Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29531

The national grain industry

association commented that, ‘‘In today’s

highly competitive business

environment, it is important that all

service providers seek new ways to meet

customer needs in the most costeffective way possible. We are not

surprised to learn that GIPSA has

determined that private contractors can,

in some cases, perform inspection

services more effectively or, at least, at

less cost than traditional service

providers. For example, GIPSA reports

that the use of private contractors has

proven effective when using contract

samplers at remote service points. Also,

as GIPSA notes, the use of private

contractors can increase the flexibility

of GIPSA and State cooperators to meet

customer needs during periods of peak

demand.’’ An official agency also

commented that using contractors

would help lower the cost of providing

official services.

The animal welfare organization

indicated several concerns about any

type of inspection services which the

Government is considering contracting

out. The organization stated that it is

imperative that ‘‘All contractors,

subcontractors, and employees of either

must be properly trained and free of any

financial or other business interest in

any of the ‘commodities’ they inspect.’’

They went on to state that ‘‘Citizens

expect that the law and its regulations

will be enforced objectively, and the

inspectors will be licensed using criteria

which is designed to select only

experienced and qualified men and

women.’’ We do note that all official

inspection personnel, whether

employed by GIPSA, a cooperator, or a

contractor, will be held to the same

standards of fitness; i.e., they must be

fully trained, tested according to

established GIPSA procedures, free of

any conflicts of interest, and licensed/

authorized by GIPSA to inspect graded

commodities.

On the basis of these comments and

other available information, GIPSA has

decided to amend the regulations to

allow GIPSA and cooperators to contract

for service work and to license

individual contractors and those

employed by contractors.

Final Action

To provide for more responsive, costeffective inspection services under the

Act of 1946, GIPSA is revising:

1. Section 868.1(b)(13) to expand the

definition of contractor to provide for

cooperators to use contractors for

specified services.

2. Section 868.80(a)(1) to add

provisions for licensing individual

contractors and employees of

contractors.

List of Subjects in 7 CFR Part 868

Administrative practice and

procedure, Agricultural commodities.

For reasons set forth in the preamble,

7 CFR part 868 is amended as follows:

PART 868—GENERAL REGULATIONS

AND STANDARDS FOR CERTAIN

AGRICULTURAL COMMODITIES

1. The authority citation for Part 868

continues to read as follows:

Authority: Secs. 202–208, 60 Stat. 1087, as

amended (7 U.S.C. 1621 et seq.).

2. Section 868.1(b)(13) is revised to

read as follows:

§ 868.1 Meaning of terms.

* * * * *

(b) * * *

(13) Contractor. Any person who

enters into a contract with the Service

or with a cooperator to perform

specified inspection services.

* * * * *

3. Section 868.80(a)(1) is revised to

read as follows:

§ 868.80 Who may be licensed.

(a) Inspectors. * * *

(1) Is employed by a cooperator, is a

contractor, or is employed by a

contractor.

* * * * *

Dated: May 21, 1998.

James R. Baker,

Administrator, Grain Inspection, Packers and

Stockyards Administration.

[FR Doc. 98–14054 Filed 5–29–98; 8:45 am]

BILLING CODE 3410–EN–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV98–989–1 FIR]

Raisins Produced From Grapes Grown

in California; Final Free and Reserve

Percentages for 1997–98 Crop Natural

(Sun-Dried) Seedless and Zante

Currant Raisins

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: The Department of

Agriculture (Department) is adopting, as

a final rule, without change, the

provisions of an interim final rule

which established final volume

regulation percentages for 1997–98 crop

Natural (sun-dried) Seedless (Naturals)

and Zante Currant (Zantes) raisins

covered under the Federal marketing

order for California raisins. The order

regulates the handling of raisins

produced from grapes grown in

California and is administered locally

by the Raisin Administrative Committee

(Committee). The volume regulation

percentages are 66 percent free and 34

percent reserve for Naturals and 44

percent free and 56 percent reserve for

Zantes. Free tonnage raisins may be sold

by handlers to any market. Reserve

raisins must be held in a pool for the

account of the Committee and are

disposed of through various programs

authorized under the order. The volume

regulation percentages are intended to

help stabilize raisin supplies and prices

and strengthen market conditions.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT:

