46306 Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 

1 In this notice of final rulemaking, the 

Department distinguishes among the terms 

DEPARTMENT OF ENERGY 

10 CFR Part 950 

RIN 1901–AB17 

Standby Support for Certain Nuclear 

Plant Delays 

AGENCY: Department of Energy. 

ACTION: Final rule. 

SUMMARY: The Department of Energy 

(Department) is adopting, with changes, 

the interim final rule published on May 

15, 2006. This interim final rule 

established a new part to implement 

section 638 of the Energy Policy Act of 

2005, which authorizes the Secretary of 

Energy to enter into Standby Support 

Contracts with sponsors of advanced 

nuclear power facilities to provide risk 

insurance for certain delays attributed to 

the regulatory process or litigation. 

DATES: Effective Date: This final rule 

will become effective on September 11, 

2006, except for §§ 950.10(b), 950.12(a) 

and 950.23 which contain information 

collection requirements that have not 

been approved by the Office of 

Management and Budget (OMB). The 

Department of Energy will publish a 

document in the Federal Register 

announcing the effective date of those 

sections. 

FOR FURTHER INFORMATION CONTACT: 

Kenneth Chuck Wade, Project Manager, 

Office of Nuclear Energy, NE–30, U.S. 

Department of Energy, 1000 

Independence Avenue, SW, Washington 

DC 20585, (301) 903–6509; or Marvin 

Shaw, Attorney-Advisor, U.S. 

Department of Energy, Office of the 

General Counsel, GC–52, 1000 

Independence Avenue, SW., 

Washington, DC 20585, (202) 586–2906. 

SUPPLEMENTARY INFORMATION: 

I. Section 638 of the Energy Policy Act of 

2005 

II. Rulemaking History 

III. Final Rule 

A. Overview of the Rule 

B. Section-by-Section Analysis 

C. Cost Analysis of Standby Support 

Program 

IV. Regulatory Review Requirements 

A. Review Under Executive Order 12866 

B. Review Under Executive Order 12988 

C. Review Under Executive Order 13132 

D. Review Under Executive Order 13175 

E. Review Under the Regulatory Flexibility 

Act 

F. Review Under the Paperwork Reduction 

Act 

G. Review Under the National 

Environmental Policy Act 

H. Review Under the Unfunded Mandates 

Reform Act 

I. Review Under Executive Order 13211 

J. Review Under the Treasury and General 

Government Appropriations Act 1999 

K. Review Under the Treasury and General 

Government Appropriations Act 2001 

L. Congressional Notification 

V. Approval of the Office of Secretary 

I. Section 638 of the Energy Policy Act 

of 2005 

On August 8, 2005, President Bush 

signed into law the Energy Policy Act of 

2005 (the Act) (Pub. L. 109–58, 119 Stat. 

594). Section 638 of the Act addresses 

the President’s proposal to reduce 

uncertainty in the licensing of advanced 

nuclear facilities. (42 U.S.C. 16014). The 

purpose of section 638 is to facilitate the 

construction and full power operation of 

new advanced nuclear facilities by 

providing risk insurance for such 

projects. Such insurance is intended to 

reduce certain regulatory and litigation 

risks for sponsors that are beyond their 

control in order to encourage 

investment in the construction of new 

advanced nuclear facilities. By 

providing insurance to cover certain of 

these risks, the Federal government can 

reduce the financial risk to project 

sponsors that invest in advanced 

nuclear facilities, which the 

Administration and Congress believe are 

necessary to promote a more diverse 

and secure supply of energy for the 

Nation. 

Section 638 contains a number of 

provisions to establish the Standby 

Support Program (the ‘‘Program’’). 

These provisions are related to (1) the 

Secretary’s authority to enter into 

contracts and details related to such 

contracts, (2) the establishment of 

funding accounts, (3) the funding of 

these accounts, (4) the types of 

regulatory and litigation delays 

Congress determined were to be covered 

by the Program, (5) the types of delays 

that Congress determined were to be 

excluded from coverage, (6) the 

maximum amount of coverage available 

for up to six advanced nuclear facilities 

with a distinction made for the initial 

two reactors and the subsequent four 

reactors, (7) the types of costs to be 

covered by the Program, (8) the 

requirements for a sponsor of an 

advanced nuclear facility, and (9) 

reporting requirements by the Nuclear 

Regulatory Commission 

(‘‘Commission’’). 

Section 638(g) requires the 

Department to issue regulations to carry 

out section 638. This section directs the 

Secretary to issue an interim final rule 

within 270 days after enactment of the 

Act and to adopt final regulations 

within one year after enactment. 

II. Rulemaking History 

Prior to developing and issuing this 

final rule, the Department held a public 

workshop and published two Federal 

Register notices: a Notice of Inquiry 

(NOI) (70 FR 71107, November 25, 2005) 

and an interim final rule (71 FR 28200, 

May 15, 2006). 

The NOI discussed the major topics 

related to section 638, including the 

types of sponsors and facilities covered, 

the Secretary’s contracting authority, 

appropriations and funding accounts, 

covered and excluded delays, covered 

costs and requirements, and 

disagreements and dispute resolution. 

The NOI included a general request for 

comments and identified certain topics 

on which the Department specifically 

requested comments. Among other 

matters, the Department sought 

comment about how the statute could be 

implemented most effectively to achieve 

the objective of reducing the risks 

associated with certain delays in the 

advanced nuclear facility licensing 

process and thereby facilitate the 

expeditious construction and operation 

of new advanced nuclear facilities. 

On December 15, 2005, the 

Department sponsored a public 

workshop to allow the public to provide 

oral comments about section 638 and 

the NOI. Over 60 people attended the 

public workshop. A transcript of the 

proceedings is posted at 

www.nuclear.gov. The Department 

received nine written comments on the 

NOI, including comments from the 

Commission, a nuclear energy trade 

association, several utilities and other 

potential sponsors, an economic 

consulting firm, and a public advocacy 

group. In addition to responding to the 

questions posed in the NOI, the 

commenters provided their general 

views on implementing section 638. 

On May 6, 2006, the Department 

issued an interim final rule that 

established a new part 950 in Title 10 

of the Code of Federal Regulations 

(CFR), Standby Support for Certain 

Nuclear Plant Delays. The rule includes 

five subparts that set forth the 

procedures, requirements and 

limitations for the award and 

administration of Standby Support 

Contracts that indemnify a project 

sponsor of certain costs that may be 

incurred due to a delay in full power 

operation of the sponsor’s advanced 

nuclear facility. 

Subpart A set forth the purpose, scope 

and applicability, and definitions of the 

regulation. Subpart B set forth 

provisions addressing the Standby 

Support Contract process, including the 

process whereby a sponsor and the 

Program Administrator1 enter into a 


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Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 46307 

‘‘Program Administrator,’’ ‘‘Claims Administrator,’’

and ‘‘Department.’’ ‘‘Program Administrator’’ is 

used to identify situations in which a Department 

representative executes a Conditional Agreement or 

a Standby Support Contract; ‘‘Claim Administrator’’

is used to identify situations in which a Department 

representative administers the claims process; and 

‘‘Department’’ is used to identify general statements 

of policy and situations involving more general 

matters such as funding and appropriations. 

Conditional Agreement prior to a 

Standby Support Contract, obligations 

of a sponsor prior to entering into a 

Conditional Agreement, the provisions 

of that Conditional Agreement, 

conditions precedent that must be 

satisfied prior to entering into a Standby 

Support Contract, funding issues related 

to the Standby Support Program, 

reconciliation of costs, and termination 

of a Conditional Agreement. Subpart B 

also addressed the provisions for each 

Standby Support Contract. These 

include general contract terms, such as 

the contract’s purpose, the advanced 

nuclear facility that is the subject of the 

contract, the sponsor’s contribution, the 

maximum aggregate compensation, the 

term of the contract, cancellation 

provisions, termination by sponsor, 

assignment, claims administration, and 

dispute resolution; and specific contract 

terms that implement section 638’s 

provisions related to covered events, 

exclusions, covered delay, and covered 

costs. Subpart C set forth the claims 

administration process, including the 

submission of claims and payment of 

covered costs under a Standby Support 

Contract. Subpart D set forth provisions 

related to dispute resolution, including 

disputes involving covered events and 

disputes involving covered costs. In 

each case, subpart D provided a twostep process, first requiring non-binding 

mediation and then binding arbitration, 

if the parties cannot reach agreement. 

Subpart E set forth miscellaneous 

provisions about the Department’s 

authority to monitor and audit a 

sponsor’s activities and the public 

disclosure of information provided by a 

sponsor to the Department. 

The Department received four written 

comments addressing the interim final 

rule, including comments from a 

nuclear industry trade association, two 

utilities, and a public advocacy group. 

In telephone communications and a 

meeting, interested persons provided 

verbal communications to Department 

representatives that addressed the same 

issues raised in written comments on 

the interim final rule. The Department 

responds to all the relevant comments 

in section III of the preamble to this 

final rule. 

III. Final Rule 

A. Overview 

In today’s final rule, the Department 

has largely adopted the provisions set 

forth in the interim final rule. The 

revised 10 CFR part 950 adopted by this 

final rule will become effective thirty 

days after the final rule’s publication in 

the Federal Register. The changes 

between the interim final rule and the 

final rule will not have any effect, given 

that the Department anticipates that no 

sponsor will apply for a combined 

license until after the final rule takes 

effect later in 2006. In addition to some 

editorial and other non-substantive 

changes that modify and clarify the 

interim final rule, particularly in 

subparts C and D, the Department is 

making the following changes 

including: 

• In section 950.3, the definition for 

‘‘litigation’’ has been modified to 

include ‘‘local courts;’’ (See also 

950.14(a)(4)) 

• In section 950.3, the definition for 

‘‘pre-operational hearing’’ has been 

modified to state ‘‘any Commission 

hearing, that is provided for in 10 CFR 

part 52, after issuance of the combined 

license that is provided for in 10 CFR 

part 52;’’ (See also 950.14(a)(3)) 

• In section 950.11(b), the following 

clarifying sentence has been added: ‘‘A 

sponsor may elect to allocate 100 

percent of the coverage to either the 

Program Account or the Grant 

Account.’’

• In section 950.11(c)(1), the 

following clarifying sentence has been 

added with respect to funding: 

‘‘Covered costs paid through the 

Program Account are backed by the full 

faith and credit of the United States;’’

• In section 950.11(e), the provision 

addressing the process by which the 

anticipated contributions are specified 

in the Conditional Agreement has been 

clarified; 

• In section 950.12(c), the provision 

on limitations to entering into a Standby 

Support Contract has been modified; 

• In section 950.12(d), the following 

section has been added with respect to 

abandonment of a project and 

cancellation by the Department: ‘‘(1) If 

the Program Administrator cancels a 

Standby Support Contract for 

abandonment pursuant to 950.13(f)(1), 

the Program Administrator may reexecute a Standby Support Contract 

with a sponsor other than a sponsor or 

that sponsor’s assignee with whom the 

Department had a cancelled contract, 

provided that any such replacement 

Standby Support Contract is executed in 

accordance with the terms and 

conditions set forth in this part, and 

shall be deemed to be one of the 

subsequent four reactors under this part. 

(2) Not more than two Standby Support 

Contracts may be re-executed in 

situations involving abandonment and 

cancellation by the Program 

Administrator.’’

• In section 950.13(f), the following 

has been added with respect to 

cancellation of a Standby Support 

Contract: ‘‘(1) If the sponsor abandons 

construction, and the abandonment is 

not caused by a covered event or force 

majeure, the Program Administrator 

may cancel the Standby Support 

Contract by giving written notice thereof 

to the sponsor and the parties have no 

further rights or obligations under the 

contract.’’

• In section 950.13(h), the following 

has been added with respect to 

assignment of payments: ‘‘The Program 

Administrator shall permit the 

assignment of payment of covered costs 

with prior written notice to the 

Department.’’

• In section 950.13(k), the following 

has been added with respect to 

reestimation under the Federal Credit 

Reform Act (FCRA) of 1990: ‘‘The 

sponsor is neither responsible for any 

increase in loan costs, nor entitled to 

recoup fees for any decrease in loan 

costs, resulting from the re-estimation 

conducted pursuant to FCRA.’’

• In section 950.14(b), certain types of 

excluded events have been deleted. 

• In section 950.14, an additional 

section, 950.14(e), has been added to 

address adjustments to the inspections, 

tests, analysis and acceptance criteria 

(ITAAC) schedule. 

• In section 950.20, the following has 

been added with respect to exclusions: 

‘‘the Department is required to establish 

an exclusion in accordance with 

950.14(b).’’

• Sections 950.21, 950.22, and 950.24 

have been modified to add information 

reporting requirements and to clarify the 

Department’s role in establishing an 

exclusion. 

• Subpart D has been revised to 

specify that dispute resolution will be 

administered by the Civilian Board of 

Contract Appeals. 

The preamble first provides a sectionby-section response to the specific 

comments on the interim final rule and 

explains modifications from the interim 

final rule to the final rule. The preamble 

then provides a detailed discussion of 

the Standby Support Program’s 

estimated costs. 

B. Section-by-Section Analysis 

Section 950.1—Purpose 

In section 950.1 of the interim final 

rule, the Department stated that ‘‘The 


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46308 Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 

purpose of this part is to facilitate the 

construction and full power operation of 

new advanced nuclear facilities by 

providing risk insurance for certain 

delays attributed to the Nuclear 

Regulatory Commission regulatory 

process or to litigation.’’

The public advocacy group 

commented that the Department should 

avoid using taxpayer funds to provide 

an expensive subsidy to the nuclear 

industry. Industry commenters stated 

that they believe the program should 

provide broad coverage and financial 

certainty. 

The Department notes that Congress 

specifically authorized the Standby 

Support Program and provided explicit 

direction on calculating the premium 

for the insurance and allocating this 

premium between appropriated funds 

and funds from sponsors or other nonFederal sources. The Department has 

sought to ensure that, in implementing 

this authorization and direction, it put 

in place a Program that facilitates the 

construction and full power operation of 

new advanced nuclear facilities, 

protects taxpayer funds, reflects both 

the magnitude of the risk presented and 

the protection provided against that 

risk, and avoids undermining the safety 

of constructing advanced nuclear 

facilities. The Department continues to 

believe that the regulations developed 

by the Department are appropriate and 

necessary to effectuate section 638’s 

objectives. 

Multiple Incentive Programs 

The Department requested comment 

on whether sponsors should be eligible 

to participate in multiple Federal 

Government loan guarantee or other 

programs intended to incentivize the 

construction and operation of nuclear 

facilities and, if so, whether clarification 

is needed on issues such as the amounts 

an entity can receive under more than 

one Federal program. 

In response to the interim final rule, 

industry commenters stated that 

participation in the different programs 

established under the Act should not 

limit a project sponsor’s eligibility for 

any of these programs, or the amounts 

that a sponsor can receive under them. 

Industry commenters stated that the 

objective of these incentives is to 

facilitate and encourage the 

construction and full power operation of 

new advanced nuclear facilities and that 

the programs are complementary, not 

exclusive. For example, commenters 

stated that the cost of any loan 

guarantee should be adjusted downward 

to reflect the reduced risk of default on 

the underlying debt obligation as a 

result of the Standby Support Program. 

The public advocacy group stated that 

the nuclear industry includes some of 

the country’s wealthiest companies and 

should not be eligible for numerous 

subsidies for the same plant. 

The Department has determined that 

the Act does not prohibit a sponsor from 

acquiring for a specific facility more 

than one, or even all, of the various 

forms of incentives provided under the 

Act. Therefore, in this final rule, the 

Department is not prohibiting a sponsor 

from being eligible for all of the 

incentive programs for which the Act 

makes it eligible. 

Section 950.3—Definitions 

Advanced nuclear facility. In the 

notice of interim final rulemaking, the 

Department took the definition of 

‘‘advanced nuclear facility’’ verbatim 

from the Act. The Department further 

noted that there are likely no reactor 

designs that have been approved after 

December 31, 1993 that are 

‘‘substantially similar’’ to designs that 

were certified before that date for which 

potential project sponsors have 

suggested interest. Nevertheless, the 

Department reserved the right to make 

a final determination if a project 

sponsor chooses a design that the 

Department has not anticipated. 

The Department received two 

comments addressing this issue. The 

public advocacy group stated that 

companies should not be encouraged to 

apply for design certification at the 

same time as a combined license. In 

contrast, the industry trade association 

generally agreed with the definition in 

the interim final rule, yet requested that 

the Department clarify the use of the 

word ‘‘approved,’’ particularly with 

respect to what constitutes design 

approval. Industry further stated that 

under the Commission’s rules in 10 CFR 

part 52, Commission design approval 

may be obtained in two ways. The 

design may be certified in a rulemaking 

proceeding, or the design may be 

approved in the combined licensing 

proceeding itself. The trade association 

stated that the Act does not address 

these two paths to design approval, and 

requested that the final rule state 

explicitly that either path to design 

approval is acceptable under the rule. 

The Department agrees with the trade 

association’s comment that the pathway 

for approval is subject to the 

Commission’s rules under 10 CFR part 

52, and that design approval may be 

obtained by either path. Nevertheless, 

the Department has determined that 

there is no reason to amplify or alter the 

statutorily specified definition. 

Consistent with section 638, the 

definition at section 950.3 states that an 

advanced nuclear facility must be 

approved by the Commission and makes 

no distinction as to when or how such 

approval is issued other then what is 

stated in section 638 (i.e., ‘‘the approval 

is made after December 31, 1993.’’) 

Although the Department agrees that 

sponsors should be encouraged to 

obtain design approval prior to filing a 

combined license application with the 

Commission, thereby expediting the 

combined license review process, such 

a stringent requirement is not mandated 

by the Act and is not necessary to 

support the purposes of the Standby 

Support Program. 

Covered Event—Litigation. Section 

638(c)(1)(B) refers to ‘‘litigation that 

delays the commencement of full-power 

operations * * * ’’ In the interim final 

rule, the Department defined litigation 

to include only adjudication in State, 

federal, or tribal courts, including 

appeals of Commission decisions 

related to the combined license to such 

courts, and excluding administrative 

litigation that occurs at the Commission 

related to the combined license process. 

(See also section 950.14(a)(4) which 

addresses covered events.) 

The Department received divergent 

comments on the definition of litigation. 

The public advocacy group expressed 

concern that the definition for litigation 

was overly expansive, claiming that it 

should cover only frivolous lawsuits; on 

the other hand, industry commenters 

believed it was not expansive enough. 

The public advocacy group disagreed 

with including in the definition appeals 

of Commission decisions to the courts 

and in including litigation involving 

safety or security issues. The industry 

commenters requested that 

administrative litigation that occurs at 

the Commission related to the combined 

license should not be excluded from the 

definition. The industry trade 

association stated that Congress did not 

intend to condition the coverage based 

on the type of litigation causing the 

delay or when such delay occurs. 

Further, the industry commenters 

objected to the Department’s 

interpretation that only litigation 

resulting in a court order enjoining the 

sponsor’s actions would be eligible as a 

covered delay. 

As explained in the interim final rule, 

the Department has broad authority to 

interpret the terms in section 638, 

including the terms ‘‘litigation’’ and 

‘‘pre-operational hearing.’’ After 

reviewing the comments in light of 

section 638, the Department has 

determined that it is appropriate to 

adopt the definition in the interim final, 

except for minor changes as discussed 

below. 


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Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 46309 

Section 638(c) sets forth three types of 

events for coverage, which Congress 

terms ‘‘Inclusions.’’ These are (1) 

ITAAC-related delays, (2) preoperational hearings, and (3) litigation. 

Based on this statutory delineation, the 

Department has determined that most of 

the requested changes to the definition 

set forth in the interim rule would be 

inappropriate and inconsistent with 

section 638. With respect to the public 

advocacy groups’ request to include 

only frivolous lawsuits and to exclude 

appeals of Commission decisions to the 

courts, the Department has determined 

that such an interpretation would be 

inconsistent with the reference in 

section 638(c)(1)(B), without 

qualifications, to litigation that delays 

commencement of full power operation 

of the advanced nuclear facility. 

Obviously, litigation that is not 

‘‘frivolous’’ has the potential to delay 

full operation of a facility. Moreover, 

what constitutes a ‘‘frivolous’’ lawsuit 

can itself be a question involving 

substantial uncertainty and the 

Department believes it would be counter 

to the purposes of section 638 to import 

this uncertainty into the Standby 

Support Program. 

With respect to industry’s specific 

requests, the Department has 

determined that most of them would 

likewise be inconsistent with the 

reference in section 638(c)(1)(B). Even if 

one assumes that the term ‘‘litigation’’ is 

ambiguous, the Department has 

determined that as a matter of policy, 

industry’s suggested expansions of the 

term litigation are inappropriate, except 

for including litigation in local courts. 

Industry requested that the Department 

expand the definition of ‘‘litigation’’ to 

include any administrative litigation 

that occurs at the Commission related to 

the combined licensing process, and 

arbitration proceedings and orders. The 

Department reaffirms its previous 

determination that since section 

638(c)(1)(A) covers the risk of preoperational hearings and Commission 

review of ITAACs, the reference in 

section 638(c)(1)(B) to litigation should 

be interpreted to mean litigation outside 

the context of the Commission 

proceeding on the combined license. 

For the Department to adopt the 

industry’s recommendation to interpret 

the term ‘‘litigation’’ even more broadly 

would effectively nullify these 

distinctions and undermine 

Congressional intent. The industry’s 

recommended broad interpretation also 

likely would increase the risk that a 

covered event would occur and the 

insurance be triggered, thereby 

increasing (perhaps substantially) the 

premium for the risk insurance. The 

Department has determined that the 

better approach is to define each 

covered delay clearly and distinctly 

recognizing section 638’s structure 

which delineates only certain delays 

that are eligible for cost recovery by 

categories, i.e., ITAAC-related delays, 

pre-operational hearings, and litigation. 

