POLICY ISSUE

NOTATION VOTE

October 7, 2002 SECY-02-0180

FOR: The Commissioners

FROM: William D. Travers

Executive Director for Operations

SUBJECT: LEGAL AND FINANCIAL POLICY ISSUES ASSOCIATED WITH LICENSING

NEW NUCLEAR POWER PLANTS

PURPOSE:

To obtain Commission approval of staff positions on issues related to modular plant licensing,

merchant plant licensing and high-temperature gas-cooled reactor (HTGR) licensing.

BACKGROUND:

By letter dated December 5, 2000, Exelon Generation Company (Exelon) expressed an

interest in pre-application activities for the pebble bed modular reactor (PBMR). The staff

began its pre-application review at a meeting with Exelon on April 30, 2001. During the

meeting, Exelon discussed legal and financial issues, among others, that Exelon believed

merited special consideration due to the unique features of the modular facility, the

gas-cooled reactor design, and Exelon’s intention to operate the PBMR as a merchant plant. 

By letter dated May 10, 2001 (ADAMS Accession No. ML011420393), Exelon submitted white

papers on these legal and financial issues and requested a response from the

Nuclear Regulatory Commission (NRC). The Exelon white papers addressed requirements

associated with: 

 fuel cycle impacts: Tables S-3 and S-4 in 10 CFR 51.51 and 51.52 

 financial qualifications 

 decommissioning funding

 operator staffing requirements

 fuel cycle impacts: Waste Confidence Rule (10 CFR 51.23) 

 minimum decommissioning costs

CONTACT:

Amy E. Cubbage, NRR 

301-415-2875
The Commissioners - 2 -

 antitrust review

 modular reactor licensing

 annual fees

 financial protection 

In addition to the issues discussed in the white papers, the staff identified the following related

issue: 

 testing of new design features for a COL

SECY-01-0207, “Legal and Financial Issues Related to Exelon’s Pebble Bed Modular Reactor

(PBMR),” dated November 20, 2001 (ADAMS Accession No. ML012850139), presented

preliminary staff positions related to the staff’s assessment of Exelon’s proposals on legal and

financial issues and additional staff-identified licensing-related issues. In that paper, the staff

informed the Commission that it would engage stakeholders on these preliminary staff

positions, amend the positions as necessary, and make recommendations on policy issues

related to the legal and financial issues for Commission approval. On March 27, 2002, the

staff conducted a public workshop to apprise Exelon and other stakeholders of the positions

presented in the paper and obtain their feedback. The workshop transcript and a summary of

stakeholder comments were provided in a meeting summary dated June 4, 2002

(ADAMS Accession No. ML021500200).

The staff also solicited written comments on the preliminary staff positions in SECY-01-0207. 

In response, General Atomics submitted comments by letter dated April 10, 2002

(ADAMS Accession No. ML021070343). In its letter, General Atomics also provided a

justification of the applicability of the issues discussed in SECY-01-0207 to the gas turbinemodular helium reactor (GT-MHR) design it is currently developing.

On April 16, 2002, Exelon announced that it would not proceed with the PBMR project after the

completion of the current feasibility study. After this announcement regarding the PBMR

project, the Nuclear Energy Institute (NEI) requested a meeting with the NRC to discuss

modular plant and merchant plant licensing issues that NEI believes have generic applicability. 

On May 22, 2002, the staff held a public meeting with NEI, Exelon, and other interested

stakeholders to discuss NEI’s proposed integrated approach to modular plant licensing,

including the assessment of annual fees. By letter dated June 17, 2002 (ADAMS Accession

No. ML021970596), NEI submitted a white paper providing the details of this proposed

approach. In the June 17, 2002, letter, NEI also provided comments on the preliminary staff

positions discussed in SECY-01-0207 related to decommissioning funding assurance, timing

of the approval of new and spent fuel storage casks, testing requirements for COL applicants,

and NRC antitrust review requirements. 

Following receipt of stakeholder comments at the workshop and through written

correspondence, the staff reviewed the positions presented in SECY-01-0207 and prepared

final recommendations as discussed below in the summary.

Finally, it should be noted that technical policy issues related to licensing non-light water

designs are not included in this paper. They will be addressed in a separate paper to the
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Commission as discussed in SECY-02-0139, “Plan for Resolving Policy Issues Related to

Licensing Non-Light Water Reactor [non-LWR] Designs.”

DISCUSSION:

Based on the staff’s review of stakeholder comments on the preliminary staff positions

discussed in SECY-01-0207 and the staff’s assessment of NEI’s proposals, the staff has

developed final positions on modular plant, merchant plant, and HTGR licensing issues

(the issues are discussed in detail in the attachment). The staff is providing Commission

recommendations for issues 1 through 3. For remaining issues, the staff is providing

information to the Commission regarding the status or resolution of the issue. 

1. Fuel cycle and transportation impacts: Tables S-3 and S-4 in 10 CFR 51.51 and 51.52

Should the NRC initiate rulemaking specifying the environmental impacts of the production,

transportation, and storage of reactor fuel and radioactive waste for HTGRs on a generic

basis?

The staff recommends that the environmental effects of the production, transportation, and

storage of reactor fuel and radioactive waste be reviewed on an application-by-application

basis for other-than-LWR applicants. 

2. Financial qualifications in 10 CFR 50.33(f)

Are there regulatory and policy bases for establishing by rulemaking a class of non-utility

licensees who need not submit the financial qualifications information otherwise required by

10 CFR 50.33(f)?

The Commission has the authority to determine by regulation that a given class of non-electricutility applicants for nuclear power plant licenses shall not be required to submit financial

qualifications information. However, the staff has not identified a reasonable basis for

establishing such a class of applicants. The staff recommends that non-electric-utility

applicants continue to be required to submit financial qualifications information in accordance

with 10 CFR 50.33(f).

3. Decommissioning funding requirements in 10 CFR 50.75

Can a non-utility utilize an alternative method for decommissioning funding, such as partial

prepayment?

According to current NRC regulations, an applicant has several options for funding

decommissioning. Non-electric-utility applicants are not allowed to use the sinking fund option

exclusively (uniform series of payments). The staff recommends that the NRC require nonelectric-utility applicants to use the other options provided in 10 CFR 50.75 to fund

decommissioning costs. The staff does not recommend that the regulations be modified to

allow additional alternatives for decommissioning funding.
The Commissioners - 4 -

4. Operator staffing in 10 CFR 50.54(m)

Should a modular facility be allowed to control more than two reactors from one control room

and operate with a control room staffing complement that is less than would be required for

individual reactors?

Current regulations do not address the possibility of more than two reactors being controlled

from one control room. Applicants will need to address the safety implications to demonstrate

that more than two reactors can be adequately controlled from one control room. Regarding

operator staffing requirements, applicants could request an exemption to current requirements

to allow an alternate level of operator staffing for modular reactors, provided they address the

safety implications.

5. Fuel cycle impacts: the Waste Confidence Rule (10 CFR 51.23)

Would PBMR and GT-MHR spent fuel fall within the scope of the NRC’s Waste Confidence

Rule?

The staff concluded that PBMR and GT-MHR facilities appear to be within the scope of the

generic determination in Section 51.23(a). With respect to the Department of Energy’s

(DOE’s) acceptance of PBMR or GT-MHR spent nuclear fuel (SNF), applicants should

discuss DOE’s acceptance of non-LWR SNF with DOE, as appropriate.

6. Minimum decommissioning cost estimates in 10 CFR 50.75(c)

Can a non-LWR applicant submit design-specific decommissioning cost estimates?

The staff will accept a minimum decommissioning cost estimate specifically for the PBMR or 

for the GT-MHR if the applicant can technically justify this estimate.

7. Antitrust review requirements in 10 CFR 50.33a

Can the NRC except applicants for nuclear plants that will be operated as merchant plants

from the prelicensing antitrust review?

The authority of the NRC to except certain applicants for new nuclear generating facilities

from the NRC’s antitrust review requirements is being addressed separately by the Office of

the General Counsel.

