[Federal Register Volume 85, Number 245 (Monday, December 21, 2020)]
[Proposed Rules]
[Pages 82950-82952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27776]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / 
Proposed Rules

[[Page 82950]]



NUCLEAR REGULATORY COMMISSION

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

[NRC-2017-0021]
RIN 3150-AJ92


Alternatives to the Use of Credit Ratings

AGENCY: Nuclear Regulatory Commission.

ACTION: Advance notice of proposed rulemaking; request for comment.

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SUMMARY: The U.S. Nuclear Regulatory Commission (NRC) is considering an 
amendment to its regulations that would alter financial assurance 
mechanisms approved by the NRC for the decommissioning of nuclear power 
plants and other nuclear facilities. Specifically, this action would 
amend provisions for parent company and self company guarantees that 
require bond ratings issued by credit rating agencies. This action 
would implement the provisions of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010, which directed agencies to amend their 
regulations to remove any reference to or reliance on credit ratings. 
Applicants and licensees who are required to provide decommissioning 
financial assurance may be affected. The NRC is soliciting public 
comment on potential approaches for amending the regulations and 
invites stakeholders and interested persons to participate. The NRC 
plans to hold a public meeting during the comment period to facilitate 
stakeholder participation.

DATES: Submit comments by March 8, 2021. Comments received after this 
date will be considered if it is practical to do so, but the Commission 
is able to ensure consideration only for comments received before this 
date.

ADDRESSES: You may submit comments by any of the following methods:
    <bullet> Federal Rulemaking website: Go to https://www.regulations.gov and search for Docket ID NRC-2017-0021. Address 
questions about NRC dockets to Dawn Forder; telephone: 301-415-3407; 
email: <a href="/cdn-cgi/l/email-protection#ca8eabbda4e48ca5b8aeafb88aa4b8a9e4ada5bc"><span class="__cf_email__" data-cfemail="6622071108482009140203142608140548010910">[email protected]</span></a>. For technical questions contact the 
individual listed in the FOR FURTHER INFORMATION CONTACT section of 
this document.
    <bullet> Email comments to: <a href="/cdn-cgi/l/email-protection#1c4e697079717d7775727b325f7371717972686f5c726e7f327b736a"><span class="__cf_email__" data-cfemail="5002253c353d313b393e377e133f3d3d353e2423103e22337e373f26">[email protected]</span></a>. If you do 
not receive an automatic email reply confirming receipt, then contact 
us at 301-415-1677.
    <bullet> Mail comments to: Secretary, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001, ATTN: Rulemakings and 
Adjudications Staff.
    For additional direction on obtaining information and submitting 
comments, see ``Obtaining Information and Submitting Comments'' in the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Gregory Trussell, Office of Nuclear 
Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001; telephone: 301-415-6244, email: 
<a href="/cdn-cgi/l/email-protection#54132631333b262d7a0026212727313838143a26377a333b22"><span class="__cf_email__" data-cfemail="91d6e3f4f6fee3e8bfc5e3e4e2e2f4fdfdd1ffe3f2bff6fee7">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Obtaining Information and Submitting Comments
    A. Obtaining Information
    B. Submitting Comments
II. Background
III. Regulatory Objectives
IV. Specific Considerations
V. Public Meeting
VI. Plain Writing
VII. Rulemaking Process

I. Obtaining Information and Submitting Comments

A. Obtaining Information

    Please refer to Docket ID NRC-2017-0021 when contacting the NRC 
about the availability of information for this action. You may obtain 
publicly-available information related to this action by any of the 
following methods:
    <bullet> Federal Rulemaking website: Go to https://www.regulations.gov and search for Docket ID NRC-2017-0021.
    <bullet> NRC's Agencywide Documents Access and Management System 
(ADAMS): You may obtain publicly-available documents online in the 
ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select ``Begin Web-based ADAMS 
Search.'' For problems with ADAMS, please contact the NRC's Public 
Document Room (PDR) reference staff at 1-800-397-4209, at 301-415-4737, 
or by email to <a href="/cdn-cgi/l/email-protection#0c7c687e227e697f63797e6f694c627e6f226b637a"><span class="__cf_email__" data-cfemail="81f1e5f3aff3e4f2eef4f3e2e4c1eff3e2afe6eef7">[email protected]</span></a>.
    <bullet> Attention: The PDR, where you may examine and order copies 
of public documents, is currently closed. You may submit your request 
to the PDR via email at <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="b1e1f5e39fe3d4c2dec4c3d2d4f1dfc3d29fd6dec7">[email protected]</a> or call 1-800-397-4209 
between 8:00 a.m. and 4:00 p.m. (EST), Monday through Friday, except 
Federal holidays.