With respect to the exclusionary 

language for administrative litigation at 

the Commission that is in the definition 

of litigation, this language is intended to 

clearly distinguish between proceedings 

that are conducted before the 

Commission from litigation that is 

conducted before a court of law. The 

Department could remove the exclusion 

language from the definition of 

litigation, but the effect would be the 

same. That is, a sponsor could be 

covered for delays associated with 

litigation that occurs in a court of law 

outside the context of the Commission, 

e.g., in state, federal, tribal or local 

courts. This definition of litigation 

precludes coverage for any form of 

proceeding that occurs before the 

Commission, whether or not the 

exclusion is expressly stated in the 

definition. Accordingly, the Department 

has determined that it would be 

inappropriate and unnecessary to 

remove the exclusion for other 

administrative litigation at the 

Commission. 

Furthermore, the Department notes 

that by defining litigation to include 

only litigation in the courts, it is also 

excluding administrative litigation at 

federal or state agencies other than the 

Commission. As explained above, the 

Department interprets the Act to 

provide coverage for specific events. 

Even though proceedings at other 

federal or state agencies may be referred 

to as ‘‘administrative litigation’’ and 

may affect the sponsor’s ability to 

construct or operate an advanced 

nuclear facility, the Department does 

not believe the language of the Act is 

properly interpreted to include those 

proceedings within the definition of 

litigation. Such an interpretation 

requested by the commenters would 

significantly expand the definition of 

litigation beyond the Act’s objectives. 

As a consequence, it would also 

increase the cost of the risk insurance 

program. The Department notes, 

however, that such administrative 

proceedings may lead to court litigation 

and, as such, coverage for delays may be 

possible under the Standby Support 

Contract. 

Similarly, the Department has 

determined that it would be 

inappropriate to expand the term 

litigation to cover ‘‘arbitration’’ which is 

defined as ‘‘a method of dispute 

resolution involving one or more neutral 

third parties who are usually agreed to 

by the disputing parties and whose 

decision is binding.’’ Black’s Law 

Dictionary Eighth Edition (2004). It is 

generally understood that such dispute 

resolution is outside of litigation and 

the court system. The Department’s 

exclusion of arbitration from the 

definition of litigation is not intended to 

discourage parties from alternative 

forms of dispute resolution. Rather, the 

Department recognizes the value of 

arbitration, either to avoid litigation or 

as a mechanism to end litigation in 

court (in which case the arbitration 

would be encompassed by the litigation 

giving rise to the arbitration and thus, as 

a practical matter, would be covered), 

but believes that it is an overly broad 

view of the term litigation not within 

the coverage of section 638. The 

Department also notes that making the 

term more expansive would result in 

increased cost of the risk insurance and 

the program. 

Covered events—Pre-operational 

Hearings. In the interim final rule, the 

Department defined pre-operational 

hearing to mean ‘‘a hearing held 

pursuant to the Commission’s regulation 

in 10 CFR 52.103.’’ In the preamble of 

the interim final rule, the Department 

stated that it would be inappropriate 

and unnecessary to broaden the term to 

include all hearings taking place prior to 

operation or fuel load. 

The industry trade association 

expressed its view that Congress did not 

intend to limit this coverage to only the 

hearing provided for in 10 CFR 52.103, 

but to any other hearings the 

Commission holds with respect to the 

part 52 licensing procedure and any 

Commission appeals or remands 

associated with the hearing. The 

industry trade association provided the 

example of hearings that may be 

requested, pursuant to 10 CFR 52.97, in 

the event a sponsor makes 

modifications, additions, or deletions to 

the combined license. It further stated 

that such a limitation would be contrary 

to Congress’s intent to provide 

protection from delays resulting from 

the untested licensing process, and to 

remove this regulatory uncertainty as a 

barrier to the development of new 

nuclear power plants. 

Based on further review, the 

Department has determined that it is 

appropriate to provide coverage for 

other types of Commission preoperational hearings that occur after 

issuance of a combined license that are 

directly related to the part 52 

proceeding on the combined license and 

are so referenced in the regulation. For 


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46310 Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 

example, the Department notes that 

under part 52, the Commission 

addresses the situation where, prior to 

fuel load or initial operations, a party 

may petition to modify the terms or 

conditions of the combined license and 

in so doing may invoke procedures for 

a non-mandatory hearing. Thus, an 

expansion of the definition of preoperational hearing to include such 

hearings is consistent with the language 

in section 638(c)(1). It is also consistent 

with the distinction in that section to 

provide coverage for two separate 

events: pre-operational hearings by the 

Commission and litigation. Based on 

these considerations, the Department 

has revised the definition for preoperational hearing to state ‘‘any 

hearing held by the Commission after 

issuance of the combined license that is 

provided for by part 52.’’

However, the Department has 

determined that the Act’s language 

should not be interpreted so broadly as 

to categorically include in the definition 

of pre-operational hearings any and all 

Commission appeals or remands 

associated with the hearing. The Act 

defines a covered delay as ‘‘the conduct 

of pre-operational hearings by the 

Commission.’’ Like the term litigation, 

the term pre-operational hearing is 

subject to interpretation. The 

Department has determined that as a 

matter of policy, the industry’s 

suggested expansion of this definition is 

inappropriate. The Department 

recognizes that the outcome of a 

Commission hearing may result in 

additional proceedings, such as appeals 

and remands, which may in turn cause 

a delay in construction or operations. A 

similar outcome is also possible in the 

context of litigation. Nevertheless, the 

Department does not believe it is 

appropriate or necessary to define the 

terms pre-operational hearings or 

litigation to necessarily include those 

additional proceedings. Rather, the 

Department believes that it is 

appropriate to determine through the 

claims administration process whether 

based on the facts of the case any 

ensuing proceedings are part of, or the 

same as, the pre-operational hearing or 

litigation that is a covered event. The 

Department notes that such additional 

proceedings may fall within the 

category of an excluded event, e.g., 

events within the control of the sponsor. 

Full power operation. In the interim 

final rule, the Department defined ‘‘full 

power operation’’ to mean the point at 

which the sponsor first synchronizes the 

advanced nuclear facility to the 

electrical grid. This is typically at a 

power level in the range of 10 to 25 

percent. 

Industry commenters stated that 

definition fails to recognize adequately 

that full-scale commercial operation 

could be delayed by judicial or 

administrative proceedings even after a 

new plant has reached 10–25 percent 

power levels. Industry commenters 

argued that what they viewed as by 

narrowly defining the term, the 

Department is attempting to shift that 

risk back to sponsors and their investors 

and lenders, which they viewed as 

impermissible. The industry trade 

association recommended that the 

definition of ‘‘full-power operation’’

include two triggers: (1) Power output 

level at or near 100 percent of its 

nameplate capacity and (2) the 

completion and resolution of any 

pending or ongoing hearings or 

litigation. 

As explained in the interim final, the 

Department has determined that it has 

broad authority to interpret the terms in 

section 638, especially undefined terms 

such as ‘‘full power operation.’’ The 

Department concludes that the 

definition of full power operation in the 

interim final rule is appropriate, given 

that initial synchronization to the 

electric grid provides a clear, 

unambiguous point in time at which a 

new nuclear facility would have the 

ability to generate revenue. The 

Department views the industry’s 

recommendation for power output at or 

near 100 percent as far too open-ended, 

given that a sponsor could make a 

business or operational decision to 

operate a facility at a level of less than 

100 percent for a very long time or even 

permanently; there is no good reason 

why such a situation should result in 

long-term or permanent coverage for the 

reactor under the Program. The 

Department agrees that the sponsor 

should be eligible to submit claims for 

covered events prior to the resolution of 

pending or ongoing hearings or 

litigation, so long as full power 

operation has not commenced. 

Accordingly, the resolution of any 

pending or ongoing hearings or 

litigation is confined to those events 

that happen prior to first grid 

synchronization. Based on this analysis, 

the Department has determined that it 

would be inappropriate to modify the 

definition for full power operation. 

Incremental Costs. In the interim final 

rule, the Department specified that 

‘‘incremental costs’’ mean the 

incremental difference between: (1) The 

fair market price of power purchased to 

meet the contractual supply agreements 

that would have been met by the 

advanced nuclear facility but for a 

covered delay; and (2) the contractual 

price of power from the advanced 

nuclear facility subject to the delay. 

The Department received two 

comments addressing this issue. The 

industry trade association commented 

that the concept of incremental costs is 

applicable to new nuclear power plants 

constructed as merchant power 

generators. However, it stated that a 

nuclear plant built by a regulated utility 

as part of its rate base may not have a 

contract to sell the output from the 

facility because the plant’s output 

becomes part of general system supply. 

The trade association commented that if 

the nuclear plant start is delayed, a 

regulated utility may have to purchase 

power from the market to cover needs, 

or it may be able to supply that shortfall 

from general system supply. If it does 

purchase power, the provisions related 

to fair market price at section 

950.25(2)(i) would apply. However, if 

the utility does not purchase 

replacement power from the market, the 

commenter requested that the 

regulations provide an alternative 

means to calculate the fair market price 

for covering demand from within its 

system. 

The public advocacy group stated that 

the term ‘‘fair market price of power’’

needs further clarification within the 

regulations. Specifically, it requested 

that the Department make a distinction 

between ‘‘merchant power plants,’’

which are only selling into the 

‘‘market,’’ and power plants that are in 

a utility’s ‘‘rate base’’ and selling to 

retail customers under state regulation. 

The Department has determined that 

it is neither necessary nor appropriate to 

create an alternative cost recovery 

mechanism for a sponsor that does not 

contract for replacement power from the 

market. Section 638 provided clear 

directions for mitigating a sponsor’s 

delay cost for debt and contractual 

supply agreements. By allowing a 

sponsor to mitigate its cost of delay 

through one or both mechanisms, the 

Department believes that cost mitigation 

has been addressed for the scenarios 

highlighted by industry. In addition, the 

Department believes that the definition 

of ‘‘fair market price’’ stated in the 

interim final rule is sufficient and 

addresses potential gaming scenarios, 

given that the determination of the fair 

market price is the lower of two options: 

(A) The actual cost of the short-term 

supply contract for replacement power, 

purchased by the sponsor, during the 

period of delay, or (B) for each day of 

replacement power by its day-ahead 

weighted average index price in $/MWh 

at the hub geographically nearest to the 

advanced nuclear facility as posted on 

the previous day by the Intercontinental 


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Exchange (ICE) or an alternate electronic 

marketplace deemed reliable by the 

Department. 

Sponsor. In the interim final rule, the 

Department defined ‘‘sponsor’’ to mean 

any person that has ‘‘applied for’’ a 

combined license and such application 

by the person has been docketed by the 

Commission. The Department believed 

that such a definition was necessary to 

ensure that an application was sufficient 

for docketing by the Commission. 

The nuclear trade association 

requested that the term sponsor be 

expanded to address situations in which 

several entities apply for a combined 

license. Specifically, it requested that 

the term ‘‘sponsor’’ be defined in 

section 950.3 of the regulation to mean 

‘‘a person or persons whose application for 

a combined license for an advanced nuclear 

facility has been docketed by the 

Commission. Multiple applicants involved in 

the same advanced nuclear facility are 

considered a single sponsor. Where multiple 

applicants are involved, the applicant for 

authority to operate the advanced nuclear 

facility is designated the lead sponsor and 

acts as the sponsor for purposes of these 

regulations. The lead sponsor is responsible 

to the Department for providing information, 

making or receiving notices, and 

administering claims on behalf of the 

applicants. Applicants having an ownership 

share in the advanced nuclear facility share 

in the benefits and obligations of the Standby 

Support Agreement in pro rata proportion to 

their NRC licensed ownership in the 

advanced nuclear facility.’’

The Department generally agrees with 

the goal of the comment that multiple 

sponsors should define their 

relationships and obligations. 

Nevertheless, the Department believes 

that it is inappropriate and unnecessary 

to specify by regulation such an 

arrangement, particularly since the term 

‘‘sponsor’’ is expressly defined in 

section 638, and a sponsor or sponsors 

that have made such arrangements 

would qualify for coverage under the 

existing definition. The Department 

further notes that if such a definition 

were imposed by regulation, it would 

reduce the flexibility among potential 

sponsors. Accordingly, the Department 

has decided not to amend the definition 

for ‘‘sponsor’’ in section 950.3. 

Subpart B—Standby Support Contract 

Process 

Sections 950.10—Conditional 

Agreement 

Section 638(b) authorizes the 

Secretary to enter into Standby Support 

Contracts with sponsors of advanced 

nuclear facilities. That subsection 

requires that sufficient funding be 

placed in designated Departmental 

accounts before a Standby Support 

Contract may be executed. In the 

interim final rule, the Department 

adopted a two-step process in which a 

Conditional Agreement can, for the 

qualifying sponsors, be converted into a 

Standby Support Contract at a later date, 

if the sponsor meets certain conditions 

and budgetary resources are provided. 

The Department noted that it has 

significant discretion to establish the 

procedures needed to manage the 

Standby Support Program, provided that 

they are consistent with section 638. 

Industry commenters generally agreed 

with the two-step approach. In contrast, 

the public advocacy group asserted it 

was unnecessary and inappropriate. The 

Department continues to believe that 

such a two-step implementation process 

is appropriate because it allows the 

Department and potential sponsors to 

manage the difficult timing issues 

inherent in the federal appropriations 

process and business concerns in 

planning and financing a multi-billion 

dollar advanced nuclear facility. 

In section 950.10(b)(1)–(5), the 

Department requires a sponsor to 

provide certain information to be 

eligible to enter into a Conditional 

Agreement. This includes an electronic 

copy of its complete combined license 

application docketed by the 

Commission, a summary schedule of the 

project, a detailed business plan, the 

sponsor’s estimate of the amount and 

timing of payments for debt service and 

the estimated dollar amount to be 

allocated to the sponsor’s covered costs. 

The nuclear trade association stated 

that it was inappropriate for the 

Department to request what it termed 

project specific background information, 

claiming that this information had little 

or no bearing on calculating the budget 

score under FCRA. 

The Department has determined that 

to ensure appropriate regulatory 

oversight of the Standby Support 

Program, it is necessary for the 

Department to request the information 

set forth in section 950.10(b)(1)–(5). 

Insurers of large construction projects 

typically obtain such information to 

establish due diligence. Absent such 

oversight, the Department would not be 

adequately fulfilling its responsibilities 

for overseeing a program with such 

potentially large payouts, particularly 

its responsibility to facilitate the full 

power operation of advanced nuclear 

facilities and to protect taxpayer funds. 

In addition, this information, along with 

other information, will assist the 

Department in determining the 

necessary amount of funding for a 

potential Standby Support Contract 

with the sponsor. Lastly, the 

Department believes that this 

information will assist the Department 

in refining estimated cash flows payouts 

in the event a claim is submitted and in 

estimating the full power operation 

schedules. 

National Environmental Policy Act 

(NEPA) 

In section 950.10(c), the Department 

set forth the bases upon which it will 

determine whether to enter into a 

Conditional Agreement. In the interim 

final rule, the Department noted that it 

will determine whether the Conditional 

Agreement may be issued consistent 

with applicable statutes or regulations, 

including the National Environmental 

Policy Act (NEPA). The Department 

anticipates that its environmental 

review under NEPA for the Conditional 

Agreement or Standby Support Contract 

would acknowledge or be based upon 

the NEPA review conducted by the 

Commission in relation to its review 

and approval of the sponsor’s combined 

license application. 

The industry commented that it 

generally supported the Department’s 

position about NEPA review in the 

interim final rule. Nevertheless, it 

expressed concern that the 

Commission’s NEPA review is likely to 

occur during the Commission’s review 

of the combined license application, 

and therefore it is unlikely that a 

Commission NEPA review would have 

occurred at the time of the Conditional 

Agreement. Accordingly, it urges the 

Department to make a determination 

that entering into a Conditional 

Agreement is not a major federal action 

and does not trigger NEPA. 

The Department believes that it is 

unlikely that a Commission NEPA 

review would have occurred at the time 

a Conditional Agreement is issued, and 

generally agrees that entering into a 

Conditional Agreement would not be a 

major federal action. The Department 

notes that prior to issuance of a 

combined license, which is a 

prerequisite for the Department to 

execute a Standby Support Contract, the 

Commission would have to complete its 

NEPA review of the proposed advanced 

nuclear facility. 

Section 950.11 Terms and Conditions 

of the Conditional Agreement 

In the interim final rule, the 

Department stated that a sponsor should 

know its funding needs prior to 

execution of the Standby Support 

Contract, and included sections 950.11 

(b), (c) and (d) in the regulations to 

reflect the need for specificity, 

transparency and accuracy on funding 

of Standby Support Contracts prior to 


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execution. In particular, section 

950.11(b) required each Conditional 

Agreement to include a provision 

specifying the amount of coverage to be 

allocated under the Program Account 

and Grant Accounts. 

Industry commenters stated that the 

rule should explicitly indicate that a 

sponsor is not obligated to allocate 

coverage between the Program Account 

and Grant Account and may elect to 

allocate 100 percent of the coverage to 

either the Program Account or Grant 

Account. 

The Department believes that the 

interim final rule permitted such an 

allocation of coverage, but agrees with 

the commenter that it would be 

appropriate to expressly state this in the 

regulatory text. Accordingly, the 

Department today amends section 

950.11(b) to state that ‘‘a sponsor may 

elect to allocate 100 percent of the 

coverage to either the Program Account 

or the Grant Account.’’ The Department 

notes that industry made an identical 

comment with respect to 950.11(c)(1). 

950.11(c) Funding 

In section 950.11(c) of the interim 

final rule, the Department specified that 

each Conditional Agreement contain a 

provision that the Program Account or 

the Grant Account be funded in advance 

of the Department entering into a 

Standby Support Contract. After 

explaining the funding of these accounts 

under FCRA, the Department further 

explained in the preamble that it was 

within the Department’s discretion to 

interpret section 638 as authorizing and 

providing that Standby Support 

Contracts are backed by the full faith 

and credit of the United States, even 

though section 638 did not include that 

precise phrase. 

The industry group requested that the 

regulatory text include an unequivocal 

statement that payment of costs covered 

under the Program Account is backed by 

the full faith and credit of the United 

States. It argued that such a statement in 

the regulation was necessary for 

financing purposes. 

The Department has modified section 

950.11(c) to state that ‘‘Covered costs 

paid through the Program Account are 

backed by the full faith and credit of the 

United States.’’ The Department notes 

that it is making this modification to 

facilitate financing of advanced nuclear 

facilities, even though such an express 

statement is not actually required. 

Also in section 950.11(c), the 

Department specifically addressed how 

the Standby Support Contracts will be 

funded. Among other things, that 

section states ‘‘[u]nder no circumstances 

will the amount of the coverage for 

payments of principal and (sic) interest 

under a Standby Support Contract 

exceed 80 percent of the total of the 

financing guaranteed under that 

Contract.’’

The industry trade association 

objected to the provision prohibiting 

payments to exceed 80 percent of the 

total financing. It expressed its view that 

this provision reflects the Office of 

Management and Budget (OMB) 

guidance in OMB Circular A–129, but 

that this guidance is merely 

‘‘discretionary.’’ The commenter further 

stated that the Department’s inclusion of 

this provision reflected ‘‘chronic 

confusion in the May 15 Rule over 

whether the Standby Support Program 

Account is delay insurance or a loan 

guarantee program.’’

The commenter is correct that this 

provision reflects the policy set forth in 

OMB Circular A–129, which provides 

guidance for all government programs 

covered by FCRA. The same policy that 

informed the 80 percent threshold in 

OMB Circular A–129 also informs the 

Department’s determination and 

judgment that this threshold is 

appropriate for the Standby Support 

Program. Moreover, as noted in the 

preamble to the interim final rule, the 

Department views the coverage 

provided through the Program Account 

to be a loan guarantee for purposes of 

FCRA and thus backed by the full faith 

and credit of the United States; and 

therefore governed by the terms of 

Circular A–129. Insofar as the 

Department uses this analysis to explain 

why it is appropriate and permissible to 

extend the full faith and credit of the 

United States even though those words 

are not used in section 638, the 

Department believes it should be 

consistent with other policies applicable 

to implementing loan guarantee 

authorities, where appropriate. 

950.11(d) Reconciliation 

In section 950.11(d), the Department 

specified that ‘‘Each Conditional 

Agreement shall include a provision 

that the sponsor shall provide no later 

than ninety (90) days prior to execution 

of a Standby Support Contract sufficient 

information for the Program 

Administrator to recalculate the loan 

costs and the incremental costs 

associated with the advanced nuclear 

facility, taking into account whether the 

sponsor’s advanced nuclear facility is 

one of the initial two reactors or the 

subsequent four reactors.’’

The industry trade association 

objected to this provision, claiming that 

the concept of re-calculating the loan 

cost was inappropriate. It requested that 

the Department and OMB establish a 

procedure through which the loan cost 

and insurance premium are fixed at the 

time of the Conditional Agreement 

consistent with FCRA. The commenter 

further recommended that any increase 

in loan cost come from permanent 

indefinite budget authority. 

The Department has determined that 

cost reassessment is consistent with 

other programs that employ a two-step 

process for approval. The Department 

further notes that the government would 

be remiss in its duty to taxpayers if it 

did not reassess the costs, given that 

several years typically will elapse 

between signing a Conditional 

Agreement and a Standby Support 

Contract. Failure to make such a 

reassessment would not be consistent 

with FCRA and sound financial 

management practices. The Department 

further notes that the permanent 

indefinite budget authority is available 

only for reestimates of the loan cost 

covered by an existing Standby Support 

Contract, not for changes in cost prior to 

the execution of the Standby Support 

Contract. Once the Standby Support 

Contract has been executed, any reestimation costs would be covered from 

the Treasury’s permanent indefinite 

budget authority consistent with FCRA. 

