STATEMENTI_ Ion behalf of Petitioner State of New Jersey, filed. (ADR)

08/30/2011 • Decommissioning Planning Rule, 7 ECF FILER: Concise Summary of the Case filed by76 Fed. Reg. 35512 (June 17, 2011) _ Petitioner State of New Jersey, received. (ADR)

PrintCase: IHNIM ST dId 6• rLS PgI'T1IIE DR8#iW•1WC /20 11 P i

No. 11-3228

State of New Jersey vs. Nuclear Regulatory Commission, et

ENTRY OF APPEARANCE

Please the list names of all parties represented, using additional sheet(s) if necessary:

State of New Jersey

Indicate the party's role IN THIS COURT (check only one):

V Petitioner(s)

Respondent(s)

Appellant(s)

Appellee(s)

Intervenor (s)

Amicus Curiae

(Type or Print) Counsel's Name Andrew D. ReeseV Mr. Ms. Mrs. Miss

Firm Paula T. Dow, Attorney General of New Jersey

Address PO Box 093, Hughes Justice Complex, 25 Market Street

City, State, Zip Code Trenton, NJ 08625-0093

Fax (60• 341-5031

Phone (609) 292-1509 Fax (609) 341-5031

Primary E-Mail Address (required) [email protected]

Additional E-Mail Address (1)Additional E-Mail Address (2)Notices generated from the Court's ECF system will be sent to both the primary e-mail and additional e-mailaddresses. YOU ARE LIMITED TO TWO ADDITIONAL E-MAIL ADDRESSES.

SIGNATURE OF COUNSEL: /s/Andrew D. Reese

COUNSEL WHO FAILS TO FILE AN ENTRY OF APPEARANCE WILL NOT BE ENTITLED TORECEIVE NOTICES OR COPIES OF DOCUMENTS INCLUDING BRIEFS AND APPENDICES UNTIL ANAPPEARANCE HAS BEEN ENTERED.

ONLY ATTORNEYS WHO ARE MEMBERS OF THE BAR OF THE COURT OF APPEALS FOR THETHIRD CIRCUIT OR WHO HAVE SUBMITTED A PROPERLY COMPLETED APPLICATION FORADMISSION TO THIS COURT'S BAR MAY FILE AN APPEARANCE FORM. (BAR ADMISSION ISWAIVED FOR FEDERAL ATTORNEYS.)

IT IS IMPORTANT THAT ALL REQUESTED INFORMA TION BE PRO VIDED AND

THA T COUNSEL SIGN THE FORM IN THE APPROPRIA TE AREA.

This entry of appearance must be served on all parties.

REV. 10/16/09

Case: drb1' ST[MT U36)P0 SILS WTItIE *l i~eWIV/2011

CONCISE SUMMARY OF THE CASE

Pursuant to 3 d Cir. LAR 33.3, counsel are required to file a concise summary of the casewithin 14 days of the date of docketing of the Notice of Appeal. Total statement is limited to no more than 2pages, single-spaced. Counsel may utilize this form or attach a 2 page statement encompassing the informationrequired by this form.

SHORTCAPTION: State of New Jersey v. U.S. Nuclear Regulatory Commission

USCA NO.: 11-3228

LOWER COURT or AGENCY and DOCKET NUMBER:U.S. Nuclear Regulatory Commission, NRC-2008-0030, RIN 3150-AI55

NAME OFJUDGE:

Specify who is suing whom, for what, and the subject of this action. Identify (1) the nature of the action; (2) theparties to this appeal; (3) the amount in controversy or other relief involved; and (4) the judgment or otheraction in the lower court or agency from which this action is taken:

The State of New Jersey petitions the Court for. review of the final rule of the United States Nuclear RegulatoryCommission ("NRC") entitled "Decommissioning Planning" ("Decommissioning Planning Rule"). The DecommissioningPlanning Rule was published at 76 Fed. Reg. 35512 (June 17, 2011). The respondents are the NRC and the USA.. NewJersey requests that the Court set aside the Decommissioning Planning Rule as arbitrary and capricious and otherwisecontrary to law.

LIST and ATTACH a copy of each order, judgment, decision or opinion which is involved in this appeal. If theorder(s) or opinion(s) being appealed adopt, affirm, or otherwise refer to the report and recommendation of amagistrate judge or the decision of a bankruptcy judge, the report and recommendation or decision shall also beattached.Decommissioning Planning Rule, 76 Fed. Reg. 35512 (June 17, 2011) (attached).

I

CONCISE iv ,•AR3?%W TIIc&I g1 1 06393 8 1 Page: 2 Date Filed: 08/30/2011

Provide a short statement of the factual and procedural background which you consider important to this appeal:On January 22, 2008, the NRC proposed the Decommissioning Planning Rule. 73 Fed. Reg. 3812 (Jan. 22, 2008). OnApril 4, 2008, the State of New Jersey submitted timely comments on the proposal. On June 17, 2011, the NRC adoptedthe Rule without changes.

The Rule sets forth the real rate of return on investment when establishing financial assurance for long-term maintenanceand monitoring of a site containing long-lived radioactive waste. The NRC assumes the financial assurance under theRule would endure to perpetuity.

Identify the issues to be raised on appeal:1. Whether the Rule is arbitrary and capricious because the NRC failed to consider important aspects of the rule and lacked asufficient record.

2. Whether the Rule is arbitrary and capricious because it conflicts with the NRC's own justification for the Rule.

3. Whether the Rule is arbitrary and capricious because the NRC misconstrued New Jersey's comments on the Rule.

4. Whether the Rule violates the Atomic Energy Act, 42 U.S.C. § 2011 et seq., the National Environmental Policy Act (NEPA), 42U.S.C. § 4321 et seq., and the Administrative Procedure Act, 5 U.S.C. § 501 et seq.

This is to certify that this Concise Summary of the Case was electronically filed with the Clerk of the U.S. Courtof Appeals for the Third Circuit and a copy hereof served to each party or their counsel of recordthis 30th day of August ,20_11

/s/ Andrew D. Reese

Signature of Counsel

Rev. 04/2010

2

Case: 11-3228 Document: 003110639384 Page: 1 Date Filed: 08/30/2011

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

DOCKETING STATEMENT

Administrative Agency Review/Enforcement Proceedings

I. DOCKETNO.: 11-3228 2. DATE DOCKETED: 8/17/2011

3. CASE NAME (Lead Parties Only)

State of New JerseyPetitionerV.

U.S. Nuclear Regulatory CommissionRespondent

4. TYPE OF CASE: Review 1/ Enforcement

5, CASE INFORMATION:

a. Identify agency whose order is to be reviewed: U.S. Nuclear Regulatory Commission

b. Give agency docket or docket number(s): NRC-2008-0030

c. Give date(s) oforder(s): June 17, 2011

d. Is a request for rehearing or reconsideration pending at the agency? Yes No

e. Are any other cases involving the same underlying agency order pending in this Court or in any other court?_Yes Lk/_No

If Yes, identify name(s), docket number(s), and court(s):

f. Are any other cases, to counsel's knowledge, pending before the agency, this Court or the Supreme Court which involvesubstantially the same issues as the instant case presents? Yes . No

If Yes, give name(s) of these cases and identify court/agency:

Signature: /S/ Andrew D. Reese Date:

Name of Counsel or Pro Se Litigant (Print) Andrew D. Reese

Firm: New Jersey Attorney General's Office Phone: 609-292-1509

Address: 25 Market St., PO Box 093, Trenton, NJ 08625-0093

Name of Party Represented: State of New Jersey

ATTACH A CERTIFICATE OF SERVICE

NOTE: If counsel for any other party believes that the information submitted is inaccurate or incomplete,counsel may so advise the Clerk within 10 days by letter, with copies to all other parties, specificallyreferring to the challenged statement. An original and three copies of such letter should be submitted.

REV. 1/31/08


UNITED STATES COURT OF APPEALSFOR THE THIRD CIRCUIT

STATE OF NEW JERSEY,

Petitioner,

V.

No. 11-3228

UNITED STATES NUCLEARREGULATORY COMMISSION andthe UNITED STATES OF AMERICA,

Respondents,

CERTIFICATION OF SERVICE

I, Andrew Reese, hereby certify that the enclosed docketingstatement, concise summary of the case, and notice of appearancewere served by first class mail on this date on the following:

James AdlerOffice of the General CounselU.S. Nuclear Regulatory CommissionWashington, D.C. 20555

Kathryn E. KovacsAppellate SectionEnvironmental and NaturalResources DivisionU.S. Department of JusticePO Box 23795Washington, D.C. 20026-3795

Date: August 30, 2011 Is! Andrew D. ReeseAndrew D. Reese

Case: 11-3228 Document: 003110639393 Page: 1 Date Filed: 08/30/201135512 Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and Regulations

NUCLEAR REGULATORYCOMMISSION

10 CFR Parts 20, 30, 40, 50, 70, and 72

[NRC-2008--0030]

RIN 3150-AI55

Decommissioning Planning

AGENCY: Nuclear RegulatoryCommission.ACTION: Final rule.

SUMMARY: The U.S. Nuclear RegulatoryCommission (NRC or the Commission)is amending its regulations to improvedecommissioning planning and therebyreduce the likelihood that any currentoperating facility will become a legacysite. The amended regulations requirelicensees to conduct their operations tominimize the introduction of residualradioactivity into the site, whichincludes the site's subsurface soil andgroundwater. Licensees also may berequired to perform site surveys todetermine whether residualradioactivity is present in subsurfaceareas and to keep records of thesesurveys with records important fordecommissioning. The amendedregulations require licensees to reportadditional details in theirdecommissioning cost estimate (DCE),eliminate the escrow account and line ofcredit as approved financial assurancemechanisms, and modify other financialassurance requirements. The amendedregulations require decommissioningpower reactor licensees to reportadditional information on the costs ofdecommissioning and spent fuelmanagement.

DATES: The final rule is effective onDecember 17, 2012. Compliance withthe reporting provisions in Title 10 ofthe Code of Federal Regulations (10CFR) 50.82(a)(8)(v) and (vii) is requiredby March 31, 2013.ADDRESSES: You can access publiclyavailable documents related to thisdocument using the following methods:

e NRC's Public Document Room(PDR): The public may examine andhave copied, for a fee, publicly availabledocuments at the NRC's PDR, O1-F21,One White Flint North, 11555 RockvillePike, Rockville, Maryland 20852.

* NRC's AgencvVwide DocumentsAccess and Management System(ADAMS): Publicly available documentscreated or received at the NRC areavailable online in the NRC Library athttp://www.vnrc.gov/reading-rm/adams.html. From this page, the publiccan gain entry into ADAMS, whichprovides text and image files of theNRC's public documents. If you do not

have access to ADAMS or if there areproblems in accessing the documentslocated in ADAMS, contact the NRC sPDR reference staff at 1-800-397-4209,301-415-4737, or by e-mail [email protected].

e Federal Rulemaking Web Site:Public comments and supportingmaterials related to this final rule can befound at http://www.regulations.gov bysearching on Docket ID NRC-2008-0030. Address questions about NRCdockets to Carol Gallagher, telephone:301-492-3668; e-mail:Carol. [email protected].

FOR FURTHER INFORMATION CONTACT:Robert D. MacDougall, Office of Federaland State Materials and EnvironmentalManagement Programs, U.S. NuclearRegulatory Commission, Washington,DC 20555-0001, telephone: 301-415-5175; e-mail:Robert.Ma [email protected], or KevinO'Sullivan, Office of Federal and StateMaterials and EnvironmentalManagement Programs, U.S. NuclearRegulatory Commission, Washington,DC 20555-0001, telephone: 301-415-8112; e-mail: [email protected] INFORMATION:1. BackgroundII. Discussion

A. What action is the NRC taking?B. Whom does this action affect?C. What steps did NRC take to prepare for

this rulemaking?D. What alternatives did NRC consider?E. What is a legacy site?F. What are financial assurances?G. Why might some materials licensees not

have funds to decommission theirfacility?

H. Why is 10 CFR 50.82 being amended?1. What changes are being made to 10 CFR

20.1406?J. Which surveys are required under

amended 10 CFR 20.1501(a)?K. What information must the licensee

collect under amended 10 CFR 20.1501?L. How will licensees report required

information to the NRC?M. What financial assurance information

must licensees report to the NRC?N. What changes are being made to

financial assurance regulations?0. Will some licensees who currently do

not have financial assurance need to getfinancial assurance?

P. What changes are being made withrespect to materials facilities'decommissioning funding plan (DFP)and DCE?

Q. What changes are being made withrespect to license transfer regulations formaterials licensees?

R. What changes are being made withrespect to permanently shutdown reactordecommissioning fund status and spentfuel management plan reporting?

S. When do these actions become effective?T. Has NRC prepared a cost-benefit

analysis of the final rule?

U. Has NRC evaluated the additionalpaperwork burden to licensees?

Ill. Summary and analysis of publiccomments on the proposed rule

IV. Discussion of Final Amendments bySection

V. Criminal PenaltiesVI. Agreement State CompatibilityVII. Voluntary Consensus StandardsVIII. Environmental Assessment and Finding

of No Significant Environmental Impact:Availability

IX. Paperwork Reduction Act StatementX. Regulatory AnalysisXI. Regulatory Flexibility CertificationXII. Backfit AnalysisXIII. Congressional Review Act

I. Background

The NRC issued comprehensive andrisk informed decommissioningregulations in 1997 as Subpart E of 10CFR part 20 (62 FR 39058; July 21,1997). This set of requirements isknown as the License Termination Rule(LTR). The LTR is based on calculateddoses, and it established specificradiological criteria for remediation oflands and structures to complete sitedecommissioning and successfullyterminate the license. The LTR providesan overall approach for licensetermination for two different siteconditions: unrestricted use andrestricted conditions for use afterlicense termination. The LTR applies tothe decommissioning of facilitieslicensed under the regulations in 10CFR parts 30, 40, 50, 60, 61, 63, 70, and72. In the 1997 LTR final rule, inresponse to a public comment that therequirements of then-proposedregulations in 10 CFR 20.1406 shouldapply to all licensees rather than only toapplicants for new licenses, theCommission stated:

Applicants and existing licensees,including those making license renewals, arealready required by 10 CFR part 20 to haveradiation protection programs aimed towardsreducing exposure and minimizing waste. Inparticular, § 20.1101(a) requires developmentand implementation of a radiation protectionplan commensurate with the scope andextent of licensed activities and sufficient toensure compliance with the provisions of 10CFR part 20. Section 20.1101(b) requireslicensees to use, to the extent practicable,procedures and engineered controls toachieve public doses that are [as low asreasonably achievable] ALARA. In addition,lessons learned and documented in reportssuch as NUREG-1444 IML080860275 andML0808603081 have focused attention on theneed to minimize and control wastegeneration during operations as part ofdevelopment of the required radiationprotection plans. Furthermore, the financialassurance requirements issued in the January27, 1988 (53 FR 24018), rule on planning fordecommissioning require licensees toprovide adequate funding fordecommissioning. These funding


Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and Regulations 35513

requirements create great incentive tominimize contamination and the amount offunds set aside and expended on cleanup. (62FR 39082; July 21, 1997).

Current 10 CFR 20.1101(a) requireseach licensee to implement a radiationprotection program to ensurecompliance with the regulations in 10CFR part 20. Current § 20.1101(b)requires each licensee to use, to theextent practical, procedures andengineering controls based upon soundradiation protection principles toachieve occupational doses and doses tomembers of the public that are ALARA.To achieve doses that are ALARA,licensees are already required to applyoperating procedures and controls toevaluate potential radiological hazardsand methods to minimize and controlwaste generation during facilityoperations.

In a Staff Requirements Memorandum(SRM) for SECY-01-0194, dated June18, 2002 (NRC ADAMS AccessionNumber ML021690563), theCommission directed the staff toconduct an analysis of LTR issues. Thestaff conducted the analysis andpresented results and recommendationsto the Commission in SECY-03-0069(ML030800158), dated May 2, 2003, andknown as the LTR Analysis. One of therecommendations was a set of-measures to prevent future legacysites." A legacy site is a facility that isin decommissioning status withcomplex issues and an owner whocannot complete the decommissioningwork for technical or financial reasons(as discussed further in Section II.E ofthis document). The set of measures toprevent future legacy sites had twodistinct parts: (1) The need for timelyreporting during facility operations ofsubsurface contamination that has apotential to complicate futuredecommissioning efforts; and (2) Theneed for more detailed reporting oflicensee financial assurancemechanisms to fund sitedecommissioning activities andprotection of the committed funds incases of financial distress. The need fortimely reporting of subsurfacecontamination during facility operationswas explained in Attachment 8 toSECY-03-0069 (ML030870186).Attachment 8, under the heading"chronic releases," recommendedrevising the regulations in 10 CFR20.1406 to extend its minimization ofcontamination requirements to coverlicensees in addition to licenseapplicants. Recommendations for moredetailed decommissioning financialassurance requirements are set forth inAttachment 7 to SECY-03-0069(ML030870180).

In the SRM for SECY-03-0069(ML033210595), the Commissionapproved the staffs recommendationsand authorized development of atechnical basis to support a proposedrule. As pertinent to the then-proposedregulations in 10 CFR 20.1406 and 10CFR 20.1501 revisions, theCommission's SRM states as follows:

The Commission has approved the staffsrecommendation related to changes inlicensee operations as described inattachment 8. However, in addition toincorporating risk-informed approaches, thestaff should ensure that they areperformance-based. The staff will have to bevery careful when crafting the guidancedocuments so that it is clear to the licenseesand to the staff how much characterizationinformation is enough. The staff should onlyask for limited information. Licensees shouldnot be required to submit the equivalent ofa full scale MARSSIM [Multi-AgencyRadiation Survey and Site InvestigationManual (ML082470583)] survey every year.

During 2003 and 2004, the NRC staffevaluated the decommissioning programand assessed the effectiveness of otherimprovements to protect public healthand safety beyond those identified inthe LTR Analysis. To integrate and trackregulatory improvements resulting fromthe LTR Analysis and the furtherevaluation of the decommissioningprogram, the NRC adopted an IntegratedDecommissioning Improvement Plan(IDIP) for activities during FY 2004through 2007 (ML050890051). Amongother actions, the IDIP called forpublication of the DecommissioningPlanning proposed rule and writtenguidance describing changes in theregulations to prevent future legacysites.

In 2005 and 2006, the operators ofseveral nuclear power plants reportedthat inadvertent and unmonitoredradioactive liquid releases, primarilytritium contained in water, hadoccurred. In some instances, the releaseof radioactive liquid was not recognizedby the licensee until years after therelease had apparently started. The NRCExecutive Director for Operationschartered a Task Force to conduct alessons-learned review of theseincidents. The Task Force final report(ML062650312) dated September 1,2006, concluded that the levels oftritium and other radionuclidesmeasured thus far do not present ahealth hazard to the public andpresented a list of findings andrecommendations that the Task Forcebelieved would improve plantoperations and public confidence innuclear plant operations. The findingsand recommendations in the Task Forcereport identified the need to clarify

existing licensee requirements todemonstrate that they have achievedpublic and occupational exposures thatare ALARA during the life cycle of thefacility, which includes thedecommissioning phase.

In April 2005, the NRC conducted a2-day public workshop to solicit publiccomments on the technical basis for theproposed rule, covering changes inlicensee operations and financialassurance. A 1-day public roundtablemeeting was held in January 2007 tosolicit public comments on specifictopics in the technical basis for theproposed rule.

SECY-07-0177 (ML072390153), datedOctober 3, 2007, requested Commissionapproval to publish a proposed ruleconsistent with the recommendationsapproved in SRM-SECY-03-0069 andthe public comments from the workshopand roundtable meeting notedpreviously. The Commission approvedstaffs request in SRM-SECY-07-0177(ML073440549), dated December 10,2007, and accordingly, the proposedrule was published for comment in theFederal Register on January 22, 2008(73 FR 3812).

II. Discussion

A. What action is the NRC taking?

The NRC is amending its regulationsto improve decommissioning planningand thereby reduce the likelihood thatfacilities under its jurisdiction willbecome legacy sites. To help achievethis goal, one set of complementaryamendments revises 10 CFR 20.1406 tomake it applicable to licensees withoperating facilities as well as to licenseapplicants and revises 10 CFR20.1501(a) by replacing its undefinedterm "radioactive material" with"residual radioactivity," a term alreadydefined in 10 CFR part 20. This definedterm includes subsurface contaminationwithin its scope. Both new 10 CFR20.1406(c) and amended 10 CFR20.1501(a) are worded to includesubsurface contamination within theirscope by using the term "residualradioactivity." These changes serve toreinforce the intended linkage betweenthese provisions, and are consistentwith NRC policy that licensees conductoperations to minimize the generation ofwaste to facilitate later facilitydecommissioning. A second set ofamendments improvesdecommissioning planning by requiringmore detailed reporting of DCEs andtighter control of financial instrumentsused to provide decommissioningfinancial assurance.

The new 10 CFR 20.1406(c) states asfollows:


35514 Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and Regulations

(c) Licensees shall, to the extent practical,conduct operations to minimize theintroduction of residual radioactivity into thesite, including the subsurface, in accordancewith the existing radiation protectionrequirements in Subpart B of this part andradiological criteria for license termination inSubpart E of this part.

The amended 10 CFR 20.1501(a) and (b)state as follows:

(a) Each licensee shall make or cause to bemade, surveys of areas, including thesubsurface, that-

(1) May be necessary for the licensee tocomply with the regulations in this part; and

(2) Are reasonable under the circumstancesto evaluate-

(i) The magnitude and extent of radiationlevels; and

(ii) Concentrations or quantities of residualradioactivity; and

(iii) The potential radiological hazards ofthe radiation levels and residual radioactivitydetected.

(b) Notwithstanding § 20.2103(a) of thispart, records from surveys describing thelocation and amount of subsurface residualradioactivity identified at the site must bekept with records important fordecommissioning, and such records must beretained in accordance with §§ 30.35(g),40.36(f), 50.75(g), 70.25(g), or 72.30(d), asapplicable.

As indicated, use of the term"residual radioactivity" is a keycomponent of the amendments, and thisterm is discussed below. It is alsodiscussed in the response to commentG.19 in section III of this document.

1. Residual Radioactivity

As set forth in 10 CFR 20.1003:

Residual radioactivity means radioactivityin structures, materials, soils, groundwater,and other media at a site resulting fromactivities under the licensee's control. Thisincludes radioactivity from all licensed andunlicensed sources used by the licensee, butexcludes background radiation. It alsoincludes radioactive materials remaining atthe site as a result of routine or accidentalreleases of radioactive material at the site andprevious burials at the site, even if thoseburials were made in accordance with theprovisions of 10 CFR part 20.

Certain operational events (e.g., slow,long-term leaks), particularly those thatcause subsurface soil and ground-watercontamination, can significantlyincrease the cost of decommissioning.To adequately assure that adecommissioning fund will cover thecosts of decommissioning, the owner ofa facility must have a reasonablyaccurate estimate of the extent to whichresidual radioactivity is present at thefacility, particularly in the subsurfacesoil and groundwater. As reflectedpreviously, the new 10 CFR 20.1406(c)requires that licensees conduct theiroperations in a manner that willminimize the introduction of residualradioactivity into the site.

Section 20.1501(a) has been revisedby replacing its undefined term"radioactive material" with "residualradioactivity." For some, the phrase"residual radioactivity" may have aconnotation implying radioactivematerial that is "left over" afteroperations. This is not the meaning. Asreflected in the previously stateddefinition, the term "residualradioactivity" includes everything thatthe term "radioactive material" impliesin this section of the current regulationsplus other radioactive material resultingfrom activities under the licensee'scontrol, such as contamination in thesubsurface. The use of the term"residual radioactivity" in § 20.1501(a)also is intended to provide a link withnew § 20.1406(c). The amended§ 20.1501(a) retains previous surveyrequirements, with the addition thatsuch requirements includeconsideration of waste in the form ofresidual radioactivity. Together, theamended § 20.1501(a) and the new§ 20.1406(c) specify that compliancewith 10 CFR part 20 requirements is anecessary part of effectively planningfor decommissioning. The §§ 20.1406(c)and 20.1501(a) provisions are discussedfurther in Sections I.I and J of thisdocument. These activities, undertakenduring facility operations, will providea technical basis for licensees and NRCto understand the effects of significantresidual radioactivity ondecommissioning costs, and will help todetermine whether existing financialassurance provided for site-specificdecommissioning is adequate. By usingthe term "residual radioactivity," thenew § 20.1406(c) and amended§ 20.1501(a) cover any licensed andunlicensed radioactive material thathave been introduced to the site bylicensee activities.

New paragraph 10 CFR 20.1501(b)requires licensees to keep records ofsurveys of subsurface residualradioactivity identified at the site withthe records important fordecommissioning. To remove anyambiguity about the applicability ofrecord retention requirements, thisparagraph also clarifies that suchrecords must be retained in accordancewith §§ 30.35(g), 40.36(f), 50.75(g),70.25(g), or 72.30(d), as applicable.These provisions specify certain typesof information important todecommissioning and require licenseesto keep records with this information inan identified location until the site isreleased for unrestricted use, or in thecase of reactors, until the license isterminated. These decommissioning-related record retention requirements

supersede those of § 20.2103(a), whichgenerically requires that records of theresults of such radiological doseassessment activities as surveys, airsampling, bioassays, and calibrations beretained for 3 years after the record ismade.

During operations, residualradioactivity that would be significantfor decommissioning planning would bea quantity of radioactive material thatwould later require remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402. As stated in the proposed rule,significant residual radioactivity insubsurface media, such as soil, is acomponent of waste, because it must beremoved and disposed of to meetunrestricted use criteria in 10 CFR20.1402 (73 FR 3815; January 22, 2008).

During decommissioning, the licenseemust evaluate dose from all residualradioactivity surveyed at its site usingthe radiological criteria in Subpart E to10 CFR part 20. For contaminationmigrating offsite from previous leaksand spills into the subsurface, a licenseemust comply with the applicable licenseconditions for its facility. Such offsitecontamination, released as an effluent inquantities below annual regulatorylimits, has been a factor in thedecommissioning of a few NRC andAgreement State sites. However, thescope of this rulemaking does notinclude offsite contaminationdiscovered during decommissioning.

The NRC's technical basis for theeffect that significant residualradioactivity in the subsurface has ondecommissioning costs is based on a2005 NRC staff study, "GeneralGuidance for Inspections andEnforcement to Prevent Future LegacySites and Indicators of Higher Risk ofSubsurface Contamination"(ML052630421). The purpose of thisstudy was to evaluate experience at sitesthat have undergone, or wereundergoing, decommissioning toidentify the types of events that havecaused subsurface contamination.Associating these events withknowledge of currently operating sitesprovided a means for NRC staff toevaluate the potential for futuresubsurface contamination at currentlyoperating facilities. This risk-informedapproach concluded that the sites witha higher likelihood of becoming legacysites shared the followingcharacteristics: relatively large volumesof low specific activity radioactivelycontaminated liquids, large volumes oflong-lived radionuclides, largethroughput, liquid processes, orprocesses that involve large quantities ofsolid radioactive material stored



outdoors. The study identified a numberof events that could increasedecommissioning costs by increasingthe possibility of soil or ground-watercontamination and concluded that theseevents should cause the licensee toreevaluate its DCE. Additionaldiscussion on this topic is in Sectionsll.G and II.H of this document.

The changes to 10 CFR 20.1406 and20.1501 are consistent with existingNRC policy for operating facilities.Under 10 CFR 20.1101(b), licenseesmust use procedures and engineeringcontrols to achieve occupational dosesand doses to members of the public thatare ALARA, during operations andduring decommissioning. Toaccomplish this, licensees must be ableto demonstrate their knowledge ofresidual radioactivity in the subsurface,including soil and ground-watercontamination, particularly if thesubsurface contamination is asignificant amount that would requireremediation during decommissioning tomeet the unrestricted use criteria of 10CFR 20.1402. This is an extension of therequirements promulgated in the 1997LTR that were applicable only to licenseapplicants. This action is needed,because significant subsurface residualradioactivity at current operatingfacilities may be a potential radiologicalhazard. Such a hazard, if leftundetected, could potentially result in afailure to fully fund decommissioningwhile the facility is still operating. Therevised requirements implementexisting NRC policy by helpinglicensees to continue achieving dosesthat are ALARA and within dose limits,and helping them to more effectivelyplan for decommissioning.

2. Financial AssuranceThis final rule (amending §§ 30.35,

40.36, 70.25, and 72.30, and Criterion 9of Appendix A to Part 40) codifiescertain aspects of existing regulatoryguidance to improve the quality of theDFP and applies NRC experience toincrease the likelihood that adequatefunds will be available when needed tocomplete the decommissioning process.This final rule allows materialslicensees to base their financialassurance for decommissioning on a"certification amount" only if thelicensee's site surveys do not indicatethe presence of residual radioactivity inamounts that would prevent the sitefrom meeting the unrestricted usecriteria in § 20.1402. This final ruleaddresses the potential vulnerability ofthe parent company guarantee and theself-guarantee as the financialmechanism for providingdecommissioning funding assurance, in

cases where the guarantor falls intofinancial distress. This final rulerequires all reactor and materialslicensees who use these guaranteemechanisms to establish a standby trustfund to receive the guaranteed financialassurance amount should that amountbecome immediately due and payable.

For licensees with reactors in adecommissioning status, this final ruleinstitutes additional reportingrequirements for decommissioning fundstatus, spent fuel management costs,and estimated decommissioning costs.These new reporting requirements, inpart, modify the existing Post ShutdownDecommissioning Activities Report(PSDAR) requirements set forth in 10CFR 50.82(a)(4)(i). Additional reportingrequirements specify that each powerreactor licensee undergoingdecommissioning must submit anannual financial assurance status report,as set forth in new paragraphs 10 CFR50.82(a)(8)(v) through (a)(8)(vii).

Under this final rule, all licenseesdecommissioning their facilitiespursuant to 10 CFR 20.1403 restrictedrelease criteria are required to use atrust fund to meet the financialassurance requirements. A trust fund isthe only financial assurance mechanismallowed for the long-term maintenanceand surveillance of restricted releasesites, unless a government organizationeither provides a guarantee of funds orassumes custody and ownership of thesite. This topic is discussed further inSection IL.N of this final rule.

B. Whom does this action affect?

By the effective date of this final rule,the NRC believes that the changes to 10CFR part 20 will affect a small numberof licensees, and that the changes tofinancial assurance regulations willaffect several hundred NRC licensees.

Based on the regulatory analysis forthe final rule, NRC believes a smallnumber of materials licensees (a total ofabout five NRC and Agreement Statelicensees) will need to performadditional site surveys due to thepresence of significant residualradioactivity. The licensees who willneed to perform additional surveys weremodeled in the regulatory analysis asrare metal (i.e., rare earth) extractionfacilities with uranium as a soilcontaminant. Although the number oflicensees affected by rule changes to 10CFR part 20 is small, the cost to Statesor the Federal Government to enforceand then fully decommission a singlelegacy site is much higher than the costto prevent the occurrence of a legacysite through amended regulations.

Uranium recovery licensees andapplicants will not be subject to the new

10 CFR 20.1406(c) requirements, just asthey are not subject to the existing 10CFR 20.1406 requirements. As stated inexisting 10 CFR 20.1401(a), uraniumand thorium recovery facilities, anduranium solution extraction facilities,are not subject to the regulations in 10CFR part 20, Subpart E. Such facilitiesare and will continue to be subject tothe regulations in the other 10 CFR part20 subparts, and the revised survey andmonitoring requirements in 10 CFR20.1501(a) and new 10 CFR 20.1501(b)will thus be applicable to them.Uranium recovery licensees areadditionally subject to existingmonitoring requirements pertaining tosoil and groundwater contamination inAppendix A to 10 CFR part 40. Theabove issues are discussed further in theresponse to Comment G.14 in Section IIIof this document.

For NRC licensees who havesubsurface soil contamination but nogroundwater contamination, a minimal,routine monitoring plan may remain ineffect through license termination. Theroutine monitoring plan will bedescribed in DG-4014. Application of aminimal, routine monitoring plan atsites with no groundwatercontamination is meant to improvelicensee decommissioning planning andthe basis used for DCEs.

The large majority of NRC andAgreement State licensees are notexpected to have residual radioactivityin soil or groundwater, because theypossess small amounts of short-livedbyproduct material or byproductmaterial that is encased in a capsuledesigned to prevent leakage or escape ofthe byproduct material (i.e., a sealedsource). This set of licensees is expectedto include the non-fuel-cycle nuclearfacilities, which either have nosignificant residual radioactivecontamination to be cleaned up, or, ifthere is contamination, it is localized orwill be quickly reduced to low levels byradioactive decay. Licensees who do nothave residual radioactivity in soil orgroundwater, and who do not have anobligation to set aside funds fordecommissioning financial assurance.are not affected by this final rule.

Approximately 300 NRC materialslicensees and over 1,000 AgreementState licensees have an obligation to setaside funds for decommissioningfinancial assurance. Of the NRClicensees, approximately 50 percent usea certified amount, specified inregulations, with the remaining 50percent using a site-specific DFP orLicense Termination Plan (LTP) to meetthe decommissioning financialassurance requirements. If there issignificant residual radioactivity at the


site, the final rule changes in §§ 30.35,40.36, 70.25, and 72.30 require alicensee to switch out of its certifiedfunding amount and replace thecertified amount with a DFP. At thistime, the NRC staff is not aware of anylicensees using certified amounts fordecommissioning that need to switch toa DFP because of significant residualradioactivity.

Licensees using a site-specific DFP orLicense Termination Plan to meetdecommissioning financial assurancerequirements will have additionalreporting requirements based on finalrule changes in §§ 30.35, 40.36, 50.82,70.25, and 72.30. The materialslicensees under 10 CFR parts 30, 40, 70,and 72 will need to provide more detailsto support their DCEs, such as theassumed cost of an independentcontractor to perform alldecommissioning activities.

Final rule changes to 10 CFR 50.82(a)affect the 12 power reactor licenseesundergoing decommissioning. Suchlicensees will need to provide moredetails regarding their DCEs and willneed to provide cost estimates formanaging irradiated fuel. Morespecifically, licensees who havesubmitted a certification of permanentcessation of operations under 10 CFR50.82(a) are subject to annual financialassurance reporting requirementssimilar to those imposed on operatingreactors under existing 10 CFR 50.75(f).The annual reports must identify yearlydecommissioning expenditures, theremaining balance of decommissioningfunds, and a cost estimate to completedecommissioning. Similar to the one-time reports required by 10 CFR50.54(bb), the annual reports requiredunder 10 CFR 50.82(a)(8) must identifythe amount of funds accumulated tomanage irradiated fuel and the projectedcost of managing the irradiated fueluntil title and possession is transferredto the Secretary of Energy.

Approximately 20 NRC licensees usean escrow account as a prepaymentfinancial mechanism and will beaffected by final rule changes in§§ 30.35, 40.36, 70.25, and 72.30 (whicheliminate the escrow account as aprepayment financial assurancemethod). No NRC licensees are using aline of credit (which is being eliminatedas an acceptable financial assuranceinstrument) to provide financialassurance.

Approximately 45 NRC licensees usea parent company guarantee or self-guarantee as a financial assurancemechanism. These licensees will beaffected by final rule changes in 10 CFRpart 30, Appendices A, C, D, and E,which require establishment of a

standby trust fund before the guaranteebecomes effective, and which containother new requirements. The standbytrust fund is to be set up for receipt offunds in the case of financial distress bythe guarantor. In the regulatory analysisand Paperwork Reduction Act burdenestimate, NRC assumed that a total of 25of these 45 licensees will need toestablish a trust fund to comply with theamended regulations, while the other 20already have an established trust fund.

The regulatory analysis for this finalrule, referenced in Section X of thisdocument, has detailed cost-benefitestimates regarding the licensees whowill be affected by the amendedregulations.

C. What steps did NRC take to preparefor this rulemaking?

The NRC took several initiatives toenhance stakeholder involvement and toimprove efficiency during therulemaking process. On May 28, 2004,the NRC staff issued RegulatoryInformation Summary (RIS) 2004-08,"Results of the License TerminationRule Analysis" (ML041460385). ThisRIS was the first follow-up action takenin response to the SRM for SECY-03-0069. The purpose of the RIS was toinform licensees and stakeholders ofNRC's analysis of the issues associatedwith implementing the LTR, theCommission's direction to resolve theseissues, the schedule for future actions,and opportunities for stakeholdercomment. The RIS noted thatstakeholder involvement would be animportant part of developing theplanned rulemaking and guidance.

In April 2005, the NRC conducted a2-day decommissioning workshopexamining a number of LTR topics,including potential changes in facilityoperating requirements and changes tofinancial assurance to prevent legacysites. Stakeholders addressed the issuesand potential resolutions that could beaccomplished through rulemaking.Since then, NRC has maintained a Webpage (http://ww.nrc.gov/about-nrc/regulatory/decommissioning.html) withinformation including draft guidancedocuments, Commission papers, and avariety of decommissioning programdocuments. The NRC presented paperson the technical basis scope of therulemaking at American Nuclear Societyconferences in 2004, 2005, and 2006,and other stakeholder forums.

In June 2006, the NRC formed aproposed rule Working Group of NRCstaff and one Agreement Staterepresentative from the Organization ofAgreement States (OAS). The NRC hasheld discussions with State and Federalagencies on their experience with trust

funds for long-term financial assurance,including a discussion with the U.S.Environmental Protection Agency (EPA)on October 6, 2006.

In January 2007, the NRC held apublic roundtable meeting that wasattended by about 40 stakeholders. Themeeting was held to solicit input fromstakeholders and interested members ofthe public regarding the issues oflicensee control and identification ofsubsurface residual radioactivity andchanges that were being considered indecommissioning financial assurancerequirements. The Summary Notes andtranscript of this public meeting areposted on: http://www.nrc.gov/about-nrc/regulatory/decommissioning/public-involve.html.

D. What alternatives did NRC consider?

The proposed rule Working Groupconsidered three different alternativesfor the rule. Each was evaluated in theenvironmental assessment (see SectionVIII of this document) and theregulatory analysis (see Section X of thisdocument). Alternative 2, comprised ofthe amendments in this final rule, wasassessed to be superior compared to theother alternatives.

E. What is a legacy site?

A legacy site is a facility that isdecommissioning and has an ownerwho cannot complete thedecommissioning work for technical orfinancial reasons. These sites have beenmaterials facilities, not reactor facilities.

The purpose of this final rule is toimprove decommissioning planning andthereby reduce the likelihood that a sitewill become a legacy site, thus avoidingunnecessary expense and promotingmore timely return of licensed sites toother productive uses.

NRC terminates several hundredmaterials licenses each year. Most ofthese are routine actions, and the sitesrequire little, if any, remediation to meetNRC's unrestricted use criteria. Thereare other sites where more complexdecommissioning actions are needed.These complex decommissioning sitesare described, along with the objectivesof NRC decommissioning activities, inthe "Status of DecommissioningProgram 2006 Annual Report" availableat: http://www.nrc.gov/about-nrc/regulatory/decommissioning/program-docs.htm]. This report identifies anddescribes the status of 32 complexmaterials sites undergoingdecommissioning. Of the total 32complex sites, the NRC considered 8 ofthese to be legacy sites as of December31, 2006. At the end of 2010, there were6 legacy sites among the complex



materials sites undergoingdecommissioning.

F. What are financial assurances?

Financial assurances are financialarrangements provided by a licensee,whereby funds for decommissioningwill be available when needed. EachNRC licensee has a regulatory obligationto properly decommission its facility.However, only licensees whosedecommissioning cost is likely toexceed a threshold amount mustprovide financial assurance. All nuclearpower reactors and about 7 percent ofNRC materials licensees must providedecommissioning financial assurance.This financial assurance may be fundsset aside by the licensee or a guaranteethat funds will be available whenneeded. The guarantee may be providedby a qualified third party or uponpassage of a financial test by thelicensee. The third party may be theparent company of the licensee, whichis the case for about 10 percent of theNRC materials licensees that areobligated to have decommissioningfinancial assurance.

Nuclear power reactors have financialassurance obligations that are differentfrom materials licensees. The minimumamount of financial assurance forreactors is defined in 10 CFR 50.75, andthis rulemaking does not change thisrequired minimum amount. Acceptablefinancial assurance mechanisms forpower reactors are defined in§ 50.75(e)(1). An external sinking fundis used to provide financial assurancefor about 90 percent of the reactors. Theremaining 10 percent of reactors haveassurance through prepaid funds and/orguarantees.

As of December 31, 2006, there wereabout 300 NRC materials licensees thathad a regulatory obligation to provideapproved financial assurancemechanisms. An acceptable financialassurance mechanism for unrestricteduse decommissioning is any of thefollowing four types of financialinstruments:

* A prepayment of the applicabledecommissioning costs;

* A guarantee to pay thedecommissioning costs issued by aqualified third party or the licensee;

* A statement of intent from aFederal, State or local governmentlicensee; or

* An external sinking fund.The prepayment method is full

payment in advance ofdecommissioning using an accountsegregated from licensee assets andoutside the licensee's administrativecontrol. About 11 percent of currentfinancial assurance mechanisms for

materials licensees are prepaymentmethods, with most of these beingescrow accounts. Currently acceptedprepayment mechanisms includeescrow accounts (8 percent), trust funds(2 percent), certificates of deposit(1 percent), government funds(0 percent), and deposits of governmentsecurities (0 percent). This final ruleeliminates all prepayment mechanismsexcept the trust fund, for reasonsdiscussed under Section II.N.2 of thisdocument.

The guarantee method can be used bylicensees that demonstrate adequatefinancial strength through their annualcompletion of financial tests containedin Appendices A, C, D, and E of 10 CFRpart 30. About 51 percent of currentfinancial assurance mechanisms formaterials licensees are guaranteemethods. Currently accepted guaranteemechanisms include letters of credit (28percent), parent company guarantees (8percent), licensee self-guarantees (7percent), surety bonds (8 percent), linesof credit (0 percent), and insurancepolicies (0 percent). This final ruleeliminates the line of credit as anacceptable mechanism, for reasonsdiscussed under Section II.N.10 of thisdocument.

The statement of intent is acommitment from a Federal, State orlocal government licensee that it willrequest and obtain decommissioningfunds from its funding body, whennecessary for decommissioning an NRClicensed site. It is available for use onlyby governmental entities.Approximately 38 percent of the NRCmaterials licensees who are required toprovide financial assurance use thestatement of intent as a means toprovide financial assurance.

The external sinking fund is anapproved financial assurance methodthat allows an NRC licensee to graduallyprepay the DCE, but no NRC materialslicensees who have an obligation toprovide decommissioning financialassurance use this option. Before thisrulemaking, materials licenseeschoosing this option would have tocover amounts that were not prepaid bya surety mechanism or insurance. Thesame requirements apply to powerreactor licensees, except that theamounts that are not prepaid can becovered by a guarantee method as wellas by surety or insurance. Thisrulemaking provides materials licenseesopting to use the external sinking fundwith the same degree of flexibility thatpower reactor licensees have had since1998 (in a final rulemaking for powerreactor financial assurance, the NRCallowed use of a parent companyguarantee or self-guarantee with an

external sinking fund (63 FR 50465;September 22, 1998)). This final rulemakes conforming changes in thefinancial assurance requirements formaterials licensees (10 CFR 30.35,40.36, 70.25, and 72.30) to providegreater consistency with the 10 CFR part50 regulations.

This discussion of financial assuranceto decommission a site pertains only tounrestricted use under 10 CFR 20.1402.If a licensee can demonstrate its abilityto meet the provisions of 10 CFR20.1403 for restricted use, financialassurance for long-term surveillance andcontrol may be provided by a trust fundor by a government entity assumingownership and custody of the site.

G. Why might some materials licenseesnot have funds to decommission theirfacility?

In SECY-03-0069, the NRC evaluatedlicensee decommissioning experienceand identified the following five reasonswhy some licensees may not haveenough funds to complete theirdecommissioning activities.

1. Licensees at complex sites mayunderestimate decommissioning costs,if the assumption that the site willqualify for a restricted release provesincorrect. The cost for a restrictedrelease is usually significantly lowerthan unrestricted release given the highoffsite disposal costs of licensedmaterial when compared to the cost ofonsite controls. If it turns out that thelicensee cannot meet the 10 CFR20.1403 criteria for restrictedconditions, the licensee may then not beable to meet its decommissioningfinancial obligations. To address thisproblem, this final rule amends 10 CFR30.35, 40.36, 70.25, and 72.30 to requirelicensees to obtain NRC approval oftheir DFP based on a DCE forunrestricted release, unless the ability tomeet the restricted release criteria canbe adequately shown.

2. Certain operational events,particularly those that cause soil orground-water contamination, canincrease decommissioning costs if notaddressed during the life of the facility.If the licensee does not identify theseevents, assess the problem in a timelymanner, and update its DCE based onnew conditions, the licensee may find itdifficult to later meet itsdecommissioning obligations. Toaddress this problem, this final ruleamends 10 CFR 20.1406 as discussedpreviously in Section II.A of thisdocument. Licensees also are required,in amendments to 10 CFR 30.35, 40.36,70.25, and 72.30, to factor in residualradioactivity information in arriving atDCEs.


3. Certain financial assurancemethods may not be effective inbankruptcy situations, given that fundsheld in them may be accessible tocreditors. For example, title to propertyheld in escrow remains with thelicensee, making the propertypotentially vulnerable to claims bycreditors. Another example is the parentand self-guarantees. The guaranteespromise performance rather thanpayment. In the past, two companiesused corporate reorganization to isolatethe decommissioning obligations withthe subsidiary company, but withinsufficient funds to perform the work.In one case, the parent companyreorganized without NRC approval andtransferred to the subsidiary few assetsand low levels of operating profits, sothat the subsidiary was able to fundonly a small portion of itsdecommissioning costs. In the secondcase, the parent company purchased thelicensee before the financial assuranceregulations went into in effect. Thelicensee was permanently shut downafter the purchase and was unable toprovide full financial assurance. Toaddress this problem, this final ruleamends 10 CFR 30.35, 40.36, 70.25,72.30, and 10 CFR part 30, AppendicesA, C, D, and E by eliminating the use ofan escrow account as a financialassurance option, and requiring aguarantor, as a condition of using theparent company guarantee and self-guarantee financial assurance options,to establish a standby trust fund and tosubmit to a Commission order, if theguarantor is in financial distress, toimmediately pay the guaranteed fundsinto the standby trust.

4. The funds set aside by licensees tocarry out decommissioning may declinein value over time. To address thisproblem, this final rule amends 10 CFR30.35(h), 40.36(f), 70.25(h), and 72.30(g)to require that a licensee monitor thestatus of its decommissioning fundsand, if necessary, add funds if thebalance falls below the estimated cost ofdecommissioning.

5. The initial funding of a trust fundto cover the recurring costs of long-termsurveillance and control for licensetermination under restricted releasecriteria may be inadequate if it assumesa high rate of return for the trust fund.To address this problem, this final ruleamends 10 CFR 20.1403 to require thatlicensees assume only a 1 percent realrate of return in establishing the initialfunding amount.

H. Why Is 10 CFR 50.82 being amended?

Several power reactor licensees havesuccessfully decommissioned theirreactor sites consistent with 10 CFR part

20 requirements. In some cases, reactordecommissioning costs have exceededthe initial DCE. For example, theConnecticut Yankee Nuclear Plantexperienced higher decommissioningcosts than planned, due in part to alarger volume of contaminated soil thanwas identified in the initial sitecharacterization.

In the past, the NRC has not requiredlicensees to submit details ofdecommissioning costs on the groundsthat the typical reactor licensee was partof a public utility with access tosubstantial assets and revenues and thatthe minimum required amount fordecommissioning financial assurancewas adequate. A licensee's status as aregulated public utility provided accessto cost of service rate recovery to helpprovide additional funds. A publicutility had access to sales revenues tofund its obligations, even if raterecovery was limited.

Deregulation of the electric industrynow permits a reactor licensee tooperate as a merchant plant not subjectto rate regulation or rate recovery ofcosts of service. When it ceasesoperation, it may have no salesrevenues. The licensee may beorganized as a separate company or asubsidiary of a holding company toisolate the risks and rewards of sellingelectricity on the open market. Withoutaccess to rate relief, with no salesrevenues, and with the licensee's ownerprotected by limited liability, shortfallsin decommissioning funding mayjeopardize timely completion ofdecommissioning. This final ruleprovides NRC regulatory authority toperform oversight to assure that thelicensee anticipates potential shortfallsand takes steps to control costs to staywithin its budget or obtain additionalfunds.

I. What changes are being made to 10CFR 20.1406?

New 10 CFR 20.1406(c) states asfollows:

(c) Licensees shall, to the extent practical,conduct operations to minimize theintroduction of residual radioactivity into thesite, including the subsurface, in accordancewith the existing radiation protectionrequirements in Subpart B of this part andradiological criteria for license termination inSubpart E of this part.