8. Licensing multiple modular reactors and the duration of a combined license (COL) 

Can the NRC conduct a single set of licensing reviews and a single public hearing for

multiple, nearly identical COL applications? What is the effective duration of a COL?

The Commission has the authority to conduct a single set of licensing reviews and a single

public hearing for multiple COL applications for nuclear power plants of essentially the same

design. Under current regulations, the term of operation for each COL would be limited to

40 years from the date of issuance of the COL. However, legislation submitted by the
The Commissioners - 5 -

Commission addressing 40-year terms, if enacted, would permit the 40-year term of operation

to begin when the Commission authorizes operation (i.e, makes the initial 10 CFR 52.103(g)

finding). This pending legislation would not specify the duration of the construction period of

the COL and the design approval. 

The NRC did not envision the delayed use of COLs that is possible under pending legislation,

which is inconsistent with the Commission’s policy on duration of design approvals. The staff

will provide the Commission with a recommended course of action on this issue six months

after Congress acts with respect to the pending legislation.

9. Annual fee requirements in 10 CFR Part 171

How should annual fees be assessed for a set of modular reactors that constitute a facility?

Based on the provisions of 10 CFR Part 171 that a separate annual fee be assessed for each

license, if a separate COL is issued for each module of a modular facility, a separate annual

fee would be assessed for each module. The annual fees for the COLs would be determined

based on the requirements of Omnibus Budget Reconciliation Act of 1990 (OBRA-90), as

amended, that the charges be assessed in a fair and equitable manner and, to the maximum

extent practicable, reflect a reasonable relationship to the costs of providing services to the

licensees or classes of licensees. Therefore, the staff has concluded that no further change

to the fee rule is necessary at this time to address the assessment of annual fees for modular

facilities.

10. Financial protection requirements in 10 CFR Part 140

Should Price-Anderson financial protection requirements be applied to each reactor module

or to the entire modular “facility”?

The House of Representatives and the Senate passed legislation to amend Section 170b. of

the Atomic Energy Act (AEA) to allow a combination of two or more reactor modules (each

rated 100–300 MWe) with a combined rated capacity of not more than 1300 MWe to be

considered one facility for the purposes of application of Price-Anderson financial protection

requirements. This legislation is currently being considered in the Energy Bill conference. 

11. Testing of new design features for a COL

Should a COL be issued before completion of all testing that is necessary to demonstrate the

performance of safety systems and components?

This issue will be resolved as part of the 10 CFR Part 52 rulemaking after review of public

comments provided in response to the proposed rule change which was provided in

SECY-02-0077, “Proposed Rule To Update 10 CFR Part 52, ‘Early Site Permits,

Standard Design Certifications, and Combined Licenses For Nuclear Power Plants’,” dated

May 8, 2002 (ADAMS Accession No. ML021040009).
The Commissioners - 6 -

RECOMMENDATION:

That the Commission approve the following recommendations:

1. The staff recommends that the environmental effects of the production, transportation,

and storage of reactor fuel and radioactive waste be reviewed on an application-byapplication basis for other-than-LWR applicants;

2. The staff recommends that non-electric-utility applicants continue to be required to

submit financial qualifications information in accordance with 10 CFR 50.33(f); and

3. The staff recommends that the NRC require non-electric-utility applicants to use the

options provided in 10 CFR 50.75 to fund decommissioning costs. The staff does not

recommend that the regulations be modified to allow additional alternatives for

decommissioning funding.

COORDINATION:

The Office of the General Counsel has no legal objections to this paper. The Office of the

Chief Financial Officer has concurred in this paper.

/RA by William F. Kane Acting For/

William D. Travers

Executive Director

 for Operations

Attachments: Policy Issues, Analysis and Recommendations
The Commissioners - 7 -

RECOMMENDATION:

That the Commission approve the recommendations to:

1. The staff recommends that the environmental effects of the production, transportation,

and storage of reactor fuel and radioactive waste be reviewed on an application-byapplication basis for other-than-LWR applicants;

2. The staff recommends that non-electric-utility applicants continue to be required to

submit financial qualifications information in accordance with 10 CFR 50.33(f); and

3. The staff recommends that the NRC require non-electric-utility applicants to use the

options provided in 10 CFR 50.75 to fund decommissioning costs. The staff does not

recommend that the regulations be modified to allow additional alternatives for

decommissioning funding.

COORDINATION:

The Office of the General Counsel has no legal objections to this paper. The Office of the

Chief Financial Officer has concurred in this paper.

/RA by William F. Kane Acting For/

William D. Travers

Executive Director

 for Operations

Attachments: Policy Issues, Analysis and Recommendations

*See previous concurrence

Accession #ML022130093-SECY

OFC NRLPO* Tech Ed* DD:NRLPO* D:NRLPO* D:DRIP*

NAME ACubbage PKleene MGamberoni JLyons DMatthews

DATE 8/13/02 7/30/02 8/9/02 8/13/02 8/14/02

OFC D:DIPM* NMSS* RES* OGC OCFO*

NAME BBoger MVirgilio AThadani JMoore JFunches

DATE 8/16/02 8/15/02 8/19/02 8/30/02 8/16/02

OFC NRR ET DEDRP EDO

NAME SCollins WKane WTravers

DATE 8/30 /02 10/7/02 10/07/02

OFFICIAL RECORD COPY
Policy Issues, Analysis, and Recommendations

As part of the pebble bed modular reactor (PBMR) pre-application review, Exelon Generation

(Exelon) submitted nine white papers on selected legal and financial issues for Commission

response. Exelon identified several regulations that could be an undue and unintended burden

when applied to gas-cooled reactors, modular facilities, or merchant plants. In addition, the

staff has identified related issues, including the duration of design approval for combined

licenses (COLs) and requirements for testing new design features for COLs. 

 

SECY-01-0207, “Legal and Financial Issues Related to Exelon’s Pebble Bed Modular Reactor

(PBMR),” dated November 20, 2001 (ADAMS Accession No. ML012850139), presented

preliminary staff positions related to the staff’s assessment of Exelon’s proposals on legal and

financial issues and additional staff-identified licensing-related issues. On March 27, 2002, the

staff conducted a public workshop to apprise Exelon and other stakeholders of the positions

presented in the paper and obtain their feedback. The workshop transcript and a summary of

the stakeholder comments were provided in a meeting summary dated June 4, 2002

(ADAMS Accession No. ML021500200). In addition, by letter dated April 10, 2002

(ADAMS Accession No. ML021070343), General Atomics provided a justification of the

applicability of the issues discussed in SECY-01-0207 to their gas turbine-modular helium

reactor (GT-MHR) design currently under development.

On April 16, 2002, Exelon announced that it would not proceed with the PBMR project beyond

the completion of the current feasibility study phase. Following Exelon’s announcement

regarding the PBMR project, the Nuclear Energy Institute (NEI) submitted a white paper dated

June 17, 2002 (ADAMS Accession No. ML021970596), providing a proposed integrated

approach to modular plant licensing. In the June 17, 2002, letter, NEI also provided comments

on the preliminary staff positions discussed in SECY-01-0207 related to decommissioning

funding assurance, timing of approval of new and spent fuel storage casks, testing

requirements for COL applicants, and NRC antitrust review requirements.

The staff has considered stakeholder feedback on the preliminary positions presented in

SECY-01-0207 and has evaluated NEI’s proposed integrated approach to modular plant

licensing. Based on this review, the staff has developed positions related to the following

issues and regulations:

A. Fuel cycle impacts: Tables S-3 and S-4 in 10 CFR 51.51 and 51.52

B. Financial qualifications in 10 CFR 50.33(f)

C. Decommissioning funding requirements in 10 CFR 50.75

D. Operator staffing in 10 CFR 50.54(m)

E. Fuel cycle impacts: the Waste Confidence Rule (10 CFR 51.23)

F. Minimum decommissioning cost estimates in 10 CFR 50.75(c)

G. Antitrust review requirements in 10 CFR 50.33a

H. Licensing issues:

1. Licensing multiple modular reactors

2. Duration of a combined license (COL)

I. Annual fee issues:

1. Annual fee requirements in 10 CFR Part 171

2. Commencement of annual fees for COL

Attachment
- 2 -

J. Financial protection requirements in 10 CFR Part 140 

K. Testing of new design features for a COL

The detailed discussions of these issues on the following pages summarize the issues, the

current regulations, stakeholder positions, the staff’s considerations, and the staff’s positions.

