Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34293

Date of issuance: June 15, 2001.

Effective date: As of the date of

issuance and shall be implemented by

December 21, 2001.

Amendment Nos.: 227 and 208.

Facility Operating License Nos. NPF–

4 and NPF–7: Amendments change the

Technical Specifications.

Date of initial notice in Federal

Register: December 13, 2000 (65 FR

77929). The December 18, 2000,

February 2, March 2, and May 21, 2001,

supplements contained clarifying

information only, and did not change

the initial no significant hazards

consideration determination, or expand

the scope of the initial application.

The Commission’s related evaluation

of the amendments is contained in a

Safety Evaluation dated June 15, 2001.

No significant hazards consideration

comments received: No.

Dated at Rockville, Maryland, this 19th day

of June 2001.

For the Nuclear Regulatory Commission.

John A. Zwolinski,

Director, Division of Licensing Project

Management, Office of Nuclear Reactor

Regulation.

[FR Doc. 01–15818 Filed 6–26–01; 8:45 am]

BILLING CODE 7590–01–P

NUCLEAR REGULATORY

COMMISSION

Preliminary Impact Assessment of

Nuclear Industry Consolidation onNRC

Oversight: Request for Comments

AGENCY: Nuclear Regulatory

Commission (NRC).

ACTION: Request for comments.

SUMMARY: Economic deregulation of the

electric utility industry has resulted in

consolidation and restructuring of the

nuclear power industry. The

transformation of the once strictly

regulated industry has led to separation

of the generation, transmission and

distribution sectors, corporate mergers

and asset transfers, acquisitions by

outright purchase, and a general

transition to a nationwide competitive

market. There have also been numerous

nuclear power plant license transfer

applications, which the NRC staff must

review and approve before a license can

be transferred to a new entity.

The NRC staff has identified and

performed a preliminary assessment of

the impacts of nuclear industry

consolidation on the NRC and whether

the NRC needs to change its regulations,

policies, processes, guidance, or

organizational structure to continue to

meet its strategic public health and

safety goals. The initial object of this

effort is to identify impacts that need to

be considered further.

The NRC staff has identified a number

of consolidation and a few deregulationrelated impacts on NRC oversight of the

nuclear industry, grouped them by

category, and performed preliminary

impact assessments. The individual

assessments follow this notice.

The NRC staff requests comments and

suggestions from stakeholders on the

identified issues and the preliminary

impact assessments. The NRC staff will

consider all comments received. A

public workshop will be held at NRC

Headquarters in the October/November

2001 timeframe to discuss the regulatory

oversight issues attendant to industry

consolidation, the staff’s preliminary

impact assessments, and the comments

received from the stakeholders. Notice

of this workshop will be published at a

later date. Commenters should indicate

their interest in attending and

participating in this workshop.

The product of this effort will be staff

recommendations of impacts that the

Commission needs to consider further.

DATES: The comment period ends

August 27, 2001. Comments received

after this date will be considered if it is

practical to do so, but the staff

guarantees consideration only of

comments received on or before this

date.

ADDRESSES: Mail written comments to

Chief, Rules and Directives Branch,

Division of Administrative Services,

Office of Administration, U.S. Nuclear

Regulatory Commission, Washington,

DC 20555–0001. Comments may also be

sent by completing the online comment

form at http://www.nrc.gov/NRC/

REACTOR/CONSOLIMPACT/

index.html.

Deliver comments to Room 6D59,

Two White Flint North, 11545 Rockville

Pike, Rockville, Maryland, between 7:30

a.m. and 4:15 p.m. on Federal workdays.

For further information contact

Herbert N. Berkow, Mail Stop O 8 H–12,

Office of Nuclear Reactor Regulation,

U.S. Nuclear Regulatory Commission,

Washington, DC 20555; telephone (301)

415–1485 and e-mail at

HNB@NRC.GOV.

Dated at Rockville, Maryland, this 20th day

of June 2001.

For the Nuclear Regulatory Commission.

Herbert N. Berkow,

Director, Project Directorate II, Division of

Licensing Project Management, Office of

Nuclear Reactor Regulation.

Industry Consolidation Preliminary

Impact Assessments

Categorization of Industry Consolidation

Issues

Category 1 Plant Operational Safety

Issue 1.a Possible Cost-cutting Initiatives

Issue 1.b Technology-related Issues

Issue 1.c Spent Fuel Storage and

Transportation

Issue 1.d Low-Level Radioactive Waste

Management

Issue 1.e Emergency Preparedness

Issue 1.f Reliable Off-site Power

Category 2 Licensing

Issue 2.a License Transfer Process

Issue 2.b New License Applications, Site

Approvals, and Reactivations of Deferred

Plants

Issue 2.c License Renewal

Issue 2.d NRC Organizational Structure

Category 3 Inspection, Enforcement, and

Assessment

Issue 3.a NRC Reactor Oversight Process

Issue 3.b Other NRC Inspection Programs

Issue 3.c NRC Enforcement Program

Issue 3.d NRC Allegation Program

Category 4 Decommissioning

Category 5 External Regulatory Interfaces

Category 6 Fuel Cycle Facilities

Category 7 Financial

Issue 7.a Foreign Ownership

Issue 7.b License Fee Structure

Issue 7.c Insurance

Issue 7.d Joint and Several Regulatory

Responsibility

Issue 7.e Bankruptcy Protection

Issue 7.f Financial Qualifications

Category 8 Non-NRC Regulatory

Considerations

Issue 8.a Grid Stability/Reliability

Issue 8.b Antitrust Considerations

Issue Category: 1. Plant Operational

Safety

Issue: 1.a Possible Cost-Cutting

Initiatives

Discussion

In a more consolidated, economically

deregulated market, the nuclear power

industry will be faced with new

pressures to operate more efficiently.

Cost controls could result in shorter

outages (and thus longer run times),

increased use of on-line maintenance,

power uprate amendments, increased

use of risk-informed technology and

decisions and other changes that would

result in lower costs and increased

productivity.

34294 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

Consolidated licensees will also seek

to achieve economies of scale, which is

a major potential benefit of

consolidation. This will likely be

manifested in organizational changes,

both at the plant and corporate levels,

to combine duplicative functions,

optimize staff size, standardize best

practices, and centralize functions.

Organizational and operational

philosophies may also be influenced by

the prerequisites of economic

deregulation, which often require

existing utilities to separate power

generation from transmission and

distribution functions. Consolidation

and economic deregulation will likely

result in increased efforts by licensees to

seek reductions in unnecessary

regulatory burden. Licensees may also

seek reductions in licensing fees beyond

that relief already provided by Congress.

Preliminary Impact Assessment

Licensee efforts to operate more

efficiently may result in net positive

safety impacts. There is evidence, both

domestic and foreign, to demonstrate

that well run, efficiently operated plants

are also the safest plants. Nevertheless,

if carried to excess, cost-cutting

measures to achieve short-term

economic gains could result in longerterm adverse safety performance

impacts.

Licensees are responsible to ensure

that safety and regulatory compliance

are not compromised by the industry

goals to maximize operational efficiency

and performance effectiveness. The NRC

must stay focused on operational safety

and have the capability to assess and

react to industry activities in response

to economic pressures that appear to

have an adverse impact on safety.

Augmented staff expertise beyond

currently existing capabilities may be

needed to effectively implement

oversight responsibilities in the

changing industry environment. The

staff must assure that its safety

assessment processes have adequate

flexibility to detect and respond to

adverse safety performance trends that

result from competition-driven licensee

actions. At the same time, the staff will

have to remain sensitive to reducing

unnecessary regulatory burden.

Recommended Followup

Continued staff monitoring of

experience and feedback from current

oversight processes should provide

early identification of issues related to

economics-driven licensee actions that

need to be addressed. This, in turn, will

define any needed staff reaction. No

other special followup effort is

recommended at this time.

Issue Category: 1. Plant Operational

Safety

Issue Title: 1.b Technology-Related

Issues

Discussion

While technology and process

advances have continued to be

developed and introduced to the design

and operation of licensed nuclear

facilities, industry consolidation and

economic deregulation may provide

additional incentives for such advances.

The NRC research-sponsored effort

encompasses a variety of broad

technological areas which may be

involved in future developments related

to industry consolidation and economic

deregulation. The following are

examples of such technological areas

which the staff may have to deal with

in the future.

1. Fuel integrity must be addressed in

an integrated fashion considering longer

operating cycles, ultra-high fuel

burnups, new cladding materials, power

uprates, and changes to operational

conditions such as may result from load

following. A stronger, consolidated

industry may see advantages to moving

to a simpler performance-based

assessment rather than the present

design-based method.

2. Human and organizational factors

affected by industry consolidation and

deregulation may need to be considered

to address reduced staffing, modified

maintenance strategies, and possible

increased use of contractors.

3. Introduction of new technologies,

such as advanced information

technologies, evolution of digital

instrumentation and control systems in

existing facilities, and development of

new reactor concepts may require new

regulatory approaches. These types of

issues are also pertinent to Issue 2.b.

The staff has on-going, or planned

activities which will enable it to

accommodate the technology-related

issues arising from industry

consolidation and deregulation. The

following are examples of such

activities:

1. Development of risk-based

performance indicators (RBPIs) could

provide an additional tool with which

to assess plant safety performance on a

plant-specific as well as industry-wide

basis. The RBPIs, if successfully

developed, would provide broader

coverage of risk than the current

performance indicators and would

allow a more detailed assessment of the

root causes of problems, whether or not

they are related to consolidation or

deregulation. Also, plant-specific

thresholds based upon risk could be

established.

2. Risk information is routinely used

to assist in regulatory decisions

regarding such issues as equipment and

plant aging, fuel burnup and power

uprates. The synergetic effects of such

changes on the overall safety of

operating plants may require reevaluation of existing probabilistic risk

assessments.

3. Advanced information technologies

are likely to be employed in emergency

preparedness programs (Issue 1.e).

Areas of potential interest are possible

consolidation-related impacts on the

communications infrastructure and

integrity of data used for making

decisions during emergencies.

4. There is an increased focus on

results-based regulatory decisionmaking. The staff has developed highlevel guidelines for performance-based

activities to facilitate implementation of

such approaches while ensuring that

adequate safety margins are maintained.

Broader use of performance-based

approaches may allow more direct

observation of the effects of

consolidation.

Preliminary Impact Assessment

The technology-related aspects of

many of the potential issues that may

arise from industry consolidation and

deregulation require that more

experience and operational information

be incorporated into the staff’s

evaluations. While the staff is alert to

possible safety concerns, the

expectation is that the changes will also

bring about safety improvements.

However, impact assessments are

premature at this point. The work being

conducted by the staff on issues relevant

to industry consolidation and

deregulation provides confidence that

technical challenges can and will be met

effectively.

The generic issues program has dealt

with a number of issues where safety

considerations similar to those

occurring with industry consolidation

were addressed. A process exists for

new information from industry

consolidation to be fed back into the

program and potentially trigger a reevaluation of specific issues, if

appropriate. So far, resolved issues in

this area have not had to be reevaluated, suggesting that the safety

assessments conducted previously

remain valid.

Recommended Followup

As experience with industry

consolidation is limited at this time, the

emphasis should be on monitoring

operational information and being alert

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34295

to indications of an unexpected nature.

NRC should continue to monitor the

changes occurring within the nuclear

industry and take these changes into

account when considering

modifications to its research activities.

Issue Category: 1. Plant Operational

Safety

Issue: 1.c Spent Fuel Storage and

Transportation

Discussion

U.S. nuclear power plants were not

designed to store all the spent nuclear

fuel generated throughout their

operating lives. To date, utilities have

been coping with the lack of spent fuel

storage capacity by expanding the

capacity of spent fuel pools through

redesign (reracking) and by constructing

independent spent fuel storage

installations (ISFSIs) for at-reactor,

above ground, dry storage. Prior to the

increase in industry consolidation

activities, Private Fuel Storage L.L.C, a

company owned by eight U.S. utilities,

applied for a license to receive, handle,

transfer, and store spent nuclear fuel

from commercial nuclear power plants

at a privately owned ISFSI. This awayfrom-reactor ISFSI will be able to store

as much as 40,000 MTU of spent fuel at

one location. The purpose of the

proposed facility is to satisfy the need

for an interim storage facility that would

serve as a safe, efficient, and economical

alternative to continued spent fuel

storage at reactor sites. NRC is aware of

a potential application for a second

away-from-reactor ISFSI (i.e., the Owl

Creek site). As a result of industry

consolidation and the good performance

record of operating plants, it is expected

that essentially all currently operating

plants will seek license renewal. Since

the availability of a permanent spent

fuel repository is uncertain, there will

likely be a need for additional

temporary spent fuel storage as plants

operate for extended lifetimes. At this

point in time, it is premature to predict

whether nuclear industry consolidation

could increase the need to consolidate

spent fuel storage either at selected

reactor site ISFSIs or at new away-fromreactor ISFSIs. Further, there is no basis

to say that consolidation will affect the

amount of spent nuclear fuel that will

need to be transported to or from reactor

sites.