The term "to the extent practical" isintended to limit the scope of thisprovision to actions that are alreadymanifested in practice or action. Thesame phrase is used in existing 10 CFR20.1101(b), which requires thatlicensees keep occupational and publicradiological doses to ALARA levels.This final rule requires licensees to

conduct their operations to minimizethe introduction of residualradioactivity into the site, including thesubsurface, to achieve effectivedecommissioning planning. Foroperating facilities, significant residualradioactivity is a quantity that wouldlater require remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402.

The current 10 CFR 20.1101requirements are related to those in new10 CFR 20.1406(c). Section 20.1101(a)requires each licensee to implement aradiation protection program to ensurecompliance with the regulations in 10CFR part 20. The current 10 CFR20.1101(b) requires each licensee to use,to the extent practical, procedures andengineering controls based upon soundradiation protection principles toachieve occupational doses and doses tomembers of the public that are ALARA.To achieve doses that are ALARAduring facility operations anddecommissioning, the § 20.1101(b)operating procedures and controls mustapply to potential radiological hazardsand to methods used by the licensee tominimize and control waste generation.

In furtherance of these existingrequirements, new 10 CFR 20.1406(c)includes the term "residualradioactivity," as discussed previouslyin Section IL.A of this document. Thisnew section applies to current licenseeoperations, in contrast to the§ 20.1406(a) and (b) requirements whichare imposed on license applicants.Residual radioactivity excludesbackground radiation. The licensees oflarge nuclear facilities will haveperformed an assessment of backgroundradioactivity at their site as part of anEnvironmental Impact Statementrequired during the license applicationprocess. As a matter of standardoperating practice, licensees willdocument the background level ofradioactivity when a survey isperformed at the site. Residualradioactivity, as defined in 10 CFR20.1003, is not "residual radioactivematerial" as defined in 10 CFR 40.4,which is used only with respect tomaterials at sites subject to remediationunder Title I of the Uranium MillTailings Radiation Control Act of 1978,as amended.

The final rule's use of the term"subsurface" designates the area belowthe surface by at least 15 centimeters, asdefined in NUREG-1575, "Multi-Agency Radiation Survey and SiteInvestigation Manual" (ML070110228).Under this final rule, licensees mustconduct their operations to minimizeresidual radioactivity that enters the

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subsurface at the site. If there arepathways that would allow thecontamination to migrate, the licenseemay need to monitor the groundwateronsite for contamination based on sitespecific conditions. Based on past NRCexperience, significant concentrations orquantities of undetected andunmonitored contamination, causedprimarily by subsurface migration ofgroundwater, have been a majorcontributor to a site's becoming a legacysite and a potential radiological hazard.

Several hundred NRC materialslicensees possess radioactive materialand have liquid processes that couldcause subsurface contamination. Theselicensees generally are compliant withregulations that limit effluent release tothe environment over a specified time.Some of these licensees may not havedocumented onsite residualradioactivity, such as spills, leaks andonsite burials that may be costly toremediate during decommissioning andshould be considered in arriving at anaccurate DCE. There have beeninstances of previously unidentified soiland ground-water contamination aturanium recovery and rare earth metalrecovery sites undergoingdecommissioning in several states,notably Colorado and Pennsylvania.Two contributing factors to theaccumulation of unidentified subsurfacecontamination are: (1) Reluctanceamong some licensees to spend fundsduring operations to perform surveysand document spills and leaks that mayaffect site characterization: and (2)reluctance to implement procedures forwaste minimization.

The vast majority of NRC materialslicensees do not have processes thatwould cause subsurface contamination.NRC's expectation is that theselicensees, including those that releaseand monitor effluents of short-livedradionuclides to municipal sewersystems, will not be impacted by new 10CFR 20.1406(c). The accumulation ofradionuclides at municipal wastetreatment facilities was the subject of anInteragency Steering Committee onRadiation Standards (ISCORS) study(NUREG-1775, November 2003,ML033140171), which concluded that,in general, these facilities do not havesignificant concentrations of long-livedradionuclides. Other classes of licenseesthat are, in general, not expected tointroduce significant residualradioactivity into the subsurface includebroad scope academic, broad scopemedical, and small research and testreactors. The DG-4014 proposes anacceptable method for these licensees toevaluate the subsurface residualradioactivity.

Power reactor licensees haveexhibited a high level of ALARAdiscipline with respect to effluentrelease and known spills and leaks.Current NRC regulations in §§ 20.1301,20.1302, and 50.36a ensure that powerreactor licensees maintain adequatemonitoring and surveys of radioactiveeffluent discharges, with annualreporting requirements outlined in§ 50.36a(2) that are made available tothe public on the NRC Web site. Severalnuclear power plants have reportedabnormal releases of liquid tritium,which resulted in ground-watercontamination. On May 5, 2006, theNRC staff issued a revised baselineinspection module (Procedure 71122.01,ML053490179) used to inspect leaksand spills at power reactor sites. Tofurther address this issue, the NuclearEnergy Institute (NEI) developedvoluntary guidance for licensees in theIndustry Ground Water ProtectionInitiative (GPI) (ML072600295). Thevoluntary GPI, implemented by alllicensed power reactors as of September2008, is a site-specific groundwaterprotection program to manage situationsinvolving inadvertent releases oflicensed material to groundwater and toprovide informal communication toappropriate State/Local officials, withfollow-up notification to the NRC asappropriate.

J. What surveys are required underamended 10 CFR 20.1501(a)?

Before this final rule, § 20.1501(a)required licensees to perform surveysnecessary to comply with Part 20requirements, including surveysreasonable under the circumstances toevaluate potential radiological hazards.This final rule requires radiologicalsurveys, reasonable under thecircumstances (such as scopingsurveys), sufficient to understand theextent of significant residualradioactivity, including the subsurface.This final rule does not add any newrequirements regarding extensive sitecharacterization. Slow and long-lastingleaks of radioactive material into theonsite subsurface may eventuallyproduce radiological hazards and pose arisk for creation of a legacy site ifcontaminant characteristics are notidentified when the facility is operating.The staff views radiological hazards asincluding those resulting fromsubsurface contaminating events, whenthese events produce significantresidual radioactivity that would laterrequire remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402. An effective approach tounderstand the extent of subsurface

residual radioactivity is through the useof radiological surveys.

Appropriate surveys are essential fordetermining the adequacy of financialassurance for materials licensees, andneed to be done periodically on alimited basis during operations whenthe DFP and financial assurance can beadjusted while the licensee is stillgenerating revenue. This is far superiorto the current practice at some facilitiesof delaying even limited survey work atthe site until after the facility has beenshut down.

Facilities that process large quantitiesof licensed material, especially in fluidform, have the potential for causingsignificant environmentalcontamination. Leaks from thesefacilities can lead to large amounts ofradioactive contamination entering thesubsurface environment over anextended time. The estimated dosesfrom this contamination are below thelimits in 10 CFR part 20 that wouldinitiate immediate regulatory action.Another factor the staff considered inpreparing this final rule is the high costto dispose of radioactive materialsoffsite. These costs are a concern, evenwhen the material contains relativelylow concentrations of radioactivity. Acontinued trend of high disposal costscould increase the number ofenvironmental contamination incidentsat operating facilities, resulting inhigher decommissioning costs. A thirdfactor that may contribute to futurelegacy sites is the delayed identificationof contamination on the site. Over along time, contamination that migratesin subsurface soil or groundwater doesnot cause immediate exposure to eitherworkers or the public that approachesthe limits specified in 10 CFR part 20.It is only after operations have ceasedwhen the possible results of unlimitedaccess to the site, and associatedexposure pathways (i.e., ingestion andinhalation) are being evaluated, that thevolume of contamination becomesapparent.

As discussed previously in SectionII.A of this document, amended 10 CFR20.1501(a) requires licensees to performcontamination surveys to comply withcurrent 10 CFR part 20 requirementsand the new § 20.1406(c), if there is ahistory of leaks or spills to thesubsurface at the site. The magnitudeand extent of radiation levels aretypically defined in units ofradioactivity measurement, such as inmicro-rem per hour (prem/hr). Theconcentrations or quantities of residualradioactivity are typically defined inunits of radioactivity associated with aspecific radionuclide, for example



picocuries per liter of tritium (pCi/L ofH-3).

The amended § 20.1501(a) retainsprevious survey requirements andspecifies that such requirements includeconsideration of subsurface residualradioactivity. Survey requirements mayinclude ground-water monitoring ifreasonable under the site specificconditions. Soil sampling also may bewarranted based on site-specificconditions-for example, if there is noground-water monitoring at the site or ifknown subsurface contamination hasnot migrated to the groundwater. TheDC-4014 proposes a variety ofacceptable methods to evaluatesubsurface characteristics. The NRCrecognizes that ground-watermonitoring may be a surrogate forsubsurface monitoring at some sites,that soil sampling may be appropriate atother sites, and that there are sites withno subsurface residual radioactiyitywhere the existing monitoring method isappropriate. Also, the NRC recognizesthat an area within the footprint of abuilding, during licensed operations,may not be a suitable area for subsurfaceresidual radioactivity surveys if theprocess of sampling would have anadverse impact on facility operations.The decision to perform subsurfaceresidual radioactivity sampling in aparticular area should be balancedagainst the potential to jeopardize thesafe operation of the facility. Thepurpose of amended 10 CFR 20.1501(a)and new 10 CFR 20.1406(c) is to specifythat compliance with 10 CFR part 20survey and recordkeeping requirementsis necessary to demonstrate compliancewith existing regulations and to planeffectively for decommissioning,including effects from subsurfacecontamination.

Final rule amendments to 10 CFR30.35(e)(2), 40.36(d)(2), 70.25(e)(2), and72.30(c) require licensees who have aDFP or a LTP to factor in the results ofsurveys, performed under § 20.1501(a),in estimating decommissioning costs.This requirement applies only tomaterials licensees who are required tohave a DFP and assures that theselicensees properly consider the extent ofsubsurface residual radioactivity in theirDCEs, thus improving decommissioningplanning and helping to reduce thelikelihood of future legacy sites.

For the materials licensees with acertified amount as decommissioningfinancial assurance, the NRC assumestheir current monitoring methods areadequate. If these licensees detect onsitecontamination that would later requireremediation during decommissioning tomeet the unrestricted use criteria of 10CFR 20.1402, then the licensees are

required to submit for approval by theNRC a DFP with a DCE.

Some materials licensees are notrequired to have financial assurance fordecommissioning based on a licensepossession limit that is below thefinancial assurance threshold values inAppendix B of 10 CFR part 30. For theselicensees, the NRC's expectation is thatthe monitoring performed underamended § 20.1501(a) would be of asimple form, as will be discussed inDG-4014. Simple form monitoring is amethod that confirms the absence ofleaks or spills to the subsurface. Therisk is low that any of these sites wouldcause contamination to create apotential radiological hazard or a futurelegacy site.

On the effective date of this final rule,NRC's expectation is that no additionalsurveys will be required of powerreactor licensees and fuel cyclefacilities. For power reactors, NRC staffconcludes that the monitoring andsurvey processes and related reportsprepared at power reactor sites willlikely contain sufficient information tosatisfy new § 20.1406(c) and amended§ 20.1501 requirements. The NRC is notrequiring licensees to submit reports,but the information must be kept onsitein records that are available for review.It is not expected that power reactorlicensees will need to immediatelyinstall additional monitoring equipmentor modify existing operating proceduresto satisfy the amended § 20.1501(a)requirements. It may be necessary,however, for such licensees to take theseactions if, for example, significantresidual radioactivity is identified at apower reactor site at a level higher thanhad been previously identified. In anysuch situations, the need for additionalmonitoring will be determined on acase-by-case basis.

Fuel cycle facilities, such as uraniumfuel fabrication plants, the gaseousdiffusion enrichment plants, and the dryprocess natural uranium conversion/de-conversion facility, also perform surveysto detect radioactive releases to thegroundwater. NRC staff concludes thatthe monitoring and survey processesand related reports prepared at thesefacilities would likely contain sufficientinformation to satisfy § 20.1406(c) and§ 20.1501 requirements. A high level ofALARA discipline for onsite spills andleaks is expected of the centrifugeenrichment plants and mixed oxidefabrication plant based on theinformation in their license applications(these facilities have not begunoperations).

K. What information must the licenseecollect under amended 10 CFR 20.1501?

For facilities having significantsubsurface contamination, NRC isrequiring licensee documentation ofcontaminating events and surveyresults, including groundwatermonitoring surveys, and the retention ofsurvey records until license termination,to facilitate later decommissioning ofthe facility.

Licensees must be able to demonstratecompliance with the regulations in 10CFR part 20 through surveys thatevaluate the magnitude and extent ofsite radiation levels, includingsignificant concentrations or quantitiesof residual radioactivity in thesubsurface. Such surveys wouldevaluate any potential radiation hazardsof the radiation levels and residualradioactivity detected. The samplingresults should include the date, time,location, contaminants of interest andcontamination levels, and theconcentrations at which action isrequired to comply with regulations.The contaminants of interest are thoseused within the facility with half-liveslong enough that they would requireremediation during decommissioning tomeet the unrestricted use criteria under10 CFR 20.1402. Contaminants mayinclude both chemicals andradionuclides in the groundwater fromsources upstream of the NRC-licensedsite because of the potential forinteraction with releases from othersites. When groundwater is beingmonitored, the surveys conducted bythe licensee should include hydro-geologic evaluations that lead to adetermination of effective sampling andanalysis, including accurate placementand installation of the wells, and welllocations to determine the nominalgroundwater flow direction andpreferential flow paths for each'aquifer" underlying the site. Licenseesmay need to perform surveys todemonstrate compliance with the new10 CFR 20.1406(c).

Under the requirements of §§ 30.35(g),40.36(f), 50.75(g), 70.25(g), and 72.30(d),licensees must designate the recordsfrom 10 CFR 20.1501(b) surveys ofsubsurface residual radioactivity at thesite as records important fordecommissioning. Significant residualradioactivity that must be documentedin these records would include onsitesubsurface residual radioactivity thatwould later require remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402 (73 FR 3815; January 22, 2008).These records can be as simple as adescription of the contaminating event,


to include date, time, location, and theestimated quantities and activity levelsof radioactive materials that werespilled or leaked. The documentationmay describe the activation of amoisture alarm system used to indicatethe presence of liquid in an area that issupposed to be dry. Contaminationsurvey results must be included in theserecords if the surveys are consideredimportant for decommissioningplanning.

L. How will licensees report requiredinformation to the NRC?

There are no reporting requirementsfor licensees under amendments to 10CFR 20.1406(c) and 20.1501.

Instead, the NRC requires licensees tocollect information and to have thatinformation available for review. Theinformation must be retained bylicensees in records important fordecommissioning under §§ 30.35(g),40.36(f), 50.75(g), 70.25(g), and 72.30(d).

Under amendments to financialassurance regulations, under § 30.35(e),§ 40.36(d), 10 Part 40 Appendix ACriterion 9(b), § 70.25(e), and § 72.30,reporting requirements would increasefor materials licensees who mustprepare a detailed cost estimate fordecommissioning. Reportingrequirements also increase based onamended § 50.82(a) for power reactorlicensees who prepare a post-shutdowndecommissioning activities report(PSDAR) or an annual financialassurance status report.

Under amendments to 10 CFR part 30,Appendix A, licensees who use theparent company guarantee as financialassurance for decommissioning willhave increased reporting requirements.Increased reporting requirements willinclude reporting of off-balance sheettransactions and verification of bondratings and annual documentation ofcontinuing eligibility to use the parentcompany guarantee. Licensees who usethe self-guarantee as financial assurancefor decommissioning under 10 CFR part30, Appendices C, D, and E, will havesimilarly increased reportingrequirements.

Licensees will continue to submitinformation to the NRC by certified mailor through approved ElectronicInformation Exchange (EIE) methods.

M. What financial assuranceinformation must licensees report to theNRC?

Materials licensees with a licensepossession limit that is below thefinancial assurance threshold in 10 CFRpart 30, Appendix B, are not required tohave financial assurance fordecommissioning. Licensees under 10

CFR parts 30, 40, and 70 with a licensepossession limit above the financialassurance threshold in 10 CFR part 30,Appendix B, but below the thresholdrequiring a DFP, have an option ofproviding financial assurance based onan amount specified by regulation orbased on a DFP with a site-specific costestimate. Materials licensees with alicensed possession limit above thefinancial assurance threshold, and all 10CFR part 72 licenses, must submit atintervals not exceeding 3 years a DFPwhich includes the following: A site-specific cost estimate, a description ofthe methods used to assure the funds,and a description of the means ofadjusting the cost estimate. The requiredcontents of the DFP are changing as aresult of this final rule, as discussed inSection II.P of this document.

Except for 10 CFR part 72 licensees,materials licensees must also provide asigned original of the financialinstrument obtained to satisfy thefinancial assurance requirement.

For materials licensees, Chapter 4 inNUREG-1757, Volume 3, revision 1,"Consolidated NMSS DecommissioningGuidance," provides details oninformation necessary to satisfy theirfinancial assurance requirements. Thisdocument is available on the NRC Website at: http://www.nrc.gov/reading-rm/doc-collections/n uregs/staff/sri 757/.This document is being updated toinclude new requirements resultingfrom this final rule.

Power reactor licensees are alreadyrequired by existing 10 CFR 50.75(f)(1)to report on the status of theirdecommissioning funds at 2-yearintervals. A power reactor licensee thatis within 5 years of the end of itsprojected life, or will close within 5years (before the end of its licensed life),or has already closed, must submit thereport of funds status on an annualbasis. These requirements are not beingchanged.

Applicants for power reactor and non-power reactor licenses and reactorlicense holders must submit adecommissioning report as required byexisting 10 CFR 50.33(k), and thisprovision is not being changed. The 10CFR 50.33(k) report is submitted onceand contains the following: Informationindicating how reasonable assurancewill be provided that funds will beavailable to decommission the facility,the method used to provide funds fordecommissioning, and the means foradjusting periodically the amount to beprovided. The reporting requirementsfor reactors being decommissioned arechanging as a result of amendments to10 CFR 50.82, as discussed in SectionII.R in this document.

For nuclear power reactor licensees,Chapter 2 in Regulatory Guide 1.159,"Assuring the Availability of Funds forDecommissioning Nuclear Reactors,"provides details on the informationnecessary to satisfy these licensees'financial assurance requirements(ML032790365). This regulatory guide isbeing revised. The draft guide (DG-1229) is available at ML103400008.

N. What changes are being made tofinancial assurance regulations?

Most of the final rule amendments arechanges to financial assuranceregulations for materials licensees. Afew changes apply to decommissioningfinancial assurance for power reactorlicensees. The changes to financialassurance regulations are discussed inthis section, under the followingheadings:N.1 Require a trust fund for

decommissioning under restrictedrelease.

N.2 Require a trust fund for theprepayment option.

N.3 Require an upfront standby trustfund for the parent guarantee and self-guarantee options.

N.4 Require parent company to informNRC of financial distress and submitto an Order.

N.5 Require guarantor paymentimmediately due to standby trust.

N.6 Allow intangible assets, with aninvestment grade bond, to meet somefinancial tests.

N.7 Increase the minimum tangible networth for the guarantees' financialtests.

N.8 Clarify guarantors' bond ratingsand annual demonstration submittals.

N.9 Invalidate the use of certificationfor financial assurance if there iscontamination.

N.10 Other changes to financialassurance regulations.Many of the financial assurance

amendments had been in NRC guidanceand are being codified in this final rule.The amendments strengthen and clarifythe financial assurance requirements.The NRC seeks to improvedecommissioning planning and reducethe number of funding shortfalls causedin the past by-(1) overly optimisticdecommissioning assumptions; (2) lackof adequate updating of cost estimatesduring operation; and (3) licensees'falling into financial distress withfinancial assurance funds unavailablefor decommissioning. The changesincrease licensee reportingrequirements. The added reportingburden is estimated as part of thePaperwork Reduction Act Statement inSection IX of this document. The costs



and benefits of this final rule areevaluated in the regulatory analysis inSection X of this document.

N.1 Require a Trust Fund forDecommissioning Under RestrictedRelease

The NRC is amending the regulationsrelated to decommissioning financialassurance applied to planned restrictedrelease sites.

This final rule requires, under§ 20.1403(c), that the funds for financialassurance of long-term care andmaintenance of a restricted release sitemust be placed into a trust segregatedfrom the licensee's assets and outsidethe licensee's administrative control.

This amendment eliminates, asprepayment options, the escrowaccount, sureties and insurance, and theparent company and self-guaranteemethods at restricted release sites. Todate, no licensee has chosen to use thesefinancial assurance mechanisms at arestricted release site. Thesemechanisms were eliminated, becausethey possess characteristics that maketheir use inadvisable for the types oflong-term care and maintenancesituations involved in restricted releasesites. The final rule continues to permitgovernment entities to use a statementof intent or to assume custody andownership of a site.

Escrow accounts are not well suited tothe protection of funds over a long term.The purpose normally served by anescrow is to collect or hold funds for anexpense to be paid in the relatively nearfuture (e.g., property tax escrows). TheEPA concluded that a trust was moreprotective of funds because, under trustlaw, the title to property in a trust istransferred to the trustee (46 FR 2802,2827; January 12, 1981). In an escrowaccount, title to the property remainswith the grantor. Thus, escrow propertyis more likely to be subject to acreditor's claim than property held intrust. In addition, the law of trustsplaces obligations on the trustee to actin the interest of the beneficiary. Incontrast, an escrow agent is responsibleonly for what is specified in the escrowagreement. The EPA concluded that itwould be extremely difficult to draft anescrow agreement that adequatelyspecifies all the actions that an escrowagent would need to take in allsituations to assure the instrumentserved its intended purpose.

The surety methods and insurance arealso not well suited to protect fundsover the long term, because they dependon contracts made by the formerlicensee. There are no actual funds setaside for future costs; rather, themethods are promises made by the

issuer to pay at a future time. Thesemethods require renewal to remaineffective. They depend on the formerlicensee continuing to exist to makerenewal payments for the surety orinsurance instruments. The instrumentlapses if the payments are not made.Under the existing rule, the NRC mayrequire the issuer to pay the faceamount before the lapse occurs.However, issuers may resist making thepayment, which could delay obtaining(and possibly reduce) the amount offunds for long-term care andmaintenance. Whether the issuer resistspaying or not, when the funds are paidfor the face amount, the funds will beplaced into a trust account. That is, theresponse to the non-renewal of a suretyis to create a trust to hold funds. Thelong-term nature of the obligationincreases the possibility thatcircumstances may arise that wouldrequire a demand for payment. In viewof the potential difficulties and delaysand recognizing that a trust fund is thepreferred long-term instrument forholding funds, the surety and insurancemethods of financial assurance for long-term maintenance and control havebeen eliminated.

Likewise, the parent company andself-guarantee mechanisms are not wellsuited for providing financial assuranceat restricted release sites, because thesewere designed to assure funding for therelatively limited time needed tocomplete most decommissioningprojects under 10 CFR 20.1402. Theformer licensee or its parent mustcontinue to exist to pay for long-termcontrol and maintenance costs. If theformer licensee or its parent ceases toexist, the self-guarantee or parentcompany guarantee has no source offunds to pay the costs. In addition, theseguarantees presume the existence of alicensee subject to NRC authority.However, when the license isterminated, the NRC has no regulatoryauthority over the former licensee.Therefore, the self-guarantee and parentcompany guarantee have beeneliminated as financial assuranceoptions at restricted release sites.

In contrast, the trust fund is bestsuited as a financial mechanism toassure the necessary long-term care andmaintenance at restricted release sites.The trust fund can exist for long periodswithout need for renewal. It existsindependently of the former licenseeand can continue to serve the purposesof control and maintenance, even if theformer licensee ceases to exist. Thetrustee has a fiduciary duty to serve thebeneficiaries of the trust. The fundsplaced in the trust become property ofthe trust and generally cannot be

reached by creditors of the formerlicensee. Trust funds have traditionallybeen used to provide for the long-termcare and maintenance of parks and otherpublic facilities, to care for cemeteries,and for similar purposes. This final rulerequires the use of trust funds for thefinancial assurance for long-term careand maintenance at restricted releasesites, unless a government entityprovides long-term funding or assumescustody and ownership of the site.

A further change to 10 CFR20.1403(c)(1) requires that the initialamount of the trust fund established forlong-term care and maintenance bebased on a 1 percent annual real rate ofreturn on investment. A similarprovision is currently contained in 10CFR part 40, Appendix A, Criterion 10,which provides that if a site-specificevaluation shows that a sum greaterthan the minimum amount specified inthe rule is necessary for long-termsurveillance following decontaminationand decommissioning of a uranium millsite, the total amount to cover the costof long-term surveillance must be thatamount that would yield interest in anamount sufficient to cover the annualcosts of site surveillance, assuming a 1percent annual real rate of interest.

The NRC concluded that aconservative estimate of the annual realrate of return is justified in the case offinancial assurance for long-term careand maintenance under § 20.1403(c)(1).Although the NRC in 10 CFR50.75(e)(1)(ii) allows a licensee of anuclear power reactor that is using anexternal sinking fund to take credit forprojected earnings on the externalsinking funds (using up to a 2 percentannual real rate of return from the timeof the future fund's collection throughthe decommissioning period), thereactor situation is distinguished by thecontinuing presence of the reactorlicensee, who is obligated to provideadditional funds if necessary. Long-termtrust funds for surveillance and controlare created when license terminationrelieves the licensee of any furtherobligation regarding the site. Therefore,no licensee is available to make upshortfalls in the fund, which reduces thelikelihood that funds will be availablewhen needed. A long period of lowreturns could deplete a trust fund sothat later higher returns would beinsufficient to return the fund to thevalue needed to permit earnings tocover the recurring long-term costs.Consequently, a conservative rate ofreturn is necessary to assure that fundswill be available when needed. From1975-2005, the annual real rate ofreturn was 1.58 for U.S. Treasury Billsand 4.87 for government bonds. Thus, a



1 percent real rate of return isconservative and appropriate forassuring funds under the amended§ 20.1403(c)(1). The actual rate of returnmay exceed the 1 percent real rate. Thetrust agreement may contain provisionsto return excess funds to the trustgrantor if the fund balance significantlyexceeds the amount needed to cover therecurring costs at the 1 percent rate.

This final rule adds a new§ 20.1404(a)(5) specifying one of thefactors that the Commission mustconsider in determining whether toterminate a license under alternatecriteria. The Commission must considerwhether the licensee has providedsufficient financial assurance to enablean independent third party (including agovernment custodian of a site) toassume and carry out responsibilities forany necessary control and maintenanceof the site. This new section alsoexplicitly states that the financialassurance be in the form of a trust fund,as in § 20.1403(c).

N.2 Require a Trust Fund for thePrepayment Option

The final rule amends the list ofprepayment financial methods that maybe used to provide financial assurancefor decommissioning to provide thatprepayment shall only be in the form ofa trust established for decommissioningcosts (§§ 30.35(f)(1), 40.36(e)(1),70.25(f)(1), and 72.30(c)(1)). The finalrule eliminates the four otherprepayment options that had been listedin those sections of the regulations (i.e.,the escrow account, government fund,certificate of deposit, and deposit ofgovernment securities). Three of theseoptions (the government fund,certificate of deposit, and deposit ofgovernment securities) initially wereauthorized for use to providealternatives to licensees that elected notto use a trust fund as their prepaymentmechanism, even though the NRCrecognized that in the event of thelicensee's bankruptcy, they providedsomewhat less assurance that the fundswould remain available to pay fordecommissioning. However, no NRClicensees have elected to use thegovernment fund and deposit ofgovernment securities options, and onlytwo have used a certificate of deposit.Because of their relative risk inbankruptcy and their non-use bylicensees, the NRC has eliminated themas alternatives for providing financialassurance for decommissioning.

The NRC recognizes that theelimination of the escrow accountoption will affect some materialslicensees who currently use escrows.Approximately 25 escrows are currently

in use as a prepayment option fordecommissioning financial assurance.Because some materials licensees usemore than one escrow, the number ofmaterials licensees using escrows isslightly less than the number ofescrows.

The staff reviewed several studies ofthe situation of escrows in bankruptcyand concluded that the most accuratesummary of the various assessments isas follows. The funds contained inescrows that are set up correctly beforea licensee's entry into bankruptcy willlikely be secure from transfer into thebankruptcy estate as assets of the debtor,and they will not be reachable by thebankruptcy trustee using doctrines offraudulent conveyance or voidablepreference. However, correctly settingup an escrow is difficult, as noted inSection II.N.1 of this document. TheNRC is also concerned that adetermination of the legal status of anescrow may be subject to considerabledelay. In addition to the time necessaryto carry out a legal standing analysis, abankruptcy trustee could attempt to usethe automatic stay provisions of thebankruptcy code to stop payment by anescrow agent under the escrow, if thatpayment is occurring following thecommencement of the bankruptcyaction. While this attempt may fail, itcould postpone the NRC's access to thefunds held in the escrow and therebypreclude the prompt commencement ofdecommissioning. Finally, theadministrative costs of a trust fund arecomparable to an escrow, so there islittle economic benefit to using theescrow.

Elimination of the use of escrowaccounts by materials facilities wasdiscussed at the public stakeholdermeeting held January 10, 2007. Nostakeholders objected to the eliminationof the escrow as a financial assurancemethod. Two comments on this topicwere received during the proposed rulepublic comment period. Both commentsdisagreed with the NRC's elimination ofthe use of escrow accounts for financialassurance. For reasons discussedpreviously, the NRC disagrees withthese comments and has eliminated theescrow as an approved method formaterials licensees to provide financialassurance. The escrow account maycontinue to be used by power reactorlicensees, pursuant to 10 CFR 50.75.The technical basis for theDecommissioning Planning proposedrule did not include removal of theescrow account from 10 CFR 50.75, sothis change was not made during thisrulemaking.

N.3 Require an Upfront Standby TrustFund for the Parent Guarantee and Sell-Guarantee Options

The final rule amends Appendices A,C, D, and E to 10 CFR part 30 (amendsSection III.D of Appendix A; amendsSection III.F and adds a new SectionIII.G to Appendix C; amends SectionIII.D and adds a new Section III.E toAppendix D; and adds a new SectionIII.F to Appendix E). The amendmentsrequire a parent company providing aparent company guarantee and alicensee providing a self-guarantee to-(l) set up a standby trust before it mayrely on the guarantee for financialassurance, and (2) specify criteria forselecting an acceptable trustee.

Under current regulations, theguarantor was not required to establisha standby trust before providing a parentcompany or self-guarantee. Instead, astandby trust would be established andused to hold funds for decommissioningonly if the NRC required the guarantorto provide such funding fordecommissioning. Setting up a standbytrust at the time that the guarantee isdrawn upon could lead to a significantdelay. Therefore, regulatory guidancerecommended the creation of a standbytrust at the commencement of theguarantee. A standby trust is necessary,because the NRC cannot acceptdecommissioning funds directly. Underthe "miscellaneous receipts" statute (31U.S.C. 3302(b)), the NRC must turn overall payments received to the U.S.Treasury. Therefore, a standby trust isnecessary to receive funds if the NRCrequires the guarantor to put the fundsinto a segregated account. Creating astandby trust before the guarantee isprovided avoids potential delays ininitiating decommissioning. In addition,the use of a trust protects the funds fromcreditors' claims, which may benecessary if the guarantor faces financialdistress. Therefore, the final rulerequires that the guarantor set up astandby trust. In addition, the final ruleprovides that the Commission has theright to change the trustee of the trust.That power is necessary to assure thatthe trustee will faithfully execute itsduties. Finally, to assure that the trustagreement is adequate, the final rulespecifies that an acceptable trust is onethat meets the regulatory requirementsof the Commission.

N.4 Require Parent Company to InformNRC of Financial Distress and Submit toan Order

Because a parent company is notusually an NRC licensee subject to theNRC's authority, 10 CFR part 30,Appendix A, Section III.E (published as

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10 CFR part 30, Appendix A, SectionIII.F in the proposed rule) is added tospecify that the parent companyguarantee option must include acontractual agreement by the parentcompany to submit to NRC paymentorders.

Before this final rule, the parentcompany had no requirement to informthe NRC of financial distress that mayadversely affect its ability to meet itsguarantee obligations. Because the NRCneeds to know if the parent guarantor isin financial distress to take steps toprotect the funds guaranteed fordecommissioning, the final rule requiresthe parent guarantor to notify the NRCin case of its financial distress, and itsplan to transfer the guaranteed amountto the standby trust. In these situations,payments from the parent company areimmediately due and payable to thestandby trust pursuant to anacceleration clause, discussed inSection I1.N.5 of this document. Asimilar notification requirement is notnecessary for a licensee guarantorbecause NRC regulations under 10 CFR30.34(h), 40.41(f), 70.32(a)(9), and72.44(a)(6) already require licensees tonotify NRC of bankruptcy proceedings.

N.5 Require Guarantor PaymentImmediately Due to Standby Trust

Before this final rule, the regulationsdid not address the possibility that theguarantor of the parent guarantee or self-guarantee may be in financial distresswhen it is required to provide alternatefinancial assurance. Whendecommissioning is not beingconducted at the time of an insolvencyproceeding, creditors could argue thatthe debtor owes performance ofdecommissioning in the future, notmoney at the present time. Thatargument could potentially support afinding that no payment is owed to thestandby trust. In that event, a divisionof assets to satisfy creditors' claims maynot adequately protect resources neededto fund decommissioning. To provide amoney claim on the assets of theguarantor that would cover the cost ofdecommissioning at the time of adivision of assets, the final ruleauthorizes the Commission to make theamount guaranteed immediately dueand payable to the standby trust (i.e., anacceleration clause).

N.6 Allow Intangible Assets, With anInvestment Grade Bond, To Meet SomeFinancial Tests

The NRC regulations allow guaranteesto be used as financial assurance fordecommissioning by companies whosefinancial statements demonstrate a lowrisk of default for corporate obligations.

A set of financial tests are prescribed in10 CFR part 30, Appendices A, C, D,and E for companies who may qualifyto use the guarantee methods. Licenseeswho desire to use the parent companyguarantee or self-guarantee as a financialassurance option must pass the tests onan annual basis. Some of the financialtests in 10 CFR part 30, Appendices A,C, and E involve bond valuations. In thepast, only tangible assets wereconsidered within the calculationsperformed under the financial tests. Inresponse to an inquiry during the publicstakeholder meeting on January 10,2007, the NRC staff considered whetherallowing the use of intangible assetswould materially increase the risk of ashortfall in decommissioning funds. TheNRC concluded that if a licensee canmeet a minimum tangible net worthrequirement, then allowing that licenseeto use intangible assets to meet a totalnet worth requirement beyond theminimum tangible net worth amount, inconjunction with certain bondvaluations of the guarantor, would notmaterially decrease the ability of thelicensee to provide assurance that it willhave the requisite decommissioningfunding.

Although the use of a company's bondrating remains a joint criterion with theuse of intangible assets in some of thefinancial tests, the NRC is making otherchanges so that licensees that pass thetests will have an increased likelihoodof providing financial assurance. Recentdata suggests that regulators should notrely on a bond rating by itself to providefinancial assurance, as discussed inparagraph N.7 of this section. However,an investment grade bond ratingcoupled with a minimum amount oftangible net worth does provide anadditional level of assurance. In a 1982revised interim final rule, the EPAprovided several reasons for accepting aminimum tangible net worthrequirement, which are discussed inParagraph N.7 of this section. Oncethese other components of the financialtests are met, licensees can useintangible assets for a total net worthrequirement beyond the minimumtangible net worth requirement. Becausebond rating agencies include intangibleassets in their evaluation of the financialstability of a company's bonds, thesecompanies are already given credit fortheir intangible assets in the bond ratingcomponent of the test. The minimumtangible net worth component preventsthe NRC from relying too heavily onintangible assets. To further assure theefficacy of a company's current bondrating, amendments in the final rulespecify that the bond must be

uninsured, uncollateralized, andunencumbered to be used in thefinancial test. Moreover, the value of thenuclear facilities, both as tangible andintangible assets, is excluded from thecalculation of net worth, because thoseassets would not be available to producefunds for decommissioning after thefacility is shut down. The staffconcluded that permitting the use ofintangible assets after the minimumtangible net worth requirement is met,in conjunction with an investment gradebond rating, would not materiallydecrease the ability of the licensee toprovide assurance that it will haveadequate decommissioning funding.

With the financial tests required by 10CFR part 30, Appendices A, C, and E,the NRC has a greater level of assurancethat these companies will not default ontheir decommissioning obligations. Inaddition, the guarantee methods requireannual re-passage of the test. Because acompany that satisfies the minimumtangible net worth criterion and has aninvestment grade bond rating is lesslikely to default in a one-year period,the annual re-passage requirement willnormally provide adequate time for theguarantor to obtain alternative financialassurance. In rare cases in which adefault may occur in a short time, theacceleration clause, discussed inparagraphs N.4 and N.5 of this section,will provide a method to obtain fundsin situations of financial distress.

Therefore, after the minimum tangiblenet worth requirement is met, this finalrule will allow the use of intangibleassets, in conjunction with aninvestment grade bond rating, to meetspecified criteria in the financial testsfor parent company and self-guarantees.

N.7 Increase the Minimum TangibleNet Worth for the Guarantees' FinancialTests

Before this final rule, the financialtests in Appendices A and D to 10 CFRpart 30 each require the entity seekingto pass the relevant financial test tohave a tangible net worth of at least $10million. The financial test in the currentAppendix C to 10 CFR part 30 requiresthe applicant or licensee to have atangible net worth at least 10 times thecurrent DCE or certification amount fordecommissioning. The final ruleamendments require a tangible networth of at least $21 million in each ofthe financial tests in Appendices A, C,and D to 10 CFR part 30.

The $10 million in tangible net worthrequirement was first adopted by theEPA in 1981, and the financial testadopted by the NRC in 1988 used thesame criterion. The NRC believes thatthe criterion should be adjusted to


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represent the value in current dollars of$10 million in 1981. For the proposedrule, the NRC calculated a new tangiblenet worth amount using the 2005Implicit Price Deflator for GrossDomestic Product published by the U.S.Department of Commerce in its Surveyof Current business, and the equivalentImplicit Price Deflator for 1981, to arriveat a value of $19 million to represent the$10 million value (1981 dollars) in 2005dollars. The NRC agrees with acomment submitted on the proposedrule to escalate the 1981 dollars to 2007dollars. This calculation, rounded up inunits of one million dollars, equals $21million.

The final rule adds a requirement inSection II.A.(1) of Appendix C to 10CFR part 30 for applicants or licenseesto have a tangible net worth of at least$21 million. Before this final rule, thatcomponent of the financial test for self-guarantee specified only that theapplicant or licensee must have atangible net worth at least 10 times thecurrent DCE or certification amount.The additional requirement has beenadded as recent events indicate that theexisting requirement in Section II.A.(3)of Appendix C-that the applicant orlicensee must have a current rating forits most recent bond issuance of AAA,AA, or A as issued by Standard & Poor's(S&P), or Aaa, Aa, or A as issued byMoody's -may not be adequate. TheNRC has historically relied on the bondrating component to provide greaterassurance that a company with aqualifying rating will be less likely tofall into bankruptcy within a one yeartime period; hence, the regulationsrequire a licensee to repeat passage ofthe financial test on an annual basis.Recent trends suggest that a bond ratingmay not provide the additionalassurance that the NRC is seeking. Forexample, companies that provide bondratings may be reluctant to downgrade,because a downgrade can have such anadverse effect on a rated sovereign orcorporate issuer that it can destabilizethe issuer or the market for its securities(e.g., AIG) (Katz, J., Salinas, E., &Stephanou, C., "Credit Rating Agencies:No Easy Regulatory Solution," CrisisResponse: Public Policy for the PrivateSector, Note Number 8, 4-5 (October2009), http://rru.worldbank.org/documents/CrisisResponse/Note8.pdj).Credit ratings can also be slowindicators of an entities' financial health(e.g., Enron, Worldcom, Parmalat,Lehman Brothers) (Katz; O'Brien, B.,"Fitch Fells Berkshire's Credit Rating,"Barron's (March 13, 2009), http://blogs.barrons.com/stockstowatchtoday/

2009/03/1 3/fitch-fells-berkshires-credit-rating/).

Because recent events and trendscause the NRC to question the adequacyof the bond rating requirement toprovide financial assurance, the NRCconcludes that the bond ratingrequirement in appendix C to 10 CFRpart 30 should be coupled with anotherrequirement. The NRC determined thatthe tangible net worth requirementfound in appendix A and appendix D to10 CFR part 30 is an adequateaccompaniment. The basis of thisfinding is rooted in a 1982 EPA revisedinterim final rule (47 FR 15032; April 7,1982), which provided several reasonsfor choosing $10 million in tangible networth in 1982 dollars as a financial test.The EPA recognized that the businessfailure rate for firms with $10 million(1982 dollars) or more in net worth wassignificantly lower than for firmsoverall. (47 FR 15035; April 7, 1982).Because firms with $10 million or morein net worth were more stable thancompanies with less net worth, theselarger firms were less likely to abandonfacilities or otherwise avoid closure orpost-closure responsibilities. (47 FR15035; April 7, 1982). EPA "furthermorebelieves that retaining the $10 millionrequirement will keep the burden ofadministering this new financialassurance mechanism at manageablelevels; monitoring the use of thefinancial test by less stable firms can beexpected to be more time-consumingand a greater administrative burden."(47 15035; April 7, 1982). Because"[aissets of firms often includeintangibles such as goodwill, patents,and trademarks which may be difficultto convert into cash to pay for closureor post-closure costs," the EPAconcluded that only tangible net worthcould be used to meet its net worthrequirements. (47 FR 15035; April 7,1982).

The data suggests that a high bondrating by itself does not necessarilysignal financial strength. Also, the riskof a shortfall is expected to be lower forlicensees that pass these qualifying teststhan for licensees that do not. Therefore,the NRC has determined that licenseesthat can satisfy the $21 million tangiblenet worth minimum, together with theother financial tests, will have anincreased likelihood of providingreasonable assurance that the necessarydecommissioning funding will beavailable when it is needed.

N.8 Clarify Guarantees' Bond Ratingsand Annual Demonstration Submittals

The final rule amendments specifythat the current rating of the most recentbond issuance of AAA, AA, or A by

Standard and Poor's could includeadjustments of + or - (i.e., AAA+, AA+,or A+ and AAA-, AA-, and A-would meet the criterion) and thecurrent rating of Aaa, Aa, or A byMoody's could include adjustments of1, 2, or 3.

Standard and Poor's and Moody'shave introduced the plus or minus andnumerical adjustments to refine theprecision of their ratings. As a result,licensees have been uncertain whether arating that includes these adjustments,and in particular ratings that might beconsidered below the unadjusted ratingsspecified in the appendices (e.g., A-)could be used. Based on the minimaldifference in default rate associatedwith the qualifiers, the final rule statesthat all the bonds within a specifiedrating level meet the regulatorystandard.

In addition, the final rule amendsSection II.A.(2)(i) of Appendix A to 10CFR part 30 and Section II.A.(3) ofAppendix C to 10 CFR part 30 to requirethe bond to be the most recent"uninsured, uncollateralized, andunencumbered" bond issuance. Thisamendment makes the bond criterion inAppendix A to 10 CFR part 30 andAppendix C to 10 CFR part 30consistent with the bond criterion inAppendix E to 10 CFR part 30. Asexplained in NUREG/CR-6514, when arated bond has insurance or pledgedassets to provide additional security, thebond rating may not directly reflect thecreditworthiness of the bond issuer.Therefore, the final rule adds therequirement that the bond rating used topass the financial test must beuninsured, uncollateralized, andunencumbered.

The final rule makes a conformingchange in Section III.E. of Appendix Eto 10 CFR part 30 to provide that if, atany time, the licensee's most recentbond issuance ceases to be rated in anycategory of "A -" and above byStandard and Poor's or in any categoryof "A3" and above by Moody's, thelicensee no longer meets therequirements of the financial test.

The final rule amendments to thebond rating criterion in Appendices Aand C to 10 CFR part 30 are intendedto clarify the intent of the rule,eliminate an unintended apparentinconsistency among the differentfinancial tests that may be used, and tomake administration of the financialassurance requirements more efficientby eliminating recurring questions.

The final rule requires a certifiedpublic accountant to verify that a bondrating, if used to demonstrate passage ofthe financial test, meets therequirements. Some financial tests


received by the NRC did not apply therequirement correctly. Requiring anaudit of the bond rating will minimizethe potential that an error is made inverification of the bond rating.

Before this final rule, the regulationsrequired the licensee to repeat passageof the financial test each year, but theregulations did not explicitly state thatthe licensee must annually submitdocumentation to the NRC to verify itspassage of the test. However, the parentcompany and self-guarantee agreementsillustrated in regulatory guidanceinclude a provision that the licenseewill annually submit to the NRC revisedfinancial statements, financial test data,and an auditor's special report.Submittal of the documents permits theNRC to verify the licensee's continuingeligibility to use the parent companyguarantee without incurring the expenseof an onsite inspection. Therefore, thefinal rule codifies the regulatoryguidance to require annual submittal ofdocumentation that the guarantorpassed the financial test.

Before this final rule, the regulationswere unclear about whether the parentcompany guarantee and financial testare to remain in effect until the licenseis terminated. The final rule clarifiesthat the NRC's written acceptance of analternate financial assurance by theparent company or licensee allows theguarantee and financial test to lapse.

N.9 Invalidate the Use of Certificationfor Financial Assurance if There IsContamination

This final rule amends regulations toadd new requirements related todecommissioning financial assurance asapplied to certifications. The changesaffect §§ 30.35(c)(6), 40.36(c)(5), and70.25(c)(5).

Before this final rule, the regulationsprescribed specific amounts of financialassurance for licensees that areauthorized to possess relatively smallamounts of radioactive material.Licensees authorized to possessradioactive materials in higher amountsmust submit a DFP, which includes asite-specific cost estimate fordecommissioning. The site-specific costestimate is almost always higher thanthe prescribed certification amounts.

This final rule requires licensees whoqualify to use the certification amountsto submit a DFP in the event that surveyresults detect significant residualradioactivity within the site boundary,including the subsurface. A significantamount would be residual radioactivitythat would, if left uncorrected, preventthe site from meeting the criteria forunrestricted use. Remediatingsubsurface contamination can be very

expensive. However, licensees thatqualify to use the certification amountshave no regulatory requirement toincrease the amount of financialassurance to cover subsurfaceremediation costs. In the eventsubsurface contamination occurs at sucha site, this final rule provides theregulatory basis to require theselicensees to cover the full cost, not justthe certification amount.

N.10 Other Changes to FinancialAssurance Regulations

This final rule eliminates the line ofcredit option from 10 CFR 30.35(f),40.36(e), 50.75(e)(1)(iii)(A), 70.25(f), and72.30(e) from the list of surety,insurance, or other guarantee methodsthat may be used to provide financialassurance for decommissioning.Although the line of credit was initiallyauthorized for use to provide analternative to licensees that elected notto use a surety or letter of credit, theNRC recognized that it posed a greaterrisk than the other two surety methods,because it might be subject tounderlying loan covenants that couldmake it more vulnerable to cancellationif the licensee experienced financialdifficulties. However, since 1988, noNRC licensees have elected to use a lineof credit to provide financial assurancefor decommissioning. Because of itsgreater risk of cancellation and its non-use by licensees, the NRC has decidedto eliminate the line of credit as analternative for providing financialassurance for decommissioning.

The final rule excludes, in thefinancial tests for the parent guaranteeand self-guarantee, the net book value ofthe nuclear facility and site from thecalculation of tangible net worth. Beforethis final rule, the regulations requiredthat the calculation of tangible networth must exclude the book value ofthe "nuclear units." That requirementleads to confusion, because someinterpreted it to apply to nuclear reactorunits and not other kinds of nuclearfacilities. However, other kinds ofnuclear facilities should be excludedfrom the tangible net worth calculation,because they are unlikely to providefunds for decommissioning. Theexisting rule does not specify whetherthe nuclear site, as distinguished fromthe facility, may be included in thecalculation of tangible net worth. Thevalue of the site is likely to depend onthe probability that thedecommissioning will be completed,and is subject to some degree ofuncertainty. Therefore, the calculationof tangible net worth has been changedto exclude the net book value of thenuclear facility and site.

