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[Federal Register Volume 66, Number 104 (Wednesday, May 30, 2001)]
[Proposed Rules]
[Pages 29244-29251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13489]

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NUCLEAR REGULATORY COMMISSION

10 CFR Part 50

RIN 3150-AG52

Decommissioning Trust Provisions

AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is proposing to amend 
its regulations relating to decommissioning trust provisions for 
nuclear power plants. The NRC proposes to require that decommissioning 
trust agreements be in a form acceptable to the NRC in order to 
increase assurance that an adequate amount of decommissioning funds 
will be available for their intended purpose. Until recently, direct 
NRC oversight of the terms and conditions of the decommissioning trusts 
was not necessary because rate regulators typically exercised such 
authority. With deregulation, this oversight may cease and the NRC may 
need to take a more active oversight role.

DATES: Submit comments on the proposed rule and accompanying regulatory 
guide August 13, 2001. Comments received after this date will be 
considered if it is practical to do so, but the Commission is able to 
ensure consideration only for comments received on or before this date.

ADDRESSES: Mail comments to: Secretary, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001. ATTN. : Rulemakings and 
Adjudications Staff.
    Deliver comments to: 11555 Rockville Pike, Rockville, Maryland, 
between 7:30 a.m. and 4:15 p.m. on Federal workdays.
    You may also provide comments via the NRC's interactive rulemaking 
website at http://ruleforum.llnl.gov. This site provides the capability 
to upload comments as files (any format), if your web browser supports 
that function. For information about the interactive rulemaking 
website, contact Ms. Carol Gallagher, (301) 415-5905 (e-mail: 
[email protected]).
    Certain documents related to this rulemaking, including comments 
received, the draft regulatory analysis and the draft Regulatory Guide, 
DG-1106, ``Proposed Revision 1 of Regulatory Guide 1.159, Assuring the 
Availability of Funds for Decommissioning Nuclear Reactors,'' may be 
examined, and/or copied for a fee, at the NRC's Public Document Room, 
One White Flint North, 11555 Rockville Pike (first floor), Rockville, 
Maryland. These same documents also may be viewed and downloaded 
electronically via the interactive rulemaking website established by 
NRC for this rulemaking.
    Documents created or received at the NRC after November 1, 1999, 
are also available electronically at the NRC's Public Electronic 
Reading Room on the Internet at http://www.nrc.gov/NRC/ADAMS/index.html. From this site, the public can gain entry into the NRC's 
Agency wide Document Access and Management System (ADAMS), which 
provides text and image files of NRC's public documents. For more 
information, contact the NRC Public Document Room (PDR) Reference staff

[[Page 29245]]

at 1-800-397-4209, (301) 415-4737, or by email to [email protected].

FOR FURTHER INFORMATION CONTACT: Brian J. Richter, Office of Nuclear 
Reactor Regulation, Washington, DC 20555-0001, telephone (301) 415-
1978, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Until recently, rate regulators have generally exercised direct 
oversight of the terms and conditions of decommissioning trust 
agreements. Extensive NRC involvement was not necessary. Because this 
oversight may cease with deregulation, the NRC believes it needs to 
take a more active oversight role. 10 CFR 50.75(e) allows sinking fund 
payment or prepayment into external decommissioning trusts as two of 
several acceptable financial assurance methods. These methods are used 
by virtually all nuclear power plant licensees. The NRC included sample 
language for decommissioning trust agreements in guidance issued in 
August 1990 (Regulatory Guide 1.159, ``Assuring the Availability of 
Funds for Decommissioning Nuclear Reactors''), but the NRC's 
regulations do not explicitly require that specific terms and 
conditions be included in the decommissioning trust agreements or that 
the decommissioning trust agreements be in a form acceptable to the 
NRC. This proposed rule attempts to remedy this situation.

II. Rulemaking Initiation

    In a staff requirements memorandum (SRM) dated August 10, 1999, the 
Commission directed the NRC staff to initiate a rulemaking to require 
that decommissioning trust agreements be in a form acceptable to the 
NRC in order to increase assurance that an adequate amount of 
decommissioning funds will be available for their intended purpose. 
This SRM was in response to SECY-99-170 (July 1, 1999), ``Summary of 
Decommissioning Fund Status Reports,'' in which the NRC staff noted 
that it intended to continue to review decommissioning trust agreements 
in license transfers on a case-by-case basis and impose appropriate 
conditions in the orders approving these transfers. However, the NRC 
staff believes that efficiency would be increased if the NRC codified 
this practice generically in the regulations. Also, based on experience 
with approving the transfers of the operating licenses of the Three 
Mile Island Unit 1, Pilgrim, Clinton, Oyster Creek, and other nuclear 
power stations, the NRC staff believes this rulemaking could expedite 
similar transfers in the future by providing increased regulatory 
predictability. The proposed rule and accompanying revisions to 
regulatory guidance, if adopted, would provide uniform decommissioning 
trust terms and conditions for all power reactor licensees. The NRC 
staff issued a rulemaking plan for Decommissioning Trust Provisions, 
SECY-00-0002, on December 30, 1999. The plan called for amending 10 CFR 
50.75 and a revision to Regulatory Guide 1.159, ``Assuring the 
Availability of Funds for Decommissioning Nuclear Reactors.'' The 
Commission approved the plan on February 9, 2000, directing the NRC 
staff to include specific trust fund terms and conditions necessary to 
protect funds fully in the rule itself and suggested that sample 
language for trust agreements consistent with the terms and conditions 
within the rule be provided in the associated regulatory guide.