Maureen T. Pello, Marketing Specialist,

California Marketing Field Office, Fruit

and Vegetable Programs, AMS, USDA,

2202 Monterey Street, suite 102B,

Fresno, California 93721; telephone:

(209) 487–5901, Fax: (209) 487–5906; or

George Kelhart, Technical Advisor,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090–6456;

telephone: (202) 720–2491, or Fax: (202)

205–6632. Small businesses may request

information on compliance with this

regulation by contacting Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525-S, Washington, DC 20090–6456;

telephone (202) 720–2491; Fax: (202)

205–6632.

SUPPLEMENTARY INFORMATION: This rule

is issued under Marketing Agreement

and Order No. 989 (7 CFR part 989),

both as amended, regulating the

handling of raisins produced from

grapes grown in California, hereinafter

referred to as the ‘‘order.’’ The order is

effective under the Agricultural

Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereinafter

referred to as the ‘‘Act.’’

The Department is issuing this rule in

conformance with Executive Order

12866.

This rule has been reviewed under

Executive Order 12988, Civil Justice

Reform. Under the order provisions now

in effect, final free and reserve

percentages may be established for

raisins acquired by handlers during the

crop year. This rule establishes final free

and reserve percentages for Natural and

Zante raisins for the 1997–98 crop year,

which began August 1, 1997, and ends

July 31, 1998. This rule will not
29532 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

preempt any State or local laws,

regulations, or policies, unless they

present an irreconcilable conflict with

this rule.

The Act provides that administrative

proceedings must be exhausted before

parties may file suit in court. Under

section 608c(15)(A) of the Act, any

handler subject to an order may file

with the Secretary a petition stating that

the order, any provision of the order, or

any obligation imposed in connection

with the order is not in accordance with

law and request a modification of the

order or to be exempted therefrom. A

handler is afforded the opportunity for

a hearing on the petition. After the

hearing, the Secretary would rule on the

petition. The Act provides that the

district court of the United States in any

district in which the handler is an

inhabitant, or has his or her principal

place of business, has jurisdiction in

equity to review the Secretary’s ruling

on the petition, provided an action is

filed not later than 20 days after the date

of the entry of the ruling.

This rule continues in effect the

provisions of an interim final rule

which established final volume

regulation percentages for 1997–98 crop

Natural and Zante raisins covered under

the order. The volume regulation

percentages are 66 percent free and 34

percent reserve for Naturals and 44

percent free and 56 percent reserve for

Zantes. Free tonnage raisins may be sold

by handlers to any market. Reserve

raisins must be held in a pool for the

account of the Committee and are

disposed of through various programs

authorized under the order. For

example, reserve raisins may be sold by

the Committee to handlers for free use

or to replace part of the free tonnage

raisins they exported; used in diversion

programs; carried over as a hedge

against a short crop the following year;

or disposed of in other outlets not

competitive with those for free tonnage

raisins, such as government purchase,

distilleries, or animal feed. The volume

regulation percentages are intended to

help stabilize raisin supplies and prices

and strengthen market conditions. Final

percentages were recommended by the

Committee at a meeting on February 12,

1998.

Section 989.54 of the order prescribes

the procedures and time frames to be

followed in establishing volume

regulation. This includes methodology

used to calculate percentages. Pursuant

to § 989.54(a) of the order, the

Committee met on August 14, 1997, to

review shipment and inventory data,

and other matters relating to the

supplies of raisins of all varietal types.

The Committee computed a trade

demand for each varietal type for which

a free tonnage percentage might be

recommended. Trade demand is a

computed formula specified in the order

and, for each varietal type, is equal to

90 percent of the prior year’s shipments

of free tonnage and reserve tonnage

raisins sold for free use into all market

outlets, adjusted by subtracting the

carryin on August 1 of the current crop

year and by adding the desirable

carryout at the end of that crop year. As

specified in § 989.154, the desirable

carryout for each varietal type is equal

to the shipments of free tonnage raisins

of the prior crop year during the months

of August and September. In accordance

with these provisions, the Committee

computed and announced 1997–98

trade demands for Naturals and Zantes

at 252,398 and 2,058 tons, respectively,

as shown below.