The final rule requires a certifiedpublic accountant to include anevaluation of off-balance sheettransactions, for the parent guaranteeand self-guarantee. Generally acceptedaccounting principles (GAAP) permitcertain kinds of transactions to beaccounted for off the company's balancesheet. Many companies, as a means ofmanaging risk and/or taking advantageof legitimate tax minimizationopportunities, create off-balance-sheettransactions. It is important tounderstand the nature and the reasonfor each off-balance-sheet item andensure that any such relationships areadequately disclosed. (Off-BalanceSheet Arrangements and OtherDisclosures, American Institute ofCertified Public Accountants, http://www.aicpa.org/ForThePublic/A uditCommitteeEffectiveness/AuditCommitteeBrief/DownloadableDocuments/Off%2oBalance%2oSheet%20Arrangements.pdf, last visited May 9,2011). The volume and risk of the off-balance-sheet activities need to beconsidered (Risk Management Manualof Examination Policies, Federal DepositInsurance Corporation, http://www.fdic.gov/regulations/safety/manual/section3-8.pdf, last visitedDecember 20, 2010). Before this finalrule, the regulations did not require theindependent certified publicaccountant's special report to examineoff-balance sheet transactions. However,these transactions have the potential tomaterially affect the guarantor's abilityto fund decommissioning obligations.Therefore, the final rule requires theauditor to include an evaluation of off-balance sheet transactions.

0. Will some licensees who currently donot have financial assurance need to getfinancial assurance?

No. Licensees who are not required toprovide financial assurance fordecommissioning will not have toobtain financial assurance as a result ofamendments in this final rule.

The decommissioning planning andfinancial assurance amendments in thisfinal rule only apply to licensees whoare or will be subject to thedecommissioning financial assurancerequirements under 10 CFR 30.35,40.36, 50.75, 70.25, and 72.30.

All operating power reactor licenseesare required to have financial assurance,consistent with 10 CFR 50.75(c), and alllicensees with an independent spentfuel storage installation (ISFSI)regulated under 10 CFR part 72 musthave financial assurance fordecommissioning in accordance with 10CFR 72.30(c).



P. What changes are being made withrespect to materials facilities'decommissioning funding plan (DFP)and DCE?

This final rule requires certainlicensees under 10 CFR part 72 to adjusttheir DCEs within 3 years of theprevious DCE. This was done by finalrule on October 3, 2003 (68 FR 57327)for licensees under 10 CFR parts 30, 40,and 70. This provision in the final rulemakes the timing basis for DCEadjustments consistent among allmaterials facilities.

Regarding DFPs, §§ 30.35(e), 40.36(d),70.25(e), and 72.30(b) are amended torequire additional information fromlicensees. The NRC's experienceindicates that underestimation ofdecommissioning costs can occur whenthe licensee assumes it will qualify fora restricted site release by meeting all ofthe 10 CFR 20.1403 requirements. If itturns out that these requirements cannotbe met, and that an unrestricted siterelease under 10 CFR 20.1402 will berequired, the licensee may not have theability to fund a potentially moreexpensive cleanup. For example, ifinstead of leaving large volumes ofslightly contaminated soil onsite in arestricted release decommissioning, thelicensee must ship this material offsitefor disposal to support an unrestrictedsite release, then the decommissioningwill typically be much more expensivedue to high offsite disposal costs.Therefore, the final rule requires thelicensee to estimate and cover the coststo decommission the facility to meetunrestricted use criteria. The option ofmeeting the 10 CFR 20.1403 restrictedrelease requirements will be available,but the licensee would have todemonstrate that it can meet thosecriteria before a cost estimate based onthat assumption would be acceptable.

In addition, certain operational eventscan increase decommissioning costsabove the original estimate. Theseevents include spills, increases in onsitewaste inventory, increases in wastedisposal costs, facility modifications,changes in authorized possession limits,actual remediation costs that exceed theinitial cost estimate, onsite disposal,and use of settling ponds. The final ruleamends 10 CFR 30.35(e)(2), 40.36(d)(2),70.25(e)(2), and 72.30(b) to require the3-year update of the DFP to considerthese events for the effect, if any, theymay have on the estimated cost ofdecommissioning. Subsurfacecontamination can be very expensive toremediate. The new regulations requirethe licensee to estimate the volume ofcontaminated subsurface material thatwould require remediation, and provide

financial assurance for the estimatedcost of remediation. Early considerationand funding arrangements to coverincreased costs will improvedecommissioning planning and increasethe likelihood that funds will beavailable when needed for sitedecommissioning.

Existing regulatory guidanceidentifies recommended methods forarriving at DCEs. The NRC is codifyingsome of these recommended methods inthis final rule. To assure that funds willbe adequate to completedecommissioning in the event thelicensee is unable to do so, costestimates are required to includecontractor overhead and profit. Anadequate contingency factor is necessaryto cover unanticipated costs that canarise after the decommissioning projectbegins. The key assumptions underlyingthe cost estimate would have to beidentified to aid the staff in evaluatingthe adequacy of the estimate.Codification of these recommendationswill improve the quality of DFPsubmittals, facilitate the staff's review ofthese submittals, and result inregulatory efficiencies.

The NRC is aware of the recordsimportant for decommissioningreporting requirements that licenseeshave under §§ 30.36(g)(1), 40.36(f)(1),50.75(g)(1), 70.25(g)(1), and 72.30(d)(1).The additional reporting requirementsin this final rule are designed to fostera better understanding of the impact thespill or contaminating event has on theDCE.

Q. What changes are being made withrespect to license transfer regulationsfor materials licensees?

This final rule makes a set of parallelchanges to §§ 30.34(b)(2), 40.46(a)(2),and 70.36(a)(2). These changes codifyNRC regulatory guidance to require thelicensee to do the following: (1) Provideinformation on the proposed transferee'stechnical and financial qualifications,and (2) to provide decommissioningfinancial assurance as a condition forapproval of the transfer if the licenseeis required to have financial assurance.The information and financial assuranceare necessary to evaluate the adequacyof the proposed transferee. Placing theseprovisions in the regulation, rather thankeeping them in regulatory guidance,will improve regulatory efficiency byimproving the quality of license transferrequests. It also will ensure that aprospective license transferee providesto the NRC the information necessary todetermine that public health and safetyare not compromised by the transfer andthat the radiation safety aspects of theprogram are not degraded.

R. What changes are being made withrespect to permanently shutdownreactor decommissioning fund statusand spent fuel management planreporting?

The final rule amends § 50.82(a)(4)(i)and adds three new provisions to§ 50.82(a)(8) in Paragraphs (a)(8)(v)through (a)(8)(vii). The revised§ 50.82(a)(4)(i) requires that the PSDARinclude, if applicable, a cost estimate formanaging irradiated fuel, pursuant to§ 50.54(bb). Before this final rule, thePSDAR was required to include adescription of the planneddecommissioning activities, a schedulefor their accomplishment, and anestimate of expected costs.

The amendments to § 50.82(a)(8)require each power reactor licenseeundergoing decommissioning to submit,in the form of an annual financialassurance status report, information(specified further in this section)regarding its decommissioning funds.Currently, under § 50.75(f)(1), theinformation reported to the NRC bypower reactor licensees is focused oncollection of funds before permanentshutdown and does not requireinformation on the actual funds spent.To assess the adequacy of power reactordecommissioning funding afterpermanent shutdown, the NRC needs toknow the actual costs being incurred atdecommissioned facilities. To obtainthis information, the annual report isnow required to include, among otherthings, the amount spent ondecommissioning over the previouscalendar year, the remaining balance ofany decommissioning funds, and anestimate of the costs to completedecommissioning. If the annual reportreveals a projected funding shortfall,additional financial assurance to coverthe cost to complete decommissioningmust be provided. These changes willimprove NRC oversight ofdecommissioning planning and increasethe likelihood that funds fordecommissioning will be availablewhen needed.

Under new § 50.82(a)(8)(vii), theannual financial assurance status reportmust also include the status of funds tomanage irradiated fuel. Due to thecessation of operating revenues, spentfuel management and related fundingare a concern after the reactor ispermanently shut down. Therefore, thefinal rule requires the following: (1)That the amount of funds accumulatedto cover the cost of managing the spentfuel be specified; (2) that an estimate ofthe projected costs of spent fuelmanagement, until the Department ofEnergy takes title to the spent fuel, be



provided; and (3) that a plan to obtainadditional funds if the accumulatedfunds do not cover the projected cost beidentified. These changes will increasethe likelihood that funds for spent fuelmanagement will be available whenneeded.

S. When do these actions becomeeffective?

The effective date of theDecommissioning Planning final rule iseighteen months after publication of thefinal rule in the Federal Register. TheNRC considers this an adequate time forlicensees to implement the requirementsin the final rule. The 18-month periodwill provide licensees sufficient time ifthere is a need on their part to reviewtheir current methods for radiologicalsurveys and monitoring in relation tonew 10 CFR 20.1406(c) and modified 10CFR 20.1501(a) and (b). Also, the 18-month implementation period willaccommodate the time needed toprepare and publish a final version ofDG-4014. The DG-4014 containschanges made as a result of publiccomments received on the draftguidance released with theDecommissioning Planning proposedrule. The NRC considered revisingRegulatory Guide 4.21, "Minimizationof Contamination and RadioactiveWaste Generation: Life-Cycle Planning,"dated June 2008, but considered thisinappropriate because Regulatory Guide4.21 applies only to certain licenseeswho submitted their initial licenseapplication after August 20, 1997. TheDG-4014 applies to licensees whosubmitted their initial licenseapplication on or before August 20,1997, and who were not required toconsider in the early planning stages ofthe facility specific design features forcontaminant management. Additionally,the 18-month implementation periodwill provide sufficient time to licenseeswho need to-(1) Switch out of theirescrow account into a different financialassurance mechanism; (2) examine theircontinued use of a parent guarantee orself-guarantee as decommissioningfinancial assurance; or (3) prepare moredetailed information in their DCE orsurety supporting their DFP. Powerreactor licensees who are in a shutdownstatus will need to submit a report onthe status of funding for managingirradiated fuel by March 31, 2013.

T. Has NRC prepared a cost-benefitanalysis of the final rule?

Yes, the NRC staff prepared a draftregulatory analysis for the proposedrule. Public comments were received onthe draft regulatory analysis and arediscussed in Section III.D of this

document. The regulatory analysis wasrevised for this final rule. Single copiesof the regulatory analysis are availableas discussed in Section X of thisdocument.

The implementation of the final ruleby industry, NRC, and Agreement Stateswas analyzed to cost about $43 million(2007$) over a 15-year analysis period ata 3 percent discount rate. NRC licenseecosts are about $6 million, and NRCcosts are about $3 million. AgreementState licensee costs are about $22million, and Agreement State costs areabout $12 million. Two alternativeswere considered, each with estimatedtotal costs that were higher thanimplementation of this final rule. Theprimary benefits of the final rule are dueto reduction in the number of legacysites and higher reliability of obtainingsufficient funds pledged fordecommissioning financial assurance tocomplete the decommissioning workthrough license termination.

U. Has NRC evaluated the additionalpaperwork burden to licensees?

This final rule contains new oramended information collectionrequirements that are subject to thePaperwork Reduction Act of 1995 (44U.S.C. 3501 et seq.). The NRC staff hasestimated the impact this final rule willhave on reporting and recordkeepingrequirements of NRC and AgreementState licensees. More information onthis subject is in Sections III.J and IX ofthis document.

III. Summary and Analysis of PublicComments on the Proposed Rule

The proposed rule onDecommissioning Planning waspublished on January 22, 2008 (73 FR3812), for a 75-day public commentperiod. The NEI and several otherstakeholders requested an extension of90 days to provide review of issuesraised in the proposed rule. The NRCextended the comment period by 30days, until May 8, 2008 (73 FR 14946).The NRC received 35 comment letterson the proposed rule. Commenters onthe proposed rule included states,licensees, industry organizations,environmental advocacy organizations,and one individual.

The comments and responses havebeen grouped into 11 areas. The NRCspecifically sought comments on thefirst five areas: (A) The use of feeincentives to induce licensees tocharacterize subsurface residualradioactivity while their facility isoperating; (B) licensees' use of a secureWeb site to submit and updatedecommissioning reporting andfinancial assurance requirements; (C)

the extent of proprietary data in thedetails submitted under newrequirements in 10 CFR 50.82(a)(4)(i)and 50.82(a)(8)(v); (D) the accuracy ofinput assumptions and methodology inthe regulatory analysis andenvironmental assessment; and (E)information regarding significantamounts of radium-226 at sites thatcould be considered legacy sites in theregulatory analysis. The other commentareas are: (F) backfit considerations; (G)need for 10 CFR 20.1403, 20.1406 and20.1501 amendments; (H) financialassurance mechanisms and reporting; (I)draft regulatory guidance, (J) OMBSupporting Statement; and (K)Agreement State compatibility table. Tothe extent possible, all of the commentson a particular subject are groupedtogether. A discussion of the commentsand the NRC staffs responses follow.

A. Fee Incentives

Comment: In the proposed rule, theNRC specifically invited comment onwhether fee incentives, as permitted in10 CFR 171.11(b), would be effective asa means to induce licensees to performsite characterization work duringoperations instead of waiting until thefacility is shut down.

Six commenters responded to thistopic, and all argued against theadoption of fee incentives. Some saidthe concept had not been clearlyexplained. Several commenters arguedthat any incentive should not reducefinancial assurance amounts. Somethought that incentives would have theeffect of transferring the financialburden of meeting the proposedrequirements from licensees who havesubsurface residual radioactivity tothose who do not. Monitoring ofenvironmental impacts duringoperations, one said, is an essential partof doing business that should notrequire incentives. Three commentersthought that the exemption of annualfees as a "fee incentive" to conductmonitoring during facility operationswould be contrary to Congress'requirement that the NRC collect userfees and would not fit into the narrowrange of exemptions contemplated in 10CFR 171.11. One commenter said thatthe NRC should not give a blanketexemption to all power reactor licenseesunder 10 CFR part 171 by characterizingit as a "fee incentive" for complyingwith a proposed regulation or avolunteer monitoring program.

Response: The Commission agreeswith the commenters that no feeincentives should be provided as part ofthis final rule. For any subsurfacemonitoring and modeling activities thatmay be required as a result of this final


rule, licensees should fund suchactivities as an operating andmaintenance expense to help achieveoccupational and public doses that areALARA.

B. Secure Web Site

Comment: The NRC specificallyinvited comment on licensees' use of asecure Web site to submit and updatethe following: (1) Decommissioningreporting requirements, and (2)information submitted to supportpassing the financial tests in the parentguarantee and self-guarantee. The NRCreceived input on this issue from twostates and the Conference of RadiationControl Program Directors, Inc.(CRCPD). The commenters were notclear on the implementation of the Website because this topic was notdiscussed in the proposed rule. Onecommenter supported the concept ofusing a Web site but questioned whetherstates would have access to theinformation, whether notificationswould be sent electronically wheninformation was updated, and whetherthe Web site would be a data transfertool or would also contain algorithmsfor decision logic. One of the statecommenters supported the concept onlyif the information would be publiclyavailable.

Response: Public comments weresolicited on this topic to provide initialinformation regarding the scope offunctions for a Web site to allowmaterials licensees to submit, revise andupdate the following: (1) Information intheir DFP, (2) DCEs, (3) information inthe financial tests for the parentcompany guarantee and self-guarantees,and (4) decommissioning power reactorannual financial assurance statusreports. For the licensees whosecompanies are publicly traded, thereappears to be no sensitive or proprietarydata in the financial informationreported to support use of the parentguarantee and the self-guarantee, asmuch of this information can beobtained in the public domain.Licensees may request that informationsubmitted to the NRC be withheld frompublic disclosure in accordance with 10CFR 2.390(b). The NRC thankscommenters for responding to thisquestion and will factor their commentsinto any plans to modernize theprocessing of this information.Currently, there are no plans to developsuch a Web site.

C. Proprietary DataComment: NRC specifically invited

comment on whether additional detailsin new reporting requirements oflicensees with a power reactor in a shut

down status would be consideredproprietary to the licensees reportingthe information. These new reportingrequirements are in 10 CFR50.82(a)(4)(i) and 50.82(a)(8)(v). Onecommenter responded to this question,stating that making more informationavailable for public review will facilitatebetter analysis of work scope and costfor decommissioning planning.

Response: The NRC staff agrees withthis comment. The information requiredby the new reporting requirements canbe conveyed by licensees in theirPSDAR and in their annual financialassurance status report, with littleadditional burden. The PSDARinformation is publicly available. Theannual financial assurance status reportinformation submitted to the NRC underrevised 10 CFR 50.82(a)(8)(v) and(8)(vii) will be publicly available, unlessthe licensee submitting the informationshows that the information should bewithheld from public disclosure inaccordance with the regulations in 10CFR 2.390(b).

D. Regulatory Analysis and theEnvironmental Assessment

The NRC specifically invitedcomment on the input assumptions,methodology, and results of the draftregulatory analysis, including thebackfit analysis, and the environmentalassessment. Comments were receivedand are discussed below. Comments onthe backfit analysis are discussed inSection III.F of this document.

Comment D.I: The need to install newcapital or modify procedures is notexpected.

Several commenters objected to thefollowing statement made by the NRC inthe Executive Summary and again inSection 2 of the regulatory analysis: "Itis not expected that (power reactor anduranium fuel fabrication) licensees willneed to install new capital or modifyexisting operating procedures to satisfythe proposed amendments to 10 CFR20.1406(c) and 20.1501." Thecommenters interpreted the statement tomean that those licensees would neverneed to install new equipment ormodify procedures in order to complywith the new requirements.

Response: The previous statementwas made in the context of anticipatedchanges that licensees would need tomake by the effective date of the finalrule, given information about onsiteleaks and spills known to the NRC whenthe proposed rule was published.Licensees must be allowed time toperform scoping surveys andpreliminary characterization of sitecontamination to determine if their sitecontains significant residual

radioactivity. Based on the evaluation ofthese surveys, additional monitoringand modeling may be required based onsite specific conditions. Page 41 of thedraft regulatory analysis released withthe proposed rule states this position bythe NRC: "It may be necessary forlicensees at a time after the effectivedate of the final rule to install additionalmonitoring equipment under somecircumstances. * * * The need foradditional monitoring equipment wouldbe determined on a case-by-case basisby either licensee activities or after NRCinspection activities."

Comment D.2: Costs to uraniumrecovery licensees.

Several commenters stated that theregulatory analysis did not properlyanalyze the costs to retrofit and upgradeuranium recovery facilities.

Response: As discussed in theresponse to Comment C.14 below, theNRC has concluded that a uraniumrecovery licensee's program thatcomplies with the 10 CFR part 40,Appendix A site remediation criteriawould not be impacted by the revisedsurvey requirements in § 20.1501(a), andsuch programs would not become morecomplex or expensive as a result of thisrulemaking. Thus, survey andmonitoring costs at uranium recoveryfacilities are not expected to change,and there is no need to revise theregulatory analysis in this regard.

Comment D.3: 10 CFR part 20changes could affect hundreds, andcosts are underestimated.

Several commenters argued that theproposed changes to 10 CFR part 20 anddraft guidance for survey andmonitoring could affect hundreds oflicensees, and that the costs of theregulation were underestimated both formaterials licensees and for powerreactor licensees. One commenter statedthat the NRC has grossly underestimatedthe cost to licensees of achievingcompliance. One commenter believesthat the proposed regulations and draftguidance documents appear to leave nooptions other than installation of acomplicated subsurface monitoringsystem to prove that a subsurfacemonitoring system is not needed. Thecommenter stated that industryexperience shows that these monitoringsystems can cost from $500,000 to wellover $1,000,000. Another commenterargued that the scope of the proposedrule and guidance is far more extensivethan warranted by the circumstancesand is inconsistent with the NRC's ownfinding that none of the instances ofinadvertent releases to the environmentpresented a threat to public health andsafety.


Response: Section II.B of thisdocument discusses why very fewlicensees will be affected by the changesbeing made to new 10 CFR 20.1406(c)and amended 20.1501. For thoselicensees who are affected by the changein 10 CFR part 20 regulations, therevisions made to their existingmonitoring methods will be site-specificand may not require the installation ofa subsurface monitoring system. Forexample, if a site contains significantresidual radioactivity in the soil, themonitoring plan likely will require onlythe specification of sampling locationsand sampling methodology. If thesignificant residual radioactivity in thesoil has migrated to a groundwaterpathway, then a groundwatermonitoring plan will be required that isappropriate for the affected site. Asstated in the preamble to the proposedrule (73 FR 3821; January 22, 2008), thelicensees of power reactors and fuelcycle facilities already perform surveysto detect radioactive releases to thegroundwater or will be performinggroundwater surveys by the effectivedate of this final rule. It is likely thatthese surveys will contain sufficientinformation to satisfy the final rulerequirements in new 10 CFR 20.1406(c)and amended 20.1501.

The NRC revised the regulatoryanalysis for this final rule to include aone-time cost for 500 NRC licensees and1,000 Agreement State licensees to dothe following: (1) Read the final rulechanges in new 10 CFR 20.1406(c) andamended 20.1501 and DG-4014, and (2)to determine if the licensees are affectedby the final rule. The NRC assumed thatthiese licensees would need 90 minuteseach to read the changes to 10 CFR part20 and DG-4014. This increased thecost estimate irn the regulatory analysisby $270,000 for the preferred alternativebut did not affect the decision rationalethat implementation of the final rule ispreferred compared to the other twoalternatives.

Comment D.4: Impact of requirementson existing facilities.

One commenter stated that theproposed rule could significantly affectthe existing design of systems,monitoring, surveys, sitecharacterization, and recordkeeping thatare performed to meet existingregulations. The proposed rules couldalso ultimately affect the site releasealternatives available atdecommissioning. One commenterargued that for some licensees, such asresearch and test reactors, theconsequence would be to severely limitor entirely eliminate the ability of thesefacilities to perform their mission ofresearch and education. Another

commenter disagreed with the NRCstaffs conclusion that currentlyoperating power reactor licensees'voluntary adherence to the NEI GPI issufficient to comply with the proposedamendments to 10 CFR 20.1406 and20.1501. One commenter representingseveral States disagreed with the NRC'sstatement that survey and monitoringactivities are already taking place,finding it unlikely that groundwater orsubsurface surveys have been anintegral part of the past radiationmonitoring programs at facilities. Thecommenter also disagreed that adequatecurrent information exists on the spatialbounds and concentrations of residualradioactivity at sites to enable decisionsto be made about which sites willrequire remediation.

Response: For the reasons discussedin the response to comment D.3, and inSection II.B of this document, the NRCbelieves that very few licensees will beaffected by changes to new 10 CFR20.1406(c) and amended 20.1501 by theeffective date of the final rule. After theeffective date, as modeled in theregulatory analysis, the NRC believeslicensees of a small number of materialsfacilities will need to perform additionalmonitoring compared to their currentpractices because of significant residualradioactivity at their sites. With respectto information collected by powerreactor licensees as part of the NEI GPI,the NRC will begin to inspect theactivities performed by power reactorlicensees compared to their publiccommitments in the GPI. The NRC'sTemporary Instruction 2515/173(ML072950622) will be used byinspectors to assess if licensees havecompleted the voluntary industry GPI.The Temporary Instruction includesinspection of licensees' AnnualReporting whereby the power reactorlicensees will have documented onsitegroundwater sample results for eachcalendar year in the AnnualRadiological Environmental OperatingReport (AREOR) or the AnnualRadiological Effluent Release Report(ARERR), as part of their annualenvironmental and effluent reports. Thisinformation is publicly available inADAMS. The NRC agrees with thecommenter representing several Statesthat groundwater or subsurface surveysare not expected to be performed bymaterials licensees as an integral part oftheir current radiation monitoringprograms if there is no evidence at thesite of significant subsurface residualradioactivity. The 10 CFR part 20changes in this final rule aim to improvelicensee understanding of spatialbounds and concentrations of

significant residual radioactivity at sitesduring active facility operations.

Comment D.5: Analysis of VoluntaryIndustry Actions.

One commenter, supported by twoother commenters, stated that the NRCdid not properly assess the impact of therule against current regulatoryrequirements. In an apparent referenceto the GPI, the commenter stated thatthe proposed rule was being improperlyanalyzed against a more stringent set ofvoluntary licensee actions. Thisapproach is said to have policyimplications in that it could have achilling effect on licensees' willingnessin the future to undertake voluntaryinitiatives.

Response: The NRC disagrees withthis comment. The NRC staff evaluatedthe GPI consistent with the 2004guidance in NUREG/BR-0058,"Regulatory Analysis Guidelines of theU.S. Nuclear Regulatory Commission,"Revision 4 (http://wwivw.nrc.gov/reading-rm/doc-collection s/n uregs/broch ures/br0058). Section 4.3.1 of NUREG/BR-0058 describes an acceptable method toanalyze voluntary industry initiatives inestimating values and impacts. Valuesare benefits, and impacts are costs. A1999 staff requirements memorandum("Treatment of Voluntary Initiatives inRegulatory Analyses," (ML003752222))had directed the NRC staff to ensure thatNUREG/BR-0058 was revised tofacilitate consistent and predictabletreatment of voluntary initiatives inregulatory analyses. In accordance withNUREG/BR-0058, the regulatoryanalysis, in estimating values andimpacts of the GPI, considered twocases: Giving "no credit" for thevoluntary GPI, and giving "full credit"for the voluntary GPI.

In the regulatory analysis, a"Baseline" of No-Action was modeledas Alternative 1. Alternative 2 wasmodeled as the preferred Alternative,consistent with the amendments in thisrulemaking. Alternative 3 was the sameas Alternative 2 but added a securityinterest in collateral for licensees whouse a parent guarantee or a selfguarantee. Table 5-1 in the regulatoryanalysis itemized the net impacts ofAlternatives 1, 2, and 3. The net impactover a 15-year analysis period ofAlternative 2 was $70 million less thanAlternative 1, and the net impact ofAlternative 2 was $260 million less thanAlternative 3. These results provided"no credit" for the voluntary activitiesperformed by power reactor licenseesunder the GPI.

Section 6 of the regulatory analysisprovided a description of the GPI, withSection 6.1 on page 42 identifying theincremental impact of the voluntary GPI


based on cost assumptions in AppendixD of the regulatory analysis. Nocomments were received during theproposed rule public comment periodregarding the NRC's cost estimates ofthe GPI. The NRC estimated the costs of10 CFR part 50 licensees to implementthe GPI over the 15-year analysis periodto be about $105 million (2007$) at a 3percent discount rate. "No credit" wasgiven for these activities, because thesecosts are incurred regardless of theeventual promulgation of this final rule.The GPI has different objectives than theamendments in this final rule, and thevoluntary activities by power reactorlicensees were undertaken beforedevelopment of this rulemaking.

If, instead, "full credit" was given forthe expected costs under the GPI, theresults for Alternative 2 would notchange, because no additional surveyand monitoring activities were modeledin any of the Alternatives for powerreactors that are implementing thevoluntary GPI. Based upon the NRC'sreview of power reactor licensee reportsand information known to the NRCabout current conditions at powerreactor sites, the NRC does not believethat any current power reactor licenseehas contamination at its site whichexceeds the threshold in the final rulethat would require additionalmonitoring. Therefore, the regulatoryanalysis did not identify any additionalcosts or benefits associated with thefinal rule's survey and monitoringrequirements as applied to currentpower reactor licensees. Followingpromulgation of this final rule, theremay be an increase in survey andmonitoring activities at some powerreactors and a decrease in activities atother power reactors. The results forAlternative 2 in the regulatory analysisshow that early detection of significantsubsurface contamination throughsurveys and monitoring and appropriateresponse by the licensee become thepreferred approach when the regulatoryobjective is to ensure the licensee andthe NRC are aware of contamination thatmay create conditions that wouldcomplicate decommissioning, andpossibly create a legacy site.

The NRC does not agree with thecommenter that a "chilling effect" onfuture voluntary industry initiatives willoccur if the NRC adopts the final surveyrequirements by rule. As discussed inthe regulatory analysis, the GPI wasinitiated by power reactor licenseesindependent of this rulemaking. Theindustry operates in an environment inwhich there are many factors other thanthe possibility of NRC rulemaking thatmay influence the industry's decision tovoluntarily undertake action. The NRC

does not believe it is reasonable toassume that a rulemaking whichoverlaps an area of voluntary industryaction will inhibit future voluntaryindustry initiatives. Moreover, the NRCbelieves that any possible disincentiveto industry to undertake such voluntaryactions is removed by the NRCperforming a regulatory analysis usingtwo different baselines to account forthe industry's voluntary actions,consistent with the guidance in NUREG/BR-0058.

Comment D.6: Cost ofcharacterization.

Several commenters stated that thecost would be large to perform sitecharacterization, if required under theproposed rule in 10 CFR 20.1501(a).According to one cost estimate preparedfor a 10 CFR part 40 facility, setting upthe initial near-surface soilcharacterization and installing thenecessary monitoring equipment wouldcost between $30,000 and $50,000 for asite with a relatively small footprint.This cost would include obtaining thenecessary samples and conducting theassociated laboratory work.Additionally, requiring maintenanceand ongoing monitoring would result inannual expenditures of approximately$10,000/year. One commenter believedthe NRC's estimate of the cost was toolow, and that therefore its cost-benefitanalysis was flawed.

Response: The NRC's estimates ofone-time monitoring equipment andannual maintenance costs were almostidentical to those cited previously bythe commenter. On page 54 of theregulatory analysis released with theproposed rule, the one-time capital costfor a groundwater monitoring systemwas estimated at $46,000, and theannual cost for inspection, leakdetection and groundwater monitoringwas estimated at $9,500 per year, for thefew facilities that were analyzed to needsuch monitoring. The actual scope ofwork that will be performed bylicensees as a result of amended 10 CFR20.1501(a) in this final rule covers abroad range of activities, with a broadrange of expected costs. This final rulerequires radiological surveys, reasonableunder the circumstances (such asscoping surveys), sufficient tounderstand the extent of significantresidual radioactivity, including thesubsurface. This final rule does not addany new requirements regardingextensive site characterization.

Comment D. 7: Regulatory analysisexamples cannot be generalized tobroad classes of licensees.

One commenter believes that theexamples in the regulatory analysisrelate to unusual factual and financial

circumstances which cannot begeneralized to broad classes of NRClicensees.

Response: The Commission disagreeswith this statement. The legacy sitesmodeled in the regulatory analysis wereassumed to be rare earth extractionfacilities holding contaminated materialin areas of 200 square meters at 0.6meters depth. This is viewed as being anacceptably conservative representationof a legacy site for purposes ofperforming the regulatory analysis.Without effective regulation, thetechnical and financial conditions thatcontributed to the creation of legacysites in the past could occur in thefuture at sites that are licensed under 10CFR parts 30, 40, 50, 70, and 72,especially those with radioactivematerial possession limits high enoughto require decommissioning financialassurance.

Comment D.8: Environmentalassessment.

One comment received on theenvironmental assessment agreed thatmonitoring wells, if required at licensedsites, will result in small environmentalimpacts. Another commenter, a state,disagreed strongly with the finding inthe proposed rule of no significantenvironmental impact and stated thatsuch a finding violates the NationalEnvironmental Policy Act (NEPA). Thecommenter believes that the NRC mustperform additional environmentalanalyses, because the final rule does notgo far enough in requiring promptremediation of spills and leaks duringfacility operations, and that during anycleanup delays contamination couldspread, resulting in larger impacts onenvironmental resources, nearbyproperties, and public health.

Response: The NRC agrees that theprocedures necessary to detect andmonitor subsurface contamination willnot have a significant environmentalimpact. The initial licenseeinvestigation may involve only thereview of records of past leaks and spills(if any) and facility inspections toidentify potential release points.Physical sampling, if any, will takeplace within the boundaries of the siteand will involve small amounts ofdrilling and analysis. The wastesgenerated from sampling and fromlaboratory analysis of the samples willbe managed according to existingenvironmental requirements that havebeen designed to avoid impacts on theenvironment. The environmentalimpacts of remediation, if it occurs,have already been reviewed inconnection with the LTR (62 FR 39057;July 21, 1997). In that final rule, ageneric Environmental Impact


35532 Federal Register/Vol. 76, No. 117/Friday, June 17, 2011 /Rules and Regulations

Statement evaluated "the environmentalimpacts associated with the remediationof several types of NRC-licensedfacilities to a range of residualradioactivity levels" (62 FR 39086; July21, 1997).

The NRC does not agree that absentimmediate remediation of all subsurfacecontamination there will be a significantimpact on the environment; nor doesthe NRC agree that the environmentalassessment's finding of no significantimpact is incorrect. This final ruleallows a licensee who detectssubsurface contamination either toconduct immediate remediation or toplan for and provide funds in the formof financial assurance to conductremediation at a later time, including atthe time of decommissioning. Thus, this.final rule creates a potential incentivefor immediate remediation instead of anincreased financial assurance obligation.Whenever the remediation occurs,however, the licensee is required toensure that at the time ofdecommissioning the annual 25millirem license termination standardwill be met. This final rule does notchange or weaken that requirement.

E. Radium-226

Comment: The NRC invitedcomments regarding the description ofsites that are known to have significantamounts of radium-226 contaminationfrom past practices or operations, andwhether the information of these sitescould be included as legacy sites in theregulatory analysis. Two commentswere received on this topic. Onecomment, from a state, provided limitedinformation on the remediation ofradium contamination at two structuresin the state. This commenter also notedthe difference between discrete radiumsources that are considered byproductmaterial and diffuse radium sourceswhich are not regulated by the NRC. Asecond comment, from an organizationrepresenting states, noted that legacysites exist where discrete radium wasmanufactured and that these types ofsites should be included in theregulatory analysis, but no specificinformation was provided for use in theregulatory analysis.

Response: The NRC appreciates thecomments from states with qualitativeinformation about radium-226contaminated sites. No changes weremade in the quantitative results of theregulatory analysis to include costs andbenefits from radium sites, but theanalysis was revised with the qualitativedescriptions from these commenters.

F. Backfit Considerations

Comment F. 1: Proposed rule andguidance will have substantial impactson facilities and procedures.

One commenter (NEI) stated that theproposed rule, coupled with the surveyand monitoring draft guidance, willhave substantial impacts on licensees'facilities and procedures (e.g., newconfinement measures; leak detectionequipment; three-dimensional modelingof groundwater contamination) andwould require the preparation of abackfit analysis. The commenter statedthat the proposed rule would codify inthe regulations for power reactorlicensees the actions which suchlicensees have voluntarily agreed toperform under the GPI. The commenterfurther stated that the new 10 CFR20.1406(c) and amended 10 CFR20.1501(a) and (b) are not a"clarification" of existing requirements,but rather an effort to impose anexpansive regulatory scheme of"ongoing decommissioning," wherebyactivities that would normally takeplace at the time of decommissioningwould have to occur instead duringplant or facility operation. Thecommenter also stated that the NRC hasmade no demonstration that there is asubstantial increase in the protection ofthe public health and safety, or that theproposed rule is justified to achievecompliance or ensure adequateprotection of the public health andsafety, or that a redefinition of the levelof protection is necessary.

Response: While the commenter iscorrect that the findings referenced werenot made, these findings are notrequired here, because the preparationof a backfit analysis of this rulemakingis not required, as discussed further inthis section.

The NRC disagrees that the new 10CFR 20.1406(c) and amended 10 CFR20.1501(a) and (b) will have substantialimpacis on facilities and procedures. Asstated in the preamble of the proposedrule, these proposed requirements"specify that compliance with 10 CFRpart 20 requirements is a necessary partof effectively planning fordecommissioning," and that any actionsundertaken by licensees during facilityoperations to comply with these newrequirements would only "provide atechnical basis for licensees and theNRC to understand the effects ofsignificant residual radioactivity ondecommissioning costs, and todetermine whether existing financialassurance provided for site specificdecommissioning is adequate" (73FR3814; January 22, 2008). This final rulerequires radiological surveys, reasonable

under the circumstances (such asscoping surveys), sufficient tounderstand the extent of significantresidual radioactivity, including thesubsurface. The term "residualradioactivity" includes radioactivity insoils and groundwater, which shouldalready be the focus of licensee surveyand monitoring efforts, andminimization efforts, to prevent thesubsurface accumulation of radioactivematerial that could be a potentialradiological hazard.

Whether significant residualradioactivity exists at a given site is acomplex site-specific issue, and theNRC received no information during theproposed rule public comment periodthat any site now has residualradioactivity at levels that would exceedthe 10 CFR 20.1402 dose criteria at thetime of facility decommissioning. Foroperating facilities, significant residualradioactivity is a quantity of radioactivematerial that would later requireremediation during decommissioning tomeet the unrestricted use criteria of 10CFR 20.1402 (73 FR 3835). For example,the sample data from isopleths ofsubsurface contamination at IndianPoint Energy Center (submitted by theState of New York, in Exhibit A of itscomment (ML081340325)) does notshow that significant levels of residualradioactivity are present there (2008Indian Point Government toGovernment Meeting, May 9, 2008(ML090540162)).

The commenter is correct that theNRC will expect licensees to applyradiological screening values, or othermethods recommended in guidance, todetermine if residual radioactivity at thesite has accumulated or is ingroundwater at levels that areconsidered significant. But to the extentthat the commenter is relying on thesurvey and monitoring draft guidance tosupport its backfit argument, suchreliance is misplaced. Guidancedocuments do not impose regulatoryrequirements.

Moreover, it has never been a policyof the NRC that significant subsurfacecontamination may go unmonitored, orthat appropriate survey information notbe obtained regarding suchcontamination, just because thecontamination does not pose animmediate safety or health hazard. Thelicensee must have such information toachieve doses that are ALARA duringthe life cycle of the facility, includingduring decommissioning. Licenseeprocedures to comply with the ALARArequirement in 10 CFR 20.1101(b)should be in place at facilities wherethere is a reasonable risk that suchcontamination may occur.


Regarding the issue of "ongoingdecommissioning," the NRC disagreesthat the regulations for this final rulecontain such a requirement. Licenseesare not required through this final ruleto perform any new type of extensivecharacterization or timely remediationduring facility operations. Instead, inDG-4014, the NRC has proposed forlicensees-(1) An acceptable method todetermine if any changes are needed toexisting site monitoring practices, and(2) acceptable approaches to determinethe cost-effectiveness of prompt,compared to deferred, cleanup ofcontamination based on sampleanalysis. The scope of cleanup activitiesduring facility operations is dependenton site-specific conditions. This finalrule does not require that any newremediation action be undertaken by alicensee during operations. Remediationof residual radioactivity at the site mayoccur during decommissioning, or itmay occur during facility operations ifthe licensee deems it beneficial toperform sooner rather than later. If thedecision is to remediate later, then amaterials licensee must consider theextent of contamination in its updatedDFP.

The final rule does not codify theactions that power reactor licensees areperforming voluntarily under the GPI.New 10 CFR 20.1406(c) requires powerreactor licensees to conduct theiroperations, to the extent practical, tominimize the introduction of residualradioactivity into the site, including thesubsurface. The GPI does not specifylicensee activities to minimizecontamination at the site. Revised 10CFR 20.1501(a) specifies that survey andmonitoring requirements must beperformed of residual radioactivity inareas, including the subsurface, that arepotential radiological hazards. This finalrule identifies significant residualradioactivity at the site as a potentialradiological hazard. This specificationof survey and monitoring requirementsis not part of the GPI.

Comment F.2: Immediateremediation.

Three commenters argued thatimmediate remediation should berequired after contamination isdiscovered. One commenter stated thatrequiring licensees to immediatelyremediate the contamination resultingfrom any unplanned or unauthorizedrelease would protect the environmentand the public and reduce thelikelihood that the NRC and the Federaltaxpayers would be saddled with theresponsibility of decontaminating aspreading plume of radionuclides atlegacy sites several years down the road.Another commenter urged the NRC to

include rules related to theestablishment of reclamationmilestones. The commenter stated thatthe NRC in the past has allowed at leastone licensee to defer the cleanup of off-site tailings until the final reclamation,even though it was perfectly feasible forthe off-site contamination to be cleanedup and placed on the tailingsimpoundment. The result was that thecost from extensive offsite tailingscleanup was not born by the licensee.

Response: The issue of whetherimmediate remediation should berequired after contamination isdiscovered is outside the scope of thisrulemaking. The focus of thisrulemaking is on improving thedecommissioning planning process.This rule does not suggest thatimmediate remediation is beingimposed as a new requirement.

Slow, long-term leaks, particularlythose that cause subsurface soil andground-water contamination, cansignificantly increase the cost ofdecommissioning (73 FR 3814; January22, 2008). Such leaks may eventuallyproduce radiological hazards (73 FR3820). To adequately assure that adecommissioning fund will cover thecosts of decommissioning, one musthave a reasonably accurate estimate ofthe extent to which residualradioactivity is present in the subsurfacesoil and groundwater. Together, theproposed requirements in 10 CFR20.1406(c) and 10 CFR 20.1501(a)specify that compliance with 10 CFRpart 20 requirements is a necessary partof effectively planning fordecommissioning (73 FR 3814). Theseregulatory changes are consistent withexisting requirements for operatingfacilities contained in 10 CFR20.1101(b), requiring licensees to useprocedures and engineering controls toachieve doses to members of the publicthat are ALARA, both during operationsand during decommissioning. Toaccomplish this, licensees must be ableto demonstrate their knowledge ofresidual radioactivity in the subsurface,including soil and groundwatercontamination, particularly if thesubsurface contamination is asignificant amount that would requireremediation during decommissioning tomeet the unrestricted use criteria of 10CFR 20.1402 (73 FR 3815). While leaksfrom facilities can lead to a large volumeof radioactive contamination enteringthe subsurface environment over anextended time, this does not necessarily*mean that estimated doses from thiscontamination are above the limits in 10CFR part 20 that would initiateimmediate regulatory action (73 FR3820).

Moreover, even if the commentpertained to issues within the scope ofthis rulemaking, this final rule does notimpose immediate remediation as aregulatory requirement. The NRC'sperformance-based regulatoryframework provides licensees a measureof flexibility to determine forthemselves the appropriate response toa contaminating radiological event thatdoes not exceed a regulatory thresholdand does not result in a health or safetyconcern. By providing this discretion tolicensees instead of a prescriptiveapproach, the NRC is encouraginglicensees to focus on results and toimplement methods that are effective forthem and will result in improvedoutcomes. The types of contaminatingevents that are the focus of this finalrule are not an immediate radiologicalhazard, but over time they canaccumulate in an inaccessible area ormigrate to groundwater pathways toform significant residual radioactivity atthe time of decommissioning. Licenseesare not now required to performimmediate remediation of low-levelcontaminating events that do not exceedregulatory thresholds, and licensees arenot required through this final rule toperform any new type of immediateremediation. If the licensee is aware ofsignificant subsurface contaminationthrough surveys and decides to defercleanup of that contamination to somefuture date, then the NRC must ensurethat adequate funds are available at thetime of decommissioning in order tocomplete the work. During facilityoperations, it is the responsibility of theNRC staff to ensure that licensees haveadequate decommissioning financialassurance based on specific regulatoryrequirements, including in many casessite specific DCEs. At the start of andduring facility decommissioning, theNRC staff is responsible for ensuringthat the DCE is based on reasonableproject milestones to complete theactivities within a timely schedule, tomonitor the progress of the licenseeagainst the milestones, and to requireadditional decommissioning financialassurance if the schedule is extended.

Comment F.3: The expanded scope ofnew 10 CFR 20.1406(c).

Regarding the expanded scope of 10CFR 20.1406 to include existinglicensees, several commenters arguedthat this expansion-(1) had not beenadequately analyzed for its impact; (2)was inconsistent with the NRC's ownfinding in the Liquid RadioactiveRelease Lessons Learned Task ForceFinal Report (ML062650312) that thereleases were not a threat to publichealth and safety, and (3) should beevaluated as a backfit.


Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and Regulations35534

Response: The expanded scope of 10CFR 20.1406 was evaluated in theregulatory analysis for the proposedrule. Based on the technical basis inSection 2 of the regulatory analysis, fiveoperating sites with licensed rare earthextraction activities were modeled tohave residual radioactivity at a levelthat would exceed the unrestrictedrelease criteria of 10 CFR 20.1402, at thetime of their decommissioning. The one-time costs and annual costs for theselicensees were modeled over a 15-yearanalysis period, including groundwatermonitoring, and licensee inspection andleak detection activities at each facility(Regulatory Analysis, September 2007,page 34, ML072390191). The commentsoffer no specific criticisms of thisanalysis and thus do not call intoquestion the validity of its findings.

The regulatory analysis for theproposed rule and final rule includeddiscussion of the findings of the LiquidRadioactive Release Lessons LearnedTask Force Final Report. The regulatoryanalysis summarizes the report ashaving "identified a large volume ofsubsurface and ground-water tritiumcontamination from power reactors dueto undetected leaks in spent fuel pools,component cooling water tanks,condensate holding tanks, refuelingwater storage tanks, borated waterstorage tanks, buried piping, andventilation systems," as well as having"identified other radionuclides,including mixed fission products,cobalt-60, cesium-137, and strontium-90, that were inadvertently released intothe onsite environment at two powerplants" (Regulatory Analysis, September2007, page 7, ML072390191). The NRCagrees that one of the conclusions of theLiquid Radioactive Release LessonsLearned Task Force Final Report wasthat the report did not identify anyinstances of liquid radioactive releasewhere the health of the public wasimpacted. However, none of the sitesexamined in the report are legacy sites.Based on NRC experience, chronicradioactive release to the subsurface isa primary contributing cause to thecreation of a legacy site, and a legacysite is a potential radiological hazardthat may be a threat to public health andsafety. The final rule does not requireevaluation of a backfit analysis, becausethe new or amended regulations in therule either clarify existing requirementsor require the collection and reportingof information using existing equipmentand procedures. As such, the new oramended regulations are not regulatoryactions that require the performance ofa backfit analysis.

Comment F.4: Agreement that abackfit analysis is not required.

One commenter agreed with theposition taken by the NRC that a backfitanalysis is not required for thisproposed rule, because the requirementalready exists for licensees to performwaste characterization andminimization during operations.

Response: The NRC agrees that abackfit analysis is not required for thisproposed rule. But the NRC cannotrespond further to the comment, as itprovides no citations to regulatoryrequirements referenced in thecomment.

G. Need for 10 CFR 20.1403, 20.1406,and 20.1501 Amendments

Comment G. 1: Support for amended10 CFR 20.1403.

Commenters from several Statesexpressed support for the proposedcriteria in § 20.1403 for licensetermination under restricted conditionseliminating certain financial assurancemethods. Noting that since September11, 2001, it has become more difficultfor materials licensees to get any formof surety, the commenters agreed thatwhile the NRC should be sensitive tothis situation, certain financialassurance methods may not be effectivein bankruptcy situations.

Response. The NRC agrees that a trustfund is the financial assurancemechanism most suitable for use overthe relatively long period required forlicense termination under restrictedconditions. The trust fund should be aless complicated financial instrument toestablish and fund decommissioningfinancial assurance compared to otherforms of surety which can be difficultfor materials facilities to maintain overlong periods.

Comment G.2: Support for amended10 CFR 20.1406 and 20.1501.

Several commenters supported thenew 10 CFR part 20 regulations, arguingthat residual radioactivity is a problemthat should be addressed promptly. Onecommenter stated that as time passes,residual radioactivity can spreadvertically and laterally driven bydownward percolating rainfall andsnow melt, increasing the volume ofmaterials requiring excavation. Thiscommenter concluded that licenseesshould be compelled to conductthorough subsurface investigations oftheir sites that include drilling, andshould residual radioactivity be found,licensees should be compelled toremediate or otherwise address itpromptly. Commenters from severalStates also support the proposedrequirements. One commenter statedthat a lack of characterization ofsubsurface residual radioactivity couldlead to a need for additional unforeseen

decommissioning activities, and that thecost of removing and disposing ofresidual radioactivity could overwhelmexisting decommissioning funds andlead to the site's becoming a legacy site.Subsurface investigations should takeplace when it is known that residualradioactivity exists, so that mitigatingefforts can be put in place, if necessary,before the situation worsens andrevisions to the decommissioningfunding calculations can be made. Thecost to enforce and fully decommissiona single legacy site is much higher thanthe cost to prevent the occurrence of alegacy site through amendedregulations. A commenter representingseveral States generally supported theproposed § 20.1501 requirements,noting that slow and long-lasting leaks,and leaks from the processing of largequantities of licensed material,especially in liquid form, did poseparticular risks. Another commenterasserted that events in the last decadehave shown that the key assumptionsbehind the 1988 and 1998decommissioning regulations are nolonger accurate, and that the NRC hasbecome aware of several unpermittedreleases at sites across the country.

Response: The Commission agreesthat licensees must have, at a minimum,adequate information about the type andextent of significant residualradioactivity that is present in thesubsurface at their facility. Thelicensees can then make informeddecisions about whether to undertakeremediation immediately or to plan forremediation at the time ofdecommissioning, while revising theirDCE and decommissioning financialassurance to ensure that they will beable to address effectively the cleanupof the subsurface contamination.

Comment G.3: Support for monitoringand recordkeeping requirements.