Preliminary Impact Assessment

The NRC has been able to successfully

address applications for new ISFSI

licenses and new spent fuel storage cask

designs, as well as applications to

amend existing licenses and cask

certifications. Consolidation could

result in an increased number of

amendments to existing ISFSI licenses

(to increase storage capacity),

applications for new site-specific ISFSI

licenses, applications for away-fromreactor ISFSIs, applications to amend

existing Part 71 and 72 quality

assurance programs, and amendments to

existing certified cask designs (to permit

storage of additional types of spent fuel

and fuel with higher burnup). The staff

currently interfaces with the licensees

and industry groups (e.g., NEI) on a

periodic basis to identify future

submittals and thus aid in assessing

future resource needs.

Existing Part 71 and 72 regulations,

policies, and guidance are sufficient to

support nuclear industry consolidation.

Recommended Followup

At this time, it appears that current

ISFSI licensing and spent fuel storage

cask certification regulations, policies,

and procedures are sufficient to

accommodate situations resulting from

industry consolidation. Staff will

continue to work with industry to

obtain advance notice of future

applications and thus predict future

casework levels that may be generated

by consolidations. Furthermore, there

may be some unique, unanticipated

circumstances that require changes to

spent fuel storage or transportation

policies or regulations. For either of

these situations, the staff will utilize the

PBPM process to address resource

impacts or significant policy matters

and make appropriate recommendations

to NRC management.

Issue Category: 1. Plant Operational

Safety

Issue: 1.d Low-Level Radioactive Waste

Management

Discussion

Nuclear industry consolidation can

affect how individual licensees address

management of low-level wastes.

Regulations applicable to waste

management include operational

radiation health and safety requirements

applicable to all waste generator

licensees and requirements for

commercial facilities licensed to dispose

of low-level radioactive wastes. The

Low-Level Radioactive Waste Policy

Amendments Act of 1985 provides a

process for siting new low-level waste

disposal facilities. Regulations are also

in place for transportation of low-level

radioactive wastes. Policy guidance for

implementing these regulations has

been prepared and issued as standard

format and content guides, standard

review plans, and branch technical

positions.

Nuclear industry consolidation has

the potential to strengthen low-level

waste management programs within

licensee organizations by consolidating

management of waste disposal

activities. The Envirocare disposal

facility in Utah currently negotiates

disposal charges on a case-by-case basis.

Therefore, consolidation may also

reduce disposal costs through the

negotiation of larger volume contracts.

Additional cost savings could also be

implemented through the potential use

of licensees’ own low-level waste

volume reduction and processing

systems that may become economical

for a larger number of plants, rather than

contracting for this service. The

construction and use of new volume

reduction and waste processing systems

would generally be implemented

through 10 CFR 50.59, without the need

for a license amendment. Incineration,

however, would require licensing

pursuant to 10 CFR 20.2004. Due to the

controversial nature of incineration

issues, intervention on any such license

amendment applications would be

likely.

Most nuclear power plants have

developed on-site storage facilities as a

contingency in the event of short-term

interruptions in disposal site

availability, as has occurred in the past.

Industry consolidation could allow

more optimal use of these storage

facilities. However, because nuclear

power plants generally are not licensed

to accept wastes from off-site, license

amendments would be required to

implement optimized storage programs

among several nuclear power plant

sites. Indeed, the staff recently issued a

license amendment to TVA that allows

them to store low-level waste from the

Watts Bar facility at Sequoyah. There

would also be a need for transportation

of wastes from the point of generation

to the centralized storage facility. Due to

the controversial nature of waste

management and transportation issues,

intervention on any license amendment

applications is a likelihood.

Centralization of storage facilities could

require that licensees increase tracking

of the origin of the wastes to ensure that

State and compact waste generator

reporting requirements are met.

There do not appear to be

consolidation efforts among the lowlevel waste disposal licensees at this

time. Programs at low-level waste

facilities are driven primarily by

external impacts (e.g., decisions related

to the closure of the Barnwell low-level

waste site) rather than by consolidation.

Currently, all low-level waste disposal

site facilities are located in and licensed

by Agreement States, and there are no

34296 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

new applications projected to be

submitted to the NRC.

Preliminary Impact Assessment

Regulations and policies addressing

low-level waste management and

transportation are sufficiently flexible to

address license amendments to

consolidate on-site storage operations or

to use advanced volume-reduction

technology. Industry consolidation

should have no impact on the

availability of low-level waste disposal

sites or programs for handling and

processing mixed wastes. There does

not appear to be a need to revisit the

Low-Level Radioactive Waste Policy

Amendments Act of 1985 based solely

on industry consolidation impacts,

although the lack of progress in opening

new low-level waste disposal sites, as

documented by the General Accounting

Office, may require amendment of that

statute. DOE and State projections of

low-level waste generation may be

affected by nuclear power plant license

renewals that occur from industry

consolidation.

Recommended Followup

At this time, it appears that current

low-level waste management regulations

and policies are sufficiently flexible to

accommodate situations resulting from

industry consolidation. Therefore,

industry consolidation appears to have

no significant impact in the waste

management area and no further effort

is recommended. However, the NRC

needs to consider the effects of license

renewals when providing feedback on

DOE and State projections of low-level

waste generation.

Issue Category: 1. Plant Operational

Safety

Issue: 1.e Emergency Preparedness

Discussion

Emergency preparedness (EP)

programs, both on-site and off-site, are

sensitive to the impacts of industry

consolidation because of the

dependence on relationships with State

and local governments and facilities

where the plants are located. Outcomes

of industry consolidation have included

centralization of staffs, functions, and

facilities remote from individual site

locations and the standardization of

licensee EP programs and procedures.

These outcomes can have both positive

and negative impacts. Consolidation can

strengthen licensees’ programs or,

conversely, create problems and

deficiencies throughout multiple plant

organizations or facilities. There are

NRC staff resource implications and

challenges to assure that regulations and

policies continue to be satisfied and that

the NRC’s safety assessment processes

provide sufficient focus on any

proposed changes. Changes that impact

offsite emergency preparedness are

coordinated with the Federal Emergency

Management Agency (FEMA) as well as

affected State and local authorities.

Preliminary Impact Assessment

The NRC must be alert to potential

safety impacts of EP program changes

resulting from consolidation. Industry

consolidation already has resulted in

some centralized Emergency Operations

Facilities (EOFs), with the corporate

headquarters serving as the location for

and source of personnel to staff the EOF.

Shared Emergency News Centers are

another result of consolidation, with

licensee corporate personnel staffing

these facilities. Efficiencies can result

when one EOF is capable of effectively

serving multiple nuclear sites.

Some concerns associated with

centralized emergency preparedness

facilities remote from the site area

include the potential loss of expertise

local to the facility and maintenance of

local contacts with first responders.

Corporate personnel may face

challenges in maintaining knowledge of

the plant(s), local organizations, and

procedures. However, centralized,

shared facilities and staffs can

strengthen EP programs. Some

communications capabilities have

improved and the perception for the

need for locating close to the site has

been reduced in some locations.

Consolidation of EOFs affecting

multiple States and/or local authorities

can present challenges in

accommodating differences among these

offsite entities and meeting the needs of

local constituencies. A major factor in

the location of the EOF is ensuring the

capability for effective communication

and response among the licensee, the

State and local emergency response

organizations, FEMA, and NRC relative

to protective action decision-making

and implementation of protective

actions.

Another area of potential impact is

the incentive for increased use of

standardized emergency response

procedures across multiple reactor

facilities. Standardized procedures have

positive and negative aspects. They can

result in a better procedure and the

ability to cross-utilize staff at multiple

facilities. However, a licensee may be

more reluctant to modify standardized

procedures for needed changes, due to

the number of facilities affected by

procedure changes and potentially

increased training needs.

NRC has reviewed industry requests

for consolidation of emergency response

facilities (ERFs), changes in emergency

plans and procedures, Emergency

Action Levels (EALs), and emergency

organizations as a result of

consolidation. The NRC evaluates

proposals for centralized EP staffs,

programs and facilities and, indeed, has

approved such proposals in the past.

Commission-level approval is required

for centralized EOFs and EOFs located

more than 25-miles from a nuclear

power plant site. The NRC coordinates

with FEMA and States when emergency

planning changes are contemplated that

affect offsite preparedness.

Recommended Followup

Given the ongoing industry

consolidation, the potential exists that

owners of multiple facilities will

continue to seek consolidation of EP

program functions and organizations.

The staff recommends that NRC staff

resource implications and challenges be

assessed and trended to assure that

regulations and policies continue to be

satisfied and that the NRC’s safety

assessment processes provide sufficient

focus on emergency preparedness.

Issue Category: 1. Plant Operational

Safety

Issue: 1.f Reliable Off-Site Power

Discussion

As described in Issue 8.a., the primary

concerns that arise with respect to offsite power reliability are a result of

economic deregulation rather than

industry consolidation. Stability and

reliability of off-site power is a

significant safety consideration in the

regulation of nuclear power plants. The

primary reason is that off-site power is

the preferred source of electrical supply

to operate decay heat removal systems.

Hence, although highly reliable on-site

emergency diesel generators will be

available to assure capability to safely

shut down the plant and provide for

transfer of decay heat to the ultimate

heat sink temporarily, a reliable off-site

power supply is important for long-term

safety. The NRC has a significant

interest in monitoring challenges to the

operation and management of the

electric power grid so that appropriate

actions can be taken to address concerns

regarding reliability of off-site power.

From the perspective of plant

operational safety, the potential

challenges to the reliability of off-site

power affect the use of probabilistic risk

analyses in safety related decisionmaking. Increasingly, both licensees and

the NRC staff use PRAs for riskinformed decision-making. Regulatory

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34297

Guide 1.174, ‘‘An Approach for Using

Probabilistic Risk Assessment in RiskInformed Decisions on Plant-Specific

Changes to the Licensing Basis’’,

provides the guidance needed for

making licensing decisions using risk

insights that may derive from the

impacts of changes due to economic

deregulation. New information based on

grid experience after economic

deregulation may have to be considered

in estimating the frequency of initiating

events where off-site power plays a role.

Most of the information needed is likely

to be readily available from the grid

operators. This information is likely to

be a part of submittals made by

licensees in support of licensing actions.

In recognition of the importance of

assuring the stability and reliability of

off-site power the industry, as well as

the NRC, has implemented programs

and other initiatives to address this

challenge. The NRC issued Regulatory

Issue Summary 2000–24 on the subject

in December 2000. NEI and INPO

sponsored a workshop on offsite power

reliability in April 2001, in which NRC

staff participated. In 1999, INPO issued

SOER 99–1, which provides guidelines

for good practices in support of grid

reliability and is currently conducting

an audit of licensees to determine the

degree of conformance to these good

practices.

Preliminary Impact Assessment

Reliability of off-site power lately has

been receiving considerable attention.

The external stakeholders include other

government agencies with regulatory

responsibilities. Communication

channels have been established with

various stakeholders and are improving

as experience is gained. The Institute for

Nuclear Power Operations has

developed the Equipment Performance

and Information Exchange (EPIX)

system, which should enable

information needed to update PRAs to

be easier to obtain.

Relative to operational safety matters,

the body of regulations currently in

force provides for safe operation,

shutdown, and decay heat removal from

nuclear power plants. The established

lines of communication with industry

and other stakeholders, especially those

concerned with economic deregulation,

are expected to provide timely

information if safety issues arise. In

addition, the NRC has in place the

needed infrastructure (such as a

Memorandum of Understanding with

the Electric Power Research Institute) to

obtain and assess information, affecting

off-site power reliability.

Recommended Followup

The NRC should continue its ongoing

efforts to monitor developments relative

to grid operation. The monitoring

should include keeping abreast of

actions taken by other government

agencies which may affect grid

reliability, as well as nuclear power

industry initiatives relative to assurance

of grid reliability.

Issue Category: 2. Licensing

Issue: 2.a License Transfer Process

Discussion

The NRC responsibilities for the

transfer of a license are set forth in 10

CFR 50.80, ‘‘Transfer of Licenses.’’ From

1998 through the present, the staff has

received license transfer applications for

about 80 nuclear power reactor units.

Most of the reviews for these

applications have been completed

except for a few that were submitted

recently. Applications for transfer of a

license include information on the

identity and technical and financial

qualifications of the proposed

transferee, as well as any additional

information that the Commission

requires, such as radioactive material

safeguards protection, and certain

information related to the purpose of the

transfer and the nature of the

transaction necessitating the transfer.

The NRC must obtain, review, and

assess all relevant organizational and

financial information associated with

each license transfer to determine

whether the proposed transferee is

qualified and the transfer is otherwise

consistent with the law and NRC

regulations. Transfer of the license is by

issuance of an order and, where

necessary, a conforming amendment.