Limitations 

In section 950.11(e) of the interim 

final rule, the Department specified 

situations in which the Conditional 

Agreement should no longer remain in 

effect. Specifically, if the amount of 

appropriated funds is not sufficient to 

fund the statutorily required costs, the 

sponsor was given the option to either 

(1) not execute a Standby Support 

Contract or (2) provide additional 

contributions to fund the total amount 

of coverage in either the Program 

Account, Grant Account, or both 

accounts as specified in the Conditional 

Agreement. The Department believed 

that these provisions take into account 

the change in circumstances that may 

occur between the time of the 

Conditional Agreement and the Standby 

Support Contract. The provision also 

provided a sponsor the option either to 

enter into a contract or forego that 

opportunity. 

The industry trade association 

commented that in addition to the two 

options set forth in section 950.11(e), 

the sponsor should be given two more 

options: First, to hold open its right to 

execute a Standby Support Contract 

until such time as appropriated funds 

become available, either through the 

normal appropriations process or 

through reprogramming. Second, the 

trade association requested that a 


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sponsor should be entitled to elect a 

reduced level of coverage. 

The Department has determined that 

the first option would reduce flexibility 

in executing a Standby Support Contract 

and administering the Standby Support 

Program. The Department believes that 

it would be counter to the goal of 

facilitating full power operation of 

advanced nuclear facilities to permit a 

sponsor to hold a contract while waiting 

for funds that Congress may never 

appropriate, particularly since a 

different sponsor may be willing to pay 

the cost and initiate construction of an 

advanced nuclear facility. 

The Department has determined that 

the second option is consistent with the 

goal of facilitating full power operation, 

and that this goal can be achieved at a 

lower cost to the government. The 

Department has modified section 

950.11(e)(2) to provide the sponsor with 

the option to elect a reduced level of 

coverage based on the amounts 

deposited in the Program Account and 

Grant Account. However, to protect the 

Department from any potential claims 

by a sponsor for the maximum amount 

of coverage available under section 638, 

the Department has also added language 

to this section to make it clear that the 

Department is not responsible or liable 

for any claims by the sponsor for 

additional coverage. 

950.11(f) Termination of Conditional 

Agreement 

In section 950.11(f) of the interim 

final rule, the Department set forth five 

situations in which a Conditional 

Agreement remains in effect until a 

certain event. For instance, 950.11(f)(4) 

stated that event was when ‘‘The 

Program Administrator has entered into 

Standby Support Contracts that cover 

three different reactor designs, and the 

Conditional Agreement is for an 

advanced nuclear facility of a different 

reactor design than those covered under 

existing Standby Support Contracts; and 

950.11(f)(5) stated ‘‘The Program 

Administrator has entered into six 

Standby Support Contracts.’’

The industry trade association stated 

that it generally had no objection to 

section 950.11(f), but that the situations 

under clauses (4) and (5) should 

accommodate the circumstances where 

an existing Standby Support Contract is 

terminated or cancelled. The commenter 

requested that these two provisions be 

modified with the phrase ‘‘such Standby 

Support Contracts have expired in 

accordance with the stated term thereof 

pursuant to 10 CFR 950.13(e).’’

The Department has concluded that it 

would be inappropriate to add this 

language to the regulations as suggested 

by the commenters. Nevertheless, as 

discussed further in relation to section 

950.12(d) there are limited 

circumstances under which the 

Department would consider reexecuting a Standby Support Contract; 

in such circumstances, not more than 

two Standby Support Contracts may be 

re-executed by the Program 

Administrator in situations involving 

abandonment and cancellation. In 

addition, in those limited circumstances 

and conditions, a sponsor or sponsors 

would be in a position to initiate the 

process under these regulations of 

executing a Conditional Agreement and 

becoming eligible for a Standby Support 

Contract. 

Sections 950.12, 950.13 and 950.14—

Standby Support Contract 

In the interim final rule, the 

Department noted that it is sufficient to 

include the critical contract terms in a 

regulation rather than provide a sample 

contract. The Department stated that a 

sample contract was not necessary, 

given that a sponsor could appropriately 

evaluate the potential contract’s effect 

on risk allocation and financing during 

the pre-contract discussions set forth in 

sections 950.10 and 950.11. 

The industry trade association agreed 

with the Department that it is not 

necessary to provide a sample contract 

in the regulation; nevertheless, it 

requested that the Department 

expeditiously develop a standardized 

contract with formal stakeholder input. 

One utility favored including a contract 

in the regulation. 

The Department has determined that 

it is not necessary to include a Standby 

Support Contract in the regulation for 

the reasons set forth in the interim final 

rule. After completing the rulemaking, 

the Department intends to develop a 

Standby Support Contract form 

consistent with 10 CFR part 950 and 

will consider whether to provide for 

public input. 

Section 950.12—Standby Support 

Contract Conditions 

Conditions Precedent 

In section 950.12(a) of the interim 

final rule, the Department set forth nine 

conditions precedent that a sponsor 

must fulfill to be eligible to enter into 

a Standby Support Contract. Among 

these conditions that a sponsor must 

fulfill are ‘‘[d]ocumented coverage of 

required insurance for the project’’

(950.12(a)(5)), and ‘‘a detailed systemslevel construction schedule that 

includes a schedule identifying 

projected dates of construction, testing 

and full power operation of the 

advanced nuclear facility and which the 

Department will evaluate and approve.’’

(950.12(a)(8)). 

The industry trade association agreed 

that seven of the nine conditions 

precedent were appropriate. It 

nevertheless requested that the 

Department delete condition (5) related 

to documentation of required insurance 

coverage, claiming that such 

documentation is not relevant to 

Standby Support for covered delays. 

Similarly, the trade association 

requested that the Department delete 

condition (8) related to the systemslevel construction schedule, claiming 

that this information is unnecessary to 

the Standby Support Program. It 

claimed that the Department’s request 

for this information ‘‘represents an 

unnecessary interjection of the 

Department into the construction 

process’’ given that the construction 

schedule will be determined between 

sponsors, their contractors, and their 

lenders. The industry further requested 

that the Department should not evaluate 

or approve the construction schedule. 

The Department has determined that 

to protect taxpayer funds and to ensure 

an appropriate level of regulatory 

oversight for a program with such 

potentially large payouts, it is 

appropriate to obtain the insurance 

information set forth in condition (5) 

and the construction schedule set forth 

in condition (8). The Department notes 

that both types of information are 

readily available to a sponsor, given that 

the sponsor must have this information 

to obtain financing from a lender and a 

combined license from the Commission. 

With respect to the construction 

schedule, this information has direct 

relevance to the timing of possible 

claims, e.g., projected timing of fullpower operation. Consequently, this 

information is necessary for the effective 

administration of the Standby Support 

Contract even if, and particularly 

because, it is subject to change. 

Nevertheless, the Department agrees 

that it is not necessary for the 

Department to approve the construction 

schedule and thus has deleted this term 

in section 950.12(a). Further, the 

Department has revised condition (5) to 

state ‘‘[d]ocumented coverage of 

insurance required for the project by the 

Commission and lenders.’’

Funding and Limitations 

In section 950.12(b) of the interim 

final rule, the Department specified that 

no later than thirty days prior to 

execution of the Standby Support 

Contract, funds in an amount sufficient 

to fully cover the loan costs or 

incremental costs as specified in the 


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Conditional Agreement shall be 

deposited in the Program Account or the 

Grant Account. The purpose of this 

provision is to ensure that the 

administration and funding of the 

Standby Support Program occurs in an 

efficient and orderly manner. 

The industry trade association 

objected to the requirement that the 

funds need to be deposited 30 days in 

advance of the contract’s execution. It 

requested that a sponsor be able to meet 

this condition simultaneous with 

closing on the financing. 

The Department is required by section 

638 to deposit the necessary funds in 

the Program Account or Grant Account 

before a contract is executed. While the 

Department appreciates the fact that a 

sponsor’s financing arrangements may 

be complicated and a simultaneous 

closing would be desirable, the 

Department requires a certain amount of 

time prior to contract execution to 

ensure compliance with the 

requirements of the Act and 

coordination of the Department’s 

administrative functions. Accordingly, 

the 30 day time period specified in the 

interim final rule is appropriate and 

necessary. 

Cancellation by Abandonment 

In its comments, the trade industry 

recommended the Department allow for 

Standby Support Contracts to ‘‘roll 

over’’ as an added incentive to advanced 

nuclear facility construction. In section 

950.12 of the final rule, the Department 

has added a provision to address the 

situation where a sponsor may abandon 

a project and the Department may 

determine it is appropriate and 

consistent with the goal of the Standby 

Support Program to re-execute a 

contract. In accordance with this goal, 

any new contract under this provision 

would be deemed to replace a 

previously executed contract and 

therefore not exceed the mandate to 

facilitate the construction and operation 

of six new advanced nuclear reactor 

facilities. 

Specifically, section 950.12(d) 

provides for the re-execution of a 

Standby Support Contract under certain 

conditions of abandonment pursuant to 

section 950.13(f)(1). The Department 

anticipates that situations involving 

abandonment are likely to be rare or 

non-existent given that a sponsor will 

have expended millions of dollars and 

cleared most of the regulatory and 

litigation hurdles once it has executed a 

Standby Support Contract and 

commenced construction. The 

Department has included language 

indicating that cancellation of a Standby 

Support Contract as a result of a 

sponsor’s abandonment permits the 

Program Administrator to re-execute not 

more than two new Standby Support 

Contracts, provided that the new 

contract is executed in accordance with 

the terms and conditions of part 950 and 

such contracts are deemed to be one of 

the subsequent four reactors under part 

950. That is, any new contract under 

this provision would be deemed to 

replace one of the subsequent four 

reactors, and thus would be eligible for 

coverage in the amounts provided for 

such reactors. 

Section 950.13—Standby Support 

Contract: General Provisions 

In section 950.13 of the interim final 

rule, the Department specified that each 

Standby Support Contract include 

provisions addressing basic contract 

terms, including the contract’s purpose, 

covered facility, sponsor contribution, 

maximum aggregate compensation, the 

term, cancellation, termination by a 

sponsor, assignment, claims 

administration, and dispute resolution. 

The industry group stated that it had 

no objection to most of these provisions, 

but nevertheless provided comment on 

four of these provisions: the 

cancellation provisions in (f), 

termination in (g), assignment in (h), 

and re-estimation in (k). 

Cancellation 

In section 950.13(f)(2), the 

Department set forth the bases upon 

which a Standby Support contract can 

be cancelled by stating that if a sponsor 

does not require continuing coverage 

under the contract that the sponsor may 

cancel the contract by giving written 

notice to the Program Administrator. 

Industry commenters stated that they 

had no objection to section 950.13(f)(2); 

however, they commented that the 

Standby Support coverage should 

explicitly provide that in the event of 

cancellation by the Department, the 

sponsor, or as agreed by the parties, the 

Standby Support coverage should ‘‘roll 

over’’ both in terms of (1) making 

available the full 100 percent coverage 

to the first of the second four reactors in 

the event the contract that was 

cancelled was one of the first two 

contracts and (ii) making available a 

Standby Support Contract to the next 

project sponsor with a Conditional 

Agreement in the queue. (The 

commenter was of the mistaken belief 

that a potential sponsor that entered 

into a Conditional Agreement would 

have a higher priority in a ‘‘queue;’’ in 

fact, the Department is not creating a 

‘‘queue’’ under the regulations.) 

The Department has determined that 

Section 638(d) should be interpreted as 

not permitting a process that would 

allow a sponsor to cancel its contracts 

thereby allowing the contracts to ‘‘roll 

over’’ to a sponsor with an existing 

contract. This process could potentially 

create a total of six ‘‘premium’’ contracts 

(i.e., contracts with coverage up to $500 

million) going beyond the Act’s cost and 

coverage limitation for the initial two 

reactors and subsequent four reactors. In 

addition, the purpose of risk insurance 

is to provide an incentive for sponsors 

to construct and operate new advanced 

nuclear power facilities. Once the 

Department and a sponsor have entered 

into a Standby Support Contract, the 

Department believes that it has provided 

the appropriate level of incentive and 

the proper amount of coverage. 

Accordingly, no additional coverage is 

needed, because a sponsor had decided 

to construct a new advanced nuclear 

facility. 

However, the Department has 

determined that there could be 

situations where a sponsor is unwilling 

or unable to continue with the 

construction of a new nuclear plant and 

the Department may have to terminate 

the contract. In those instances, it may 

be prudent for the Department to reexecute a contract and it would be 

consistent with section 638 and its 

objectives for the Department to do so. 

Section 950.13(f) is modified to provide 

for the situation in which the Program 

Administrator may cancel a contract for 

abandonment of the project by the 

sponsor, where such abandonment is 

not caused by a covered event or force 

majeure. 

Termination by Sponsor 

Under section 950.13(g), if a sponsor 

elects to terminate a Standby Support 

Contract, the sponsor or any related 

party is prohibited from entering into 

another Standby Support Contract. The 

Department stated that such a provision 

is necessary to prohibit potential 

sponsors from ‘‘gaming’’ the Standby 

Support Program. Specifically, a 

sponsor could be on the verge of full 

power operation of an advanced nuclear 

facility, without the need to make any 

claims on the Standby Support Program. 

Absent this provision, the sponsor could 

terminate its initial Standby Support 

Contract and then enter into a new 

contract for a different facility. 

The industry trade association 

objected to this provision, claiming that 

it is overbroad and may, among other 

things, penalize sponsors who own 

partial interests in different projects. 

The industry requested that the 

Department either delete 950.13(g) or 

limit the prohibition to situations in 

which a ‘‘sponsor elects to terminate its 


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Standby Support Contract unless the 

sponsor has suspended, cancelled or 

terminated construction of the reactor 

covered by such contract.’’

The Department has determined that 

it would be appropriate to modify 

section 950.13(g) to include the 

commenters requested limitation as 

modified; i.e., ‘‘sponsor elects to 

terminate its Standby Support Contract 

unless the sponsor has cancelled or 

terminated construction of the reactor 

covered by such contract.’’ The 

Department did not include a provision 

where the sponsor may merely 

‘‘suspend’’ construction as that situation 

does not avoid possible ‘‘gaming’’ of the 

system by a sponsor. By adding the 

additional language as stated, the 

Department believes that the regulations 

provide the appropriate balance 

between preventing a sponsor from 

‘‘gaming’’ the Program, while allowing a 

sponsor to cancel or terminate a no 

longer viable Standby Support Contract. 

The Department notes that the 

Department and taxpayer funds are 

sufficiently protected, in a situation in 

which the entire reactor project is 

terminated. 

Assignment 

In section 950.13(h) of the interim 

final rule, the Department required each 

Standby Support Contract to include a 

provision specifying the assignment of a 

sponsor’s rights and obligations under 

the Standby Support Contract. 

Specifically, this provision stated that 

the sponsor is permitted to assign the 

rights under the contract with the 

Secretary’s prior approval. The sponsor 

must obtain this approval, in writing, 

prior to assigning such rights. 

The industry trade association 

commented that the assignment 

provision should address two types of 

assignment: (1) Assignment of 

payments, and (2) assignment of the 

Standby Support Contract. As for the 

assignment of payments, it 

recommended that each Standby 

Support Contract allow the assignment 

of covered costs to the lenders of the 

project with notice, but without prior 

Department consent. The commenter 

claimed that assignment of payment is 

a necessary condition of debt financing. 

As for the assignment of the contract 

itself, including the rights and 

obligations under the contract, the 

industry trade association commented 

that the Standby Support Contract 

should be assignable without the 

requirement of prior Department 

consent to any license transferee 

approved by the Commission. 

The Department has determined that 

the assignment of payments, without the 

Department’s prior consent, is 

appropriate and consistent with 

standard financing arrangements for 

construction projects. The final rule is 

modified to permit an assignment of 

payments with prior notice to the 

Department to facilitate contract 

administration. However, the 

Department has determined that to 

ensure proper regulatory oversight, it is 

necessary for the Department to retain 

the provision requiring prior approval of 

any rights and obligations under the 

Standby Support Contract. The 

Department anticipates that it will 

consent to any license transferee 

approved by the Commission, but is not 

prepared at this point to abdicate to the 

Commission this responsibility under a 

program administered by the 

Department. 

Reestimation 

In section 950.13(k) of the interim 

final rule, the Department required each 

Standby Support Contract to include a 

provision specifying that consistent 

with FCRA, the sponsor provide all 

needed documentation to allow the 

Department to annually re-estimate the 

loan cost (as defined by FCRA) needed 

in the financing account under 2 U.S.C. 

661a(7) funded by the Program Account. 

The industry trade association did not 

object to the Department re-estimating 

the loan cost of the Standby Support 

Contract on an annual basis consistent 

with FCRA once the contract has been 

executed. However, the commenter 

requested that this provision should 

expressly state that any increase in loan 

cost resulting from the re-estimation 

shall be covered from the permanent 

indefinite budget authority that is 

available for this purpose. Under FCRA, 

any increase in loan costs resulting from 

the re-estimation would be covered by 

the Treasury general fund through 

permanent indefinite budget authority; 

similarly, any decrease in loan costs 

resulting from re-estimation would be 

paid to the Treasury general fund. To 

address any uncertainty, however, this 

section is modified to state that any 

changes in loan costs resulting from the 

re-estimation are neither the 

responsibility of, nor an entitlement to 

the sponsor. 

Section 950.14—Covered Events, 

Exclusions, Covered Delay, and Covered 

Costs 

In section 950.14 of the interim final 

rule, the Department set forth provisions 

related to situations in which the 

Secretary will pay ‘‘covered costs.’’

Among the situations expressly set forth 

in section 638(c)(1) are: (A) ‘‘the failure 

of the Commission to comply with 

schedules for review and approval of 

inspections, tests, analyses, and 

acceptance criteria [ITAAC] established 

under the combined license or the 

conduct of preoperational hearings by 

the Commission. * * *’’ or (B) 

‘‘litigation that delays the 

commencement of full-power 

operations. * * *’’

Covered Events 

In section 950.14(a) of the interim 

final rule, the Department explained 

that it is necessary to add the term 

‘‘covered event’’ to reflect that not all 

events appearing to fall under section 

638(c)(1) will warrant compensation. 

Compensation is dependent on whether 

a covered event in fact leads to a delay 

in full power operation. For instance, 

there may be a delay in the Commission 

staff’s meeting the ITAAC review 

schedule for an individual ITAAC, but 

the delay does not actually cause a 

delay in full power operation, because 

other factors may have caused the delay. 

In addition, there may be a delay in 

meeting the ITAAC review schedule but 

the ITAAC-related delay may have no 

actual effect on a facility obtaining full 

power operation. The same may be true 

for delays attributable to a preoperational hearing or litigation. A 

discussion relating to the preoperational hearing and litigation are 

addressed in the definition section of 

this preamble. 

ITAAC Delays. 

In section 950.14(a)(1) of the interim 

final rule, the Department required each 

Standby Support Contract to include a 

provision setting forth a two-tier level of 

review for assessing whether an ITAACrelated delay should be considered a 

covered event. 

In its comments, the industry trade 

association agreed with the two-tier 

approach for assessing whether an 

ITAAC-related delay should be 

considered a covered event. It further 

commented that the final rule should 

outline a process for the adjustment of 

the ITAAC review schedule, to which 

both parties must agree. The commenter 

then stated the ITAAC review schedule 

should not be changed without express 

approval by both the sponsor and the 

Department. In addition, it stated that 

the last agreed-upon ITAAC review 

schedule would remain in place and be 

used to determine covered events, until 

an updated schedule was established. 

The Department agrees with the 

comment about the ITAAC review 

schedules. An additional section has 

been added to section 950.14 (950.14(e)) 

to address the process for adjustments to 

the ITAAC schedule. 


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Exclusions—Burden of Proof 

Section 638(c)(2) expressly precludes 

the Secretary from paying costs 

resulting from three general causes: ‘‘(A) 

the failure of the sponsor to take any 

action required by law or regulation; (B) 

events within the control of the sponsor; 

or (C) normal business risks.’’

In section 950.14(b)(2) of the interim 

final rule, the Department set forth a 

non-exhaustive set of example 

exclusions, including situations 

involving the sponsor’s failure to take 

action required by law or regulation, 

situations within the control of a 

sponsor, and normal business risks. 

In addition to comments about 

specific exclusions listed in 950.14(b), 

the industry trade association provided 

general comments about causation and 

burden of proof. Specifically, the trade 

association stated that consistent with 

insurance law, it should be the 

responsibility of the Department to 

establish whether an exclusion is 

applicable to a given situation. It further 

recommended a specific regulatory 

provision to address causation. The 

commenter stated that clear standards 

and proper allocation will simplify 

contract administration, facilitate claims 

determinations, and minimize disputes. 

The Department generally agrees with 

the comment recommending that the 

regulation more precisely address 

causation and burden of proof. With 

respect to establishing an exclusion, the 

industry trade association is correct that 

an insurer is typically responsible for 

establishing an exclusion. (See 7 Couch 

on Insurance 101:63 (3rd ed. 2005) 

which states ‘‘[i]n keeping with the 

general rules of proof, any causation 

required to bring a loss within positive 

coverage terms of the [insurance] policy 

generally must be shown by the insured 

or person seeking coverage, while the 

insurer bears the burden of showing any 

causation necessary to bring the case 

within an exclusion for coverage.’’) In 

recognition of this general standard 

applicable to insurance contracts, the 

Department is modifying section 950.20 

as a matter of policy to provide that ‘‘[a] 

sponsor is required to establish that 

there is a covered event, a covered delay 

and a covered cost; the Department is 

required to establish an exclusion in 

accordance with 950.14(b).’’