One commenter stated that when anysubsurface contamination abovebackground is identified, it should benoted in decommissioning records, evenif it is not otherwise reportable. This isbecause such information can be veryuseful for conducting sitecharacterization for purposes of licensetermination and to support decisions onthe extent of site remediation necessaryto meet unrestricted use criteria. It isalso useful when planningmodifications to a facility. This stemsfrom the logic that if subsurfacecontamination exists, then it came fromsome plant system that handles thatmaterial; therefore, any physical activityon or near those systems should includeprovisions for dealing with the source ofcontamination. One state commenterprovided a detailed description of a



situation it had encountered thatsupported the need for increasedmonitoring. It stated further thatrecording recurring leaks or spills indecommissioning records or operationallogs is neither onerous nor financiallyburdensome. Geographic InformationSystems (GIS) make documentation oftracking of spills a relatively easy task,and do not pose a paperwork burden.Tracking of these data are critical for aneffective Historical Site Assessmentunder MARSSIM.

Response: The NRC agrees with thesecomments as they apply .tocontamination that may be significantfor site specific decommissioningplanning.

Comment G.4: Cost of requiredactivities compared to potentialbenefits.

Some commenters argued that thefinal rule survey and monitoringrequirements, particularly as they wereinterpreted in the draft survey andmonitoring guidance released with theproposed rule, would be a tremendouspotential financial burden to licenseeswith no health and safety benefit to thepublic. Some commenters stated thatsites already have sufficient existingsurvey, monitoring and detectionprograms in place to assure compliancewith current licenses. In addition, theextent of modeling of the hydrology thatwould be required to meet the draftregulatory guidance does not appear tobe warranted at sites that do not haveextensive subsurface contamination.

One commenter argued that the scopeof the proposed rule and guidance is farmore extensive than what is warrantedby the circumstances, and that both theproposed rule and the guidance areinconsistent with the NRC's ownfinding that none of the instances ofinadvertent releases to the environmentpresented a threat to public health andsafety.

Response: The commenter is correctthat the NRC's conclusion in its LiquidRadioactive Release Lessons LearnedTask Force final report dated September1, 2006, which was focused oninadvertent and unmonitoredradioactive liquid releases from powerreactors, was that the measured levels oftritium and other radionuclides do notpresent a health hazard to the public,and this finding was noted in thepreamble to the proposed rule (73 FR3814; January 22, 2008). However, asalso noted in the preamble to theproposed rule (73 FR 3820), based onpast NRC experience, significantconcentrations or quantities ofundetected and unmonitoredcontamination, caused primarily bysubsurface migration of groundwater,

have been a major contributor to a sitebecoming a legacy site. A legacy site isa potential radiological hazard and athreat to public health and safety.

As discussed in Section II.B of thisdocument, all power reactor licenseesand about 300 NRC and 1,000Agreement State licensees have anobligation to set aside funds fordecommissioning financial assurance.These licensees are subject to theamended regulations in 10 CFR part 20and are already required to haveradiation protection programs aimedtoward reducing exposure andminimizing waste at their sites (73 FR3813). The NRC received no informationduring the proposed rule publiccomment period that any operatingfacility now has subsurface residualradioactivity at levels that would exceedthe 10 CFR 20.1402 dose criteria at thetime of facility decommissioning. Thus,the NRC believes there is noincremental burden for these licenseesas a result of final rule amendments to10 CFR part 20, except to read andunderstand the final rule and the surveyand monitoring guidance.

If there is a history of subsurfacespills at a site, to the extent that arecurrence could result in significantresidual radioactivity, then the NRCexpects appropriate licensee action tocomply with the new survey andmonitoring requirements as appropriatefor site-specific conditions. The surveyand monitoring requirements in 10 CFRpart 20 are broad scope requirementsthat apply to many types of facilitiesand thus cannot be specific to any onetype of facility. Therefore, the extent ofcompliance with new survey andmonitoring requirements and the levelof licensee burden is very much a site-specific issue.

Comment G.5: Indian Point NuclearPower Plant and Breazeale ResearchReactor.

The State of New York andRiverkeeper cited in their comments onthe proposed rule information aboutradioactive leaks from the Indian PointNuclear Power Plant.

Response: The NRC takes thisopportunity to discuss survey andmonitoring requirements in this finalrule by using public information ofrecent leaks at two nuclear facilities,one at the Indian Point Nuclear PowerPlant and the other at a research and testreactor.

A public meeting was held on May20, 2008, in Cortlandt, New York, todiscuss the results of the NRC'sinspection of the licensee's performanceand the agency's independentassessment of contaminatedgroundwater conditions that were first

detected by the licensee at the IndianPoint Energy Center in September 2005.The NRC Inspection Reports Nos.05000003/2007010 and 05000247/2007010, dated May 13, 2008, werereferenced in this report(ML081340425). The groundwatersamples contained tritium andstrontium-90 that were not previouslymonitored or detected in groundwaterbefore late 2005. As determined by thelicensee's hydro-geological analysis andindependently confirmed by the NRC,the contaminated groundwater does notmigrate off-site, except directly to theHudson River. Because there is nocurrent drinking water pathway derivedfrom groundwater or the Hudson Riverin the vicinity influenced by the IndianPoint Energy Center, the primaryradiological liquid effluent exposurepathway is through the consumption ofaquatic foods such as fish andinvertebrates. The licensee'sradiological assessment of this pathway,performed in accordance with NRCregulatory requirements and confirmedby NRC inspection, determined that theradiological consequence ofgroundwater migration to the HudsonRiver was, and continues to be,negligible with respect to NRCregulatory limits; i.e., the doseconsequence to a hypotheticalmaximally exposed individual is nomore than 0.1 percent of the NRCregulatory specification for liquidradiological effluent release.

In view of the potential radiologicalimplications of contaminatedgroundwater, the NRC initiatedenhanced regulatory oversight at IndianPoint following the licensee's initialreporting of onsite sample data ofgroundwater contamination.Subsequently, the licensee initiated acomprehensive investigation of theextent of onsite groundwatercontamination which included anextensive hydro-geological sitecharacterization, the installation ofseveral groundwater monitoring wells,comprehensive radiological assessment,and the establishment of a long-termmonitoring program. As the NRCreported at the May 20, 2008, publicmeeting (ML081490020), the NRCindependently confirmed the adequacyand acceptability of the licensee'sinvestigation, radiological assessment,and plans for long-term monitoring ofthe contaminant groundwaterconditions. The licensee's remediationapproach (i.e., monitored naturalattenuation) is considered reasonable bythe NRC. Notwithstanding, thelicensee's long term monitoring program



will continue to be inspected by theNRC.

The State of New York, in Exhibit Aof its comment to the Commission onthe proposed rule, cited sample datataken of the contaminationconcentration levels. Based on thesample data, this level of residualradioactivity is likely to be below the 10CFR 20.1402 unrestricted release dosecriteria at the time of Indian Pointdecommissioning. On the effective dateof the final rule, the licensee mustdemonstrate that it is conductingoperations, to the extent practical, tominimize the introduction of residualradioactivity at the site, including thesubsurface (10 CFR 20.1406(c)). Theamended 10 CFR 20.1501(a), and theexistence of previously undetectedgroundwater contamination due toleakage from the Units 1 and 2 spentfuel pools, requires the licensee tocontinue monitoring the condition andevaluate the need for additionalmonitoring and modeling at the plant inthe event of new or additional leaks,spills, data from existing monitoringwells, or other information pertaining toresidual radioactivity at the site. Thelicensee may modify or revise the scopeof its monitoring effort at Indian Pointbased on demonstrated results,supported by analysis of sample andsurvey data, which indicate thatoperations and activities are sufficientto minimize the introduction of residualradioactivity at the site. The sample andsurvey data is planned to be publiclyavailable in ADAMS with the annualeffluent and environmental reports.

In October 2007, the PennsylvaniaState University Breazeale ResearchReactor facility experienced a minorleak of slightly radioactive water fromthe reactor pool lining. In the following6 weeks, the NRC performed severalinspections at the facility(ML073480163) and determined that theexisting environmental monitoringsatisfied licensee and regulatoryrequirements. The licensee reviewed itsmonitoring and decided to take samplesfrom a nearby water well to assessoverall area well quality. Contaminationsurveys were performed at the site tounderstand the migration of the residualradioactivity. The NRC inspectionconcluded that the number and locationof survey points were adequate tocharacterize the radiological conditions.The NRC inspection report noted thatthe licensee always investigatesreadings above background levels andensures that contaminated areas aredecontaminated.

Following the effective date of thisfinal rule, this licensee mustdemonstrate that, to the extent practical,

it is conducting operations so as tominimize the introduction of residualradioactivity at the site, including thesubsurface. Also, the licensee mustperform surveys sufficient to evaluatethe need for additional monitoring andmodeling at the reactor based on futureleaks or spills or other information thelicensee has relevant to residualradioactivity at the site.

There have been leaks at otherresearch and test reactors with outcomesthat affected decommissioningplanning. For example, Cintichem, Inc.,of Tuxedo, New York, held two NRClicenses, one for the operation of a 5-megawatt research reactor and anotherfor special nuclear material. In February1990, the licensee reported anunmonitored release of radioactivelycontaminated water from the reactorbuilding to an onsite retention pond anda second leak in an onsite concretevessel (56 FR 23601; May 22, 1991). InMay 1990, Cintichem informed the NRCthat it had decided to decommission thereactor and related facilities. Over thenext several years, Cintichem conductedcleanup activities and dismantled thereactor. The Cintichem licenses wereterminated in 1998, with the site havingbeen remediated to levels suitable forunrestricted use (63 FR 45268; August25, 1998).

Comment G.6: The proposed rule isunnecessary.

One commenter, supported by severaladditional commenters, stated thatexisting decommissioning regulationscontain appropriate requirements toprovide reasonable assurance thatlegacy sites will be prevented. Theprograms that NRC licensees alreadyhave in place address all aspects ofdecommissioning planning, includingconduct of operations to minimizecontamination, monitoring andsurveillance, recordkeeping, andfinancing. These programs are subject toNRC inspection and oversight. Anothercommenter argued that the reduction ofradiological risk associated with theproposed rule is extremely small, yetcompliance will be very resource-intensive and costly.

One commenter agreed with theNRC's statement that the vast majorityof NRC materials licensees do not haveprocesses that would cause subsurfacecontamination. This same commenterreasoned that additional surveys shouldbe therefore required only at thoselimited sites where subsurfacecontamination may be a concern. Thiscommenter also asserted that therequirements in § 20.1406(c) wereunnecessary, because ALARArequirements covered the requirementto conduct operations to minimize

subsurface and other residualradioactivity. Current regulationsinclude consideration of subsurfacecontamination in the DCE, or could beaddressed on a case-by-case basisthrough license conditions and requiredmaterials licensees to minimizecontamination, survey contamination,and keep records. This commenterbelieved that the vast majority oflicensees would be unlikely to have areason for, or a means of determining,the volume of onsite subsurface materialcontaining residual radioactivity.

Commenters opposing the rule asunnecessary stated that, at a minimum,the proposed rule and accompanyingdraft regulatory guidance should be heldin abeyance until the issues identifiedby the commenter have been addressed.The commenter stated that the proposedrule and regulatory guides should besubstantially rewritten, and this wouldrequire reissuance for public comment.In addition, the commenter encouragedthe NRC to hold workshops with theaffected stakeholders. Although thecommenter believed the rulemaking isunnecessary, issues of importance to thestaff might be pursued in theseworkshops.

Response: The NRC disagrees withthese comments concerning the need forrulemaking. The ALARA requirementsin existing regulations do not explicitlyaddress subsurface contamination anddo not provide adequate assurance thatadditional legacy sites will beprevented. Before this final rule, theNRC regulations did not explicitlyspecify licensees' obligations to surveysubsurface contamination, nor did theregulations explicitly specify therequirement of licensees to conductoperations to minimize residualradioactivity at the site, including thesubsurface. This rulemaking willaugment NRC inspection and oversightactivities by defining the regulatorybasis to mandate particular licenseeactions on a timely basis to prevent thecreation of more legacy sites. Theradiological risk of a legacy site withgroundwater contamination may besignificant. The NRC will issue DG-4014 to support the survey andmonitoring requirements in this finalrule and will hold at least one publicworkshop (details on the publicworkshop will be available underDocket ID NRC-2011-0103) to refinethat guidance for issues of importance tostakeholders.

Comment G.7: The proposed rule isunnecessary because NRC couldaccomplish its objectives throughinspection, oversight, and licensingactivities.



Several commenters argued that thedecommissioning issues raised in theproposed rule could be better addressedon a case-by-case basis through thelicensing, inspection, and enforcementprocess for the unusual licensee thatmay have those concerns. This would bemuch more effective and efficient thanattempting to adjust regulations that23,000 licensees are obliged to read.One commenter stated that the ruleseems to be an overly broad response toa narrow problem. If the NRC hasconcerns regarding the potential for"legacy sites" for only five to sixlicensees, then the more efficient pathwould be to impose site-specific andlicense-specific conditions on thelimited set of facilities, rather thanimpose regulations on all licensees withuncertain costs and even more uncertainbenefits. Given the limited scope of theproblem as defined by the NRC, it doesnot make sense to introduce a new layerof NRC review and approval of surveyand monitoring programs outside oflicensing reviews.

Several commenters alsorecommended that statements should beadded that certain categories oflicensees currently satisfy the proposedrequirements. According to onecommenter, the NRC should include anunqualified statement that NRCinspection and oversight programsprovide the necessary guidance andlicense conditions/requirements toregulate activities for uranium millsundergoing decommissioning andremediation. One commenter noted thatthe issue of controlling or limiting therelease of radioactivity in licensedoperations is different than the issue ofintervention to address residualradioactivity that was previouslypermitted. In the latter case, no generalsolutions are available, and a case-by-case analysis will be necessary. This isexactly what has taken place at theexisting legacy sites. To the extent thatthe proposed rule seeks to requireintervention to address residualradioactivity resulting from past,permissible activities, the rule isunlikely to have any impact on reducingthe cost or complexity ofdecommissioning. Ultimately, the NRC'slicensing and oversight programs areadequate to reduce introduction ofresidual radioactivity from currentpractices. Finally, two commentersargued that the proposed rulemakingcontradicts the NRC's policy of risk-based regulation. Each affected licenseewill be required to spend an enormousamount of resources on monitoringprograms to address an issue that by theNRC's own evaluation has no impact on

the health and safety of the public. Amore reasonable approach would be toaddress subsurface contaminationconcerns on a risk-informed basis forindividual licensees by means of theexisting inspection and licensingprocess.

Response: The NRC believes thatrulemaking is much more effective thanrelying on existing licensing, inspection,the Reactor Oversight Process and/orenforcement processes to accomplishregulatory objectives that were stated inthe technical basis for the proposedrule. A legacy site can occur among abroad range of currently operatinglicensees. Section II.B in this documentidentifies the licensees that are affectedby this final rule. The NRC agrees withthe commenter that case-by-caseintervention is not an effectiveregulatory approach to reduce the costor complexity of decommissioning. Asdiscussed in the response to commentG-9 and G-13 below, the NRC considersthis final rule to be risk-informed.

Comment G.8: The proposed rule isnot stringent enough.

Several commenters generallyopposed the proposed rules because,they believe that the rules are notstringent enough to protect theenvironment or promote safety and willnot make NRC actions more effective,efficient, and realistic. One commenterbelieves that the proposed regulationswill encourage licensees to postpone thecleanup of radionuclide leaks untilsome future date, by which time aplume may be more difficult andexpensive to decontaminate. Thiscommenter argued that aside from a fewmodest improvements in limited aspectsof the decommissioning process, theproposed rule does not address, in ameaningful way, the deficiencies infacility operations that lead tosubsurface contamination, the threatsposed by delayed remediation, or therisks of unfunded subsurfacedecontamination at nuclear powerplants. This commenter stated that thefinal rule should require nuclear powerplant owners and other licensees to: (1)Actively prevent subsurfaceradionuclide leaks, (2) look forcontamination under their sites, (3)publicly report what they find, (4)immediately clean up subsurfaceradionuclide contamination, and (5)increase their decommissioning funds tocover the costs of historicalcontamination at their plants. Thecommenter also called for the NRC tocreate an additional fundingrequirement when contamination isdiscovered by requiring licensees toupdate decommissioning estimates tokeep pace with the actual subsurface

and surface contamination conditions attheir facilities. That is, the NRC shouldrequire licensees to set aside amplefunds to cover decontamination anddecommissioning as if decommissioningwere occurring now. Monitoring shouldbe required at least every 2 years.

Response: The NRC agrees that thisfinal rule provides regulatory flexibilityto provide licensees discretion indetermining the appropriate response toa contaminating event that does notpose an immediate health or safetyconcern, and licensees may in factdecide to postpone cleanup activities.The NRC disagrees with the commenterthat the rule does not address events atoperating facilities that lead tosubsurface contamination andadditional risks later, resulting fromunfunded decommissioning activities.As stated in the proposed rule (73 FR3814; January 22, 2008), the activitiesthat will be undertaken by licensees asa result of this final rule will provide atechnical basis for licensees and theNRC to understand the effects ofsignificant residual radioactivity ondecommissioning costs, and todetermine whether existing financialassurance provided for site-specificdecommissioning is adequate. By usingthe term "residual radioactivity," thenew § 20.1406(c) and § 20.1501(a) coverany licensed and unlicensed radioactivematerial that has been introduced intothe site by licensee activities. Ifoperating events are causing significantamounts of residual radioactivity toaccumulate onsite, those events willneed to be mitigated to comply with thenew § 20.1406(c).

This final rule contains provisions in§§ 30.35(e)(2), 40.36(d)(2), 70.25(e)(2),and 72.30(c) to require licensees toupdate their DFP at least every 3 yearsto account for changes in costs and theextent of subsurface contamination. Aseparate set of similar funding updaterequirements is already applicable topower reactors.

Comment G.9: The proposed rules arenot sufficiently precise.

Several commenters opposed the useof the phrase "to the extent practical" inproposed 10 CFR 20.1406(c) and thephrase "reasonable under thecircumstances" in proposed § 20.1501,because the terms were too broad. Onecommenter stated that these phrasescreated a loophole that wascompounded by use of the term"minimize," as opposed to "prevent."The commenter stated that these wordswill hamper, if not preclude, effectiveenforcement actions by the NRC or theU.S. Department of Justice againstfacilities and operators who releaseradionuclides to the subsurface area. A


commenter representing several Statesalso stated that use of the term "to theextent practicable" in the proposed rulecould provide licensees with the leewayto perform very limited sampling orsurveys to verify the extent of anysubsurface plume, leading to erroneousconclusions regarding no significanthazards. Another commenter said thatthe survey requirement must be clearlyspelled out in the language of theregulation to make it binding uponlicensees. The current language isunacceptably vague.

Response: The NRC disagrees that therule language is vague. The phrases "tothe extent practical" and "reasonableunder the circumstances" are alreadyused in 10 CFR part 20 requirements toprovide flexibility in support of a risk-informed regulatory approach. The risk-informed approach is more effective atachieving acceptable results andcompliance by licensees compared to aprescriptive approach, which iscumbersome for licensees and regulatorsconsidering the broad range of licenseesusing radioactive material. Theregulatory analysis in the proposed ruleaddressed this specific topic as it relatesto survey requirements. On Page 45, theregulatory analysis notes that theCommission established a broadregulatory framework when § 20.1501was added to the regulations in 1991.This final rule adds precision to surveyrequirements by amending § 20.1501(a)to explicitly include the subsurface at asite as an area that needs to be surveyedif concentrations or quantities ofresidual radioactivity in the subsurfacepresent a radiological hazard. Theproposed rule states, "The staff viewsradiological hazards as including thoseresulting from subsurface contaminatingevents, when these events producesubsurface residual radioactivity thatwould later require remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402" (73 FR 3820; January 22,2008).

Comment G.bO: The proposed rule isbased on historical AEC legacy sites,rather than modern sites.

Several commenters stated that theNRC was basing the proposed rule onpast, rather than current, problems. Onecommenter asserted that the verylimited "examples" cited by the NRC oflicensees for which some concern hasexisted do not support the broad brushapproach proposed by the NRC in thisrulemaking. The cited examplesgenerally relate to licensees that hadbeen operating long before the currentregulations, comprehensive guidance,discipline in reviewing licenseapplications, contemporary licensee

practices and awareness, and currentdecommissioning funding requirementswere in place. The commenter pointedto the example of burial in soil ofradiological waste onsite, even ifexceeding "exempt" regulatory limits atthe time of burial, which was permittedfor over 20 years without prior agencyreview. The commenter argued that itwas likely that significant changes to thehistorical regulatory scheme withrespect to onsite radiological wastedisposal were at least factors in some ofthe site-specific examples of legacy sitesof concern to the NRC, but theseexamples have been addressed withinthe current regulatory framework.

Response: The NRC agrees thatprevious changes to regulations onsubsurface burials have reduced thelikelihood of legacy sites. The NRCdisagrees that the current regulatoryframework is sufficient to provideeffective oversight of operating facilitiesto ensure the prevention of more legacysites.

Comment G. 11: The proposedrulemaking is a new regulatory schemefor ongoing decommissioning.

One commenter, supported by severalothers, argued that the requirements forextensive subsurface soilcharacterization (or remediation) duringan operating facility's lifetime is largelyunrealistic. It is not feasible to performsubsurface characterization withoutrisking the breach of barriers thatcontain radioactivity, disrupting theoperationally essential equipment, orexacerbating the migration ofcontaminants already in theenvironment. Based on industrydecommissioning experience, themajority of subsurface contamination(by volume and concentration) wouldlikely be located directly understructures, systems and components(SSCs) that have leaked, where it cannotbe safely or adequately accessed forcharacterization purposes. Even in thecase of a reactor undergoingdecommissioning, these areas usuallycannot be accessed until late in thedecommissioning process, when manyof the SSCs and higher levels ofcontaminant sources have beenremoved. Another commenter statedthat the dust and other materials stirredup during decommissioning could leadto greater exposures for site personnel,thus obviating much of the alreadysmall benefit of requiring site cleanupwhile operations are ongoing. Theprospect of "continualdecommissioning" may also be contraryto the principles of ALARA embodiedelsewhere in 10 CFR part 20. Onecommenter requested that licensees bepermitted to evaluate normal

construction-related risks associatedwith any proposed excavation ofresidual radioactivity, and that shouldthese risks exceed the risks posed by theresidual contamination itself, thelicensee should not be required toexcavate the material.

Response: As indicated in theresponse to Comment F.2, conductingremediation actions while a facilitycontinues to operate is not required bythe proposed rule, even if significantamounts of residual radioactivity arepresent at a site. Based on the history ofradioactive leaks at power reactors, theleaks can generally be attributed to thefollowing SSCs: Fuel transfer systemsand spent fuel pools, buried piping, andstorage tanks. Existing regulatoryrequirements may apply to SSCs thathave leaked radioactive liquids, butdetermining which requirements applyto a specific facility requires review ofthe plant's licensing basis. SSCs that arenot safety-related and are not covered bythe licensee's quality assurance programgenerally are subject to lessmaintenance, testing and inspectionthan safety-related SSCs. The non-safetyrelated SSCs are more likely to have aradioactive leak without detection, anda significant level of contamination fromSSCs can migrate through thesubsurface far from the source. One ofthe findings in the Liquid RadioactiveRelease Lessons Learned Task Force (73FR 3814; January 22, 2008) final reportwas that a majority of leaks at powerreactors are from non-safety relatedSSCs that contain radioactive material.

Comment G. 12: Variability in licenseepractices in documenting spills andleaks important for decommissioningdoes not justify new requirements.

Several commenters stated that theproposed rule applies the samerequirements to all types of licenseesdespite the inherent differences in howeach type of licensee safely managesradioactive material and/or the financialassurance instruments fordecommissioning. Throughout thepreamble to the proposed rule, the NRCacknowledges that only a few sites haveidentified contamination and been facedwith hurdles to releasing the site forunrestricted use. To date, all nucleargenerating facilities have beensuccessful in their decommissioning forunrestricted use.

Response: The NRC agrees that the 10CFR part 20 changes in this final ruleapply equally to all NRC and AgreementState licensees despite the differences infacility operations and the extent oftheir radiation safety programs.However, licensees with an obligation toprovide decommissioning financialassurance are likely to be affected by


this rulemaking only if they have liquidprocesses that would contribute tosignificant subsurface contamination.The commenters are correct that nopower reactor sites have become legacysites.

Comment G.13: The proposed rule isbased on unusual factual and economiccircumstances that cannot begeneralized to broad classes oflicensees.

Several commenters noted thatthroughout the January 22, 2008,proposed rule, the NRC acknowledgedthat only a few facilities have identifiedcontamination that has resulted inunexpected difficulty indecommissioning the site, and that theregulatory analysis represented thesefacilities as a certain type of licensee(i.e., rare earth extraction facility).Rather than targeting the proposed ruleaccordingly, the scope of the proposedrule includes all types of licensees,despite the inherent differences in howeach type of licensee controlsradioactive material. Anothercommenter stated that the proposed ruleand draft guidance are attempting toapply a "one-size-fits-all" approach toall NRC-licensed facilities withoutregard to the varying processes,radionuclides, and risks at differentcategories of licensees. For example,uranium mills, conversion facilities, andsolution mining facilities have uniqueattributes making a "one-size-fits-all"approach inappropriate.

Response: The NRC used a risk-informed approach in developing thelanguage for the amendments to 10 CFRpart 20 in the proposed rule. This finalrule is not prescriptive but insteadapplies a broad and flexible regulatoryframework as discussed in the responseto Comment G.9. The NRC agrees in partwith the comment regarding the uniqueattributes for uranium mills andsolution mining facilities, as discussedfurther in response to the nextcomment.

Comment G.14: Applicability touranium recovery facilities.

Several commenters urged the NRCnot to make uranium recovery facilitiessubject to the new 10 CFR part 20requirements, because such facilities donot process enriched source material.One commenter stated that the proposedrule should not apply todecommissioning uranium recovery(UR) facilities. Another commenterrequested that UR facilities(conventional mills, in-situ uraniumrecovery facilities and heap leachfacilities) be categorically excluded fromcoverage under the proposedamendments to 10 CFR 20.1406 and20.1501 in the final rule. A commenter

stated that NRC inspection andoversight programs, together withlicense conditions and existingregulations, adequately regulateuranium mills undergoingdecommissioning and remediation, andare protective of the public health andsafety and the environment. Acommenter stated that the requirementsin the proposed rule to address residualradioactivity during UR operationswould result in new operationalrestrictions well beyond those imposedby existing licenses, and that theextreme variability of naturalbackground radionuclideconcentrations, and the presence ofTechnologically Enhanced Naturally-Occurring Radioactive Material(TENORM) and unprocessed ore at a sitewould introduce new requirements insurvey and monitoring methods.Commenters also stated that the"routine" monitoring program describedin the guidance would require a morecomplex and expensive program than ispresently necessary to adequatelycharacterize contamination or supportdecommissioning.

Response: The NRC agrees in partwith the above comments. In finalizingthe license termination rule, whichestablished 10 CFR part 20 Subpart E in1997, the NRC recognized that there areunique soil contamination issuesassociated with the decommissioning ofUR facilities. For this reason, 10 CFR20.1401 (a) was worded to exclude URfacilities from the scope of 10 CFR part20 Subpart E, and the NRC requestedcomments on what radiological criteriashould be used in terminating URfacility licenses (62 FR 39093; July 21,1997). The 10 CFR 20.1401(a) exclusionis not changed by the presentrulemaking, and UR licensees andapplicants will not be subject to the newrequirements in 10 CFR 20.1406(c), justas they were not subject to the existing10 CFR 20.1406 requirements.

As a result of the 1997 request forcomments referenced above, Criterion6(6) of Appendix A to 10 CFR part 40was amended in 1999 by adding itssecond paragraph, which establishedtotal effective dose equivalent (TEDE)requirements to address theradionuclides of concern (chieflyuranium and thorium) present in thesoils of UR facilities. See 64 FR 17506et seq. (April 12, 1999). If UR facilitiesundergoing decommissioning haveradioactive contamination in their soilsassociated with their operations atlevels exceeding background by5 pCi/g of radium-226 (the benchmarkdose), then Criterion 6(6) requires thatsuch contamination be remediated. Thepresent rulemaking does not change

Criterion 6(6). The NRC thus does notagree with the commenter's concernregarding TENORM and unprocessedore.

Because the 10 CFR 20.1501 surveyand monitoring requirements are part of10 CFR part 20 Subpart F rather thanSubpart E, they do not fall within the 10CFR 20.1401(a) exclusion discussedabove. For UR facilities, these surveyand monitoring requirements must beread in conjunction with the 10 CFRpart 40 Appendix A Criterion 7 and 7Arequirements. Together, these 10 CFRpart 20 and part 40 requirements helpensure that issues of soil andgroundwater contamination-both atoperating UR facilities and thoseundergoing decommissioning-areproperly addressed. For example, theoperational monitoring and surveyrequirements in 10 CFR 20.1501 helpensure that the worker and public doselimits set forth in Subparts C and D of10 CFR part 20 are met, and URfacilities have been subject to these doselimits since 1991, when Subparts C, D,and F were first established. In that1991 rulemaking, in response to acomment on then-proposed 10 CFR20.1501 on the lack of specificmonitoring requirements, the NRCexplained that because 10 CFR part 20contains the general radiation protectionrequirements that apply to all classes ofNRC licensees, the wording of many ofits provisions is necessarily general. (56FR 23360; May 21, 1991). With thelimited exception discussed aboveregarding 10 CFR part 20 Subpart Erequirements, 10 CFR part 20 is still theset of general radiation protectionrequirements that is applicable to allclasses of NRC licensees, including URfacilities. Accordingly, UR facilities areand will remain subject to the 10 CFR20.1501 survey and monitoringrequirements.

However, the revisions to § 20.1501 inthe final rule do not establish any newremediation criteria for UR facilities.Standards for decommissioning URfacilities, and the various relatedrequirements for conducting soil andground-water monitoring at URfacilities, are found in 10 CFR part 40,Appendix A. The final rulemaking doesnot change any of these requirements. AUR licensee's program that complieswith the 10 CFR part 40, Appendix Asite remediation criteria would thus notbe impacted by § 20.1501(a)'s revisedsurvey requirements, and such programswould not become more complex orexpensive as a result of this rulemaking.The 10 CFR part 20 worker and publicdose requirements are combined withthe remediation criteria for UR facilitiesin 10 CFR part 40, Appendix A, as has



been the case previous to thisrulemaking.

The change in terminology from"radioactive material" to "residualradioactivity" in 10 CFR 20.1501(a) willnot result in any new operationalrestrictions at UR facilities. Residualradioactivity, as defined in 10 CFR20.1003, is not "residual radioactivematerial" as defined in 10 CFR 40.4.The latter term is used only with respectto materials at sites subject toremediation under Title I of theUranium Mill Tailings RadiationControl Act of 1978, as amended. Thechallenge to determine backgroundlevels of radiation at specific UR siteshas not changed as a result of this finalrule. Surveys that are reasonable underthe circumstances must be performed ifthere is a potential radiological hazardat a site. Commenters expressingconcern about the unlicensed sourcesthat are included in residualradioactivity, such as TENORM andunprocessed ores at a UR facility, haveread more into the rule change in§ 20.1501 than is intended. For example,UR facilities must currently manage ore,because Criterion 5H requires thatlicensees protect underlying soils andgroundwater from ore stockpilecontamination. Furthermore, oreremaining at a UR site duringdecommissioning is considered 11e.(2)byproduct material and may be placedinto the tailings impoundment, so longas it is not removed from the site forprocessing at another facility. Aspreviously stated, radioactive soilcontamination at UR sites undergoingdecommissioning is addressed byCriterion 6(6). None of this is changedby the final rule.

Comment G. 15: Applicability tobyproduct manufacturing licensees.

One commenter argued thatradionuclide and radiopharmaceuticalmanufacturing licensees are within thescope of currently operating sites thatthe NRC would not expect to become"legacy sites." The regulations shouldtherefore categorically exempt themfrom the additional residualradioactivity monitoring requirements.

Response: Radionuclide andradiopharmaceutical manufacturinglicensees are byproduct materiallicensees regulated under therequirements of 10 CFR part 30. If sucha facility has no credible releasescenario that could contribute tosignificant subsurface residualradioactivity at the site, then it is likelythat the licensee will not be affected bythe final rule changes to 10 CFR part 20.

Comment G. 16: Applicability toresearch and test reactors.

Several commenters argued thatresearch and test reactor licenseesshould be exempt from the final rulechanges to new 10 CFR 20.1406(c) andamended 10 CFR 20.1501.

Response: Research and test reactorsare licensed under the requirements of10 CFR part 50. If a research and testreactor has no credible release scenariothat could contribute to significantsubsurface residual radioactivity at thesite, then it is likely that the licensee ofsuch a reactor will not be affected by thefinal rule changes to 10 CFRpart 20.

Comment G. 17: Applicability to watertreatment facilities.

One commenter asked the NRC toaddress the potential applicability tolicensed water treatment facilities andto make it clear that such survey andmonitoring requirements likely will notbe necessary at such facilities because:(1) Their licensed operations involve theproduction of uranium-laden ionexchange (IX) resins that aresubstantially similar, if not identical, tothose generated at in situ uraniumrecovery (ISR) facilities; (2) allequipment that generates such resins is,by license condition, contained withinstructures/buildings that provideprimary and secondary containment tominimize, if not eliminate, potentialreleases of licensed material; (3) theresins do not present credible releasescenarios where potential subsurfacecontamination would be implicated;and (4) the licenses contain strictmonitoring and survey requirements.

Response: Licensees who possessuranium-laden resins at water treatmentplants are source material licenseesregulated under 10 CFR part 40.Licensees possessing uranium-ladenresins at water treatment plants are notsubject to the 10 CFR part 40 AppendixA criteria, and are thus subject to thenew 10 CFR part 20 requirements.However, if a water treatment facilityhas no credible release scenario thatcould contribute to significantsubsurface residual radioactivity at thesite, then it is likely that the facility willnot be affected by the final rule changesto 10 CFR part 20.

Comment G. 18: Residual radioactivityat publicly owned sewage treatmentworks.

A commenter noted that the NRC'sconclusion that municipal wastetreatment facilities were unlikely tohave significant concentrations of long-lived radionuclides fails to account forthe potential impacts to such facilities if(1) the new uranium and radiumMaximum Contaminant Levels (MCLs)are enforced effectively by EPA andtheir delegated States, and (2) uraniumand/or radium water treatment residuals

are released in an uncontrolled mannerinto sanitary sewers or other dischargepoints from which such residuals couldmigrate.

Response: Regardless of whether thedrinking water treatment plant is: (1)Not removing radium from the drinkingwater (such as prior to the new EPAdrinking water standards forradionuclides) or (2) removing radiumfrom drinking water and discharging theradium-laden residuals to the sanitarysewage system, the amount of radium(or other radionuclide found in thesource water) that reaches the publiclyowned sewage treatment works (POTW)is unchanged. The NRC assumes, forpurposes of this rulemaking, that EPAdrinking water standards will beenforced effectively at municipal watertreatment plants, and that any release ofuranium and/or radium residuals willbe done in a controlled mannerconsistent with license conditions andregulations. Recommendations areavailable from the ISCORS regardingactions that a POTW operator may taketo determine if there is radioactivecontamination at its facility and how tointerpret the detection results. Therecommendations are contained inISCORS Technical Report 2004-04(ML103400184).

Comment G. 19: Definition of residualradioactivity.

One commenter, supported by severalothers, argued that licensees should notbe required to control unlicensedmaterial in a manner that issubstantively different from thatrequired by a non-licensee. This samecommenter stated that the definition of'residual radioactivity" in 10 CFR20.1003 is inconsistent with a risk-informed approach to regulation andwith the recently-issued RIS 2008-03"Return/Re-Use of PreviouslyDischarged Radioactive Effluents"(ML072120368). In further support ofthis argument, the commenter cited theproposed rule's preamble (73 FR 3815;January 22, 2008) as excluding from therule's scope off-site contaminationattributable to previously releasedeffluents, thus demonstrating theinconsistency of requiring the licenseeto control onsite unlicensed material.This commenter accordingly requestedthat the NRC revise the definition of"residual radioactivity" by deleting itsreference to unlicensed sources, and itsreference to routine releases ofradioactive material.

Response: "Residual radioactivity" isa term already defined in 10 CFR20.1003. Because no changes to thisterm were proposed when thisrulemaking action was published forpublic comment, the request to now



change the definition is outside thescope of this rulemaking. In consideringthe comment, the NRC re-examined thecited section of the proposed rule'spreamble (73 FR 3815). As stated there,the scope of this rulemaking "does notinclude offsite contaminationdiscovered during decommissioning."The final rule deletes the following textwhich conditioned the above statement:"unless such contamination is anextension of onsite contamination (e.g.,a contaminated groundwater plumeoriginating from the licensee's facility)."What the NRC may later choose to doregarding offsite contaminationdiscovered during decommissioning isunknown at this point, and making theabove deletion avoids any limitation onfuture actions the NRC may take on thisissue.

When RIS 2008-03 was issued, theterm "radioactive material" was used in10 CFR 20.1501(a), which created theneed to differentiate licensed fromunlicensed material. The RIS 2008-03provides a distinction between onsiteand offsite unlicensed material. Offsiteunlicensed material results primarilyfrom authorized effluent discharges tounrestricted areas that have beenevaluated in accordance with regulatoryrequirements. Radioactive effluentdischarge controls, environmentaldispersion modeling, and doseassessments ensure that any public doseis within public radiation protectionstandards. The licensed radioactivematerial that was properly discharged inaccordance with 10 CFR part 20 to theunrestricted area is no longer theresponsibility of the licensee. However,onsite unlicensed material is sometimesco-mingled with licensed radioactivematerial (for example from leaks orspills) and generally cannot bedistinguished from or separated fromlicensed radioactive material. Bothlicensed and unlicensed radioactivity(e.g., from returned or re-used effluents)at the site are the responsibility of thelicensee, during operations and duringdecommissioning. Unlicensedradioactivity from the return or recycleof previously discharged radioactiveeffluents can be discharged in liquid orgaseous effluents to the environment inaccordance with RIS 2008-03. Thecontrol of residual radioactivity at thesite during operations increases theassurance that the 10 CFR 20.1402criteria will be met at the time ofdecommissioning. The reasons that theNRC is using the term "residualradioactivity" in new § 20.1406(c) andamended § 20.1501 were set forth in theproposed rule's preamble (73 FR 3814).The NRC does not agree that the

definition of "residual radioactivity" in10 CFR 20.1003 is inconsistent with RIS2008-03.

Comment G.20: Clarify what is meantby "significant" residual radioactivity.

A commenter stated that the term"significant" is not defined and may beopen to wide interpretation by licenseesand others. Similarly, several othercommenters stated that the NRC shoulddefine "significant" contamination, andshould specify: (1) Methods required toconduct surveys and their frequency, toensure consistency in the groundwatermonitoring and sampling program; and(2) the constituents to be sampled, thetiming and frequency of the sampling,sampling techniques, and how toanalyze samples.

Response: The intended meaning ofthe phrase "significant residualradioactivity "-which is not a definedregulatory term-is discussed in theproposed rule's preamble (73 FR 3815and 3835). As stated there, "significant"residual radioactivity is a quantity ofradioactive material that would laterrequire remediation duringdecommissioning to meet theunrestricted use criteria of 10 CFR20.1402. The DG-4014 proposesguidance to licensees on acceptablemethods to conduct soil andgroundwater sampling to meet the newsurvey requirements.

Comment G.21: Subsurface andsignificant contamination.

One commenter disagreed with thestatement in the proposed rule'spreamble (73 FR 3819) that subsurfacecontamination occurs in an area at least15 centimeters (6 inches) below thesurface, arguing that instead it should bedefined to, and inclusive of, thegroundwater table. The samecommenter noted that "Significantcontamination" is not defined, contraryto a recommendation made at Page 22of the 2006 Final Report of the NRCLiquid Radioactive Release LessonsLearned Task Force (ML062650312).

Response: The NRC's use of the term"subsurface" in the proposed rulepreamble is consistent with thedefinition of "subsurface" used inNUREG-1575, "Multi-Agency RadiationSurvey and Assessment of Materials andEquipment Manual (MARSAME)"(ML070110228). As stated on Page 3-14of that manual, the surface layer isrepresented as the top 15 centimeters (6in.) and may include gravel fill, wastepiles, concrete, or asphalt paving.Subsurface soil and media are definedon that same page of the manual as anysolid materials not considered surfacesoil.

In this rulemaking, the NRC decidednot to make "significant contamination"

a defined term in the regulations.Instead, the NRC found that "residualradioactivity"-which is already adefined regulatory term-covers thetype of subsurface contamination thatprompted the creation of the LiquidRadioactive Release Lessons LearnedTask Force. Additionally, as stated inthe response to Comment G.20, theproposed rule's preamble providesguidance on the level of residualradioactivity that is considered to be"significant."

Comment G.22: Additional sitecharacterization and monitoring notwarran ted.

Several commenters stated that theproposed NRC regulations could havethe unintended consequence oftriggering performance of extensivecharacterization and remediation efforts,without regard to the degree of actualhealth and safety impact. The proposedregulations would require theevaluation of subsurface contaminationbased on future decommissioningexposure scenarios, even though noforeseeable operating exposure limitswould be exceeded. Furthermore, due toaccess constraints, it is unlikely thatsubsurface characterization efforts at anoperating reactor would provide anybetter DCE input data (i.e., volumes andlocations of subsurface media exceedingdecommissioning criteria) than thatproduced by experienceddecommissioning experts makingengineering judgments usinginformation currently available as 10CFR 50.75(g) file data.

Response: As stated in the proposedrule's preamble (73 FR 3813), the NRCidentified the need for licensees duringfacility operations to timely report theexistence of subsurface contaminationthat has the potential to complicatefuture decommissioning efforts. But asindicated in responses to othercomments, these commentersincorrectly state that the proposedregulations require the immediateevaluation of subsurface contaminationeven in cases where no foreseeableoperating exposure limits would beexceeded by the contamination. Asstated in DG-4014, a licensee maydecide to perform extensivecharacterization following its initialscoping surveys and preliminarycharacterization to determine if an areaat the site contains significant residualradioactivity. There may be a need foradditional monitoring and modeling,following evaluation of the initialscoping surveys, based on thesignificance of a spill or leak. But ifthere is no significant residualradioactivity at a site, then it is likelythat the licensee's current monitoring


plan is sufficient and no additionalsurveys or monitoring are necessary.When there is significant residualradioactivity at a site, survey results willserve as a technical basis to support thelicensee's estimates of volumes andlocations of subsurface contamination.Such estimates will, in turn, aid thelicensee in arriving at a more accurateDCE.

Comment G.23: Frequency of surveys.One commenter said that the phrase

in 10 CFR 20.1501(b), which requireslicensees to keep records from surveys"describing the location and amount ofsubsurface residual radioactivityidentified at the site," does not clarifywhether the surveys are to be simplyone-time snapshots of residualradioactivity at One time, or are to beconducted periodically. The commenterurged the NRC to specify that surveysare mandatory and to be conductedperiodically, and that the resultssubmitted to the NRC will be madepublic.

Response: The frequency of surveys isdependent on site-specific conditionsand is a topic discussed in guidance.The survey results that are included inrecords important for decommissioningare a licensee recordkeepingrequirement for NRC review. As notedin the response to Comment D.4, theNRC understands that power reactorlicensees will be submitting the onsitegroundwater sampling results as part oftheir annual effluent and environmentalreports. The NRC understands that thisinformation is planned to be publiclyavailable in ADAMS, similar to theannual effluent and environmentalreports that are currently publiclyavailable.

Comment G.24: Assessed backgroundradioactivity prior to operation.

One commenter questioned the NRCstatement that materials licenseesalready must assess their backgroundradiation prior to operation. Anothercommenter argued that materialslicensees are not now required by 10CFR 20.1301(a)(1) to makecomprehensive measurements ofradioactivity in soil or groundwaterbefore operation to distinguish levels ofresidual radioactive material from thatdue to natural background or theoperations of others.

Response: The following statement inthe proposed rule's preamble is notcorrect: "All licensees with operatingfacilities must have performed anassessment of background radiationprior to operating their facility, to becompliant with the requirements in 10CFR 20.1301(a)(1)" (73 FR 3819). TheNRC regrets the error. Measuringbackground before plant operation is not

a regulatory requirement in 10 CFRparts 20, 50 or 52. Instead, as stated inRegulatory Guide 4.1, "Programs forMonitoring Radioactivity in theEnvirons of Nuclear Power Plants," alicensee or license applicant for anuclear power plant should initiatepreoperational monitoring 2 yearsbefore operations to provide a sufficientdata base for comparison withoperational data. This would includesurveys of background radioactivity.

Comment G.25: The proposed ruleeffectively eliminates the option to userestricted release for licensetermination.

A commenter stated that the intent ofthe proposed rule is to addresssignificant amounts of residualradioactivity at a site in order to achieveeffective decommissioning planning.The proposed rule assumes that foroperating facilities, these events wouldresult in a quantity of residualradioactivity that would later requireremediation during decommissioning inorder to meet the unrestricted usecriteria of 10 CFR 20.1402. Theestablished approach for determiningthe cost under ALARA is not factoredinto the proposed remediation decision.Further, as currently worded, theproposed rule and draft regulatoryguidance have the apparentlyunintended consequence of eliminatingthe ability to use the restricted releasecriteria at license termination, because aspill has to be remediated to the DerivedConcentration Guideline Levels (DCGLs)for unrestricted release of the site. If thelicensee does not remediate to thescreening DCGLs, it must put moneyinto its decommissioning fund toremediate such that the license can beterminated for unrestricted use of thesite.

Response: The NRC does not agreethat it is effectively eliminatinglicensees' use of the restricted releaseoption for license termination. On thecontrary, the changes being made to 10CFR 30.35(e)(1)(i)(B), 40.36(d)(1)(i)(B),70.25(e)(1)(i)(B), and 72.30(b)(2)(iii)allow licensees during facilityoperations to base their DFP on the 10CFR 20.1403 restricted release criteria, ifthe licensee can demonstrate its abilityto meet the provisions of § 20.1403. TheNRC will accept a reasonablemethodology used by a licensee to (1)evaluate remediation costs that supporta licensee's decision regarding itsresponse to a spill or leak and (2)demonstrate that the licensee isachieving doses at the site that areALARA. The DCGL screening criteria inNUREG 1757, Volume 1, Rev. 1,"Consolidated NMSS DecommissioningGuidance," apply when the site is a

relatively simple site with residualradioactivity in topsoil, typically in thetop 15 centimeters of surface soils. Formore complex sites with deepersubsurface residual radioactivity, thecriteria for significant residualradioactivity may require an evaluationusing a more complex modeling code,such as RESRAD or its equivalent, todetermine whether the subsurfaceresidual radioactivity is significant withrespect to decommissioning criteria of25 mrem per year TEDE. The DG-4014proposes more guidance to licensees onthis topic.

Comment G.26: Reporting andrecordkeeping requirements.

Numerous commenters addressed thereporting and recordkeepingrequirements. Most were critical,although for widely differing reasons.Several commenters criticized therequirements as unnecessary or toobroad. One agreed that documentationof subsurface contamination should beplaced in decommissioning records.However, the commenter stated that asmall leak or spill inside a building thatis promptly cleaned up is not adecommissioning issue. Thus, thecommenter objected to references to"any" leakage or spills. Anothercommenter stated that licensees arecurrently required to report significantenvironmental impacts to both NRC-Agreement State agencies and the EPA.A commenter from a power reactorstated that reporting rules under Part 20were unnecessary because of therequirements already in place in 10 CFR50.75(g). One commenter also pointed topotential double counting, noting that10 CFR part 20 prohibits gaseouseffluent releases to the atmosphereabove regulatory limits. In accordancewith 10 CFR part 50, Appendix I,releases within regulatory limits mustaccount for the dose to the public. Thus,low levels of radioactivity could bedeposited onto the site due to rainout,washout and other means, which couldthen leach into the subsoil. Theproposed rule does not consider thatthese gaseous effluents are accountedfor at the time of their release, causingthem to be counted again. Finally, onecommenter stated that if the proposedrule is finalized, more than 60 days willbe needed to implement it. At least ayear should be provided to prepare therequired reports.

Response: Licensees are responsiblefor completing decommissioningactivities and thus must, fordecommissioning planning purposes,determine which leaks and spills mustbe documented. The NRC has removedits reference to "any" leakage or spillsin DG-4014. The NRC agrees that



gaseous effluents that are properlydischarged in accordance with 10 CFRpart 20 to an unrestricted area are nolonger the responsibility of the licensee.However, because onsite unlicensedmaterial is sometimes co-mingled withlicensed radioactive material (forexample from leaks or spills) andgenerally cannot be distinguished fromor separated from licensed radioactivematerial, both licensed and unlicensedradioactivity (e.g., from returned orreused effluents) at the site are theresponsibility of the licensee, duringoperations and duringdecommissioning. The control ofresidual radioactivity at the site duringoperations ensures that the 10 CFR part20 Subpart E criteria for unrestrictedrelease will be met at the time ofdecommissioning. The NRC agrees withthe commenter on the effective date ofthe final rule and has established animplementation period of eighteenmonths following publication of thefinal rule in the Federal Register.