A concern has been raised by some

external stakeholders that once a

licensee has decided to sell its nuclear

plants that licensee may no longer have

the incentive to invest in safety or

maintenance improvements, or take

necessary corrective action to address

identified problems, pending transfer of

responsibility and liability to the license

transferee. The stakeholders’ proposed

resolution to this concern is that the

NRC staff consider such indications in

its license transfer reviews and make the

correction of physical or performance

problems a condition of transfer

approval.

Preliminary Impact Assessment

The staff believes that the current

license transfer process is effective. It

appears likely that license transfer

applications will continue to be

submitted, and completed transfers will

continue to be reviewed for lessons

learned to improve the effectiveness of

the process.

The concern that a licensee planning

to sell its plant might no longer place a

high priority on safety initiatives is

accommodated by the staff’s oversight

process, as discussed in Issue 3.a. The

NRC closely monitors the transfer

process to ensure that NRC regulations

and license requirements are met

regardless of any pending sale. Further,

the new license holder has a strong

incentive to assure that the plant will

meet NRC requirements upon

completion of the transfer. Finally, it

should be noted that the staff has had

considerable experience with the

license transfer process and has not seen

any evidence to validate this concern.

Recommended Followup

No special followup effort is

recommended at this time.

Issue Category: 2. Licensing

Issue: 2.b New License Applications,

Site Approvals, and Reactivations of

Deferred Plants

Discussion

A consolidated nuclear power

industry consisting of larger, financially

strong nuclear operators is more likely

to consider new plant applications,

standard design applications, power

uprates, reactivation of deferred plants,

and site approval applications. There

already is industry consideration of new

reactor design applications (such as the

pebble-bed-type standard design) within

the next few years.

With larger, more stable licensees, the

costs associated with new nuclear

power plant planning and construction

can be more readily supported. These

new units likely would serve as

merchant power plants for the owner.

New construction may also involve

multiple corporations pooling their

resources to build new facilities.

The NRC has been monitoring

industry activities in this area. The

Commission has stated in COMSECY–

00–0026 (REVISED FY 2000–2005

STRATEGIC PLAN) that the staff has an

important ongoing initiative to improve

the regulatory infrastructure associated

with new plant construction (10 CFR

Part 52) and that improving this

infrastructure should serve to improve

the efficiency, effectiveness,

predictability, and consistency of the

combined license review process.

Preliminary Impact Assessment

The staff will need to assure that the

necessary staff resources, expertise,

organizational infrastructure, review

34298 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

processes, and guidance are available to

support future activities in this area. In

addition, current regulations and

processes may need to be reviewed.

New guidance may be needed on the

scope of the review, as well as for

antitrust and foreign ownership issues.

Additional resources may need to be

reassigned to support future staff action

in this area. The Commission has

directed the staff in COMJSM–00–0003,

‘‘Staff Readiness for New Nuclear Plant

Construction and the Pebble Bed

Reactor,’’ to assess existing capabilities

and identify needed enhancements to

process an early site permit application,

a license application, and construction

of a new nuclear power plant. It also

directed the staff to assess and identify

needed enhancements to the regulatory

infrastructure supporting applicable

regulations, with emphasis on

identification of regulatory issues and

potential process improvements. In

response to this directive, the staff has

established a temporary Future

Licensing Organization (FLO) within the

Office of Nuclear Reactor Regulation. A

principal function of the FLO is to

coordinate an interoffice effort to assess

the needed technical, licensing, and

inspection capabilities to ensure that the

agency can effectively carry out its

future licensing activities.

Recommended Followup

Renewed interest in new license

applications is attributable, at least in

part, to industry consolidation. The

Commission and staff have had

meetings with industry representatives

who are formulating plans for possible

site and plant license application

submittals in the next few years. The

staff already has initiatives underway to

prepare for such submittals. These

ongoing initiatives appear to be

sufficient and should be responsive to

industry developments and evolving

plans. Because industry’s interest in

pursuing new licenses only recently

materialized, the current FY2002 budget

estimate does not provide sufficient

resources to accommodate emerging

work for potential new license

applications. The FLO is developing

updated budget assumptions and

resource needs. No specific additional

followup effort is recommended at this

time.

Issue Category: 2. Licensing

Issue: 2.c License Renewal

Discussion

The number of future license renewal

applications is expected to increase as a

result of consolidation. Some reactors

that were not considered to be

candidates for license renewal could be

reevaluated as a result of consolidation.

With larger, more financially stable

nuclear power plant owners, increased

competition in power generation, and

because of cost benefits, there will be

increased incentive to extend the

licenses of currently operating nuclear

power plants. License renewal is seen

by licensees as a cost-effective means of

adding capacity. It is anticipated that

virtually all of the currently operating

plants will seek license renewal.

The license renewal process for power

reactors relies on a review of the

licensing basis and plant design,

scoping, and screening of structures and

components that need to be subjected to

an aging management review and

evaluation of time-limited aging

analyses.

Preliminary Impact Assessment

The staff recognizes the potential

resource impacts of the receipt of an

increased number of license renewal

applications, some of which may not

have been in the planning assumptions.

The NRC has published Regulatory

Issue Summary 2000–20, which

encourages licensees to inform the staff

as soon as possible of their plans for

license renewal. The staff uses the

PBPM process to budget for applications

for which the staff has been notified of

submittal dates and to respond to

emergent work. However, license

renewal is a voluntary initiative and the

decision to renew an operating license

is largely a business decision over

which the NRC has no control. In

addition, a greater number of renewal

applications could result in already

established submittal dates being

changed as consolidated licensees reevaluate and re-prioritize their license

renewal plans.

Recommended Followup

No special followup effort is

recommended at this time. As

consolidation progresses, the NRC

should stay engaged with the industry

as to changing license renewal plans

and schedules and modify resource

planning assumptions accordingly.

Issue Category: 2. Licensing

Issue: 2.d NRC Organizational

Structure

Discussion

Traditionally, licensees have operated

within limited geographical service

areas and have had to interface with just

one regional office and one headquarters

project directorate. As a result of

consolidation, some licensees may have

to interact with as many as four regional

offices and headquarters project

directorates. This is likely to introduce

management challenges, both for the

staff and the licensees, especially with

respect to consistent, coordinated,

efficient, and effective regulatory

oversight.

The Commission stated in

COMSECY–00–0026 (REVISED FY

2000–2005 STRATEGIC PLAN) that the

staff needs to assure that NRC

stakeholders recognize the importance

the Commission places on regional

consistency and coordination. With

deregulation proceeding in the electric

industry and with continuing

applications for license transfers, the

NRC will see an increase in the number

of cross-regional licensees. While

consistency and coordination between

and among headquarters and the regions

have been high priorities for the NRC,

the increase in cross-regional licensees

represents a growing challenge in these

areas warranting greater management

oversight.

Preliminary Impact Assessment

The industry is currently in a state of

transition and significant consolidation

is relatively recent. Thus, it is premature

to identify potential challenges to the

current NRC organization, or to consider

alternative organizational structures.

With respect to the question of

whether the existing regional

boundaries and currently assigned

licensee oversight responsibilities will

facilitate efficient and effective

regulation of those licensees that own

and operate reactor facilities in multiple

regions, the key is effective NRC

management oversight to assure

consistency in implementing its

programs. Measures that have been

developed to assure consistent

application of oversight processes

include various periodic meetings with

regional and headquarters management

to discuss program implementation

issues, conducting annual selfassessments, development of metrics for

inspection procedures, program office

audits of regional inspection reports,

and obtaining industry stakeholder

feedback. Consistent application of the

Significance Determination Process

among regions will be particularly

important. Increased communications,

both formal and informal, among the

respective regional staffs are necessary

to share insights when programs and

processes are transferred from one

licensee to another. Increased

communications and coordination

among regional staffs may also result in

a broader look at a particular

performance issue.

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34299

Recommended Followup

Within the next few years, the

regional and headquarters staffs will

gain significant experience in regulating

and otherwise interacting with

consolidated licensees. This experience

should be monitored so that a

meaningful assessment of the impacts of

consolidation on the NRC organization

can be made at the appropriate time.

The recommended followup effort is

to establish a consistent, agency-wide

process to monitor and document

relevant staff experience and

stakeholder feedback and to establish

meaningful assessment criteria for

evaluating this experience and feedback.

A principal objective of this effort

should be an assessment of the impact

of industry consolidation on both the

efficiency and effectiveness of the

agency’s current organizational

structure. Since there already are several

cross-regional, consolidated licensees,

this effort should be started in the nearterm.

Issue Category: 3. Inspection,

Enforcement, and Assessment

Issue: 3.a NRC Reactor Oversight

Process

Discussion

In evaluating the potential impact of

industry consolidation on effective

implementation of the reactor oversight

process (ROP), a number of issues need

to be considered. One of the principal

considerations is whether the ROP will

provide the NRC with assurance that

licensees are maintaining public health

and safety in a consolidated/deregulated

environment. The ROP is performancebased, meaning the level of NRC

engagement is a function of licensee

performance. It is also structured to be

‘‘indicative’’ rather than ‘‘diagnostic’’,

meaning the inspection and assessment

processes within the ROP are designed

to provide an indication of licensee

problems, e.g., performance indicators

(PIs) and associated thresholds, rather

than to determine the specific root

causes for issues of lesser significance.

This raises the question of whether the

ROP enables the NRC to address adverse

performance trends that might result

from consolidation-related cost-cutting

initiatives, which could be driven by

financial pressures, or non-conservative

changes to corporate policies, programs,

and procedures, before they evolve into

significant safety issues.

Industry consolidation could result in

staffing reductions as licensees seek to

increase their efficiency of operations by

eliminating redundant functions and

standardizing ‘‘best practices’’. If the

staffing reductions are substantive, not

targeted appropriately, and/or not

managed well, problem identification

and resolution functions could be

impacted as key staff leave the

company. Licensee efforts to increase

operational efficiency could also result

in changes to corporate policies,

programs, and procedures. If these

changes are non-conservative, the

effectiveness of problem identification

and resolution activities could be

adversely affected. For example, a

licensee could adopt a corrective action

program with higher thresholds for

initiating a root cause evaluation. This

could result in more significant

problems developing, as the root causes

for lower level issues are not addressed.

It is important to note that, while these

postulated scenarios may be possible,

experience to date with consolidated

licensees has demonstrated that the

opposite is true. Changes associated

with the integration of individual

facilities into a consolidated entities

have generally been well managed and

produced positive performance results.

The current situation in California,

where the Southern California Edison

and Pacific Gas and Electric companies

are facing substantial financial

difficulties, has generated a number of

questions regarding the NRC’s role in

ensuring public health and safety. The

NRC conducted focused inspections at

these facilities in response to this

situation. These inspections revealed

that there was no adverse impact on

safety as a result of the financial

difficulties. Nevertheless, significant

financial pressures on a licensee could

result in decisions to reduce the

workforce, revise the scope of and/or

delay planned maintenance and

modification activities, shorten or delay

plant outages, terminate licensing

classes or training initiatives, etc. While

these decisions would likely result in

performance problems, it is not clear

how significant those problems would

be and in what time frame they would

emerge. Assuming that some licensee

decisions would have short-term and

substantive effects on performance and

given that the NRC focus is on safety

performance, a critical question is

whether the NRC’s safety assessment

processes are structured to ensure that

the NRC will be made aware of these

performance issues in sufficient time to

engage the licensee with the appropriate

focus. For those licensee decisions that

provide short-term financial relief but

have a longer-term impact on

performance, the question is how

significant the associated performance

issues would be when they first surface.

Another issue warranting

consideration is whether the existing

regional boundaries and currently

assigned licensee oversight

responsibilities will facilitate effective

regulation, within the context of the

ROP, for those licensees that own and

operate reactor facilities in multiple

regions (see Issue 2.d). Licensees that

cross regional boundaries may present

management challenges for the NRC

with respect to consistency,

coordination, and efficiency of

oversight.

Preliminary Impact Assessment

There are two scenarios which need

to be considered in evaluating what

impact industry consolidation might

have on the effectiveness of the ROP.

The first scenario relates to longer-term

manifestation of licensee performance

problems stemming from consolidationrelated activities, and the second

scenario involves safety performance

problems deriving from licensee actions

in response to financial pressures.

Regarding the first scenario, one of the

primary considerations is whether the

ROP is conducive to identifying adverse

performance trends that might result

from consolidation-related activities

such as cost-cutting initiatives and nonconservative changes to corporate

policies, programs, and procedures. The

NRC must be able to engage a licensee

to ensure the underlying performance

deficiencies are appropriately addressed

before these deficiencies evolve into

significant safety issues that challenge

public health and safety. Licensee

performance issues, particularly those

relating to human performance and the

corrective action program, should

become evident at a lower level of

significance. This affords the licensee

the opportunity to correct the issues

before more significant NRC action is

necessary due to elevated safety

performance problems. As noted earlier,

by design, the ROP is ‘‘indicative’’

rather than ‘‘diagnostic’’, which means

that as inspection findings and PIs

become more safety significant, the ROP

increases focus on why a particular

performance problem has occurred.