III. Proposed Action

    The NRC is proposing to amend its regulations on decommissioning 
trust agreements. The proposed action would state that the trust 
provisions must be acceptable to the NRC and contain general terms and 
conditions that the NRC believes are required to ensure that funds in 
the trusts will be available for their intended purpose. To accomplish 
this objective, the NRC is proposing to modify paragraphs 10 CFR 
50.75(e)(1)(i) and (ii), and to add a new paragraph,10 CFR 50.75(h) to 
its regulations. The changes in Sec. 50.75(e) specify that the trust 
should be an external trust fund in the United States, established 
pursuant to a written agreement and with an entity that is a State or 
Federal government agency or an entity whose operations are regulated 
by a State or Federal agency. Paragraph 50.75(h) will reference the 
other paragraphs in Sec. 50.75 where necessary and will discuss the 
terms and conditions that the NRC believes are necessary to ensure that 
funds in the trusts will be available for their intended purpose. As an 
accompaniment to this rulemaking, the NRC intends to update Regulatory 
Guide 1.159 to include sample trust fund language containing these 
terms and conditions.

IV. Discussion

    The NRC believes that certain decommissioning trust language should 
be standardized to increase assurance of the protection of public 
health and safety by requiring that the decommissioning trusts: (1) 
Ensure that special care is taken to safeguard the trust corpus from 
investment risks, (2) provide adequate information concerning the trust 
to the NRC, and (3) provide safeguards against improper payments from 
the trust.
    These issues are now of particular interest to the NRC because 
deregulation of the electric utility industry can potentially lead to 
several changes in the structure of ownership of nuclear power reactors 
that could affect reactor decommissioning trust funds. These changes 
include the following:
     Relaxation or elimination of regulatory oversight by State 
Public Utility Commissions (PUCs) or the Federal Energy Regulatory 
Commission (FERC). With utility industry deregulation, State PUCs and/
or FERC may no longer have jurisdiction of the kind that they now 
exercise over electricity rates. Under regulation, utilities are 
reimbursed for their costs, including nuclear decommissioning trust 
fund costs, from approved rates charged ratepayers. If, under 
deregulation, PUCs and/or FERC no longer approve rates they will also 
no longer have a basis for establishing stringent accounting and 
financial controls. Without these controls, PUCs may determine that 
they have no basis for specifying terms and conditions for nuclear 
reactor decommissioning trust funds or for monitoring those trust 
funds.
     Changes in ownership of nuclear generating facilities. 
Under deregulation, vertically integrated public utilities that 
generate electricity, own and manage the transmission system, and sell 
power to the ultimate consumers may gradually become less prevalent. 
Instead, generating facilities may be separated (i.e., ``spun off'') 
within a holding company structure or sold to power-producing companies 
that sell electricity as a commodity to other companies that service 
consumers. Currently, certain energy companies that are non-utility 
suppliers of electricity have announced their intention to acquire 
nuclear power plants. After these acquisitions, State PUCs and/or FERC 
may no longer have jurisdiction over the energy company obtaining the 
reactors. NRC is required to determine the suitability of transferring 
reactor licenses from the former licensee to a new licensee.
    To date, as part of its review of requests for license transfer in 
connection with the sale of nuclear power reactors, the NRC has 
examined whether reasonable assurance of decommissioning funding will 
continue to be provided. As a result, the NRC is proposing to both 
codify existing practice and consider enhancements to trust agreements 
to strengthen these

[[Page 29246]]

agreements in the future environment of deregulation. As a condition 
for NRC approval, the NRC has required certain clauses (some that 
parallel criteria in Regulatory Guide 1.159 and others that parallel 
FERC requirements) to be included in decommissioning trust funds. The 
NRC has essentially been using these evaluative tests in its review of 
decommissioning trusts in license transfers involving an unregulated 
license. In view of deregulation, the NRC believes that these tests are 
also appropriate for evaluating the trust agreements of all NRC power 
reactor licensees.
    This section of the notice presents a set of evaluative tests for 
assessing whether particular terms and conditions for decommissioning 
trust funds will help meet NRC's goals of providing ``reasonable 
assurance that adequate funds are available,'' and that lack of funds 
will not result in delays in decommissioning creating public health and 
safety problems.
    The following tests do not address the amount of funds in the 
decommissioning trust, a topic that NRC dealt with in its 1998 rule (63 
FR 50465). However, the tests address how to assess the certainty that 
assured funds will be available. The tests were obtained by reviewing 
existing requirements of the NRC, the Internal Revenue Service, FERC, 
and several States that currently apply to decommissioning trusts, as 
well as non-binding recommendations created by those agencies for those 
trusts.
    Certainty can be evaluated under several basic tests:

Test (1) Is the trust fund valid and enforceable?

