This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

53313 

Vol. 70, No. 173 

Thursday, September 8, 2005 

DEPARTMENT OF AGRICULTURE 

Animal and Plant Health Inspection 

Service 

9 CFR Part 94 

[Docket No. 04–083–2] 

Add Argentina to the List of Regions 

Considered Free of Exotic Newcastle 

Disease; Correction 

AGENCY: Animal and Plant Health 

Inspection Service, USDA. 

ACTION: Proposed rule; correction. 

SUMMARY: In a proposed rule published 

in the Federal Register on August 23, 

2005 (Docket No. 04–083–1), we 

proposed to amend the regulations by 

adding Argentina to the list of regions 

considered free of exotic Newcastle 

disease (END) and announced the 

availability of a qualitative evaluation 

regarding the END status of Argentina. 

The proposed rule contained an 

incorrect Internet address and 

incomplete instructions on how to 

access the qualitative evaluation. This 

document corrects those errors. 

DATES: We will consider all comments 

that we receive on Docket No. 04–083– 

1 on or before October 24, 2005. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• EDOCKET: Go to http:// 

www.epa.gov/feddocket to submit or 

view public comments, access the index 

listing of the contents of the official 

public docket, and to access those 

documents in the public docket that are 

available electronically. Once you have 

entered EDOCKET, click on the ‘‘View 

Open APHIS Dockets’’ link to locate 

Docket No. 04–083–1. 

• Postal Mail/Commercial Delivery: 

Please send four copies of your 

comment (an original and three copies) 

to Docket No. 04–083–1, Regulatory 

Analysis and Development, PPD, 

APHIS, Station 3C71, 4700 River Road 

Unit 118, Riverdale, MD 20737–1238. 

Please state that your comment refers to 

Docket No. 04–083–1. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov and follow 

the instructions for locating this docket 

and submitting comments. 

Reading Room: You may read the 

qualitative evaluation and any 

comments that we receive on Docket 

No. 04–083–1 in our reading room. The 

reading room is located in room 1141 of 

the USDA South Building, 14th Street 

and Independence Avenue SW., 

Washington, DC. Normal reading room 

hours are 8 a.m. to 4:30 p.m., Monday 

through Friday, except holidays. To be 

sure someone is there to help you, 

please call (202) 690–2817 before 

coming. 

Other Information: You may view 

APHIS documents published in the 

Federal Register and related 

information on the Internet at http:// 

www.aphis.usda.gov/ppd/rad/ 

webrepor.html. 

FOR FURTHER INFORMATION CONTACT: Dr. 

David Nixon, Case Manager, 

Regionalization Evaluation Services, 

National Center for Import and Export, 

VS, APHIS, 4700 River Road Unit 38, 

Riverdale, MD 20737–1231; (301) 734– 

4356. 

SUPPLEMENTARY INFORMATION: On August 

23, 2005, we published in the Federal 

Register (70 FR 49200–49207, Docket 

No. 04–083–1) a proposed rule in which 

we proposed to amend the regulations 

in 9 CFR part 94 by adding Argentina 

to the list of regions considered free of 

exotic Newcastle disease (END) and 

announced the availability of a 

qualitative evaluation regarding the 

END status of Argentina. The evaluation 

documents the factors that have led us 

to conclude that commercial poultry in 

Argentina are END-free. We are making 

the proposed rule and the qualitative 

evaluation available for public comment 

for 60 days. Comments must be received 

on or before October 24, 2005. 

In the background portion of the 

proposed rule, we provided an Internet 

address where the evaluation could be 

viewed. This address was incorrect. The 

Internet address should have read: 

http://www.aphis.usda.gov/vs/ncie/regrequest.html. In addition, the 

instructions we provided for accessing 

the evaluation were incomplete. This 

document corrects those errors. 

Correction 

In FR Doc. 05–16689, published on 

August 23, 2005 (70 FR 49200–49207), 

make the following correction: On page 

49205, first column, third full 

paragraph, in the first sentence, correct 

http://www.aphis.usda.gov/vs/regrequest.html by following the link for 

current requests and supporting 

documentation to read http:// 

www.aphis.usda.gov/vs/ncie/regrequest.html. At the bottom of that Web 

site page, follow the link for 

‘‘Information previously submitted by 

Regions requesting export approval and 

supporting documentation.’’ At the next 

screen, click on the triangle beside 

‘‘Argentina/ Poultry Products/Exotic 

Newcastle Disease.’’ From that screen, 

you may click on the triangle beside 

‘‘Response by APHIS’’ to view the 

qualitative evaluation and the triangle 

beside ‘‘Information supporting request’’ 

to view information provided by 

Argentine veterinary officials. You may 

also view the evaluation in our reading 

room (information on the location and 

hours of the reading room is provided 

under the heading ADDRESSES at the 

beginning of this document)’’. 