A. Environmental Impacts of the Fuel Cycle and Transportation: 10 CFR Part 51,

Tables S-3 and S-4

Issue

Should the NRC initiate rulemaking specifying the environmental impacts of the production,

transportation, and storage of reactor fuel and radioactive waste for high-temperature

gas-cooled reactors (HTGRs) on a generic basis?

Current Regulations

In accordance with 10 CFR 51.41, 51.45, 51.50, 52.17(a)(2), and 52.79(a)(2), an

environmental report prepared by the applicant for a construction permit, early site permit

(ESP), or COL that does not reference an ESP must provide sufficient information regarding

any applicable environmental impacts associated with all stages of the project, including

production, transportation, and storage of reactor fuel and radioactive waste. Light-water

power reactor (LWR) applicants must use the generic values in Tables S-3 and S-4 in their

environmental report to describe fuel cycle and transportation effects. For other-than-LWR

applicants, fuel cycle and transportation effects must be described on a docket-specific basis. 

That information serves as a starting point for the NRC’s environmental impact statement

(EIS).

Discussion

The NRC staff has initiated work that will lead to rulemaking to revise Tables S-3 and S-4 in 10

CFR 51.51 and 51.52. However, the scope of this rulemaking is limited to the environmental

impacts of LWRs. The fuel cycle and fuel transportation impacts for non-LWRs could be

different from those addressed in 10 CFR Part 51; absent rulemaking to specify the values on

a generic basis for non-LWRs, these impacts would have to be addressed in each COL or

ESP application. The NRC staff must review these design-specific environmental impacts. 

The impacts should be discussed in a manner similar to that presented in 10 CFR 51.51 and

51.52; the discussion would serve as a starting point for the NRC independent assessment

and should provide sufficiently detailed information on the cumulative, environmental,

socioeconomic, and human health impacts of the production, transportation, and storage of

reactor fuel and radioactive waste. 

The NRC has only limited experience in licensing other-than-LWRs; at this time all operating

power reactors are LWRs. Inasmuch as the PBMR and GT-MHR are prospective designs, the

staff believes that any effort to undertake a generic rulemaking on these issues would be

premature. When the staff has gained more experience in the issues associated with the

PBMR, GT-MHR or other non-LWR designs, through a design certification or safety evaluation

and/or environmental review of a COL application, the staff will be able to determine whether it

has sufficient information to proceed with a generic regulatory solution.
- 3 -

Recommendation

The staff recommends that the environmental effects of the production, transportation, and

storage of reactor fuel and radioactive waste be reviewed on an application-by-application

basis for other-than-LWR applicants. 

B. Financial Qualifications

Issue

Are there regulatory and policy bases for establishing by rulemaking a class of non-utility

licensees who need not submit the financial qualifications information otherwise required by

10 CFR 50.33(f)?

Current Regulations

Section 182(a) of the Atomic Energy Act (AEA) requires license applications to include such

information on the financial qualifications of the applicant as the Commission may specify by

regulation. Title 10 of the Code of Federal Regulations (10 CFR) Section 50.33(f) specifies the

information sufficient to demonstrate to the Commission the financial qualifications of the

applicant. Electric utility applicants are not required to provide this information because the

financial qualifications have been established for electric utilities on a generic basis by

rulemaking. An electric utility is defined in 10 CFR 50.2 as “any entity that generates or

distributes electricity and which recovers the cost of this electricity, either directly or indirectly,

through rates established by the entity itself or by a separate regulatory authority.” An

application for a new facility may be submitted under either 10 CFR Part 50 or 10 CFR Part 52

of the regulations. In either case, a non-utility applicant is required to submit financial

qualifications information as stated in 10 CFR 50.33(f).

Discussion

The NRC issued NUREG-1577, Rev. 1, “Standard Review Plan on Power Reactor Licensee

Financial Qualifications and Decommissioning Funding Assurance” to describe the process it

uses to review the applicant’s financial qualifications and proposed methods of providing

decommissioning funding assurance to evaluate compliance with the financial qualifications

requirements of 10 CFR 50.33(f). Under these requirements, the NRC staff is obligated to

conduct a financial qualifications review for each license application. 

If an applicant does not satisfy the definition of an electric utility, it is deemed to be a nonutility. Utilities use rate base rate of return, which provides a more stable and regular income. 

Non-utilities face more competition in the marketplace than utilities and are not guaranteed a

return by a State public service commission.

The financial information required to fulfill 10 CFR 50.33(f) is information that the applicant will

have at its disposal. The NRC seeks to review financial information in order to have reasonable

assurance that the facility will have the resources to operate safely. The staff believes it is

premature to categorize any applicant as having reasonable assurance before examining such

assets or parental guarantees. 
- 4 -

Non-electric-utility applicants must submit estimates for the total construction costs and annual

operating costs for each of the first 5 years of operation of the facility and identify the source of

funds to cover such operating costs, as required by Appendix C of Part 50. This submittal will be

reviewed by the staff using the process provided in NUREG-1577, Rev. 1.

At the March 27, 2002, public workshop, Greenpeace provided comments on this issue. They

stated that “the public would be well served if the NRC would require the financial requirements

be met and not exempt any merchant plant from that requirement.”

Recommendation

The Commission has the authority to determine by regulation that a given class of non-electricutility applicants for nuclear power plant licenses shall not be required to submit financial

qualifications information. However, the staff has not identified a reasonable basis for

establishing such a class of applicants. The staff recommends that non-electric-utility applicants

continue to be required to submit financial qualifications information in accordance with 10 CFR

50.33(f).

C. Decommissioning Funding

Issue

Can a non-utility utilize an alternative method for decommissioning funding, such as partial

prepayment?

Current Regulations

The regulations of 10 CFR 50.75 contain the requirements for providing decommissioning

funding assurance. The regulations describe six methods of providing decommissioning funding

assurance: (1) prepayment, (2) an external sinking fund, (3) surety bonds, (4) a corporate

parent guarantee, (5) contracts, and (6) any other mechanism or combination of mechanisms

that is determined by the NRC to provide assurance of decommissioning funding. Utilities are

licensees that are rate-regulated; they may use any of the six methods. Non-rate-regulated

licensees, such as merchant plant operators, may not use the sinking fund method, but are

allowed to use any of the other methods. A non-utility may also use an external sinking fund in

combination with a guarantee mechanism, provided that the total amount of funds estimated to

be necessary for decommissioning is assured. The only notable exception to the above is a

power reactor licensee that has the full faith and credit backing of the United States

Government. This option entails a statement of intent containing a cost estimate for

decommissioning and indicating that funds for the decommissioning will be obtained when

necessary.

Discussion

The intent of this regulation is to provide assurance that decommissioning funding is available,

particularly in the event of a permanent shutdown of the plant prior to the expiration of the

license. According to the regulations, all funding options are available to a non-utility or a

non-rate-regulated entity except the sinking fund option. A sinking fund is a fund that is

accumulated by making periodic deposits and is reserved for a specific purpose, such as
- 5 -

retirement of debt or decommissioning of a commercial nuclear reactor. In a sinking fund,

uniform periodic payments accumulate at compound interest to a given sum at a given future

time. Exelon considered proposing an alternative decommissioning funding method for the

PBMR that involved a partial payment of the total decommissioning cost estimate and annual

contributions over the next 20 years. This proposed method of decommissioning funding is

deemed a form of a sinking fund. The staff does not believe that a sinking fund alone would

provide the same level of assurance as other funding options available to non-rate-regulated

entities and is not consistent with current requirements. Further, an exemption to use a sinking

fund is likely to be difficult to justify technically since non-utilities do not have a rate base rate of

return (i.e., a guaranteed rate base).