    The trust instrument should be required to include information that 
helps to ensure and to demonstrate its validity. A requirement that the 
instrument be valid under State law, while helpful, does not identify 
any features of the trust that demonstrate its validity. The trust must 
be in writing and include the names and signatures of the parties 
entering into the agreement; their titles; the dates of signing (and 
the effective date, if different); notarization of the signatures; a 
description of the basic agreement being entered into; and an 
affirmative statement that the trustee accepts the appointment.
    An important measure of the enforceability of the trust is whether 
the trustee is clearly able to remain financially solvent and capable 
of providing the necessary services over the period that the trust is 
in effect. Factors that address the trustee's reliability include 
requirements that the trustee be qualified or licensed, and demonstrate 
that it has a particular level of financial backing. The financial 
condition of an institutional trustee may be addressed in licensing of 
the trustee through requirements for specified levels of operating 
capital or reserves.

Test (2) Do the terms of the instrument ensure that funds can be used 
only for certain key activities--reactor decommissioning and specified 
administrative costs of the trust--rather than a broad range of 
potentially conflicting uses?

    This test is to ensure that the trust contains provisions that use 
of the decommissioning trust funds is reserved for decommissioning and 
routine and minor administrative expenses.

Test (3) Is the trust protected against events, such as amendment or 
cancellation, that could lessen NRC's ability to direct the use of 
necessary funds in a timely manner?

    To address this particular problem, the following features of the 
trust are very important. The trust should contain provisions 
describing procedures for its amendment and cancellation. NRC approval 
should be required for both these actions when amendment or 
cancellation could materially affect timely access to decommissioning 
funds. Because disagreements over interpretation of the trust could 
delay payment, the trust should contain rules of interpretation that 
specify how disagreements should be resolved. Payment should occur upon 
the happening of triggering events, even if differences of opinion 
about the trust have not been resolved.

Test (4) Do the terms of the trust ensure that NRC will receive timely 
notice of all important information concerning the trust?

    Trustees generally prepare annual reports and accounting summaries 
indicating the sums on hand, investment results, taxes due, and 
payments into the trust. These reports can be supplied to NRC, upon 
request, if NRC determines that it has a need for the information. In 
general, however, NRC determined in its rulemaking in 1998 that 
biennial reports of any material changes in the trust, plus information 
on the status of funds in the trust, were sufficient to monitor the 
trust funds. Thus, no changes to the current frequency of reporting 
requirements are being proposed.

Test (5) Do the terms of the trust place appropriate limits on the 
investments that the trustee may make?

    This is typically accomplished by specifying allowed or disallowed 
investments and by defining a ``prudent'' investment. If the NRC relies 
upon a ``prudent investment'' standard adopted by investment 
specialists (e.g., the Third Restatement of Trusts) it will need to 
track how that standard is being interpreted in practice. In the past, 
standards for the definition of prudent investments have evolved over 
time. For example, increasing use of diversified investment portfolios 
led to changing standards about whether each investment in a portfolio, 
rather than the portfolio as a whole, needed to be prudent. Similarly, 
increasing use of mutual funds led to relaxation of the prohibition on 
delegation of investment decisions by a trustee to a fund manager. 
Because of these and other evolving changes to the then-existing 
``prudent man'' rule, the American Law Institute adopted a new 
``prudent investor'' rule in the Restatement of the Law Third, Trusts 
in 1992 (Third Restatement). In addition, the National Conference of 
Commissioners on Uniform State Laws promulgated a Uniform Prudent 
Investor Act in 1994, and numerous States have since adopted the entire 
Act or amended their State laws to reflect it. However, the rule cannot 
be said to be completely uniform across the country, and continued 
evolution can be expected.\1\
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    \1\ See Train, J. and Wolfe, T., Investing and Managing Trusts 
under the New Prudent Investor Rule, Harvard Business School Press, 
1999.
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    In view of the above tests, the NRC believes that assurance can be 
enhanced by specifying in 10 CFR 50.75 essential terms and conditions 
of the decommissioning trusts that address the following topics:

--The trust must be an external trust fund held in the United States, 
established pursuant to a written agreement and with an entity that is 
any appropriate State or Federal government agency or whose operations 
are regulated by a State or Federal agency.
--The trust agreement must provide that trust investments are 
prohibited in securities or other obligations of the reactor owner or 
its affiliates, successors, or assigns.
--The trust agreement must provide that trust investments are 
prohibited in any entity owning one or more nuclear power plants, 
except for investments tied to general market indices or non-nuclear 
sector mutual funds.