Further, sections 950.21, 950.22 and 

950.24 are also modified to clarify the 

Department’s role in establishing an 

exclusion. The modifications in these 

sections clarify that the Department’s 

role in establishing an exclusion is 

conditioned on the sponsor’s 

cooperation in providing information to 

the Department. To insure the 

Department’s ability to establish an 

exclusion is not unreasonably hampered 

by the sponsor, the Department is 

modifying section 950.22 to require the 

sponsor to provide to the Department 

information in its possession that is 

relevant to the Department’s claim of an 

exclusion. For example, in the case 

where the Department claims a delay is 

an exclusion because it was ‘‘within the 

sponsor’s control,’’ the Department may 

require the sponsor—the party likely in 

possession of the best available 

information—to provide relevant 

information to the Department in 

support of its claim for exclusion. 

Failure of a sponsor to provide the 

necessary and relevant information to 

the Department would be grounds for 

denial of the sponsor’s claim for 

coverage. In addition, the Department is 

modifying section 950.21(b) to add a 

clause requiring the sponsor to certify 

their claim for covered costs, as well as 

certify the absence of an exclusion. 

Exclusions 

In section 950.14(b) of the interim 

final rule, the Department sets forth the 

statutory exclusions and provides 

examples of excluded events as 

requested by commenters in response to 

the NOI and public workshop. The 

Department has modified this section to 

clarify that the Standby Support 

Contracts shall include the statutory 

exclusions and, within those exclusions, 

provide example types of events that 

may constitute an exclusion. The 

industry trade association had no 

objection to most of the examples listed, 

but objected to certain provisions, 

including clauses (1)(ii), 1(iii) and 

(2)(iii) that state, respectively: 

(1)’’The failure of the sponsor to take 

any action required by law, regulation, 

or ordinance, but not limited to * * * 

(ii) The sponsor’s re-performance of any 

inspections, tests, analyses or redemonstration that acceptance criteria 

have been met due to Commission nonacceptance of the sponsor’s submitted 

results of inspections, tests, analyses, 

and demonstration of acceptance 

criteria; [or] 

(iii) Delays attributable to the 

sponsor’s actions to redress any 

deficiencies in inspections, tests, 

analyses or acceptance criteria as a 

result of a Commission disapproval of 

fuel loading.’’

The commenter stated that leaving 

these items as examples of excluded 

events could result in excluding 

coverage where the sponsor’s actions 

may result from the Commission’s 

failure to comply with the ITAAC 

schedule or other fault of the 

Commission, such as an inspector’s non 

acceptance of ITAAC or an unwarranted 

Commission determination of 

deficiency. The commenter requested 

that the Department remove these items 

from the regulation, because they 

should be left to the claims 

administration process and not be a 

categorical exclusion. 

The Department has determined that 

most of the examples provided of 

excluded types of events are appropriate 

as stated in the rule and that providing 

such examples is not an improper 

incursion into the claims administration 

process. The Department agrees with the 

comment that the claims administration 

process is the appropriate venue to 

assess the specific facts of a sponsor’s 

claim of a covered event and the Claims 

Administrator’s determination of an 

exclusion. The examples provided in 

the regulation are meant to provide 

guidance for the parties in that process; 

the judgment of the Claims 

Administrator on a particular claim 

necessarily will be based on the facts 

that underlie the claim. 

The examples provided in subsection 

950.14(b)(1) and (2) are consistent with 

the language and intent of the Act. The 

intent of section 638 is to provide 

coverage to a sponsor for specified 

events in the untested regulatory 

process that are not the result of the 

sponsor’s failure to comply with laws 

and regulations or are beyond the 

sponsor’s control. If a sponsor has not 

met its ITAAC, as determined by the 

Commission, and needs additional time 

to satisfy the Commission’s 

expectations, then that delay is not 

covered under section 683 and no 

further inquiry is needed into whether 

or not the Commission’s finding was 

‘‘warranted.’’ Although not a stated 

example in the rule, the same reasoning 

would apply to any delay associated 

with a sponsor’s need to redress some 

noncompliance with a law or regulation 

as determined by a court. Accordingly, 

the Department will not modify the rule 

to delete the examples provided of the 

type of events that may be exclusions. 

The industry trade association also 

objected to the type of event in clause 

(3)(iv) which provides an exclusion for 

‘‘[n]ormal business risks, including but 

not limited to * * * (iv) Acts or 

decisions, including the failure to act or 

decide, of any person, group, 

organization, or government body 

(excluding those acts or decisions or 

failure to act or decide by the 

Commission that are covered events).’’

The trade association requested that this 

clause be deleted, claiming that it was 

overly broad. 

This clause is patterned after 

provisions in standard insurance 


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contracts covering the construction of 

large facilities. The Department 

continues to believe that it is necessary 

to continue its reference to acts or 

decisions by other government bodies 

like State and local governments, since 

such actions would be normal business 

risks faced by an entity constructing a 

large facility and go beyond the 

intended coverage under section 638 for 

Commission-related delays, even though 

they may be within coverage for 

litigation-related delays. To reiterate, 

however, this event is identified as an 

example of an event that would 

constitute a normal business risk to 

provide guidance to the parties. The 

ultimate determination of whether an 

event constitutes an exclusion in the 

context of a Standby Support Contract 

will be addressed through the claims 

administration process. Nevertheless, 

upon further review, the Department 

has determined that by including 

reference to ‘‘any person, group or 

organization,’’ the clause was overly 

broad. Accordingly, this provision is 

modified to delete that reference. 

The industry trade association also 

objected to clause (3)(viii) which 

includes an exclusion for ‘‘unrealistic 

and overly ambitious schedules set by 

the sponsor.’’ It claimed that this 

exclusion was unnecessary and 

unwarranted, since it reasoned that this 

phrase is not referring to ITAAC 

schedules since those are approved by 

the Commission or Department. Further, 

it stated that any construction schedule 

would be determined by the sponsor 

and its contractors or lenders. The 

commenter concluded that whether a 

schedule is unrealistic or overly 

ambitious is not relevant to whether a 

covered event occurs. 

The Department has determined that 

the exclusion for unrealistic or overly 

ambitious schedules is not appropriate. 

Any covered events attributable to 

ITAAC schedules are already covered 

under section 950.14(a)(1) and (2). 

Further, section 950.14(b)(2)(i) more 

appropriately addresses project 

planning and construction problems 

that are events within the control of the 

sponsor. In reconsidering the exclusion 

in 950.14(b)(3)(viii), the Department has 

determined that the phrase ‘‘unrealistic 

and overly ambitious schedules set by 

the sponsor’’ is ambiguous and would 

be difficult to apply. Accordingly, the 

Department has deleted this provision. 

Lastly, the industry trade association 

took exception to the Department’s 

covered event exclusion in (b)(2)(v) for 

litigation-related delays in those 

situations where a sponsor decides not 

to continue construction or attain full 

power operation unless such action is 

required by a court order. The industry 

trade association noted that in many 

cases litigation may cause numerous 

and substantial delays without a court 

order mandating the work stoppage. The 

industry trade association argues that 

the Department improperly categorically 

excluded such delays, and should allow 

the claims process to be used to 

determine whether or not the delay is 

covered. 

The Department agrees that the 

exclusion language in the interim rule 

may be misinterpreted, and modified 

the rule to eliminate this type of 

exclusion and avoid unnecessary 

confusion. Nevertheless, the Department 

stresses that elimination of this 

provision does not relieve the sponsor 

of its substantial burden to prove that 

any litigation-related delay is a covered 

delay, and that the Department will look 

critically at a sponsor’s claim that 

litigation without an order to stop 

activities was the cause of delay. The 

Department acknowledges that, even in 

the absence of a court order directly 

prohibiting construction or operational 

activities, pending litigation or court 

decisions may cause a sponsor to delay 

or suspend its activities thus delaying 

full power operation. However, 

depending on the nature of the litigation 

or court order, the decision whether to 

continue activities at risk or halt 

activities pending the outcome of the 

litigation is often a business decision 

largely within the sponsor’s control. The 

Department does not believe it is 

appropriate to shift the burden or risk 

entailed in that decision to the standby 

support insurance program. Otherwise, 

the Department would create the 

perverse incentive for a sponsor to halt 

or delay activities unnecessarily because 

the costs of that delay would be covered 

by the insurance contract. On the other 

hand, the Department recognizes that in 

some cases, e.g., where the sponsor 

would breach a fiduciary duty if 

construction or operation activities are 

continued or there is an adverse 

decision against the Commission, a halt 

in the sponsor’s construction or 

operations may be necessary and 

beyond the sponsor’s control. As 

suggested by the commenters, the 

Department believes the appropriate 

forum to determine whether or not a 

litigation-related delay is a covered 

delay is the claims administration 

process. 

Due Diligence 

Section 638(e) specifies that any 

Standby Support Contract requires ‘‘the 

sponsor to use due diligence to shorten, 

and to end, the delay covered by the 

contract.’’ Section 950.14(c)(2) requires 

each Standby Support Contract to 

include a provision to require the 

sponsor to use due diligence to mitigate, 

shorten, and end covered delay under 

the contract and to demonstrate that to 

the Program Administrator. Similarly, 

section 950.23(b)(2)(iii) requires a 

sponsor to use due diligence to mitigate, 

shorten and end the covered delay and 

the associated costs. 

The industry trade association 

commented that the due diligence 

requirement is consistent with a party’s 

obligation under general principles of 

contract law to mitigate damages. 

Nevertheless, the commenter objected 

that a sponsor must demonstrate due 

diligence to the Program Administrator 

in demonstrating a covered delay. 

Rather, the commenter requested that 

due diligence only be considered when 

determining whether covered costs 

should be limited. This led the 

commenter to request deletion of the 

phrase ‘‘demonstrated this to the 

Program Administrator.’’

Upon further review, the Department 

has modified this section to delete the 

phrase ‘‘demonstrated this to the 

Program Administrator.’’ Removal of 

this phrase does not relieve the sponsor 

of its obligation under section 638 and 

part 950 to use due diligence to 

mitigate, shorten and end a covered 

delay. This requirement remains in the 

rule, and the sponsor’s actions in that 

regard will be reviewed by the Claims 

Administrator in reaching a claim 

determination on covered costs 

pursuant to section 950.24. This 

allocation of responsibility is consistent 

with the plain language of section 638 

that ‘‘the sponsor [is] to use due 

diligence to shorten, and to end, the 

delay covered by the contract.’’

Covered Costs 

Section 638(d) provides for the 

coverage of costs that result from a delay 

during construction and in gaining 

approval for full power operation, 

specifically (A) principal or interest and 

(B) incremental cost of purchasing 

power to meet contractual agreements. 

In the interim final rule, the Department 

determined that it is appropriate to limit 

the concept of covered costs to those 

expressly set forth in paragraph (d)(5). 

Accordingly, under the Program 

Account, the Department will 

indemnify sponsors for the cost of 

principal or interest on the debt 

obligation for the period or duration of 

covered delay, less 180 days for one of 

the subsequent four reactors. 

The public advocacy group agreed 

with the Department’s determination to 

limit covered costs to the express terms 

of section 638. In contrast, industry 


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46318 Federal Register / Vol. 71, No. 155 / Friday, August 11, 2006 / Rules and Regulations 

commenters requested that the 

Department expand coverage to 

operating and maintenance costs and 

other costs associated with delay in 

commercial operation, including costs 

of demobilization and remobilization, 

idle time costs incurred in respect of 

equipment and labor, increased general 

and administrative costs, and escalation 

costs for the completion of construction. 

The industry group even commented 

that additional costs associated with 

redesign or alterations should be 

covered, to the extent that litigation or 

changes in regulation resulted in a 

redesign. 

The Department has determined that, 

consistent with its broad authority to 

interpret the terms ‘‘covered costs’’ and 

‘‘including’’ in section 638(d)(5), it will 

limit these terms to the items 

specifically set forth in the statute. As 

the Department concluded in the 

interim final rule, it would be 

inappropriate to expand these terms, 

particularly given the statute’s plain 

language and the fact that providing 

expanded coverage to a myriad of other 

costs might serve as a disincentive to a 

sponsor to complete a project in a 

timely fashion. The commenters 

provided no new information or 

justification to support a potentially 

dramatic expansion of coverage, which 

would have the effect of making the 

Standby Support Program significantly 

more expensive, without increasing the 

likelihood of meeting the statutory 

objectives of section 638, i.e., the 

expeditious licensing, construction and 

full power operation of new nuclear 

facilities. 

Subpart C—Claims Administration 

Process 

Subpart C of the regulation sets forth 

the procedures and conditions to be 

followed by a sponsor for the 

submission of claims and the payment 

of covered costs under a Standby 

Support Contract. 

The industry trade association 

generally supported the requirement 

that a sponsor has the burden of making 

a good-faith showing of a covered event, 

covered delay and covered cost. Further, 

it generally supported the two-step 

process for claims administration. The 

trade association made several 

suggestions related to the wording of 

Subpart C, including replacing the term 

‘‘appropriate’’ with cross-references to 

other sections of the rule, suggesting 

timing changes such as that the Claims 

Administrator must ‘‘make a 

determination on the covered event 

within 30 days,’’ and several other 

recommendations that do not 

substantively enhance the rule and may 

serve to limit the Claims 

Administrator’s ability to effectively 

administer the claims in a timely 

fashion. 

The Department has determined that 

it is appropriate to retain most of the 

wording in subpart C of the interim final 

rule, which is based in large part on the 

Department of Treasury’s Terrorism Risk 

Insurance Program at 31 CFR Part 50 (69 

FR 39296, June 29, 2004). The 

Department notes that several of the 

requested changes would result in 

increased ambiguity or would not 

provide greater clarity, and thus would 

not serve the Department’s goal of an 

efficient and effective claims 

administration process. For instance, 

the commenter requested deleting the 

phrase ‘‘including an assessment of the 

sponsor’s due diligence in mitigating or 

ending covered costs,’’ in section 

950.24(a)(2) as potentially duplicative or 

confusing even though this requirement 

is expressly set forth in section 638. 

Accordingly, the Department has 

determined that, aside from comments 

addressed in the next section, it would 

be inappropriate to adopt the industry 

group’s other recommendations related 

to the claims process. 

Burden of Proof on Claims 

As discussed in connection with 

section 950.20, the Department agrees 

with the comment from the industry 

trade association that a sponsor bears 

the burden of proof on a covered event, 

a covered delay and a covered cost, and 

the Department bears the burden of 

proof of an exclusion from a covered 

event and whether a purported covered 

delay is the result of, or was contributed 

to, by the exclusion. The rule is 

modified in sections 950.20 through 

950.24 to codify this expectation. 

Determinations by the Claims 

Administrator 

The industry trade association 

suggested several sections needed 

clarification based on their 

interpretation of the phrase 

‘‘appropriate’’ in describing the Claims 

Administrator’s determinations 

regarding covered events and covered 

costs. It noted that this language 

suggested the Claims Administrator 

could render a decision based on 

subjective factors outside the terms and 

conditions of the Standby Support 

Contract or the rule. This is a 

misinterpretation of the regulation’s 

language. Nevertheless, to avoid the 

misinterpretation that the Claims 

Administrator would make 

determinations based solely on 

subjective judgment, subpart C of part 

950 is modified in several places (e.g., 

950.24 (a) and (d)) to replace the word 

‘‘appropriate’’ with ‘‘allowable’’ to 

indicate the objective nature of the 

Claims Administrator’s cost 

determinations based on the terms and 

conditions of the contract. 

Timing of Covered Event Determinations 

and Payments 

The industry trade association 

commented that notification of a 

covered event should be submitted ‘‘no 

later than’’ 30 days after the end of the 

covered event, and requested that ‘‘the 

Department be willing to accept notice 

and begin paying claims as covered 

losses are incurred, while a covered 

event is ongoing.’’ The rule is modified 

to allow notification of a covered event 

‘‘no later than’’ 30 days after the end of 

the covered event. This change 

appropriately provides flexibility to the 

sponsor to submit notification of a 

covered event to the Claims 

Administrator at a time the sponsor 

deems appropriate, particularly where a 

covered event may be protracted. 

However, the Department does not 

believe it is appropriate to change the 

timing of the claims process for 

payment of covered costs. Sections 

950.23 and 950.24 address the process 

and timing of claims for covered costs, 

and are premised on the fact that 

covered costs are not expected to be 

incurred until the time the sponsor was 

scheduled to attain full power 

operations. In other words, a covered 

event that occurs early in construction 

(e.g., in the first year of a five year 

construction schedule) would not be 

coincident in time with the obligation of 

the sponsor to pay covered costs such as 

principal or interest, as those costs 

would not be incurred until much later 

in time (e.g., in the fifth year after 

construction is complete). 

The industry trade association also 

objected to what it viewed as an openended process in section 950.22(c) for 

the Claims Administrator to render a 

determination on a covered event with 

the option for the Administrator to 

determine that the claim ‘‘requires 

further information.’’ The Department 

believes it is important to provide this 

flexibility to the Claims Administrator 

and serves to facilitate a resolution of 

any issues between the Claims 

Administrator and the sponsor without 

resort to alternative dispute resolution. 

Consequently, the Department is not 

modifying the rule to address this 

objection. 


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Subpart D—Dispute Resolution Process 

Covered Events and Covered Costs 

Dispute Resolution 

In the interim final rule, the 

Department stated that claims should be 

resolved as effectively and efficiently as 

possible. Subpart D provides a two step 

dispute resolution process for resolving 

claims that first calls for mediation and 

then a Summary Binding Decision. 

The industry trade association 

generally agreed with the concept of 

dispute resolution through a binding 

arbitration process as an appropriate 

and expeditious method of resolving 

disputes under the Standby Support 

Contract. However, the trade association 

objected to the use of the DOE Board of 

Contract Appeals (DOE Board) as the 

final arbiter of disputes, claiming that 

the Board is not independent from the 

Department, it does not have experience 

with insurance-type contracts, and it is 

not an appropriate venue for complex or 

novel cases such as a Standby Support 

Contract. Rather, industry preferred an 

independent, third-party arbitration 

process such as the American 

Arbitration Association (AAA) and its 

rules for commercial arbitration and 

expedited proceedings, which it 

claimed is familiar to industry and 

without which the industry stated a 

sponsor would be reluctant to agree to 

binding arbitration without the right of 

appeal to a court. 

In response to the industry trade 

association’s concern over lack of 

neutrality, that concern should be 

obviated with the establishment of the 

Civilian Board of Contract Appeals 

(Civilian Board) (Section 847 of the 

National Defense Authorization Act of 

Fiscal Year 2006, 41 U.S.C. 438). 

Effective January 6, 2007, Congress is 

establishing in the General Services 

Administration a board of contract 

appeals to be known as the Civilian 

Board of Contract Appeals (Civilian 

Board). The new Civilian Board will 

include any full time member of several 

other agency board of contract appeals 

in addition to the disbanded DOE 

Board. Thus, any concern that the 

Civilian Board is not independent of the 

Department is unfounded. The Civilian 

Board will provide a wide range of 

expertise from various agencies and 

departments throughout the 

government. It will also assume 

jurisdiction over any category of laws or 

disputes over which an agency board of 

contract appeals has jurisdiction. The 

Department believes that the Civilian 

Board will have the independence, 

expertise, and requisite procedures to 

ensure a fair and expeditious process for 

the resolution of disputes in the context 

of Standby Support Contracts. 

Moreover, the Standby Support 

Contracts will be new not only to the 

Department and the Civilian Board, but 

also to industry, the AAA, and any 

arbitrator. Accordingly, the existing 

rules of the AAA for commercial 

arbitration of complex cases are not any 

better suited to adjudication of claims 

under a Standby Support Contract than 

the similar procedures successfully 

employed by the Civilian Board to fairly 

and expeditiously resolve contract 

disputes involving the commercial 

sector and the federal government. The 

Department is confident that the 

Civilian Board and the dispute 

resolution procedures it follows are well 

suited to resolve any issues arising 

under the Standby Support Contracts; 

commenters have not demonstrated 

otherwise. 

In response to the industry trade 

association’s comment, the rule is 

modified in sections 950.31, 950.33 and 

950.36 to clarify that the parties will 

jointly select the mediator that will 

preside over mediation of disputes. 

C. Cost Analysis of the Standby Support 

Program 

Industry commenters stated that it 

was critical for the Department inform 

potential sponsors about the cost of the 

insurance coverage. These commenters 

stated the nuclear industry cannot 

provide a reasoned determination of the 

value of the Program and the rule 

without knowing what the insurance 

contracts will cost. Accordingly, they 

requested the Department to establish a 

two-step calculation which they 

characterized as workable and credible 

to investors. Under the first step, the 

Department would establish a standard 

premium for the insurance contracts 

based on, and comparable to the 

premium charged by other government 

agencies and the private sector for 

comparable sovereign risk insurance. 

Under the second step, the Department 

would then establish a standard ‘‘loan 

cost’’ for the insurance contracts 

calculated under FCRA. To the extent 

the loan cost is higher than the premium 

amount, the Department would cover 

the difference through appropriations. 

The industry then stated that the 

Department ‘‘appears to be moving in 

the opposite direction: There is no 

standard insurance premium, and the 

expected sponsor payment appears to be 

subject to a case-by-case, contract-bycontract determination dependent 

largely on the Department’s success in 

obtaining appropriations.’’