However, as noted in the staff’s position in item F, “Minimum Decommissioning Cost Estimates,”

a non-LWR applicant would be able to use an adequately justified site-specific estimate for

decommissioning costs. Since the decommissioning cost estimate would be based on a

site-specific study, the staff interprets 10 CFR 50.75(e)(1)(i) (the prepayment option) to allow an

applicant to take the 2-percent real earnings credit for the whole period if necessary if 

the final decontamination schedule and the schedule of cash flows necessary to complete

decommissioning is specifically outlined in a site-specific estimate. The present value of even a

relatively large decommissioning cost, when discounted back at 2-percent real rate of return,

should not be very large and should thus not require an onerous initial deposit. 

Staff Position

According to current NRC regulations, an applicant has several options for funding

decommissioning. Non-electric-utility applicants are not allowed to use the sinking fund option

exclusively (uniform series of payments). The staff recommends that the NRC require nonelectric-utility applicants to use the other options provided in 10 CFR 50.75 to fund

decommissioning costs. The staff does not recommend that the regulations be modified to allow

additional alternatives for decommissioning funding.

D. Operator Staffing

Issue

Should a modular facility be allowed to control more than two reactors from one control room

and operate with a control room staffing complement that is less than would be required for

individual reactors?

Current Regulations

The NRC has established the requirements for control room staffing in 10 CFR 50.54(k)

and (m). Section 50.54(k), states “An operator or senior operator licensed pursuant to Part 55 of

this chapter shall be present at the controls at all times during the operation of the facility.”

Three sections of 10 CFR 50.54(m) relate to this operator staffing issue. The first is 10 CFR

50.54(m)(2)(i), which states: “Each licensee shall meet the minimum licensed operator staffing

requirements in the following table.” The table includes one, two and three nuclear units and

one, two, and three control rooms and gives the minimum number of operators and senior
- 6 -

operators for each applicable combination, but does not address more than two units per control

room.

The second related section is 10 CFR 50.54(m)(2)(iii), which states: “When a nuclear power unit

is in an operational mode other than cold shutdown or refueling, as defined by the unit’s

technical specifications, each licensee shall have a person holding a senior operator license for

the nuclear power unit in the control room at all times. In addition to this senior operator, for

each fueled nuclear power unit, a licensed operator or senior operator shall be present at the

controls at all times.”

The third related section is 10 CFR 50.54(m)(2)(iv), which states: “Each licensee shall have

present, during alteration of the core of a nuclear power unit (including fuel loading and transfer),

a person holding a senior operator license or a senior operator license limited to fuel handling to

directly supervise the activity and, during this time, the licensee shall not assign other duties to

this person.”

In addition, NUREG-0800, Standard Review Plan (SRP) 13.1.2, Section II.B.3, states that

staffing should follow the staff positions of items I.A.1.1 and I.A.1.3 of NUREG-0737,

“Clarification of TMI Action Plan Requirements:”

a. A shift supervisor with a senior reactor operator’s license, who is also a member of

the station supervisory staff, shall be on site at all times when at least one unit is

loaded with fuel.

b. In addition to the licensed personnel specified in 10 CFR 50.54(m), as a minimum, an

auxiliary operator (non-licensed) shall be assigned to each reactor and an additional

auxiliary operator shall be assigned for each control room for an operating reactor. 

TMI Action Plan item I.A.1.1 also discusses the need for engineering expertise on shift in the

position of a shift technical advisor.

Discussion

To allow an alternate level of operator staffing, an exemption from the regulation would need to

be justified. The staff has identified a number of issues that would need to be addressed to

justify an alternate operator staffing level in an application. The key to justification of alternate

staffing is a detailed function and task analysis, followed by performance demonstrations on a

control room simulator or control room prototype of all activities expected of the operators in

normal, abnormal, emergency, and accident conditions. To accomplish this, an applicant would

first have to develop its concept of operations, considering the following, at a minimum:

 Role of the operator—Is the operator to be an active participant in reactor operation or

merely a passive monitor or troubleshooter?

 Level of automation—Is the system to be fully automatic, fully manual, or some combination

thereof? What degree of automation is desired?

 Modes of operation—What modes of operation will be required of the system

(e.g., cold shutdown, hot standby, normal operation, refueling)?
- 7 -

 Multiple module control—What is the goal? How many modules should be controlled per

operator or how many operators should there be per module?

 Control room design—What is the control room design concept? How many workstations?

For what purpose? What is the individual workstation design concept?

 Refueling during operation—How accomplished? How controlled? By whom?

 Personnel categories and qualifications—Should operators be licensed as they are today or

will they need different qualifications (e.g., knowledge of refueling operations, computer

expertise)?

 Procedures—Symptom based? Interactive? Computerized or hard copy?

Once the concept of operations is determined, the applicant could follow the Human Factors

Engineering Program Review Model described in NUREG-0711, “Human Factors Program

Review Model.” This NUREG was developed during the review of the three certified advanced

reactor designs. It was specifically intended to anticipate advances in instrumentation

technology that might occur prior to actual construction of a plant. This guidance will be used by

the staff to review the applicant’s human factors engineering program. This guidance includes

an element on operator staffing.

The staff has an issue regarding the interpretation of the phrase “at the controls” in

10 CFR 50.54(k) as it might relate to one operator controlling multiple reactors in a modular

facility. For example, if the operator of a multimodule facility is manipulating reactivity in one 

reactor via digital keyboard and CRT (cathode ray tube [display]), is that operator “at the

controls” of other reactors using the same or a spatially different keyboard and CRT? The issue

is the precise definition of “at the controls.” The staff expects applicants to address the safety

implications of this issue as it affects modular reactor designs.

The issue related to 10 CFR 50.54(m)(2)(i) is twofold. First, for a multimodule facility having only

one control room (as opposed to two or three), the Minimum Requirements table considers only

up to two nuclear power units controlled from that one control room. The regulation is silent on

the consideration of three or more reactors controlled from one control room, and the staff

concludes that a safety justification is necessary. The second issue associated with the table is

the number of operators required per unit per control room. An applicant would have to provide

a justification of any proposed reduced level of operator staffing. The issue with 10 CFR

50.54(m) (2)(iii) is similar to the issue with 10 CFR 50.54(k) (requiring the operator to be “at the

controls”) but contains an additional requirement in that the provision is “for each fueled nuclear

power unit.”

The final staffing issue associated with 10 CFR 50.54 relates to 10 CFR 50.54(m)(2)(iv). The

issue stems from the last phrase in the requirement: “the licensee shall not assign other duties

to this person.” If the reactor design includes online refueling, the core is being altered

continuously. Based on 10 CFR 50.54(m)(2)(iv), the staff would expect a senior licensed

operator to be in the control room to supervise the fuel handling activity, with no other assigned

duties. The staff, therefore, expects applicants to define the duties of the senior licensed

operator as they relate to the refueling process and to justify these duties with regard to safety.

Lastly, the staff believes the staffing-related issues in the SRP are applicable to modular designs

and expects these issues to be addressed by applicants.
- 8 -

Staff Position

Current regulations do not address the possibility of more than two reactors being controlled

from one control room. Applicants will need to address the safety implications to demonstrate

that more than two reactors can be adequately controlled from one control room. Regarding

operator staffing requirements, applicants could request an exemption to current requirements to

allow an alternate level of operator staffing for modular reactors, provided they address the

safety implications.

E. Environmental Impacts of the Fuel Cycle and Transportation: Waste Confidence Rule

Issue

Would PBMR and GT-MHR spent fuel fall within the scope of the NRC’s Waste Confidence

Rule?

Current Regulations

The Commission codified its Waste Confidence findings at 10 CFR 51.23. Section 51.23(a)

states: 

The Commission has made a generic determination that, if necessary, spent fuel

generated in any reactor can be stored safely and without significant

environmental impacts for at least thirty years beyond the licensed life for

operation (which may include the term of a revised or renewed license) of that

reactor at its spent fuel storage basin or at either onsite or offsite independent

spent fuel storage installations. Further, the Commission believes there is

reasonable assurance that at least one mined geologic repository will be

available within the first quarter of the twenty-first century, and sufficient

repository capacity will be available within thirty years beyond the licensed life for

operation of any reactor to dispose of commercial high-level waste and spent 

fuel originating in such reactor and generated up to that time.