COMPUTED TRADE DEMANDS

[Natural condition tons]

Naturals Zantes

Prior year’s shipments ..................................................................................................................................................... 314,013 3,277

Multiplied by 90 percent ................................................................................................................................................... 0.90 0.90

Equals adjusted base ....................................................................................................................................................... 282,612 2,949

Minus carryin inventory .................................................................................................................................................... 92,769 1,679

Plus desirable carryout .................................................................................................................................................... 62,555 788

Equals computed trade demand ...................................................................................................................................... 252,398 2,058

As required under § 989.54(b) of the

order, the Committee met on October 2,

1997, and announced a preliminary

crop estimate of 353,583 tons for

Naturals. With the crop estimate much

higher than the trade demand of 252,398

tons, the Committee determined that

volume regulation was warranted. The

Committee announced preliminary free

and reserve percentages for Naturals

which released 65 percent of the

computed trade demand since the field

price had not yet been established. The

preliminary percentages were 46

percent free and 54 percent reserve. The

Committee authorized its staff to modify

the preliminary percentages to release

85 percent of the trade demand when

the field price was established. The field

price was established on October 17,

1997, and the preliminary percentages

were thus modified to 61 percent free

and 39 percent reserve. As discussed

later in this rule, the 353,583 ton crop

estimate was subsequently revised to

381,484 tons, the largest crop since

1993–94. The production of Naturals

has exceeded market needs during the

current crop year, as in most seasons.

Volume regulation in such a large crop

year should help stabilize prices and

improve market conditions.

Also at its October 2, 1997, meeting,

the Committee announced a preliminary

crop estimate for Zantes at 4,812 tons.

This compared to the trade demand of

2,058 tons. It was determined that a

Zante reserve pool was warranted

because estimated production exceeded

the trade demand by a significant

amount. The Committee computed

preliminary percentages for Zantes at 36

percent free and 64 percent reserve

which would have released 85 percent

of the computed trade demand.

However, as authorized under

§ 989.54(c), the Committee modified the

computed preliminary percentages and

established interim percentages to

release slightly less than the full trade

demand (98.8 percent) at 42.5 percent

free and 57.5 percent reserve. Volume

regulation for Zantes should also help

stabilize prices and improve market

conditions.

Also at that meeting, the Committee

computed and announced preliminary

crop estimates for Dipped Seedless,

Oleate and Related Seedless, Golden

Seedless, Sultana, Muscat, Monukka,

and Other Seedless raisins. The

Committee computed preliminary

volume regulation percentages for these

varieties, but determined that such

regulation was only warranted for

Naturals and Zantes. It determined that

the supplies of the other varietal types

would be less than or close enough to

the computed trade demands for each of

these varietal types. As in past seasons,

the Committee submitted its marketing

policy to the Department for review.
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29533

The Committee met on February 12,

1998, and revised its crop estimates for

both Naturals and Zantes as follows: for

Naturals, the estimate was increased

from 353,583 to 381,484 tons; and for

Zantes, the estimate was increased from

4,812 to 4,955 tons. The Committee also

announced interim percentages for

Naturals at 65.75 percent free and 34.25

percent reserve. Regarding Zantes, the

Committee modified its trade demand

figure from 2,058 to 2,200 tons at an

earlier meeting in November 1997. At its

February meeting, the Committee

revised its interim percentages for

Zantes to 43.75 percent free and 56.25

percent reserve. As required under

§ 989.54(d) of the order, the Committee

also recommended to the Secretary at its

February meeting final free and reserve

percentages which, when applied to the

final production estimate of a varietal

type, will tend to release the full trade

demand for any varietal type. The

Committee’s calculations to arrive at

final percentages for Naturals and

Zantes are shown in the table below.