Thus, if a consolidation-related, costcutting initiative or non-conservative

changes in corporate policies, programs,

and procedures result in a performance

issue, that issue would likely surface

initially as a finding of lesser safety

significance. The licensee should then

determine the extent of the condition

and implement appropriate corrective

action. Assuming that consolidationrelated activities continue to create

performance problems because the

licensee has not addressed the root

34300 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

causes for the issues of lesser

significance, those problems should

develop into more safety-significant

issues. The NRC would then detect this

adverse performance trend and engage

appropriately. This is not to say that

licensee performance problems could

not initially be evident at a higher level

of significance, but this should be the

exception if the licensee is aggressively

addressing its lower level issues.

The corporate structure, ownership,

and location of a particular plant should

not impact the effectiveness of the ROP.

While industry consolidation may offer

efficiencies for the licensee, the

assessment process under the ROP is

based on performance results and not on

how licensees gain efficiencies.

Inspection activities under the baseline

and supplemental inspection programs

are sufficiently defined in terms of

scope and objectives, that ownership or

geographic location is not a factor in

effective implementation of the

inspection program. Similarly, the use

of risk information to determine the

safety significance of inspection

findings by applying the Significance

Determination Process (SDP) is

independent of plant ownership or

licensee size.

In assessing overall licensee

performance, the ROP uses PI

information in conjunction with the

significance of inspection findings. The

degree of regulatory engagement is

dictated by the results of this

assessment through the Agency Action

Matrix. Each licensee is expected to

submit quarterly PI information to the

NRC for each plant owned by that

licensee. If a licensee, for some reason,

elects not to submit PI data for a specific

plant, then the ROP has provisions for

additional inspection activities to obtain

the information captured by the PIs in

order to fully assess licensee

performance. As the ROP is further

refined, each licensee will be expected

to implement associated changes, e.g.,

revisions to the PI reporting criteria, at

each of its facilities.

Regarding the second scenario, there

is a concern among some stakeholders

that a licensee, when faced with

financial pressures, including potential

bankruptcy, could make decisions that

might have significant short- or longterm effects. With respect to substantial

short-term effects, the question is

whether the NRC’s regulatory oversight

framework, given its performance-based,

indicative nature in contrast to a more

diagnostic approach, could preclude the

NRC from increasing the level of

licensee oversight in a timely manner to

assure that operational safety is being

maintained. Rather than having a shortterm impact, some licensee decisions to

dramatically improve financial viability

could generate performance issues that

do not surface until several months after

the decisions are implemented. These

performance issues could be safetysignificant, depending upon the

activities affected by the financiallybased decisions. While the NRC’s

limited experience with licensees facing

financial pressures has not validated

these concerns, it may be prudent for

the NRC to adopt a preemptive

approach by initiating a targeted

inspection module to assess licensee

response to financial pressures.

Recommended Followup

The ROP is expected to be transparent

to industry consolidation. However, the

NRC currently has limited experience

with the effects of industry

consolidation on effective

implementation of the ROP. With

additional experience, changes that may

be needed to the ROP should become

evident. The annual self-assessment

process built into the ROP should serve

as a vehicle to evaluate any needed

changes. The NRC staff should continue

to monitor consolidation activities and

use the ROP self-assessment process to

periodically evaluate the effectiveness

of the ROP in light of the changing

industry environment.

Further study should be initiated by

the NRC to determine if an inspection

module or ‘‘contingency plan’’ (similar

to the ‘‘strike contingency plans’’

generated by some of the regional

offices) needs to be developed to

facilitate NRC evaluation of a licensee

facing financial difficulties. This will

help ensure that an enhanced level of

NRC oversight is provided, if

appropriate, in a timely manner to

assure operational safety is being

maintained, and that the longer-term

performance impacts of licensee actions

have been appropriately evaluated.

Issue Category: 3. Inspection,

Enforcement, and Assessment

Issue: 3.b Other NRC Inspection

Programs

Discussion

The NRC is in the process of

developing revisions to the fuel cycle

facility oversight process, including

inspection, performance assessment,

and enforcement. This process affects

ten fuel cycle facilities: two gaseous

diffusion plants, two highly enriched

uranium fuel fabrication facilities, five

low-enriched uranium fuel fabrication

facilities, and one uranium hexaflouride

production facility (See Issue Category

6). These facilities possess large

quantities of materials that are

potentially hazardous (radioactive,

toxic, and/or flammable) to the workers,

public, and environment. Similar to the

reactor oversight process (ROP), the

overarching objective in revising the

fuel cycle facility oversight process is to

establish a process that is more riskinformed and performance-based to

focus on the more significant risks at

fuel cycle facilities. The intent is to

provide an objective and reliable basis

for determining if a fuel cycle facility is

safe and secure and to provide early

indications of declining safety and

safeguards performance.

The staff has interacted with external

stakeholders through several public

meetings and exchanges of documents.

A work plan for revision of the fuel

cycle facility oversight process, which

lists the priority, sequence, and

schedules for completing the oversight

program revisions has been issued for

stakeholder comment.

The NRC is also in the process of

making the inspection program for

independent spent fuel storage

installations (ISFSIs) more riskinformed and performance-based. This

is being accomplished in a phased

approach. The short-term phase

involves risk prioritizing the existing

inspection procedures using available

risk/consequence information and an

expert panel approach, and applying

inspection resources commensurate

with risk and the performance history of

the licensee. The longer-term phase is

conceptualized to more closely align

with the risk-informed inspection

approach of the ROP. This would

involve completing a probabilistic risk

assessment (PRA) for ISFSIs and then

using the PRA results to develop an

inspection program, which is based on

performance indicators and a

significance determination process,

similar to the ROP.

Preliminary Impact Assessment

Given that the fuel cycle facility

oversight process is being revised using

a framework similar to the ROP, it is

reasonable to expect that the new

oversight process will be able to

accommodate potential impacts of

consolidation (refer to Section 3.a. for a

discussion of the impacts of industry

consolidation on the ROP). In addition,

the extensive outreach effort initiated by

the NRC to exchange information and

obtain stakeholder feedback provides an

opportunity to discuss any expected

impacts from the consolidation of fuel

cycle facilities on the new oversight

process. Similarly, since the ISFSI

inspection program is being revised

using a framework similar to the ROP,

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34301

it is reasonable to expect that the new

program will be able to accommodate

potential impacts of consolidation.

Recommended Followup

No additional staff action beyond that

recommended under Issue 6 is

recommended at this time.

Issue Category: 3. Inspection,

Enforcement, and Assessment

Issue: 3.c NRC Enforcement Program

Discussion

The NRC derives its enforcement

authority from the Atomic Energy Act of

1954, as amended, and the Energy

Reorganization Act of 1974, as

amended. The NRC exercises its

statutory authority to impose

enforcement sanctions in accordance

with its enforcement policy described in

NUREG–1600, ‘‘General Statement of

Policy and Procedures for NRC

Enforcement Actions’’. Enforcement

actions have been used as a deterrent to

emphasize the importance of

compliance with NRC requirements and

to encourage prompt identification and

prompt, comprehensive correction of

violations of those requirements.

Compliance with NRC requirements

plays an important role in giving the

NRC confidence that safety is being

maintained. In the context of riskinformed regulation, compliance also

plays an important role in ensuring that

key assumptions used in underlying risk

and engineering analyses remain valid.

With the development of the reactor

oversight process (ROP), where the

significance of individual noncompliance findings is evaluated using

more objective criteria and the

regulatory response to these findings is

more predictable, the enforcement

program was revised to better integrate

with the ROP. This revision to the

enforcement program consisted of

categorizing violations into two groups.

The first group consists of those

violations that can be evaluated under

the Significance Determination Process

(SDP), with appropriate NRC action

determined by the Agency Action

Matrix. Issue 3.a. discusses the potential

impacts of industry consolidation on the

ROP. The second group includes

violations related to willfulness,

including discrimination; violations

involving actual safety consequences,

such as an overexposure to the public or

plant personnel or a substantial release

of radioactive materials; and violations

that may impact the NRC’s ability to

oversee licensed activities. This issue

discussion focuses on the impact of

industry consolidation on the

enforcement program as it pertains to

violations in the second group.

As noted in other issue discussions,

licensee efforts to increase efficiency of

operations could result in changes to

corporate policies, programs, and

procedures. Since consolidation results

in more reactor facilities under a single

licensee’s control, corporate-wide

changes affect more reactor facilities

and more employees. Depending upon

how a licensee manages these changes,

there could be an increased number of

allegations, although there has been no

evidence of such a trend in the industry

consolidation that has taken place to

date. Similarly, efforts to increase

operational efficiency or actions in

response to financial pressures could

result in staffing reductions which

could lead to more discrimination

complaints. Increased numbers of

allegations would translate to an

increased enforcement workload,

assuming that the NRC substantiates

some percentage of these allegations, in

whole or in part, based on the results of

its investigations.

On the other hand, it is equally likely

that consolidation may result in a

reduced volume of enforcement actions

because of stronger licensees and better

managed regulatory programs. Staff

experience to date with consolidated

licensees has not shown any noticeable

increases or decreases in discrimination

complaints or other allegations or in

related enforcement actions.

While measures and processes have

been established to assure consistent

application of the enforcement program

among the regions, e.g., audits,

enforcement panels, counterparts

meetings, etc., those inconsistencies in

implementing the enforcement program

that may exist will be more apparent to

cross-regional licensees. These

inconsistencies may involve different

thresholds for issuing non-cited

violations, distinguishing between

minor and Severity Level IV violations,

and reaching conclusions on alleged

discrimination. This may necessitate

more oversight from the Office of

Enforcement to ensure similar issues are

treated consistently among the regions.

Another area potentially impacted by

consolidation relates to the possible

employment by a licensee of an

individual who was terminated at one

facility, based on poor performance or

wrongdoing (whether or not the

individual had been issued an NRC

order prohibiting his involvement in

licensed activities), at another facility if

the second employer is unaware of the

performance or wrongdoing problem at

the first facility. This would be less

likely to occur in a consolidated

industry with fewer licensees.

Preliminary Impact Assessment

The impact of industry consolidation

on the NRC’s enforcement program

relates to implementation issues vice

policy issues. It appears that the NRC

can address these implementation

issues within the context of the existing

enforcement program framework/

infrastructure. The Office of

Enforcement may decide to increase its

audit activities in an effort to minimize

inconsistencies among the regions in

implementing the enforcement program.

More coordination and communication

between the regions and program office

can help assure that the same thresholds

are applied for determining if

discrimination violations occurred, as

well as distinguishing between cited

and non-cited violations and between

minor and Severity Level IV violations.

Regarding the potential increase in

enforcement workload stemming from a

greater number of technical allegations

and discrimination complaints, this

situation will need to be monitored to

determine if additional resources are

warranted.

Recommended Followup

Experience with the effects of

industry consolidation on effective

implementation of the enforcement

program is limited. The NRC should

continue to monitor the enforcement

workload associated with

discrimination complaints and

technical-related allegations to

determine if industry consolidation

activities are influencing this workload

and make resource decisions based on

the monitoring results. The Office of

Enforcement should maintain its

oversight activities of regional

enforcement program implementation to

minimize inconsistencies.

Issue Category: 3. Inspection,

Enforcement, and Assessment

Issue: 3.d NRC Allegation Program

Discussion

The allegation program was

established to provide a mechanism for

individuals to identify safety and

regulatory issues directly to the NRC.

An allegation is defined as a

‘‘declaration, statement, or assertion of

impropriety or inadequacy associated

with NRC-regulated activities, the

validity of which has not been

established.’’ The allegation program is

structured to provide a comprehensive

response to an alleger’s concerns in a

timely manner. It includes provisions to

protect the identity of the alleger; to

34302 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

provide timely resolution of the issues

specific to an allegation; and to

communicate the staff’s understanding

of those issues, status of the staff’s

review efforts, and ultimate resolution

of the issues in a timely manner.

Industry consolidation could potentially

impact these and other aspects of the

allegation program.

As discussed in Issue 3.c., licensee

efforts to increase efficiency of

operations could result in changes to

corporate policies, programs, and

procedures. Since consolidation results

in more reactor facilities under a single

licensee’s control, corporate-wide

changes would affect more reactor

facilities and more employees. The

impact of these changes could result in

larger numbers of allegations. Similarly,

corporate cultural initiatives such as

maintaining a safety conscious work

environment (SCWE), could have a

bigger impact on safety given the

increased number of affected reactor

sites. Additional NRC inspection may be

necessary to evaluate whether a SCWE

exists or was adversely affected by

changes in corporate policies, programs,

or procedures. In addition, reductions in

licensee staff could result in an

increased number of discrimination

allegations.

As is the case with enforcement

actions (Issue 3.c), it is equally likely

that consolidation may result in a

reduced number of allegations because

of stronger licensee management and

more effective regulatory programs.

However, staff experience to date with

consolidated licensees has not shown

any noticeable increase or decrease in

allegations.