Done in Washington, DC, this 1st day of 

September 2005. 

Elizabeth E. Gaston, 

Acting Administrator, Animal and Plant 

Health Inspection Service. 

[FR Doc. 05–17799 Filed 9–7–05; 8:45 am] 

BILLING CODE 3410–34–P 

NUCLEAR REGULATORY 

COMMISSION 

10 CFR Part 63 

RIN 3150–AH68 

Implementation of a Dose Standard 

After 10,000 Years 

AGENCY: Nuclear Regulatory 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Nuclear Regulatory 

Commission (NRC) is proposing to 

amend its regulations governing the 

disposal of high-level radioactive wastes 

in a proposed geologic repository at 

Yucca Mountain, Nevada. The proposed 

rule would implement the U.S. 

Environmental Protection Agency’s 

(EPA’s) proposed standards for doses 

that could occur after 10,000 years but 

within the period of geologic stability. 

The proposed rule also specifies a value 

to be used to represent climate change 

53314 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

after 10,000 years, as called for by EPA, 

and specifies that calculations of 

radiation doses for workers use the same 

weighting factors that EPA is proposing 

for calculating individual doses to 

members of the public. 

DATES: The comment period expires 

November 7, 2005. Comments received 

after this date will be considered if it is 

practical to do so, but NRC is able to 

assure consideration only for comments 

received on or before this date. 

ADDRESSES: You may submit comments 

by any one of the following methods. 

Please include the following number 

(RIN 3150–AH68) in the subject line of 

your comments. Comments on 

rulemakings submitted in writing or in 

electronic form will be made available 

to the public in their entirety on the 

NRC rulemaking Web site. Personal 

information will not be removed from 

your comments. 

Mail comments to: Secretary, U.S. 

Nuclear Regulatory Commission, 

Washington, DC 20555–0001, ATTN: 

Rulemakings and Adjudications Staff. 

E-mail comments to: SECY@nrc.gov. If 

you do not receive a reply e-mail 

confirming that we have received your 

comments, contact us directly at (301) 

415–1966. You may also submit 

comments via the NRC’s rulemaking 

Web site at http://ruleforum.llnl.gov. 

Address questions about our rulemaking 

website to Carol Gallagher (301) 415–

5905; e-mail cag@nrc.gov. Comments 

can also be submitted via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov. 

Hand deliver comments to: 11555 

Rockville Pike, Rockville, Maryland 

20852, between 7:30 a.m. and 4:15 p.m. 

Federal workdays. (Telephone (301) 

415–1966). 

Fax comments to: Secretary, U.S. 

Nuclear Regulatory Commission at (301) 

415–1101. 

Publicly available documents related 

to this rulemaking may be examined 

and copied for a fee at the NRC’s Public 

Document Room (PDR), Public File Area 

O1 F21, One White Flint North, 11555 

Rockville Pike, Rockville, Maryland. 

Selected documents, including 

comments, can be viewed and 

downloaded electronically via the NRC 

rulemaking Web site at http:// 

ruleforum.llnl.gov. 

Publicly available documents created 

or received at the NRC after November 

1, 1999, are available electronically at 

the NRC’s Electronic Reading Room at 

http://www.nrc.gov/NRC/ADAMS/ 

index.html. From this site, the public 

can gain entry into the NRC’s 

Agencywide Document Access and 

Management System (ADAMS), which 

provides text and image files of NRC’s 

public documents. If you do not have 

access to ADAMS or if there are 

problems in accessing the documents 

located in ADAMS, contact the NRC 

Public Document Room (PDR) Reference 

staff at 1–800–397–4209, 301–415–4737, 

or by e-mail to pdr@nrc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Timothy McCartin, Office of Nuclear 

Material Safety and Safeguards, U.S. 

Nuclear Regulatory Commission, 

Washington, DC 20555–0001, telephone 

(301) 415–7285, e-mail tjm3@nrc.gov; 

Janet Kotra, Office of Nuclear Material 

Safety and Safeguards, U.S. Nuclear 

Regulatory Commission, Washington, 

DC 20555–0001, telephone (301) 415–

6674, e-mail jpk@nrc.gov; or Lydia 

Chang, Office of Nuclear Material Safety 

and Safeguards, U.S. Nuclear Regulatory 

Commission, Washington, DC 20555–

0001, telephone (301) 415–6319, e-mail 

lwc1@nrc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On November 2, 2001 (66 FR 55732), 

NRC published its final rule, 10 CFR 

part 63, governing disposal of high-level 

radioactive wastes in a potential 

geologic repository at Yucca Mountain, 

Nevada. The U.S. Department of Energy 

(DOE) must comply with these 

regulations for NRC to authorize 

construction and license operation of a 

potential repository at Yucca Mountain. 