FINAL VOLUME REGULATION PERCENTAGES

[Tonnage as natural condition weight]

Naturals Zantes

Trade demand .................................................................................................................................................................. 252,398 2,200

Divided by crop estimate ................................................................................................................................................. 381,384 4,955

Equals free percentage .................................................................................................................................................... 66 44

100 minus free percentage equals reserve percentage .................................................................................................. 34 56

In addition, the Department’s

‘‘Guidelines for Fruit, Vegetable, and

Speciality Crop Marketing Orders’’

(Guidelines) specify that 110 percent of

recent years’ sales should be made

available to primary markets each

season for marketing orders utilizing

reserve pool authority. This goal was

met for Naturals and Zantes by the

establishment of final percentages

which released 100 percent of the trade

demand and the offers of additional

reserve raisins for sale to handlers under

the ‘‘10 plus 10 offers.’’ As specified in

§ 989.54(g), the 10 plus 10 offers are two

offers of reserve pool raisins which are

made available to handlers during each

season. Handlers may sell their 10 plus

10 raisins to any market. For each such

offer, a quantity of reserve raisins equal

to 10 percent of the prior year’s

shipments is made available for free use.

For Naturals, the first 10 plus 10 offer

was made available in December 1997

and about 31,000 tons of raisins were

purchased by handlers. The second 10

plus 10 offer was made available to

handlers in May 1998 at which time

about another 31,000 tons of reserve

Naturals were offered for sale to

handlers. Adding the 62,000 tons of 10

plus 10 raisins to the 252,398 ton trade

demand figure, plus 92,769 tons of

1996–97 carryin inventory equates to

about 407,170 tons natural condition

raisins or 381,750 tons packed raisins

made available for free use, or to the

primary market. This is 130 percent of

the quantity of Naturals shipped in 1997

(314,013 natural condition tons or

294,406 packed tons).

For Zantes, both Zante 10 plus 10

offers were made available

simultaneously in November 1997 and

656 tons of raisins were purchased by

handlers. Adding the 656 tons of 10

plus 10 raisins to the 2,200 ton trade

demand figure, plus 1,679 tons of 1996–

97 carryin inventory equates to 4,535

tons natural condition raisins or about

3,970 tons packed raisins made

available for free use, or to the primary

market. This is 138 percent of the

quantity of Zantes shipped in 1997

(3,277 natural condition tons or 2,868

packed tons).

In addition to the 10 plus 10 offers,

§ 989.67(j) of the order provides

authority for sales of reserve raisins to

handlers under certain conditions such

as a national emergency, crop failure,

change in economic or marketing

conditions, or if free tonnage shipments

in the current crop year exceed

shipments of a comparable period of the

prior crop year. Such reserve raisins

may be sold by handlers to any market.

These additional offers of reserve raisins

would thus make even more raisins

available to primary markets which is

consistent with the Department’s

Guidelines.

Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA), the

Agricultural Marketing Service (AMS)

has considered the economic impact of

this action on small entities.

Accordingly, AMS has prepared this

final regulatory flexibility analysis.

The purpose of the RFA is to fit

regulatory actions to the scale of

business subject to such actions in order

that small businesses will not be unduly

or disproportionately burdened.

Marketing orders issued pursuant to the

Act, and rules issued thereunder, are

unique in that they are brought about

through group action of essentially

small entities acting on their own

behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 20 handlers

of California raisins who are subject to

regulation under the order and

approximately 4,500 raisin producers in

the regulated area. Small agricultural

service firms have been defined by the

Small Business Administration (13 CFR

121.601) as those having annual receipts

of less than $5,000,000, and small

agricultural producers are defined as

those having annual receipts of less than

$500,000. No more than 7 handlers, and

a majority of producers, of California

raisins may be classified as small

entities. Thirteen of the 20 handlers

subject to regulation have annual sales

estimated to be at least $5,000,000, and

the remaining 7 handlers have sales less

than $5,000,000, excluding receipts

from any other sources.

Pursuant to § 989.54(d) of the order,

this rule continues in effect the

provisions of an interim final rule

which established final volume

regulation percentages for 1997–98 crop

Natural and Zante raisins. The volume

regulation percentages are 66 percent

free and 34 percent reserve for Naturals

and 44 percent free and 56 percent

reserve for Zantes. Free tonnage raisins

may be sold by handlers to any market.

Reserve raisins must be held in a pool

for the account of the Committee and

are disposed of through certain

programs authorized under the order.