Comment G.27: Public documentationof spills and leaks.

Several commenters argued that theproposed rule was inadequate because,although licensees are required to keeprecords of spills and leaks on site, theyare not required to notify NRC regionaloffice or headquarters that such spillsand leaks have occurred. Thus,information about spills and leaks willnot be added to the "public side" of theCommission's ADAMS documentmanagement system, nor will theCommission ever "possess" a documentfor purposes of the Federal Freedom ofInformation Act. The proposed rule willnot enable the public to see thecompany's memo documenting the leak,spill, or plume. These commentersargued that the final rule must requirethat all licensees submit theirdocumentation of spills and leaks to theNRC and that the NRC promptly makesuch documentation available to thepublic. One stated that operatingfacilities must be required to informstate and local officials of the following,with follow-up notification to the NRC:(1) Onsite leaks and spills intogroundwater and (2) onsite or offsitewater sample results that exceedestablished criteria in the radiologicalmonitoring program. Another said thatall surveys and reports of leaks andspills prepared pursuant to § 20.1406,§ 20.1501 and § 50.75(g) must besubmitted to the NRC and disclosed tothe general public through publicationon the NRC'S ADAMS Database.

Response: The proposed rule did notcontain new reporting requirementsregarding spills and leaks, and the

issues raised in this comment are notwithin the scope of this. rulemaking.

H. Financial Assurance Mechanismsand Reporting

Comment H. 1: Need for regulations.Several commenters argued that the

current decommissioning rules in 10CFR parts 20, 30, 50, 70, and 72 alreadyprovide reasonable assurance ofadequate protection of public health,safety, and the environment related todecommissioning, and that thereforenew and additional financial assurancerequirements are unnecessary. Onecommenter, whose comments wereendorsed by several other commenters,cited that statement in SECY-03-0069that "no licensee providing a parentcompany or self-guarantee has enteredbankruptcy or has failed to proceed withdecommissioning projects in anadequate manner." This commenterfurther quoted the SECY statement thatthe NRC "staff has not observed anexample of an NRC licensee whosedecommissioning funding fell shortbecause of inadequate disclosure of thelicensee's financial position." Onecommenter stated that the proposedrules contained some modestimprovements in financial assurance formaterials facilities and interim spentfuel storage installations but argued thatit did nothing to require licensees ofoperating power reactors to set asidesufficient funds for decommissioning.

Response: The proposed rule did notidentify any changes to financialassurance requirements specificallyapplicable to licensees of operatingpower reactors. Thus, comments arguingfor such changes are outside the scopeof this rulemaking and will not beconsidered here.

The NRC agrees with the othercommenters that an extensive revisionto the financial assurance requirementsapplicable to operating reactors is notnecessary, because in general thecurrent requirements have workedeffectively since they were promulgatedin 1988. However, since then, thefinancial industry, accountingstandards, bankruptcy law, andcommercial law and practices haveevolved, and the NRC periodicallyamends its financial assurance rules toaddress these changes. The NRCdisagrees with the commenters that thecurrent rules are fully adequate andrequire no changes to update or improvethem. The agency's goal is to addresspotential risks to the financial assurancesystem as they are identified, ratherthan waiting until the risks manifestthemselves as delays indecommissioning or the addition ofmore legacy sites.

Comment H.2: Financial tests.One commenter stated that the

current financial tests in Appendix A(Parent Company Guarantee) andAppendix C (Self-Guarantee) of Part 30have proved to be an economical wayfor materials licensees to demonstratefinancial assurance sufficient to funddecommissioning efforts. The NRC hasnot demonstrated a need, and in fact itis unnecessary, to impose greaterrestrictions in those tests to providereasonable assurance ofdecommissioning funding. Anothercommenter expressed support for theclarification in the proposed rule thatadjustments of "+" or " -" to bondratings are included. However, anothercommenter questioned the proposedrequirement that bond ratings be for themost recent "uninsured,uncollateralized, and unencumbered"bond issuance. The commenter statedthat the NRC had not presented anyevidence concerning the need for thischange, particularly because ratings forsenior secured debt are a relevantindicator of good financial health. Thesame commenter argued that althoughannual reevaluation of the financial testwas already the practice, suchreevaluations should not be required tobe certified by an independent CertifiedPublic Accountant (CPA).

Response: Although the NRC agreesthat the current parent companyguarantee and self-guaranteemechanisms have been effective meansof demonstrating financial assurance, itbelieves that the revisions to thefinancial tests that determine eligibilityto use the guarantees will strengthen thetests and thereby increase the assuranceprovided by the guarantees. Otherchanges will codify established NRCpractice. The NRC currently allows theuse of "+" and "-" bond ratings. Therequirement for "uninsured,uncollateralized, and unencumbered"bonds is currently part of some, but notall, financial tests used by the NRC, andthe agency is making all the testsconsistent with respect to this criterion.The NRC is convinced that thisrequirement is desirable and increasesassurance. An uninsured,uncollateralized, and unencumberedbond rating is an opinion as to theissuer's ability to meet its repaymentobligations in a timely manner. Ratingagencies typically go through anextensive financial evaluation processand credit analysis before they assignratings to the debt of an organization,including meeting with management,examination of financial statements,research into industry and marketconditions, and review of non-publiclyavailable information obtained from the



organization. However, bonds that areinsured, collateralized, or encumberedare not rated in the same manner.Instead, the rating of insured bonds isbased on the rating assigned to theinsurance company and can changesignificantly if that rating changes. TheNRC notes recent public discussions ofsudden declines in the rating of insureddebt instruments based on declines inthe rating of the insurers. Similarly, therating of collateralized bonds dependson an evaluation of the quality of thecollateral, rather than an evaluation ofthe underlying financial condition ofthe bond issuer and can change quicklyand significantly if the quality of thecollateral declines. Bonds issued forcertain purposes (usually by publicentities) may be tied (encumbered) toproperty that is affected by activitiespaid for by the revenues from the bonds,and the property may, in turn, serve ascollateral for the bonds. The ratings forsuch bonds may be affected by all ofthese factors. Therefore, the NRCrequires that when bonds are used aspart of a demonstration that the firm canpass a financial test, the bonds areuninsured, uncollateralized, and.unencumbered. With respect to CPAcertifications, this requirement iscurrently part of the financial tests, andthe NRC did not propose to revise it.The agency, therefore, is going forwardwith the changes as proposed.

Comment H.3: Insurance.One commenter addressed the NRC's

decision not to require materialslicensees to obtain environmentalcleanup insurance/onsite propertydamage insurance. The commenteragreed with the NRC's assessment thatthe cost of such insurance would beprohibitive for a very rare event.

Response: In the absence of anycomments supporting the inclusion ofan insurance requirement, the agencyplans to continue tracking the issue butis not adopting such a requirement atthis time.

Comment H.4: License transferapplication.

The three commenters who addressedthis topic supported the proposedrequirement to supply financialassurance information as part of alicense transfer application. Twocomments supported the § 30.34proposed requirements.

Another commenter supported theproposed addition to 10 CFR 72.50. Thiscommenter pointed to the possibility ofa licensee's spinning off a merchantnuclear plant into a new holdingcompany with limited financial assets.The commenter stated that under thecurrent regulations, it remains unclearwhat financial assurance applicants

must provide to the NRC in order toaddress this issue.

Response: The NRC agrees with thecommenters that it is important, beforeapproving a license transfer, todetermine whether the proposed licensetransferee will be able to provide therequired financial assurance fordecommissioning. Therefore, the NRC isadopting this proposed requirement.

Comment H.5: Tangible net worthrequirement increase to $21 Million.

One commenter agreed with theproposal to increase the tangible networth requirement in the existingfinancial tests to address inflation sincethe financial tests were adopted, butargued that the amount of $19 millionwas based on a calculation performed in2005. This commenter stated that theNRC should recalculate the proposed$19 million for tangible net worth onthe basis of 2007 or 2008 to ensure thatit is fully current. The commenterestimated that approximately $21million would be the more appropriateamount.

Another commenter noted that theproposed rule would also modify Part30, Appendix C to add a new criterionto the financial test for an entity thatwould provide a self-guarantee. Theproposal would add a requirement fordemonstrating a tangible net worth of atleast $19 million. The commenter notedthat the only basis given for this changeis that it would make Appendix Cconsistent with the financial tests inAppendix A (parent companyguarantees) and Appendix D (companieswith no outstanding rated bonds).However, the commenter argued thatthe proposed change is unnecessary-first, because the proposed test ($19million) has no correlation to thedecommissioning obligation andsecond, because a focus on tangible networth as a measure of financial stabilityand risk of default is unnecessary. Thecommenter stated that for manycompanies a $19 million tangible networth test that excludes intangibleassets would serve little purpose. Thecommenter concluded that the NRCshould not adopt this requirement.

Response: The NRC agrees with thecomment to increase the tangible networth requirement to $21 million for thefinancial tests, as discussed in sectionII.N.7 of this document and has madethis change in the final rule text. TheNRC disagrees with the secondcomment regarding the proposedaddition to Appendix C of Part 30 of arequirement for licensees and applicantsto have a tangible net worth of at least$21 million. Although the $21 milliontangible net worth minimum might insome cases be substantially less than the

estimated costs of decommissioning, thepurpose of this requirement is not tomatch estimated costs ofdecommissioning, but rather, as statedin section II.N.7, to provide greaterassurance of financial stability andhence a lower likelihood of bankruptcy.Further, as discussed in section II.N.7,the reasons for adopting the tangible networth test as one criterion for using aguarantee apply today as much as theydid when the parent guarantee wasestablished in 1988. Because a tangiblenet worth of at least $21 million isconsidered by the NRC as an effectivefinancial threshold among the otherfinancial tests that may be applied bylicensees to use a guarantee mechanism,the NRC amended Appendix C of Part30 to include the $21 million tangiblenet worth requirement.

Comment H.6: Inclusion of salvagevalue.

One commenter argued that the NRCshould consider allowing DCEs toconsider the resale value of product andother valuable assets, determined on acase-by-case basis. The amount could belimited to less than the contingencyfactor in the cost estimate.

Response: Since the financialassurance requirements werepromulgated in 1988, the NRC has takenthe consistent position, expressed inguidance until issuance of this proposedrule, that licensees should not takecredit in their DCEs for the value of anymaterials that may be byproducts of thedecommissioning process (e.g., salvagevalue). Estimates of salvage value areconsidered extremely speculative anduncertain, and allowing such estimatesto be included in DCEs as offsets wouldraise the possibility that the amount offinancial assurance would beinadequate if at the time ofdecommissioning such salvage valuecould not be realized. Allowing salvagevalue to be included up to the amountof the contingency factor would subvertthe reason for the contingency factor,because it is required to addressunforeseen technical situations thatincrease the cost of decommissioning.

Comment H. 7: Assume 1 percent realrate of return in §20.1403 trust.

Several commenters addressed theproposal to require licensees to assumeonly a 1 percent real rate of return onfunds set aside to provide long-termcare and maintenance of sitesdecommissioned for restricted use.Commenters' positions ranged fromsupport for the proposal to statementsthat the 1 percent rate was too high andstatements that it was unnecessarilylow.

Comment H.7.1: One commenter whosupported the proposal noted that a


similar provision is currently containedin 10 CFR part 40, Appendix A,Criterion 10, which provides that if asite-specific evaluation shows that asum greater than the minimum amountspecified in the rule is necessary forlong-term surveillance followingdecontamination and decommissioningof a uranium mill site, then the totalamount to cover the cost of long-termsurveillance must be that amount thatwould yield interest in an amountsufficient to cover the annual costs ofsite surveillance, assuming a 1 percentannual real rate of interest. Thecommenter noted that once reclamationis complete at Title II uranium milltailings sites, the licensee is required totransfer the land containing the 11(e)2byproduct to the Federal Government/Department of Energy (DOE) or to theState government (if the State agrees toaccept it) along with funds (a minimumof $250,000 in 1978 dollars or more ifnecessary) to fund long-term sitemonitoring and maintenance, assuminga 1 percent real rate of return on thefunds. The commenter believed thatextending this type of regulation toother licensees is consistent and fair.

Response: No response is necessary.Comment H. 7.2: One commenter

criticized the proposed amendment to10 CFR 20.1403. This commenter arguedthat the 30-year period of interest ratesexamined by the NRC resulting in the 1percent proposal did not adequatelyrepresent the highly variable history ofinterest rates. The commenter arguedthat the NRC should incorporate theuncertainty of predicting future interestrates into its analysis of the correct ratesfor long-term care by adopting a slidingand declining interest rate assumption.The commenter cited an academicexpert's suggestion for a sliding scale ofinterest rates ranging from 4 percent(years 1-5) to 0 percent (years 300 andover). However, the commenter did notexplicitly endorse the sliding scaleprovided in its comments.

Response: For the reasons discussedin the January 22, 2008, proposed rule,the NRC's view remains that anassumed 1 percent annual rate of returnis an appropriate criterion to qualify forlicense termination under restrictedconditions. From 1975 to 2005, U.S.Treasury Bills returned an average of1.58 percent per year, and governmentbonds returned an average of 4.87percent per year (73 FR 3824; January22, 2008). Additionally, the method bywhich the assumed annual real rate ofreturn would be applied is the same asthe method required by 10 CFR part 40,Appendix A, Criterion 10 (rule fordetermining the adequacy of fundsprovided by a licensee for long-term

surveillance and control of tailings priorto the termination of a uranium orthorium mill license). NUREG-0706provides details to determine theminimum charge for long-termsurveillance and control. Pages 14-12through 14-16 of NUREG-0706, Volume1 (ML032751663) provide examples ofthe method, including Table 14.2 thatshows different levels of the total fundamount based on three values of annualmonitoring expense and three values forthe real rate of return. The method usedto derive the values in Table 14.2 isknown as an annuity that has nodefinite end, which would beappropriate for long-term surveillanceand control of a site contaminated withuranium or thorium. An annuity thathas no definite end is a "perpetuity," ora "perpetual annuity." The presentvalue of a perpetuity is equal to theamount of the annual payment, assumedto be in identical amounts each year,divided by the appropriate rate ofreturn. The perpetuity acceptable to theNRC includes the annual payments foran independent third-party to performthe surveillance and control work,including the 25 percent contingency.For example, if the annual paymentwere determined to be $200,000 at thetime the license was terminated, then aminimum amount of $20 million wouldbe required at an assumed 1 percent realrate of return. This method to derive thevalue of an adequate amount ofdecommissioning financial assurance isnot the same as a sinking fund method,suggested by the commenter, in whicha sliding scale of interest rates could beapplied over a specified period of time.The NRC considers an assumed annual1 percent real rate of return oninvestment to be appropriate for 10 CFR20.1403(c)(1), as it is for 10 CFR part 40,Appendix A, Criterion 10, even ifhistorically low rates of return prevailfor extended periods of time. Themethod is well suited for assessment ofsites for which restricted use is plannedfor license termination. Accordingly, theNRC is making no change to the ruletext in 10 CFR 20.1403(c)(1) in the finalrule compared to the proposed rule.

Comment H. 7.3: Some commentersargued that the proposed rate to be usedin determining the appropriate amountto be set aside in a trust for long-termsurveillance and monitoring was toolow. They argued that the trust fundsshould be managed to the standard ofcare required by State or Federal law orone or more State or Federal regulatoryagencies with jurisdiction over the trustfunds, or to the standard of care of thata prudent investor would use in thesame circumstances. In light of these

new restrictions on the handling andsegregation of long-term funds, theadequacy of the trust funds should beassessed based on an assumed annual 2percent real rate of return oninvestment. This would bring thetreatment of long-term surveillance andmonitoring funds into line with theother NRC regulatory provisions, suchas 10 CFR 50.75(e)(1)(ii), which permitcredit for projected earnings using up toa 2 percent annual real rate of return.One commenter noted that the 2 percentreal rate of return assumption is alreadyvery conservative and is used over verylong periods of time, including safestorage (SAFSTOR) periods forshutdown reactors. The commenterasserted that the NRC should not departfrom a real rate of return standard thatis already adequately conservative. Thecommenter stated that it did not find theargument for considering the 1 percentreal rate of return compelling.

Response: For the reasons discussedin the response to Comment H.7.2, theNRC believes an assumed 1 percentannual rate of return is an appropriatecriterion to qualify for licensetermination under restricted conditions.

Comment H.8: Standby trustestablished for all guarantees.

Several commenters opposed theproposed requirement that a standbytrust fund be set up at the same timethat a licensee proposes using a parentcompany guarantee for financialassurance. One commenter argued thatto qualify for the parent-companyguarantee, the licensee's guarantor mustpass a rigorous financial test withacceptance criteria that banks, whichwould engage with licensees to establishthe standby trust fund, may not satisfy.There would be no need for such acompany, particularly with an AAArating, to establish a trust fund with abank with a rating that is at the samelevel or lower. It makes no sense for theNRC to prefer to accept this potentiallygreater vulnerability. Anothercommenter noted that a Part 50 reactorlicensee may have established adecommissioning trust and be using aguarantee to provide financial assurancefor the balance of the decommissioningassurance required. This commenterargued that a standby trust should notbe required to support a parentcompany guarantee if the licensee hasalready established a decommissioningtrust. The same commenter also arguesthat, for non-reactor licensees, thisrequirement imposes an unnecessaryburden and significant cost, includingthe cost to develop the trustarrangements and ongoing trustee fees.These costs are not insignificant in thecontext of the amount of the guarantees


being provided by many non-reactorlicensees. Moreover, the cost is simplynot justified, given the already very highthresholds for qualifying to give aguarantee (e.g., an investment gradecredit rating). A company that drops toa slightly below-investment-grade ratingis not necessarily in financial distress.This itself is a very early warning signal,which can be used as the trigger pointfor requiring the creation of the trustand setting aside of funds, long beforethe company's ability to fund theguarantee can seriously be questioned.Thus, the commenter suggests that therequirement to establish a trust beimposed at the time that this advanceindicator of a potential financial issuearises, and payment under a guaranteeis required under the new rules. Forreactor licensees, the requirement for anexisting standby trust is not a majorissue, because existing trustarrangements should qualify to servethis purpose. If this requirement isretained, a clarifying sentence should beadded: "An existing trust established forpurposes of meeting the prepayment orexternal sinking fund methods pursuantto 10 CFR 50.75(e)(1) is acceptable toserve as the "standby trust." Thiscommenter concluded that there isinsufficient justification to requireadditional standby trust agreements forfinancially sound companies well inadvance of the need.

Response: As stated in the proposedrule's preamble, the standby trust isnecessary to ensure that if the entitysupplying financial assurance isrequired to provide funds, the funds donot need to go directly to the NRC,which would then be required to remitthem to the U.S. Treasury. For fundsplaced in a standby trust, the NRC canissue instructions to the trustee toexpend the funds on decommissioningwithout facing the possibility ofsignificant delays in carrying outdecommissioning. If the NRC hasrequired the guarantor to fund thestandby trust, it will be because theparent or self-guarantor no longer canpass the financial test and has not beenable to obtain alternative financialassurance in an approved form. Thus,because the financial strength of theparent or self-guarantor at that pointwill not be sufficient to pass thefinancial test, the argument about thefinancial vulnerability of the guarantorversus the vulnerability of the trustee isnot relevant. Furthermore, the licenseeshould be able to set up a standby trustwith de minimis funding at relativelylittle cost. The NRC is not aware of anyreason that a nuclear power reactorcould not revise and use a tax-qualified

or non-tax-qualified trust fund that thereactor already has in place as itsstandby trust. Having the trust in placefrom the beginning of the time that thelicensee relies on a guarantee for itsfinancial assurance will ensure that ifthe funds are needed fordecommissioning, delays will not occurwhile the trust is set up.

Comment H.9: Parent companyguarantor is subject to Commissionorders.

One commenter noted that theproposed rule would require that whatis essentially a consent order be enteredinto by a parent company seeking toprovide a guarantee on behalf of itssubsidiary.

Response: A parent companyproviding a parent company guaranteeon behalf of its subsidiary must agree tobe subject to Commission orders tomake payments under the guaranteeagreement. The NRC believes that theparent company's agreement to besubject to such Commission orders istantamount to consent to NRC personaljurisdiction. The parent company wouldbe acknowledging that it is subject toNRC subject matter jurisdiction, but itwould not be waiving any hearing rightsor defenses.

Comment H.1O: Joint and severalliability for the full cost ofdecommissioning.

Comment H. 10: Several commentersobjected to the proposed addition of anew joint and several liability provisionto Part 30 Appendix A. The provision(designated as Section IIL.E in theproposed rule) pertains to the parentcompany guarantee option that NRClicensees have for providing financialassurance, and states as follows:

The guarantor must agree that it is jointlyand severally liable with the licensee for thefull cost of decommissioning, and that if thecosts of decommissioning and termination ofthe license exceed the amount guaranteed,the guarantor will pay such additional coststhat are not paid by the licensee.

The comments objecting to thisprovision are collectively summarizedin the following paragraphs.

Adopting the proposed requirementwould effectively eliminate the abilityof power reactor licensees to combineuse of the parent company guaranteemethod with an external sinking fundmethod for providing financialassurance. In 1998, NRC changed itsrules to specifically permit the currentpractice of using a parent guarantee incombination with a trust fund balance,a practice which had been prohibiteduntil 1998. Now, under existing 10 CFR50.75(e)(1)(iii)(B), a parent guarantee fora reactor licensee is expected to conformto the "guarantee and test as contained

in Appendix A to 10 CFR part 30."Thus, changing Appendix A to Part 30impacts how 10 CFR 50.75(e)(1) isapplied with respect to approval ofparent company guarantees, in which aguaranty is typically provided in alimited specified amount incombination with a trust fund orexternal sinking fund. For example, if alicensee's trust balance is $350 million,and the NRC required amount ofassurance is $360 million, a parentcompany guarantee may be provided inthe amount of $10 million. The parentcompany is not guaranteeing the full$360 million. The preamble of theproposed rule published January 22,2008 (73 FR 3818) states that no changesto 10 CFR 50.75(e) requirements werebeing proposed. Imposing the abovejoint and several liability requirementon power reactors may thus be anunintended consequence of thisproposed change to Appendix A to 10CFR part 30.

Further examples were cited in whichparent company guarantees have beenapproved by the NRC for power reactorlicensees, including Orders inindividual license transfer cases that donot provide for joint and several liabilitybetween a parent guarantor andlicensee. In one such case, a companyhad acquired an ownership share in areactor licensee, and the NRC approveda guaranty (given by the parentcompany on behalf of the acquiringcompany) to provide financial assurancefor the difference between the amountthat was deposited in adecommissioning trust account and theNRC's 10 CFR 50.75(c) formula amountfor decommissioning. Imposition of anew requirement for the parent toassume joint and several liability aboveand beyond the amount of the parentguarantee would be a fundamentalchange, after the fact, to the terms of thistransaction. There has not been anypractical experience demonstrating aneed to impose such a joint and severalliability requirement on parentguarantors. The proposed rule's packageprovides no specific evidence of anyvulnerability in a parent guaranteearrangement, only a brief reference to a"potential" vulnerability (73 FR 3815).The NRC has not articulated a factual orlegal basis justifying this proposedchange to Part 30.

The parent company guarantee is alegal commitment to cover costs only upto the guarantee amount. If the proposedrequirement is adopted, financialauditors might consider it necessary torequire the guarantors to reflect theentire projected cost among theirliabilities on their financial statements.This could have the result of negatively


impacting corporate credit ratings andthe guarantor's ability to borrow.

Response: Between publication of theproposed rule and this final rule, theNRC staff has reconsidered the joint andseveral liability issue. For the reasonsdiscussed below, and in considerationof the comments summarizedpreviously, the proposed joint andseveral liability provision is notincluded as part of the final rule.

During the 1990's, the NRC took stepsto address the deregulation of electricutilities. As part of this effort, a "FinalPolicy Statement on the Restructuringand Economic Deregulation of theElectric Utility Industry" was publishedon August 19, 1997 (62 FR 44071). Inresponding to comments on jointownership issues raised in the draftpolicy statement, the NRC stated in thepolicy preamble as follows:

The NRC recognizes that co-owners and co-licensees generally divide costs and outputfrom their facilities by using a contractually-defined, pro rata share standard. The NRChas implicitly accepted this practice in thepast and believes that it should continue tobe the operative practice, but reserves theright, in highly unusual situations whereadequate protection of public health andsafety would be compromised if such actionwere not taken, to consider imposing jointand several liability on co-owners of morethan de minimis shares when one or more co-owners have defaulted. The NRC isaddressing the issue of non-owner operatorsseparately. (62 FR 44074).

A proposed rule, "FinancialAssurance Requirements forDecommissioning Nuclear PowerReactors," was published on September10, 1997 (62 FR 47588) wherein theNRC stated in the preamble that:

The regulations do not explicitly imposejoint liability on co-owners and co-licensees.* * * [The NRCI sees no need to impose anadditional regulatory obligation of jointliability on co-owners or co-licensees. (62 FR47594).

In response to requested input on howto address the issue of future fundingshortfalls caused by underestimates ofdecommissioning costs, the NRC notedin this preamble its authority to requirepower reactor licensees to submit theircurrent financial assurance mechanismsfor review and stated the following:

The Commission reserves the right to takethe following steps in order to assure alicensee's adequate accumulation ofdecommissioning funds: Review, as needed.the rate of accumulation of decommissioningfunds; and either independently or incooperation with either the FERC and theState PUC's, take additional actions asappropriate on a case-by-case-basis,including modification of a licensee'sschedule for accumulation ofdecommissioning funds. (62 FR 47597).

In the final rule published onSeptember 22, 1998 (63 FR at 50465 etseq.), "Financial AssuranceRequirements for DecommissioningNuclear Power Reactors," the above-quoted language from the preamble wascodified as 10 CFR 50.75(e)(2), and thisprovision remains in place today.

In the 1998 final rulemaking, ratherthan revising the Part 50 definition of"electric utility" as initially proposed,the NRC instead amended 10 CFR 50.75by replacing its references to electricutilities with references to power reactorlicensees. This action had the effect ofseparating issues of whether applicantsfor reactor licenses are financiallyqualified under 10 CFR 50.33(f) (wherethe definition of "electric utility" is stillrelevant) from financial assurance issuesfor decommissioning under 10 CFR50.75 (63 FR 50466; September 22,1998).

In this latter area, the NRC endorsedthe need for flexibility given theongoing restructuring of the electricpower industry. For example, situationscould arise in which the plant operatorhas greater financial resources than theplant owner, and the NRC thereforedeclined to exempt operator licenseesfrom financial assurance fordecommissioning requirements (63 FR50468). Among the 1998 amendments,10 CFR 50.75(e)(1)(vi) was added, and10 CFR 50.75(e)(1) was otherwisestructured to provide a variety ofapproved financial assurancemechanisms (63 FR 50469).

In 1998, the NRC similarly endorsedusing combinations of financialassurance methods. The 1998rulemaking removed the regulatoryprohibition which did not allow use ofeither the self-guarantee or parentcompany guarantee "in combinationwith other mechanisms" (but to avoiddouble counting the same assets, theprohibition on using the self-guaranteeand parent company guarantee "incombination with each other" wasretained) (63 FR 50473). Thecombination of a self-guarantee orparent company guarantee and anexternal sinking fund "appears toprovide a relatively low-cost means" toprovide financial assurance while thereactor licensee continues to "graduallyfund decommissioning costs over time."Accordingly, 10 CFR 50.75(e)(1) wasamended as described above, which"eliminated the prohibition oncombining parent company or self-guarantees with external sinking funds"(63 FR 50473).

The proposed DecommissioningPlanning rule was published forcomment on January 22, 2008 (73 FR3812). The statement in the proposed

rule that no changes to 10 CFR 50.75(e)were being proposed was accurate. Butthe staff failed to acknowledge theconnection between 10 CFR 50.75(e)(1)and 10 CFR part 30, Appendix A. Theexisting parent company guaranteeprovisions of 10 CFR 50.75(e)(1)(iii)reference 10 CFR part 30, Appendix A.Thus, adding a joint and several liabilityprovision to the Parent CompanyGuarantee requirements under SectionIII of Appendix A to Part 30 wouldeffectively change the 10 CFR50.75(e)(1) requirements. No suchchange in requirements was intended,and this was not part of theDecommissioning Planning rule'stechnical basis.

The decision not to establish a jointand several liability requirementsshould not be construed to mean thatthe NRC will never seek to impose suchliability on the parent corporation of anNRC licensee. In unusual cases wherethe legal doctrine known as "piercingthe corporate veil" may be applicable,the NRC may pursue such a remedy (asit has in the past), and the NRC'sprevious policies and practicesregarding joint and several liability arenot being changed at this time. Thus, intaking this rulemaking action, the NRCintends no change in its positionregarding its legal right to seek fundsfrom a licensee's corporate parent inappropriate, case-specificcircumstances.

Comment H. 11: Issues whenguarantor is in financial distress.

One commenter, supported by severaladditional commenters, argued that theproposed rule is overly harsh inrequiring payment of the guarantee if atriggering event occurs. Options short ofsuch payment should include use of athird party letter of credit. The rulesshould be revised to provide that uponNRC's determination that the guaranteeis no longer acceptable, it may bereplaced by another acceptable form offinancial assurance.

Response: The currentdecommissioning financial assurancerules allow a licensee that haspreviously relied upon a parentguarantee or self-guarantee, but whichno longer can do so because it or itsparent cannot pass the financial test, toobtain a replacement form of financialassurance. However, if a guarantor'sability to pay its debts is compromised,then the NRC may seek immediatepayment of the entire DCE, or a lesseramount if the guarantee is combinedwith another financial assurancemechanism, to the standby trust. Underthe existing financial assurancerequirements, a licensee must notify theNRC in writing immediately following


the filing of a bankruptcy action. Therevisions to the requirements provide amore detailed description of theinformation to be provided in such asituation, as previously set forth inguidance.

Comment H. 12: Elimination of theescrow.

Several commenters supportedretention of the escrow as a financialassurance mechanism. One commenterargued that NRC lacked a clear basis foreliminating the escrow, stating that theescrow account is a sound financialinstrument that is protected to the sameextent as a trust fund duringbankruptcy. It stated that NRC'sarguments that a dedicated trust fundshould be outside the reach of creditorsin a bankruptcy also would apply to adedicated escrow account. Thecommenter noted that in cases wherethe amount of decommissioning fundingassurance is relatively small (e.g.,$100,000), use of an escrow accountmay be less expensive and moreappropriate, because the cost of trustarrangements and annual trustee feesmay be prohibitive. While eliminatingthe escrow option would thusparticularly impact small materialslicensees, small minority owners ofpower reactors during decommissioningmay also want to use an escrow account.Two other commenters said that NRCshould not limit the options(instruments) available for financialassurance, and noted that AgreementState licensees were using escrows.

Response: As stated in the proposedrule's preamble, the NRC does not agreethat escrows are as secure as trust fundsin the event of bankruptcy (73 FR 3819),and the commenter's general statementsto the contrary are not persuasive. Whilethe NRC agrees that a number offinancial assurance options should beavailable, the NRC must balance costand availability with other factors,including especially the ability of themechanism to provide funds fordecommissioning when needed. TheNRC has evaluated the likelihood thatan escrow could survive the bankruptcy,insolvency, or financial incapacity ofthe licensee, and concluded that incomparison to other financialmechanisms like the trust, surety bond,or letter of credit, the escrow issignificantly less secure. The EPAdecided in 1981 not to add the escrowaccount as an approved financialassurance mechanism (January 12, 1981;46 FR 2827). Based on theseconsiderations, the NRC is removing theescrow from the list of approvedmechanisms in 10 CFR 30.35(f)(1),40.36(e)(1), 70.25(f)(1), and 72.30(e)(1).Note that this rulemaking does not

eliminate use of escrows as an optionfor Part 50 licensees. Power reactorlicensees are allowed to continue theiruse of an escrow account, pursuant to10 CFR 50.75(e), due to an unintentionalomission by the NRC to includeparagraphs 10 CFR 50.75(e)(1), (h)(1),and (h)(2) in the scope of the proposedrule text. The NRC plans to propose thatregulatory change in the future in aseparate rulemaking.

Comment H.13: Elimination of theline of credit.

One commenter supported retentionof the line of credit, noting that whileno NRC licensees were apparently usinga line of credit for financial assurance,such is not the case with respect toAgreement State licensees.

Response: The NRC finds that a letterof credit-which will be available foruse-has many of the attributes in termsof cost and availability as a line ofcredit, but provides greater security. Aline of credit can be cancelled quicklyif certain financial conditions are notmet, while a letter of credit representsa more binding obligation of thefinancial institution. Based on theseconsiderations, and those discussed inthe proposed rule's preamble (73 FR3826), the NRC is removing the line ofcredit from the list of approvedmechanisms in 10 CFR 30.35(f)(1),40.36(e)(1), 50.75(e)(1)(iii)(A),70.25(f)(1), and 72.30(e)(1).

Comment H. 14: Allowing intangibleassets in the determination of total networth,

Some commenters disagreed with theproposal to allow intangible assets to beused in the determination of total networth for purposes of meeting thefinancial test applied to those seeking touse a parent company or self-guaranteefinancial assurance method. Twocommenters, including CRCPD, pointedto recent overvaluing of bundledmortgage assets and said that in light ofthis experience, the NRC shouldreconsider allowing intangible assets tobe used in conjunction with aninvestment grade bond rating to meetfinancial test criteria.

In contrast, several commentersrepresenting both materials licenseesand reactor licensees stated thatconsideration of intangible assetsshould be allowed. One commenternoted that the NRC had already grantedan exemption to one licensee allowinga company with an investment gradebond rating to consider intangible assetsto meet the 10 times ratio test. Thecommenter noted that intangible assetsgenerally include assets such asgoodwill, brand value, or patents andthat, as recognized in the proposedrule's preamble (73 FR 3812, 3825),

financial accounting standards issuedafter 1988 (when the NRC's originaldecommissioning rule was adopted)provide objective methods for valuationof such intangible assets. According tothe commenter, for a diversifiedtechnology and manufacturing companywith a history of acquisitions intangible,assets are a significant measure of thefinancial stability of the company.Another commenter stated thatpermitting the consideration ofintangible assets is an appropriatechange in light of the development ofobjective methods to value intangibleassets.

Response: The NRC agrees with thislatter set of comments. The NRC hasexamined a sample of firm financialreports to ensure that confirmatoryinformation about intangible assetscould be obtained from publiclyavailable quarterly and annual reports ofpublicly traded firms. The NRC findsthat bundled mortgage assets aresufficiently dissimilar to intangibleassets that the recent problemsassociated with bundled mortgages donot provide a basis for withdrawing thisprovision from the final rule. On thebasis of these considerations and thosediscussed in section II.N.6 of thisdocument, the NRC will allow the useof intangible assets.

Comment H.15: CPA evaluation of off-balance sheet transactions.

A commenter opposed therequirement that the CPA provideinformation about off-balance sheettransactions, stating that it was alreadydifficult to meet the timetable for annualsubmittal of the financial assurancereport, which already must be reviewedby a CPA. The commenter consultedwith an independent accountant, whosaid that meeting the additionalrequirements would take considerablemore evaluation time at a greater cost.According to the commenter, if theproposed provision is adopted, the datefor submission of financial assurancereports will need to be extended by atleast one month to allow reasonableperformance of the additionalevaluation. Another commenter arguedthat CPA certification was anunnecessary burden and cost, becausecompany officials are already requiredto submit information that is completeand accurate in all material respects,and this should provide adequateassurance that the financial informationis being evaluated by qualified companypersonnel.

Response: Firms may, as a means ofreducing risk or achieving taxminimization opportunities, account forcertain kinds of transactions off thecompany's balance sheet. Recent



experience has shown, however, thatsuch off-balance sheet transactions mayconstitute a source of risk to the firm.Information should be readily availableconcerning such transactions,particularly for publicly traded firms.Section 401(a) of the Sarbanes-OxleyAct of 2002 requires disclosure of off-balance sheet transactions that may bematerial. In 2003, the Securities andExchange Commission issuedregulations to implement Section 401(a).The AICPA has prepared materials forcompany audit committees andaccountants on the identification andevaluation of such transactions. TheNRC therefore finds that the proposedrequirement will be neither difficult norunduly expensive for licensees to meet.The NRC is therefore retaining theproposed requirement in the final rule.

Comment H. 16: CPA verification ofbond ratings.

One commenter opposed theproposed new requirement forcertification by an independent CPA ofa parent company's or a licensee's bondratings as part of showing that thecriteria for using a parent companyguarantee or self guarantee are met (asset forth in 10 CFR part 30 AppendicesA and C, respectively). The commenterstated that this new requirement wouldimpose an additional unnecessaryburden and cost. Company officials noware required to submit information thatis complete and accurate in all materialrespects (e.g., 10 CFR 30.10, 40.10, 50.5,70.10, and 72.12). This should provideadequate assurance that the specificbond rating is being evaluated byqualified company personnel, and if theimportance of such information needs tobe emphasized the rule could simplyrequire a company to certify itsaccuracy.

Response: In the past, thoseaddressing the 10 CFR part 30Appendices A and C financial testcriteria have frequently failed tocorrectly apply the requirement to usethe current rating of the most recentbond issuance. As stated in theproposed rule's preamble (73 FR 3826),the NRC finds that requiring an audit ofthe bond rating will minimize thepotential of future such errors beingmade. An independent CPA is alreadyrequired to audit the financial test datafor a parent company and a selfguarantee, and adding the verification ofa bond rating to this existing audit is nota significant burden.

Comment H. 17: Requirement to baseDFP on unrestricted release.

Two commenters supported theproposal to require licensees to basetheir DFPs and DCEs on unrestrictedrelease, unless they can show the ability

to meet the restricted release criteria.Making early funding arrangements tocover the increased costs of unrestrictedrelease will increase the likelihood thatthe funds will be available whenneeded.

Response: The NRC agrees with thesecomments. Based on theseconsiderations, and those discussed inthe proposed rule's preamble (73 FR3818), the NRC is retaining the proposedrequirement in the final rule.

Comment H.18: Basis for the costestimate in the DFP.

One commenter argued that the DFPshould include an estimate of the fundsnecessary to pay licensing fees. Thepublic should not have to pay the costsof inspections, document reviews,license amendments, and other NRCregulatory activities when a license istaken over by an independent thirdparty. Nor should a licensee beexempted for annual fees that ordinarilywould have been assessed. Recovery ofthese fees should be part of anyfinancial assurance.

Response: Applicable guidance(section A.3.17 of NUREG-1757,Volume 3, Appendix A, ML032471471)specifies that one of the miscellaneouscosts that should be included in theDCE is licensing fees. But making thisa regulatory requirement was notproposed in the draft rules published forpublic comment. The NRC thus viewsthis comment as raising issues that areoutside the scope of this rulemaking.

Comment H. 19: Basis for certification.Two commenters argued that DCEs

should be based on a licensee's actualradionuclide inventory, rather than onlicense limits. Both stated that, forexample, broad scope licensees may belicensed to possess multi-Ci quantitiesof a broad range of radionuclides, butmay actually possess only limitedquantities of radionuclides in a narrowrange. The DCEs should be based on thehistoric use as indicated in licenseeinventory records.

Response: This concern is addressedin part by existing regulations in 10 CFRparts 30, 40, and 70, allowing licenseesholding limited amounts of licensedmaterial to certify and to providespecified amounts of financialassurance. Such licensees need notsubmit a DCE and DFP to the NRC forapproval. The NRC recently updated thecertification amounts in anotherrulemaking, and in the currentrulemaking is updating NUREG-1757,Volume 3, Appendix A, Attachment 1 toreflect those changes to certificationamounts. However, the agency did notpropose in this rulemaking to revise thecertification amounts or the basis uponwhich a licensee determines the

certification amount it must provide.Therefore, the request to base thecertification amounts on actualradionuclide inventory is not within thescope of this rulemaking.

Comment H.20: Use of third-partycosts.

One commenter opposed theproposed requirement in§ 30.35(e)(1)(i)(A) that each DFP must bebased on the cost of an independentcontractor to perform alldecommissioning activities. It statedthat its industry had extensiveexperience using licensee staff toperform decommissioning, and madeuse of custom-designed equipment thatonly licensee staff was experienced inusing safely. Use of licensee staff,according to the commenter, providedthe optimum cost effective schedule.

Response: The rule is not intended topreclude the use of licensee staff tocarry out decommissioning activities.However, the financial assurancerequirements are designed to providethe funds necessary to carry outdecommissioning activities even whenthe licensee is no longer present orfinancially able to do so and, as aconsequence, licensee staff are notavailable to perform decommissioning.Thus, the NRC has recommended inguidance since 1988 that DFPs be basedon the use of third party contractors,which as the commenter notes are likelyto be more expensive than licensee staff,to ensure that if third party contractorsmust be relied upon the necessary fundsare available. The proposed rule codifiesthe previously mentioned guidance.

Comment H.21: Timing of preparationof DFP and DCE.

One commenter stated that theproposed requirement in § 30.35(e)(2) tosubmit a DFP at the time of licenserenewal, in addition to submitting oneat intervals not to exceed 3 years, wouldcause an excessive frequency ofsubmissions, because the licenserenewal interval is typically 5 years.The commenter suggested thatsubmission of an updated DFP berequired only at the time of licenserenewal, or when a substantive changeis necessary, or as specified as a licensecondition. Of these alternatives, thecommenter recommended specifyingthe renewal period as a licensecondition, possibly on the order of 5 to6 years. The commenter argued thatimprovements in operations tended tocancel out inflation in the costs ofdecommissioning and waste disposal.

Response: Frequent revisions aredesirable to ensure that the DCE remainsaccurate and reflects current prices forlabor and materials, even in periods ofrapid inflation. On balance, the NRC



finds that the benefits of frequentrevisions to the DCE outweigh the costs,and that revisions should be submittedas part of a license renewal request inaddition to being submitted every 3years.

Comment H.22: Status of DFPs foroperating power reactors.

One commenter criticized theproposed rule on the basis that it wouldrequire all types of licensees, exceptlicensees of operating power reactors, tosubmit a DFP to the NRC if during thesite survey the licensee detectsradioactive contamination that wouldhave to be removed duringdecommissioning. Under the proposedrule, the licensee would have a yearafter detection of the contamination tosubmit the funding plan or update to theNRC. The commenter supports thisconcept, and notes that it may in someinstances serve as an incentive tominimize contamination so that thelicensee does not have to go to thetrouble and expense of preparing orupdating a DFP and setting asideadditional decommissioning funds. But,the commenter claims, the flaw in theNRC's proposed changes to 10 CFR30.35, 40.36, 70.25, and 72.30 is theapparent exemption being granted topower reactor licensees. According tothe commenter, a survey of a powerreactor site may detect an amount ofcontamination that materially increasesthe cost of decommissioning, yet theNRC proposes to give such a licenseethe option of doing nothing more thanrecording the information in the plant'sdecommissioning planning records.This is not acceptable and is notprotective of long-term public safety.

Another commenter objected to theproposed rule's failure to require fullpublic reporting of the factors used toestimate decommissioning costs and theNRC's failure to set a specific andresponsible deadline for licenseesubmission of DFPs incorporating costsstemming from known subsurfacecontamination. The commenter urgedthe NRC to require power reactor, drycask storage, and materials licensees tothoroughly survey their facilities forcontamination within six months of thefinal rule's effective date and submit asurvey report and a DFP within a yearof that date. The commenter said thatthe NRC also should require reactorlicensees to submit an updated DFP tothe NRC within a year of discovery ofsite contamination.

Response: Existing 10 CFR part 50regulations (e.g. § 50.75 and § 50.82)contain a comprehensive set ofdecommissioning requirements that areunique to power reactors. The NRC doesnot agree that these requirements fail to

adequately protect public health andsafety. Moreover, in the proposed rule'spreamble, the NRC stated that it wasmaking no changes with respect to theobligated amount for power reactordecommissioning financial assurance(73 FR 3818). Because the proposed ruledid not address the manner or amountof financial assurance required fornuclear power reactors, commentsseeking such actions are outside thescope of this rulemaking.

Comment H.23: Potential redundancyin DFP requirements.

Two commenters stated that inproposed § 72.30(b), paragraphs (b)(1)and (b)(4) are partially redundant andshould be merged. The commenter alsonoted that the comment also related tothe proposed rules in 10 CFR parts 30,40, and 70.

Response: The NRC disagrees thatparagraphs (b)(1) and (b)(4) should bemerged. Section 72.30(b) previouslyread as follows:

"(b) The proposed decommissioning planmust also include a decommissioningfunding plan containing information on howreasonable assurance will be provided thatfunds will be available to decommission theISFSI or MRS. This information must includea cost estimate for decommissioning and adescription of the method of assuring fundsfor decommissioning from paragraph (c) ofthis section, including means of adjustingcost estimates and associated funding levelsperiodically over the life of the ISFSI orMRS."

In the proposed rule, 10 CFR72.30(b)'s first sentence has becomeparagraph (b)(1), which states theoverall general obligation regarding theDFP. The proposed requirement inparagraph (b)(4) largely repeats the textin the last sentence of the precedingparagraph, describing in detail themethod of assuring funds. Bothparagraphs (b)(1) and (b)(4) haveindependent utility-just as the twosentences in the former 10 CFR 72.30(b)had-so no change in the final rule willbe made in response to this comment.

Comment H.24: Implementationschedule for submission of revisedDFPs.

Several commenters addressed theimplementation of the revised DCE andDFP requirements. One commenterurged the NRC to allow at least 1 yearfor licensees to prepare and submit theirfirst updated DFPs and to state thissubmittal time in the final rule. Anothersuggested that the NRC should considera time frame of 5 years forimplementation, because existing siteswould face significant costs retrofittingor upgrading their facilities.

Response: The NRC has establishedthe final rule effective date to be

eighteen months following publicationof the final rule in the Federal Register.This provides sufficient time to respondto the revised DFP requirements. TheNRC concluded that adoption of aperiod as long as 5 or 6 years betweenrevisions of the DFP could cause theDCEs to fall substantially out of date.

Comment H.25: Special requirementsfor 10 CFR part 72 licensees.

Comment H.25.1: One commenter,supported by several additionalcommenters, noted that proposed rulesection 10 CFR 72.13 states that only§ 72.30(e) and (f) apply to ISFSI generallicensees (holders of a Part 50 License).The commenter believes that the basisfor excluding ISFSI general licenseesfrom compliance with the newrequirements in proposed rule§ 72.30(b), (c), and (g), was that theselicensees have a Part 50 license and,therefore, have accumulated or haveaccess to adequate funds fordecommissioning. However, thecommenter argued that as written theproposed rule § 72.30(b)(2)(i) wouldrequire holders of a Part 50 license, whoare also Part 72 specific licensees, tosubmit a separate DCE for their ISFSI.This effectively prohibits the Part 50licensee from continuing to include inthe Part 50 DCE, the ISFSIdecommissioning costs and relatedassumptions. The commenter urged theNRC to revise the proposed rule to allowa Part 72 specific licensee, who alsoholds a Part 50 license, to continue toinclude in the Part 50 DCE the ISFSIdecommissioning costs and relatedassumptions. The same commenter alsonoted that, as written, the proposed rule§ 72.30(c) would require holders of aPart 50 license, who are also Part 72specific licensees, to report theiradjusted ISFSI DCE information to theNRC at intervals not to exceed 3 years.Part 72 specific licensees that have aPart 50 license normally have includedcosts for decommissioning of the ISFSIin their Part 50 DCE. The proposed ruleshould be revised to allow a Part 72specific licensee with a Part 50 licenseto continue to report their ISFSI DCEinformation to the NRC in their Part 50DCE submittal using the Part 50reporting interval.

Response: This rulemaking revises§ 72.30(b), and adds new paragraphs (c),(d), and (g). Existing paragraph (c) isredesignated as paragraph (e), andexisting paragraph (d) is redesignated asparagraph (f). Section 72.13(b)references the Part 72 provisionsapplicable to those holding Part 72specific licenses, and 10 CFR 72.13(c)references the Part 72 provisionsapplicable to those holding Part 72general licenses. Thus, any amendments



to 10 CFR 72.30 need to be reflected in10 CFR 72.13.

In considering this comment, the NRCrealized that the proposed changes to 10CFR 72.30-as published in the January22, 2008, proposed rule-are not fullyreflected in the discussion there of theproposed amendments to 10 CFR 72.13.While the NRC correctly stated in itsJanuary 2008 proposed rule that 10 CFR'72.13(c) was being amended to reference10 CFR 72.30(e) and (fl-reflecting thefact that existing 10 CFR 72.13(c)references 10 CFR 72.30(c) and (d)-theproposed revisions to paragraph (b), andthe addition of new paragraphs (c), (d),and (g) to 10 CFR 72.30 are notreferenced in the discussion of 10 CFR72.13. As discussed further in thisdocument, the NRC is correcting theinadvertent omissions in the final rule,and finds that Part 72 general licenseeswere fairly on notice that they weresubject to revisions in DFP requirementsdue to the provisions of existing§ 72.30(d)(4).