Under the current program, the NRC

may elect to refer a particular allegation

to the licensee for evaluation with the

licensee reporting back to the NRC on

the results of its review, or decide to

conduct an independent inspection to

determine the validity of the allegation.

If a consolidated licensee crosses

regional boundaries, absent some

coordinating efforts on the part of the

NRC, one regional office could decide to

follow up an allegation with inspection

to protect the alleger’s identity, while

another regional office could decide to

refer a similar allegation from another

employee to the licensee for followup.

With different approaches to following

up on similar allegations, NRC staff in

the respective regions may reach a

different conclusion on the validity and

disposition of the allegation issues,

although this is unlikely. These and

other potential inconsistencies in

implementing the allegation program

would be more apparent to crossregional licensees.

The roles and responsibilities of NRC

staff in implementing the allegation

program are another area potentially

impacted by consolidated licensees that

cross regional boundaries. If the NRC

receives an allegation concerning a

programmatic issue which cross-cuts

regional boundaries because it pertains

to activities at multiple sites in different

regions, there must be a standard

method for determining which NRC

organization would take the lead for

followup.

Preliminary Impact Assessment

While industry consolidation may

impact some aspects of the NRC’s

allegation program, as described above,

the impact relates to implementation

issues vice policy issues. It appears that

the NRC can address these

implementation issues within the

context of the existing NRC allegation

program framework/infrastructure. For

example, NRC follow-up action to

address similar allegations received in

different regions, stemming from

corporate-wide changes to policies,

programs, and procedures, may require

coordination of efforts among regional

offices to ensure consistency and alleger

identity protection. Allegations

involving programmatic issues which

cross-cut regional boundaries, i.e.,

pertain to activities at multiple sites in

different regions, can be effectively

addressed by defining which internal

NRC organization has the lead

responsibility for follow-up. The

potential increased number of

allegations, including those involving

discrimination complaints, as well as

increased inspection activities to

validate corporate cultural issues, e.g.,

SCWE, may require additional resources

dedicated to the allegation program.

Recommended Followup

While experience to date with the

effects of industry consolidation on

effective implementation of the

allegation program is limited, there

appears to be the need for developing

guidance to assure consistent treatment

of similar allegations received in

different regions, and to define which

organization should take the lead in

addressing programmatic issues that

cross-cut regional boundaries. In

addition, the NRC should continue to

monitor the number of allegations

received to determine if industry

consolidation activities are influencing

this workload, through an increased or

decreased number of allegations, and

make resource decisions based on the

results of this monitoring.

Issue Category: 4. Decommissioning

Discussion

Nuclear industry consolidation can

affect individual licensee

decommissioning planning, financial

assurance, and schedules for

dismantling power reactor and fuel

cycle facilities. Regulations applicable

to decommissioning include

radioactivity cleanup criteria for

unrestricted and restricted release,

financial assurance that funds will be

available to decommission the site,

decommissioning planning, and

procedures for submitting applications

requesting license termination.

Decommissioning policy guidance for

implementing the above regulations has

been prepared and issued as standard

format and content guides and standard

review plans.

The potential impacts from nuclear

industry consolidation on

decommissioning planning, scheduling,

and funding can vary. The most likely

outcome is that industry consolidation

will strengthen licensee business

conditions to encourage license renewal

or avoid early license termination. For

example, strengthened business

conditions from consolidation have

allowed power reactor licensees to

continue operations at some plants (e.g.,

Oyster Creek) that were previously

being considered for decommissioning.

Consolidation has and will likely

continue to result in an increased

interest in license renewal. Actions that

extend the operation of nuclear power

plants will, in general, increase the

available time to fund decommissioning

if sinking funds are used.

Consolidation may also result in

decommissioning schedule stretch-outs

to accommodate consolidated companywide decommissioning programs.

Licensees may seek process and funding

alternatives not specifically addressed

or allowed in current regulations, and

possibly request an increased number of

exemptions. Licensees may also seek

financial assurance rule changes to

allow stretch-outs in the time required

to fully fund decommissioning trusts,

on the basis that consolidated

decommissioning schedules can reduce

the need for full funding if plant

dismantlement will take place further in

the future. Adverse impacts of delaying

decommissioning include uncertainties

in the availability of future low-level

waste disposal sites that could result in

higher decommissioning costs and the

possible lack of licensed disposal

facilities at the time decommissioning

activities take place.

Nuclear power plant licensees that are

no longer rate-regulated are required by

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34303

1Section 50.2 defines ‘‘electric utility’’ as ‘‘any

entity that generates or distributes electricity and

which recovers the cost of this electricity, either

directly or indirectly, through rates established by

the entity itself or by a separate regulatory

authority. Investor-owned utilities, including

generation and distribution subsidiaries, public

utility districts, municipalities, rural electric

cooperatives, and State and federal agencies,

including associations of any of the foregoing, are

included within the meaning of ‘‘electric utility.’’

the NRC’s regulations to provide means

of assuring any estimated unfunded

decommissioning cost through some

surety, insurance, or equivalent method.

The staff evaluates such changes either

through license transfer applications

pursuant to 10 CFR 50.80 or through

biennial reports on decommissioning

funding status required to be submitted

by licensees.

Preliminary Impact Assessment

License termination regulations apply

to planned and premature

decommissioning activities. Because

regulations allow nuclear power plant

licensees 60 years after permanently

ceasing operations to complete

decommissioning, there is substantial

flexibility already allowed for

consolidated utilities to delay

decommissioning to take advantage of

operational efficiencies. NRC staff has

been able to successfully address cases

involving immediate dismantlement,

partial dismantlement, and delayed

decommissioning alternatives.

Fuel cycle facility license termination

regulations do not allow delayed

decommissioning because studies have

shown that delaying decommissioning

of these facilities does not have a

financial or radiological safety benefit.

Thus, fuel cycle facility shutdowns due

to industry consolidation efforts do not

appear to introduce unique

circumstances that require new license

termination processes.

Power reactor decommissioning

financial assurance regulations allow

the use of sinking funds where licensees

are either rate-regulated or can recover

costs through the rate base (currently all

States allow recovery of

decommissioning costs through various

rate base mechanisms; otherwise, full

funding or guarantee of full funding

would be required under NRC

regulations). In premature

decommissioning cases, full funding

may not be available at the time of

shutdown. However, experience with

actual cases has not identified

unresolvable funding issues. Reviews of

power reactor licensee ownership

changes include consideration of

decommissioning funding. No

decommissioning regulation or policy

changes, other than the rulemaking to

standardize trust fund provisions

currently underway, appear necessary at

this time to reflect industry

consolidation impacts.

Fuel cycle licensee decommissioning

financial assurance regulations should

not be affected by industry

consolidation because the regulations

ensure that full funding would be

available if a licensee is unable to

complete decommissioning, for example

due to bankruptcy or premature

shutdown.

Recommended Followup

At this time, it appears that current

decommissioning regulations and

policies are sufficiently flexible to

accommodate situations resulting from

industry consolidation. Therefore,

industry consolidation appears to have

no significant impact in the

decommissioning area and no further

effort is recommended. Some unique,

unanticipated circumstances may arise

in the future that result in requests for

exemptions or require changes in

decommissioning regulations or

policies. For these situations, staff will

continue to identify significant policy

matters and make appropriate

recommendations to NRC management.

Issue Category: 5. External Regulatory

Interfaces

Discussion

The Commission issued the ‘‘Final

Policy Statement on the Restructuring

and Economic Deregulation of the

Electric Utility Industry’’, 62 Fed. Reg.

44071 on August 19, 1997. The policy

statement established the NRC’s

expectations for, and intended approach

to, power reactor licensees as the

electric utility industry moved from an

environment of rate regulation toward

greater competition. In its policy

statement, the Commission anticipated

changes, including consolidation, in the

electric utility industry. The policy

statement states:

The electric utility industry is entering a

period of economic deregulation and

restructuring that is intended to lead to

increased competition in the industry.

Increasing competition may force integrated

power systems to separate (or ‘disaggregate’)

their systems into functional areas. Thus,

some licensees may divest electrical

generation assets from transmission and

distribution assets by forming separate

subsidiaries or even separate companies for

generation. Disaggregation may involve

utility restructuring, mergers, and corporate

spinoffs that lead to changes in owners or

operators of licensed power reactors and may

cause some licensees, including owners, to

cease being an ‘electric utility’ as defined in

10 CFR 50.2.1

In its policy statement, the

Commission recognized the primary

role that State and federal economic

regulators have served, and in many

cases will continue to serve, in setting

rates that include appropriate levels of

funding for safe operation and

decommissioning. The NRC took a

number of actions to increase

cooperation with State and federal rate

and financial regulators to promote

dialogue and minimize the possibility of

rate deregulation or other actions that

would have an adverse effect on safety.

The policy further elaborated on NRC’s

intent to continue to work and consult

with the State public utility

commissions, individually or through

the National Association of Regulatory

Utility Commissioners (NARUC), and

with the Federal Energy Regulatory

Commission (FERC) and other federal

agencies to coordinate activities and

exchange information. This increased

level of interaction and consultation has

also been beneficial to the NRC in

industry consolidation efforts.

Several regulatory agencies at the

federal and State level have jurisdiction

over, or interest in, nuclear industry

consolidation. Issues concerning

nuclear industry consolidation and

license transfers (see Issue 2.a.) involve

a number of entities besides the NRC,

including, as appropriate, State public

utility commissions, the Department of

Justice (DOJ), FERC, the Securities and

Exchange Commission (SEC), and the

Federal Trade Commission (FTC).

Traditionally, State public utility

commissions have had jurisdiction over

electric utilities with the general

responsibility to assure safe, reasonable

and adequate service at rates which are

just and reasonable to customers and the

utilities. DOJ is responsible for

maintaining competitive markets by

enforcing federal antitrust laws. Among

other things, FERC has responsibility for

regulating the transmission and sale of

wholesale electricity. SEC administers

federal securities laws that seek to

provide protection for investors and to

ensure that securities markets are fair

and honest. The role of the FTC is to

maintain the competitive enterprise and

to prevent the free enterprise system

from being fettered by monopoly or

restraints on trade or corrupted by

unfair or deceptive trade practices. The

NRC has worked with FERC, SEC and

DOJ to develop methods by which the

NRC can minimize the duplication of

effort on antitrust reviews and still carry

out its statutory responsibilities. For

example, NRC recently amended its

regulations to clarify that it will no

longer require owners of operating

nuclear power plants to include

34304 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

antitrust information in license transfer

applications, eliminating duplication of

a review performed by other federal and

State agencies. However, NRC continues

to require antitrust information for new

license applications (see Issue 8.b.).

NRC is supporting legislation to

eliminate its antitrust review mandate.

Other such jurisdictional issues (i.e.,

antitrust and merger reviews by

multiple jurisdictions) between

regulatory authorities may emerge as a

result of further industry consolidation.

In addition, industry consolidation

may affect NRC’s interfaces with other

federal and or State agencies having

collateral jurisdiction, responsibility or

interest in nuclear licensees. Potential

consolidation issues discussed

elsewhere in this document have

external regulatory interface elements.

These issues include: high-level

radioactive waste and low-level

radioactive waste management (see

Issue 1.d.—Department of Energy (DOE),

Environmental Protection Agency (EPA)

and State agencies), spent fuel storage

and transportation (see Issue 1.c.—DOE,

Department of Transportation and State

agencies), decommissioning (see Issue

4.—EPA and State agencies) emergency

preparedness (see Issue 1.e.—Federal

Emergency Management Agency and the

associated State agencies) and grid

stability and reliability (see Issues 1.f.

and 8.a.—DOE and FERC).

Nuclear industry consolidation may

also have additional impacts on NRC’s

interactions with external regulatory

agencies. For example, new license

applications (see Issue 2.b.) and license

renewals (see Issue 2.c.) require

consultation or interaction with a

number of federal, State and local

governmental agencies in the

preparation of the environmental impact

statement. In the event of bankruptcy

(see Issue 7.e.), to ensure that NRC’s

interests and responsibilities and a

licensee’s obligations with respect to

public health and safety are properly

recognized, NRC would ask DOJ to

intervene on behalf of the NRC in any

bankruptcy proceeding.

Preliminary Impact Assessment

As identified in the Commission’s

policy statement, the NRC took a

number of actions to increase

cooperation with State and federal rate

and financial regulators to minimize the

possibility that rate deregulation or

other actions would have an adverse

effect on safety. This open dialogue with

these regulators has been helpful in

minimizing potential adverse effects on

nuclear safety as a result of electric

utility industry deregulation and

restructuring by assuring appropriate

levels of funding for safe nuclear power

plant operation and decommissioning.

As electric utility industry

consolidation continues, a reassessment

may be needed of its impact on NRC’s

interfaces with other regulatory bodies

at the federal and State levels in

approving license transfers.