The volume regulation percentages are

intended to help stabilize raisin

supplies and prices and strengthen

market conditions.

Many years of marketing experience

led to the development of the current

volume regulation procedures. These

procedures have helped the industry

address its marketing problems by

keeping supplies in balance with

domestic and export market needs, and

strengthening market conditions. The

current volume regulation procedures

fully supply the domestic and export

markets, provide for market expansion,

and help prevent oversupplies in the

domestic market.
29534 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

In discussing the possibility of

volume regulation for the 1997–98 crop

year, the Committee considered the

following factors:

Naturals* Zantes*

Estimated tonnage held by producers, handlers, and for the account of the Committee at the beginning of the crop

year ............................................................................................................................................................................... 92,769 1,679

Estimated tonnage of standard raisins which will be produced in 1997–98 ................................................................... 381,484 4,955

Trade demand for raisins in free tonnage outlets for 1997–98 ....................................................................................... 252,398 2,200

Estimated desirable carryout at the end of the 1997–98 crop year for free tonnage ..................................................... 58,875 545

*Natural condition tons.

The Committee also considered the

estimated world raisin supply and

demand situation; the current prices

being received and the probable level of

prices to be received for raisins by

producers and handlers; and the trend

and level of consumer income.

The Committee’s review resulted in

the computation and announcement in

October 1997 of volume regulation

percentages for Naturals and Zantes.

Naturals are the major commercial

varietal type of raisin produced in

California. Volume regulation has been

implemented under the order for

Naturals for the past several seasons.

With the crop estimate of 381,484 tons,

much higher than the computed trade

demand of 252,398 tons, the Committee

determined that volume regulation was

warranted.

In comparison, Zante production is

much smaller than that of Naturals.

Volume regulation was last

implemented for Zantes during the

1995–96 crop year. Volume regulation

was warranted for Zantes this season

because the crop estimate of 4,955 tons

exceeded the trade demand of 2,200

tons by a significant amount.

Raisin variety grapes can be marketed

as fresh grapes, crushed for use in the

production of wine or juice concentrate,

or dried into raisins. Annual

fluctuations in the fresh grape, wine,

and concentrate markets, as well as

weather related factors, cause

fluctuations in raisin supply. These

supply fluctuations can cause producer

price instability and disorderly market

conditions. Volume regulation is helpful

to the raisin industry because it lessens

the impact of such fluctuations and

contributes to orderly marketing. For

example, producer returns for Naturals

have remained fairly steady over the last

5 crop years although production has

varied. As shown in the table below,

production over the last 5 years has

varied from a low of 272,063 tons in

1996–97 and to a high of 387,007 tons

in 1993–94, or 42 percent. According to

Committee data, total producer return

per ton, which includes proceeds from

both free tonnage plus reserve pool

raisins, has varied from a low of $901

in 1992–93 to a high of $1,049 in 1996–

97, or 16 percent.

NATURAL SEEDLESS PRODUCER

RETURNS

Crop year

Production

(natural

condition

tons)

Producer

returns

1996–97 ............ 272,063 $1,049

1995–96 ............ 325,911 1,007

1994–95 ............ 378,427 928

1993–94 ............ 387,007 904

1992–93 ............ 371,516 901

Free and reserve percentages are

established by variety, and only in years

when the supply exceeds the trade

demand by a large enough margin that

the Committee believes volume

regulation is necessary to maintain

market stability. Accordingly, in

assessing whether to apply volume

regulation or, as an alternative, not to

apply such regulation, the Committee

recommended only two of the nine

raisin varieties defined under the order

for volume regulation this season.

The free and reserve percentages

release the full trade demand and apply

uniformly to all handlers in the

industry, regardless of size. Small and

large raisin producers and handlers

have been operating under volume

regulation percentages every year since

1983–84. There are no known additional

costs incurred by small handlers that are

not incurred by large handlers. All

handlers are regulated based on the

quantity of raisins which they acquire

from producers. While the level of

benefits of this rulemaking are difficult

to quantify, the stabilizing effects of the

volume regulations impact both small

and large handlers positively by helping

them maintain and expand markets

even though raisin supplies fluctuate

widely from season to season. Likewise,

price stability positively impacts small

and large producers by allowing them to

better anticipate the revenues their

raisins will generate.