As mandated by the Energy Policy Act 

of 1992, Public Law 102–486 (EnPA), 

NRC’s final rule was consistent with the 

radiation protection standards issued by 

EPA at 40 CFR Part 197 (66 FR 32074; 

June 13, 2001). EPA developed these 

standards under Congress’ direction, in 

Section 801 of EnPA, to issue public 

health and safety standards for 

protection of the public from releases of 

radioactive materials stored or disposed 

of in a potential repository at the Yucca 

Mountain site. These standards were to 

be ‘‘based upon and consistent with’’

the findings and recommendations of 

the National Academy of Sciences 

(NAS). The NAS issued its findings and 

recommendations, on August 1, 1995, in 

a report entitled Technical Bases for 

Yucca Mountain Standards. 

The State of Nevada and other 

petitioners challenged both the EPA 

standards and the NRC regulations in 

court. On July 9, 2004, the United States 

Court of Appeals for the District of 

Columbia Circuit upheld both EPA’s 

standards and NRC’s regulations on all 

but one of the issues raised by the 

petitioners. See Nuclear Energy 

Institute, Inc. v. Environmental 

Protection Agency, 373 F.3d 1251 (D.C. 

Cir. 2004). The court disagreed with 

EPA’s decision to adopt a 10,000-year 

period for compliance with the 

standards and NRC’s adoption of that 

10,000-year compliance period in NRC’s 

implementing regulations. The court 

found that EPA’s 10,000-year 

compliance period was not ‘‘based upon 

and consistent with’’ NAS findings, as 

required by Section 801 of EnPA. See 

the aforementioned 373 F.3d at 1270. 

The NAS recommended that a standard 

be developed that would provide 

protection when radiation doses reach 

their peak within the limits imposed by 

long-term stability of the geologic 

environment. In addition, NAS found 

no scientific basis for limiting 

application of the individual-risk 

standard to 10,000 years. Thus, the 

court vacated EPA’s rule at 40 CFR part 

197 to the extent that it specified a 

10,000-year compliance period and 

remanded the matter to EPA. The court 

also vacated NRC’s rule at 10 CFR Part 

63 insofar as it incorporated EPA’s 

10,000-year compliance period. 

In response to the remand, EPA 

issued its proposed revised standards on 

August 22, 2005 (70 FR 49014). To 

comply with EnPA and the court’s 

remand, NRC must now revise 10 CFR 

Part 63 to be consistent with EPA’s 

revised standards. For that purpose, 

NRC is proposing revisions to 10 CFR 

part 63 in this notice. 

II. Discussion 

To address the court’s decision, EPA 

is retaining the standards applicable to 

the first 10,000 years after disposal and 

proposes to add separate requirements 

for the peak dose after 10,000 years and 

within the period of geologic stability. 

EPA also proposes to revise the 

approach for calculating doses, based on 

International Commission on 

Radiological Protection (ICRP) 

recommendations, for the periods before 

and after 10,000 years. Specifically, 

EPA’s proposed revisions to its 

standards: (1) Provide a limit for the 

peak dose after 10,000 years; (2) specify 

criteria DOE must use in performance 

assessments for estimating doses after 

10,000 years; and (3) specify ‘‘weighting 

factors’’ for DOE’s use when calculating 

individual dose during the operational 

or preclosure phase as well as after the 

disposal or postclosure phase. Also, in 

its proposal, EPA states that NRC should 

specify a value or values that DOE must 

use to represent climate change after 

10,000 years. 

In this rulemaking, the NRC proposes 

to (1) adopt the limit EPA sets for the 

peak dose after 10,000 years; (2) adopt 

the criteria EPA has specified for 

performance assessments that estimate 

Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 53315 

doses after 10,000 years; (3) adopt the 

‘‘weighting factors’’ EPA specifies for 

calculating individual doses during the 

operational or preclosure phase, as well 

as after the disposal or postclosure 

phase; (4) require that calculations of 

radiation doses for workers use the same 

weighting factors EPA is proposing for 

calculating individual dose; and (5) 

specify a value that DOE must use to 

project the long-term impact of climate 

variation after 10,000 years, as called for 

by EPA. These proposals are more fully 

described below. 