As stated previously, existing 10 CFR72.13(c) references 10 CFR 72.30(d).Thus, those holding Part 72 generallicenses are subject to the 10 CFR72.30(d) requirements, including theDFP provisions referenced in 10 CFR72.30(d)(4). The new provisions in 10CFR 72.30(b) provide further details ofwhat initial DFPs must include. Newparagraph (c) of 10 CFR 72.30 providesa set of timing provisions describingwhen updated DFPs must be submittedfor NRC approval. New paragraph (d) of10 CFR 72.30 is a special 1-year DFPupdate provision based on 10 CFR20.1501 survey results. Together, thesenew DFP requirements, for purposes ofapplicability, should be treated the sameas the existing 10 CFR 72.30(d)(4) DFPprovisions, as it would make no senseto have some but not all DFPrequirements be applicable to Part 72general licensees,

Existing 10 CFR part 72 subpart Krequirements already impose similarrequirements on Part 72 generallicensees. Existing 10 CFR 72.218(a)references 10 CFR 50.54(bb), which isthe functional equivalent of a DFPprovision in requiring a one-time reportsetting forth the licensee's program toprovide funding for management ofspent fuel during the time betweenwhen the reactor shuts down and whenDOE accepts title to and takespossession of the spent fuel. Existing10 CFR 72.218(a) further requires that aplan be identified for removing spentfuel from the reactor site in connectionwith decommissioning activities. Part72 general licensees are thus alreadysubject to spent fuel fundingrequirements. Similarly, 10 CFR

72.218(b) references 10 CFR 50.82,stating that such applications mustdescribe how spent fuel will eventuallybe removed from the reactor site.

A further reason that the new 10 CFR72.30 provisions referenced previouslyare applicable to Part 72 generallicensees is the connection that some ofthe provisions have (10 CFR72.30(b)(2)(iii) and (b)(5), and 72.30(d))with 10 CFR part 20 requirements. Suchrequirements are applicable to the Part72 general licensees, because Part 20 isapplicable to all Part 50 licensees.

Accordingly, the final rule amends10 CFR 72.13(c) so that it correctlyreferences 10 CFR 72.30(b), (c), (d), (e),and (f) as being applicable to holders ofPart 72 general licenses.

The requirements of new 10 CFR72.30(g)-under which licensees mustreplenish fund levels ifdecommissioning funds fall belowspecified levels-are unlike thepreviously referenced DFP and relatedrequirements in that no similarprovisions now exist in either Part 72 orPart 50. Additionally, the January 2008proposed rule gave no notice that anysuch provisions would be added to Part50, and a Part 72 general licensee canonly be subject to requirements that aPart 50 licensee is subject to.Accordingly, new 10 CFR 72.30(g) willbe applicable only to holders of Part 72specific licenses. There is no need toamend 10 CFR 72.13(b) in this regard,because it already specifies that 10 CFR72.30 requirements apply to holders ofPart 72 specific licenses.

Comment H.25.2: Another commenterargued that the NRC had approvedpartial exemptions from 10 CFR72.30(c)(5) for Part 72 specific licenseesto continue to rely on 10 CFR50.75(e)(1)(ii)(A) as their exclusivemechanism for providing financialassurance for ISFSI decommissioning,even after the reactor's Part 50 licensewas terminated. This commenter alsoencouraged the NRC to allow Part 72specific licensees that no longer have apower reactor license under Part 50 tocontinue to use the methods of 10 CFR50.75(b), (e), and (h) without the needfor an exemption. The commenterprovided recommended wordingchanges to 10 CFR 72.30(e)(5) to achievethis result.

Response: The NRC agrees with thesecomments and has made the suggestedchanges to the final rule text in§ 72.30(e)(5), as discussed further inSection IV of this document.

Comment H.25.3: A commenter statedthat to meet the requirements of thisrule change, a Part 72 specific licenseewill need a considerable amount of timeand resources to prepare this DFP and

its detailed DCE for submittal to theNRC. It is recommended that the NRCprovide at least one year following theeffective date of the rule change for Part72 specific licensees to prepare andsubmit their first updated DFP. Thissubmittal time should be stated in§ 72.30(c) of the final rule.

Response: NRC agrees with thiscomment, except that there is no needto specify a submittal time in § 72.30(c).As explained in Section II.S of thisdocument, an eighteen-monthimplementation period is provided forall of the final rule requirements (exceptfor the reporting provisions in 10 CFR50.82(a)(8)(v) and (vii), which are dueby March 31, 2013).

Comment H.25.4: Several commenterscited the proposed provision in§ 72.30(c) which states: "If the amountof financial assurance will be adjusted,this cannot be done until the updateddecommissioning funding plan isapproved." The commenters asked whyincreases could not occur beforeapproval of the DFP. One commenternoted that § 72.54(e) currently statesthat, "the amount of financial assurancemust be increased, or may be decreased,as appropriate, to cover the detailed costestimate for decommissioning * * *"

and recommended that the wording inthe last sentence to proposed § 72.30(c)be changed to read as follows: "If theamount of financial assurance will bedecreased, this cannot be done until theupdated decommissioning funding planis approved."

Response: The NRC agrees with thecommenters that it needs to approveonly reductions in the amount offinancial assurance in the DFP. Inconformance with this comment, theNRC has made changes to the final ruletext in § 30.35(e)(2), § 40.36(d)(2),§ 70.25(e)(2), and § 72.30(c).

Comment H.25.5: A commenter notedthat Part 72 does not have provisions foran ISFSI licensee to certify to aprescribed amount of financialassurance like Parts 30, 40, and 70material licensees do. Therefore, the§ 72.30(f)(4) wording, related tocertifying to a prescribed amount offinancial assurance, should be deletedand § 72.30(f)(4) reworded as:"(4) Records of the cost estimateperformed for the decommissioningfunding plan and records of the fundingmethod used for assuring funds areavailable for decommissioning." Thesame commenter recommended changesin cross references in Part 72 to addressproposed rule changes.

Response: The commenter hasidentified a technical error in theexisting regulations which was notidentified in the proposed rule. Because


the suggested action to remove "amountcertified for decommissioning"constitutes a technical correction, theNRC is making the correction in Part 72,even though it was not previouslyproposed, The NRC is also correctingcross references in the final rule.

Comment H.26: Monitordecommissioning fund investmentbalance.

Comment H.26.1: Several commentersdisagreed with the proposed regulationsin 10 CFR 30.35(e)(1)(iv), 40.36(d)(1)(iv),70.25(e)(1)(iv), and 72.30(b)(6) requiringthat if there are changes to the DCE, theamount of financial assurance must berevised to match the cost estimate. Onecommenter agreed that licensees mightconsider increasing decommissioningassurance when remediation costsexceed the initial DCE but said theincrease should not be a requirement.The actual remediation costs couldexceed DCEs due to a licensee decidingfor business purposes to choose anexpensive method to remediate. Thismight be to minimize a businessinterruption or to organize theremediation around ongoing operations.Another commenter stated that the newrules require that additional financialassurance must be provided each year,if there is any shortfall in existingassurance levels. An annual assessmentof financial assurance is alreadyrequired by 10 CFR 50.75(b)(2), but thenew rules would impose a firmrequirement, which would be lessflexible than the NRC's current case-by-case evaluation of the funding plans forshutdown reactors. To assure that thenew rule is not interpreted as adeparture from current practice, thecommenter recommended that the NRCrevise the language to provide thateither additional assurance be providedor that the licensee submit an acceptableplan for obtaining additional assurance.

Response: Decommissioning financialassurance is required in the amount ofthe DCE. Just as a licensee that has notused its financial assurance proceedswisely to remediate a site is stillrequired to provide financial assuranceto complete the remediation work, alicensee that decides to use a moreexpensive remediation method isrequired to provide financial assuranceto cover the entire cost estimate. A planfor obtaining additional assurance is notconsidered financial assurance, andallowing a licensee to rely on a mereplan may result in significant delaysand insufficient funds being availablefor decommissioning.

Comment H.26.2: Another commenterstated that the new § 72.30(g) of theproposed rule contains excessiverequirements for monitoring and

correcting fund balances. It noted thatPart 72 specific licenses are normally20-year licenses that will need to berenewed or extended until the U.S.Department of Energy takes title to thespent nuclear fuel. Based on continuingdelays in the scheduled opening of theFederal repository, a specific andrealistic ISFSI facility decommissioningdate cannot be determined; however, itmay not occur until approximately 2030*or 2040. Based on such a long period ofISFSI licensed operations, therequirements in § 72.30(g) to monitordecommissioning fund balances"quarterly" and "at any time" and toincrease fund balances "within 5 days"are very excessive. The commenterrecommended several changes tosimplify the rule and reduce anunnecessary burden on Part 72 specificlicensees, while still providing adequateassurance and information to the NRC.The commenter stated that it was notclear why the requirements in both§ 72.30(g)(1) and (g)(2) are needed,because the required action (increasefund balance within five days) andreporting requirement (30 day report tothe NRC) are essentially the same. Onemonitoring requirement that requirestimely action and adequate reportingshould be sufficient. Based on the longduration of ISFSI operations, an annual(versus quarterly) monitoringrequirement and a 30 day (versus 5days) requirement to increase the fundbalance is considered more reasonableand adequate. The commenter providedrecommended wording incorporatingthis recommendation. The commenteralso suggested that the NRC could, if itfound it necessary to know when alicensee's fund balance falls below 75percent of the required amount, add anew reporting provision. Thecommenter recommended language forsuch a provision. Finally, thecommenter recommended parallelchanges to § 30.35(h), § 40.36(g), and§ 70.25(h).

Response: While ISFSIs may operatefor many years, continuous access toadequate financial funds is crucial if thecreation of additional legacy sites is tobe avoided and funding shortfallscannot be tolerated. However, the NRChas considered the fact that some ISFSIlicensees hold both Part 72 general andspecific licenses at a single ISFSI site.With respect to providing financialassurance, Part 72 general licensees aresubject to Part 50 requirements and arethus required by 10 CFR 50.75(b)(2) toadjust their financial assurance annuallyusing a rate at least equal to formulaadjustment factors in 10 CFR 50.75(c).As discussed previously in comment

section H.25 of this document, new 10CFR 72.30(g) applies only to Part 72specific licensees. To achieve greaterconsistency in how Part 72 general andspecific licensees are regulated in thisregard, the NRC is revising proposed§ 72.30(g)(1) in this final rule to requirethat the fund balance be monitoredevery calendar year, rather than everycalendar quarter.

The NRC considers ISFSI operationsto be at a lesser risk of becoming alegacy site compared to other materialslicensees, because many of the Part 72licensees are also electric utilities andthus can more easily gain access todecommissioning financial assurancefunding for their ISFSI operations. Theproposed quarterly monitoringrequirement is being retained in thisfinal rule for Parts 30, 40, and 70licensees.

In further response to the comment,the NRC had decided to give Parts 30,40, 70, and 72 licensees 30 days-ratherthan the proposed 5 days-to increasethe fund balances when specifiedfunding shortfalls exist. The process ofobtaining access to funds may, in manycases, take longer than 5 days, and sucha short period may have generated anexcessive number of exemption requestsfor more time. Accordingly, theproposed 5-day timing provisions arerevised to 30 days in 10 CFR 30.35(h),40.36(g), 70.25(h), and 72.30(g) of thisfinal rule. Thus, if a fund balance dropsby more than 25 percent, the licenseemust increase the balance within 30days of the occurrence, and the increasemust be sufficient to cover the cost ofdecommissioning. If a fund balancedrops by 25 percent or less, Parts 30, 40,and 70 licensees must increase thebalance within 30 days after the end ofthe calendar quarter, and the increasemust be sufficient to cover the cost ofdecommissioning. In such cases, Part 72licensees must increase the balancewithin 30 days after the end of thecalendar year, and the increase must besufficient to cover the cost ofdecommissioning.

Comment H.26.3: A commenterrequested that the following contents ofthe financial assurance status reportsrequired by 10 CFR 50.82(a)(8)(v) and(vii) be made available to the public:(1) The amount of funds accumulated tocover the current cost of managing spentfuel, (2) The projected costs of spentfuel management until the Departmentof Energy takes title to the spent fuel,and (3) The plan to obtain additionalspent fuel management funds if theaccumulated funds do not cover theprojected costs. Potential delays in theavailability of a long-term repository,issues of repository capacity, and the

Case: 11-3228 Document: 003110639393 Page: 42 Date Filed: 08/30/2011Federal Register / Vol. 76, No. 117 / Friday, June 17, 2011 / Rules and Regulations 35553

consequent likelihood of long-termstorage of spent fuel at reactor sitesmake this information particularlyimportant. This commenter also statedthat the power reactor decommissioningfund should never be allowed to pay foronsite spent fuel storage.

Response: The financial assurancestatus report, due annually from thepower reactor licensees under theproposed requirements in 10 CFR50.82(a)(8)(v) and (vii), will be subject tothe public disclosure requirements in 10CFR 2.390. If a power reactor licenseeconsiders the submitted information tobe proprietary, the licensee must meetthe requirements in 10 CFR 2.390(b) tosupport withholding the report frompublic disclosure. Absent such ashowing, the report will be madepublicly available in ADAMS. As statedby the commenter, this final rulerequires in 10 CFR 72.30(g) thatdecommissioning financial assurancefunds must be used only fordecommissioning activities whichwould not include onsite spent fuelstorage operations.

Comment H.27: Replenish funds if anexternal sinking fund is used.

Comment H.27.1: On the proposedrequirements to track the level ofdecommissioning financial assuranceand to replenish the funds if, as a resultof market fluctuations or other causes,they fall below certain specified levels,almost all of the comments addressedthe implications of the requirement forISFSI's and related to 10 CFR 72.30(g)in particular. One commenter noted thatthe new § 72 .30(g) requirements, whichare consistent with the newrequirements being added to § 30.35(h),§ 40.36(g), and § 70.25(h) for othermaterial licensees, would apply only toPart 72 specific licensees. These newrequirements are focused on the portionof a licensee's decommissioning fundsthat have been prepaid or collected andare subject to market variations. Thelicensee's funds associated with theprepayment and external sinking fundmethods will be invested and may besubject to market variations. Because theprepayment method is expected to befully funded at all times, the commenterbelieved that the proposed wordingwould work for that mechanism.However, in the case of the externalsinking fund method, the fund is notrequired to be fully funded until thefinal facility decommissioning isexpected to begin. Section 72.30(b) ofthe proposed rule would require a Part72 specific licensee to have an NRC-approved DFP for their external sinkingfund and to make deposits into the fundat least annually. Parts 30, 40, and 70material licensees may also use an

external sinking fund and could have anNRC-approved DFP. The proposedwording in § 30.35(h), § 40.36(g),§ 70.25(h), and § 72.30(g) does notrecognize that a licensee's fund balancefor their external sinking fund is notrequired to contain "the amountnecessary to cover the cost ofdecommissioning" until the finalfacility decommissioning begins. Asthese proposed rule sections arecurrently worded, on the effective dateof the rule change, some licenseeswould be required to fully fund theirexternal sinking fund to cover the costof decommissioning within 5 days andmake the 30 day report to the NRC. Thecommenter therefore recommended thatwording similar to the following beadded to the proposed § 72.30(g)(1) and(g)(2) and the corresponding sections inParts 30, 40, and 70: "If * * *, the fundbalance is below the amount necessaryto cover the cost of decommissioning, orin the case of an external sinking fundthe amount required at that point intime by the approved funding plan, thelicensee must increase the balance toprovide the required amount of funds.

Response: If funds from a Part 50external sinking fund are to be used forPart 72 decommissioning, the fundsmust be reported separately under 10CFR 72.30 for the ISFSI and held in aseparate subaccount and thissubaccount must be identified for spentfuel. The certification for an externalsinking fund will include a calculationsection in which the licensee can takecredit for future contributions that areprovided by ratepayers and a 2 percentgrowth rate for the estimated number ofyears remaining prior to title transferand possession of the fuel by DOE. Forthe Part 72 specific licensee, if thiscalculation yields anything lower thanthe total cost estimate, than the fundbalance must be increased. If the fundbalance is underfunded by more than 25percent, the Part 72 specific licenseemust fully fund the balance within 30days of when such underfundingoccurs. If the fund balance isunderfunded by 25 percent or less, thanthe Part 72 specific licensee must fullyfund the balance within 30 days afterthe end of the calendar year.

Comment H.27.2: A commenter statedthat the proposed rule was appropriateonly for prepaid funds and should notbe applied to ISFSI general licenseefacilities using external sinking funds.The commenter also argued that thequarterly monitoring requirements andthe reporting requirements were veryexcessive for ISFSI facilities, which maynot be decommissioned until 2030 or2040. The commenter stated that the

rule should specify the NRC position/office which should receive reports andwhether a written report is required.

Response: The NRC partially agreeswith these comments. The reportingrequirements in § 72.30(b), (c), and (d)apply to Part 72 specific and generallicensees. Likewise, the financialassurance requirements in § 72.30(e),the maintenance of records importantfor decommissioning, and the § 72.30(f)DCE funding plan requirements, applyto Part 72 specific and general licensees.The final rule language in § 72.30(e)(5),allowing use of the external sinkingfund in 10 CFR 50.75(e)(1)(ii) as theexclusive funding method, applies toPart 72 licensees who hold a 10 CFRpart 50 power reactor license and to Part72 specific licensees who meet the Part50 definition of an "electric utility."Regarding the reporting requirements in§ 72.30(g), which apply to Part 72specific licensees, if thedecommissioning fund balance needs tobe replenished, the required writtenreport must be submitted to theDirector, Office of Federal and StateMaterials and EnvironmentalManagement Programs. The NRC is notadopting the commenter's suggestionsregarding the timing of required reports,finding that the quarterly monitoring offunds is a prudent business practice.Also, the NRC considers the annualreporting of a financial status report tobe a reasonable burden as part of alicensee's responsibility to maintain anaccurate DFP.

Comment H.27.3: Two commenterssupported the changes to § 72.30,because they address the concern that-depending on future NRC actions-spent fuel could remain in dry caskstorage at reactors for decades,providing the potential for additionaladverse environmental impacts whoseremediation costs must be assessed andaddressed in the decommissioning plan.This commenter noted that theproposed rule appears to require morespecific reporting requirements forISFSI licensees than would be requiredfor power reactor licensees.

Response: The NRC shares thecommenter's concern about the lengthof time spent fuel may need to bemanaged at the ISFSI facility. The NRCprovides oversight of the facilityoperations and decommissioning toprevent adverse environmental impacts.The commenter is correct that thecontent of the spent fuel financial statusreport to be required by 10 CFR50.82(a)(8)(vii) differs from the contentof decommissioning financial assurancereports required of power reactorlicensees.



Comment H.28: Support for moredetail in the DCE.

Comment H.28. 1: Two commenterssupported the proposed requirements in10 CFR 30.35(e)(2), 40.36(d)(2),70.25(e)(2), and 72.30(c) requiring thelicensee to address how routine spillsand accidental releases affect the cost ofdecommissioning. They believed thatthis requirement would be a usefulreinforcement to the requirements in§ 40.36(f) and § 20.1101(b), which hadbeen interpreted to require reducingdose to a receptor, but not to be driversfor environmental monitoring orremediation, particularly if thepresumed receptor was not drinkingwater from the site. Historically,according to these commenters, siteswere not characterized until shortlybefore closure, and routine spills werenot considered significant. Thecommenters believed that theidentification of source terms duringoperations would reduce the possibilityof underestimation of public dose. Incontrast, one commenter argued thatalthough current regulations do notspecifically require a licensee toincrease its decommissioning financialassurance following a spill if thelicensee decides to defer remediation toa later date, this requirement is coveredby broader requirements, includingALARA provisions and the cradle-to-grave principle in managing licensedmaterials. The commenter pointed outthat these provisions can be written intothe section of the DFP that specifieshow the cost estimate and fundingassurance are maintained and keptcurrent. Also, the commenter stated thatthe plan will typically have a 25 percentcontingency for unexpected costincreases that would cover all but themost unusual spill.

Response: The NRC agrees that thedocumentation of spills and accidentalreleases will improve the basis for theDCE, and the identification of sourceterms at the site during operations willhelp to reduce the possibility ofunderestimation of public dose due as aresult of contaminant migration beyondthe licensed site. The NRC regulationsallow some discretion in the licenseeresponse to a spill or leak that is not animmediate safety concern. If thelicensee chooses to defer remediation toa later date in such a situation, then thelicensee must document the release inits records important fordecommissioning and the added cost, ifany, to remediate the spill or leak whichmust be included in the cost estimate,DFP, and financial instruments used asdecommissioning financial assurance.

Comment H.28.2: One commenterstated that the NRC should ensure that

there is a direct correlation betweendecontamination costs anddecommissioning funding assurances.To implement this, the NRC shouldrequire bi-annual funding reports and alink between the changes proposed to10 CFR 20.1501 and the DFP requiredby 10 CFR 50.75(g).

Response: The NRC agrees with thecommenter regarding a directcorrelation between the DCE and thefinancial assurance provided by thelicensee. New 10 CFR 20.1501(b)provides a link to the existing 10 CFR50.75(g) provisions in requiring thatsurvey records of subsurface residualradioactivity be kept with recordsimportant for decommissioning.

Comment H.29: Reportingrequirements for shut down powerreactors.

Comment H.29.1: One commenterinterpreted the proposed 10 CFR50.82(a)(8) reporting requirements asalso creating a requirement that anoperating utility with a shut-downreactor that funds its spent fuel storagecosts from its operating budget, wouldinstead now need to set aside largeamounts of dedicated funding to pre-fund the costs of spent fuel storage.

Response: The proposed changes in10 CFR 50.82(a)(8) specify increasedreporting requirements for all licenseeswith a power reactor indecommissioning status. Thesereporting requirements do not change inany way the existing 10 CFR 50.75requirements to prepaydecommissioning financial assurance orthe existing 10 CFR 50.54(bb)requirements to provide funding for themanagement of irradiated fuel until titleand possession of the fuel is transferredto the Secretary of Energy.

Comment H.29.2: A commenter statedthat it is not clear what is meant by "thedecommissioning criteria upon whichthe estimate is based" in proposed10 CFR 50.82(a)(8)(v)(B).

Response: The proposed 10 CFR50.82(a)(8)(v)(B) is a required element ofthe annual financial assurance statusreport to be submitted by shutdownpower reactors, requiring such licenseesto update DCEs. Such estimates mustreflect whether the site is planned to bereleased for unrestricted use, or isplanned to be released under restrictedconditions. Both of these release optionsare available-based on how the term"decommission" is defined in § 50.2-and the option chosen will affectdecommissioning costs.

Comment H.29.3: One commenterargued that the proposed 10 CFR50.82(a)(8)(vii) reporting requirementregarding spent fuel management costswas not necessary for facilities that are

owned by operating utilities with asignificant electric sales income andwho have access to rate relief.According to this commenter, for sitesowned by an operating utility, theannual expense for nuclear fuel storagewill be a very small percentage of theutility's total operating budget andwould be included in rate reliefproceedings.

Response: Regardless of companysize, all licensees must demonstrate andprovide adequate financial assurance fordecommissioning. For facilities that areowned by an electric utility, as definedin 10 CFR 50.2, this demonstration(described in NUREG-1757, Volume 3,Revision 1 to be released shortly afterthe final rule) may include a calculationfor an external sinking fund in whichthe licensee can take credit for futurecontributions that are provided byratepayers and a 2 percent growth ratefor the estimated number of yearsremaining prior to DOE taking title andpossession of the spent fuel. The NRCagrees that the annual expense andfuture contributions for nuclear fuelstorage will be a small percentage of anelectric utility's total operating budget.

Comment H.29.4: A commenter notedsome technical obstacles to theproposed reporting under 10 CFR50.82(a)(8). First, because DOE hasprovided no reliable basis fordetermining when it will begin toperform and complete its obligation toremove the nation's used nuclear fuelfrom individual facilities or take title tothe fuel, the total cost of fuel storagecannot be estimated. The total cost isthe summation of annual expenses overtime, and because there is a lack of anydefinitive information on the durationof the storage periods, it is unreasonableto require the owners to pay up-front aprojected unknown total cost of nuclearfuel storage. Second, under the DOEStandard Contract and legal decisions,DOE is liable to pay for the storage costfor nuclear fuel. Ongoing and possiblefuture litigation will eventuallydetermine the schedule and amounts forwhich the DOE is responsible. Forpermanently shutdown plants, it is theDOE, not the utility, which should berequired to provide financial assurancefor fuel storage.

Response: The extent to which theDOE may be responsible for onsite spentfuel storage costs is an issue that isoutside the scope of this rulemaking.Moreover, the NRC disagrees with theclaim that total spent fuel storage costscannot be estimated. Similar costestimates for decommissioning arerequired by existing regulations (10 CFR50.82(a)(8)(iii)), and have duly beensubmitted by NRC licensees. While


Federal Register / Vol. 76, No. 117 / Friday, June 17, 2011 / Rules and Regulations 35555

estimates of future costs will always bebased on uncertainties to some extent,this does not mean that no estimate atall can be made. This is as true forestimated spent fuel storage costs as forany other estimated cost.

Comment H.29.5: One commenterargued that the NRC is imposing a newannual reporting requirement onshutdown reactors that requires a higherlevel of detail than the annualdecommissioning funding status reportscurrently required under 10 CFR50.75(f). It is not clear why the existingreports are not adequate, but at aminimum, there should not beduplicative requirements. If the NRCadopts this provision, it should removethe reporting requirement under 10 CFR50.75(f). To the extent that the NRC'sdesire is to ensure that appropriatefunds will be available by reviewing thehistorical expenditures, power reactorlicensees are able to provide thisinformation. However, it is unlikely tobe useful other than for interest's sake,and further use of this data to predictfuture decommissioning costs may besuspect. The value of the reportingrequirement does not justify burdenupon licensees, because only a fewplants have decommissioned tounrestricted release and this data doesnot constitute a representative sample.Licensees will be unduly challenged byrate regulators, financial auditors andother stakeholders having opposinginterests as they relate to fundingdecommissioning. The existing NRCminimum funding formulae providestability in rate regulation prior toretirement. Estimates of only forward-looking expenses have provided thesame stability for retired units. Thissection should be focused only onforward-looking needs to meetdecommissioning liabilities.

Response: The final rule 10 CFR50.82(a)(8)(v) reporting requirements donot duplicate the existing 10 CFR50.75(f) reporting requirements. Asstated in the proposed rule's preamble(73 FR 3828; January 22, 2008), thereports under 10 CFR 50.75(f) do notrequire information on the actualamount of funds spent ondecommissioning, whereas suchinformation is required by proposed10 CFR 50.82(a)(8)(v). The newreporting requirements are not intendedfor comparison between different powerreactor decommissioning costs. Thepurpose of obtaining the informationreported under 10 CFR 50.82(a)(8)(v) isto identify actual expenditures at aparticular site and projected costs tocomplete the decommissioning.

I. Draft Regulatory Guidance

Comment .1: The survey andmonitoring guidance goes beyond whatis required.

Several commenters criticized thedraft guidance on subsurface residualradioactivity. They argued that theguidance went substantially beyondwhat the rule required with respect tosite surveys, the timeframe forremediation, retrofitting facilities toeliminate sources of subsurface residualradioactivity, monitoring, use ofMARSSIM, and remediation duringoperations. One commenter, whoprovided detailed comments on manyparts of the guidance, stated that itdescribed actions that were notnecessary to protect public health,safety, and the environment.

Response: All comments werereviewed and considered by the agencyin preparing DG-4014 to support thisfinal rule.

Comment 1.2: The survey andmonitoring guidance requires promptremediation.

A commenter on the draft guidanceon subsurface residual radioactivityargued that, as written, the remediationlanguage in the draft regulatoryguidance document could have theunintended consequence of disruptingsafe plant operation, without regard toactual health or environmental impacts.Another commenter, supported byseveral additional commenters, arguedthat the emphasis on "prompt"remediation, found especially in thedraft guidance, of a leak or spill isunreasonable and is not alwayspractically achievable. Licensees shouldbe given the flexibility to define theappropriate timeframe for clean-up of aspill or leak, taking into considerationALARA, realistic exposure pathways,and the site-specific soil andgroundwater characteristics. Anothercommenter said it makes little sense torequire remediation during theoperation of the site. The commenternoted that the draft guidance encourageslicensees to perform cost-effectivenessanalyses of prompt versus delayed cleanup of residual radioactivity at the site.

Response: The NRC is aware that insome cases subsurface residualradioactivity is located where the onlyfeasible remediation measures that canbe taken without disrupting safe plantoperation must occur at the time of finalplant decommissioning. The NRC doesnot intend that licensees adoptremediation measures that will disruptsafe plant operation. The topic ofcleanup activities during facilityoperations, especially in the context ofsoil contamination, is very dependent

on site-specific conditions. In responseto the commenters, the NRC has applieda performance-based approach in theDG-4014 survey and monitoringguidance released for public commentto support this final rule. Small leaksand spills that have no impact ondecommissioning planning are notwithin the scope of the guidance, butthe larger leaks and spills to thesubsurface that could affectdecommissioning planning areaddressed in the guidance. The NRC hasplaced in DG-4014 a discussion ondifferent approaches that may be usedby licensees to determine the cost-effectiveness of prompt compared todeferred cleanup. Licensees shouldbecome familiar with this guidance,which can help them to developreasoned explanations to supportdeferral of cleanup activities wherethere has been a significant amount ofsubsurface contamination.

Comment 1.3: The survey andmonitoring guidance should clarify cost-effectiveness calculations.

One commenter stated that the cost-effectiveness calculation recommendedin the guidance will nearly always showthat it is more cost-effective to wait untila site has ceased operations to disposeof contaminated soil or conduct anyremediation. The proposed regulationswould require an evaluation ofsubsurface contamination based onfuture decommissioning exposurescenarios, even though no foreseeableoperating exposure limits would beexceeded. The guidance describesmethods to conduct such evaluations.

Response: The NRC agrees with thiscomment that it is likely that licenseeswill decide to remediate soilcontamination during decommissioningrather than during operations, althoughthis is a site-specific and licensee-specific decision. The NRC believes it isbeneficial for licensees to remediatecertain types of contaminating events ona timely basis. This certainly includescontaminating events that have thepotential to reach a groundwaterpathway or that are cost-effective toperform earlier rather than later asdetermined by an analysis performed bythe licensee, as recommended in DG-4014.

Comment 1.4: The survey andmonitoring guidance is contrary toCommission direction.

A commenter stated that that the draftguidance's references to MARSSIM for"subsurface" survey requirements,documentation and quality assurance/quality control requirements arecontrary to the Commission's SRM inSECY-03-0069 regarding MARSSIM.


Response: This final rule is notrequiring any MARSSIM submittals.The optional use of the MARSSIMscreening values is discussed in DG-4014, along with several other low costapproaches as a means for the licenseeto apply sampling concentration resultsto dose based results. The dose-basedresults are the basis by which thefacility will be evaluated for licensetermination.

Comment 1.5: The financial assuranceguidance needs to clarify acceptablemethods for Part 72 licensees.

The comments on the revisions toNUREG-1757, Volume 3, raisedquestions concerning how 10 CFR part72 licensees, and in particular specificlicensees and general licensees, shouldimplement the proposed rules. Thecommenters also suggested renumberingof certain sections of the guidance andpointed out possible typographicalerrors.

Response: All comments werereviewed and considered by the agencyin preparing Revision 1 to NUREG-1757, Volume 3 to be released shortlyafter this final rule. Additional sections.have been added to the guidancedocument for the Part 72 licensees.

1. OMB Supporting Statement

In comments on the OMB SupportingStatement submitted to OMB, NEIargued that the NRC's justification forimposing new information collectionrequirements was flawed, because theproposed rule, including theinformation collection requirements,was designed to address problems thatno longer existed because of interveningregulatory developments. In addition,the NRC enforcement and oversightcould address any problems moreefficiently. Secondly, NEI argued thatthe proposed information collection andrecordkeeping requirements are notjustified, because current reporting andrecordkeeping requirements areadequate, and any necessaryclarification can be achieved in a lessburdensome manner. NEI thereforeconcluded that the requirements of thePaperwork Reduction Act were not met,because the required balancing of theburden against the need for theinformation showed that the burden wasexcessive. NEI argued that the estimateof the burden did not adequatelyinclude costs of new equipment,physical containment barriers,procedures, and training, which itsuggested might total as much as $500thousand to $1 million per nuclearpower reactor. NEI did not agree withthe NRC's conclusion that the voluntaryimplementation of the nuclearindustry's GPI will make it unnecessary

for nuclear power reactors to take anyadditional significant steps to complywith the reporting and recordkeepingrequirements of these rules.

In comments on the January 2008proposed rule, NEI again addressed onlythe reporting and recordkeepingrequirements associated with 10 CFR20.1406 and 20.1501. NEI noted that theestimate for the burden for Part 50implementation of those two provisionswas zero. NEI then essentiallysummarized its previous comments onthe OMB Supporting Statement,although it also addressed in the samecomment proposed implementingguidance. NEI argued that the burdenestimate in the supporting statement forimplementation of the Part 20requirements by nuclear power reactorswas "grossly inaccurate" because as "anindustry, nuclear power plants havespent thousands of person hours andmillions of dollars implementing theIndustry Groundwater ProtectionInitiative. Given that the GPI is avoluntary effort and, to some degree,adopts a more graded approach toreevaluation of a site's hydrogeology, asan example, the amount of time andresources necessary to implement theproposed rule using the draft guidanceare significantly greater than zerohours."

Response: The NRC, after carefulconsideration of the comments, hasconcluded that the commenters arecorrect. The time that certain licenseeswill need to spend in order to determinewhether a particular facility is affectedby the final rule's Part 20 regulationsshould have been included as part of thepaperwork burden. Therefore, theburden estimate has been increasedsignificantly for new § 20.1406(c) andamended § 20.1501 (a) to account for thetime necessary to read the regulations,determine their impact, if any, on thelicensee, and prepare a record of thisactivity. However, the NRC does notagree with the commenter that time andother resources used to implement thepreexisting voluntary industrygroundwater initiative are properlyattributable as reporting orrecordkeeping burden for this rule.Although the NRC received no publiccomments on the reporting andrecordkeeping requirements in theproposed rule for 10 CFR parts 30, 40,70, or 72, it has reviewed all of thoseprovisions and in a few instancesincreased the burden estimates forparticular sections of those rules.Finally, the NRC has added an estimateof the burden for 10 CFR part 50licensees of changes to the financial testrequirements in 10 CFR part 30, whichare cross-referenced in 10 CFR 50.75.

K. Agreement State Compatibility

Two comments were received on theAgreement State Compatibility tablepublished with the DecommissioningPlanning proposed rule. One of thecommenters, an organizationrepresenting multiple states, stated thatit had no issues with the compatibilitydesignations in the proposed rule.Another commenter stated that theCompatibility Table for the final ruleshould be expanded to include 10 CFR20.1401 and 20.1402 and that thesesections should be assigned AgreementState Compatibility Category B insteadof the existing Category C. Thecommenter believes this change isneeded to eliminate inconsistency inregulatory approach in the AgreementStates. The commenter believes thatsome states, using the CompatibilityCategory C guideline to adopt the NRC"essential objectives," are regulating sitetermination and release under schemesthat are unreasonable and impractical,resulting in excessive burden onlicensees without measurable benefit tothe public or the environment.

Response: The commenter is correctthat 10 CFR 20.1401 and 20.1402 areboth assigned Compatibility Category C.But those two sections were notincluded in the technical basissupporting the DecommissioningPlanning proposed rule, and no changesto these regulations were proposed. TheNRC does not have a technical basis tosupport a Compatibility Categorychange for these regulations, and thechange request is outside the scope ofthis rulemaking. Accordingly, the NRCis making no change in this final rule tothe compatibility designations for 10CFR 20.1401 and 20.1402.

V. Discussion of Final Amendments bySection

Section 20.1403 Criteria for LicenseTermination Under RestrictedConditions

This rulemaking (1) amends§ 20.1403(c)(1) to require financialassurance funds to be placed into a trustsegregated from the licensee's assets andoutside the licensee's administrativecontrol; and (2) eliminates the licensee'soption to use other prepaymentfinancial mechanisms, such as theescrow account, government fund,certificate of deposit, or deposit ofgovernment securities. This subsectionis further amended to require that theinitial amount of the trust fundestablished for long-term care andmaintenance be based on a conservativeassumption of a 1 percent annual realrate of return on investment.


The current § 20.1403(c)(2) is deletedto remove the licensee's option to use asurety method, insurance, or otherguarantee method to provide financialassurance for a restricted release site.The provisions for government entitiesto provide financial assurance for long-term control and maintenance containedin existing § 20.1403(c)(3) and (4) isretained but redesignated as§ 20.1403(c)(2) and (3).

Section 20.1404 Alternate Criteria forLicense Termination

This rulemaking adds a new§ 20.1404(a)(5) specifying a fifthcriterion that the NRC must consider indetermining whether to terminate alicense under alternate site releasecriteria. This new fifth criterion pertainsto whether the licensee has providedsufficient financial assurance in theform of a trust fund to enable anindependent third party, including agovernment custodian of a site, toassume and carry out responsibilities forany necessary control and maintenanceof the site.

Section 20.1406 Minimization ofContamination

This rulemaking adds a new§ 20.1406(c) to require licensees, to theextent practical, to conduct operationsto minimize the introduction of residualradioactivity into the site, including thesubsurface. The term "residualradioactivity," defined in 10 CFR part20, identifies the type and scope ofradioactive material that must beconsidered by licensees to effectivelyplan for decommissioning activitiesduring facility operations. The termincludes licensed and unlicensedradioactive material.

Section 20.1501 GeneralThis rulemaking amends § 20.1501(a)

to specify that licensee surveyrequirements include consideration ofresidual radioactivity, conforming to thenew § 20.1406(c). The linkage betweennew § 20.1406(c) and amended§ 20.1501(a) requires that surveys beperformed if there is reason to believethat significant subsurfacecontamination is present whichconstitutes a potential radiologicalhazard.

This rulemaking adds a new§ 20.1501(b) to require licensees tomaintain records from surveysdescribing the location and amount ofsubsurface residual radioactivityidentified at the site with recordsimportant for decommissioning, in§§ 30.35(g), 40.36(f0, 50.75(g), 70.25(g),or 72.30(d), as applicable . Existing§ 20.1501(b) has been redesignated as

paragraph (c), and existing § 20.1501(c)has been redesignated as paragraph (d).

Section 30.34 Terms and Conditions ofLicenses

Existing § 30.34(b) has beenredesignated as paragraph (b)(1) and anew paragraph (b)(2) has been added torequire that an application for licensetransfer must include the proposedtransferee's identity, its technical andfinancial qualifications, and a showingthat it will be able to provide adequatefinancial assurance fordecommissioning.

Existing § 40.46 and § 70.36 containparallel provisions to those in§ 30.34(b). Sections 40.46 and 70.36have been redesignated as § 40.46(a) and§ 70.36(a), respectively. New § 40.46(b)and § 70.36(b) parallel the new§ 30.34(b)(2) provisions describedpreviously.

Section 30.35 Financial Assuranceand Recordkeeping forDecommissioning

A new paragraph (c)(6) has beenadded to 10 CFR 30.35 (and parallel§ 40.36(c)(5) and § 70.25(c)(5)), to reflectthe changes being made to the§ 20.1501(a) survey requirements. Ifthese surveys detect residualradioactivity at a site at levels thatwould, if left uncorrected, prevent thesite from meeting the § 20.1402 criteriafor unrestricted use, the licensee mustsubmit a DFP within one year of whenthe survey is complete.

Existing § 30.35(e) (and in parallel§ 40.36(d)(1) and (d)(2), Part 40Appendix A, § 70.25(e)(1) and (e)(2),and § 72.30(b) and (c)) have beenamended to contain new paragraphs(e)(1) and (e)(2). Section 30.35(e)(1)requires that each DFP submitted forreview and approval must contain aDCE based on three cost components.Two of the cost components (a dollaramount adequate to cover the cost of anindependent contractor to perform alldecommissioning activities, and anadequate contingency factor) aredescribed in existing guidance. The newcost component is an estimate of thevolume of onsite subsurface materialcontaining residual radioactivity thatwill require remediation to meet thedecommissioning criteria. Additionally,the DCE must be based on the cost ofmeeting the § 20.1402 criteria forunrestricted use unless it can beadequately shown that the requirementsof § 20.1403 will be met.

A new provision, § 30.35(e)(1)(ii),requires the licensee to identify andjustify the basis for all key assumptionsunderlying the DCE.

Section 30.35(e)(1)(iii) retains theexisting § 30.35(e) provision requiring adescription of the method of assuringfunds for decommissioning. Section30.35(e)(1)(iv) retains the existing§ 30.35(e) provision requiring acertification by the licensee thatfinancial assurance fordecommissioning has been provided inthe amount of the DCE. Section30.35(e)(1)(v) retains the existing§ 30.35(e) requirement that the DFPinclude "a signed original of thefinancial instrument" being used toprovide financial assurance, if it has notbeen previously submitted and acceptedas the financial instrument to cover thecost estimate for decommissioning.

New § 30.35(e)(2) requires that theDFP be submitted at the time of licenserenewal and at intervals not exceeding3 years with adjustments as necessary toaccount for changes in costs and theextent of contamination. The updatedDFP must specifically consider theeffect of the following events on the costof decommissioning:

e Spills of radioactive materialproducing additional residualradioactivity in onsite subsurfacematerial,

* Waste inventory increasing abovethe amount previously estimated,

* Waste disposal costs increasingabove the amount previously estimated,

" Facility modifications," Changes in authorized possession

limits,e Actual remediation costs that

exceed the previous cost estimate,* Onsite disposal, and" Use of a settling pond.As discussed further in this section,

this rulemaking amends theintroductory language in 10 CFR30.35(f) and amends paragraphs (f)(1)through (f)(3). Parallel changes havebeen made in § 40.36(e), § 40.36(e)(1),(e)(2) and (e)(3), § 70.25(f), § 70.25(f)(1),(f)(2) and (f)(3), § 72.30(e), § 72.30(e)(1),(e)(2) and (e)(3).

Section 30.35(f) is amended to requirethat the financial instrument used fordecommissioning funding assuranceinclude the licensee's name, licensenumber, and docket number, and thename, address, and other contactinformation of the issuer, and, if a trustis used, the trustee. If there are anychanges to this information, the licenseemust submit financial instrumentsreflecting these changes within 30 days.

Section 30.35(f)(1) is amended torequire that the prepayment financialmethod be in the form of a trust. Thislanguage parallels the rule text changein § 20.1403, eliminating the four otherprepayment mechanisms (i.e., theescrow account, government fund,



certificate of deposit, and deposit ofgovernment securities).

Section 30.35(f)(2) is amended toeliminate the existing line of creditoption as a guarantee method forfinancial assurance.

Section 30.35(f)(3) is amended torequire an external sinking fund to be inthe form of a trust, eliminating theescrow account, government fund,certificate of deposit, and deposit ofgovernment securities because of theirrelative risk of loss during bankruptcy.

Section 30.35(h) has been added (andin parallel new § 40.36(f) and § 70.25(h))specifying that each licensee must useits financial assurance funds only fordecommissioning activities. The newsection also requires monitoring by thelicensee of its investment balance in thedecommissioning trust account.Conservative investments are expectedin the trust account. If the investmentbalance in the trust account is below theestimated cost of decommissioning, butis not below 75 percent of the cost, thenthe licensee must, within 30 days afterthe end of the calendar quarter, depositfunds into the trust account to fullycover the estimated cost. If at any timethe loss results in a balance that isbelow 75 percent of the amountnecessary to cover the decommissioningcost, the licensee must, within 30 daysof such occurrence, deposit funds intothe trust account to fully cover theestimated cost. The licensee must reporttaking such actions to the NRC within30 days of the occurrence.

Part 30 Appendices A, C, D, and E

This rulemaking makes a set ofparallel amendments to 10 CFR part 30,Appendices A, C, D, and E. The typesof guarantors for which the financialtests in these appendices apply are:

9 Appendix A, Parent companyguarantees;

* Appendix C, Self-guarantees;* Appendix D, Self-guarantees by

companies that have no ratedcommercial bonds; and

o Appendix E, Self-guarantees bynon-profit colleges, universities andhospitals.

In the financial test in Section II.A inAppendices A, C, and D of Part 30, thisrulemaking adds language to allow theinclusion of intangible assets in thedetermination of total net worth. Totalnet worth is defined to exclude the netbook value and goodwill of the nuclearfacility and site. Tangible net worth isdefined to exclude all intangible assetsand the net book value of the nuclearfacility and site. In Appendix A of theexisting rule, Section ll.A.1.(i) providesthat a parent company guaranteeing tofund the cost of decommissioning must,

among other things, have two of threedefined financial ratios. This provisionhas been revised to clarify that incalculating the ratio of liabilities to networth, the parent company mustcalculate its total liabilities against itstotal net worth, which may now includeintangible assets. Section ll.A.2.(ii) ofAppendix A has also been revised torequire the licensee to perform a totalnet worth calculation instead of atangible net worth calculation. (Theparent company must also have aminimum tangible net worth of $21million, as required by SectionlI.A.(2).(iii) of Appendix A anddescribed in the next paragraph.) InAppendix D, which establishes financialtest criteria for companies that do notissue bonds, Section II.A.(3) has beenrevised to clarify that a self-guaranteeingcompany must have, among otherthings, a ratio of total liabilities dividedby total net worth that is less than 1.5.

In the financial test in Section II.A inAppendices A, C, and D of Part 30, thisrulemaking requires that the guarantor'stangible net worth be at least $21million to pass one of the criteria forthat financial test.

Each set of changes to Appendices A,C, D, and E of Part 30 requires theindependent CPA (who compares thedata used in the financial tests againstdata in year-end financial statements) toevaluate the guarantor's off-balancesheet transactions regarding the impactthese transactions may have on theguarantor's ability to paydecommissioning costs. The CPA alsomust verify bond ratings if these areused to pass the financial test.

For those licensees or guarantors thatissue bonds and use the financial testunder Section II.B of Appendices A, C,and E of Part 30, this rulemakingspecifies that the current rating of themost recent bond issuance of AAA, AA,or A by Standard and Poor's couldinclude adjustments of + or-(i.e.,AAA+, AA+, or A+ and AAA-, AA-,and A - would meet the criterion) andthe current rating of Aaa, Aa, or A byMoody's could include adjustments of1, 2, or 3. In each of these appendices,this rulemaking also requires the bondto be the most recent "uninsured,uncollateralized, and unencumbered"bond issuance.

In each Appendix A, C, D, and E ofPart 30, this rulemaking makes changesto the 90 day test to show continuedeligibility for the licensee and guarantor.

In each Appendix A, C, D, and E toPart 30, this rulemaking amends SectionIII to clarify that the guarantor isrequired to set up a standby trust, withnew criteria for selecting an acceptabletrustee.

In Appendix A to Part 30, thisrulemaking amends Section III torequire that the parent companyguarantor agree to make itself subject toCommission orders (e.g., order to makepayments under the guaranteeagreement).

In each Appendix A, C, D, and E toPart 30, this rulemaking amends SectionIII to allow the Commission, in cases ofthe guarantor company's financialdistress, to declare the financialassurance guaranteed by the guarantorto be immediately due and payable tothe standby trust. The guarantorcompanies also are required to notifythe NRC, in writing, immediatelyfollowing the occurrence of eventssignifying financial distress.


This rulemaking amends § 40.36(c)(5)in changes that are parallel to thosedescribed under § 30.35(c)(6); amends§ 40.36(d)(1) and (d)(2) in changes thatare parallel to those described under§ 30.35(e)(1) and (e)(2); amends§ 40.36(e) in changes that are parallel tothose described under § 30.35(f); andamends § 40.36(f) in changes that areparallel to those described under§ 30.35(h).

Section 40.46 Inalienability of Licenses

This rulemaking amends § 40.46. Thechanges are described under the sectionfor § 30.34.