Because of the generic determination in Section 51.23(a), there is no need to consider the

environmental impacts of the onsite storage of spent fuel (in environmental reports, EISs,

environmental assessments, or other analyses), for the period following the expected expiration

of the license, in reactor and independent spent fuel storage facility licensing proceedings. 

However, Section 51.23(c) requires consideration of environmental impacts during the term of

the reactor operating license or a license for an independent spent fuel storage installation

(ISFSI) in a licensing proceeding. 

Discussion

The Commission based its Waste Confidence Rule, as codified at 10 CFR 51.23, on the

findings of its Waste Confidence Decision (WCD). The Commission issued its first WCD on

August 31, 1984 (49 FR 34658). This decision assessed the degree of assurance then

available that radioactive waste can be disposed of safely, when such disposal or offsite

storage would be available, and whether radioactive waste can be stored safely on site after

expiration of existing facility licenses until offsite disposal or storage is available. The 
- 9 -

Commission reevaluated its initial WCD in 1990 and affirmed, with some changes, the findings

of the original decision (55 FR 38474; September 18, 1990). The Commission also changed

Section 51.23 to conform to the revised findings (55 FR 38472; September 18, 1990). On

December 6, 1999, the Commission issued a status report on the WCD. The Commission

noted that “experience and developments since 1990 confirm the Commission’s 1990

Waste Confidence findings” (64 FR 68005). 

The WCD found there is reasonable assurance that (1) safe disposal of radioactive waste and

spent fuel in a mined geologic repository is technically feasible; (2) one or more geologic

repositories will be available within the first quarter of the twenty-first century, and sufficient

repository capacity will be available within 30 years beyond expiration of any reactor license to

dispose of high level waste (HLW) and SNF; (3) HLW and SNF will be managed safely until

sufficient repository capacity is available to assure the safe disposal of all high-level waste and

spent fuel; (4) if necessary, the SNF can be stored safely and without significant environmental

impacts for at least 30 years beyond the reactor license expiration at either an onsite or offsite

storage facility; and (5) safe independent onsite or offsite storage capacity will be available if

needed.

Findings 2 and 5 address availability of repository and storage capacity, respectively. These

findings do not depend on the type of spent fuel involved. Finding 1 on the technical feasibility

of the safe disposal of spent fuel in a mined geologic repository recognized that different types

of spent fuel might need to be accommodated in the repository. Also, Findings 3 and 4

specifically considered the storage of different types of spent fuel, including fuel from

gas-cooled reactors and spent fuel similar to the graphite-encased PBMR and GT-MHR fuel. 

In reaching Finding 3, the Commission considered the technical feasibility of using both wet

and dry storage. The form of PBMR and GT-MHR SNF will necessitate the use of dry storage. 

Although the basis for Finding 4 is considered primarily LWR spent fuel, the basis references

several reports that considered dry cask storage of spent fuel from gas-cooled reactors. 

These reports include “Dry Storage of Spent Nuclear Fuel: A Preliminary Survey of Existing

Technology and Experience” (NUREG/CR-1223, 1980) and “Behavior of Spent Nuclear Fuel

and Storage System Components in Dry Interim Storage” by A.B. Johnson et al. (PNL-4189,

Rev. 1, August 1982).

The first report (NUREG/CR-1223) is a survey of the then-existing technology and experience

with the dry storage of spent fuel. The report describes the experience with the dry storage of

irradiated graphite fuel at the Irradiated Fuel Storage Facility at the Idaho National Engineering

Laboratory (INEL). The graphite fuel included fuel from the HTGRs at Peach Bottom 1 (Core

2) and Fort St. Vrain and irradiated fuel from the Rover Nuclear Rocket Program. The report

also discusses the experience with the storage of Peach Bottom 1 (Core 1) graphite fuel and

Fermi 1 blanket fuel in dry storage at the Idaho Chemical Processing Plant at INEL. For both

of these storage alternatives, the report notes that there were no unusual or significant

unexpected occurrences during the period of operation.

The second report (PNL-4189, Rev. 1) discusses the dry storage experience with gas-cooled

reactor spent fuel, including graphite fuel, and concludes that “at all the operating facilities...,

dry storage operations have been successful, with low radiation doses and no serious

operational problems” (p. xii). One of these facilities was a vault to store pebble bed

gas-cooled test reactor fuel at the Julich Research Center. The report also concludes that all

types of irradiated reactor fuel have been shipped and handled under dry conditions. 
- 10 -

In addition to these two reports, the Commission, in discussing the safety of dry storage in the

original WCD, referenced DOE comments on successful storage of reactor fuel from a

sodium-cooled, graphite research reactor and from the Fort St. Vrain HTGR prototype facility. 

In response to these comments, the Commission stated that it was “confident that dry storage

in 

installations can provide continued safe storage of spent fuel at reactor sites for at least

30 years after expiration of the operating license” (49 FR 34658, 34663; August 31, 1984). 

Although cask designs and information on potential accidents associated with PBMR or

GT-MHR fuel storage have not been submitted, there does not appear to be any technically

insurmountable issues. Since the original WCD, there has been a significant increase in

knowledge of and experience with the design and performance of dry casks. Designs of

independent spent fuel storage installations (ISFSIs) consider accident scenarios such as

natural disasters and incorporate security and safeguard features. In addition, any potential 

long-term environmental impacts will be addressed in the cask design process and through

demonstration of compliance with the Commission’s regulations. The Commission would then

evaluate potential environmental impacts as part of future licensing actions. 

In the Commission’s 1990 re-evaluation of its WCD, the Commission modified Finding 4

to state that spent fuel generated in any reactor can be stored safely and without significant

environmental impacts for at least 30 years beyond the licensed life for operation, including the

term of revised or renewed licenses. On dry storage, the Commission found that (1) the

material degradation processes of spent fuel in dry storage are well understood; (2) dry

storage systems are simple, passive, and easily maintained; (3) both the NRC and dry storage

operators have gained experience with dry storage that confirms the Commission’s 1984

conclusions; and (4) the Commission maintains regulatory authority over any spent fuel

installation (55 FR 38474, 38509; September 18, 1990).

The NRC staff evaluation that formed the basis for the 1990 reevaluation of the WCD cited the

environmental assessment for 10 CFR Part 72, “Licensing Requirements for the Independent

Storage of Spent Fuel and High-Level Radioactive Waste” (NUREG-1092), as support for

reaffirmation of Finding 4 (NRC Staff Waste Confidence Review Group’s Final Waste

Confidence Decision Review, 1990). The environmental assessment found that almost

40 years of experience attests to the safety of passive dry storage technologies, beginning

with the extended vault and drywell tests conducted by INEL in 1964 on liquid metal fast

breeder reactor fuel, and 12 years of research into passive dry storage technology in the

United States and abroad. U.S. research conducted by INEL includes operations that began in

1971 with dry well storage of gas-cooled reactor fuel and vault storage of gas-cooled reactor

fuel in 1975. The environmental assessment also includes a statement made by the

Commission in response to the authorization proceedings on the Nuclear Waste Policy Act

(NWPA): “the Commission believes the information is sufficient to reach a conclusion on the

environmental effects of dry storage. All areas of safety and environmental concern

(e.g., maintenance of systems and components, prevention of material degradation, protection

against accidents and sabotage) have been addressed and shown to present no more

potential for adverse impact on the environment and the public health than the storage of

spent fuel in water pools” (at II-7).

Regarding DOE’s responsibility to accept irradiated PBMR fuel under the NWPA, the volume

of spent fuel produced by a PBMR or GT-MHR facility is expected to be greater than that

produced by a typical LWR. More detail on the design of the proposed facilities is necessary

to predict with accuracy the volume of spent fuel that would be produced and what impact that
- 11 -

volume would have on the repository. About the WCD’s general consideration of the need for

a second repository, the 1990 reevaluation noted that “since Congress specifically provided in

the NWPA for a first repository, and required DOE to return for legislative authorization for a 

second repository, the Commission believes that Congress will continue to provide institutional

support for adequate repository capacity” (55 FR 38474, 38508). This statement appears to

encompass any capacity concerns associated with a PBMR, GT-MHR, or other nuclear reactor

facility in terms of the Commission’s WCD. However, applicants should discuss DOE’s

acceptance of non-LWR SNF with DOE, as appropriate. 