The NRC’s proposal of these changes 

to part 63 coincides with EPA’s 

publication of its proposal to provide 

important and timely information to the 

public on how NRC plans to incorporate 

and implement EPA’s standards in 

NRC’s regulations. In general, the 

changes to part 63 adopt the same or 

approximately the same wording as 

used by EPA in its proposed revisions 

to 40 CFR part 197. Comments on EPA’s 

proposal (e.g., the dose limit) should be 

directed to EPA and refer to EPA’s 

proposal published on August 22, 2005. 

NRC’s existing regulations, which are 

applicable for the first 10,000 years after 

disposal, remain in place [e.g., the 0.15 

millisieverts/year (15 millirem/year) 

individual protection standard] 

consistent with the existing EPA 

standards, and are not affected by this 

rulemaking except insofar as NRC’s rule 

adopts more up-to-date dosimetry for 

dose calculations. 

The Commission welcomes comments 

on NRC’s proposed implementation of 

EPA’s proposed revisions to its 

standards as well as on NRC’s revisions 

for use of specific weighting factors for 

calculating worker doses, and on NRC’s 

specification of a value for climate 

change. NRC requests and will respond 

to comments only on those provisions of 

part 63 that we are now proposing to 

change. A description of these changes 

follows. 

1. Dose Limit 

EPA’s proposed standards would 

require DOE to estimate peak dose after 

10,000 years as part of the evaluations 

for both individual protection and 

human intrusion. DOE must then 

compare the results of these estimates to 

an annual dose limit of 3.5 mSv/yr (350 

mrem/yr). For this comparison, EPA 

proposes that DOE use the median value 

of the projected doses after 10,000 years 

and through the period of geologic 

stability. NRC proposes to incorporate 

the new EPA dose limit and statistical 

measure for compliance directly into 

NRC’s regulations at § 63.311 for 

individual protection and at § 63.321 for 

human intrusion. 

2. Criteria for Performance Assessments 

Used to Estimate Peak Dose After 10,000 

Years 

EPA proposes using the performance 

assessment for the first 10,000 years as 

the basis for projecting repository 

performance after 10,000 years. EPA 

asserts that its requirements for the 

performance assessment for the first 

10,000 years (e.g., consideration for 

features, events, and processes with a 

probability of occurrence greater than 

10¥8 per year) provide a suitable basis 

for projecting performance after 10,000 

years. NRC’s existing regulations at 10 

CFR Part 63 already include additional 

requirements, governing the preparation 

of the performance assessment, that 

ensure that features, events, and 

processes considered for inclusion in 

the performance assessment over the 

10,000-year compliance period 

represent a wide range of both favorable 

and detrimental effects on performance. 

Because of the uncertainties 

associated with estimating performance 

over very long times (e.g., hundreds of 

thousands of years) and to limit 

speculation, EPA proposes specific 

constraints on the consideration of 

features, events, and processes after 

10,000 years. First, EPA asserts that data 

and models used to prepare the 

performance assessment for the first 

10,000 years provide adequate support 

for projections used in the performance 

assessment after 10,000 years. For 

example, DOE may apply the seismic 

hazard curves used in the 10,000-year 

assessment to project seismic activity 

after 10,000 years. Second, EPA 

proposes to (1) limit the analysis of 

seismic activity to the effects caused by 

damage to the drifts and the waste 

package; (2) limit analysis of igneous 

activity to effects on the waste package 

that result in release of radionuclides to 

the atmosphere or ground water; (3) 

limit the effect of climate variation to 

those resulting from increased water 

flowing to the repository; and (4) require 

DOE to include general corrosion in its 

analysis of engineered barrier 

performance. NRC proposes to 

incorporate these criteria into NRC 

regulations at § 63.342. NRC also 

proposes revising requirements for the 

performance assessment, specified at 

§ 63.114, to be consistent with EPA’s 

proposal that the performance 

assessment for the first 10,000 years 

serve as the basis for projecting 

repository performance assessment after 

10,000 years. 

3. Individual Dose Calculations 

EPA proposes that DOE use specific 

weighting factors provided in proposed 

Appendix A of its standards at 40 CFR 

197. These weighting factors reflect 

current methods of dosimetry and 

updated models for calculating 

individual exposures from radiation. 

EPA cites, as a basis for this proposal, 

recommendations and guidance from 

ICRP Publications 60 through 72. NRC 

supports the use of current dosimetry 

and proposes to adopt this specification. 