Recommended Followup

There does not appear to be a need for

any additional near-term action to

address the potential impacts of

industry consolidation on NRC’s

external regulatory interfaces. However,

NRC interaction and dialogue with other

federal and State regulatory authorities,

including national associations

representing these authorities, as well as

foreign regulatory authorities, should

continue in order to identify emerging

policy issues related to new trends in

industry consolidation. In addition,

NRC should continue to consult with its

stakeholders to identify emerging policy

issues that could affect NRC’s interfaces

with other State and federal regulatory

bodies in approving license transfers.

Issue Category: 6. Fuel Cycle Facilities

Discussion

Industry consolidation activities are

occurring throughout the entire fuel

cycle as global market conditions

become more competitive and force

companies to eliminate excess capacity

and less economically beneficial

operations. Consolidation of fuel cycle

facilities has occurred in the past, as

most recently experienced in the

Westinghouse and ABB merger, which

is resulting in the closure of the former

ABB fuel fabrication operation (CE

Nuclear Power) in Hematite, MO. Other

significant past consolidations include

Westinghouse and BNFL, Framatome’s

purchase of the B&W fuel operation, and

the reorganization of GE with its

Japanese shareholders to create Global

Nuclear Fuels (GNF).

Even in light of this recent flurry of

consolidations within the nuclear fuel

cycle, this consolidation trend appears

to be continuing. The staff is currently

reviewing an application for the transfer

of ownership and control of a materials

license as a result of the planned merger

of the world-wide nuclear businesses of

Siemens AG (Siemens) and Framatome

S.A. (Framatome). Also, information

from licensees indicates that the

Honeywell facility will be acquired by

General Electric; and the fact that the

United States Enrichment Corporation

(USEC) is planning on closing portions

of the enrichment cascade at the

Portsmouth Gaseous Diffusion Plant and

turning them over to the Department of

Energy within the next year, coupled

with the expiration of USEC stock

ownership restrictions in July 2001, may

make them a target for acquisition. In

addition, due to low uranium market

prices, uranium mining and milling

companies throughout the world are

discussing consolidation, which may

lead to further consolidation or possible

closure of U.S. fuel cycle facilities that

are not fiscally viable under increased

global competition. New construction

may also involve multiple corporations

pooling their resources to build new

fuel facilities, as evidenced by Duke,

Cogema, and Stone & Webster’s plan to

build a mixed oxide (MOX) fuel

fabrication facility at the Savannah

River site.

All commercial nuclear fuel facilities

in the United States are required to be

licensed or certified by the NRC.

Existing domestic fuel facilities are

divided into three groups: those that

involve the processing of uranium ore

into uranium hexaflouride (UF6); those

that enrich the UF6 in the 235U isotope;

and those that fabricate enriched

uranium into nuclear reactor fuel. The

NRC issues and maintains licenses or

certificates for fuel facility operators to

authorize their possession and use of

source, special nuclear, and byproduct

material in accordance with the

requirements promulgated in 10 CFR

Parts 40, 70, 73, 74, and 76 upon NRC

approval of the license or certificate

applications. Certain facilities are also

subject to Agreement State regulation

for source and byproduct materials.

The potential impacts from further

fuel cycle industry consolidation will

depend on the licensee and the

objectives of the consolidation. In cases

where a consolidated facility can

operate in a more profitable

environment, license renewal

applications may be submitted to the

NRC. Recent inquiries during the

ongoing Siemens/Framatome merger

indicate that the consolidated company

may want to license both facilities

under one license, thereby avoiding an

additional license fee. Staff is currently

preparing a Commission paper that

describes the NRC fee methodology and

associated constraints on agency action

in order to reduce unnecessary burden,

while making regulatory improvements,

especially for a declining licensee

population. In other cases, the

economics of the newly formed

conglomerate may lead to facilities

closing down, as in the case of the

Westinghouse/CE Hematite merger,

which would require decommissioning

on an earlier schedule than previously

forecasted.

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34305

2Other than 100 percent ownership by a foreign

entity of a U.S. nuclear reactor, there is no preestablished limit above which foreign ownership

would be absolutely prohibited.

In addition, the staff is currently

considering whether to realign the fuel

cycle inspection program partly because

of the trend in industry consolidation,

but also to attain improved efficiency

and effectiveness. This may involve a

range of options, including

consolidation of the program in a

region, consolidation within NMSS, or

maintenance of the status quo.

Preliminary Impact Assessment

The NRC has addressed fuel cycle

consolidations in the past, and in all

cases the existing regulations and NRC

staff resources have been sufficient to

ensure the safety of the facilities

involved in the mergers. However, due

to the consolidation and

decommissioning of fuel cycle facilities,

there is now only one domestic source

of uranium ore conversion to UF6

(Honeywell), and within the next fiscal

year there will only be one domestic

source of UF6 enrichment (Paducah

Gaseous Diffusion Plant). If either of

these plants were to close, there could

be significant impact on the three

remaining civilian nuclear fuel

fabricators, and likewise on the entire

nuclear industry due to domestic fuel

unavailability.

Although the fuel fabrication field has

become fairly narrow, with only a

handful of fuel cycle facilities now in

operation, further consolidation of

companies is not out of the question.

The international conglomerates BNFL

and Cogema have been aggressively

acquiring a wide range of fuel cycle

operations around the world, which

would seem to indicate that they intend

to become the predominant companies

in the marketplace. Although foreign

ownership and transfer of companies is

not uncommon in the fuel cycle,

complete reliance on foreign sources for

nuclear fuel may need to be addressed.

This may have national security

implications, as noted by Congress and

by the FY2001 Energy and Water

Appropriations Act, which required

DOE to assess the implications for

uranium conversion and enrichment.

There are other impacts of fuel cycle

facility industry consolidation on NRC

oversight and regulation of the industry.

For example, although the Commission

approved staff plans to proceed with a

rulemaking to establish a stand-alone,

risk-informed, and performance-based

rule for uranium recovery in August

2000, because the number of facilities to

which the rule would apply has reduced

significantly since the staff originally

made the recommendation, and the

potential future for uranium recovery is

bleak over the next several years, the

Commission has directed the staff to

develop guidance rather than

rulemaking.

Recommended Followup

Many of the impact assessments

discussed in other areas are applicable

to licensed fuel cycle facilities as well

as licensed reactor sites. NRC

experience in handling past and

pending consolidations within the fuel

cycle industry has demonstrated that

the existing regulations, guidance, and

processes have been able to handle the

various consolidation efforts. No

obvious impacts from industry

consolidation were identified that could

affect the staff’s future ability to regulate

fuel cycle facilities. However, two

followup efforts are recommended. Staff

should consider options to consolidate

the fuel cycle inspection program, in

parallel with efforts to revise the

oversight process and the ongoing Phase

II Byproduct Materals Review. Staff

should also stay aware of pending

competition-related business decisions

by licensees such as those to shut down

portions of operations and outsource

that work, similar to what is currently

happening at Global Nuclear FuelsAmericas, which is shutting down its

uranium recovery circuit and is

planning on sending their waste for

processing by other facilities. This is to

enable the staff to plan for the necessary

resources to process the licensing

actions that may follow such decisions.

Issue Category: 7. Financial

Issue: 7.a Foreign Ownership

Discussion

This issue addresses potential unique

concerns associated with foreign

ownership of reactor facilities that

might occur as a result of industry

consolidation.

The Atomic Energy Act of 1954, as

amended, and the NRC’s regulations in

10 CFR 50.38 provide that any person

who is a citizen, national, or an agent of

a foreign country, or any corporation, or

other entity which the Commission

knows or has reason to believe is

owned, controlled, or dominated by an

alien, a foreign corporation, or a foreign

government, shall be ineligible to apply

for and obtain a license. The NRC staff

evaluates license transfer applications

that involve foreign ownership

considerations by using the Final

Standard Review Plan (SRP) on Foreign

Ownership, Control, or Domination,

which was issued on September 28,

1999. In addition, the NRC is required

to make a finding that the approval and

issuance of a licensing action, including

license transfers, would not be inimical

to the common defense and security of

the United States.

Ownership of domestic operating

nuclear power plants has been explored

by several foreign utilities. One joint

venture, AmerGen, was formed to buy

domestic nuclear power plants. This

venture was structured as a joint

partnership with a U.S. utility owning

50% and a foreign entity owning 50%.2

Based on a ‘‘negation action plan’’

developed pursuant to the SRP to

mitigate foreign ownership, control, or

domination, the NRC found that the

foreign partner did not control or

dominate the safety-related decision

making related to the plant. Based on

this assessment, the NRC was able to

approve AmerGen’s purchase of Three

Mile Island, Unit 1, as well as

subsequent license transfers involving

AmerGen. The NRC has similarly

analyzed proposals by other entities

with some degree of foreign

involvement. As industry consolidation

progresses, it is anticipated that there

will be additional situations in which

foreign organizations seek to acquire

domestic nuclear power plants and

domestic utility organizations. However,

the Atomic Energy Act significantly

inhibits any foreign acquisitions and the

NRC’s review will be performed within

these constraints as reflected in the

Commission’s regulations and the SRP.

Since 1999, the Commission has

developed and submitted proposed

legislation that would remove

restrictions on foreign ownership.

Senator Domenici has introduced in the

current session of Congress, S. 472,

‘‘Nuclear Energy Electricity Assurance

Act of 2001,’’ which, among other things

would eliminate the foreign ownership

restrictions for nuclear power plants.

Preliminary Impact Assessment

Industry consolidation is not likely to

have an impact on the complexity of the

NRC’s process for evaluating foreign

ownership, control, or domination. An

applicant for several plant licenses

would be required to meet the same

standards as a single-plant applicant to

address any foreign ownership, control,

or domination issues in a negation

action plan pursuant to the SRP. For

example, AmerGen has bought three

U.S. nuclear plants so far and has bid on

several others. The NRC’s review of

AmerGen’s additional acquisitions

essentially followed the same template

laid out in AmerGen’s initial

acquisition. A suitable negation action

34306 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

3 In order to address fairness and equity concerns

related to charging NRC licensees for agency

expenses that do not provide a benefit to the

licensee, the FY 2001 Energy and Water

Development Appropriations Act requires that 98

percent of the NRC’s new budget authority, less the

appropriations from the Nuclear Waste Fund and

from the General Fund, be collected from fees in FY

2001, decreasing by 2 percent per year to 90 percent

by FY 2005.

plan would also likely allow the NRC to

make its required findings.

At this time, it appears that current

financial regulations and policies are

sufficiently flexible to accommodate

situations associated with foreign

ownership resulting from industry

consolidation, within the provisions of

current law.

Recommended Followup

No further effort is recommended at

this time.

Issue Category: 7. Financial

Issue: 7.b License Fee Structure

Discussion

Since FY 1991, the NRC has been

required by the Omnibus Budget

Reconciliation Act of 1990 to recover

approximately 100 percent 3 of its

budget, less any amount appropriated to

the Commission from the Nuclear Waste

Fund and the General Fund, by

assessing fees. Additionally, in recent

Appropriations Acts, Congress has

permitted NRC to perform certain

limited activities that are not subject to

fee recovery.

The NRC assesses two types of fees to

recover its budget authority. First,

license and inspection fees, established

in 10 CFR Part 170 under Title V of the

Independent Offices Appropriation Act

of 1952, recover NRC’s costs for special

services rendered to an individual

licensee or applicant. These services

include things like inspections and

review of applications for the issuance

of licenses (new, amended, or renewal).

Second, annual fees, established in 10

CFR Part 171 under the authority of the

Omnibus Budget Reconciliation Act of

1990, recover generic and other

regulatory costs not recovered through

10 CFR Part 170 fees. The generic and

other regulatory costs are allocated to

classes of licensees on an annual basis.

Continued consolidation is expected

to result in fewer owners having more

licenses under their domain. It does not

appear that industry consolidation will

have an effect on the total number of

licenses held by the industry.

Preliminary Impact Assessment

NRC’s assessment of fees is based on

the filing of a request for NRC review

and approval, or the existence of an

NRC license or approval for individual

facilities or licenses. There does not

appear to be a need to change NRC’s fee

structure at this time due to industry

consolidation.

Recommended Followup

Since there is no significant impact,

no further effort is recommended at this

time.

Issue Category: 7. Financial

Issue: 7.c Insurance

Discussion

This issue is concerned with whether

industry consolidation will affect the

availability and maintenance of

insurance and indemnity for both offsite and on-site coverage.

The Atomic Energy Act of 1954, as

amended, and the NRC’s regulations at

10 CFR Part 140 require licensees to

provide financial protection for the offsite consequences of accidents at

nuclear power plants. Insurance and

indemnity programs have been

developed to provide coverage for thirdparty liability claims that may arise

from any accidents that may occur.

Coverage includes $200 million of

primary insurance from commercial

insurers. In addition, each power reactor

licensee is required to provide

secondary financial protection through

an agreement to pay a retrospective

premium that would, if necessary, be

assessed against each power reactor

licensee up to a maximum of $88

million per reactor per accident, with an

annual cap of $10 million per reactor.

The total available financial protection

currently available is about $9 billion

per accident.