B. Submitting Comments

    Please include Docket ID NRC-2017-0021 in your comment submission.
    The NRC cautions you not to include identifying or contact 
information that you do not want to be publicly disclosed in your 
comment submission. The NRC will post all comment submissions at 
https://www.regulations.gov as well as enter the comment submissions 
into ADAMS. The NRC does not routinely edit comment submissions to 
remove identifying or contact information.
    If you are requesting or aggregating comments from other persons 
for submission to the NRC, then you should inform those persons not to 
include identifying or contact information that they do not want to be 
publicly disclosed in their comment submission. Your request should 
state that the NRC does not routinely edit comment submissions to 
remove such information before making the comment submissions available 
to the public or entering the comment into ADAMS.

II. Background

    Congress passed the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (the Dodd-Frank Act or the Act) to ``promote the 
financial stability of the United States by improving accountability 
and transparency in the financial system.'' \1\ In the Act, Congress 
found that ``ratings on structured financial products have proven to be 
inaccurate'' and that ``[t]his inaccuracy contributed significantly to 
the mismanagement of risks by financial institutions and investors, 
which in turn adversely impacted the health of the economy.'' \2\ In 
section 939A of the Act, Congress directed each Federal agency to 
``review any regulation issued by such agency that requires the use of 
an

[[Page 82951]]

assessment of the credit-worthiness of a security or money market 
instrument and any references to or requirements in such regulations 
regarding credit ratings.'' \3\ Section 939A further directed each such 
agency to ``modify any such regulations identified by the review . . . 
to remove any reference to or requirement of reliance on credit ratings 
and to substitute in such regulations such standard of credit-
worthiness as each respective agency shall determine as appropriate for 
such regulations.'' \4\
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    \1\ Public Law 111-203, Preamble.
    \2\ Public Law 111-203, Sec. 931(5).
    \3\ Public Law 111-203, Sec. 939A(a)(1)-(2).
    \4\ Public Law 111-203, Sec. 939A(b).
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    As directed by section 939A of the Dodd-Frank Act, the NRC has 
reviewed its regulations for any references to or requirements of 
reliance on credit ratings. Appendices A, C, and E to part 30 of title 
10 of the Code of Federal Regulations (10 CFR) provide methods for 
licensees and applicants to demonstrate that a self-guarantee or parent 
company guarantee provides a reasonable assurance of adequate funding 
for decommissioning. Those appendices provide an option based in part 
on specified bond ratings from Moody's or Standard and Poor's credit 
rating agencies. Absent the use of credit ratings, current NRC 
financial test criteria located at 10 CFR part 30, appendices A, D, and 
E, for use of parent company guarantees and self-guarantees, rely in 
part on working capital liability-based test criteria. In accordance 
with the Dodd-Frank Act, the NRC is considering amending these 
appendices to remove reliance on credit rating criteria. Other 
regulations that cite or reference these appendices may also be 
affected by a proposed rule. The other potentially affected regulations 
include Sec.  30.35(f)(2); Sec.  40.36(e)(2); 10 CFR part 40, criterion 
9 of appendix A; Sec.  50.75(e)(1)(iii)(c); Sec.  70.25(f)(2); and 
Sec.  72.30(e)(2).
    The NRC held a public meeting on October 30, 2019 (ADAMS Accession 
No. ML19276F107), where the NRC staff presented an analysis of the 
Dodd-Frank Act and its impact on the NRC regulations. The NRC staff 
also discussed the alternatives for implementing the requirements of 
the Dodd-Frank Act, the NRC staff's recommendation for a proposed 
rulemaking, and the rulemaking timeline for the proposed rule. The 
proposed rulemaking would have removed the provisions in Part 30 
appendices A, C, and E providing the option to demonstrate the 
sufficiency of a guarantee based in part on a credit rating; thus, only 
the method based in part on financial ratios would have remained. 
Industry participants shared a view that the staff's initial rulemaking 
approach would have a substantial negative impact on the availability 
of parent company guarantees and self-guarantees (Public Meeting 
Summary, ADAMS Accession No. ML19322A692). Participants recommended 
that the NRC examine approaches taken by other Federal agencies for 
implementing the Dodd-Frank Act requirements, which could help identify 
alternative approaches for assessing a licensee's credit-worthiness. In 
evaluating potential approaches, the NRC determined that it would be 
beneficial to solicit early stakeholder views on the approaches being 
considered before developing the proposed rule.