[[Page 29247]]

--The trust agreement must provide that the agreement cannot be amended 
in any material respect without 30-days prior written notification to 
the NRC, and there is no objection from the NRC within the notice 
period.
--The trust agreement must provide that the trustee, investment 
advisor, or anyone else directing investments made by the trust should 
adhere to a ``prudent investor'' standard.
--The trust agreement must provide that no disbursements or payments 
from the trust may be made by the trustee, other than for payment of 
ordinary administrative expenses (examples of ordinary administrative 
expenses are set out in the Internal Revenue Code Section 468A), until 
the trustee has first given the NRC 30-days prior written notice, and 
that no disbursements or payments from the trust may be made if the 
trustee receives written notice of objection from the NRC within the 
notice period.
--The person directing the investment of the funds is prohibited from 
engaging the licensee or its affiliates or subsidiaries as investment 
manager for the funds or from accepting day-to-day management direction 
of the funds' investments or direction on individual investments by the 
funds from the licensee or its affiliates or subsidiaries.

    The NRC currently does not include an extensive set of prescriptive 
requirements in its regulations for the terms and conditions of reactor 
decommissioning trusts. Rather, the NRC requires only that the funds be 
segregated from the licensee's assets and outside the licensee's 
administrative control. A trust fund used to accomplish these purposes 
must be acceptable to the NRC. This overall approach gives licensees 
great flexibility in how they set up a decommissioning trust fund, but 
it provides little guidance to them concerning what trust provisions 
NRC will find acceptable. NRC's Standard Review Plan NUREG-1577, Rev. 1 
contains references to recent regulatory amendments, as well as useful 
explanations of certain key regulatory terms, that are not found in the 
older Regulatory Guide 1.159. However, Regulatory Guide 1.159 contains 
a model trust that provides an example of the trust terms that NRC 
finds acceptable. As a result, Regulatory Guide 1.159 is being expanded 
and updated. The NRC is seeking public comment on the draft revised 
regulatory guide. Comments may be submitted as indicated under the 
ADDRESSES heading.
    An alternative approach would be for the NRC to specify the precise 
wording of the trust provisions in its regulations. The NRC does not 
believe it would be either feasible or desirable to change its overall 
approach by specifying mandatory wording in regulations for the entire 
decommissioning trust fund. Based on the wide variety of trust 
instruments that are currently in use for decommissioning trust funds, 
it appears that, at a minimum, several of these trust fund templates 
would be needed (e.g., a model master trust fund agreement; a model for 
a qualified fund under Internal Revenue Code Section 468A; and a model 
for a non-qualified fund). Substantial time and considerable costs, 
both to licensees and to the NRC, would be necessary to fit the 
disparate trust instruments currently in use into any templates 
established by NRC. In addition, the requirements in 10 CFR 50.75 would 
become more prescriptive.
    With respect to the issuance of DG-1106, ``Proposed Revision 1 of 
Regulatory Guide 1.159, Assuring the Availability of Funds for 
Decommissioning Nuclear Reactors,'' the NRC:

--Incorporates material from NUREG-1577, Rev. 1, ``Standard Review Plan 
on Power Reactor Licensee Financial Qualification and Decommissioning 
Financial Assurance'' that provides criteria for determining the 
meaning of the terms ``acceptable to NRC,'' ``under the administrative 
control of the licensee,'' and other terms used in the pertinent 
regulations that are currently not defined in the regulatory guide.
--Develops a list of trust provisions, based on the model trust 
language contained in Regulatory Guide 1.159 that identifies key 
provisions in the model language that currently are not described in 
the text of the regulatory guide. The NRC has also provided 
explanations of these provisions.
--Provides explanations or definitions of other terms and conditions 
such as ``subsidiaries,'' `` affiliates,'' ``successors,'' ``assigns,'' 
and similar terms. In addition, an explanation is provided of the types 
of investments tied to market indices or non-nuclear mutual funds that 
will be acceptable.
--Provides explanation of what is likely to constitute a ``material'' 
change or amendment to the trust instrument.
--Provides explanations of certain concepts that are currently 
ambiguous. For example, the current regulatory guide suggests that 
licensees ``should'' ensure that trust funds meet certain requirements, 
such as effectiveness under pertinent State trust law. This may be 
confusing to licensees who believe that trusts must be legally 
effective.
--Explains the intent and effect of cross references to other sources 
of authority, such as Internal Revenue Service, FERC, and State 
requirements. In some cases, the current regulatory guide suggests that 
trust funds that meet the requirements of these other sources of 
authority will be acceptable to NRC. The revised guidance explains that 
compliance with these other sources of authority will be acceptable, 
within the scope of the topic that they address (e.g., investment 
criteria or amount of annual payment into the trust fund), but are not 
measures of the overall acceptability of the trust instrument to NRC. 
In some cases, compliance with these requirements will not be 
sufficient, by itself, to constitute acceptability to the NRC.
--Provides a clear and consistent description of the investment 
guidelines pertinent to decommissioning trust funds. Current references 
in the regulatory guide to State law, FERC requirements, and other 
standards appear to create some ambiguity concerning the precise limits 
of the investment guidelines and what they include.
--Revises the Sample Parent Guarantee to eliminate NRC as a direct 
beneficiary within the guarantee. This modification reflects current 
NRC practice.