In an August 1998 report to Congress,

the NRC recommended that

consideration be given to doubling the

current retrospective premium from $10

million to $20 million annually (as well

as raising the $200 million primary level

of private insurance). The NRC was

concerned that the 1998 forecast of a

significant number of early plant

shutdowns would decrease

contributions to the retrospective pool.

However, in his May 2001

Congressional testimony related to

renewal of the Price-Anderson Act,

Chairman Meserve reversed the 1998

recommendation in light of the much

more optimistic current industry

projections for license renewal.

In addition to Price-Anderson, 10 CFR

50.54(w) requires power reactor

licensees to provide on-site property

damage insurance of $1.06 billion per

unit. The NRC imposed this

requirement after the Three Mile Island,

Unit 2, accident in order to ensure that

licensees had sufficient funds to

stabilize and clean up a reactor site after

an accident. The insurers and insured in

the industry adopted a retrospective

premium methodology (similar to PriceAnderson) to reduce the up-front

premiums associated with on-site

insurance. The insurers have performed

their own assessments of license

transfer applicants’ ability to pay

retrospective premium assessments. The

NRC’s policy has been to accept,

although not necessarily endorse, the

use of retrospective premiums for onsite insurance since it was developed in

the early 1980s.

Preliminary Impact Assessment

With respect to Price-Anderson

liability coverage, each reactor that a

licensee owns will expose it to a

potential retrospective premium

assessment of $10 million per year. For

example, in the event of a major

accident, a licensee with 20 reactors

could be required to pay retrospective

premiums of $200 million annually for

about 9 years. If a major accident forced

the shutdown of a class of reactors for

safety reasons, a consolidated licensee

could lose a portion of its primary

source of revenue for paying its

retrospective premiums.

With respect to on-site insurance,

licensees are also exposed to potential

retrospective premium payments. These

payments would be in addition to the

retrospective premium payments

required to be made under the PriceAnderson system and could impose

additional financial stress on some

licensees. Licensees with several plants

will likely have access to a greater

revenue stream than licensees with

fewer plants. Nevertheless, the impact

of being required to pay retrospective

premiums for many units could be

significant if a licensee was otherwise

financially stressed.

The NRC has programs in place to

evaluate a licensee’s or license

applicant’s ability to pay retrospective

premiums for both liability and on-site

insurance. With respect to license

transfers, this evaluation is part of the

safety evaluation that the staff prepares

to support approval (or denial) of

license transfer applications. In

addition, licensees are required

pursuant to 10 CFR 140.21 to

demonstrate annually that they are able

to pay retrospective premiums for their

reactors that may be assessed under the

Price-Anderson system.

However, for those licensees not

involved in license transfers, there is no

requirement similar to that under 10

CFR 140.21 for licensees to demonstrate

annually their ability to pay on-site

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34307

insurance premiums. With industry

consolidation, the potential burden of

such retrospective payments on

licensees, especially when coupled with

Price-Anderson retrospective payments,

could be significant.

Recommended Followup

Since a potentially significant impact

has been identified, consideration

should be given to developing a

rulemaking to establish an annual

requirement to demonstrate the

licensee’s ability to pay on-site

retrospective insurance premiums

specified in 10 CFR 50.54(w), in parallel

with those in 10 CFR 140.21.

Issue Category: 7. Financial

Issue: 7.d Joint and Several Regulatory

Responsibility

Discussion

The NRC views all co-owners as colicensees who are responsible for

complying with the terms of their

licenses. Co-owners and co-licensees

generally divide costs and output from

their facilities by using a contractuallydefined, pro rata share standard. The

NRC has implicitly accepted this

practice in the past and believes it

should continue to be the operative

practice. Most power reactor owners

and operators believe that each coowner should be limited to its pro rata

share of operating costs and

decommissioning expenses and that the

NRC should not look to one owner to

‘‘bail out’’ another owner by imposing

joint and several liability on the coowners. Joint and several liability refers

to the legal doctrine of holding all or

any one of the co-owners financially

responsible for the default of any coowner.

The Commission addressed the issue

of joint and several liability by nuclear

power reactor licensees in its ‘‘Final

Policy Statement on the Restructuring

and Economic Deregulation of the

Electric Utility Industry’’ 62 FR 44071

(August 19, 1997). The Commission

stated that it

reserves the right, in highly unusual

situations where adequate protection of

public health and safety would be

compromised if such action were not taken,

to consider imposing joint and several

liability on co-owners of more than de

minimis shares when one or more co-owners

have defaulted.

On July 25, 2000, the Commission

denied a petition for rulemaking to

amend the regulations to preclude the

imposition of joint and several liability.

65 FR 46661 (July 31, 2000). The

Commission emphasized its already

articulated policy not to impose

operating and decommissioning costs

on co-owners in a manner inconsistent

with their agreed-upon shares, except in

highly unusual circumstances when

required by public health and safety

considerations, and that it would not

seek more than pro rata shares from coowners with de minimis ownership. The

Commission stated, however, that

granting the petition would

unnecessarily limit the Commission’s

flexibility when highly unusual

circumstances affecting the public

health and safety would require action

by the Commission. The Commission

also noted that the term ‘‘joint and

several liability’’ may have connotations

for contract law that it did not intend to

convey and that the term ‘‘joint and

several regulatory responsibility’’ more

accurately reflects the Commission’s

intent. Thus, the Commission stated that

it will use the term ‘‘joint and several

regulatory responsibility’’ in lieu of

‘‘joint and several liability.’’ Id. at

46663. The Commission’s policy on

joint and several regulatory

responsibility applies only to nuclear

power reactor licensees.

Preliminary Impact Assessment

In its recent denial of the petition for

rulemaking, the Commission addressed

this issue in the midst of the trend

toward industry consolidation. It,

therefore, is unlikely that the issue

warrants reconsideration in the near

future. Indeed, the trend toward

consolidation arguably makes it even

more important to maintain the

Commission’s position.

Recommended Followup

Since there is no significant impact,

no further effort is recommended.

Issue Category: 7. Financial

Issue: 7.e Bankruptcy Protection

Discussion

This issue addresses whether industry

consolidation raises unique concerns

with respect to licensee bankruptcy. The

provisions in 10 CFR 50.54(cc) require

a licensee to notify the NRC when a

voluntary or involuntary petition for

bankruptcy is filed under Title 11 of the

United States Code against it or its

parent or affiliate. Notifications of

petitions for bankruptcy are required for

fuel cycle facilities under 10 CFR

40.41(f)(1) and 70.32(a)(9)(i) and for

spent fuel storage licenses under 10 CFR

72.44(b)(6)(i). The NRC needs

information with respect to bankruptcy

filings against its licensees in order to

determine whether additional action is

warranted. Specifically, the NRC must

be able to participate in bankruptcy

proceedings when necessary to ensure

the adequate protection of the public

health and safety.

Preliminary Impact Assessment

Industry consolidation, in and of

itself, is not expected to increase or

decrease the frequency of bankruptcy

filings by licensees. However a

bankruptcy filing (either under Chapter

7 or Chapter 11 of the U.S. Bankruptcy

Code) by a licensee with several plants

could have more wide-ranging effects

than a licensee with only one or a few

plants. It is likely that the NRC’s reactor

oversight process will detect declining

plant performance caused by financial

stress, including bankruptcy. However,

a bankrupt licensee with several plants,

each of which could possibly require

increased NRC oversight, could place

additional burdens on the NRC

oversight process.

Additionally, a bankrupt licensee

with few assets other than its nuclear

plants might have difficulty in obtaining

necessary funds to operate and

decommission its nuclear plants even

with, as is likely based on previous

experience, positive actions by a

bankruptcy court. (Presumably, a

licensee that only owns nuclear assets

would file for bankruptcy protection

only because the revenues received from

its power sales in an unregulated market

were insufficient to cover its overall

production costs. In such a situation, a

bankruptcy court could do little to

improve a licensee’s cost structure

beyond relieving it of some portion of

its debt burden.) In a worst case

situation, the NRC could be required to

shut down the nuclear plants of a

bankrupt licensee if sufficient operating

funds were unavailable.

Licensees with only nuclear assets

would almost certainly not be subject to

rate regulation. As such, these licensees

are required under NRC regulations to

have decommissioning costs prepaid or

otherwise guaranteed in an amount

either based on NRC-stipulated generic

formulas or on site-specific estimates, if

greater than the formula amounts.

Although unlikely, if the cost estimates

did not reflect the full cost to

decommission because of unforeseen

difficulties in the decommissioning

process, the bankruptcy of a licensee

could have adverse impacts on the

timing and completion of

decommissioning.

Recommended Followup

The NRC will continue to monitor

licensees’ financial health using the

reports filed under 10 CFR 50.71(b) and

financial trade press resources to

determine whether any bankruptcy

34308 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

filings appear to be imminent. As in the

past, if a licensee files for bankruptcy

protection, the NRC will work to ensure

that health and safety interests are

adequately represented in bankruptcy

proceedings. No additional action

appears to be necessary at this time.

Issue Category: 7. Financial

Issue: 7.f Financial Qualifications

Discussion

The provisions of 10 CFR 50.33(f)

require that power reactor licensees

demonstrate that they are financially

qualified to construct and operate their

nuclear plants safely. Licensees that are

‘‘electric utilities’’ are exempt from

demonstrating financial qualifications at

the operating license stage pursuant to

50.33(f). Currently, the provisions of

§ 50.33(f) require licensees or applicants

to demonstrate financial qualifications,

in essence, by showing that projected

revenues exceed expenses over the first

five years following the licensing action.

Additionally, applicants for the transfer

of the Three Mile Island, Unit 1,

Pilgrim, Clinton, and other plants

recently sold have provided parent

company guarantees of additional

operating expenses. NUREG–1577, Rev.

1, provides additional information on

how licensees and applicants may

demonstrate financial qualifications for

initial licensing and license transfers.

The issue is whether industry

consolidation will affect the ability of

applicants and licensees to demonstrate

financial qualifications.

Preliminary Impact Assessment

As industry consolidation proceeds,

licensees with a large number of reactor

units may be vulnerable to financial

stress if a significant number of their

units are shut down at one time or are

otherwise unable to operate over

sustained periods at costs less than

revenues received for output from the

plants. This situation could be

exacerbated for licensees that are no

longer diversified companies with

substantial non-nuclear assets (e.g.,

transmission lines, distribution

networks, non-nuclear generating units)

to provide offsetting revenues. On the

other hand, industry consolidation may

actually reduce some financial risk by

spreading out risk among several

units—that is, it is unlikely that several

nuclear units would be shut down at the

same time. The remaining operating

units could provide sufficient funds to

cover expenses for the shutdown plants.

Of course, if a consolidated licensee had

reactors predominantly of one design,

and that design was found to have

sufficient safety concerns to cause an

extended shutdown of all the units of

that design, the financial stress would

likely increase significantly.

Once a plant is permanently shut

down and enters decommissioning

status, financial qualification for

operations is no longer a health and

safety issue. Rather, the issue then

concerns the adequacy of

decommissioning funds. However, the

ability to provide safety expenditures

during the transition period between a

permanent shutdown and

decommissioning could be affected if

the licensee is financially stressed. It is

not clear, at present, whether industry

consolidation would positively or

negatively affect access to funds during

such a transition period. However, this

issue has been raised in license transfer

cases by petitioners to intervene.

In 1997, in SECY–97–253, the staff

proposed to conduct a rulemaking,

among other things, to require sufficient

financial resources in certain reactor

license transfer cases to assure funding

for the transition from cessation of

operations to the beginning of

decommissioning, but the Commission

did not approve the proposal. In SECY–

98–153, the Commission again

considered the issues related to reactor

financial qualifications in light of

industry restructuring and decided to

delay that rulemaking in its SRM dated

December 9, 1998. The current standard

review plan (SRP), based on the current

rules, requires only that the non-utility

license transfer applicant comply with

the same financial qualifications

standards as for a non-utility operating

license applicant: it must submit

estimates of annual operating costs for

each of the first 5 years of operation of

the facility and indicate a source of

funds to cover the operating costs.

However, the current de facto

situation is different. One entity,

Amergen, has ‘‘voluntarily’’ set up a

$200 million reserve for the plants it has

or is planning to acquire. Within the

$200 million it has apparently

established specific funds for specific

reactors, and it has pointed to those

funds in State Public Utility

Commission proceedings as ‘‘assurance

that at least that amount will be

available specifically to assure for the

transition from cessation of operation of

Vermont Yankee to the beginning of its

decommissioning.’’ (Nucleonics Week,

Volume 41, Number 23, June 8, 2000, at

page 5.) The Commission, in its recent

license transfer decisions has

specifically acknowledged the staff

practice of capturing these ‘‘voluntary’’

offers in license conditions.

Recommended Followup

The potential impacts of industry

consolidation on licensees’ financial

qualifications are uncertain at present.

There doesn’t appear to be a need for

any immediate response, but the NRC

should continue to evaluate its financial

qualification requirements for the

transition period between permanent

plant shutdown and decommissioning

to determine whether any changes are

needed to 10 CFR 50.33(f).