Part 40 Appendix AThis rulemaking amends Appendix A,

Criterion 9, to Part 40. For the most part,the changes are parallel to thosedescribed under § 30.35(e)(1) and§ 30.35(e)(2). However, two errorscontained in the proposed publishedamendments to Criterion 9 are beingcorrected. First, in proposed Criterion9(b)(2)-relating to financial suretyarrangements that uranium recoverylicensees must establish-the term"residual radioactive material" wasused in describing one of the items thata Commission-approved cost estimatemust contain. This term, as defined inexisting 10 CFR 40.4, applies only touranium mill sites that were inactive(so-called Title I sites) as of 1978 whenthe Uranium Mill Tailings RadiationControl Act was enacted. To avoidconfusion, the proposed use of "residualradioactive material" is replaced by thephrase "radioactive contamination" inCriterion 9(b)(2). Second, in proposedCriterion 9(f)(4)-relating to requiredadjustments in surety liabilityamounts-the term "residualradioactivity" was used in conjunction



with the phrase "license terminationcriteria." Such a juxtaposition isappropriate for 10 CFR part 30 licenseesand most others. But pursuant to 10 CFR20.1401(a), the scope of 10 CFR part 20Subpart E, "Radiological Criteria forLicense Termination," does not includefacilities subject to Part 40 Appendix A,which contains its own set of provisionsgoverning the long term control andremediation of tailings and associatedcontaminants. Accordingly, in Criterion9(f)(4), the term "residual radioactivity"is replaced by the word'contamination"; and the phrase"license termination criteria" isreplaced by the phrase "applicableremediation criteria."

Section 50.75 Reporting andRecordkeeping for DecommissioningPlanning

This rulemaking eliminates the line ofcredit in § 50.75(e)(1)(iii)(A) as aguarantee method for financialassurance. Additionally, in the parallelprovisions of § 50.75(f)(1) and (f)(2), ineach paragraph between its second andthird sentences, the following additionalsentence is added: "If any of thepreceding items is not applicable, thelicensee should so state in its report."This change clarifies that not all listeditems in § 50.75(f)(1) and (f(2) areapplicable to all reactor licensees, andresolves an issue raised in a recent NRCaudit of decommissioning fundingassurance requirements. The NRC isalso making minor editorial andclarifying changes in § 50.75(0(1) and(fl(2) that impose no additionalrequirements, and are not substantivemodifications.

Section 50.82 Termination of LicenseThis rulemaking revises

§ 50.82(a)(4)(i) to require that additionaldetails be included in the PSDAR. ThePSDAR must now include a descriptionof the planned decommissioningactivities, a schedule for theiraccomplishment, and an estimate ofexpected costs. As revised, thisregulation will also require that thePSDAR cost estimates include those formanaging irradiated fuel.

This rulemaking also adds paragraphs(v) through (vii) to existing § 50.82(a)(8).New paragraph (a)(8)(v) requires that apower reactor licensee, that hassubmitted its certification of permanentcessation of operation, must reportannually on the status of its radiologicaldecommissioning funding on acalendar-year basis.

New paragraph (a)(8)(vi) requires thatif funds reported in the financialassurance status report are below theestimated cost to complete the

decommissioning, the licensee mustinclude additional financial assuranceto make up the difference.

New paragraph (a)(8)(vii) requires anannual report on the status of funds formanaging irradiated fuel. This reportincludes the accumulated amount, theprojected costs until title to the fuel istransferred to the Secretary of Energy,and the plan to obtain the necessaryadditional funds if the total projectedcost is higher than the accumulatedamount.


This rulemaking amends § 70.25. Thechanges are parallel to those describedunder § 30.35.

Section 70.36 Inalienability of LicensesThis rulemaking amends § 70.36. The

changes are parallel to those describedunder § 30.34.

Section 72.13 ApplicabilityAs stated in the January 22, 2008

proposed rule, references in § 72.13(c) to§ 72.30 are being changed to conformwith the revisions to § 72.30, whereby§ 72.30(c) is being redesignated as§ 72.30(e), and § 72.30(d) is beingredesignated as § 72.30(f). This reflectsthe fact that existing 10 CFR 72.13(c)references 10'CFR 72.30(c) and (d).

However, the January 2008 notice'sdiscussion of proposed changes in thecross-referencing provisions of § 72.13did not capture all of the proposedchanges to 10 CFR 72.30 (i.e., therevisions to 10 CFR 72.30(b), and theaddition of new sections (c), (d), and (g)to 10 CFR 72.30). Section 72.13(b)references the Part 72 provisionsapplicable to those holding Part 72specific licenses, and 10 CFR 72.13(c)references the Part 72 provisionsapplicable to those holding Part 72general licenses. Thus, any amendmentsto 10 CFR 72.30 need to be reflected in10 CFR 72.13. An expanded discussionof the changes in the cross-referencingprovisions of § 72.13 is set forth below(a more detailed discussion of these andrelated issues appears in the response tocomment H.25 above).

As stated above, existing 10 CFR72.13(c) references 10 CFR 72.30(d).Thus, those holding Part 72 generallicenses are already subject to all of theexisting 10 CFR 72.30(d) requirements.Such requirements include the DFPprovisions referenced in 10 CFR72.30(d)(4)-which this rulemakingredesignates as 10 CFR 72.30(f)(4). Thenew provisions in 10 CFR 72.30(b)proiide further details of what initialDFPs must include. New section (c) of

10 CFR 72.30 presents a set of timingprovisions describing when updatedDFPs must be submitted for NRCapproval. New section (d) of 10 CFR72.30 is a special 1-year DFP updateprovision based on 10 CFR 20.1501survey results. Together, these new DFPrequirements, along with the 10 CFR72.30(0(4) DFP provisions, will bereferenced in 10 CFR 72.13(c), and willthus be applicable to Part 72 generallicensees.

Accordingly, the final rulemakingamends 10 CFR 72.13(c) so that itcorrectly includes references 10 CFR72.30(b), (c), (d), (e), and (f) that areapplicable to holders of Part 72 generallicenses.

The requirements of new 10 CFR72.30(g)-under which licensees mustreplenish fund levels ifdecommissioning funds fall belowspecified levels-are unlike the above-referenced DFP requirements in that nosimilar provisions now exist in eitherPart 72 or Part 50. Aside fromrequirements listed in 10 CFR 72.13(c),a Part 72 general licensee can only besubject to requirements that a Part 50licensee is subject to. Thus, the new 10CFR 72.30(g) requirements will beapplicable only to holders of Part 72specific licenses. No amendment to 10CFR 72.13(b) is necessary to reflect this,because existing 10 CFR 72.13(b) lists§ 72.16 through § 72.34 as being amongthe Part 72 requirements that areapplicable to specific licenses.


This rulemaking amends § 72.30. Thechanges are similar to those describedunder § 30.35(e), and two existingparagraphs are redesignated.

Additionally, the NRC is amendingthe newly redesignated § 72.30(e)(5)-formerly § 72.30(c)(5)-to allow alicensee, who is also an electric utilityas defined in 10 CFR part 50, tocontinue to rely on Part 50 mechanismsfor decommissioning financialassurance. In the event that fundsremaining to be placed into thelicensee's ISFSI decommissioningexternal sinking fund are no longerapproved for recovery in rates by acompetent rate making authority, thelicensee must make changes to providefinancial assurance using the methodsin 10 CFR 72.30(e). This change was notnoticed in the January 2008 proposedrule. It is being made as a result of apublic comment on the proposed rule,regarding acceptable mechanisms inproviding decommissioning financialassurance under § 72.30(e). Thecommenter noted that it and another


licensee, each with Part 72 specificlicenses, were granted in 2005exemptions from 10 CFR 72.30(c)(5)-now 72.30(e)(5)-allowing them tocontinue to use 10 CFR 50.75(e)(1)(ii)(A)as the exclusive mechanism for ISFSIdecommissioning financial assurance.This rulemaking change in § 72.30(e)(5)provides adequate financial assurancefor decommissioning an ISFSI, and willimprove regulatory efficiency andeffectiveness by allowing ISFSIlicensees who are also an electric utilityto continue their use of the Part 50sinking fund applied to ISFSIdecommissioning after the powerreactor has been decommissioned.

The NRC is amending the newlyredesignated § 72.30(f)(4) to remove thereference to "the amount certified fordecommissioning" which occurs in theexisting regulation, under § 72.30(d)(4).Part 72 does not have provisions for anISFSI licensee to certify to a prescribedamount of financial assurance. Thisrulemaking change is being made as atechnical correction.

New § 72.30(g) states that eachlicensee with a Part 72 specific licensemust use its financial assurance fundsonly for decommissioning activities. Asdiscussed previously in response to acomment, the NRC in this final rule isrevising the proposed § 72.30(g) torequire monitoring by the licensee of itsinvestment balance in thedecommissioning trust account, on anannual rather than quarterly basis. If, atthe end of a calendar year, theinvestment balance in the trust accountis below the estimated cost ofdecommissioning, but is not below 75percent of the cost, then licensees must,within 30 days after the end of thecalendar year, deposit funds into thetrust account to fully cover theestimated cost. If at any time the lossresults in a balance that is below 75percent of the amount necessary tocover the decommissioning cost, thelicensee must, within 30 days of suchoccurrence, deposit funds into the trustaccount to fully cover the estimatedcost. The licensee must report takingsuch actions to the NRC within 30 daysof the occurrence.

Section 72.50 Transfer of License

This rulemaking amends § 72.50 byadding a new paragraph (b)(3), requiringthat the license transfer applicationdescribe the financial assurance thatwill be provided for thedecommissioning under § 72.30.

Section 72.80 Other Records andReports

References in § 72.80(e) and (f) arecorrected to conform with the changesto § 72.30, whereby § 72.30(d) wouldbecome § 72.30(f).

V. Criminal Penalties

For the purpose of Section 223 of theAtomic Energy Act (AEA), theCommission is amending 10 CFR parts20, 30, 40, 50, 70, and 72 under one ormore of Sections 161b, 161i, or 161o ofthe AEA. Willful violations of the rulewould be subject to criminalenforcement.

VI. Agreement State Compatibility

Under the "Policy Statement onAdequacy and Compatibility ofAgreement State Programs" approved bythe Commission on June 30, 1997, andpublished in the Federal Register onSeptember 3, 1997 (62 FR 46517), thisfinal rule is a matter of compatibilitybetween the NRC and the AgreementStates, thereby providing consistencyamong the Agreement States and theNRC requirements. The NRC staffanalyzed the final rule in accordancewith the procedure established withinPart III, "Categorization Process for NRCProgram Elements," of Handbook 5.9 toManagement Directive 5.9, "Adequacyand Compatibility of Agreement StatePrograms" (a copy of which may beviewed at http://www.nrc.gov/reading-rm/doc-collections/management-directives/volumes/vol-5.html.

The NRC program elements(including regulations) are placed intofour compatibility categories (See theCompatibility Table in this section). Inaddition, the NRC program elementsalso can be identified as havingparticular health and safety significanceor as being reserved solely to the NRC.Compatibility Category A establishesprogram elements that are basicradiation protection standards andscientific terms and definitions that are

necessary to understand radiationprotection concepts. An AgreementState should adopt Category A programelements in an essentially identicalmanner to provide uniformity in theregulation of agreement material on anationwide basis. CompatibilityCategory B establishes programelements that apply to activities thathave direct and significant effects inmultiple jurisdictions. An AgreementState should adopt Category B programelements in an essentially identicalmanner. Compatibility Category Cestablishes program elements that donot meet the criteria of Category A or B,but the essential objectives of which anAgreement State should adopt to avoidconflict, duplication, gaps, or otherconditions that would jeopardize anorderly pattern in the regulation ofagreement material on a nationwidebasis. An Agreement State should adoptthe essential objectives of the CategoryC program elements. CompatibilityCategory D establishes programelements that do not meet any of thecriteria of Category A, B, or C, above,and, thus, do not need to be adopted byAgreement States for purposes ofcompatibility.

Health and Safety (H&S) are programelements that are not required forcompatibility but are identified ashaving a particular health and safetyrole (i.e., adequacy) in the regulation ofagreement material within the State.Although not required for compatibility,the State should adopt programelements in this H&S category based onthose of the NRC that embody theessential objectives of the NRC programelements, because of particular healthand safety considerations. CompatibilityCategory NRC establishes programelements that address areas of regulationthat cannot be relinquished toAgreement States under the AtomicEnergy Act, as amended, or provisionsof 10 CFR. These program elements arenot adopted by Agreement States.

The following table lists the parts andsections that have been added or revisedby this final rule and theircorresponding categorization under the"Policy Statement on Adequacy andCompatibility of Agreement StatePrograms."

COMPATIBILITY TABLE FOR DECOMMISSIONING PLANNING FINAL RULE

CompatibilitySection Change Subject Compatibilit

20.1403(c)(1) ..............................................20.1403(c)(2) ..............................................20.1403(c)(3) & (4) .....................................20.1404(a)(5) ..............................................

Amend ..............Deleted .............Redesignated ...Add ...................

Trust fund for restricted use ......................Acceptable financial assurance methods ..Government entity financial assurance .....Trust fund for alternate criteria ..................

C ...................... CC ...................... CC ...................... C........................ .. C


COMPATIBILITY TABLE FOR DECOMMISSIONING PLANNING FINAL RULE-Continued

CompatibilitySection Change Subject Existing New *

20.1406(c) ................................................... Add ................... Minimize residual radioactivity ............................................. C20.1501(a) .................................................. Amend .............. Surveys and monitoring ............................. H&S .................. H&S20.1501 (b) .................................................. Add ................... Records from surveys .......... ........................... H&S30.34(b)(1) ................................................. Redesignated ... License transfer requirements ................... C............ C30.34(b)(2) .................................................. Add ................... License transfer requirements ............................................. C30.35(c)(6) .................................................. Add ................... Assess subsurface contamination ...................................... D30.35(d) ...................................................... No change ........ Certification amounts financial assurance H&S ** ............... D30.35(e)(1) .................................................. Amend .............. Contents of decommissioning funding plan D .................. H&S30.35(e)(2) ................................................. Amend .............. Updates of decommissioning funding plan D .................. H&S30.35(f) ...................................................... Amend .............. Methods for financial assurance ..................... D30.35(h) ...................................................... A dd ................... M onitor the balance of funds ..................... ........................... D30 Appendix A ............................................ Amend .............. Parent company guarantee ....................... D ....................... D30 Appendix C .................... Amend .............. Self-guarantee with bonds ......................... D30 Appendix D ............................................ Amend .............. Self-guarantee without bonds .................... D............ D30 Appendix E .................... Amend .............. Self-guarantee nonprofits ............. D............ D40.36(c)(5) .................................................. Add ................... Assess subsurface contamination ...................................... D40.36(d)(1) .................................................. Amend .............. Contents of decommissioning funding plan H&S .................. H&S40.36(d)(2) .................................................. Amend .............. Updates of decommissioning funding plan H&S .................. H&S40.36(e) ..................................................... Amend .............. Methods for financial assurance ......... 0............ D40.36(g) ...................................................... A dd ................... M onitor the balance of funds ..................... .......................... D40.46(a) ...................................................... Redesignated ... License transfer requirements ................... C............ C40.46(b) ..................................................... Add ................... License transfer information requirements ......................... C40 Appendix A Criterion 9(b) ...................... Amend .............. DCEs and financial surety [with 11 e.(2)] ... C ...................... C40 Appendix A Criterion 9(b) ...................... Amend .............. DCEs and financial surety [without NRC .................. NRC

11 e.(2)].50.75(e) & (f) .............................................. Amend .............. Surety and reporting of status of funding .. NRC .................. NRC50.82(a)(4) .................................................. Amend .............. Cost information in the PSDAR ................. NRC .................. NRC50.82(a)(8)(v), (vi) & (vii) ............................ Add ................... Cost information in the annual financial ........................... NRC

assurance status report.70.25(c)(5) .................................................. Add ................... Assess subsurface contamination ...................................... D70.25(d) ...................................................... No change ........ Certification amounts financial assurance H&S**. .............. D70.25(e)(1) .................................................. Amend .............. Contents of decommissioning funding plan D .................. H&S70.25(e)(2) .................................................. Amend .............. Updates of decommissioning funding plan D .................. H&S70.25(f) ....................................................... Amend .............. Methods for financial assurance ............... D............ D70.25(h) ...................................................... Add ................... Monitor the balance of funds ................................................ D70.36(b) ...................................................... Add ................... License transfer requirements ............................................. C72.13 & 72.30(b) ......................................... Amend .............. Applicability and contents of funding plan NRC .................. NRC72.30(c) ....................................................... Add ................... Updates of decommissioning funding plan ........................... NRC72.30(d) ...................................................... Add ................... Assess subsurface contamination ........................................ NRC72.30(e) ...................................................... Amend .............. Methods for financial assurance ............... NRC .................. NRC72.30(g) ...................................................... Add ................... Monitor the balance of funds .............................. ....... NRC72.50(b)(3) & 72.80 .................................... Add ................... License transfer and other records ........... ......................... . NRC

* Final rule compatibility category.**The compatibility category for §30.35(d) and §70.25(d) were incorrectly specified in the 68 FR 57334, October 3, 2003, Financial Assurance

for Materials Licensees final rule. The correct category for both of these sections is D.***The compatibility category for §30.35(e) and §70.25(e) were incorrectly specified in the 68 FR 57334, October 3, 2003, Financial Assur-

ance for Materials Licensees final rule. The correct category for both of these sections is H&S.

VII. Voluntary Consensus Standards

The National Technology Transferand Advancement Act of 1995, PublicLaw 104-113, requires that Federalagencies use technical standardsdeveloped or adopted by voluntaryconsensus standards bodies unless theuse of such a standard is inconsistentwith applicable law or otherwiseimpractical. There are no consensusstandards regarding acceptable methodsfor radiological surveys across a broadspectrum of licensed facilities, or forpreparing DCEs or providing financialassurance for decommissioning thatwould apply to the requirementsimposed by this final rule. Thus, the

provisions of the Act do not apply tothis rule.

VIII. Environmental Assessment andFinding of No SignificantEnvironmental Impact: Availability

The Commission has determinedunder the National EnvironmentalPolicy Act of 1969, as amended, and theCommission's regulations in Subpart Aof 10 CFR part 51, that this rule is nota major Federal action significantlyaffecting the quality of the humanenvironment and therefore anenvironmental impact statement is notrequired. The Commission has preparedan environmental assessment for thisfinal rule.

The amendments in this final rulerequire licensees, to the extent practical,to conduct their operations to minimizethe introduction of residualradioactivity into the site, particularlyin the subsurface soil and groundwater.There are a variety of monitoringmethods to evaluate subsurfacecharacteristics, and these are highly sitespecific with respect to theireffectiveness. One or more licenseesmay find that compliance with theamendments will mean the installationof groundwater monitoring wells andsurface monitoring devices at their sites.The installation of these monitoringdevices and wells is generally expected


to result in small environmental impactsdue to their very localized nature.

During sampling and testing, theamendments introduce the potential fora small amount of increasedoccupational exposures. Theseexposures are expected to remain within10 CFR part 20 limits and to be ALARA.If subsurface contamination is detected,licensees may choose to remediate whencontamination levels are lower andmore manageable, which could result inreduced future occupational exposurerates than if the contaminationconditions were allowed to remain andbecome increasingly more hazardous.Licensees may alternatively choose toprovide adequate funding in response totheir knowledge of the extent of anysubsurface contamination, which willbetter ensure that the area is remediatedfollowing decommissioning to a degreethat supports public health and safety,and protection of the environment.

If significant onsite residualradioactivity in the subsurface is founddue to the monitoring imposed by theseamendments, such knowledge willbetter ensure the protection of publichealth and safety, and protection of theenvironment. Identifying and resolvingthe source of the contamination willbetter ensure that waste is not allowedto migrate offsite. Early identificationalso provides more time to plan wasteremediation strategies that are both safeand cost effective. The effect of theamendments is anticipated to bebeneficial to the environment, and it isexpected that the overall environmentalimpacts will be positive.

Therefore, the determination of theenvironmental assessment is that therewill be no significant impact to thehuman environment from this action.

This conclusion was published in theenvironmental assessment that wasposted to the NRC rulemaking Web site:http://www.regulations.gov for 75 daysafter publication of the proposed rule.Two comments were received on thecontent of the environmentalassessment. These comments did notchange the conclusion of theenvironmental assessment. Thesecomments are discussed in Section III.Dof this document.

IX. Paperwork Reduction ActStatement

This final rule contains new oramended information collectionrequirements contained in 10 CFR parts20, 30, 40, 50, 70, and 72, that aresubject to the Paperwork Reduction Actof 1995 (44 U.S.C. 3501, et seq.). Theserequirements were approved by theOffice of Management and Budget,

approval number 3150-0014, -0017,-0020, -0011, -0009, and -0132.

The burden to the public for theseinformation collections is estimated toaverage 12 hours per response,including the time for reviewinginstructions, searching existing datasources, gathering and maintaining thedata needed, and completing andreviewing the information collection.Send comments on any aspect of theseinformation collections, includingsuggestions for reducing the burden, tothe Information Services Branch (T-5F53), U.S. Nuclear RegulatoryCommission, Washington, DC 20555-0001, or by Internet electronic mail toINFOCOLLECTS.Resource@NRC. GO V;and to the Desk Officer, Office ofInformation and Regulatory Affairs,NEOB-10202, (3150-0014, -0017,-0020, -0011, -0009, and -0132), Officeof Management and Budget,Washington, DC 20503 or by Internetelectronic mail [email protected].

Public Protection Notification

The NRC may not conduct or sponsor,and a person is not required to respondto, a request for information or aninformation collection requirementunless the requesting documentdisplays a currently valid OMB controlnumber.

X. Regulatory AnalysisAs part of this final rulemaking, the

Commission has prepared a regulatoryanalysis examining the costs andbenefits of the rulemaking andalternatives considered by theCommission.

The regulatory analysis wasperformed over a 15-year analysisperiod using 2007 dollars. Theimplementation of the final rule byindustry, the NRC and Agreement Statesis estimated to cost about $43 million,over the 15-year analysis period at a 3percent discount rate. The NRC licenseecosts are about $6 million, and the NRCcosts are about $3 million. AgreementState licensee costs are about $22million, and Agreement State costs areabout $12 million. Virtually all of theindustry costs are due to changes to 10CFR parts 20 and 30.

The regulatory analysis is availablefor inspection in the NRC PublicDocument Room, 11555 Rockville Pike,Rockville, MD, and may be downloadedfrom the NRC rulemaking Web site athttp://wwiv.regulations.gov. Singlecopies of the regulatory analysis areavailable from Kevin O'Sullivan, Officeof Federal and State Materials andEnvironmental Management Programs,U.S. Nuclear Regulatory Commission,

Washington, DC 20555-0001, telephone(301) 415-8112, e-mailKevin. [email protected].

XI. Regulatory Flexibility Certification

In accordance with the RegulatoryFlexibility Act of 1980 (5 U.S.C. 605(b)),the Commission certifies that this rulewill not have a significant economicimpact on a substantial number of smallentities. Only about 300 NRC materialslicensees are required to havedecommissioning financial assuranceand the large majority of theseorganizations do not fall within thescope of the definition of "smallentities" set forth in the RegulatoryFlexibility Act or the Small BusinessSize Standards set out in regulationsissued by the Small BusinessAdministration at 13 CFR part 121.Based on the regulatory analysis, theNRC believes that the amendments inthis final rule are the least burdensome,most flexible alternative that wouldaccomplish the NRC's regulatoryobjective.

XII. Backfit Analysis

As discussed more fully in theregulatory analysis, the NRC hasdetermined that the NRC's backfittingrules at issue here (10 CFR 50.109,70.76, and 72.62) do not require thepreparation of a backfit analysis for thisrulemaking. A backfit is themodification of equipment orprocedures required to operate a facilityresulting from new or amended NRCregulations, or the imposition of aregulatory staff position interpreting theCommission rules that is either new ordifferent from a previously applicablestaff position.

The new or amended regulations inthis final rule either clarify existingrequirements, or require the collectionand reporting of information usingexisting equipment and procedures, orare administrative matters outside thescope of the backfitting rules. Theamended survey and monitoringrequirements in Part 20 of thisrulemaking do not constitute a backfit,because they are information collectionrequirements to support licensee andNRC decisions on decommissioningplanning and related activities. Thedecommissioning financial assurancerequirements being amended in Parts30, 40, 50, 70, and 72 of this rulemakingdo not entail modifying any equipmentor procedures required to operate thetypes of NRC-licensed facilities coveredby the backfitting rules. Theseregulatory changes concernadministrative matters and are notbackfits. Therefore, as discussed furtherbelow, the NRC finds that preparation of



a backfit analysis is not required for thisrulemaking.

In part, this rulemaking amends 10CFR 20.1406 and 20.1501. Section20.1406, "Minimization ofcontamination," is amended by addinga new subsection (c) to read as follows:

(c) Licensees shall, to the extent practical,conduct operations to minimize theintroduction of residual radioactivity into thesite, including the subsurface, in accordancewith the existing radiation protectionrequirements in Subpart B and radiologicalcriteria for license termination in Subpart Eof this part.

This is not a backfit because itclarifies licensee requirements underexisting regulations applicable tolicensed operations. The current§ 20.1101(a) requires each licensee toimplement a radiation protectionprogram to ensure compliance with theregulations in 10 CFR part 20. Thecurrent § 20.1101(b) requires eachlicensee to use, to the extent practical,procedures and engineering controlsbased upon sound radiation protectionprinciples to achieve occupational dosesand doses to members of the public thatare ALARA, during operations andduring decommissioning. Theseoperating procedures and controls needto include methods to minimize theintroduction of residual radioactivityinto the site, including the subsurface,during active facility operations toachieve doses that are ALARA.Otherwise, licensees will lack asubstantive basis to demonstrate thatthey have achieved, during the life cycleof the facility (which includesdecommissioning), public andoccupational exposures that areALARA. The concept of reducingresidual radioactivity to ALARA levelsas part of the decommissioning criteriahas been a position of the NRC since atleast 1994 (NUREG-1501, page iii).Licensees should already have theseprocedures in place as part of theirradiation protection program, and 10CFR 20.1406(c) clarifies thisrequirement.

As stated previously, this rulemakingalso amends 10 CFR 20.1501, "General"(part of Subpart F, "Surveys andMonitoring"). Section 20.1501 isamended by revising subsection (a), andinserting a new subsection (b), to readas follows:

(a) Each licensee shall make or cause to bemade, surveys of areas, including thesubsurface, that-

(1) May be necessary for the licensee tocomply with the regulations in this part; and

(2) Are reasonable under the circumstancesto evaluate-

(i) The magnitude and extent of radiationlevels; and

(ii) Concentrations or quantities of residualradioactivity; and

(iii) The potential radiological hazards ofthe radiation levels and residual radioactivitydetected.

(b) Notwithstanding § 20.2103(a) of thispart, records from surveys describing thelocation and amount of subsurface residualradioactivity identified at the site must bekept with records important fordecommissioning, and such records must beretained in accordance with §§ 30.35(g),40.36(f), 50.75(g), 70.25(g), or 72.30(d), asapplicable.

The amended 10 CFR 20.1501(a)replaces the undefined term"radioactive material" with "residualradioactivity," a term already defined in10 CFR part 20. As defined in existing10 CFR 20.1003, residual radioactivityincludes subsurface contaminationwithin its scope, and the word"subsurface" is being added to 10 CFR20.1501(a). The current 10 CFR20.1501(a)(2)(iii) already requires theevaluation of potential radiologicalhazards. Thus, as amended, 10 CFR20.1501(a) makes clear that subsurfaceresidual radioactivity is a potentialradiological hazard that is within thescope of these survey requirements.This clarification of existingrequirements does not represent a newNRC position and therefore does not fallwithin the definition of backfitting asset forth in the applicable backfittingregulations.

As stated previously, new paragraph(b) to 10 CFR 20.1501 requires thatsurvey records describing the locationand amount of subsurface residualradioactivity identified at a licensed sitebe kept with records important fordecommissioning. The NRC licenseesare already required to keep recordsimportant for decommissioning. See,e.g., 10 CFR 50.75(g), 70.25(g), and72.30(d). Moreover, the new 10 CFR20.1501(b) is not intended to requirerecordkeeping of any and all amounts ofsubsurface residual radioactivity butonly amounts that are significant toachieve effective decommissioningplanning and ALARA doserequirements. Regulatory changesimposing information collection andreporting requirements do not constituteregulatory actions to which the backfitrule applies. New subsection 20.1501(b)and amended section 20.1501(a) containprovisions which require the licensee toperform surveys to collect data on thelocation and amount of subsurfaceresidual radioactivity that may be aradiological hazard and important fordecommissioning planning. Neither ofthese provisions constitutes a backfit,because they are information collectionrequirements to support licensee and

NRC decisions on decommissioningactivities.

This rulemaking also revisesdecommissioning planning andfinancial assurance requirements in 10CFR parts 30, 40, 50, 70 and 72. Theserevisions do not entail modifying anyequipment or procedures required tooperate the types of NRC-licensedfacilities subject to the backfitting rules.Therefore, preparation of a backfitanalysis is not required for the proposedrevisions to the decommissioningplanning and financial assurancerequirements.

Accordingly, the NRC has determinedthat the final rule's provisions do notconstitute backfitting and do not requirethe preparation of a backfit analysis.The regulatory analysis identifies thebenefits and costs of the rulemaking,discusses the voluntary IndustryGround Water Protection Initiative(GPI), and evaluates other options foraddressing the identified issues. Theregulatory analysis constitutes a"disciplined approach" for evaluatingthe merits of the final rule and isconsistent with the intent of the backfitrule.

XIII. Congressional Review Act

In accordance with the CongressionalReview Act of 1996, the NRC hasdetermined that this action is not amajor rule and has verified thisdetermination with the Office ofInformation and Regulatory Affairs ofOMB.

List of Subjects

10 CFR Part 20

Byproduct material, Criminalpenalties, Licensed material, Nuclearmaterials, Nuclear power plants andreactors, Occupational safety andhealth, Packaging and containers,Radiation protection, Reporting andrecordkeeping requirements, Sourcematerial, Special nuclear material,Waste treatment and disposal.

10 CFR Part 30

Byproduct material, Criminalpenalties, Government contracts,Intergovernmental relations, Isotopes,Nuclear materials, Radiation protection,Reporting and recordkeepingrequirements.

10 CFR Part 40

Criminal penalties, Governmentcontracts, Hazardous materialstransportation, Nuclear materials,Reporting and recordkeepingrequirements, Source material,Uranium.


35564 Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and RegulationsI

10 CFR Part 50

Antitrust, Classified information,Criminal penalties, Fire protection,Intergovernmental relations, Nuclearpower plants and reactors, Radiationprotection, Reactor siting criteria,Reporting and recordkeepingrequirements.

10 CFR Part 70

Criminal penalties, Hazardousmaterials transportation, Materialcontrol and accounting, Nuclearmaterials, Packaging and containers,Radiation protection, Reporting andrecordkeeping requirements, Scientificequipment, Security measures, Specialnuclear material.

10 CFR Part 72

Administrative practice andprocedure, Criminal penalties,Manpower training programs, Nuclearmaterials, Occupational safety andhealth, Penalties, Radiation protection,Reporting and recordkeepingrequirements, Security measures, Spentfuel, Whistleblowing.

For the reasons set out in thepreamble and under the authority of theAtomic Energy Act of 1954, as amended;the Energy Reorganization Act of 1974,as amended; and 5 U.S.C. 552 and 553,the NRC is adopting the followingamendments to 10 CFR parts 20, 30, 40,50, 70, and 72.

PART 20-STANDARDS FORPROTECTION AGAINST RADIATION

m 1. The authority citation for Part 20continues to read as follows:

Authority: Secs. 53, 63, 65, 81, 103, 104,161, 182, 186, 68 Stat. 930, 933, 935, 936,937, 948, 953, 955, as amended, sec. 1701,106 Stat. 2951, 2952, 2953 (42 U.S.C. 2073,2093, 2095, 2111, 2133, 2134, 2201, 2232,2236, 22971), secs. 201, as amended, 202,206, 88 Stat. 1242, as amended, 1244, 1246(42 U.S.C. 5841, 5842, 5846); sec. 1704, 112Stat. 2750 (44 U.S.C. 3504 note), sec. 651me),Pub. L. 109-58, 119 Stat. 806-810 (42 U.S.C.2014, 2021, 2021b, 2111).

* 2. In § 20.1403, paragraph (c)(2) isremoved, paragraphs (c)(3) and (c)(4) areredesignated as paragraphs (c)(2) and(c)(3), and paragraph (c)(1) is revised toread as follows:

§20.1403 Criteria for license terminationunder restricted conditions.* * * * *

(c) * * *

(1) Funds placed into a trustsegregated from the licensee's assets andoutside the licensee's administrativecontrol, and in which the adequacy ofthe trust funds is to be assessed based

on an assumed annual 1 percent realrate of return on investment;* * * * *.

* 3. In § 20.1404, paragraph (a)(5) isadded to read as follows:

§20.1404 Alternate criteria for licensetermination.

(a) * * *

(5) Has provided sufficient financialassurance in the form of a trust fund toenable an independent third party,including a governmental custodian of asite, to assume and carry outresponsibilities for any necessarycontrol and maintenance of the site,* * * * *

E 4. In § 20.1406, paragraph (c) is addedto read as follows:

§20.1406 Minimization of contamination.* * * * *

(c) Licensees shall, to the extentpractical, conduct operations tominimize the introduction of residualradioactivity into the site, including thesubsurface, in accordance with theexisting radiation protectionrequirements in Subpart B andradiological criteria for licensetermination in Subpart E of this part.

5. In § 20.1501, paragraphs (b) and (c)are redesignated as paragraphs (c) and(d), paragraphs (a) introductory text,(a)(2)(ii) and (a)(2)(iii) are revised, anda new paragraph (b) is added to read asfollows:

§20.1501 General.(a) Each licensee shall make or cause

to be made, surveys of areas, includingthe subsurface, that -* * * * *

(2) * * *

(ii) Concentrations or quantities ofresidual radioactivity; and

(iii) The potential radiological hazardsof the radiation levels and residualradioactivity detected.

(b) Notwithstanding § 20.2103(a) ofthis part, records from surveysdescribing the location and amount ofsubsurface residual radioactivityidentified at the site must be kept withrecords important for decommissioning,and such records must be retained inaccordance with §§ 30.35(g), 40.36(f),50.75(g), 70.25(g), or 72.30(d), asapplicable.* * * * *

PART 30-RULES OF GENERALAPPLICABILITY TO DOMESTICLICENSING OF BY-PRODUCTMATERIAL

E 6. The authority citation for part 30continues to read as follows:

Authority: Secs. 81, 82, 161, 182, 183, 186,68 Stat. 935, 948, 953, 954, 955, as amended,sec. 234, 83 Stat. 444, as amended (42 U.S.C.2111, 2112, 2201, 2232, 2233, 2236, 2282);secs. 201, as amended, 202, 206, 88 Stat.1242, as amended, 1244, 1246 (42 U.S.C.5841, 5842, 5846); sec. 1704, 112 Stat. 2750(44 U.S.C. 3504 note); Energy Policy Act of2005, Pub. L. 109-58, 119 Stat. 549 (2005).

Section 30.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 as amended byPub. L. 102-486, sec. 2902, 106 Stat. 3123 (42U.S.C. 5851). Section 30.34(b) also issuedunder sec. 184, 68 Stat. 954, as amended (42U.S.C. 2234). Section 30.61 also issued undersec. 187, 68 Stat. 955 (42 U.S.C. 2237).* 7. In § 30.34, paragraph (b) isredesignated as paragraph (b)(1) and anew paragraph (b)(2) is added to read asfollows:

§ 30.34 Terms and conditions of licenses.* * * * *

(b) * * *

(2) An application for transfer oflicense must include:

(i) The identity, technical andfinancial qualifications of the proposedtransferee; and

(ii) Financial assurance fordecommissioning information requiredby § 30.35.* * * * *

N 8. In § 30.35, a new paragraph (c)(6) isadded, and paragraphs (e), (f)introductory text, (f)(1), (f)(2)introductory text, and paragraph (f)(3)are revised, and a new paragraph (h) isadded to read as follows:

§30.35 Financial assurance andrecordkeeping for decommissioning.* * * * *

(c) * * *(6) If, in surveys made under 10 CFR

20.1501(a), residual radioactivity in thefacility and environment, including thesubsurface, is detected at levels thatwould, if left uncorrected, prevent thesite from meeting the 10 CFR 20.1402criteria for unrestricted use, the licenseemust submit a decommissioningfunding plan within one year of whenthe survey is completed.* * * * *

(e)(1) Each decommissioning fundingplan must be submitted for review andapproval and must contain -

(i) A detailed cost estimate fordecommissioning, in an amountreflecting:

(A) The cost of an independentcontractor to perform alldecommissioning activities;

(B) The cost of meeting the 10 CFR20.1402 criteria for unrestricted use,provided that, if the applicant orlicensee can demonstrate its ability tomeet the provisions of 10 CFR 20.1403,the cost estimate may be based onmeeting the 10 CFR 20.1403 criteria;


(C) The volume of onsite subsurfacematerial containing residualradioactivity that will requireremediation to meet the criteria forlicense termination; and

(D) An adequate contingency factor.(ii) Identification of and justification

for using the key assumptions containedin the DCE;

(iii) A description of the method ofassuring funds for decommissioningfrom paragraph (f) of this section,including means for adjusting costestimates and associated funding levelsperiodically over the life of the facility;

(iv) A certification by the licensee thatfinancial assurance fordecommissioning has been provided inthe amount of the cost estimate fordecommissioning; and

(v) A signed original of the financialinstrument obtained to satisfy therequirements of paragraph (f) of thissection (unless a previously submittedand accepted financial instrumentcontinues to cover the cost estimate fordecommissioning).

(2) At the time of license renewal andat intervals not to exceed 3 years, thedecommissioning funding plan must beresubmitted with adjustments asnecessary to account for changes incosts and the extent of contamination. Ifthe amount of financial assurance willbe adjusted downward, this can not bedone until the updateddecommissioning funding plan isapproved. The decommissioningfunding plan must update theinformation submitted with the originalor prior approved plan, and mustspecifically consider the effect of thefollowing events on decommissioningcosts:

(i) Spills of radioactive materialproducing additional residualradioactivity in onsite subsurfacematerial;

(ii) Waste inventory increasing abovethe amount previously estimated;

(iii) Waste disposal costs increasingabove the amount previously estimated;

(iv) Facility modifications;(v) Changes in authorized possession

limits;(vi) Actual remediation costs that

exceed the previous cost estimate;(vii) Onsite disposal; and(viii) Use of a settling pond.(f) The financial instrument must

include the licensee's name, licensenumber, and docket number, and thename, address, and other contactinformation of the issuer, and, if a trustis used, the trustee. When any of theforegoing information changes, thelicensee must, within 30 days, submitfinancial instruments reflecting suchchanges. The financial instrument

submitted must be a signed original orsigned original duplicate, except wherea copy of the signed original isspecifically permitted. Financialassurance for decommissioning must beprovided by one or more of thefollowing methods:

(1) Prepayment. Prepayment is thedeposit before the start of operation intoan account segregated from licenseeassets and outside the licensee'sadministrative control of cash or liquidassets such that the amount of fundswould be sufficient to paydecommissioning costs. Prepaymentmust be made into a trust account, andthe trustee and the trust must beacceptable to the Commission.

(2) A surety method, insurance, orother guarantee method. These methodsguarantee that decommissioning costswill be paid. A surety method may bein the form of a surety bond, or letter ofcredit. A parent company guarantee offunds for decommissioning costs basedon a financial test may be used if theguarantee and test are as contained inAppendix A to this part. Forcommercial corporations that issuebonds, a guarantee of funds by theapplicant or licensee fordecommissioning costs based on afinancial test may be used if theguarantee and test are as contained inAppendix C to this part. For commercialcompanies that do not issue bonds, aguarantee of funds by the applicant orlicensee for decommissioning costs maybe used if the guarantee and test are ascontained in Appendix D to this part.For nonprofit entities, such as colleges,universities, and nonprofit hospitals, aguarantee of funds by the applicant orlicensee may be used if the guaranteeand test are as contained in AppendixE to this part. Except for an externalsinking fund, a parent companyguarantee or a guarantee by theapplicant or licensee may not be used incombination with any other financialmethods used to satisfy therequirements of this section. Aguarantee by the applicant or licenseemay not be used in any situation wherethe applicant or licensee has a parentcompany holding majority control of thevoting stock of the company. Any suretymethod or insurance used to providefinancial assurance fordecommissioning must contain thefollowing conditions:

(3) An external sinking fund in whichdeposits are made at least annually,coupled with a surety method,insurance, or other guarantee method,the value of which may decrease by theamount being accumulated in the

sinking fund. An external sinking fundis a fund established and maintained bysetting aside funds periodically in anaccount segregated from licensee assetsand outside the licensee'sadministrative control in which the totalamount of funds would be sufficient topay decommissioning costs at the timetermination of operation is expected. Anexternal sinking fund must be in theform of a trust. If the other guaranteemethod is used, no surety or insurancemay be combined with the externalsinking fund. The surety, insurance, orother guarantee provisions must be asstated in paragraph (f)(2) of this section.

(h) In providing financial assuranceunder this section, each licensee mustuse the financial assurance funds onlyfor decommissioning activities and eachlicensee must monitor the balance offunds held to account for marketvariations. The licensee must replenishthe funds, and report such actions to theNRC, as follows:

(1) If, at the end of a calendar quarter,the fund balance is below the amountnecessary to cover the cost ofdecommissioning, but is not below 75percent of the cost, the licensee mustincrease the balance to cover the cost,and must do so within 30 days after theend of the calendar quarter.

(2) If, at any time, the fund balancefalls below 75 percent of the amountnecessary to cover the cost ofdecommissioning, the licensee mustincrease the balance to cover the cost,and must do so within 30 days of theoccurrence.

(3) Within 30 days of taking theactions required by paragraph (h)(1) or(h)(2) of this section, the licensee mustprovide a written report of such actionsto the Director, Office of Federal andState Materials and EnvironmentalManagement Programs, and state thenew balance of the fund.m 9. In Appendix A to Part 30, SectionII, the introductory text of paragraph A,paragraphs A.1.(i), A.1.(ii), A.1.(iii),A.2.(i), A.2.(ii), A.2.(iii), B, and C.1. arerevised, in Section III paragraphs B, C,and D are revised, and new paragraphsE, F, and G are added to read as follows:

Appendix A to Part 30-CriteriaRelating to Use of Financial Tests andParent Company Guarantees forProviding Reasonable Assurance ofFunds for Decommissioning

II. * * *

A. To pass the financial test, the parentcompany must meet the criteria of eitherparagraph A.1 or A.2 of this section. Forpurposes of applying the Appendix Acriteria, tangible net worth must be


calculated to exclude all intangible assetsand the net book value of the nuclear facilityand site, and total net worth, which mayinclude intangible assets, must be calculatedto exclude the net book value and goodwillof the nuclear facility and site.

1. * * *

Mi) Two of the following three ratios: Aratio of total liabilities to total net worth lessthan 2.0; a ratio of the sum of net incomeplus depreciation, depletion, andamortization to total liabilities greater than0.1; and a ratio of current assets to currentliabilities greater than 1.5; and

(i0) Net working capital and tangible networth each at least six times the amount ofdecommissioning funds being assured by aparent company guarantee for the total of allnuclear facilities or parts thereof (orprescribed amount if a certification is used);and

(iii) Tangible net worth of at least $21million; and

2. * * *

(iM A current rating for its most recentuninsured, uncollateralized, andunencumbered bond issuance of AAA, AA,A, or BBB (including adjustments of+ and- ) as issued by Standard and Poor's or Aaa,Aa, A, or Baa (including adjustment of 1, 2,or 3) as issued by Moody's; and

(iij Total net worth at least six times theamount of decommissioning funds beingassured by a parent company guarantee forthe total of all nuclear facilities or partsthereof (or prescribed amount if acertification is used); and

(iii) Tangible net worth of at least $21million; and

B. The parent company's independentcertified public accountant must compare thedata used by the parent company in thefinancial test, which is derived from theindependently audited, year-end financialstatements for the latest fiscal year, with theamounts in such financial statement. Theaccountant must evaluate the parentcompany's off-balance sheet transactions andprovide an opinion on whether thosetransactions could materially adversely affectthe parent company's ability to pay fordecommissioning costs. The accountant mustverify that a bond rating, if used todemonstrate passage of the financial test,meets the requirements of paragraph A of thissection. In connection with the auditingprocedure, the licensee must inform the NRCwithin 90 days of any matters coming to theauditor's attention which cause the auditor tobelieve that the data specified in the financialtest should be adjusted and that the companyno longer passes the test.

C.1. After the initial financial test, theparent company must annually pass the testand provide documentation of its continuedeligibility to use the parent companyguarantee to the Commission within 90 daysafter the close of each succeeding fiscal year.

Ill. * * *

B. If the licensee fails to provide alternatefinancial assurance as specified in the

Commission's regulations within 90 daysafter receipt by the licensee and Commissionof a notice of cancellation of the parentcompany guarantee from the guarantor, theguarantor will provide alternative financialassurance that meets the provisions of theCommission's regulations in the name of thelicensee.

C. The parent company guarantee andfinancial test provisions must remain ineffect until the Commission has terminatedthe license, accepted in writing the parentcompany's alternate financial assurances, oraccepted in writing the licensee's financialassurances.

D. A standby trust to protect public healthand safety and the environment must beestablished for decommissioning costs beforethe parent company guarantee agreement issubmitted. The trustee and trust must beacceptable to the Commission. An acceptabletrustee includes an appropriate State orFederal Government agency or an entitywhich has the authority to act as a trustee,whose trust operations are regulated andexamined by a Federal or State agency. TheCommission has the right to change thetrustee. An acceptable trust will meet theregulatory criteria established in theseregulations that govern the issuance of thelicense for which the guarantor has acceptedthe obligation to pay for decommissioningcosts.

E. The guarantor must agree that it wouldbe subject to Commission orders to makepayments under the guarantee agreement.

F. The guarantor must agree that if theguarantor admits in writing its inability topay its debts generally, or makes a generalassignment for the benefit of creditors, or anyproceeding is instituted by or against theguarantor seeking to adjudicate it as bankruptor insolvent, or seeking dissolution,liquidation, winding-up, reorganization,arrangement, adjustment, protection, relief orcomposition of it or its debts under any lawrelating to bankruptcy, insolvency, orreorganization or relief of debtors, or seekingthe entry of an order for relief or theappointment of a receiver, trustee, custodian,or other similar official for the guarantor orfor any substantial part of its property, or theguarantor takes any action to authorize oreffect any of the actions stated in thisparagraph, then the Commission may:

1. Declare that the financial assuranceguaranteed by the parent company guaranteeagreement is immediately due and payable tothe standby trust set up to protect the publichealth and safety and the environment,without diligence, presentment, demand,protest or any other notice of any kind, allof which are expressly waived by guarantor;and

2. Exercise any and all of its other rightsunder applicable law.

G. 1. The guarantor must agree to notify theNRC, in writing, immediately following thefiling of a voluntary or involuntary petitionfor bankruptcy under any chapter of title 11(Bankruptcy) of the United States Code, orthe occurrence of any other event listed inparagraph F of this Appendix, by or against:

(i) The guarantor;(ii) The licensee;(iii) An entity (as that term is defined in

11 U.S.C. 101(14)) controlling the licensee or

listing the license or licensee as property ofthe estate; or

(iv) An affiliate (as that term is defined in11 U.S.C. 101(2)) of the licensee.

2. This notification must include:(i) A description of the event, including

major creditors, the amounts involved, andthe actions taken to assure that the amountof funds guaranteed by the parent companyguarantee for decommissioning will betransferred to the standby trust as soon aspossible;

(ii) If a petition of bankruptcy was filed,the identity of the bankruptcy court in whichthe petition for bankruptcy was filed; and

(iii) The date of filing of any petitions.0 10. In Appendix C to part 30, inSection II, paragraphs A., B.(2) and B.(3)are revised, in Section III, paragraphs Eand F are revised, and paragraphs G, H,and I are added to read as follows:

Appendix C to Part 30-CriteriaRelating To Use of Financial Tests andSelf Guarantees for ProvidingReasonable Assurance of Funds forDecommissioning

II. * * *

A. To pass the financial test a companymust meet all of the criteria set forth in thissection. For purposes of applying theAppendix C criteria, tangible net worth mustbe calculated to exclude all intangible assetsand the net book value of the nuclear facilityand site, and total net worth, which mayinclude intangible assets, must be calculatedto exclude the net book value and goodwillof the nuclear facility and site. These criteriainclude:

(1) Tangible net worth of at least $21million, and total net worth at least 10 timesthe amount of decommissioning funds beingassured by a self-guarantee for alldecommissioning activities for which thecompany is responsible as self-guaranteeinglicensee and as parent-guarantor for the totalof all nuclear facilities or parts thereof (or thecurrent amount required if certification isused).

(2) Assets located in the United Statesamounting to at least 90 percent of totalassets or at least 10 times the amount ofdecommissioning funds being assured by aself-guarantee, for all decommissioningactivities for which the company isresponsible as self-guaranteeing licensee andas parent-guarantor for the total of all nuclearfacilities or parts thereof (or the currentamount required if certification is used).