Section-by-Section Analysis

Section 50.75(e)
    This subsection would be amended by the addition of a sentence to 
both paragraphs 50.75(e)(1)(i), which deals with the prepayment method 
of financial assurance, and 50.75(e)(1)(ii), which deals with the 
external sinking fund method of financial assurance. The sentences 
would call for the trust to be an external trust fund held in the 
United States, established pursuant to a written agreement with an 
entity that is a State or Federal government agency or whose operations 
are regulated by a State of Federal agency. These amendments would be 
used by the NRC staff in evaluating the first test addressed in the 
Discussion Section relating to trust agreement validity and 
enforceability.
Section 50.75(h)
    This is a new subsection which would implement the following 
conditions. The trust agreement must prohibit trust investments in 
securities or other obligations of the reactor owner or its affiliates, 
successors, or assigns. The trust agreement must prohibit investments 
in any entity owning one or more nuclear power plants. This is

[[Page 29248]]

proposed to address the concerns raised in Test 5 relating to the 
appropriate limits on investments. The investment may, however, be tied 
to general market indices or non-nuclear sector mutual funds. The trust 
agreement must stipulate that the agreement cannot be amended in any 
material respect without 30-days prior written notice to the NRC, and 
that no amendment to the trust may be made if the trustee receives 
written notice of objection from the NRC within that notice period. 
This is being proposed to address the lessening of NRC's ability to 
direct the use of necessary funds in a timely manner as discussed in 
Test 3. The trust agreement must stipulate that the trustee, investment 
advisor, or anyone else directing investments made by the trust should 
adhere to a ``prudent investor'' standard. The trust agreement must 
provide that no disbursements or payments from the trust (other than 
payment of ordinary administrative expenses) may be made by the trustee 
until the trustee has first given the NRC 30-days prior written notice, 
and that no disbursements or payments from the trust may be made if the 
trustee receives written notice of objection from the NRC within that 
notice period. This would ensure that the funds can be used only for 
certain key activities as identified in Test 2. The person directing 
the investment of the funds may not use the licensee or its affiliates 
or subsidiaries as the investment manager for the funds or accept day-
to-day management direction of the funds' investments or direction on 
individual investments by the funds from the licensee or its affiliates 
or subsidiaries.

V. Finding of No Significant Environmental Impact: Environmental 
Assessment

    The Commission has determined under the National Environmental 
Policy Act of 1969, as amended, and the Commission's regulations in 
Subpart A of 10 CFR Part 51, that this rule, if adopted, would not be a 
major Federal action significantly affecting the quality of the human 
environment and therefore an environmental impact statement is not 
required. The basis for this determination reads as follows: This 
action is being proposed to require that decommissioning trust 
agreements be in a form acceptable to the NRC in order to increase 
assurance that an adequate amount of decommissioning funds would be 
available for their intended purpose. Because of deregulation within 
the electric power generation industry, the NRC will need to take 
increased responsibility to oversee decommissioning trust funds as 
State Public Utility Corporations may no longer oversee these funds.
    This revision to the NRC's regulations would provide licensees with 
a codification of requirements and guidance that will specify more 
fully the provisions of the decommissioning trust agreements. The 
proposed rule would state that the trust provisions must be acceptable 
to the NRC and would contain general objectives and criteria that the 
NRC believes are required to ensure that funds in the trusts would be 
available for their intended purpose. These proposed changes would not 
lead to any increase in the effect on the environment of the 
decommissioning activities considered in the final rule published on 
June 27, 1988 (53 FR 24018) as analyzed in the Final Generic 
Environmental Impact Statement on Decommissioning of Nuclear Facilities 
(NUREG-0586, August 1988).\2\ Therefore, promulgation of this rule 
would not introduce any impacts on the environment not previously 
considered by the NRC. The NRC is not aware of any other documents 
related to the environmental impact of this action. The foregoing 
constitutes the environmental assessment and finding of no significant 
impact for this proposed rule.
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    \2\ Copies of NUREG-0586 are available for inspection or copying 
for a fee from the NRC's Public Document Room, located at One White 
Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland 
20555-0001. Copies may be purchased at current rates from the U.S. 
Government Printing Office, P.O. Box 37082, Washington, DC 20402-
9328 (telephone (202) 512-1800); or from the National Technical 
Information Service (NTIS) by writing NTIS at 5285 Port Royal Road, 
Springfield, VA 22161.
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    The determination of this environmental assessment is that there 
would be no significant offsite impact to the public from this action. 
However, the general public should note that the NRC welcomes public 
participation. The NRC has also committed to complying with Executive 
Order (EO) 12898, ``Federal Actions to Address Environmental Justice in 
Minority Populations and Low-Income Populations,'' dated February 11, 
1994, in all its actions. Therefore, the NRC has also determined that 
there are no disproportionate, high, and adverse impacts on minority 
and low-income populations. In the letter and spirit of EO 12898, the 
NRC is requesting public comment on any environmental justice 
considerations or questions that the public thinks may be related to 
this proposed rule but somehow were not addressed. The NRC uses the 
following working definition of ``environmental justice:'' the fair 
treatment and meaningful involvement of all people, regardless of race, 
ethnicity, culture, income, or educational level with respect to the 
development, implementation, and enforcement of environmental laws, 
regulations, and policies. Comments on any aspect of the environmental 
assessment, including environmental justice, may be submitted to the 
NRC as indicated under the ADDRESSES heading.
    The NRC has sent a copy of this proposed rule to every State 
Liaison Officer and requested their comments on the environmental 
assessment.