Issue Category: 8. Non-NRC

Regulatory Considerations

Issue: 8.a Grid Stability/Reliability

Discussion

As discussed in Issue 1.f, reliability of

off-site power and grid stability are

safety-significant issues. There is a large

and diverse combination of situations

possible when the issues of nuclear

industry consolidation, economic

deregulation, and separation of

generation and transmission functions

are considered simultaneously. A

consolidation of companies may occur

with or without economic deregulation.

The parties involved in a deregulated

electrical industry could include

companies generating electricity,

regulated entities such as an

Independent System Operator in charge

of transmission and distribution, and

regulatory agencies such as the Federal

Energy Regulatory Commission which

may have significant impacts on the

market environment in which nuclear

power plants operate. Given the

complex range of possibilities coming

into play in a market environment, the

effects on grid stability/reliability

cannot be predicted with any

confidence. It is prudent to monitor grid

stability around nuclear power plants

and anticipate scenarios that may

require NRC actions.

Deregulation and restructuring of the

electric power industry prompted the

NRC to conduct studies and initiate

interaction with entities such as the

National Electricity Reliability Council.

A Commission paper was issued on May

11, 1999, on ‘‘Effects of Electric Power

Industry Deregulation on Electric Grid

Reliability and Reactor Safety’’ (SECY–

99–129). A study was commissioned at

the University of Wisconsin to examine

how deregulation has worked in other

industries relative to safety. The staff

also responded to grid-related events

that have occurred at some plants by

getting stakeholders such as the Nuclear

Energy Institute and Institute of Nuclear

Power Operations involved in

discussions regarding industrysponsored initiatives, and the adequacy

Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices 34309

of the existing regulatory requirements,

such as those in General Design

Criterion 17. On the basis of the insights

gained so far, it appears that grid

reliability issues are primarily a

consequence of economic deregulation

rather than industry consolidation. This

was demonstrated by the California

experience of the 2000–2001 time

period.

Preliminary Impact Assessment

Experience in other industries has

shown that the transition phase from a

regulated to a de-regulated activity is

often accompanied by unanticipated

difficulties. This may be the case with

the impacts of deregulation on electrical

grid performance. Prior to consolidation

and economic deregulation, licensees of

nuclear power plants were ‘‘utilities’’

who controlled both the generating

plants and the distribution grid. With

consolidation and economic

deregulation, these two functions are

generally within separate corporate

entities. Thus, NRC licensees may no

longer have direct control of the grid;

and NRC regulations which addressed

grid reliability by the licensee would

not apply to the grid operator.

At this time, operational experience

appears to indicate that grid stability/

reliability will be strained without

additional capacity in transmission and

generation. In a deregulated market, if

sufficient economic incentives are not

provided for maintaining adequate

reserve capacity, cost control will lead

to a decrease in reserve capacity with

corresponding problems during peak

periods, power system disturbances, etc.

The heavy cost burden of maintaining

sufficient spinning reserve that does not

produce revenue may or may not be

transferrable to the consumer.

Reductions in system reserve margins

and unregulated fluctuations may

increase the likelihood of trips that can

challenge safety systems in ways not

considered in the plant’s probabilistic

risk assessment (PRA). Grid stability/

reliability responsibility may move from

the licensees to independent grid

operators. The frequency and voltage

level under degraded grid conditions

may present safety concerns relative to

supporting safety system operations.

Licensees must assure that they have

adequate procedures to monitor grid

reliability and stability, and deal with

their effects on plant operations.

Experience has shown that nuclear

power plants that perform well tend to

be low cost producers, thus offering

strong economic incentives for the

licensee to keep operations proceeding

smoothly. As a consequence, licensees

are likely to pay close attention to

conditions outside the immediate

confines of the plant. This may increase

the likelihood that grid disturbances

will be noticed by licensees and that

they will anticipate potential problems.

Additionally, if a licensee operates

plants at multiple sites which feed

power into a grid, there would be an

incentive to assure grid stability on a

company-wide basis. This is likely to

lead consolidated licensees to

coordinate activities among their sites to

improve grid stability. For example, online maintenance performed at each of

the sites may be coordinated to reduce

the probability that more than one plant

might trip off-line.

The NRC has sufficient regulatory and

inspection mechanisms in place to

identify and respond to nuclear safety

concerns that may develop as a result of

grid-related stability and reliability

issues. As experience is gained with the

deregulated industry, changes to the

regulatory framework may be required.

The NRC has informed the industry

stakeholders of its concerns and has

observed that organizations such as

Nuclear Energy Institute and the

Institute for Nuclear Power Operations

are responding with their own

initiatives to address the concerns. Any

proposals to change the regulatory

framework will be based on information

from the NRC’s monitoring activity as

well as assessments of operational

experience.

Recommended Followup

The NRC has established

communication channels with industry

stakeholders and other government and

non-governmental institutions to obtain

accurate and timely information. The

recommended followup is to monitor

the developments unfolding in different

parts of the country and continue the

current efforts to assimilate information.

Issue Category: 8. Non-NRC

Regulatory Considerations

Issue: 8.b Antitrust Considerations

Discussion

On June 18, 1999, the Commission

issued a Memorandum and Order in the

Wolf Creek license transfer proceeding

dismissing a petition to intervene on

antitrust grounds. Kansas Gas and

Electric Co. (Wolf Creek Generating

Station, Unit 1), CLI–99–19, 49 NRC 441

(1999) (Wolf Creek). In Wolf Creek, the

Commission ‘‘concluded that the

Atomic Energy act does not require or

even authorize antitrust reviews of postoperating license transfer applications,

and that such reviews are inadvisable

from a policy perspective.’’ The

Commission directed the staff to initiate

a rulemaking to clarify the

Commission’s regulations to remove any

ambiguities and ensure that the rules

clearly reflect the views set out in the

Wolf Creek decision. On August 18,

2000, the final rule became effective.

The Commission stated that ‘‘because

the Commission is not authorized to

conduct antitrust reviews of postoperating license transfer applications,

or at least is not required to conduct this

type of review and has decided that it

no longer will conduct them, no

antitrust information is required as part

of a post-operating license transfer

application. Because the previous

regulations did not clearly specify

which types of applications are not

subject to antitrust review, these

clarifying amendments bring the

regulations into conformance with the

Commission’s limited statutory

authority to conduct antitrust reviews.’’

65 Fed. Reg. 44649 (July 19, 2000).

The Wolf Creek decision and the

clarifying rule, which apply only to

post-operating license transfers,

eliminate antitrust reviews for transfers

of facility operating licenses which

occur after the issuance of the initial

operating license for the facility. They

do not affect the Commission’s

continuing statutory obligation to

conduct antitrust reviews of

applications for new facility operating

licenses. The Commission has

repeatedly sought legislation to

eliminate all Commission antitrust

reviews, but such legislation has not

been enacted. Therefore, antitrust

reviews for new facilities must continue

to be conducted.

Preliminary Impact Assessment

The Commission’s decision in the

Wolf Creek case, and the final rule

affirming that decision, reflect the

Commission’s conclusion that the trend

toward increased consolidation and

deregulation in the nuclear power

industry warranted a close look at the

limited antitrust authority conferred

upon the Commission by the Atomic

Energy Act. The result was the

Commission’s conclusion that the Act

does not require antitrust reviews for

post-operating license transfers and,

even if they are authorized, they no

longer will be conducted as a matter of

sound policy. Although that result

applies only to operating license

transfers occurring after the initial

operating license has been issued, the

Commission’s policy reasons for

eliminating those reviews which it was

not required to conduct under the

Atomic Energy Act apply equally to

antitrust reviews of initial operating

license applications for new facilities. It

34310 Federal Register / Vol. 66, No. 124 / Wednesday, June 27, 2001 / Notices

1 15 U.S.C. 78l(d).

2 17 CFR 240.12d2–2(d).

3 15 U.S.C. 78l(g).

4 17 CFR 200.30–3(a)(1).

is, therefore, likely that the Commission

will continue to seek legislation to

eliminate all Commission antitrust

reviews because such reviews duplicate

responsibilities of other agencies that

have more expertise in this area. Until

and unless such legislation is enacted,

however, antitrust reviews for new

facilities must continue to be

conducted. In a consolidated and

deregulated industry, and where

licensees are not electric utilities, those

reviews could be more complex for an

applicant that already owns a number of

nuclear (and other electric generating)

facilities. If so, the antitrust reviews

conducted by the staff may require more

resources than have been used for such

reviews in the past.

Recommended Followup

No further effort is recommended at

this time, except that projected resource

needs for new applications should

account for more complex antitrust

reviews.

[FR Doc. 01–16104 Filed 6–26–01; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

Issuer Delisting; Notice of Application

To Withdraw From Listing and

Registration; (SFBC International, Inc.,

Common Stock, $.001 Par Value and

Warrants) File No. 1–16119

June 21, 2001.

SFBC International, Inc., a Delaware

corporation (‘‘Company’’), has filed an

application with the Securities and

Exchange Commission (‘‘Commission’’),

pursuant to section 12(d) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 12d2–2(d)

thereunder,2 to withdraw its Common

Stock, $.001 par value, and its

redeemable warrants (‘‘Securities’’),

from list and registration on the

American Stock Exchange LLC

(‘‘Amex’’).

The Company represents that trading

in the Securities began on the Nazdaq

National Market, and ceased

concurrently on the Amex, at the

opening of business on June 19, 2001. In

making the decision to withdraw the

Securities from listing on the Exchange,

the Company considered the liquidity to

be provided by its inclusion on the

Nazdaq National Market and the

likelihood of attracting institutional

investors.

The Company stated in its application

that it has met the requirements of

Amex Rule 18 by complying with all

applicable laws in effect in the State of

Delaware, in which it is incorporated,

and with the Amex’s rules governing an

issuer’s voluntary withdrawal of a

security from listing and registration.

The Company’s application relates

solely to the Securities’ withdrawal

from listing on the Amex and shall

affect neither their approval for listing

on the Nasdaq National Market nor their

obligation to be registered under section

12(g) of the Act.3

Any interested person may, on or

before July 13, 2001, submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC 20549–0609, facts

bearing upon whether the application

has been made in accordance with the

rules of the Amex and what terms, if

any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Jonathan G. Katz,

Secretary.

[FR Doc. 01–16108 Filed 6–26–01; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Aviation Proceedings, Agreements

Filed During Week Ending June 15,

2001

The following Agreements were filed

with the Department of Transportation

under provisions of 49 U.S.C. 412 and

414. Answers may be filed within 21

days after the filing of the applications.

Docket Number: OST–2001–9941.

Date Filed: June 14, 2001.

Parties: Members of the International

Air Transport Association.

Subject: PTC31 South 0111 dated 15

June 2001 r1–r5; PTC31 South 0110

dated 8 June 2001 (Report); PTC31

South Fares 0027 dated 15 June 2001

(Tables); Intended effective date:

October 1, 2001.

Andrea M. Jenkins,

Federal Register Liaison.

[FR Doc. 01–16180 Filed 6–26–01; 8:45 am]

BILLING CODE 4910–62–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Notice of Applications for Certificates

of Public Convenience and Necessity

and Foreign Air Carrier Permits Filed

Under Subpart B (Formerly Subpart Q)

During the Week Ending June 15, 2001

The following Applications for

Certificates of Public Convenience and

Necessity and Foreign Air Carrier

Permits were filed under Subpart B

(formerly Subpart Q) of the Department

of Transportation’s Procedural

Regulations (See 14 CFR 301.201 et

seq.). The due date for Answers,

Conforming Applications, or Motions to

Modify Scope are set forth below for

each application. Following the Answer

period, DOT may process the

application by expedited procedures.

Such procedures may consist of the

adoption of a show-cause order, a

tentative order, or in appropriate cases

a final order without further

proceedings.

Docket Number: OST–2001–9918.

Date Filed: June 13, 2001.

Due Date for Answers, Conforming

Applications, or Motion to Modify

Scope: July 5, 2001.

Description: Application of C.A.L.

Cargo Airlines Limited, pursuant to 49

U.S.C. 41302 and part 211 and subpart

B, requesting an amendment for an

initial foreign air carrier permit

authorizing it to provide scheduled

foreign air transportation of property

and mail betweenTel Aviv, Israel; New

York (JFK) and Chicago (O’Hare) via

Luxembourg; Gander,New Foundland

(technical stop) and Liege, Belgium.

Docket Number: OST–2001–9936.

Date Filed: June 14, 2001.

Due Date for Answers, Conforming

Applications, or Motion to Modify

Scope: July 5, 2001.

Description: Application of Ukrainian

Cargo Airways, pursuant to 49 U.S.C.

41302, (representing the recodified

version of section 402 of the Federal

Aviation Act of 1958 ‘‘Act’’, as

amended), part 211 of the Department of

Transportation’s (‘‘Department’’)

EconomicRegulations, and Subpart B of

the Department’s Rules of Practice,

hereby applies for a foreign air carrier

permit to engage in all-cargo charter