As part of the license application, it would be prudent for applicants to have NRC-approved

fresh fuel and spent fuel casks. The staff notes that essentially all the technical criteria used in

the evaluation of a cask design's ability to contain spent fuel are based on experimental and 

performance data obtained using light-water fuel. As a result, non-LWR applicants would need

to provide additional information on interim storage and transportation scenarios to address the

safety implications of the cask designs. This information would include data on fuel geometry,

confinement and containment, and fuel stability over time, under both normal and accident

conditions. 

In reaching the various WCD findings that formed the basis for its Waste Confidence Rule in

10 CFR 51.23, the Commission specifically considered spent fuel similar to that which would be

generated at a PBMR or GT-MHR facility. Therefore, it appears that a PBMR or GT-MHR

facility is within the scope of the generic determination in Section 51.23(a). 

Since the original WCD, there has been a significant increase in knowledge and experience

regarding the design and performance of dry casks. Designs of ISFSIs consider accident

scenarios such as natural disasters and incorporate security and safeguard features. In

addition, any potential long-term environmental impacts will be addressed in the cask design

process and through demonstration of compliance with the Commission’s regulations. The

Commission would then evaluate potential environmental impacts as part of future licensing

actions. 

The staff notes that although cask designs and information on potential accidents associated

with PBMR or GT-MHR fuel storage have not been submitted, there does not appear to be any

technically insurmountable issues. The staff stated in SECY-01-0207, that “as part of the

license application, Exelon will need to have approved fresh fuel and spent fuel casks.” In

response to stakeholder comments, the staff reevaluated this position and concluded that,

although it would be prudent, there is no requirement that fresh fuel and spent fuel casks be

approved prior to submittal of an application for a COL. 

Conclusion

The staff concluded that PBMR and GT-MHR facilities appear to be within the scope of the

generic determination in Section 51.23(a). With respect to the Department of Energy’s (DOE’s)

acceptance of PBMR or GT-MHR SNF, applicants should discuss DOE’s acceptance of

non-LWR SNF with DOE, as appropriate.
- 12 -

F. Minimum Decommissioning Cost Estimates

Issue

Can a non-LWR applicant submit design-specific decommissioning cost estimates?

Current Regulations

The minimum amount of decommissioning funds required of BWRs and PWRs is regulated

through the minimum decommissioning funds equation in 10 CFR 50.75(c). There are no

formulas specifically for gas-cooled reactors or other non-LWR designs. However, the

regulations allow the use of a site-specific estimate instead of the amount calculated through

the generic formula. 

Discussion

There are currently no regulations that specifically deal with minimum decommissioning cost

estimates for gas-cooled reactors or other non-LWR designs. The staff further recognizes that,

since the regulations do not specifically address non-LWR decommissioning cost estimates, a

site-specific decommissioning cost estimate submitted with the first application could set the

standard for subsequent reactors of the same design. The initial decommissioning cost 

estimate will need to be reviewed for adequacy from both the technical and the financial 

perspectives. 

The staff is willing to accept a design-specific minimum decommissioning cost estimate for

non-LWR designs if the staff finds the technical justification to be acceptable. For a modular

facility, the staff is willing to review a standard decommissioning cost estimate based on the

decommissioning of one module, which can then be applied multiple times for the facility in

question, or (alternatively), a cost estimate based on the decommissioning of multiple modules

at a single location. Regardless of the method used, the resulting estimate must include the

cost of decommissioning common elements and structures associated with the facility, in

addition to the costs of decommissioning each individual module. 

Conclusion

The staff will accept a minimum decommissioning cost estimate specifically for the PBMR or 

for the GT-MHR if the applicant can technically justify this estimate.

G. Antitrust Review Authority

Issue

Can the NRC except applicants for nuclear plants that will be operated as merchant plants from

the prelicensing antitrust review?
- 13 -

Current Statutory Provisions and Regulations

The NRC’s antitrust responsibilities are set forth in Section 105 of the AEA. Section 105c, as

amended in 1970, requires the NRC to conduct an antitrust review of applications for

construction permits or COLs, seek the advice of the Attorney General in conducting this 

review, and provide an opportunity for members of the public to request a hearing in connection 

with this review. Section 105c prescribes the process for conducting a prelicensing antitrust

review and making findings as to whether activities under the license would create or maintain a

situation inconsistent with antitrust laws. Pursuant to 10 CFR 50.33a, prospective applicants

must submit the required antitrust review information to the NRC at least 9 months prior to the

application for a construction permit or COL. This information, which is set forth in Appendix L

to 10 CFR Part 50, includes detailed transmission, distribution, and business planning

information. Under Section 105c.(7) of the AEA, the NRC has the authority, subject to the

approval of the Attorney General, to determine that the issuance of certain classes or types of

licenses “would not significantly affect the applicant’s activities under the antitrust laws” and,

therefore, to except such applicants from the NRC’s antitrust review requirements. The NRC

also has the authority, under Section 105c.(6) of the AEA, to issue a license with appropriate

antitrust conditions on the basis of the findings of the antitrust review. 

Discussion

During the March 27, 2002, workshop, NEI stated their position that there appears to be a

sound basis for eliminating the NRC antitrust review given the oversight that exists among the

NRC, the Department of Justice (DOJ) and the Federal Trade Commission (FTC). They also

stated that they hoped a resolution could be put in place in time to support the first application

for a COL. In their June 17, 2002, white paper, NEI asserted this position and recommended

that the NRC use its existing authority under Section 105c.(7) of the AEA to seek approval from

the Attorney General to except certain license applicants (e.g., merchant generating

companies) from pre-licensing antitrust review. NEI further stated that the industry is

separately pursuing a legislative change to eliminate the Section 105c. requirement for NRC to

perform pre-licensing antitrust reviews.

Conclusion

The authority of the NRC to except certain applicants for new nuclear generating facilities from

the NRC’s antitrust review requirements is being addressed separately by the Office of the

General Counsel.

H. License Issues

H.1 Licensing Multiple Modular Reactors

H.2 Duration of a Combined License (COL)

Issues

Can the NRC conduct a single set of licensing reviews and a single public hearing for multiple,

nearly identical COL applications? What is the effective duration of a COL?
- 14 -

Current Statutory Provisions and Regulations

Section 103 of the AEA states:

a. The Commission is authorized to issue licenses to persons

applying therefor to transfer or receive in interstate commerce,

manufacture, produce, transfer, acquire, possess, use, import, or

export under the terms of an agreement for cooperation arranged

pursuant to Section 123, utilization or production facilities for

industrial or commercial purposes. Such licenses shall be issued

in accordance with the provisions of Chapter 16 and subject to

such conditions as the Commission may by rule or regulation

establish to effectuate the purposes and provisions of this Act.

b. Commission shall issue such licenses on a nonexclusive basis to

persons applying therefor (1) whose proposed activities will serve

a useful purpose proportionate to the quantities of special nuclear

material or source material to be utilized; (2) who are equipped to

observe and who agree to observe such safety standards to

protect health and to minimize danger to life or property as the

Commission may by rule establish; and (3) who agree to make

available to the Commission such technical information and data

concerning activities under such licenses as the Commission may

determine necessary to promote the common defense and

security and to protect the health and safety of the public. All

such information may be used by the Commission only for the

purposes of the common defense and security and to protect the

health and safety of the public.

c. Each such license shall be issued for a specified period, as 

determined by the Commission, depending on the type of activity

to be licensed, but not exceeding forty years, and may be

renewed upon the expiration of such period.