Although the Department understands 

the desire of industry commenters for 

certainty and relatively low 

contributions from industry, the 

Department cannot provide a definitive, 

standard premium for the six Standby 

Support Contracts available under 

section 638, or to commit to any 

specified amount of government 

appropriations that would be applied 

toward funding the Standby Support 

Contracts. The statutory language of 

section 638 provides the legal 

framework within which the 

Department must operate in establishing 

the regulations and contracts for the 

Standby Support Program. That 

framework requires the Department to 

calculate the loan costs for each Standby 

Support Contract consistent with FCRA, 

and to deposit amounts equivalent to 

that loan cost into the Program Account 

as a precondition to execution of a 

Standby Support Contract. Section 638 

dictates that loan costs in the Program 

Account are the same as the cost of a 

loan guarantee under FCRA. While 

section 638 provides the possibility for 

government funding of a Standby 

Support Contract through 

appropriations, it does not allocate any 

amount of government appropriations to 

the contracts and it does not change 

existing law that prohibits the 

Department from obligating funds where 

funds are not appropriated for that 

purpose. 

Given this statutory framework, the 

premium for coverage of principal or 

interest costs must be calculated in 

accordance with FCRA methodology, 

and the sponsor must provide the 

portion of the premium for which funds 

have not been appropriated. Thus, the 

Department cannot adopt the approach 

advanced by industry commenters. The 

Department, however, has revised the 

rule to give sponsors the ability to adjust 

coverage in accordance with the amount 

of the premium they are willing to pay. 

Specifically, section 950.11 permits a 

sponsor to specify in the Conditional 

Agreement, the amount of premium, 

(that is, its contributions to the Program 

Account and Grant Account) it 

anticipates paying when the Standby 

Support Contract is executed. 

Notwithstanding this provision, section 

950.12 of the interim final rule required 

the sponsor to pay a premium equal to 

the difference between the amount of 

appropriated funds and the amount 

necessary to fully fund the Program 

Account and Grant Account. In the final 

rule, the Department has revised section 

950.12 to permit a sponsor to pay the 

anticipated premium, with the option to 

pay additional amounts; provided that, 

if the combination of appropriated 

funds and payments from the sponsor is 

not sufficient to fully fund the Program 


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Account and Grant Account, the amount 

of coverage under the Standby Support 

Contract will be reduced to reflect the 

amount of funding deposited in the 

Accounts should the sponsor elect to 

enter into the Standby Support Contract. 

In addition, in an effort to provide 

information now to potential sponsors 

about anticipated costs for the Standby 

Support Contracts, the Department is 

providing a description of the 

methodology it expects to follow in 

calculating the loan costs in accordance 

with FCRA, including four hypothetical 

examples of estimated loan costs. The 

hypothetical examples are a 

representative, but not comprehensive, 

sample of the project type, financing 

structure, coverage amount, or other 

factors that will inform the 

Department’s loan cost estimates for 

particular projects. For each project, the 

Department will use the project-specific 

information provided by the project 

sponsor to develop an initial estimate at 

the time of the Conditional Agreement. 

Prior to entering into a Standby Support 

Contract, the loan cost estimate will be 

reevaluated and will determine the loan 

cost required by the Program Account in 

order to execute the Standby Support 

Contract. Loan costs are likely to change 

as the Department refines the 

assumptions used in the preliminary 

analysis and considers the extent to 

which other risks need to be taken into 

account. In particular, the preliminary 

analysis does not fully consider 

situations that may arise if the 

Commission does not adopt a realistic 

schedule for its actions or where there 

is an adverse decision that does not 

necessarily result in a stay, but 

nevertheless may provide a legitimate 

basis for a sponsor to delay actions. 

These discussions are detailed in this 

preamble in the Regulatory Review 

Requirements section on Executive 

Order 12866 (Section IV.A). 

For each type of covered event (e.g., 

Commission delay and litigation delay), 

the Department’s Program Account cost 

estimates will be based on three primary 

factors: first, the timing and amount of 

the debt service covered by the Standby 

Support Contract; second, the likelihood 

that a covered delay occurs; and third, 

the length of the covered delays. These 

factors are likely to vary across projects 

as they will likely have different 

financing structures—for example, 

investor-owned utilities, public utilities, 

cooperatives, or partnerships reflecting 

some combination would likely seek 

capital through different mechanisms. 

The risk of a covered event occurring 

and the length of the covered event will 

vary by the type of advanced nuclear 

facility, management experience, 

location, and a host of other factors. 

Based on these factors, the 

Department will estimate cashflows to 

and from the government over the 

expected period of Standby Support 

Contract coverage and determine the 

present value of these expected 

cashflows, in accordance with FCRA, to 

determine the required loan cost. 

In evaluating hypothetical examples 

for a 1,100 MWe reactor, the Department 

chose debt-to-equity financing 

structures of 80:20 and 50:50, which 

correspond to estimated all-in costs of 

$2.8 billion and $2.5 billion, 

respectively. The hypothetical examples 

adopt typical industry debt-to-equity 

financing structures and assume that the 

sponsor elects 100% of coverage 

through the Program Account. The 

Department notes that it is not possible 

at this time to provide the actual costs 

in the rule, given that more specific 

estimates of loan costs for individual 

projects can only be provided in 

conjunction with the issuance of a 

Conditional Agreement, based on the 

specifics of the project and coverage. 

Moreover, final loan costs must account 

for the actual terms of the debt to be 

guaranteed, and will be determined just 

prior to the execution of a Standby 

Support Contract, which is a time 

several years in the future. 

The Department has determined that 

it would be inappropriate to adopt two 

specific industry recommendations. 

First, the Department has determined 

that it would be inappropriate to rely on 

the premium charged by other 

government agencies and the private 

sector for sovereign risk insurance such 

as OPIC. As explained in the interim 

final rule, sovereign risk insurance is 

significantly different than the Standby 

Support Program, given that the 

sovereign risk insurance pool is highly 

diversified both geographically and 

among projects. Further, with respect to 

the calculation methodology, the 

interim final rule’s preamble discussion 

stated that ‘‘the cost estimate for the 

Program Account will be calculated 

consistent with FCRA.’’ In reaffirming 

this approach, the Department 

emphasizes that section 638(b)(2) 

expressly references FCRA. The 

industry’s recommended approach is 

especially untenable given that OMB 

requires the FCRA analysis to be done 

consistent with OMB guidance in 

Circular A–11, and that any Department 

decision related to loan costs must 

ultimately be approved by OMB. 

Second, the Department cannot 

specify in advance the premium to be 

paid by the sponsor that will result in 

full coverage, especially if the premium 

is set at an amount less than the amount 

that must be deposited into the Program 

Account and Grant Account. The 

Department notes that section 638 

prohibits the Department from 

executing a Standby Support Contract 

until the Program Account and Grant 

Account, if applicable, are funded. 

Accordingly, it is impossible to provide 

commenters the cost certainty they 

desire at this time. In addition, the 

Department cannot commit to deposit 

Federal funds in the Program Account 

or Grant Account in the absence of 

appropriations for that purpose. 

IV. Regulatory Review Requirements 

A. Review Under Executive Order 12866 

The Department has determined that 

today’s regulatory action is a 

‘‘significant regulatory action’’ under 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’ (58 FR 51735, 

October 4, 1993), as amended by 

Executive Order 13258 (67 FR 9385, 

February 26, 2002). Accordingly, the 

Department submitted this final to the 

Office of Information and Regulatory 

Affairs of the Office of Management and 

Budget, which has completed its review 

under E.O. 12866. 

This discussion assesses the potential 

costs and benefits of this rule. This 

regulation affects only those entities that 

voluntarily elect to apply for standby 

support and are selected to receive such 

standby support assistance. It imposes 

no direct costs on non-participants. The 

economic impact of this regulatory 

action is difficult to estimate because 

the exact nature and size of the projects 

to be assisted will not be known until 

specific project applicants come forward 

and because of the difficulty in 

predicting the scope, frequency or 

timing of the events that would be 

subject to payment of standby support. 

The Department has completed its 

analysis of the annual effect of the rule 

on the economy and determined that the 

rule likely would not have an overall 

effect on the economy that exceeds $100 

million in any one year, and will 

therefore not be treated as an 

economically significant rulemaking. 

In addition to the general effect on the 

economy, the Department notes that the 

rulemaking’s direct costs are the amount 

of funds needed in the Program Account 

for the Federal government to extend 

Standby Support. For purposes of 

review under E.O. 12866, this final rule 

provides four hypothetical examples 

that demonstrate the general 

methodology used to determine an 

estimate of the subsidy cost for the 

Standby Support Program. 


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In the interim final rule, the 

Department noted the analysis on the 

Commission’s ITAAC process from the 

Secretary of Energy Advisory Board, the 

Nuclear Energy Task Force (NETF) in 

July 2004 to ‘‘assess the issues and 

determine the key factors that must be 

addressed if the Federal government 

and industry are to commit to the 

financing, construction, and 

deployment of new nuclear power 

generation plants to meet the nation’s 

electric power demands in the 21st 

Century.’’ NETF determined that the 

ITAAC process and the possibility of a 

hearing on satisfaction of the ITAAC 

‘‘may’’ create regulatory disruption after 

substantial funds have been expended. 

Achieving the purpose of the revised 

regulatory process will be thwarted if 

the Commission does not keep the 

ITAAC process focused narrowly on 

those issues that must be subject to postconstruction verification. NETF 

concluded that this new regulatory 

process which has not been tested in 

practice, poses a significant risk factor 

to generating companies. Similarly, the 

Department funded a report which 

defined critical risks and investment 

issues. (Business Case for New Nuclear 

Power Plants: Bringing Public and 

Private Resources Together for Nuclear 

Energy, July 2002, available at http:// 

www.nuclear.gov/home/bc/ 

businesscase.html). Its conclusions were 

similar to NETF’s recommendations in 

that one of the critical risks with the 

construction of new nuclear power 

plants is the regulatory risk associated 

with the ITAAC process. 

Congress passed section 638 after 

issuance of the NETF report. In so 

doing, Congress provided direction to 

the Department on the type of delays 

and costs that are to be covered under 

the Standby Support Program to 

facilitate construction and operation of 

advanced nuclear facilities. The 

Department is following the direction 

provided by Congress to structure the 

regulations governing the Standby 

Support Program. 

The Department anticipates that the 

Standby Support Program will facilitate 

the construction of new nuclear 

facilities by decreasing the regulatory 

and litigation risks related to the 

combined license process. The program 

establishes a maximum of $500 million 

in insurance as the limit for each of the 

first two reactors covered and $250 

million for each of the subsequent four 

reactors. Section 638 also establishes 

that the covered costs for principal or 

interest on the debt obligation of the 

advanced nuclear facility (i.e., loan 

costs) are to be calculated the same as 

the cost of a loan guarantee under FCRA 

and are to be deposited in the Program 

Account prior to contract execution. 

Under FCRA, the amount of budget 

authority necessary to support a Federal 

credit instrument depends upon the 

subsidy cost (i.e., the net present value 

of the estimated cash flow of payments 

by the government to cover the expected 

value of the principal or interest on any 

debt obligation of the owner of an 

advanced nuclear facility during 

covered delay). This subsidy cost 

reflects the loan costs in the Program 

Account, which in turn equates to the 

‘‘cost of a loan guarantee’’ under section 

502(5)(C) of FCRA. Under the Standby 

Support Program and FCRA, the Federal 

government is not authorized to extend 

credit assistance unless it has sufficient 

funds in the Program Account either in 

the form of budget authority or fees 

charged by the program to offset any 

potential losses. The funds deposited in 

the Program Account needed for the 

Standby Support Program will be 

contributed by private industry through 

a risk premium, in whole or in part, 

depending on appropriations. Loan 

costs may not be paid from the proceeds 

of debt guaranteed or funded by the 

Federal government. 

Since the passage of the Act, the 

Department has conducted both 

qualitative and quantitative research to 

support four hypothetical examples that 

demonstrate the general methodology 

used to determine an estimate for the 

subsidy cost for the Standby Support 

Program. The qualitative research 

included interviewing experts at private 

firms and government agencies and 

determining the similarities and 

differences with their programs and the 

standby support insurance program. In 

particular, the Department met with or 

interviewed personnel at the 

Commission, OPIC, U.S. Export Import 

Bank, U.S. Department of Agriculture, 

and commercial insurers. The 

additional research included analyzing 

the Commission’s case history and 

researching other federal agency loan 

programs. The following provides a 

discussion of the key assumptions used, 

risks considered, and the four 

hypothetical cost estimates developed 

by the Department. 

Financial Assumptions of the Cost 

Estimate 

The following information 

summarizes the key assumptions used 

in the Department’s four hypothetical 

examples. 

The Department reviewed other 

government insurance or loan programs 

to determine their cost structure and 

applicability to the Standby Support 

Program. Following its review, the 

Department concluded that the other 

government programs provide some 

valuable information but are sufficiently 

different from Standby Support that 

they cannot provide a direct basis for 

comparison. For example, the premiums 

of the OPIC insurance program are 

pooled together and if a default occurs, 

that pool is used to pay out the 

damages. This arrangement differs in 

critical ways from the Standby Support 

program. The USDA’s Rural Utility 

Service Programs make and guarantee 

loans but the costs depend substantially 

on the credit quality of the borrowers. 

Moreover, the government has rights to 

the collateral pledged as part of the 

loan. 

The Standby Support Program does 

not compare to these other programs in 

that: (1) The other programs insure 

many entities or individuals; and (2) the 

other programs evaluate applications 

and assess costs in part based on factors 

different than those present in this 

program. In the Standby Support 

Program, there are a limited number of 

applicants to pool premiums and the 

risks include actions by the Commission 

and litigation. 

For financing, the Department 

assumed two different financing 

structures: 50:50 debt to equity (50:50 

D/E) and 80:20 debt to equity (80:20 D/ 

E). These two financial structures have 

been indicated by industry as the two 

most probable financing structures for 

new nuclear reactors. For each of these 

D/E structures, two scenarios were 

generated, one assuming level debt 

payments (constant principal and 

interest), the other assuming level 

principal payments (constant principal). 

The estimated all-in costs for a 1,100 

MWe reactor were $2.5 billion and $2.8 

billion for D/E financing structures of 

50:50 and 80:20, respectively. The debt 

was assumed to have a 20 year 

amortization period. Exhibit 1, below, 

provides a summary of the financing 

assumptions used. 


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2The process and requirements are codified in 10 

CFR part 54 (http://www.nrc.gov/reading-rm/doccollections/cfr/part054/index.html. 

3Reactor license renewal schedules are available 

on the Commission’s Web site at: http:// 

www.nrc.gov/reactors/operating/licensing/renewal/ 

applications.html 

4Reactor license renewal schedules are available 

on the Commission’s Web site at: http:// 

www.nrc.gov/reactors/new-licensing/esp.html. 

EXHIBIT 1.—FINANCING ASSUMPTIONS FOR 50:50 D/E AND 80:20 D/E STRUCTURES

Repayment Options Level Debt Payments (Prin. + Int.) Level Principal Payments 

Debt-to-Equity Financing Assumptions 50:50 D/E 80:20 D/E 50:50 D/E 80:20 D/E 

Total All-in Costs ............................................ $2.5 Billion ................. $2.8 Billion ................. $2.5 Billion ................. $2.8 Billion 

Construction Period ........................................ 5 Years after COL ..... 5 Years after COL ..... 5 Years after COL ..... 5 Years after COL 

Debt Characteristics: 

Amortization Period ................................. 20 Years .................... 20 Years .................... 20 Years .................... 20 Years 

Interest Capitalization during Construction.Yes ............................. Yes ............................. Yes ............................. Yes 

Interest Rate ........................................... 7% .............................. 8% .............................. 7% .............................. 8% 

Non-Financial Risks Affecting the Cost 

Estimate 

When developing cost estimates, the 

Department will need to assess the nonfinancial risks of the Standby Support 

Program, which can be grouped into 

three categories: (1) Delays from 

Commission regulatory review (i.e., 

untimely review of ITAAC or conduct of 

pre-operational hearings); (2) delays 

from NRC-related litigation; and (3) 

delays from external events (non-NRC). 

This division groups the risks similarly, 

based on those risks that are within the 

Commission’s control and those that are 

outside the Commission’s control. The 

Department also assumed that the 

design certification and early site permit 

process have finality, meaning that 

virtually all issues have been resolved 

and risks of litigation after combined 

construction and operating license 

issuance (i.e., when Standby Support 

Contracts are in effect) is less than 

before issuance (i.e., when Standby 

Support Contracts are not in effect). The 

Department also assumed that ITAAC 

schedules will be set either by guidance 

from the Commission, or by agreement 

of the Department and sponsor, that the 

schedule for determination letters will 

be based on completed ITAAC packages, 

and that the sponsor would be 

permitted and expected to load fuel 

once all the ITAAC letters have been 

approved. The following provides 

additional background information, 

gathered by the Department, that helps 

to inform cost estimates. 

Covered Costs From ITAAC and PreOperational Hearings 

ITAAC Review. The Department is 

aware that it is difficult to predict the 

Commission’s ability to conduct the 

ITAAC review process in a timely 

fashion, particularly since the 

Commission’s new regulatory process 

under part 52 has not been tested and 

there are presently no schedules set by 

the Commission for ITAAC review. 

Nevertheless, in conducting its analysis 

the Department considered several 

sources of current and historical 

information including a review of the 

Commission’s licensing process under 

part 52, a review of the Commission’s 

ability to meet schedules in other 

proceedings, and interviews with the 

Commission staff. To estimate the 

frequency that an ITAAC review would 

not be completed on time and would 

cause a delay in full power operation, 

the Department conducted a two-step 

analysis based on the information 

gathered from its research. 

The Department started out by trying 

to understand when ITAAC submissions 

would occur during the construction 

period. The Department’s qualitative 

research indicated that 20 percent of 

ITAACs are expected to be submitted in 

the first four years of construction while 

the remaining 80 percent of ITAACs are 

expected to be submitted in the last year 

of construction. Nuclear professionals 

indicated that these first 20 percent of 

the ITAACs are for discrete, lower risk 

items that are likely not on the critical 

path for full power operation (in 

contrast to the last year ITAAC that are 

for entire systems more critical to full 

power operation). Hence, construction 

would most likely continue even if there 

was a delay in reviewing an ITAAC in 

the earlier years. As a result, the 

Department concluded that Commission 

review of the first 20 percent of ITAACs, 

whether on time or not, would have a 

negligible effect on the commencement 

of full power operation. 

In addition, the Department reviewed 

the other 80 percent of the ITAAC to 

estimate the frequency and length of 

delay, and an estimated cost. To 

conduct this analysis, the Department 

evaluated the Commission’s ability to 

meet schedules with respect to license 

renewals for existing nuclear facilities 

under 10 CFR part 54, its reviews of 

early site permits (ESPs) under part 52, 

and its design certification of the 

Westinghouse AP1000 nuclear power 

plant. 

Under the license renewal process a 

licensee may apply to the Commission 

to renew its license as early as 20 years 

before expiration of its current license. 

The renewal process ensures that 

important systems, structures and 

components will continue to perform 

their intended functions during the 20- 

year period of extended operation.2 To 

date, the Commission has successfully 

renewed the licenses for 43 reactors 

within schedule, with only minor 

deviations from established milestone 

dates (e.g., a few instances where 

schedule dates were missed by a day or 

two, and only 2 instances out of 40 

where the delay was for more than 5 

days).3 The Department recognizes that 

in such cases, these are operating 

reactors and therefore may not 

necessarily be representative of newly 

constructed reactors. 

Under part 52, the Commission can 

issue an early site permit (ESP) that 

addresses site safety issues, 

environmental protection issues, and 

emergency plans, independent of the 

review of a specific nuclear plant design 

or specific combined license 

application. An ESP is a partial 

construction permit, and is therefore 

subject to all procedural requirements in 

10 CFR Part 2 applicable to construction 

permits. The permit is valid for 10 to 20 

years and can be renewed for an 

additional 10 to 20 years. The 

Commission is currently reviewing 

three early site permit applications and 

to date the Commission has met all 

schedules for the three applications it 

has received.4

Third, the Commission review and 

design certification of Westinghouse’s 

AP1000 nuclear power plant was issued 

on time. 

Fourth, the Commission has stated 

that in order to meet estimated work 

activities, 350 new employees have been 

added in FY 2006. This new hiring of 


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5State of Ohio v. NRC, 812 F.2d 288 (6th Cir. 

1986). 6 Limerick Ecology Action v. NRC, No. 85–3431 

(3d Cir. 1985) (unpublished order). 7San Luis Obispo Mothers for Peace v. NRC, No. 

84–1410 (D.C. Cir) (unpublished order). 

8Commission Response to Congress, July 2005. 

staff provides some additional 

confidence that the Commission may be 

able to meet schedules for licensing 

reviews. 

In addition to this research, the 

Department interviewed the 

Commission staff to better understand 

ITAAC review periods, and where 

delays related to ITAAC issues would 

result in a covered delay. The 

Commission’s staff indicated that a 90 

day review period would be a 

reasonable estimate for an average time 

period. Commission staff also noted the 

expectation that at the time a complete 

ITAAC is submitted, the Commission’s 

field team would have already begun 

conducting ongoing inspections of the 

item under review and would have 

collected data that will make the final 

review efficient. Based on these 

interviews, the Department developed 

average delay estimates. Commission 

staff indicated that even though it is 

difficult to predict the implementation 

of an untested regulatory process, the 

Department’s conclusions were 

generally reasonable based on the 

Commission’s planning for the review 

process. The Department assumed that 

the longer the delay the greater the 

likelihood that the delay would affect 

full power operation and result in a 

covered cost. 

Pre-operational Hearings. Lacking 

definitive data, the Department 

estimated that pre-operational hearings 

resulting in a Commission stay of 

construction or initial fuel load and 

causing a delay in full power operation 

are comparable to delays from untimely 

ITAAC review. Since the risk factors are 

similar, the Department evaluated the 

probability of delays due to both of 

these factors combined. 