VI. Paperwork Reduction Act Statement

    This proposed rule amends information collection requirements that 
are subject to the Paper Work Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.). This rule has been submitted to the Office of Management and 
Budget for review and approval of the information collection 
requirements.
    The burden to the public for this information collection is 
estimated to average 80 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining data needed, and completing and reviewing the information 
collection. The U.S. Nuclear Regulatory Commission is seeking public 
comment on the potential impact of the information collections 
contained in the proposed rule and on the following issues:
    1. Is the proposed information collection necessary for the proper 
performance of the functions of the NRC, including whether the 
information will have practical utility?
    2. Is the estimate of burden accurate?
    3. Is there a way to enhance the quality, utility, and clarity of 
the information to be collected?
    4. How can the burden of the information collection be minimized, 
including the use of automated collection techniques?
    Send comments on any aspect of this proposed information 
collection, including suggestions for reducing the burden, to the 
Records Management Branch (T-6 E6), U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001, or by Internet electronic mail at 
[email protected]; and to the Desk Officer, Office of Information and 
Regulatory Affairs, NEOB-1202, (3150-0011), Office of Management and 
Budget, Washington, DC 20503.
    Comments to OMB on the information collections or on the above 
issues should be submitted by June 29, 2001. Comments received after 
this date will be considered if it is practical to do so,

[[Page 29249]]

but assurance of consideration cannot be given to comments received 
after this date.

VII. Public Protection Notification

    If a means used to impose an information collection does not 
display a currently valid OMB control number, the NRC may not conduct 
or sponsor, and a person is not required to respond to, the information 
collection.

VIII. Regulatory Analysis

    The Commission has prepared a draft regulatory analysis on this 
proposed regulation. The analysis examines the costs and benefits of 
the alternatives considered by the Commission. The draft analysis is 
available for inspection in the NRC Public Document Room, One White 
Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland. 
Single copies of the analysis may be obtained from Brian J. Richter, 
Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001, telephone (301) 415-1978, e-mail 
[email protected].
    The Commission requests public comment on the draft analysis. 
Comments on the draft analysis may be submitted to the NRC as indicated 
under the ADDRESSES heading.

IX. Regulatory Flexibility Certification

    In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 
605(b)) as amended by the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121 (March 29, 1996), the 
Commission certifies that this rule will not, if promulgated, have a 
significant economic impact on a substantial number of small entities. 
This proposed rule affects only the licensing, operation, and 
decommissioning of nuclear power plants. The companies that own these 
plants do not fall in the scope of the definition of ``small entities'' 
set forth in the NRC's size standards (10 CFR 2.810).

X. Backfit Analysis

    The Regulatory Analysis for the proposed rule also constitutes the 
documentation for the evaluation of backfit requirements, and no 
separate backfit analysis has been prepared. As defined in 10 CFR 
50.109, the backfit rule applies to--

* * * modification of or addition to systems, structures, 
components, or design of a facility; or the design approval or 
manufacturing license for a facility; or the procedures or 
organization required to design, construct or operate a facility; 
any of which may result from a new or amended provision in the 
Commission rules or the imposition of a regulatory staff position 
interpreting the Commission rules that is either new or different 
from a previously applicable staff position. * * *