(3) A current rating for its most recentuninsured, uncollateralized, andunencumbered bond issuance of AAA, AA,or A (including adjustments of + and -) asissued by Standard and Poor's, or Aaa, Aa,or A (including adjustments of 1, 2, or 3) asissued by Moody's.

B. * * *(2) The company's independent certified

public accountant must compare the dataused by the company in the financial test,which is derived from the independentlyaudited, year-end financial statements for thelatest fiscal year, with the amounts in suchfinancial statement. The accountant must


evaluate the company's off-balance sheettransactions and provide an opinion onwhether those transactions could materiallyadversely affect the company's ability to payfor decommissioning costs. The accountantmust verify that a bond rating, if used todemonstrate passage of the financial test,meets the requirements of Section I1,paragraph A of this appendix. In connectionwith the auditing procedure, the licenseemust inform the NRC within 90 days of anymatters coming to the auditor's attentionwhich cause the auditor to believe that thedata specified in the financial test should beadjusted and that the company no longerpasses the test.

(3) After the initial financial test, thecompany must annually pass the test andprovide documentation of its continuedeligibility to use the self-guarantee to theCommission within 90 days after the close ofeach succeeding fiscal year.

Ill. * * *

E. (1) If, at any time, the licensee's mostrecent bond issuance ceases to be rated inany category of "A -" and above by Standardand Poor's or in any category of "AY" andabove by Moody's, the licensee will notifythe Commission in writing within 20 daysafter publication of the change by the ratingservice.

(2) If the licensee's most recent bondissuance ceases to be rated in any categoryof A or above by both Standard and Poor'sand Moody's, the licensee no longer meetsthe requirements of Section II.A. of thisappendix.

F. The applicant or licensee must provideto the Commission a written guarantee (awritten commitment by a corporate officer)which states that the licensee will fund andcarry out the required decommissioningactivities or, upon issuance of an order by theCommission, the licensee will fund thestandby trust in the amount guaranteed bythe self-guarantee agreement.

G. (1) A standby trust to protect publichealth and safety and the environment mustbe established for decommissioning costsbefore the self-guarantee agreement issubmitted.

(2) The trustee and trust must beacceptable to the Commission. An acceptabletrustee includes an appropriate State orFederal Government agency or an entitywhich has the authority to act as a trusteeand whose trust operations are regulated andexamined by a Federal or State agency. TheCommission has the right to change thetrustee. An acceptable trust will meet theregulatory criteria established in theseregulations that govern the issuance of thelicense for which the guarantor has acceptedthe obligation to pay for decommissioningcosts.

H. The guarantor must agree that if theguarantor admits in writing its inability topay its debts generally, or makes a generalassignment for the benefit of creditors, or anyproceeding is instituted by or against theguarantor seeking to adjudicate it as bankruptor insolvent, or seeking dissolution,liquidation, winding-up, reorganization,arrangement, adjustment, protection, relief orcomposition of it or its debts under any law

relating to bankruptcy, insolvency, orreorganization or relief of debtors, or seekingthe entry of an order for relief or theappointment of a receiver, trustee, custodian,or other similar official for the guarantor orfor any substantial part of its property, or theguarantor takes any action to authorize oreffect any of the actions stated in thisparagraph, then the Commission may:

(1) Declare that the financial assuranceguaranteed by the self-guarantee agreement isimmediately due and payable to the standbytrust set up to protect the public health andsafety and the environment, withoutdiligence, presentment, demand, protest orany other notice of any kind, all of which areexpressly waived by guarantor; and

(2) Exercise any and all of its other rightsunder applicable law.

I. The guarantor must notify the NRC, inwriting, immediately following theoccurrence of any event listed in paragraphH of this appendix, and must include adescription of the event, including majorcreditors, the amounts involved, and theactions taken to assure that the amount offunds guaranteed by the self-guaranteeagreement for decommissioning will betransferred to the standby trust as soon aspossible.

m 11. In Appendix D to Part 30 inSection II, the introductory text ofparagraph A., paragraphs A.(1), A.(3),B.(1), and B.(2) are revised, in SectionIII paragraph D is revised andparagraphs E, F, and G are added to readas follows:

Appendix D to Part 30-CriteriaRelating To Use of Financial Tests andSelf-Guarantee for ProvidingReasonable Assurance of Funds forDecommissioning by CommercialCompanies That Have No OutstandingRated Bonds

f* * * * *

A. To pass the financial test a companymust meet all of the criteria set forth in thissection. For purposes of applying theAppendix D criteria, tangible net worth mustbe calculated to exclude all intangible assetsand the net book value of the nuclear facilityand site, and total net worth, which mayinclude intangible assets, must be calculatedto exclude the net book value and goodwillof the nuclear facility and site. These criteriainclude:

(1) Tangible net worth of at least $21million, and total net worth of at least 10times the amount of decommissioning fundsbeing assured by a self-guarantee for alldecommissioning activities for which thecompany is responsible as self-guaranteeinglicensee and as parent-guarantor for the totalof all nuclear facilities or parts thereof (or thecurrent amount required if certification isused).

(3) A ratio of cash flow divided by totalliabilities greater than 0.15 and a ratio of totalliabilities divided by total net worth less than1.5.

B. * * *

(1) The company's independent certifiedpublic accountant must compare the dataused by the company in the financial test,which is derived from the independentlyaudited, year-end financial statements for thelatest fiscal year, with the amounts in suchfinancial statement, The accountant mustevaluate the company's off-balance sheettransactions and provide an opinion onwhether those transactions could materiallyadversely affect the company's ability to payfor decommissioning costs. In connectionwith the auditing procedure, the licenseemust inform the NRC within 90 days of anymatters coming to the auditor's attentionwhich cause the auditor to believe that thedata specified in the financial test should beadjusted and that the company no longerpasses the test.

(2) After the initial financial test, thecompany must annually pass the test andprovide documentation of its continuedeligibility to use the self-guarantee to theCommission within 90 days after the close ofeach succeeding fiscal year.

III. * * *D. The applicant or licensee must provide

to the Commission a written guarantee (awritten commitment by a corporate officer)which states that the licensee will fund andcarry out the required decommissioningactivities or, upon issuance of an order by theCommission, the licensee will fund thestandby trust in the amount of the currentcost estimates for decommissioning.

E. A standby trust to protect public healthand safety and the environment must beestablished for decommissioning costs beforethe self-guarantee agreement is submitted.The trustee and trust must be acceptable tothe Commission. An acceptable trusteeincludes an appropriate State or FederalGovernment agency or an entity which hasthe authority to act as a trustee and whosetrust operations are regulated and examinedby a Federal or State agency. TheCommission will have the right to change thetrustee. An acceptable trust will meet theregulatory criteria established in the part ofthese regulations that governs the issuance ofthe license for which the guarantor hasaccepted the obligation to pay fordecommissioning costs.

F. The guarantor must agree that if theguarantor admits in writing its inability topay its debts generally, or makes a generalassignment for the benefit of creditors, or anyproceeding is instituted by or against theguarantor seeking to adjudicate it as bankruptor insolvent, or seeking dissolution,liquidation, winding-up, reorganization,arrangement, adjustment, protection, relief orcomposition of it or its debts under any lawrelating to bankruptcy, insolvency, orreorganization or relief of debtors, or seekingthe entry of an order for relief or theappointment of a receiver, trustee, custodian,or other similar official for the guarantor orfor any substantial part of its property, or theguarantor takes any action to authorize oreffect any of the actions stated in thisparagraph, then the Commission may:

(1) Declare that the financial assuranceguaranteed by the self-guarantee agreement isimmediately due and payable to the standby


trust set up to protect the public health andsafety and the environment, withoutdiligence, presentment, demand, protest orany other notice of any kind, all of which areexpressly waived by guarantor; and

(2) Exercise any and all of its other rightsunder applicable law,

G. The guarantor must notify the NRC, inwriting, immediately following theoccurrence of any event listed in paragraphF of this appendix, and must include adescription of the event, including majorcreditors, the amounts involved, and theactions taken to assure that the amount offunds guaranteed by the self-guaranteeagreement for decommissioning will betransferred to the standby trust as soon aspossible.* 12. In Appendix E to part 30, inSection II, paragraphs A.(1), B.(1), C.(1),and C.(2) are revised, in Section III,paragraphs D and E are revised andparagraphs F, G, and H are added toread as follows:

Appendix E to Part 30-CriteriaRelating To Use of Financial Tests andSelf-Guarantee for ProvidingReasonable Assurance of Funds forDecommissioning by NonprofitColleges, Universities, and Hospitals

If* * ***

A,. * * *

A.* * *

(1) For applicants or licensees that issuebonds, a current rating for its most recentuninsured, uncollateralized, andunencumbered bond issuance of AAA, AA,or A (including adjustments of + or -) asissued by Standard and Poor's (S&P) or Aaa,Aa, or A (including adjustments of 1, 2, or3) as issued by Moody's.

B. * * *

(1) For applicants or licensees that issuebonds, a current rating for its most recentuninsured, uncotlateralized, andunencumbered bond issuance of AAA, AA,or A (including adjustments of + or -) asissued by Standard and Poor's or Aaa, Aa, orA (including adjustments of 1, 2, or 3) asissued by Moody's.

C. * * *

(1) The licensee's independent certifiedpublic accountant must compare the dataused by the licensee in the financial test,which is derived from the independentlyaudited, year-end financial statements for thelatest fiscal year, with the amounts in suchfinancial statement. The accountant mustevaluate the licensee's off-balance sheettransactions and provide an opinion onwhether those transactions could materiallyadversely affect the licensee's ability to payfor decommissioning costs. The accountantmust verify that a bond rating, if used todemonstrate passage of the financial test,meets the requirements of Section II of thisappendix. In connection with the auditingprocedure, the licensee must inform the NRCwithin 90 days of any matters coming to theauditor's attention which cause the auditor tobelieve that the data specified in the financial

test should be adjusted and that the licenseeno longer passes the test.

(2) After the initial financial test, thelicensee must repeat passage of the test andprovide documentation of its continuedeligibility to use the self-guarantee to theCommission within 90 days after the close ofeach succeeding fiscal year.

III. * * *

D. The applicant or licensee must provideto the Commission a written guarantee (awritten commitment by a corporate officer orofficer of the institution) which states thatthe licensee will fund and carry out therequired decommissioning activities or, uponissuance of an order by the Commission, thelicensee will fund the standby trust in theamount of the current cost estimates fordeconmmissioning.

E. (1) If, at any time, the licensee's mostrecent bond issuance ceases to be rated inany category of "A" or above by eitherStandard and Poor's or Moody's, the licenseeshall notify the Commission in writingwithin 20 days after publication of thechange by the rating service.

(2) If the licensee's most recent bondissuance ceases to be rated in any categoryof "A -" and above by Standard and Poor'sor in any category of "A3" and above byMoody's, the licensee no longer meets therequirements of Section II.A. of thisappendix.

F. (1) A standby trust to protect publichealth and safety and the environment mustbe established for decommissioning costsbefore the self-guarantee agreement issubmitted.

(2) The trustee and trust must beacceptable to the Commission. An acceptabletrustee includes an appropriate State orFederal Government agency or an entitywhich has the authority to act as a trusteeand whose trust operations are regulated andexamined by a Federal or State agency. TheCommission has the right to change thetrustee. An acceptable trust will meet theregulatory criteria established in the part ofthese regulations that governs the issuance ofthe license for which the guarantor hasaccepted the obligation to pay fordecommissioning costs.

G. The guarantor must agree that if theguarantor admits in writing its inability topay its debts generally, or makes a generalassignment for the benefit of creditors, or anyproceeding is instituted by or against theguarantor seeking to adjudicate it as bankruptor insolvent, or seeking dissolution,liquidation, winding-up, reorganization,arrangement, adjustment, protection, relief orcomposition of it or its debts under any lawrelating to bankruptcy, insolvency, orreorganization or relief of debtors, or seekingthe entry of an order for relief or theappointment of a receiver, trustee, custodian,or other similar official for guarantor or forany substantial part of its property, or theguarantor takes any action to authorize oreffect any of the actions stated in thisparagraph, then the Commission may:

(1) Declare that the financial assuranceguaranteed by the self-guarantee agreement isimmediately due and payable to the standbytrust set up to protect the public health and

safety and the environment, withoutdiligence, presentment, demand, protest orany other notice of any kind, all of which areexpressly waived by guarantor; and

(2) Exercise any and all of its other rightsunder applicable law.

H. The guarantor must notify the NRC, inwriting, immediately following theoccurrence of any event listed in paragraphG of this appendix, and must include adescription of the event, including majorcreditors, the amounts involved, and theactions taken to assure that the amount offunds guaranteed by the self-guaranteeagreement for decommissioning will betransferred to the standby trust as soon aspossible.

PART 40-DOMESTIC LICENSING OFSOURCE MATERIAL

* 13. The authority citation for part 40continues to read as follows:

Authority: Secs. 62, 63, 64, 65, 81,161,182, 183, 186,68 Stat. 932, 933, 935 948,953, 954, 955, as amended, secs. 11e(2), 83,84, Pub. L. 95-604, 92 Stat. 3033, asamended, 3039, sec. 234, 83 Stat. 444, asanmended (42 U.S.C. 2014(e)(2), 2092, 2093,2094, 2095, 2111, 2113, 2114, 2201,2232,2233, 2236, 2282); sec. 274, Pub. L. 86-373,73 Stat. 688 (42 U.S.C. 2021); secs. 201, asanmended, 202, 206, 88 Stat. 1242, asamended, 1244, 1246 (42 U.S.C. 5841, 5842,5846); sec. 275, 92 Stat. 3021, as amended byPub. L. 97-415, 96 Stat. 2067 (42 U.S.C.2022); sec. 193, 104 Stat. 2835, as amendedby Pub. L. 104-134, 110 Stat. 1321, 1321-349(42 U.S.C. 2243); sec. 1704, 112 Stat. 2750 (44U.S.C. 3504 note); Energy Policy Act of 2005,Pub. L. 109-59, 119 Stat. 594 (2005).

Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 as amended byPub. L. 102-486, sec. 2902, 106 Stat. 3123 (42U.S.C. 5851). Section 40.31(g) also issuedunder sec. 122, 68 Stat. 939 (42 U.S.C. 2152).Section 40.46 also issued under sec. 184, 68Stat. 954, as amended (42 U.S.C. 2234).Section 40.71 also issued under sec. 187, 68Stat. 955 (42 U.S.C. 2237).

* 14. In § 40.36, a new paragraph (c)(5)is added, paragraph (d), the introductorytext in paragraph (e), and paragraphs(e)(1), the introductory text of paragraph(e)(2) and paragraph (e)(3) are revised,and a new paragraph (g) is added to readas follows:

§40.36 Financial assurance andrecordkeeping for decommissioning.


20.1501(a), residual radioactivity in thefacility and environment, including thesubsurface, is detected at levels thatwould, if left uncorrected, prevent thesite from meeting the 10 CFR 20.1402criteria for unrestricted use, the licenseemust submit a decommissioningfunding plan within one year of whenthe survey is completed.



(d)(1) Each decommissioning fundingplan must be submitted for review andapproval and must contain-:-



(B) The cost of meeting the 10 CFR20.1402 criteria for unrestricted use,provided that, if the applicant orlicensee can demonstrate its ability tomeet the provisions of 10 CFR 20.1403,the cost estimate may be based onmeeting the 10 CFR 20.1403 criteria;

(C) The volume of onsite subsurfacematerial containing residualradioactivity that will requireremediation; and



(iii) A description of the method ofassuring funds for decommissioningfrom paragraph (e) of this section,including means for adjusting costestimates and associated funding levelsperiodically over the life of the facility;


(v) A signed original, or if permitted,a copy, of the financial instrumentobtained to satisfy the requirements ofparagraph (e) of this section (unless apreviously submitted and acceptedfinancial instrument continues to coverthe cost estimate for decommissioning).





(iv) Facility modifications;

(v) Changes in authorized possessionlimits;

(vi) Actual remediation costs thatexceed the previous cost estimate;

(vii) Onsite disposal; and(viii) Use of a settling pond.(e) The financial instrument must

include the licensee's name, licensenumber, and docket number; and thename, address, and other contactinformation of the issuer, and, if a trustis used, the trustee. When any of theforegoing information changes, thelicensee must, within 30 days, submitfinancial instruments reflecting suchchanges. The financial instrumentsubmitted must be a signed original orsigned original duplicate, except wherea copy is specifically permitted.Financial assurance fordecommissioning must be provided byone or more of the following methods:


(2) A surety method, insurance, orother guarantee method. These methodsguarantee that decommissioning costswill be paid. A surety method may bein the form of a surety bond, or letter ofcredit. A parent company guarantee offunds for decommissioning costs basedon a financial test may be used if theguarantee and test are as contained inAppendix A to this part. Forcommercial corporations that issuebonds, a guarantee of funds by theapplicant or licensee fordecommissioning costs based on afinancial test may be used if theguarantee and test are as contained inAppendix C to this part. For commercialcompanies that do not issue bonds, aguarantee of funds by the applicant orlicensee for decommissioning costs maybe used if the guarantee and test are ascontained in Appendix D to this part.For nonprofit entities, such as colleges,universities, and nonprofit hospitals, aguarantee of funds by the applicant orlicensee may be used if the guaranteeand test are as contained in AppendixE to this part. Except for an externalsinking fund, a parent companyguarantee or guarantee by the applicantor licensee may not be used incombination with any other financialmethods used to satisfy therequirements of this section. Aguarantee by the applicant or licenseemay not be used in any situation where

the applicant or licensee has a parentcompany holding majority control of thevoting stock of the company. Any suretymethod or insurance used to providefinancial assurance fordecommissioning must contain thefollowing conditions:

(3) An external sinking fund in whichdeposits are made at least annually,coupled with a surety method,insurance, or other guarantee method,the value of which may decrease by theamount being accumulated in thesinking fund. An external sinking fundis a fund established and maintained bysetting aside funds periodically in anaccount segregated from licensee assetsand outside the licensee'sadministrative control in which the totalamount of funds would be sufficient topay decommissioning costs at the timetermination of operation is expected. Anexternal sinking fund must be in theform of a trust. If the other guaranteemethod is used, no surety or insurancemay be combined with the externalsinking fund. The surety, insurance, orother guarantee provisions must be asstated in paragraph (e)(2) of this section.

(g) In providing financial assuranceunder this section, each licensee mustuse the financial assurance funds onlyfor decommissioning activities and eachlicensee must monitor the balance offunds held to account for marketvariations. The licensee must replenishthe funds, and report such actions to theNRC, as follows:



(3) Within 30 days of taking theactions required by paragraph (g)(1) or(g)(2) of this section, the licensee mustprovide a written report of such actionsto the Director, Office of Federal andState Materials and EnvironmentalManagement Programs, and state thenew balance of the fund.

R 15. In § 40.46, the current paragraph isdesignated as paragraph (a) and a newparagraph (b) is added to read asfollows:


Federal Register/Vol. 76, No. 117/Friday, June 17, 2011/Rules and Regulations35570

§40.46 Inalienability of licenses.

(b) An application for transfer oflicense must include:

(1) The identity, technical andfinancial qualifications of the proposedtransferee; and

(2) Financial assurance fordecommissioning information requiredby § 40.36 or Appendix A to this part,as applicable.

a 16. In Appendix A to part 40, SectionIl, Criterion 9 is revised to read asfollows:

Appendix A to Part 40-CriteriaRelating to the Operation of UraniumMills and the Disposition of Tailings orWastes Produced by the Extraction orConcentration of Source Material FromOres Processed Primarily for TheirSource Material Content

ll* * ***

Criterion 9-(a) Financial suretyarrangements must be established by eachmill operator before the commencement ofoperations to assure that sufficient funds willbe available to carry out the decontaminationand decommissioning of the mill and siteand for the reclamation of any tailings orwaste disposal areas. The amount of funds tobe ensured by such surety arrangements mustbe based on Commission-approved costestimates in a Commission-approved plan, ora proposed revision to the plan submitted tothe Commission for approval, if the proposedrevision contains a higher cost estimate, for:

(1) Decontamination and decommissioningof mill buildings and the milling site to levelswhich allow unrestricted use of these areasupon decommissioning, and

(2) The reclamation of tailings and/orwaste areas in accordance with technicalcriteria delineated in Section I of thisappendix.

(b) Each cost estimate must contain-(1) A detailed cost estimate for

decontamination, decommissioning, andreclamation, in an amount reflecting:

(i) The cost of an independent contractorto perform the decontamination,decommissioning and reclamation activities;and

(ii) An adequate contingency factor;(2) An estimate of the amount of

radioactive contamination in onsitesubsurface material;

(3) Identification of and justification forusing the key assumptions contained in theDCE; and

(4) A description of the method of assuringfunds for decontamination,decommissioning, and reclamation.

(c) The licensee shall submit this plan inconjunction with an environmental reportthat addresses the expected environmentalimpacts of the milling operation,decommissioning and tailings reclamation,and evaluates alternatives for mitigatingthese impacts. The plan must include asigned original of the financial instrumentobtained to satisfy the surety arrangement

requirements of this criterion (unless apreviously submitted and approved financialinstrument continues to cover the costestimate for decommissioning). The suretyarrangement must also cover the costestimate and the payment of the charge forlong-term surveillance and control requiredby Criterion 10 of this section.

(d) To avoid unnecessary duplication andexpense, the Commission may acceptfinancial sureties that have been consolidatedwith financial or surety arrangementsestablished to meet requirements of otherFederal or state agencies and/or localgoverning bodies for decommissioning,decontamination, reclamation, and long-termsite surveillance and control, provided sucharrangements are considered adequate tosatisfy these requirements and that theportion of the surety which covers thedecommissioning and reclamation of themill, mill tailings site and associated areas,and the long-term funding charge is clearlyidentified and committed for use inaccomplishing these activities.

(e) The licensee's surety mechanism willbe reviewed annually by the Commission toassure, that sufficient funds would beavailable for completion of the reclamationplan if the work had to be performed by anindependent contractor.

(f) The amount of surety liability should beadjusted to recognize any increases ordecreases resulting from:

(1) Inflation;(2) Changes in engineering plans;(3) Activities performed;(4) Spills, leakage or migration of

radioactive material producing additionalcontamination in onsite subsurface materialthat must be remediated to meet applicableremediation criteria;

(5) Waste inventory increasing above theamount previously estimated;

(6) Waste disposal costs increasing abovethe amount previously estimated;

(7) Facility modifications;(8) Changes in authorized possession

limits;(9) Actual remediation costs that exceed

the previous cost estimate;(10) Onsite disposal; and(11) Any other conditions affecting costs.(g) Regardless of whether reclamation is

phased through the life of the operation ortakes place at the end of operations, anappropriate portion of surety liability mustbe retained until final compliance with thereclamation plan is determined.

(h) The appropriate portion of suretyliability retained until final compliance withthe reclamation plan is determined will be atleast sufficient at all times to cover the costsof decommissioning and reclamation of theareas that are expected to be disturbed beforethe next license renewal. The term of thesurety mechanism must be open ended,unless it can be demonstrated that anotherarrangement would provide an equivalentlevel of assurance. This assurance would beprovided with a surety instrument which iswritten for a specified time (e.g., 5 years) andwhich must be automatically renewed unlessthe surety notifies the beneficiary (theCommission or the State regulatory agency)and the principal (the licensee) with

reasonable time (e.g., 90 days) before therenewal date of their intention not to renew.In such a situation the surety requirementstill exists and the licensee would berequired to submit an acceptable replacementsurety within a brief time to allow at least 60days for the regulatory agency to collect.

Mi) Proof of forfeiture must not be necessaryto collect the surety. In the event that thelicensee can not provide an acceptablereplacement surety within the required time,the surety shall be automatically collectedbefore its expiration. The surety instrumentmust provide for collection of the full faceamount immediately on demand withoutreduction for any reason, except for trusteefees and expenses provided for in a trustagreement, and that the surety will not refuseto make full payment. The conditionsdescribed previously would have to beclearly stated on any surety instrumentwhich is not open-ended, and must be agreedto by all parties. Financial suretyarrangements generally acceptable to theCormmission are:

(1) Trust funds;(2) Surety bonds;(3) Irrevocable letters of credit; and(4) Combinations of the financial surety

arrangements or other types of arrangementsas may be approved by the Commission. If atrust is not used, then a standby trust mustbe set up to receive funds in the event theCommission or State regulatory agencyexercises its right to collect the surety. Thesurety arrangement and the surety or trustee,as applicable, must be acceptable to theCommission. Self insurance, or anyarrangement which essentially constitutesself insurance (e.g., a contract with a State orFederal agency), will not satisfy the suretyrequirement because this provides noadditional assurance other than that whichalready exists through license requirements.

PART 50-DOMESTIC LICENSING OFPRODUCTION AND UTILIZATIONFACILITIES.

N 17. The authority citation for part 50continues to read as follows:

Authority: Secs. 102, 103, 104, 105, 161,182, 183, 186, 189, 68 Stat. 936, 937, 938,948, 953, 954, 955, 956, as amended, sec.234, 83 Stat. 444, as amended (42 U.S.C.2132, 2133, 2134, 2135, 2201, 2232, 2233,2236, 2239, 2282); secs. 201, as amended,202, 206, 88 Stat. 1242, as amended, 1244,1246 (42 U.S.C. 5841, 5842, 5846); sec. 1704,112 Stat. 2750 (44 U.S.C. 3504 note); EnergyPolicy Act of 2005, Pub. L. 109-58, 119 Stat.194 (2005). Section 50.7 also issued underPub. L. 95-601, sec. 10, 92 Stat. 2951 asamended by Pub. L. 102-486, Sec. 2902, 106Stat. 3123 (42 U.S.C. 5841). Section 50.10also issued under secs. 101, 185, 68 Stat. 955,as amended (42 U.S.C. 2131, 2235); sec. 102,Pub. L. 91-190, 83 Stat. 853 (42 U.S.C. 4332).Sections 50.13, 50.54(dd), and 50.103 alsoissued under sec. 108, 68 Stat. 939, asamended (42 U.S.C. 2138).

Sections 50.23, 50.35, 50.55, and 50.56 alsoissued under sec. 185, 68 Stat. 955 (42 U.S.C.2235). Sections 50.33a, 50.55a and Appendix



Q also issued under sec. 102, Pub. L. 91-190,83 Stat. 853 (42 U.S.C. 4332). Sections 50.34and 50.54 also issued under sec. 204, 88 Stat.1245 (42 U.S.C. 5844). Sections 50.58, 50.91,and 50.92 also issued under Pub. L. 97-415,96 Stat. 2073 (42 U.S.C. 2239). Section 50.78also issued under sec. 122, 68 Stat. 939 (42

• U.S.C. 2152). Sections 50.80-50.81 alsoissued under sec. 184, 68 Stat. 954, asamended (42 U.S.C. 2234). Appendix F alsoissued under sec. 187, 68 Stat. 955 (42 U.S.C.2237).

M 18. In § 50.75, the introductory text ofparagraph (e)(1)(iii)(A), and paragraphs(f)(1) and (f)(2) are revised to read asfollows:

§ 50.75 Reporting and recordkeeping fordecommissioning planning.* * * * *

(e)* * *(1) * * *(iii) * * *

(A) These methods guarantee thatdecommissioning costs will be paid. Asurety method may be in the form of asurety bond, or letter of credit. Anysurety method or insurance used toprovide financial assurance fordecommissioning must contain thefollowing conditions:* * * * *

(f)(1) Each power reactor licenseeshall report, on a calendar-year basis, tothe NRC by March 31, 1999, and at leastonce every 2 years thereafter on thestatus of its decommissioning fundingfor each reactor or part of a reactor thatit owns. However, each holder of acombined license under part 52 of thischapter need not begin reporting untilthe date that the Commission has madethe finding under § 52.103(g) of thischapter. The information in this reportmust include, at a minimum, theamount of decommissioning fundsestimated to be required pursuant to 10CFR 50.75(b) and (c); the amount ofdecommissioning funds accumulated tothe end of the calendar year precedingthe date of the report; a schedule of theannual amounts remaining to becollected; the assumptions usedregarding rates of escalation indecommissioning costs, rates ofearnings on decommissioning funds,and rates of other factors used infunding projections; any contracts uponwhich the licensee is relying pursuantto paragraph (e)(1)(v) of this section; anymodifications occurring to a licensee'scurrent method of providing financialassurance since the last submittedreport; and any material changes to trustagreements. If any of the precedingitems is not applicable, the licenseeshould so state in its report. Anylicensee for a plant that is within 5 yearsof the projected end of its operation, or

where conditions have changed suchthat it will close within 5 years (beforethe end of its licensed life), or that hasalready closed (before the end of itslicensed life), or that is involved in amerger or an acquisition shall submitthis report annually.

(2) Each power reactor licensee shallreport, on a calendar-year basis, to theNRC by March 31, 1999, and at leastonce every 2 years thereafter on thestatus of its decommissioning fundingfor each reactor or part of a reactor thatit owns. The information in this reportmust include, at a minimum, theamount of decommissioning fundsestimated to be required pursuant to 10CFR 50.75(b) and (c); the amount ofdecommissioning funds accumulated tothe end of the calendar year precedingthe date of the report; a schedule of theannual amounts remaining to becollected; the assumptions usedregarding rates of escalation indecommissioning costs, rates ofearnings on decommissioning funds,and rates of other factors used infunding projections; any contracts uponwhich the licensee is relying pursuantto paragraph (e)(1)(v) of this section; anymodifications occurring to a licensee'scurrent method of providing financialassurance since the last submittedreport; and any material changes to trustagreements. If any of the precedingitems is not applicable, the licenseeshould so state in its report. Anylicensee for a plant that is within 5 yearsof the projected end of its operation, orwhere conditions have changed suchthat it will close within 5 years (beforethe end of its licensed life), or that hasalready closed (before the end of itslicensed life), or that is involved in amerger or an acquisition shall submitthis report annually.* * * * *

N 19. In § 50.82, paragraph (a)(4)(i) isrevised, and paragraphs (a)(8)(v),(a)(8)(vi), and (a)(8)(vii) are added toread as follows:

§50.82 Termination of license.* * * * *

(a) * * *(4)(i) Within 2 years following

permanent cessation of operations, thelicensee shall submit a post-shutdowndecommissioning activities report(PSDAR) to the NRC, and a copy to theaffected State(s). The PSDAR mustcontain a description of the planneddecommissioning activities along with aschedule for their accomplishment, adiscussion that provides the reasons forconcluding that the environmentalimpacts associated with site-specificdecommissioning activities will be

bounded by appropriate previouslyissued environmental impactstatements, and a site-specific DCE,including the projected cost ofmanaging irradiated fuel.* * * * *

(8) * * *(v) After submitting its site-specific

DCE required by paragraph (a)(4)(i) ofthis section, and until the licensee hascompleted its final radiation survey anddemonstrated that residual radioactivityhas been reduced to a level that permitstermination of its license, the licenseemust annually submit to the NRC, byMarch 31, a financial assurance statusreport. The report must include thefollowing information, current throughthe end of the previous calendar year:

(A) The amount spent ondecommissioning, both cumulative andover the previous calendar year, theremaining balance of anydecommissioning funds, and theamount provided by other financialassurance methods being relied upon;

(B) An estimate of the costs tocomplete decommissioning, reflectingany difference between actual andestimated costs for work performedduring the year, and thedecommissioning criteria upon whichthe estimate is based;

(C) Any modifications occurring to alicensee's current method of providingfinancial assurance since the lastsubmitted report; and

(D) Any material changes to trustagreements or financial assurancecontracts.

(vi) If the sum of the balance of anyremaining decommissioning funds, plusearnings on such funds calculated at notgreater than a 2 percent real rate ofreturn, together with the amountprovided by other financial assurancemethods being relied upon, does notcover the estimated cost to complete thedecommissioning, the financialassurance status report must includeadditional financial assurance to coverthe estimated cost of completion.

(vii) After submitting its site-specificDCE required by paragraph (a)(4)(i) ofthis section, the licensee must annuallysubmit to the NRC, by March 31, areport on the status of its funding formanaging irradiated fuel. The reportmust include the following information,current through the end of the previouscalendar year:

(A) The amount of funds accumulatedto cover the cost of managing theirradiated fuel;

(B) The projected cost of managingirradiated fuel until title to the fuel andpossession of the fuel is transferred tothe Secretary of Energy; and



(C) If the funds accumulated do notcover the projected cost, a plan to obtainadditional funds to cover the cost.

PART 70--DOMESTIC LICENSING OFSPECIAL NUCLEAR MATERIAL

M 20. The authority citation for Part 70continues to read as follows:

Authority: Secs. 51, 53,161,182,183, 68Stat. 929, 930, 948, 953, 954, as amended,sec. 234, 83 Stat. 444, as amended (42 U.S.C.2071, 2073, 2201, 2232, 2233, 2282, 2297f);secs. 201, as amended, 202, 204, 206, 88 Stat.1242, as amended, 1244, 1245, 1246 (42U.S.C. 5841, 5842, 5845, 5846). Sec. 193, 104Stat. 2835, as amended by Pub. L. 104-134,110 Stat. 1321, 1321-349 (42 U.S.C. 2243);sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504note).

Sections 70.1(c) and 70.20a(b) also issuedunder secs. 135, 141, Pub. L. 97-425, 96 Stal.2232, 2241 (42 U.S.C. 10155, 10161). Section70.7 is also issued under Pub. L. 95-601, sec.10, 92 Stat. 2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42 U.S.C.5851). Section 70.21(g) also issued under sec.122, 68 Stat. 939 (42 U.S.C. 2152). Section70.31 also issued under sec. 57d, Pub. L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections70.36 and 70.44 also issued under sec. 184,68 Stat. 954, as amended (42 U.S.C. 2234).Section 70.81 also issued under secs. 186,187, 68 Stat. 955 (42 U.S.C. 2236, 2237).Section 70.82 also issued under sec. 108, 68Stat. 939, as amended (42 U.S.C. 2138).m 21. In § 70.25, a new paragraph (c)(5)is added, paragraph (e), the introductorytext in paragraph (f), and paragraph(f)(1), the introductory text of paragraph(f)(2) and paragraph (f)(3) are revised,and a new paragraph (h) is added toread as follows:



20.1501(a), residual radioactivity in thefacility and environment, including thesubsurface, is detected at levels thatwould, if left uncorrected, prevent thesite from meeting the 10 CFR 20.1402criteria for unrestricted use, the licenseemust submit a decommissioningfunding plan within one year of whenthe survey is completed.

(e)(1) Each decommissioning fundingplan must be submitted for review andapproval and must contain-



(B) The cost of meeting the 10 CFR20.1402 criteria for unrestricted use,

provided that, if the applicant orlicensee can demonstrate its ability tomeet the provisions of 10 CFR 20.1403,the cost estimate may be based onmeeting the 10 CFR 20.1403 criteria;

(C) The volume of onsite subsurfacematerial containing residualradioactivity that will requireremediation; and



(iii) A description of the method ofassuring funds for decommissioningfrom paragraph (f) of this section,including means for adjusting costestimates and associated funding levelsperiodically over the life of the facility;


(v) A signed original, or, if permitted,a copy, of the financial instrumentobtained to satisfy the requirements ofparagraph (f) of this section (unless apreviously submitted and acceptedfinancial instrument continues to coverthe cost estimate for decommissioning).





(iv) Facility modifications;(v) Changes in authorized possession

limits;(vi) Actual remediation costs that

exceed the previous cost estimate;(vii) Onsite disposal; and(viii) Use of a settling pond.(f) The financial instrument must

include the licensee's name, licensenumber, and docket number; and thename, address, and other contactinformation of the issuer, and, if a trustis used, the trustee. When any of the

foregoing information changes, thelicensee must, within 30 days, submitfinancial instruments reflecting suchchanges. Financial assurance fordecommissioning must be provided byone or more of the following methods:


(2) A surety method, insurance, orother guarantee method. These methodsguarantee that decommissioning costswill be paid. A surety method may bein the form of a surety bond, or letter ofcredit. A parent company guarantee offunds for decommissioning costs basedon a financial test may be used if theguarantee and test are as contained inAppendix A to this part. Forcommercial corporations that issuebonds, a guarantee of funds by theapplicant or licensee fordecommissioning costs based on afinancial test may be used if theguarantee and test are as contained inAppendix C to this part. For commercialcompanies that do not issue bonds, aguarantee of funds by the applicant orlicensee for decommissioning costs maybe used if the guarantee and test are ascontained in Appendix D to this part.For nonprofit entities, such as colleges,universities, and nonprofit hospitals, aguarantee of funds by the applicant orlicensee may be used if the guaranteeand test are as contained in AppendixE to this part. Except for an externalsinking fund, a parent companyguarantee or a guarantee by theapplicant or licensee may not be used incombination with any other financialmethods used to satisfy therequirements of this section. Aguarantee by the applicant or licenseemay not be used in any situation wherethe applicant or licensee has a parentcompany holding majority control of thevoting stock of the company. Any suretymethod or insurance used to providefinancial assurance fordecommissioning must contain thefollowing conditions:

(3) An external sinking fund in whichdeposits are made at least annually,coupled with a surety method,insurance, or other guarantee method,the value of which may decrease by theamount being accumulated in thesinking fund. An external sinking fund


is a fund established and maintained bysetting aside funds periodically in anaccount segregated from licensee assetsand outside the licensee'sadministrative control in which the totalamount of funds would be sufficient topay decommissioning costs at the timetermination of operation is expected. Anexternal sinking fund must be in theform of a trust. If the other guaranteemethod is used, no surety or insurancemay be combined with the externalsinking fund. The surety, insurance, orother guarantee provisions must be asstated in paragraph (f)(2) of this section.

(h) In providing financial assuranceunder this section, each licensee mustuse the financial assurance funds onlyfor decommissioning activities and eachlicensee must monitor the balance offunds held to account for marketvariations. The licensee must replenishthe funds, and report such actions to theNRC, as follows:



(3) Within 30 days of taking theactions required by paragraph (h)(1) or(h)(2) of this section, the licensee mustprovide a written report of such actionsto the Director, Office of Federal andState Materials and EnvironmentalManagement Programs, and state thenew balance of the fund.

1 22. In § 70.36, the current paragraph isdesignated as paragraph (a) and a newparagraph (b) is added to read asfollows:

§70.36 Inalienability of licenses.

(b) An application for transfer oflicense must include:

(1) The identity, technical andfinancial qualifications of the proposedtransferee; and

(2) Financial assurance fordecommissioning information requiredby § 70.25.

PART 72-LICENSINGREQUIREMENTS FOR THEINDEPENDENT STORAGE OF SPENTNUCLEAR FUEL, HIGH-LEVELRADIOACTIVE WASTE, ANDREACTOR-RELATED GREATER THANCLASS C WASTE

1 23. The authority citation for part 72continues to read as follows:

Authority: Secs, 51, 53, 57, 62, 63, 65, 69,81, 161,182,183,184,186, 187,189, 68 Stat.929,930,932,933,934,935,948,953,954,955, as amended; sec. 234, 83 Stat. 444, asamended (42 U.S.C. 2071, 2073, 2077, 2092,2093, 2095, 2099, 2111, 2201, 2232, 2233,2234, 2236, 2237, 2238, 2282); sec. 274, Pub.L. 86-373, 73 Stat. 688, as amended (42U.S.C. 2021); sec. 201, as amended; 202, 206,88 Stat. 1242, as amended; 1244, 1246 (42U.S.C. 5841, 5842, 5846); Pub. L. 95-601, sec.10, 92 Stat. 2951, as amended by Pub. L. 102-486, sec. 7902, 106 Stat. 3123 (42 U.S.C.5851); sec. 102, Pub. L. 91-190, 83 Stat. 853(42 U.S.C. 4332); secs. 131, 132, 133, 135,137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230,2232, 2241; sec. 148, Pub. L. 100-203, 101Stat. 1330-235 (42 U.S.C. 10151, 10152,10153, 10155, 10157, 10161, 10168); sec.1704, 112 Stat. 2750 (44 U.S.C. 3504 note);Energy Policy Act of 2005, Pub. L. 109-58,119 Stat. 549 (2005).

Section 72.44(g) also issued under secs.142(b) and 148(c), (d), Pub. L. 100-203, 101Stat. 1330-232, 1330-236 (42 U.S.C.10162(b), 10168(c), (d)). Section 72.46 alsoissued under sec. 189, 68 Stat. 955 (42 U.S.C.2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230(42 U.S.C. 10154). Section 72.96(d) alsoissued under sec. 145(g), Pub. L. 100-203,101 Stat. 1330-235 (42 U.S.C. 10165(g)).Subpart ) also issued under secs. 2(2), 2(15).2(19), 117(a), 141(h), Pub. L. 97-425, 96 Stat.2202, 2203, 2204, 2222, 2224 (42 U.S.C.10101, 10137(a), 10161(h)). Subparts K and Lare also issued under sec. 133, 98 Stat. 2230(42 U.S.C. 10153) and sec. 218(a), 96 Stat.2252 (42 U.S.C. 10198).

N 24. In § 72.13, paragraph (c) is revisedto read as follows:

§72.13 Applicability.

(c) The following sections apply toactivities associated with a generallicense: 72.1; 72.2(a)(1), (b), (c), and (e);72.3 through 72.6(c)(1); 72.7 through72.13(a) and (c); 72.30(b), (c), (d), (e) and(f); 72.32(c) and (d); 72.44(b) and (f);72.48; 72.50(a); 72.52(a), (b), (d), and (e);72.60; 72.62; 72.72 through 72.80(f);72.82 through 72.86; 72.104; 72.106;72.122; 72.124; 72.126; 72.140 through72.176; 72.190; 72.194; 72.210 through72.220, and 72.240(a).

* 25. In § 72.30, paragraph (b) is revised,paragraph (c) is redesignated asparagraph (e) and the introductory textof the newly redesignated paragraph (e),paragraphs (e)(1), the introductory text

of paragraph (e)(2) and paragraph (e)(3)are revised, paragraph (e)(5) is revised,paragraph (d) is redesignated asparagraph (f) and the newlyredesignated paragraphs (f)(3)(ii) and(f)(4) are revised, and new paragraphs(c), (d), and (g) are added to read asfollows:


(b) Each holder of, or applicant for, alicense under this part must submit forNRC review and approval adecommissioning funding plan thatmust contain:

(1) Information on how reasonableassurance will be provided that fundswill be available to decommission theISFSJ or MRS.

(2) A detailed cost estimate fordecommissioning, in an amountreflecting:

(i) The cost of an independentcontractor to perform alldecommissioning activities;

(ii) An adequate contingency factor;and

(iii) The cost of meeting the § 20.1402of this chapter criteria for unrestricteduse, provided that, if the applicant orlicensee can demonstrate its ability tomeet the provisions of § 20.1403 of thischapter, the cost estimate may be basedon meeting the § 20.1403 criteria.

(3) Identification of and justificationfor using the key assumptions containedin the DCE.

(4) A description of the method ofassuring funds for decommissioningfrom paragraph (e) of this section,including means for adjusting costestimates and associated funding levelsperiodically over the life of the facility.

(5) The volume of onsite subsurfacematerial containing residualradioactivity that will requireremediation to meet the criteria forlicense termination.

(6) A certification that financialassurance for decommissioning hasbeen provided in the amount of the costestimate for decommissioning.

(c) At the time of license renewal andat intervals not to exceed 3 years, thedecommissioning funding plan must beresubmitted with adjustments asnecessary to account for changes incosts and the extent of contamination. Ifthe amount of financial assurance willbe adjusted downward, this can not bedone until the updateddecommissioning funding plan isapproved. The decommissioningfunding plan must update theinformation submitted with the originalor prior approved plan and mustspecifically consider the effect of the


following events on decommissioningcosts:

(1) Spills of radioactive materialproducing additional residualradioactivity in onsite subsurfacematerial.

(2) Facility modifications.(3) Changes in authorized possession

limits.(4) Actual remediation costs that

exceed the previous cost estimate.(d) If, in surveys made under 10 CFR

20.1501(a), residual radioactivity insoils or groundwater is detected atlevels that would require suchradioactivity to be reduced to a levelpermitting release of the property forunrestricted use under thedecommissioning requirements in part20 of this chapter, the licensee mustsubmit a new or reviseddecommissioning funding plan withinone year of when the survey iscompleted.

(e) The financial instrument mustinclude the licensee's name, licensenumber, and docket number; and thename, address, and other contactinformation of the issuer, and, if a trustis used, the trustee. When any of theforegoing information changes, thelicensee must, within 30 days, submitfinancial instruments reflecting suchchanges. Financial assurance fordecommissioning must be provided byone or more of the following methods:


(2) A surety method, insurance, orother guarantee method. These methodsguarantee that decommissioning costswill be paid. A surety method may bein the form of a surety bond, or letter ofcredit. A parent company guarantee offunds for decommissioning costs basedon a financial test may be used if theguarantee and test are as contained inAppendix A to part 30 of this chapter.For commercial corporations that issuebonds, a guarantee of funds by theapplicant or licensee fordecommissioning costs based on afinancial test may be used if theguarantee and test are as contained inAppendix C to part 30 of this chapter.For commercial companies that do notissue bonds, a guarantee of funds by theapplicant or licensee fordecommissioning costs may be used ifthe guarantee and test are as contained

in Appendix D to part 30 of this chapter.Except for an external sinking fund, aparent company guarantee or aguarantee by the applicant or licenseemay not be used in combination withother financial methods to satisfy therequirements of this section. Aguarantee by the applicant or licenseemay not be used in any situation wherethe applicant or licensee has a parentcompany holding majority control of thevoting stock of the company. Any suretymethod or insurance used to providefinancial assurance fordecommissioning must contain thefollowing conditions:* * * * *

(3) An external sinking fund in whichdeposits are made at least annually,coupled with a surety method,insurance, or other guarantee method,the value of which may decrease by theamount being accumulated in thesinking fund. An external sinking fundis a fund established and maintained bysetting aside funds periodically in anaccount segregated from licensee assetsand outside the licensee'sadministrative control in which the totalamount of funds would be sufficient topay decommissioning costs at the timetermination of operation is expected. Anexternal sinking fund must be in theform of a trust. If the other guaranteemethod is used, no surety or insurancemay be combined with the externalsinking fund. The surety, insurance, orother guarantee provisions must be asstated in paragraph (e)(2) of this section.* * * * *

(5) In the case of licensees who areissued a power reactor license underpart 50 of this chapter or ISFSI licenseeswho are an electric utility, as defined inpart 50 of this chapter, with a specificlicense issued under this part, themethods of 10 CFR 50.75(b), (e), and (h),as applicable. In the event that fundsremaining to be placed into thelicensee's ISFSI decommissioningexternal sinking fund are no longerapproved for recovery in rates by acompetent rate making authority, thelicensee must make changes to providefinancial assurance using one or more ofthe methods stated in paragraphs (1)through (4) of this section.

(f) , *(3) * * *

(ii) All areas outside of restrictedareas that require documentation under§ 72.30(f)(1).

(4) Records of the cost estimateperformed for the decommissioningfunding plan and records of the fundingmethod used for assuring funds areavailable for decommissioning.

(g) In providing financial assuranceunder this section, each licensee mustuse the financial assurance funds onlyfor decommissioning activities and eachlicensee must monitor the balance offunds held to account for marketvariations. The licensee must replenishthe funds, and report such actions to theNRC, as follows:

(1) If, at the end of a calendar year, thefund balance is below the amountnecessary to cover the cost ofdecommissioning, but is not below 75percent of the cost, the licensee mustincrease the balance to cover the cost,and must do so within 30 days after theend of the calendar year.


(3) Within 30 days of taking theactions required by paragraph (g)(1) or(g)(2) of this section, the licensee mustprovide a written report of such actionsto the Director, Office of Federal andState Materials and EnvironmentalManagement Programs, and state thenew balance of the fund.

0 26. In § 72.50, paragraph (b)(3) isadded to read as follows:

§ 72.50 Transfer of license.* * * * *

(b) * * *

(3) The application shall describe thefinancial assurance that will beprovided for the decommissioning ofthe facility under § 72.30.* * * ,' *

* 27. In § 72.80, paragraphs (e) and (f)are revised to read as follows:

§ 72.80 Other records and reports.

(e) Before license termination, thelicensee shall forward records requiredby § 20.2103(b)(4), of this chapter, and§ 72.30(f) to the appropriate NRCRegional Office.

(f) If licensed activities are transferredor assigned in accordance with§ 72.44(b)(1), the licensee shall transferthe records required by § 20.2103(b)(4),of this chapter, and § 72.30(f) to the newlicensee and the new licensee will beresponsible for maintaining theserecords until the license is terminated.

Dated at Rockville, Maryland, this 2nd dayof June 2011.


For the Nuclear Regulatory Commission.Andrew L. Bates,Acting Secretary for the Commission.1FR Doc. 2011-14267 Filed 6-16-11; 8:45 am)

BILLING CODE 7590-01-P