10 CFR 50.51(a) states:

Each license will be issued for a fixed period of time to be

specified in the license but in no case to exceed 40 years from

date of issuance. Where the operation of a facility is involved, the

Commission will issue the license for the term requested by the

applicant or for the estimated useful life of the facility if the

Commission determines that the estimated useful life is less than

the term requested. Where construction of a facility is involved,

the Commission may specify in the construction permit the period

for which the license will be issued if approved pursuant to

§50.56. Licenses may be renewed by the Commission upon the

expiration of the period. Renewal of operating licenses for

nuclear power plants is governed by 10 CFR Part 54. Application

for termination of license is to be made pursuant to §50.82.
- 15 -

10 CFR 52.103(g) states:

Prior to operation of the facility, the Commission shall find that the

acceptance criteria in the combined license are met. If the

combined license is for a modular design, each reactor module

may require a separate finding as construction proceeds.

10 CFR Part 52 Appendix N(3) states:

Applications for operating licenses submitted pursuant to this

appendix N shall include the information required by §§50.33,

50.34 (b) and (c), and 50.34a(c) of this chapter. The applicant

shall also submit the information required by §51.53 of this

chapter. For the technical information required by §§50.34(b)

(2) through (5) and 50.34a(c), reference may be made to a single

final safety analysis of the design.

Background

By letter dated June 17, 2002, (ADAMS Accession No. ML021970596), NEI submitted a white

paper providing the details of a proposed integrated approach to modular plant licensing. In

their paper, NEI describes an approach to licensing that is based on issuance of a COL under

10 CFR Part 52 for each module of a modular facility. This approach is different from the

approach for licensing modular reactors proposed by Exelon in their May 10, 2001, submittal,

and assessed by the staff in SECY-01-0207. NEI proposes that (1) the facility would be subject

to a single set of licensing reviews and a single public hearing by the NRC; (2) each reactor

module of a modular facility would be permitted to operate for the maximum period permitted by

the AEA; and (3) a modular facility would be subject to a single NRC annual fee and be subject

to a single Price-Anderson retrospective premium. 

Under NEI’s proposal, NRC would issue multiple COLs that would authorize construction of

each module of the modular plant, and each COL application would identify the latest 

anticipated date that each reactor module will be completed based on the applicant’s

projections of the demand for electricity. If market conditions or other factors delay the planned

construction of one or more modules, NEI proposes that a license amendment would be

required to extend the “completion by” date(s) specified in the COL(s), and that the NRC

decision to extend the “completion by” date(s) in the COL(s) would be focused on the safety

impact of the delay and would not involve reconsideration of the design and licensing bases of

the reactor module(s). NEI further proposes that: (1) the COL will embody NRC design

approval for all modules proposed in the COL application, common systems, interfaces

between the modules, interfaces with the site, etc.; (2) the duration of the NRC design approval

is coincident with the term of the COL; and (3) the modular plant licensee may begin

construction and deploy individual modules at any time during the license term, in accordance

with the module completion dates specified in the COL.

Discussion

In accordance with 10 CFR Part 52 Appendix N, COL applicants for multiple nuclear power

plants of essentially the same design may reference a single final safety analysis of the design 
- 16 -

to provide the technical information required by 10 CFR 50.34(a) (1) through (5) and (8), 50.34a

(a) and (b), 50.34(b) (2) through (5), and 50.34a(c). It has been Commission practice, under

Part 50, to consider applications for multiple units at a single site in one proceeding. On this

basis, the Commission has the authority to conduct a single set of licensing reviews and

hearings for multiple COL applications for multiple nuclear power plants of essentially the same

design, at the same site.

The issuance of multiple COLs for the same design is equivalent to issuing a design approval

that can be referenced multiple times. The NRC has issued a number of preliminary and final

design approvals under Appendix O to 10 CFR Part 52 and, prior to 1989, under 10 CFR

Part 50. Since 1978, these design approvals have been issued with a duration of five years, in

accordance with the Commission’s “Policy Statement on Standardization of Nuclear Power

Plants,” (43 FR 38954, August 31, 1978). In the same Federal Register notice, the concept of a

manufacturing license is discussed. 

Manufacturing licenses are issued under Appendix M to Part 52 (38 FR 30253, November 2,

1973) and would authorize a number of identical nuclear power plants to be manufactured at 

one location and moved to a different location for operation. The number of units specified in

the license is that number whose start of manufacture could practically begin within a 10-year

period commencing on the date of issuance of the manufacturing license. However, in no

event will the number be more than 10. The manufacturing license requires the plant design to

be updated no later than 5 years after its initial approval. The number of units specified in the

license will be reduced if the plant design incorporates a reference system design whose term

of approval ends sooner than the approval periods of the manufacturing license. 

In 1989, the Commission decided to grant a duration of 15 years for a standard design

certification issued under Subpart B of Part 52 (see 10 CFR 52.55(a), “Duration of

Certification”). However, the Commission did not change its policy for issuance of design

approvals under Appendix O. The licensing processes in Part 52 demonstrate that the

Commission has always imposed a time limit on design approvals that can be referenced in an

application to build a nuclear power plant. 

Under Section 103 of the AEA, the term of operation for each COL would be limited to 40 years

from the date of issuance of the COL. Legislation submitted by the Commission addressing 40-

year terms, if enacted, would permit the 40-year term of operation to begin when the

Commission makes the initial 10 CFR 52.103(g) finding. This pending legislation would not

specify the duration of the construction period of the COL and the design approval. The NRC

did not envision the delayed use of COLs that is possible under the approach proposed by NEI. 

It was expected that an applicant would use a COL to construct and operate nuclear power

plant(s) in a timely manner, e.g., 10 years. However, NEI would have the NRC issue COLs for

nuclear power plants that may not be built for a long period of time. The NEI proposal is

inconsistent with the Commission’s policy on duration of design approvals. Therefore, the

question is whether the NRC should allow the same reactor design to be built over a long time

period after issuance of the license without reconsidering the acceptability of the original design

approval.
- 17 -

Conclusion

The Commission has the authority to conduct a single set of licensing reviews and a single

public hearing for multiple COL applications for nuclear power plants of essentially the same

design. Under current regulations, the term of operation for each COL would be limited to

40 years from the date of issuance of the COL. However, legislation submitted by the

Commission addressing 40-year terms, if enacted, would permit the 40-year term of operation

to begin when the Commission authorizes operation (i.e, makes the initial 10 CFR 52.103(g)

finding). This pending legislation would not specify the duration of the construction period of

the COL and the design approval. 

The NRC did not envision the delayed use of COLs that is possible under pending legislation,

which is inconsistent with the Commission’s policy on duration of design approvals. The staff

will provide the Commission with a recommended course of action on this issue six months

after Congress acts with respect to the pending legislation.

I. Annual Fee Issues

I.1 Annual Fee Assessment

1.2 Commencement of Annual Fees

Issues

How should annual fees be assessed for a set of modular reactors that constitute a facility? 

When should annual fees commence for a facility that has been issued a COL?

Current Statutory Provisions and Regulations

The Omnibus Budget Reconciliation Act of 1990 (OBRA-90), as amended, requires that the

NRC assess annual fees and that the fees be established through rulemaking. The statute

establishes two standards for the annual fees. The fees must be “fair and equitable” in

allocating the “aggregate amount of charges” among licensees; and, “to the maximum extent

practicable,” the fees must have a “reasonable relationship to the costs of providing regulatory

services and may be based on the allocation of the Commission’s resources among licensees

or classes of licensees.”

In the FY 2002 final fee rule, 10 CFR Part 171 was amended to specifically authorize the

assessment of annual fees for COLs issued under 10 CFR Part 52; to clarify that the annual fee

is charged per license, not per unit; and to establish when NRC will begin to charge an annual

fee to a holder of a 10 CFR Part 52 COL. The annual fee will be assessed for a 10 CFR

Part 52 COL only after construction has been completed, all regulatory requirements have been

met, and the Commission has authorized operation of the reactor(s).

Discussion

It is clear from the language of the OBRA-90, as amended, that the NRC has flexibility in

determining policies and practices in recovering the statutorily directed amount of the NRC’s

budget through fees. The Commission is within its statutory bounds as long as the rule

establishing the fees results in a fair and equitable allocation of costs to licensees and as long 
- 18 -

as there is a reasonable relationship between the services rendered by the agency and the

costs charged for those services. 