    The proposed amendments to NRC's requirements for decommissioning 
trust provisions of nuclear power plants would require that 
decommissioning trust agreements be in a form acceptable to the NRC in 
order to increase assurance that an adequate amount of decommissioning 
funds will be available for their intended purpose. Also, as nuclear 
power reactors have been sold, NRC has stipulated, in connection with 
license transfers, that certain terms and conditions be added to 
decommissioning trust funds. These sales may involve transfers of 
nuclear power reactors from regulated public utilities to firms that 
are not regulated as public utilities. Because rate regulators may, as 
a consequence of utility deregulation, cease to exercise direct 
oversight over decommissioning trusts, the Commission directed the NRC 
staff to initiate a rulemaking to require that decommissioning trust 
agreements are in a form acceptable to the NRC.
    Although some of the changes to the regulations are reporting 
requirements, that are not covered by the backfit rule, other elements 
in the changes are considered backfits because they would modify, 
supplement, or clarify the regulations with respect to: (1) The fact 
that the NRC will need to exercise greater oversight of decommissioning 
trust funds as State Public Utility Commissions reduce their oversight 
as a result of deregulation within the electric power generation 
industry, and (2) the NRC exercising more oversight of decommissioning 
trusts in evaluating license transfer applications. The NRC has 
concluded on the basis of the documented evaluation required by 10 CFR 
50.109(4)(a)(4) and set forth in the regulatory analysis, that the new 
or modified requirements are necessary to ensure that nuclear power 
reactor licensees provide for adequate protection of the public health 
and safety in the face of a changing competitive and regulatory 
environment not envisioned when the reactor decommissioning funding 
regulations were promulgated and that the changes to the regulations 
are in accord with the common defense and security. Therefore, the NRC 
has determined to treat this action as an adequate protection backfit 
under 10 CFR 50.109(a)(4)(ii). Consequently, a backfit analysis is not 
required and the cost-benefit standards of 10 CFR 50.109(a)(3) do not 
apply. Further, these changes to the regulations are required to 
satisfy 10 CFR 50.109(a)(5).

XI. National Technology and Transfer and Advancement Act

    The National Technology Transfer and Advancement Act of 1995, Pub. 
L. 104-113, requires that Federal agencies use technical standards 
developed or adopted by voluntary consensus standards bodies unless the 
use of such a standard is inconsistent with applicable law or otherwise 
impractical. There are no consensus standards regarding the reporting 
of status of decommissioning trust funds because of revised trust 
agreements of nuclear power plant licensees nor relating to license 
transfers that would apply to the requirements imposed by this rule. 
Thus, the provisions of this Act do not apply to this rule.

List of Subjects in 10 CFR Part 50

    Antitrust, Classified information, Criminal penalties, Fire 
protection, Intergovernmental relations, Nuclear power plants and 
reactors, Radiation protection, Reactor siting criteria, and Reporting 
and recordkeeping requirements.
    For the reasons set out in the preamble and under the authority of 
the Atomic Energy Act of 1954, as amended; the Energy Reorganization 
Act of 1974, as amended, and 5 U.S.C. 553, the NRC is proposing to 
adopt the following amendments to 10 CFR part 50.

PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION 
FACILITIES

    1. The authority citation for Part 50 continues to read as follows:

    Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 
Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234, 
83 Stat. 1244, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 
2232, 2233, 2236, 2239, 2282); secs. 201, as amended, 202, 206, 88 
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846).
    Section 50.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 (42 U.S.C. 5851). Section 50.10 also issued under secs. 101, 
185, 68 Stat. 955 as amended (42 U.S.C. 2131, 2235), sec. 102, Pub. 
L. 91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.13, 50.54(dd), 
and 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 
U.S.C. 2138). Sections 50.23, 50.35, 50.55, and 50.56 also issued 
under sec. 185, 68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a, 
50.55a and Appendix Q also issued under sec. 102, Pub. L. 91-190, 83 
Stat. 853 (42 U.S.C. 4332). Sections 50.34 and 50.54 also issued 
under sec. 204, 88 Stat. 1245 (42 U.S.C. 5844). Sections 50.58, 
50.91, and 50.92 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 
U.S.C. 2239). Section 50.78 also issued under sec. 122, 68 Stat. 939 
(42 U.S.C. 2152). Sections 50.80--50.81 also issued under sec. 184, 
68 Stat. 954, as amended (42 U.S.C. 2234). Appendix F also

[[Page 29250]]

issued under sec. 187, 68 Stat. 955 (42 U.S.C. 2237).

    2. In Sec. 50.75, the introductory text of paragraph (e)(1), 
paragraph (e)(1)(i), and the introductory text of paragraph (e)(1)(ii) 
would be revised, and a new paragraph (h) would be added to read as 
follows:

Sec. 50.75  Reporting and recordkeeping for decommissioning planning.