Covered Costs for Delays From 

Litigation 

The Department reviewed historical 

information on litigation brought against 

the Commission, instances where a 

court ordered a stay or injunction, and 

the part 52 licensing process in general. 

First, the Department considered the 

likelihood of a delay occurring from 

litigation in which there was an adverse 

ruling against the Commission or there 

was a court order enjoining reactor 

construction or operation. Next, the 

Department estimated the expected 

length of a delay in full power operation 

in such a case. 

The Department researched the 

history of judicial stays of Commission 

operating license authorizations. The 

Department’s research uncovered three 

cases since 1973 in which the issuance 

of an operating license was stayed. The 

first case involved the Perry Nuclear 

Power Plant in Ohio in which the stay 

was for 40 days.5 The second case 

involved the Limerick Nuclear Power 

Plant, which was stayed for 6 days.6 The 

third case involved the Diablo Canyon 

Nuclear Power Plant, which was stayed 

for 75 days.7 To the Commission staff’s 

best knowledge, this information is 

correct and there are no other examples 

of judicial stays regarding the issuance 

of a new nuclear power plant operating 

license.8 Given that about 123 operating 

licenses have been issued by the 

Commission, the Department estimates 

that the probability of a stay relative to 

the number of operating licenses issued 

is less than 3 percent. The Department 

recognizes, however, that for proposed 

new facilities, there may be specific 

facts and circumstances that could affect 

this possibility. 

The Department also analyzed the 

history of judicial stays on new 

operating licenses as compared broadly 

to the history of all court cases in which 

the Commission was a party or there 

was an adverse decision for the 

Commission. The Department’s research 

found, from 1973 through early 2006, 

the Commission was a party in 206 

court cases involving regulatory or 

licensing matters. Of these 206 cases, 

the Department found approximately 39 

cases in which the court ruled against 

the Commission. Of the 39 cases, only 

three cases resulted in a stay or 

injunction of operations (described 

above). While this suggests a very high 

success rate for litigation involving the 

Commission, the Department also 

recognizes that there may be some 

unforeseen factors that could affect the 

litigation risk given the new review 

process, and new technologies involved. 

The Commission’s more recent 

experience in court cases has been more 

successful. For the period starting in 

1990, or around the time the Energy 

Policy Act of 1992 was enacted, the 

Commission was directed to streamline 

the nuclear reactor licensing process to 

alleviate long delays and obstacles in 

the process. The Department believes 

the Commission’s more recent litigation 

history may be more indicative of future 

litigation. This is consistent with the 

Department’s expectation that litigation 

risks that would be covered under a 

Standby Support Contract are reduced 

because coverage is initiated after 

issuance of the combined license, when 

decisions on early site permits or design 

certifications may already have been 

settled and are final. The Department 

recognizes that this more recent 

experience directly applies to license 

renewals rather than new construction; 

however, it indicates that the 

Commission has strengthened its review 

process. Since 1990, the Commission 

has been a party in 44 court cases. Of 

those 44 cases, only 2 cases were 

decided against the Commission and no 

cases resulted in a stay or injunction. 

Another factor in estimating the cost 

of litigation is how long a delay caused 

by a stay or injunction would remain in 

effect. As noted earlier, the data 

available to analyze this is very limited 

in nature, only 3 cases, and only one of 

the cases is relevant to the analysis. The 

State of Ohio requested a stay against 

the Perry Nuclear Power Plant, 

challenging the adequacy of the 

evacuation plan and its formulation 

without adequate State participation. 

The Court of Appeals granted the State’s 

request for a stay on the operating 

license of the plant that lasted for 45 

days. While the stay itself was for 45 

days, the Department used a more 

conservative estimate of 10 months for 

the effect of the stay—which covered 

the time of the stay as well as certain 

other activities necessary before the 

reactor could begin operations. The 

Department believes that a delay 

covered by a Standby Support Contract 

would occur in a similar manner. The 

Department recognizes that in specific 

cases, however, greater delays would be 

possible, e.g., where a State or other 

entity provides early indication of its 

intent to challenge the operation of a 

reactor, or where a delay did not result 

in a stay but had such potential. In view 

of the absence of a statistically 

significant number of relevant judicial 

stay cases, the Department cannot 

conclusively predict the length of delay. 

The four hypothetical examples are 

intended to provide the public with 

some indication of possible costs, under 

a specific set of assumptions and 

conditions, with a specified coverage 

level, debt financing structure, and 

interest rates. The examples also reflect 

specific assumptions regarding the nonfinancial risks of the Standby Support 

Program, which were described earlier: 

(1) delays from Commission regulatory 

review (i.e., untimely review of ITAAC 

or conduct of pre-operational hearings); 

(2) delays from NRC-related litigation; 

and (3) delays from external events 

(non-NRC). Both the financial and nonfinancial risk factors will likely differ 

for each project, so the costs below may 

not reflect the subsidy cost associated 

with a particular Standby Support 

contract. For the examples provided 


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below, dollar amounts are stated in 

millions. 

Repayment options Debt structure 

Face value of 

debt 

Maximum coverage Interest rate 

(percent) 

Hypothetical 

subsidy cost 

Level Debt Payments (Prin. + Int) ......................................... 50:50 D/E ....

80:20 D/E ....

$1,250 

2,250 

$500 

500 

7.0 

8.0 

$14 

21 

Level Principal Payments ....................................................... 50:50 D/E ....

80:20 D/E ....

1,250 

2,250 

500 

500 

7.0 

8.0 

17 

27 

While the Department has not 

prepared nor presented hypothetical 

subsidy costs for the $250 million 

Standby Support Contracts, the 

Department believes that the subsidy 

costs would likely be roughly half of the 

subsidy costs compared to a $500 

million Standby Support Contract for 

the same project. The actual subsidy 

costs for any particular Standby Support 

Contract will vary based on the specific 

risks associated with the project and 

timing of such contract. 

B. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform’’ (61 FR 4779, February 7, 1996) 

imposes on Federal agencies the general 

duty to adhere to the following 

requirements: Eliminate drafting errors 

and needless ambiguity, write 

regulations to minimize litigation, 

provide a clear legal standard for 

affected conduct rather than a general 

standard, and promote simplification 

and burden reduction. Section 3(b) 

requires Federal agencies to make every 

reasonable effort to ensure that a 

regulation, among other things: Clearly 

specifies the preemptive effect, if any, 

adequately defines key terms, and 

addresses other important issues 

affecting the clarity and general 

draftsmanship under guidelines issued 

by the Attorney General. Section 3(c) of 

Executive Order 12988 requires 

Executive agencies to review regulations 

in light of applicable standards in 

section 3(a) and section 3(b) to 

determine whether they are met or it is 

unreasonable to meet one or more of 

them. The Department has completed 

the required review and determined 

that, to the extent permitted by law; this 

final rule meets the relevant standards 

of Executive Order 12988. 

C. Review Under Executive Order 13132 

Executive Order 13132 (64 FR 43255, 

August 10, 1999), imposes certain 

requirements on agencies formulating 

and implementing policies or 

regulations that preempt State law or 

that have federalism implications. 

Agencies are required to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and carefully assess the necessity 

for such actions. 

Today’s regulatory action has been 

determined not to be a ‘‘policy that has 

federalism implications,’’ that is, it does 

not have substantial direct effects on the 

states, on the relationship between the 

national government and the states, nor 

on the distribution of power and 

responsibility among the various levels 

of government under Executive Order 

13132 (64 FR 43255, August 10, 1999). 

Accordingly, no ‘‘federalism summary 

impact statement’’ was prepared or 

subjected to review under the Executive 

Order by the Director of the Office of 

Management and Budget. 

D. Review Under Executive Order 13175 

Under Executive Order 13175 (65 FR 

67249, November 6, 2000) on 

‘‘Consultation and Coordination with 

Indian Tribal Governments,’’ the 

Department may not issue a 

discretionary rule that has ‘‘tribal 

implications’’ and imposes substantial 

direct compliance costs on Indian tribal 

governments. The Department has 

determined that this final rule does not 

have such effects and concluded that 

Executive Order 13175 does not apply 

to this rule. 

E. Reviews Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act of 1980 

(5 U.S.C. 601 et seq.) requires that an 

agency prepare an initial regulatory 

flexibility analysis for any regulation 

which a general notice of proposed 

rulemaking is required, unless the 

agency certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities (5 U.S.C. 

605(b)). Given that no general notice of 

proposed rulemaking is required, no 

regulatory flexibility analysis is 

required. 

F. Review Under the Paperwork 

Reduction Act 

Section 950.10(b) contains 

information collection requirements 

pertaining to eligibility; section 

950.12(a) contains information 

collection requirements pertaining to 

fulfillment of conditions precedent to a 

Standby Support Contract; and section 

950.23 contains information collection 

requirements pertaining to submission 

of claims for payment of covered costs 

under a Standby Support Contract. As 

indicated in the DATES section of this 

notice, these provisions will not become 

effective until the Office of Management 

and Budget (OMB) has approved them 

pursuant to the Paperwork Reduction 

Act of 1995 (44 U.S.C. 3501 et seq.) and 

the procedures implementing that Act, 5 

CFR 1320.1 et seq. The Department has 

issued a notice seeking public comment 

under the Paperwork Reduction Act on 

the information collection requirements 

in these sections of today’s rule. (71 FR 

41788, July 24, 2006) After considering 

any public comments received in 

response to that notice, the Department 

will submit the proposed collection of 

information to OMB for approval 

pursuant to 44 U.S.C. 3507. An agency 

may not conduct, and a person is not 

required to respond to a collection of 

information, unless it displays a 

currently valid OMB control number. 

After OMB approves the information 

collection requirements, the Department 

will publish a notice in the Federal 

Register that announces the effective 

date and displays the OMB control 

number for these sections of the rule. 

G. Review Under the National 

Environmental Policy Act 

The Department has concluded that 

promulgation of these regulations fall 

into the class of actions that does not 

individually or cumulatively have a 

significant impact on the human 

environment as set forth in the 

Department regulations implementing 

the National Environmental Policy Act 

of 1969 (42 U.S.C. 4321 et seq.). 

Specifically, the rule is covered under 

the categorical exclusion in paragraph 

A6 of Appendix A to subpart D, 10 CFR 

part 1021, which applies to the 


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establishment of procedural 

rulemakings. Accordingly, neither an 

environmental assessment nor an 

environmental impact statement is 

required. 

H. Review Under the Unfunded 

Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

requires each Federal agency to prepare 

a written assessment of the effects of 

any Federal mandate in a proposed or 

final agency regulation that may result 

in the expenditure by states, tribal, or 

local governments, on the aggregate, or 

by the private sector, of $100 million in 

any one year. The Act also requires a 

Federal agency to develop an effective 

process to permit timely input by 

elected officials of state, tribal, or local 

governments on a proposed ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity to provide timely input 

to potentially affected small 

governments before establishing any 

requirements that might significantly or 

uniquely affect small governments. The 

Department has determined that the rule 

published today does not contain any 

Federal mandates affecting states, tribal, 

or local governments, so these 

requirements do not apply. 

I. Review Under Executive Order 13211 

Executive Order 13211 (Actions 

Concerning Regulations That 

Significantly Affect Energy, Supply, 

Distribution, or Use), 66 FR 28355 (May 

22, 2001) requires preparation and 

submission to OMB of a Statement of 

Energy Effects for significant regulatory 

actions under Executive Order 12866 

that are likely to have a significant 

adverse effect on the supply, 

distribution, or use of energy. The 

Department has determined that the rule 

published today does not have a 

significant adverse effect on the supply, 

distribution, or use of energy and thus 

the requirement to prepare a Statement 

of Energy Effects does not apply. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a ‘‘Family 

Policymaking Assessment’’ for any rule 

that may affect family well-being. This 

rule has no impact on the autonomy or 

integrity of the family as an institution. 

Accordingly, The Department has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

K. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

The Treasury and General 

Government Appropriations Act, 2001 

(44 U.S.C. 3516, note) provides for 

agencies to review most dissemination 

of information to the public under 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. OMB’s guidelines were published 

at 67 FR 8452 (Feb. 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (Oct. 7, 2002). The 

Department has reviewed today’s final 

rule under the OMB and Department of 

Energy guidelines, and has concluded 

that it is consistent with applicable 

policies in those guidelines. 

L. Congressional Notification 

As required by 5 U.S.C. 801, the 

Department will submit to Congress a 

report regarding the issuance of today’s 

final rule prior to the effective date set 

forth at the outset of this rulemaking. 

V. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this final rule. 

List of Subjects in 10 CFR Part 950 

Government contracts, Nuclear safety. 

Issued in Washington, DC on August 4, 

2006. 

Dennis R. Spurgeon, 

Assistant Secretary, Office of Nuclear Energy. 

■ Accordingly, the interim final rule 

published at 71 FR 28200 on May 15, 

2006 which added a new part 950 to 

Title 10 of the Code of Federal 

Regulations, is adopted as a final rule 

with the following changes. 

■ 1. Part 950 is revised to read as 

follows: 

PART 950—STANDBY SUPPORT FOR 

CERTAIN NUCLEAR PLANT DELAYS 

Subpart A General Provisions 

Sec. 

950.1 Purpose. 

950.2 Scope and applicability. 

950.3 Definitions. 

Subpart B—Standby Support Contract 

Process 

950.10 Conditional agreement. 

950.11 Terms and conditions of the 

Conditional Agreement. 

950.12 Standby Support Contract 

Conditions. 

950.13 Standby Support Contract: General 

provisions. 

950.14 Standby Support Contract: Covered 

events, exclusions, covered delay, and 

covered cost provisions. 

Subpart C—Claims Administration 

Process 

950.20 General provisions. 

950.21 Notification of covered event. 

950.22 Covered event determination. 

950.23 Claims process for payment of 

covered costs. 

950.24 Claims determination for covered 

costs. 

950.25 Calculation of covered costs. 

950.26 Adjustments to claim for payment of 

covered costs. 

950.27 Conditions for payment of covered 

costs. 

950.28 Payment of covered costs. 

Subpart D—Dispute Resolution Process 

950.30 General. 

950.31 Covered event dispute resolution. 

950.32 Final determination on covered 

events. 

950.33 Covered costs dispute resolution. 

950.34 Final claim determination. 

950.35 Payment of final claim 

determination. 

950.36 Other contract matters in dispute. 

950.37 Final agreement or final decision. 

Subpart E—Audit and Investigations and 

Other Provisions 

950.40 General. 

950.41 Monitoring/Auditing. 

950.42 Disclosure. 

Authority: 42 U.S.C. 2201, 42 U.S.C. 7101 

et seq., and 42 U.S.C. 16014 

Subpart A—General Provisions 

§ 950.1 Purpose. 

The purpose of this part is to facilitate 

the construction and full power 

operation of new advanced nuclear 

facilities by providing risk insurance for 

certain delays attributed to the Nuclear 

Regulatory Commission regulatory 

process or to litigation. 

§ 950.2 Scope and applicability. 

This part sets forth the policies and 

procedures for the award and 

administration of Standby Support 

Contracts between the Department and 

sponsors of new advanced nuclear 

facilities. 

§ 950.3 Definitions. 

For the purposes of this part: 

Act means the Energy Policy Act of 

2005. 

Advanced nuclear facility means any 

nuclear facility the reactor design for 

which is approved after December 31, 

1993, by the Nuclear Regulatory 

Commission (and such design or a 

substantially similar design of 

comparable capacity was not approved 

on or before that date). 

Available indemnification means 

$500 million with respect to the initial 

two reactors and $250 million with 

respect to the subsequent four reactors. 


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Claims administrator means the 

official in the Department of Energy 

responsible for the administration of the 

Standby Support Contracts, including 

the responsibility to approve or 

disapprove claims submitted by a 

sponsor for payment of covered costs 

under the Standby Support Contract. 

Combined license means a combined 

construction and operating license 

(COL) for an advanced nuclear facility 

issued by the Commission. 

Commencement of construction 

means the point in time when a sponsor 

initiates the pouring of safety-related 

concrete for the reactor building. 

Commission means the Nuclear 

Regulatory Commission (NRC). 

Conditional Agreement means a 

contractual agreement between the 

Department and a sponsor under which 

the Department will execute a Standby 

Support Contract with the sponsor if 

and only if the sponsor is one of the first 

six sponsors to satisfy the conditions 

precedent to execution of a Standby 

Support Contract, and if funding and 

other applicable contractual, statutory 

and regulatory requirements are 

satisfied. 

Construction means the construction 

activities related to the advanced 

nuclear facility encompassed in the time 

period after commencement of 

construction and before the initiation of 

fuel load for the advanced nuclear 

facility. 

Covered cost means: 

(1) Principal or interest on any debt 

obligation financing an advanced 

nuclear facility (but excluding charges 

due to a borrower’s failure to meet a 

debt obligation unrelated to the delay); 

and 

(2) Incremental costs that are incurred 

as a result of covered delay. 

Covered delay means a delay in the 

attainment of full power operation of an 

advanced nuclear facility caused by a 

covered event, as defined by this 

section. 

Covered event means an event that 

may result in a covered delay due to: 

(1) The failure of the Commission to 

comply with schedules for review and 

approval of inspections, tests, analyses 

and acceptance criteria established 

under the combined license; 

(2) The conduct of pre-operational 

hearings by the Commission for the 

advanced nuclear facility; or 

(3) Litigation that delays the 

commencement of full power operations 

of the advanced nuclear facility. 

Department means the United States 

Department of Energy. 

Full power operation means the point 

at which the sponsor first synchronizes 

the advanced nuclear facility to the 

electrical grid. 

Grant account means the account 

established by the Secretary that 

receives appropriations or non-Federal 

funds in an amount sufficient to cover 

the amount of incremental costs for 

which indemnification is available 

under a Standby Support Contract. 

Incremental costs means the 

incremental difference between: 

(1) The fair market price of power 

purchased to meet the contractual 

supply agreements that would have 

been met by the advanced nuclear 

facility but for a covered delay; and 

(2) The contractual price of power 

from the advanced nuclear facility 

subject to the delay. 

Initial two reactors means the first two 

reactors covered by Standby Support 

Contracts that receive a combined 

license and commence construction. 

Litigation means adjudication in 

Federal, State, local or tribal courts, 

including appeals of Commission 

decisions related to the combined 

license process to such courts, but 

excluding administrative litigation that 

occurs at the Commission related to the 

combined license process. 

Loan cost means the net present value 

of the estimated cash flows of: 

(1) Payments by the government to 

cover defaults and delinquencies, 

interest subsidies, or other payments; 

and 

(2) Payments to the government 

including origination and other fees, 

penalties and recoveries, as outlined 

under the Federal Credit Reform Act of 

1990. 

Pre-operational hearing means any 

Commission hearing that is provided for 

in 10 CFR part 52, after issuance of the 

combined license. 

Program account means the account 

established by the Secretary that 

receives appropriations or loan 

guarantee fees in an amount sufficient to 

cover the loan costs. 

Program administrator means the 

Department official authorized by the 

Secretary to represent the Department in 

the administration and management of 

the Standby Support Program, including 

negotiating with and entering into a 

Conditional Agreement or a Standby 

Support Contract with a sponsor. 

Related party means the sponsor’s 

parent company, a subsidiary of the 

sponsor, or a subsidiary of the parent 

company of the sponsor. 

Secretary means the Secretary of 

Energy or a designee. 

Sponsor means a person whose 

application for a combined license for 

an advanced nuclear facility has been 

docketed by the Commission. 

Standby Support Contract means the 

contract that, when entered into by a 

sponsor and the Program Administrator 

pursuant to section 638 of the Energy 

Policy Act of 2005 after satisfaction of 

the conditions in § 950.12 and any other 

applicable contractual, statutory and 

regulatory requirements, establishes the 

obligation of the Department to 

compensate covered costs in the event 

of a covered delay subject to the terms 

and conditions specified in the Standby 

Support Contract. 

Standby Support Program means the 

program established by section 638 of 

the Act as administered by the 

Department of Energy. 

Subsequent four reactors means the 

next four reactors covered by Standby 

Support Contracts, after the initial two 

reactors, which receive a combined 

license and commence construction. 

System-level construction schedule 

means an electronic critical path 

method schedule identifying the dates 

and durations of plant systems 

installation (but excluding details of 

components or parts installation), 

sequences and interrelationships, and 

milestone dates from commencement of 

construction through full power 

operation, using software acceptable to 

the Department. 

Subpart B—Standby Support Contract 

Process 

§ 950.10 Conditional agreement. 

(a) Purpose. The Department and a 

sponsor may enter into a Conditional 

Agreement. The Department will enter 

into a Standby Support Contract with 

the first six sponsors to satisfy the 

specified conditions precedent for a 

Standby Support Contract if and only if 

all funding and other contractual, 

statutory and regulatory requirements 

have been satisfied. 

(b) Eligibility. A sponsor is eligible to 

enter into a Conditional Agreement with 

the Program Administrator after the 

sponsor has submitted to the 

Department the following information 

but before the sponsor receives approval 

of the combined license application 

from the Commission: 

(1) An electronic copy of the 

combined license application docketed 

by the Commission pursuant to 10 CFR 

part 52, and if applicable, an electronic 

copy of the design certification or early 

site permit, or environmental report 

referenced or included with the 

sponsor’s combined license application; 

(2) A summary schedule identifying 

the projected dates of construction, 

testing, and full power operation; 

(3) A detailed business plan that 

includes intended financing for the 


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project including the credit structure 

and all sources and uses of funds for the 

project, the most recent private credit 

rating or other similar credit analysis for 

project related covered financing, and 

the projected cash flows for all debt 

obligations of the advanced nuclear 

facility which would be covered under 

the Standby Support Contract; 

(4) The sponsor’s estimate of the 

amount and timing of the Standby 

Support payments for debt service 

under covered delays; and 

(5) The estimated dollar amount to be 

allocated to the sponsor’s covered costs 

for principal or interest on the debt 

obligation of the advanced nuclear 

facility and for incremental costs, 

including whether these amounts would 

be different if the advanced nuclear 

facility is one of the initial two reactors 

or one of the subsequent four reactors. 