There are some reporting,

recordkeeping and other compliance

requirements under the order. The

reporting and recordkeeping burdens

are necessary for compliance purposes

and for developing statistical data for

maintenance of the program. The

requirements are the same as those

applied last season. Thus, this action

will not impose any additional reporting

or recordkeeping burdens on either

small or large handlers. The forms

require information which is readily

available from handler records and

which can be provided without data

processing equipment or trained

statistical staff. The information

collection and recordkeeping

requirements have been previously

approved by the Office of Management

and Budget under OMB Control No.

0581–0178. As with other, similar

marketing order programs, reports and

forms are periodically studied to reduce

or eliminate duplicate information

collection burdens by industry and

public sector agencies. In addition, the

Department has not identified any

relevant Federal rules that duplicate,

overlap, or conflict with this rule.

Further, Committee and

subcommittee meetings are widely

publicized in advance and are held in

a location central to the production area.

The meetings are open to all industry

members, including small business

entities, and other interested persons

who are encouraged to participate in the

deliberations and voice their opinions

on topics under discussion. Thus,

Committee recommendations can be

considered to represent the interests of

small business entities in the industry.

An interim final rule concerning this

action was published in the Federal

Register on March 10, 1998. Copies of

the rule were mailed by the Committee’s

staff to all raisin handlers. In addition,

the rule was made available through the

Internet by the Office of the Federal

Register. That rule provided for a 60-day

comment period which ended on May

11, 1998. Interested persons were also

invited to submit information on the

regulatory and informational impacts of

this action on small businesses. No

comments were received.

After consideration of all relevant

material presented, including the
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29535

1Pursuant to 10 CFR 50.75(e)(3), an electric

utility can satisfy the decommissioning funding

requirements with an external sinking fund,

standing alone. This rulemaking does not apply to

electric utilities and does not affect the NRC’s

Notice of Proposed Rulemaking that addresses

decommissioning funding assurance issues

associated with electric utility restructuring (see

Financial Assurance Requirements for

Decommissioning Nuclear Power Reactors—62 FR

47588, September 10, 1997). As part of this

proposed rule, the NRC is considering amending its

definition of ‘‘electric utility’’ and clarifying the

distinction between financial assurance

mechanisms applicable to power reactor licensees

and non-power reactor licensees.

2Single copies are available from the NRC

contact. Copies are available at current rates from

the U.S. Government Printing Office, P.O. Box

37082, Washington, DC 20402–9328 (telephone

(202) 512–2249); or from the National Technical

Information Service by writing NTIS at 5285 Port

Royal Road, Springfield, VA 22161. Copies are

available for inspection or copying for a fee from

the NRC Public Document Room at 2120 L Street

NW., Washington, DC; the PDR’s mailing address is

Mail Stop LL–6, Washington, DC 20555–0001;

telephone (202) 634–3273; fax (202) 634–3343.

Committee’s recommendation, and

other information, it is found that

finalizing the interim final rule, without

change, as published in the Federal

Register (63 FR 11585; March 10, 1998)

will tend to effectuate the declared

policy of the Act.

List of Subjects in 7 CFR Part 989

Grapes, Marketing agreements,

Raisins, Reporting and recordkeeping

requirements.

PART 989—RAISINS PRODUCED

FROM GRAPES GROWN IN

CALIFORNIA

Accordingly, the interim final rule

amending 7 CFR part 989 which was

published at 63 FR 11585 on March 10,

1998, is adopted as a final rule without

change.

Dated: May 26, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 98–14422 Filed 5–29–98; 8:45 am]

BILLING CODE 3410–02–P

NUCLEAR REGULATORY

COMMISSION

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

RIN 3150–AF64

Self-Guarantee of Decommissioning

Funding by Nonprofit and Non-BondIssuing Licensees

AGENCY: Nuclear Regulatory

Commission.

ACTION: Final rule.