III. Regulatory Objectives

    Under current regulations, applicants and licensees must 
demonstrate reasonable assurance that funds will be available when 
needed for decommissioning in order to obtain and maintain a reactor 
license and certain materials licenses.\5\ Such a demonstration may be 
made by prepayment of funds, payment of funds into an external sinking 
fund, use of a surety method, insurance, or other guarantee method 
including a letter of credit, a parent company guarantee, or a self-
guarantee.\6\ The only financial assurance mechanisms in NRC 
regulations that rely, in part, on credit ratings are parent company 
guarantees and self-guarantees. The NRC is considering amendments to 
current regulations that would remove reliance on and reference to 
credit rating criteria for these mechanisms.
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    \5\ Section 182.a. of the Atomic Energy Act of 1954, as amended, 
provides, ``Each application for a license . . . shall specifically 
state such information as the Commission, by rule or regulation, may 
determine to be necessary to decide such of the technical and 
financial qualifications of the applicant . . . as the Commission 
may deem appropriate for the license.''
    \6\ 10 CFR 30.35(f), 40.36(e), 50.75(e), 70.25(f), and 72.30(e).
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IV. Specific Considerations

    The NRC is seeking stakeholders' input on the following specific 
areas related to its regulations covering parent company guarantees and 
self-guarantees partially based on bond ratings issued by credit rating 
agencies. The NRC asks that commenters provide the bases for their 
comments (i.e., the underlying rationale for the position stated in the 
comment) to enable the agency to have a complete understanding of the 
comments.
    Absent the use of credit ratings, alternate NRC financial test 
criteria located at 10 CFR part 30, appendices A, D, and E rely in part 
on working capital liability-based test criteria, which certain 
licensees, including potentially credit-worthy power reactor licensees, 
may have difficulty meeting. The NRC is considering additional 
alternative approaches for determining the ability of a company or its 
parent to guarantee decommissioning funds based on an evaluation of a 
licensee's creditworthiness. The NRC is seeking input from the public 
on this matter to inform the development of a proposed rule. The NRC is 
particularly interested in comments and supporting rationale on the 
following:
    (Question 1) Are there licensees that meet the current credit 
rating-based financial test for a guarantee that would not be able to 
meet the alternate working capital and liability-based financial tests 
currently presented in 10 CFR part 30 appendices? Would such licensees 
be able to meet the decommissioning funding assurance requirements 
using one or more other funding assurance methods allowed for by 
regulation (i.e., prepayment, surety bond, insurance, external sinking 
fund)?
    (Question 2) Modified or new financial metrics for assessing 
creditworthiness: Please provide your views on financial statement 
metrics or other quantifiable financial characteristics that could be 
reported by licensees to assess a licensee's creditworthiness and 
hence, its ability to use a parent company guarantee or self-guarantee 
mechanism for providing reasonable assurance that decommissioning 
funding will be available (see Sec.  50.75, ``Reporting and 
recordkeeping for decommissioning planning''). Suggested metrics should 
differ from the current working capital and liability-based metrics 
currently presented in 10 CFR part 30 appendices cited in the 
Background to this notice and include pass or fail criteria limits.
    (Question 3) Independent agency determination: Please provide your 
views on the NRC performing an independent, risk-informed, performance-
based determination of a licensee's credit-worthiness. The NRC would 
seek to determine the licensee's risk of default based on its review of 
financial data while providing some degree of flexibility on the part 
of licensees as to the type of financial data submitted. This could 
include evaluation of financial data available from the licensee, open-
sources, and from third parties, including credit ratings.
    (Question 4) Should the NRC consider other alternative financial 
test criteria not presented above to assess an applicant's or 
licensee's use of a guarantee to provide reasonable

[[Page 82952]]

assurance of funds for decommissioning? If yes, please provide details 
of the alternative criteria and the financial data needed for its use.
    Commenters are encouraged to provide specific suggestions and 
support for them. Comments received in response to this request will be 
considered in the development of any subsequent proposed rule. The NRC 
will provide another opportunity for public comment on any subsequent 
proposed rule.

V. Public Meeting

    During the comment period, the NRC will conduct a public meeting to 
discuss the rulemaking and answer questions. The NRC will publish a 
notice of the location, time, and agenda of the meeting on the NRC's 
public meeting website at least 10 calendar days before the meeting. 
Stakeholders should monitor the NRC's public meeting website for 
information about the public meeting at: https://www.nrc.gov/pmns/mtg. 
In addition, the meeting information will be posted on https://www.regulations.gov/ under Docket ID NRC-2017-0021.

VI. Plain Writing

    The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal 
agencies to write documents in a clear, concise, and well-organized 
manner. The NRC has written this document to be consistent with the 
Plain Writing Act as well as the Presidential Memorandum, ``Plain 
Language in Government Writing,'' published June 10, 1998 (63 FR 
31885). The NRC requests comment on this document with respect to the 
clarity and effectiveness of the language used.

VII. Rulemaking Process

    The NRC does not intend to provide a detailed response to 
individual comments submitted on this advance notice of proposed 
rulemaking; however, the NRC will evaluate all public input in the 
development of a proposed rule on financial assurance mechanisms 
approved by NRC for the decommissioning of nuclear power plants and 
other nuclear facilities. If NRC determines a need for supporting 
guidance, NRC will also issue the draft guidance for public comment.

    Dated: December 14, 2020.

    For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 2020-27776 Filed 12-18-20; 8:45 am]
BILLING CODE 7590-01-P


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