(c) The Program Administrator shall 

enter into a Conditional Agreement with 

a sponsor upon a determination by the 

Department that the sponsor is eligible 

for a Conditional Agreement, the 

information provided by the sponsor 

under paragraph (b) of this section is 

accurate and complete, and the 

Conditional Agreement is consistent 

with applicable laws and regulations. 

§ 950.11 Terms and conditions of the 

Conditional Agreement. 

(a) General. Each Conditional 

Agreement shall include a provision 

specifying that the Program 

Administrator and the sponsor will 

enter into a Standby Support Contract 

provided that the sponsor is one of the 

first six sponsors to fulfill the 

conditions precedent specified in 

§ 950.12, subject to certain funding 

requirements and limitations specified 

in § 950.12 and any other applicable 

contractual, statutory and regulatory 

requirements. 

(b) Allocation of Coverage. Each 

Conditional Agreement shall include a 

provision specifying the amount of 

coverage to be allocated under the 

Standby Support Contract to cover 

principal or interest costs and to cover 

incremental costs, including a provision 

on whether the allocation shall be 

different if the advanced nuclear facility 

is one of the initial two reactors or one 

of the subsequent four reactors, subject 

to paragraphs (c) and (d) of this section. 

A sponsor may elect to allocate 100 

percent of the coverage to either the 

Program Account or the Grant Account. 

(c) Funding. Each Conditional 

Agreement shall contain a provision 

that the Program Account or Grant 

Account shall be funded in advance of 

execution of the Standby Support 

Contract and in the following manner, 

subject to the conditions of paragraphs 

(d) and (e) of this section. Under no 

circumstances will the amount of the 

coverage for payments of principal or 

interest under a Standby Support 

Contract exceed 80 percent of the total 

of the financing guaranteed under that 

Contract. 

(1) The Program Account shall receive 

funds appropriated to the Department, 

loan guarantee fees, or a combination of 

appropriated funds and loan guarantee 

fees that are in an amount equal to the 

loan costs associated with the amount of 

principal or interest covered by the 

available indemnification. Loan costs 

may not be paid from the proceeds of 

debt guaranteed or funded by the 

Federal government. The parties shall 

specify in the Conditional Agreement 

the anticipated amount or anticipated 

percentage of the total funding in the 

Program Account to be contributed by 

appropriated funds to the Department, 

by the sponsor, by a non-federal source, 

or by a combination of these funding 

sources. Covered costs paid through the 

Program Account are backed by the full 

faith and credit of the United States. 

(2) The Grant Account shall receive 

funds appropriated to the Department, 

funds from a sponsor, funds from a nonFederal source, or a combination of 

appropriated funds and funds from the 

sponsor or other non-Federal source, in 

an amount equal to the incremental 

costs. The parties shall specify in the 

Conditional Agreement the anticipated 

amount or anticipated percentage of the 

total funding in the Grant Account to be 

contributed by appropriated funds to 

the Department, by the sponsor, by a 

non-Federal source, or by a combination 

of these funding sources. 

(d) Reconciliation. Each Conditional 

Agreement shall include a provision 

that the sponsor shall provide no later 

than ninety (90) days prior to execution 

of a Standby Support Contract sufficient 

information for the Program 

Administrator to recalculate the loan 

costs and the incremental costs 

associated with the advanced nuclear 

facility, taking into account whether the 

sponsor’s advanced nuclear facility is 

one of the initial two reactors or the 

subsequent four reactors. 

(e) Limitations. Each Conditional 

Agreement shall contain a provision 

that limits the Department’s 

contribution of Federal funding to the 

Program Account or the Grant Account 

to only those amounts, if any, that are 

appropriated to the Department in 

advance of the Standby Support 

Contract for the purpose of funding the 

Program Account or Grant Account. In 

the event the amount of appropriated 

funds to the Department for deposit in 

the Program Account or Grant Account 

is not sufficient to result in an amount 

equal to the full amount of the loan 

costs or incremental costs resulting from 

the allocation of coverage under the 

Conditional Agreement pursuant to 

950.11(b), the sponsor shall no later 

than sixty (60) days prior to execution 

of the Standby Support Contract: 

(1) Notify the Department that it shall 

not execute a Standby Support Contract; 

or 

(2) Notify the Department that it shall 

provide the anticipated contributions to 

the Program Account or Grant Account 

as specified in the Conditional 

Agreement pursuant to 950.11(c)(1). The 

sponsor shall have the option to provide 

additional funds to the Program 

Account or Grant Account up to the 

amount equal to the full amount of loan 

costs or incremental costs. In the event 

the sponsor does not provide sufficient 

additional funds to fund the Program 

Account or the Grant Account in an 

amount equal to the full amount of loan 

costs or incremental costs, then the 

amounts of coverage available under the 

Standby Support Contract shall be 

reduced to reflect the amounts 

deposited in the Program Account or 

Grant Account. If the sponsor elects less 

than the full amount of coverage 

available under the law, then the 

sponsor shall not have recourse against, 

and the Department is not liable for, any 

claims for an amount of covered costs in 

excess of that reduced amount of 

coverage or the amount deposited in the 

Grant Account upon execution of the 

Standby Support Contract, 

notwithstanding any other provision of 

law. 

(f) Termination of Conditional 

Agreements. Each Conditional 

Agreement shall include a provision 

that the Conditional Agreement remains 

in effect until such time as: 

(1) The sponsor enters into a Standby 

Support Contract with the Program 

Administrator; 

(2) The sponsor has commenced 

construction on an advanced nuclear 

facility and has not entered into a 

Standby Support Contract with the 

Program Administrator within thirty 

(30) days after commencement of 

construction; 

(3) The sponsor notifies the Program 

Administrator in writing that it wishes 

to terminate the Conditional Agreement, 

thereby extinguishing any rights or 

obligations it may have under the 

Conditional Agreement; 

(4) The Program Administrator has 

entered into Standby Support Contracts 

that cover three different reactor 

designs, and the Conditional Agreement 

is for an advanced nuclear facility of a 


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different reactor design than those 

covered under existing Standby Support 

Contracts; or 

(5) The Program Administrator has 

entered into six Standby Support 

Contracts. 

§ 950.12 Standby Support Contract 

Conditions. 

(a) Conditions Precedent. If Program 

Administrator has not entered into six 

Standby Support Contracts, the Program 

Administrator shall enter into a Standby 

Support Contract with the sponsor, 

consistent with applicable statutes and 

regulations and subject to the conditions 

set forth in paragraphs (b) and (c) of this 

section, upon a determination by the 

Department that all the conditions 

precedent to a Standby Support 

Contract have been fulfilled, including 

that the sponsor has: 

(1) A Conditional Agreement with the 

Department, consistent with this 

subpart; 

(2) A combined license issued by the 

Commission; 

(3) Documentation that it possesses all 

Federal, State, or local permits required 

by law to commence construction; 

(4) Documentation that it has 

commenced construction of the 

advanced nuclear facility; 

(5) Documented coverage of insurance 

required for the project by the 

Commission and lenders; 

(6) Paid any required fees into the 

Program Account and the Grant 

Account, as set forth in the Conditional 

Agreement and paragraph (b) of this 

section; 

(7) Provided to the Program 

Administrator, no later than ninety (90) 

days prior to execution of the contract, 

the sponsor’s detailed schedule for 

completing the inspections, tests, 

analyses and acceptance criteria in the 

combined license and informing the 

Commission that the acceptance criteria 

have been met; and the sponsor’s 

proposed schedule for review of such 

inspections, tests, analyses and 

acceptance criteria by the Commission, 

consistent with § 950.14(a) of this part 

and which the Department will evaluate 

and approve; and 

(8) Provided to the Program 

Administrator, no later than ninety (90) 

days prior to execution of the contract, 

a detailed systems-level construction 

schedule that includes a schedule 

identifying projected dates of 

construction, testing and full power 

operation of the advanced nuclear 

facility. 

(9) Provided to the Program 

Administrator, no later than ninety (90) 

days prior to the execution of the 

contract, a detailed and up-to-date plan 

of financing for the project including the 

credit structure and all sources and uses 

of funds for the project, and the 

projected cash flows for all debt 

obligations of the advanced nuclear 

facility. 

(b) Funding. No later than thirty (30) 

days prior to execution of the contract, 

and consistent with section 638(b)(2)(C), 

funds in amounts determined pursuant 

to § 950.11(e) have been made available 

and shall be deposited in the Program 

Account or the Grant Account 

respectively. 

(c) Limitations. The Department shall 

not enter into a Standby Support 

Contract, if: 

(1) Program Account. The contract 

provides coverage of principal or 

interest costs for which the loan costs 

exceed the amount of funds deposited 

in the Program Account; or 

(2) Grant Account. The contract 

provides coverage of incremental costs 

that exceed the amount of funds 

deposited in the Grant Account. 

(d) Cancellation by Abandonment. 

(1) If the Program Administrator 

cancels a Standby Support Contract for 

abandonment pursuant to 950.13(f)(1), 

the Program Administrator may reexecute a Standby Support Contract 

with a sponsor other than a sponsor or 

that sponsor’s assignee with whom the 

Department had a cancelled contract, 

provided that such replacement Standby 

Support Contract is executed in 

accordance with the terms and 

conditions set forth in this part, and 

shall be deemed to be one of the 

subsequent four reactors under this part. 

(2) Not more than two Standby 

Support Contracts may be re-executed 

in situations involving abandonment 

and cancellation by the Program 

Administrator. 

§ 950.13 Standby Support Contract: 

General provisions. 

(a) Purpose. Each Standby Support 

Contract shall include a provision 

setting forth an agreement between the 

parties in which the Department shall 

provide compensation for covered costs 

incurred by a sponsor for covered events 

that result in a covered delay of full 

power operation of an advanced nuclear 

facility. 

(b) Covered facility. Each Standby 

Support Contract shall include a 

provision of coverage only for an 

advanced nuclear facility which is not 

a federal entity. Each Standby Support 

Contract shall also include a provision 

to specify the advanced nuclear facility 

to be covered, along with the reactor 

design, and the location of the advanced 

nuclear facility. 

(c) Sponsor contribution. Each 

Standby Support Contract shall include 

a provision to specify the amount that 

a sponsor has contributed to funding 

each type of account. 

(d) Maximum compensation. Each 

Standby Support Contract shall include 

a provision to specify that the Program 

Administrator shall not pay 

compensation under the contract: 

(1) In an aggregate amount that 

exceeds the amount of coverage up to 

$500 million each for the initial two 

reactors or up to $250 million each for 

the subsequent four reactors; 

(2) In an amount for principal or 

interest costs for which the loan costs 

exceed the amount deposited in the 

Program Account; and 

(3) In an amount for incremental costs 

that exceed the amount deposited in the 

Grant Account. 

(e) Term. Each Standby Support 

Contract shall include a provision to 

specify the date at which the contract 

commences as well as the term of the 

contract. The contract shall enter into 

force on the date it has been signed by 

both the sponsor and the Program 

Administrator. Subject to the 

cancellation provisions set forth in 

paragraph (f) of this section, the contract 

shall terminate when all claims have 

been paid up to the full amounts to be 

covered under the Standby Support 

Contract, or all disputes involving 

claims under the contract have been 

resolved in accordance with subpart D 

of this part. 

(f) Cancellation provisions. Each 

Standby Support Contract shall provide 

for cancellation in the following 

circumstances: 

(1) If the sponsor abandons 

construction, and the abandonment is 

not caused by a covered event or force 

majeure, the Program Administrator 

may cancel the Standby Support 

Contract by giving written notice thereof 

to the sponsor and the parties have no 

further rights or obligations under the 

contract. 

(2) If the sponsor does not require 

continuing coverage under the contract, 

the sponsor may cancel the Standby 

Support Contract by giving written 

notice thereof to the Program 

Administrator and the parties have no 

further rights or obligations under the 

contract. 

(3) For such other cause as agreed to 

by the parties. 

(g) Termination by sponsor. Each 

Standby Support Contract shall include 

a provision that prohibits a sponsor or 

any related party from executing 

another Standby Support Contract, if the 

sponsor elects to terminate its original 

existing Standby Support Contract, 


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unless the sponsor has cancelled or 

terminated construction of the reactor 

covered by its original existing Standby 

Support Contract. 

(h) Assignment. Each Standby 

Support Contract shall include a 

provision on assignment of a sponsor’s 

rights and obligations under the contract 

and assignment of payment of covered 

costs. The Program Administrator shall 

permit the assignment of payment of 

covered costs with prior written notice 

to the Department. The Program 

Administrator shall permit assignment 

of rights and obligations under the 

contract with the Department’s prior 

approval. The sponsor may not assign 

its rights and obligations under the 

contract without the prior written 

approval of the Program Administrator 

and any attempt to do so is null and 

void. 

(i) Claims administration. Each 

Standby Support Contract shall include 

a provision to specify a mechanism for 

administering claims pursuant to the 

procedures set forth in subpart C of this 

part. 

(j) Dispute resolution. Consistent with 

the Administrative Dispute Resolution 

Act, each Standby Support Contract 

shall include a provision to specify a 

mechanism for resolving disputes 

pursuant to the procedures set forth in 

subpart D of this part. 

(k) Re-estimation. Consistent with the 

Federal Credit Reform Act (FCRA) of 

1990, the sponsor shall provide all 

needed documentation as required in 

§ 950.12 to allow the Department to 

annually re-estimate the loan cost 

needed in the financing account as that 

term is used in 2 U.S.C. 661a(7) and 

funded by the Program Account. ‘‘The 

sponsor is neither responsible for any 

increase in loan costs, nor entitled to 

recoup fees for any decrease in loan 

costs, resulting from the re-estimation 

conducted pursuant to FCRA. 

§ 950.14 Standby Support Contract: 

Covered events, exclusions, covered delay 

and covered cost provisions. 

(a) Covered events. Subject to the 

exclusions set forth in paragraph (b) of 

this section, each Standby Support 

Contract shall include a provision 

setting forth the type of events that are 

covered events under the contract. The 

type of events shall include: 

(1) The Commission’s failure to 

review the sponsor’s inspections, tests, 

analyses and acceptance criteria in 

accordance with the Commission’s 

rules, guidance, audit procedures, or 

formal opinions, in the case where the 

Commission has in place any rules, 

guidance, audit procedures or formal 

opinions setting schedules for its review 

of inspections, tests, analyses, and 

acceptance criteria under a combined 

license or the sponsor’s combined 

license; 

(2) The Commission’s failure to 

review the sponsor’s inspections, tests, 

analyses, and acceptance criteria on the 

schedule for such review proposed by 

the sponsor, subject to the Department’s 

review and approval of such schedule, 

including review of any informal 

guidance or opinion of the Commission 

that has been provided to the sponsor or 

the Department, in the case where the 

Commission has not provided any rules, 

guidance, audit procedures or formal 

Commission opinions setting schedules 

for review of inspections, tests, analyses 

and acceptance criteria under a 

combined license, or under the 

sponsor’s combined license; 

(3) The conduct of pre-operational 

Commission hearings, that are provided 

for in 10 CFR part 52, after issuance of 

the combined license; and 

(4) Litigation in State, Federal, local, 

or tribal courts, including appeals of 

Commission decisions related to an 

application for a combined license to 

such courts., and excluding 

administrative litigation that occurs at 

the Commission related to the combined 

license. 

(b) Exclusions. Each Standby Support 

Contract shall include a provision 

setting forth the exclusions from 

covered costs under the contract, and 

for which any associated delay in the 

attainment of full power operations is 

not a covered delay. The exclusions are: 

(1) The failure of the sponsor to take 

any action required by law, regulation, 

or ordinance, including but not limited 

to the following types of events: 

(i) The sponsor’s failure to comply 

with environmental laws or regulations 

such as those related to pollution 

abatement or human health and the 

environment; 

(ii) The sponsor’s re-performance of 

any inspections, tests, analyses or redemonstration that acceptance criteria 

have been met due to Commission nonacceptance of the sponsor’s submitted 

results of inspections, tests, analyses, 

and demonstration of acceptance 

criteria; 

(iii) Delays attributable to the 

sponsor’s actions to redress any 

deficiencies in inspections, tests, 

analyses or acceptance criteria as a 

result of a Commission disapproval of 

fuel loading; or 

(2) Events within the control of the 

sponsor, including but not limited to 

delays attributable to the following 

types of events: 

(i) Project planning and construction 

problems; 

(ii) Labor-management disputes; 

(iii) The sponsor’s failure to perform 

inspections, tests, analyses and to 

demonstrate acceptance criteria are met 

or failure to inform the Commission of 

the successful completion of 

inspections, tests, analyses and 

demonstration of meeting acceptance 

criteria in accordance with its schedule; 

or 

(iv) The lack of adequate funding for 

construction and testing of the advanced 

nuclear facility. 

(3) Normal business risks, including 

but not limited to the following types of 

events: 

(i) Delays attributable to force majeure 

events such as a strike or the failure of 

power or other utility services supplied 

to the location, or natural events such as 

severe weather, earthquake, landslide, 

mudslide, volcanic eruption, other earth 

movement, or flood; 

(ii) Government action meaning the 

seizure or destruction of property by 

order of governmental authority; 

(iii) War or military action; 

(iv) Acts or decisions, including the 

failure to act or decide, of any 

government body (excluding those acts 

or decisions or failure to act or decide 

by the Commission that are covered 

events); 

(v) Supplier or subcontractor delays 

in performance; 

(vi) Litigation, whether initiated by 

the sponsor or another party, that is not 

a covered event under paragraph (a) of 

this section; or 

(vii) Failure to timely obtain 

regulatory permits or approvals that are 

not covered events under paragraph (a) 

of this section. 

(c) Covered delay. Each Standby 

Support Contract shall include a 

provision for the payment of covered 

costs, in accordance with the 

procedures in subpart C of this part for 

the payment of covered costs, if a 

covered event(s) is determined to be the 

cause of delay in attainment of full 

power operation, provided that: 

(1) Under Standby Support Contracts 

for the subsequent four reactors, covered 

delay may occur only after the initial 

180-day period of delay, and 

(2) The sponsor has used due 

diligence to mitigate, shorten, and end, 

the covered delay and associated costs 

covered by the Standby Support 

Contract. 

(d) Covered costs. Each Standby 

Support Contract shall include a 

provision to specify the type of costs for 

which the Department shall provide 

payment to a sponsor for covered delay 

in accordance with the procedures set 

forth in subparts C and D of this part. 

The types of costs shall be limited to 


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either or both, dependent upon the 

terms of the contract: 

(1) The principal or interest on which 

the loan costs for the Program Account 

was calculated; and 

(2) The incremental costs on which 

funding for the Grant Account was 

calculated. 

(e) ITAAC Schedule. Each Standby 

Support Contract shall provide for 

adjustments to the ITAAC review 

schedule when the parties deem 

necessary, in the case where the 

Commission has not provided any rules, 

guidance, audit procedures or formal 

Commission opinions setting schedules 

for review of inspections, tests, analyses 

and acceptance criteria under a 

combined license, upon review and 

approval by the Department and the 

sponsor. Adjustments to the ITAAC 

review schedule must be in writing, 

expressly approved by the Department 

and the sponsor, and remain in effective 

for determining covered events unless 

and until a subsequently issued ITAAC 

review schedule is approved by the 

parties. 

Subpart C—Claims Administration 

Process 

§ 950.20 General provisions. 

The parties shall include provisions 

in the Standby Support Contract to 

specify the procedures and conditions 

set forth in this subpart for the 

submission of claims and the payment 

of covered costs under the Standby 

Support Contract. A sponsor is required 

to establish that there is a covered event, 

a covered delay and a covered cost; the 

Department is required to establish an 

exclusion in accordance with 

§ 950.14(b). 

§ 950.21 Notification of covered event. 

(a) A sponsor shall submit in writing 

to the Claims Administrator a 

notification that a covered event has 

occurred that has delayed the schedule 

for construction or testing and that may 

cause covered delay. The sponsor shall 

submit the notification to the Claims 

Administrator no later than thirty (30) 

days of the end of the covered event and 

contain the following information: 

(1) A description and explanation of 

the covered event, including supporting 

documentation of the event; 

(2) The duration of the delay in the 

schedule for construction, testing and 

full power operation, and the schedule 

for inspections, tests, analyses and 

acceptance criteria, if applicable; 

(3) The sponsor’s projection of the 

duration of covered delay; 

(4) A revised schedule for 

construction, testing and full power 

operation, including the dates of system 

level construction or testing that had 

been conducted prior to the event; and 

(5) A revised inspections, tests, 

analyses, and acceptance criteria 

schedule, if applicable, including the 

dates of Commission review of 

inspections, tests, analyses, and 

acceptance criteria that had been 

conducted prior to the event. 

(b) An authorized representative of 

the sponsor shall sign the notification of 

a covered event, certify the notification 

is made in good faith and the covered 

event is not an exclusion as specified in 

§ 950.14(b), and represent that the 

supporting information is accurate and 

complete to the sponsor’s knowledge 

and belief. 

§ 950.22 Covered event determination. 

(a) Completeness review. Upon 

notification of a covered event from the 

sponsor, the Claims Administrator shall 

review the notification for completeness 

within thirty (30) days of receipt. If the 

notification is not complete, the Claims 

Administrator shall return the 

notification within thirty (30) days of 

receipt and specify the incomplete 

information for submission by the 

sponsor to the Claims Administrator in 

time for a determination by the Claims 

Administrator in accordance with 

paragraph (c) of this section. 