* * * * *
    (e)(1) Financial assurance is to be provided by the following 
methods.
    (i) Prepayment. Prepayment is the deposit made preceding the start 
of operation into an account segregated from licensee assets and 
outside the administrative control of the licensee and its subsidiaries 
or affiliates of cash or liquid assets such that the amount of funds 
would be sufficient to pay decommissioning costs at the time permanent 
termination of operations is expected. Prepayment may be in the form of 
a trust, escrow account, Government fund, certificate of deposit, 
deposit of Government securities or other payment acceptable to the 
NRC. Such trust, escrow account, Government fund, certificate of 
deposit, deposit of Government securities, or other payment shall be 
established pursuant to a written agreement and maintained at all times 
in the United States with an entity that is an appropriate State or 
Federal government agency or an entity whose operations relating to the 
prepayment deposit are regulated and examined by a Federal or State 
agency. A licensee may take credit for projected earnings on the 
prepaid decommissioning trust funds using up to a 2 percent annual real 
rate of return from the time of future funds' collection through the 
projected decommissioning period. This includes the periods of safe 
storage, final dismantlement, and license termination, if the 
licensee's rate-setting authority does not authorize the use of another 
rate. However, actual earnings on existing funds may be used to 
calculate future funds needs.
    (ii) External sinking fund. An external sinking fund is a fund 
established and maintained by setting funds aside periodically in an 
account segregated from licensee assets and outside the administrative 
control of the licensee and its subsidiaries or affiliates in which the 
total amount of funds would be sufficient to pay decommissioning costs 
at the time permanent termination of operations is expected. An 
external sinking fund may be in the form of a trust, escrow account, 
Government fund, certificate of deposit, deposit of Government 
securities, or other payment acceptable to the NRC. Such trust, escrow 
account, Government fund, certificate of deposit, deposit of Government 
securities, or other payment shall be established pursuant to a written 
agreement and maintained at all times in the United States with an 
entity that is an appropriate State or Federal government agency or an 
entity whose operations relating to the external sinking fund are 
regulated and examined by a Federal or State agency. A licensee may 
take credit for projected earnings on the external sinking funds using 
up to a 2 percent annual real rate of return from the time of future 
funds' collection through the decommissioning period. This includes the 
periods of safe storage, final dismantlement, and license termination, 
if the licensee's rate-setting authority does not authorize the use of 
another rate. However, actual earnings on existing funds may be used to 
calculate future fund needs. A licensee, whose rates for 
decommissioning costs cover only a portion of such costs, may make use 
of this method only for that portion of such costs that are collected 
in one of the manners described in this paragraph, (e)(1)(ii). This 
method may be used as the exclusive mechanism relied upon for providing 
financial assurance for decommissioning in the following circumstances:
* * * * *
    (h)(1) Licensees using prepayment or an external sinking fund to 
provide financial assurance shall provide in the terms of the trust, 
escrow account, government fund, or other account used to segregate and 
manage the funds that--
    (i) The trustee, manager, investment advisor, or other person 
directing investment of the funds:
    (A) Is prohibited from investing the funds in securities or other 
obligations of the licensee or any other owner or operator of the power 
reactor or their affiliates, subsidiaries, successors or assignees, or 
in securities of any other entity owning one or more nuclear power 
plants, except for investments tied to market indices or non-nuclear 
sector mutual funds;
    (B) Is obligated to ensure that all investments are rated at least 
``investment grade'' or equivalent;
    (C) Is obligated at all times to adhere to a prudent investor 
standard in investing the funds; and
    (D) Is prohibited from engaging the licensee or its affiliates or 
subsidiaries as investment manager for the funds or from accepting day-
to-day management direction of the funds' investments or direction on 
individual investments by the funds from the licensee or its affiliates 
or subsidiaries.
    (ii) The trust, escrow account, Government fund, or other account 
used to segregate and manage the funds may not be amended in any 
material respect without written notification to the Director, Office 
of Nuclear Reactor Regulation, or the Director, Office of Nuclear 
Material Safety and Safeguards, as applicable, at least 30-days prior 
to the proposed effective date of the amendment. The licensee shall 
provide the text of the proposed amendment and a statement of the 
reason for the proposed amendment. The trust, escrow account, 
Government fund, or other account may not be amended if the person 
responsible for managing the trust, escrow account, Government fund, or 
other account receives written notice of objection from the Director, 
Office of Nuclear Reactor Regulation, or the Director, Office of 
Nuclear Material Safety and Safeguards, as applicable, within the 
notice period; and
    (iii) No disbursement or payment may be made from the trust, escrow 
account, Government fund, or other account used to segregate and manage 
the funds, other than for payment of ordinary administrative expenses, 
until written notice of the intention to make a disbursement or payment 
has been given the Director, Office of Nuclear Reactor Regulation, or 
the Director, Office of Nuclear Material Safety and Safeguards, as 
applicable, at least 30-days prior to the date of the intended 
disbursement or payment. The disbursement or payment from the trust, 
escrow account, Government fund or other account may be made following 
the 30-day notice period if the person responsible for managing the 
trust, escrow account, Government fund, or other account does not 
receive written notice of objection from the Director, Office of 
Nuclear Reactor Regulation, or the Director, Office of Nuclear Material 
Safety and Safeguards, as applicable, within the notice period. 
Disbursements or payments from the trust, escrow account, Government 
fund, or other account used to segregate and manage the funds, are 
restricted to ordinary administrative expenses, decommissioning 
expenses, or transfer to another financial assurance method acceptable 
under paragraph (e) of this section until final decommissioning has 
been completed.
    (2) Licensees using a surety method, insurance, or other guarantee 
method to provide financial assurance shall provide that the trust 
established for decommissioning costs to which the surety or insurance 
is payable contains in its terms the requirements in paragraphs 
(h)(1)(i), (ii) and (iii) of this section.

[[Page 29251]]

    Dated at Rockville, Maryland, this 23rd day of May, 2001.
    For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 01-13489 Filed 5-29-01; 8:45 am]
BILLING CODE 7590-01-P
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