In accordance with OBRA-90, as amended, annual fees for each class of licenses are based on

NRC’s budgeted costs allocated to the class for generic activities and other costs not recovered

under 10 CFR Part 170. It is not clear whether the agency’s generic and other efforts to

regulate modular reactors will be significantly different from its regulation of other types of

operating power reactors. Further, while a modular reactor might have less megawatt output

capacity than any existing reactor, historically capacity has not been a consideration in

determining the annual fee amount. This is because the NRC has not found a necessary

relationship or predictive trend between the thermal megawatt rating of a power reactor and

NRC regulatory costs. If the NRC’s regulatory costs for a modular reactor were approximately

the same as for existing power reactors, the annual fee would be of the same magnitude as for

existing power reactors. However, if the NRC’s regulatory costs were significantly lower or

higher than those for other types of operating reactors, the Commission could establish a

separate license fee class through a 10 CFR Part 171 rulemaking.

Under the current provisions of 10 CFR Part 171, an annual fee would be charged for each

COL. In its June 17, 2002, white paper, NEI stated that “if individual COLs are issued for each

module of a modular plant (facility), a further change to the NRC’s annual fee structure will be

necessary to provide for assessment of a single annual fee to a modular plant (facility).”

Conclusion

Based on the provisions of 10 CFR Part 171 that a separate annual fee be assessed for each

license, if a separate COL is issued for each module of a modular facility, a separate annual fee

would be assessed for each module. The annual fees for the COLs would be determined

based on the requirements of OBRA-90, as amended, that the charges be assessed in a fair

and equitable manner and, to the maximum extent practicable, reflect a reasonable relationship

to the costs of providing services to the licensees or classes of licensees. Therefore, the staff

has concluded that no further change to the fee rule is necessary at this time to address the

assessment of annual fees for modular facilities.

J. Financial Protection

Issue

Should Price-Anderson financial protection requirements be applied to each reactor module or

to the entire modular “facility”?

Current Statutory Provisions and Regulations

The Price-Anderson Act, which is contained in Section 170 of the AEA (42 U.S.C. § 2210), is

implemented by the NRC via its 10 CFR Part 140 regulations. The Price-Anderson Act has

three elements. First, it establishes a ceiling on the aggregate damage award for nuclear tort

claims that can be imposed against an entity involved in the use or handling of radioactive

material. Second, it indemnifies any entity exposed to potential liability for activity resulting in a

nuclear incident, even if the entity did not directly participate in the activity. Third, it establishes

an indemnification scheme through which the Federal government requires entities involved in

nuclear activities to obtain private insurance to a certain level. 
- 19 -

With respect to the third element, the Price-Anderson indemnification scheme, Section 170b.

of the Act establishes that the amount of primary financial protection required for facilities

designed to produce substantial amounts of electricity and having a rated capacity of

100,000 electric kilowatts (100 MWe) or more must be equal to the maximum amount of

commercially and reasonably available nuclear liability insurance, which is currently $200 million

(42 U.S.C. § 2210b.(1)). Primary financial protection may include private insurance, private

contractual indemnities, self-insurance, other proof of financial responsibility, or some 

combination thereof. In addition, Section 170b. requires licensees of such facilities to

participate in an industry retrospective rating plan, or secondary layer of protection, which 

provides for the assessment of additional deferred premiums in the event that the public liability

from a nuclear incident exceeds or appears likely to exceed the level of primary financial

protection required of the licensee involved in the nuclear incident. The total amount of

financial protection presently available under the Act from both the primary and secondary

layers is approximately $9.7 billion (the primary layer of $200 million plus a secondary layer of

approximately $9.5 billion, based upon a maximum retrospective premium of $88.095 million

per nuclear incident per nuclear facility). 

The NRC’s implementing regulations impose these financial protection requirements on each

nuclear reactor a licensee is authorized to operate (10 CFR 140.11). A “nuclear reactor” is

defined as “any apparatus, other than an atomic weapon, designed or used to sustain nuclear

fission in a self-supporting chain reaction” (10 CFR 140.3(f)). The maximum amount of the

standard deferred premium that may be charged per nuclear incident is $88.095 million

($83.9 million plus a maximum 5-percent surcharge assessed under Subsection 170(1)(E) of

the Act) for each facility (nuclear reactor) for which the licensee is required to maintain the

maximum amount of primary financial protection (10 CFR 140.11(a)(4)), but no more than $10

million per year.

The Commission has stated its position, in letters to Congress, on the application of

Price-Anderson financial protection requirements to multiple modular reactor units co-located at

a single site. The Commission stated, in part, that it “believes there are substantial doubts

whether it has authority to treat multiple reactor units as only one facility for purposes of the

retrospective assessment because the specific financial protection and retrospective

assessment provisions in Section 170b. of the AEA are specified for a ‘facility,’ elsewhere

defined as a single reactor or even an important component part of a reactor. In our view,

Congress should amend the AEA if it seeks to assure that multiple modular units at a single site

are treated as a single facility.”

The staff notes that the Nuclear Control Institute provided comments on this issue at the

March 27, 2002, public workshop. They stated that “there is simply no technical basis for

concluding that it is appropriate to reduce the insurance requirement for modular reactors

based on a reduction in the rated power.”

Conclusion

The House of Representatives and the Senate passed legislation to amend Section 170b. of

the AEA to allow a combination of two or more reactor modules (each rated 100–300 MWe)

with a combined rated capacity of not more than 1300 MWe to be considered one facility for the

purposes of application of Price-Anderson financial protection requirements. This legislation is

currently being considered in the Energy Bill conference. 
- 20 -

K. Testing of New Design Features for a Combined License

Issue

Should a COL be issued before completion of all testing that is necessary to demonstrate the

performance of safety systems and components? 

Discussion

The Commission reformed its licensing process for commercial nuclear power plants with the

issuance of 10 CFR Part 52 in 1989. One of the principal issues in the development of

10 CFR Part 52 was the inclusion of requirements to demonstrate the performance of new or

innovative safety features for advanced designs prior to licensing (54 FR 15372, April 18,

1989). These requirements may be met with either separate effects tests, prototype tests, or a

combination of tests, analyses, and operating experience, as described in 10 CFR 52.47(b)(2). 

These requirements were included, as intended, in the original rulemaking for 10 CFR Part 52,

Subpart B, “Standard Design Certifications.” However, the NRC failed to include the same

requirements in Part 52, Subpart C, “Combined Licenses,” for custom plant designs. Because

the NRC intended that the testing requirement apply to all new reactor designs in accordance

with the Commission policy statement on advanced reactors, the proposed rule language for

10 CFR Part 52 corrects this oversight. The draft proposed rulemaking language was made

available in SECY-02-0077, “Proposed Rule To Update 10 CFR Part 52, ‘Early Site Permits,

Standard Design Certifications, and Combined Licenses For Nuclear Power Plants’,” dated

May 8, 2002 (see section A.9) and is available on the NRC’s rulemaking web site. 

Stakeholders will be able to provide comments on the proposed rule language after the 

Commission approves the notice of proposed rulemaking for publication in the

Federal Register.

The NRC has initiated rulemaking to update 10 CFR Part 52. In the rulemaking language that

was provided in SECY-02-0077, and made available on the NRC’s rulemaking web site, the

NRC staff proposed to revise the current language in Subpart C (proposed Subpart G) of

10 CFR Part 52 to make it consistent with current Subpart B (proposed Subpart D) of

10 CFR Part 52 and the original intent of 10 CFR Part 52. Thus, if approved, the revised 

10 CFR Part 52 would require that all testing determined to be necessary to demonstrate that

new design features will perform as predicted in the final safety analysis be completed before

issuance of the COL. 

Conclusion

This issue will be resolved as part of the 10 CFR Part 52 rulemaking after review of public

comments provided in response to the proposed rule change which was provided in

SECY-02-0077, “Proposed Rule To Update 10 CFR Part 52, ‘Early Site Permits, Standard

Design Certifications, and Combined Licenses For Nuclear Power Plants’,” dated May 8, 2002

(ADAMS Accession No. ML021040009).