(b) Covered Event Determination. The 

Claims Administrator shall review the 

notification and supporting information 

to determine whether there is agreement 

by the Claims Administrator with the 

sponsor’s representation of the event as 

a covered event (Covered Event 

Determination) based on a review of the 

contract conditions for covered events 

and exclusions. 

(1) If the Claims Administrator 

believes the event is an exclusion as set 

forth in § 950.14(b), the Claims 

Administrator shall request within 30 

days of receipt of the notification of a 

covered event information in the 

sponsor’s possession that is relevant to 

the exclusion. The sponsor shall 

provide the requested information to the 

Administrator within 20 days of receipt 

of the Administrator’s request. 

(2) The sponsor’s failure to provide 

the requested information in a complete 

or timely manner constitutes a basis for 

the Claims Administrator to disagree 

with the sponsor’s covered event 

notification as provided in paragraph (c) 

of this section, and to deny a claim for 

covered costs related to the exclusion as 

provided in § 950.24 of this part. 

(c) Timing. The Claims Administrator 

shall notify the sponsor within sixty 

(60) days of receipt of the notification 

whether the Administrator agrees with 

the sponsor’s representation, disagrees 

with the representation, requires further 

information, or is an exclusion. If the 

sponsor disagrees with the Covered 

Event Determination, the parties shall 

resolve the dispute in accordance with 

the procedures set forth in subpart D of 

this part. 

§ 950.23 Claims process for payment of 

covered costs. 

(a) General. No more than 120 days of 

when a sponsor was scheduled to attain 

full power operation and expects it will 

incur covered costs, the sponsor may 

make a claim upon the Department for 

the payment of its covered costs under 

the Standby Support Contract. The 

sponsor shall file a Certification of 

Covered Costs and thereafter such 

Supplementary Certifications of 

Covered Costs as may be necessary to 

receive payment under the Standby 

Support Contract for covered costs. 

(b) Certification of Covered Costs. The 

Certification of Covered Costs shall 

include the following: 

(1) A Claim Report, including the 

information specified in paragraph (c) of 

this section; 

(2) A certification by the sponsor that: 

(i) The covered costs listed on the 

Claim Report filed pursuant to this 

section are losses to be incurred by the 

sponsor; 

(ii) The claims for the covered costs 

were processed in accordance with 

appropriate business practices and the 

procedures specified in this subpart; 

and 

(iii) The sponsor has used due 

diligence to mitigate, shorten, and end, 

the covered delay and associated costs 

covered by the Standby Support 

Contract. 

(c) Claim Report. For purposes of this 

part, a ‘‘Claim Report’’ is a report of 

information about a sponsor’s 

underlying claims that, in the aggregate, 

constitute the sponsor’s covered costs. 

The Claim Report shall include, but is 

not limited to: 

(1) Detailed information 

substantiating the duration of the 

covered delay; 

(2) Detailed information about the 

covered costs associated with covered 

delay, including as applicable: 

(i) The amount of payment for 

principal or interest during the covered 

delay, including the relevant dates of 

payment, amounts of payment and any 

other information deemed relevant by 

the Department, and the name of the 

holder of the debt, if the debt obligation 

is held by a Federal agency; or 

(ii) The underlying payment during 

the covered delay related to the 

incremental cost of purchasing power to 


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meet contractual agreements, including 

any documentation deemed relevant by 

the Department to calculate the fair 

market price of power. 

(d) Supplementary Certification of 

Covered Cost. If the total amount of the 

covered costs due to a sponsor under 

the Standby Support Contract has not 

been determined at the time the 

Certification of Covered Costs has been 

filed, the sponsor shall file monthly, or 

on a schedule otherwise determined by 

the Claims Administrator, 

Supplementary Certifications of 

Covered Costs updating the amount of 

the covered costs owed to the sponsor. 

Supplementary Certifications of 

Covered Costs shall include a Claim 

Report and a certification as described 

in this section. 

(e) Supplementary information. In 

addition to the information required in 

paragraphs (b) and (c) of this section, 

the Claims Administrator may request 

such additional supporting 

documentation as required to ascertain 

the allowable covered costs sustained by 

a sponsor. 

§ 950.24 Claims determination for covered 

costs. 

(a) No later than thirty (30) days from 

the sponsor’s submission of a 

Certification of Covered Costs, the 

Claims Administrator shall issue a 

Claim Determination identifying those 

claimed costs deemed to be allowable 

based on an evaluation of: 

(1) The duration of covered delay, 

taking into account contributory or 

concurrent delays resulting from 

exclusions from coverage as established 

by the Claims Administrator in 

accordance with § 950.22; 

(2) The covered costs associated with 

covered delay, including an assessment 

of the sponsor’s due diligence in 

mitigating or ending covered costs, as 

set forth in § 950.23; 

(3) Any adjustments to the covered 

costs, as set forth in § 950.26; and 

(4) Other information as necessary 

and appropriate. 

(b) The Claim Determination shall 

state the Claims Administrator’s 

determination that the claim shall be 

paid in full, paid in an adjusted amount 

as deemed allowable by the Claims 

Administrator, or rejected in full. 

(c) Should the Claims Administrator 

conclude that the sponsor has not 

supplied the required information in the 

Certification of Covered Costs or any 

supporting documentation sufficient to 

allow reasonable verification of the 

duration of the covered delay or covered 

costs, the Claims Administrator shall so 

inform the sponsor and specify the 

nature of additional documentation 

requested, in time for the sponsor to 

supply supplemental documentation 

and for the Claims Administrator to 

issue the Claim Determination. 

(d) Should the Claims Administrator 

find that any claimed covered costs are 

not allowable or otherwise should be 

considered excluded costs under the 

Standby Support Contract, the Claims 

Administrator shall identify such costs 

and state the reason(s) for that decision 

in writing. A determination by the 

Claims Administrator that an event is an 

exclusion or that the sponsor has not 

provided complete or timely 

information relevant to the exclusion as 

specified in § 950.22 shall provide a 

basis for the Claims Administrator to 

find covered costs are not allowable. If 

the parties cannot agree on the covered 

costs, they shall resolve the dispute in 

accordance with the requirements in 

subpart D of this part. 

§ 950.25 Calculation of covered costs. 

(a) The Claims Administrator shall 

calculate the allowable amount of the 

covered costs claimed in the 

Certification of Covered Costs as 

follows: 

(1) Costs covered through Program 

Account. The principal or interest on 

any debt obligation financing the 

advanced nuclear facility for the 

duration of covered delay to the extent 

the debt obligation was included in the 

calculation of the loan cost; and 

(2) Costs covered by Grant Account. 

The incremental costs calculated for the 

duration of the covered delay. In 

calculating the incremental cost of 

power, the Claims Administrator shall 

consider: 

(i) Fair Market Price. The fair market 

price may be determined by the lower 

of the two options: The actual cost of 

the short-term supply contract for 

replacement power, purchased by the 

sponsor, during the period of delay, or 

for each day of replacement power by its 

day-ahead weighted average index price 

in $/MWh at the hub geographically 

nearest to the advanced nuclear facility 

as posted on the previous day by the 

Intercontinental Exchange (ICE) or an 

alternate electronic marketplace deemed 

reliable by the Department. The daily 

MWh assumed to be covered is no more 

than its nameplate capacity multiplied 

by 24 hours; multiplied by the capacityweighted U.S. average capacity factor in 

the previous calendar year, including in 

the calculation any and all commercial 

nuclear power units that operated in the 

United States for any part of the 

previous calendar year; and multiplied 

by the average of the ratios of the net 

generation to the grid for calculating 

payments to the Nuclear Waste Fund to 

the nameplate capacity for each nuclear 

unit included. In addition, the Claims 

Administrator may consider ‘‘fair 

market price’’ from other published 

indices or prices at regional trading 

hubs and bilateral contracts for similar 

delivered firm power products and the 

costs incurred, including acquisition 

costs, to move the power to the contractspecified point of delivery, as well as 

the provisions of the covered contract 

regarding replacement power costs for 

delivery default; and 

(ii) Contractual price of power. The 

contractual price of power shall be 

determined as the daily weighted 

average price in equivalent $/MWh 

under a contractual supply agreement(s) 

for delivery of firm power that the 

sponsor entered into prior to any 

covered event. The daily MWh assumed 

to be covered is no more than the 

advanced nuclear facility’s nameplate 

capacity multiplied by 24 hours; 

multiplied by the capacity-weighted 

U.S. average capacity factor in the 

previous calendar year, including in the 

calculation any and all commercial 

nuclear power units that operated in the 

United States for any part of the 

previous calendar year; and multiplied 

by the average of the ratios of the net 

generation to the grid for calculating 

payments to the Nuclear Waste Fund to 

the nameplate capacity for each nuclear 

unit included. 

§ 950.26 Adjustments to claim for payment 

of covered costs. 

(a) Aggregate amount of covered costs. 

The sponsor’s aggregate amount of 

covered costs shall be reduced by any 

amounts that are determined to be either 

excluded or not covered. 

(b) Amount of Department share of 

covered costs. The Department share of 

covered costs shall be adjusted as 

follows: 

(1) No excess recoveries. The share of 

covered costs paid by the Department to 

a sponsor shall not be greater than the 

limitations set forth in § 950.27(d). 

(2) Reduction of amount payable. The 

share of covered costs paid by the 

Department shall be reduced by the 

appropriate amount consistent with the 

following: 

(i) Excluded claims. The Department 

shall ensure that no payment shall be 

made for costs resulting from events that 

are not covered under the contract as 

specified in § 950.14; and 

(ii) Sponsor due diligence. Each 

sponsor shall ensure and demonstrate 

that it uses due diligence to mitigate, 

shorten, and to end the covered delay 

and associated costs covered by the 

Standby Support Contract. 


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§ 950.27 Conditions for payment of 

covered costs. 

(a) General. The Department shall pay 

the covered costs associated with a 

Standby Support Contract in accordance 

with the Claim Determination issued by 

the Claims Administrator under 

§ 950.24 or the Final Claim 

Determination under § 950.34, provided 

that: 

(1) Neither the sponsor’s claim for 

covered costs nor any other document 

submitted to support the underlying 

claim is fraudulent, collusive, made in 

bad faith, dishonest or otherwise 

designed to circumvent the purposes of 

the Act and regulations; 

(2) The losses submitted for payment 

are within the scope of coverage issued 

by the Department under the terms and 

conditions of the Standby Support 

Contract as specified in subpart B of this 

part; and 

(3) The procedures specified in this 

subpart have been followed and all 

conditions for payment have been met. 

(b) Adjustments to Payments. In the 

event of fraud or miscalculation, the 

Department may subsequently adjust, 

including an adjustment obligating the 

sponsor to repay any payment made 

under paragraph (a) of this section. 

(c) Suspension of payment for covered 

costs. If the Department paid or is 

paying covered costs under paragraph 

(a) of this section, and subsequently 

makes a determination that a sponsor 

has failed to meet any of the 

requirements for payment specified in 

paragraph (a) of this section for a 

particular covered cost, the Department 

may suspend payment of covered costs 

pending investigation and audit of the 

sponsor’s covered costs. 

(d) Amount payable. The 

Department’s share of compensation for 

the initial two reactors is 100 percent of 

the covered costs of covered delay but 

not more than the coverage in the 

contract or $500 million per contract, 

whichever is less; and for the 

subsequent four reactors, not more than 

50 percent of the covered costs of the 

covered delay but not more than the 

coverage in the contract or $250 million 

per contract, whichever is less. The 

Department’s share of compensation for 

the subsequent four reactors is further 

limited in that the payment is for 

covered costs of a covered delay that 

occurs after the initial 180-day period of 

covered delay. 

§ 950.28 Payment of covered costs. 

(a) General. The Department shall pay 

to a sponsor covered costs in accordance 

with this subpart and the terms of the 

Standby Support Contract. Payment 

shall be made in such installments and 

on such conditions as the Department 

determines appropriate. Any 

overpayments by the Department of the 

covered costs shall be offset from future 

payments to the sponsor or returned by 

the sponsor to the Department within 

forty-five (45) days. If there is a dispute, 

then the Department shall pay the 

undisputed costs and defer payment of 

the disputed portion upon resolution of 

the dispute in accordance with the 

procedures in subpart D of this part. If 

the covered costs include principal or 

interest owed on a loan made or 

guaranteed by a Federal agency, the 

Department shall instead pay that 

Federal agency the covered costs, rather 

than the sponsor. 

(b) Timing of Payment. The sponsor 

may receive payment of covered costs 

when: 

(1) The Department has approved 

payment of the covered cost as specified 

in this subpart; and 

(2) The sponsor has incurred and is 

obligated to pay the costs for which 

payment is requested. 

(c) Payment process. The covered 

costs shall be paid to the sponsor 

designated on the Certification of 

Covered Costs required by § 950.23, or 

to the sponsor’s assignee as permitted 

by § 950.13(h). A sponsor that requests 

payment of the covered costs must 

receive payment through electronic 

funds transfer. 

Subpart D—Dispute Resolution 

Process 

§ 950.30 General. 

The parties, i.e., the sponsor and the 

Department, shall include provisions in 

the Standby Support Contract that 

specify the procedures set forth in this 

subpart for the resolution of disputes 

under a Standby Support Contract. 

Sections 950.31 and 950.32 address 

disputes involving covered events; 

§§ 950.33 and 950.34 address disputes 

involving covered costs; and §§ 950.36 

and 950.37 address disputes involving 

other contract matters. 

§ 950.31 Covered event dispute resolution. 

(a) If a sponsor disagrees with the 

Covered Event Determination rendered 

in accordance with § 950.22 and cannot 

resolve the dispute informally with the 

Claims Administrator, then the 

disagreement is subject to resolution as 

follows: 

(1) A sponsor shall, within thirty (30) 

days of receipt of the Covered Event 

Determination, deliver to the Claims 

Administrator written notice of a 

sponsor’s rebuttal which sets forth 

reasons for its disagreement, including 

any expert opinion obtained by the 

sponsor. 

(2) After submission of the sponsor’s 

rebuttal to the Claims Administrator, the 

parties shall have fifteen (15) days 

during which time they must informally 

and in good faith participate in 

mediation to attempt to resolve the 

disagreement before instituting the 

process under paragraph (b) of this 

section. If the parties reach agreement 

through mediation, the agreement shall 

constitute a Final Determination on 

Covered Events. 

(3) The parties shall jointly select the 

mediator(s). The parties shall share 

equally the cost of the mediation. 

(b) If the parties cannot resolve the 

disagreement through mediation under 

the timeframe established under 

paragraph (a)(2) of this section and the 

sponsor elects to continue pursuing the 

claim, the sponsor shall within ten (10) 

days submit any remaining issues in 

controversy to the Civilian Board of 

Contract Appeals (Civilian Board) or its 

successor, for resolution by an 

Administrative Judge of the Civilian 

Board utilizing the Civilian Board’s 

Summary Binding Decision procedure. 

The parties shall abide by the 

procedures of the Civilian Board for 

Summary Binding Decision. The parties 

agree that the decision of the Civilian 

Board constitutes a Final Determination 

on Covered Events. 

§ 950.32 Final determination on covered 

events. 

(a) If the parties reach a Final 

Determination on Covered Events 

through mediation, or Summary 

Binding Decision as set forth in this 

subpart, the Final Determination on 

Covered Events is a final settlement of 

the issue, made by the sponsor and the 

Program Administrator. The sponsor, 

and the Department, may rely on, and 

neither may challenge, the Final 

Determination on Covered Events in any 

future Certification of Covered Costs 

related to the covered event that was the 

subject of that Initial Determination. 

(b) The parties agree that no appeal 

shall be taken or further review sought, 

and that the Final Determination on 

Covered Events is final, conclusive, 

non-appealable and may not be set 

aside, except for fraud. 

§ 950.33 Covered costs dispute resolution. 

(a) If a sponsor disagrees with the 

Claim Determination rendered in 

accordance with § 950.24 and cannot 

resolve the dispute informally with the 

Claims Administrator, then the parties 

agree that any dispute must be resolved 

as follows: 


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(1) A sponsor shall, within thirty (30) 

days of receipt of the Claim 

Determination, deliver to the Claims 

Administrator in writing notice of and 

reasons for its disagreement (Sponsor’s 

Rebuttal), including any expert opinion 

obtained by the sponsor. 

(2) After submission of the sponsor’s 

rebuttal to the Claims Administrator, the 

parties have fifteen (15) days to 

informally and in good faith participate 

in mediation to resolve the 

disagreement before instituting the 

process under paragraph (b) of this 

section. If the parties reach agreement 

through mediation, the agreement shall 

constitute a Final Claim Determination. 

(3) The parties shall jointly select the 

mediator(s). The parties shall share 

equally the cost of the mediator(s). 

(b) If the parties cannot resolve the 

disagreement through mediation under 

the timeframe established under 

paragraph (a)(2) of this section, any 

remaining issues in controversy shall be 

submitted by the sponsor within ten 

(10) days to the Civilian Board or its 

successor, for resolution by an 

Administrative Judge of the Civilian 

Board utilizing the Board’s Summary 

Binding Decision procedure. The parties 

shall abide by the procedures of the 

Civilian Board for Summary Binding 

Decision. The parties agree that the 

decision of the Civilian Board shall 

constitute a Final Claim Determination. 

§ 950.34 Final claim determination. 

(a) If the parties reach a Final Claim 

Determination through mediation, or 

Summary Binding Decision as set forth 

in this subpart, the Final Claim 

Determination is a final settlement of 

the issue, made by the sponsor and the 

Program Administrator. 

(b) The parties agree that no appeal 

shall be taken or further review sought 

and that the Final Claim Determination 

is final, conclusive, non-appealable, and 

may not be set aside, except for fraud. 

§ 950.35 Payment of final claim 

determination. 

Once a Final Claim Determination is 

reached by the methods set forth in this 

subpart, the parties intend that such a 

Final Claim Determination shall 

constitute a final settlement of the claim 

and the sponsor may immediately 

present to the Department a Final Claim 

Determination for payment. 

§ 950.36 Other contract matters in dispute. 

(a) If the parties disagree over terms 

or conditions of the Standby Support 

Contract other than disagreements 

related to covered events or covered 

costs, then the parties shall engage in 

informal dispute resolution as follows: 

(1) The parties shall engage in good 

faith efforts to resolve the dispute after 

written notification by one party to the 

other that there is a contract matter in 

dispute. 

(2) If the parties cannot reach a 

resolution of the matter in disagreement 

within thirty (30) days of the written 

notification of the matter in dispute, 

then the parties shall have fifteen (15) 

days during which time they must 

informally and in good faith participate 

in mediation to attempt to resolve the 

disagreement before instituting the 

process under paragraph (b) of this 

section. If the parties reach agreement 

through mediation, the agreement shall 

constitute a Final Agreement on the 

matter in dispute. 

(3) The parties shall jointly select the 

mediator(s). The parties shall share 

equally the cost of the mediation. 

(b) If the parties cannot resolve the 

disagreement through mediation under 

the timeframe established in paragraph 

(a)(2) of this section and either party 

elects to continue pursuing the 

disagreement, that party shall within ten 

(10) days submit any remaining issues 

in controversy to the Civilian Board or 

its successor, for resolution by an 

Administrative Judge of the Civilian 

Board utilizing the Civilian Board’s 

Summary Binding Decision procedure. 

The parties shall abide by the 

procedures of the Civilian Board for 

Summary Binding Decision. The parties 

shall agree that the decision of the 

Civilian Board constitutes a Final 

Decision on the matter in dispute. 

§ 950.37 Final agreement or final decision. 

(a) If the parties reach a Final 

Agreement on a contract matter in 

dispute through mediation, or a Final 

Decision on a contract matter in dispute 

through a Summary Binding Decision as 

set forth in this subpart, the Final 

Agreement or Final Decision is a final 

settlement of the contract matter in 

dispute, made by the sponsor and the 

Program Administrator. 

(b) The parties agree that no appeal 

shall be taken or further review sought, 

and that the Final Agreement or Final 

Decision is final, conclusive, nonappealable and may not be set aside, 

except for fraud. 

Subpart E—Audit and Investigations 

and Other Provisions 

§ 950.40 General. 

The parties shall include a provision 

in the Standby Support Contract that 

specifies the procedures in this subpart 

for the monitoring, auditing and 

disclosure of information under a 

Standby Support Contract. 

§ 950.41 Monitoring/Auditing. 

The Department has the right to audit 

any and all costs associated with the 

Standby Support Contracts. Auditors 

who are employees of the United States 

government, who are designated by the 

Secretary of Energy or by the 

Comptroller General of the United 

States, shall have access to, and the 

right to examine, at the sponsor’s site or 

elsewhere, any pertinent documents and 

records of a sponsor at reasonable times 

under reasonable circumstances. The 

Secretary may direct the sponsor to 

submit to an audit by a public 

accountant or equivalent acceptable to 

the Secretary. 

§ 950.42 Disclosure. 

Information received from a sponsor 

by the Department may be available to 

the public subject to the provision of 5 

U.S.C. 552, 18 U.S.C. 1905 and 10 CFR 

part 1004; provided that: 

(a) Subject to the requirements of law, 

information such as trade secrets, 

commercial and financial information 

that a sponsor submits to the 

Department in writing shall not be 

disclosed without prior notice to the 

sponsor in accordance with Department 

regulations concerning the public 

disclosure of information. Any 

submitter asserting that the information 

is privileged or confidential should 

appropriately identify and mark such 

information. 

(b) Upon a showing satisfactory to the 

Program Administrator that any 

information or portion thereof obtained 

under this regulation would, if made 

public, divulge trade secrets or other 

proprietary information, the Department 

may not disclose such information. 

[FR Doc. 06–6818 Filed 8–10–06; 8:45 am] 

BILLING CODE 6450–01–P 


sroberts on PROD1PC70 with RULES