SUMMARY: The Nuclear Regulatory

Commission is amending its regulations

to allow additional materials licensees

and non-electric utility reactor licensees

who meet certain financial criteria to

self-guarantee funding for

decommissioning. Certain commercial

corporate licensees who issue bonds are

presently allowed to self-guarantee

funding if they meet stringent financial

criteria. This rule allows nonprofit

licensees, such as colleges, universities,

and hospitals, as well as some

commercial licensees who do not issue

bonds, to self-guarantee funding

provided they meet similarly stringent

financial criteria. Allowing additional

qualified licensees to use self-guarantee

reduces licensee costs while providing

adequate assurance that funds for

decommissioning will be available

when needed.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Dr.

Clark Prichard, Office of Nuclear

Materials Safety and Safeguards, U.S.

Nuclear Regulatory Commission,

Washington, DC 20555–0001, telephone

(301)415–6203, e-mail cwp@nrc.gov.

SUPPLEMENTARY INFORMATION:

Licensees subject to 10 CFR parts 30,

40, 70, and 72, whose operations

involve the use of substantial amounts

of nuclear materials, and those subject

to 10 CFR Part 50 who are applicants

for, or holders of, operating licenses for

production or utilization facilities must

provide financial assurance for

decommissioning funding by selecting

from a variety of mechanisms: surety

bond or letter of credit, prepayment,

insurance, an external sinking fund

coupled with a surety or insurance,1

parent company guarantee for licensees

that have a qualifying corporate parent,

and, for certain financially strong

corporations, self-guarantee. A

statement of intent regarding obtaining

funds to satisfy decommissioning

obligations may be used by some

licensees that are governmental entities

(for example, public universities whose

charter provides for a direct link to the

State Government).

To date, self-guarantee has not been

available to nonprofit licensees such as

hospitals and universities, or to forprofit licensees who do not issue bonds,

because the financial test for selfguarantee uses the rating of the bonds

issued by the licensee as one measure of

the licensee’s financial resources and

ability to fund decommissioning.

The NRC is extending the use of selfguarantee, previously limited to bondissuing industrial corporations, to

additional categories of qualified

licensees. By selecting appropriate

financial criteria for self-guarantee, this

extension can be made without

jeopardizing the present high level of

financial assurance that the

decommissioning obligation requires.

Allowing qualified nonprofit and nonbond-issuing licensees to self-guarantee

will reduce the costs of complying with

NRC financial assurance requirements

for those who meet the specified

criteria.

Background

On December 29, 1993 (58 FR 68726),

as corrected on January 12, 1994 (59 FR

1618), the NRC published a notice of

final rulemaking that allows financially

strong corporations with A or better

bond ratings the option of using selfguarantee as a mechanism for

complying with the regulations on

financial assurance for

decommissioning. Self-guarantee was

added to the list of financial assurance

mechanisms as a cost-saving option for

licensees that are able to meet the

stringent financial test.

The NRC’s decision to add selfguarantee to the list of approved

financial assurance mechanisms for

qualified licensees came in response to

a petition for rulemaking filed by

General Electric and Westinghouse

(PRM–30–59, Notice of receipt

published September 25, 1991 (56 FR

48445)). The petition presented a case

for allowing self-guarantee as a costsaving option for corporate licensees

that are able to pass a stringent financial

test.

Subsequent to the December 29, 1993,

final rule, the Commission initiated a

study to determine whether criteria

could be developed and applied by NRC

for nonprofit licensees and non-bondissuing commercial licensees to use selfguarantee while maintaining the

required level of confidence regarding

the availability of decommissioning

funds when needed. The study,

‘‘Analysis of Potential Self-Guarantee

Tests for Demonstrating Financial

Assurance by Nonprofit Colleges and

Universities and Hospitals and by

Business Firms that Do Not Issue

Bonds,’’ NUREG/CR–6514 2 (June 1997),

identified a variety of financial criteria

that could be applied to additional

categories of licensees regarding the use

of self-guarantee. The financial criteria

in this rule were selected by the NRC

based on information in this report.

Public Comments on the Proposed Rule

The NRC published a notice of

proposed rulemaking on April 30, 1997,

(62 FR 23394). In response to this

notice, 16 comments were received; 2

from States, 6 from colleges and

universities, 3 from associations, 3 from