4. Worker Dose Calculations 

Consistent with EPA’s specification of 

dosimetry for calculating individual 

doses to members of the public (public 

doses), NRC proposes to revise its part 

63 regulations to allow DOE to use the 

same methods for calculating doses to 

workers during the operational period 

as those required for calculating public 

doses. NRC believes that calculations of 

doses to workers and the public should 

rely on a single set of weighting factors, 

based on current dosimetry. This 

approach would avoid the unnecessary 

complication and potential confusion 

for stakeholders that could result from 

the use of two sets of weighting factors. 

NRC proposes to add a definition for 

‘‘weighting factor’’ to § 63.2 that 

specifies the weighting factors provided 

in the EPA proposal, and to amend 

§ 63.111(a)(1) to provide that calculation 

of doses to meet the requirements of 10 

CFR part 20 shall use the definition for 

‘‘weighting factor’’ in § 63.2. Calculation 

of both worker and public doses would 

use the weighting factor as defined. 

5. Values Used To Project Climate 

Variation After 10,000 Years 

EPA proposes that DOE should 

assume that the effect of climate 

variation, after 10,000 years, is limited 

to the results of increased water flowing 

through the repository. EPA also 

proposes that NRC specify, in 

regulation, steady-state (constant-intime) values that DOE should use to 

project the long-term impact of climate 

variation after 10,000 years. This 

approach focuses on ‘‘average’’ climate 

conditions over the long term rather 

than on time-varying aspects of climate 

(e.g., timing, size, and duration of shortterm variations) that can be both 

uncertain and speculative. The NRC has 

considered what parameter or 

parameters would represent the average 

climate conditions. Precipitation and 

temperature are the most readily 

identified parameters, associated with 

climate, that directly influence the 

amount of water, or deep percolation, 

flowing to the repository horizon. It is 

the rate of deep percolation, however, 

that directly influences repository 

performance. Therefore, the NRC 

proposes to specify use of the deep 

53316 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

1The low value of the range is derived using the 

lower estimated fraction of precipitation that results 

in deep percolation and the lower precipitation rate 

(i.e., 5 percent of 266 is approximately 13) and the 

high value of the range from using the higher 

estimated fraction of precipitation that results in 

deep percolation and the higher value for 

precipitation rate (i.e., 20 percent of 321 is 

approximately 64). 

2The mean value of a log-uniform distribution of 

deep percolation that ranges from 13 mm/year to 64 

mm/yr is equal to (64 mm/year ¥13 mm/year)/ 

[loge(64 mm/year) ¥loge(13 mm/year)] = 32 mm/ 

year. 

percolation rate to represent the effect of 

future climate in performance 

assessments after 10,000 years. 

Southern Nevada has experienced 

significant variation in mean annual 

precipitation and temperature over the 

past 1 to 3 million years (Forester, R. M. 

‘‘Pliocene-Climate History of the 

Western United States Derived from 

Lacustrine Ostracodes,’’ Quaternary 

Science Reviews, Volume 10, pages 

133–146, 1991). Estimates of future 

climate over the next 1 million years 

involve many assumptions and are 

uncertain. One approach, discussed 

when NRC issued its regulations for 

Yucca Mountain at 10 CFR part 63 (page 

66 FR 55757; November 2, 2001), is to 

assume that fundamental mechanisms 

that will change the future climate will 

be the same as those that changed it in 

the past. Paleoclimate data suggest that, 

in general, over the past 1 million years, 

Southern Nevada has been cooler and 

wetter than it is today (Thompson, R. S., 

K. H. Anderson, and P. J. Bartlein, 

‘‘Quantitative Paleoclimatic 

Reconstructions from Late Pleistocene 

Plant Macrofossils of the Yucca 

Mountain Region,’’ U.S. Geological 

Survey Open-File Report 99–338, U.S. 

Geological Survey, Denver, CO, 1999; 

and Reheis, M., ‘‘Highest Pluvial Lake 

Shorelines and Pleistocene Climate in 

the Western Great Basin,’’ Quaternary 

Research, Volume 52, pages 196–205, 

1999). Thus, NRC expects ‘‘average’’

conditions 10,000 years in the future, 

and later, to be cooler and wetter. Those 

conditions will allow more water to 

percolate to the repository horizon than 

expected during the first 10,000 years. 

According to climatologists, the socalled intermediate and monsoon 

climate states, which occur between the 

warmer ‘‘interglacial’’ and the cooler 

‘‘full glacial’’ climate states, are both 

wetter than the present climate state. 

Climatologists estimate a mean annual 

precipitation, during these climate 

states, at about twice that of present 

mean annual precipitation at Yucca 

Mountain. Over the past million years, 

these two wetter climate states were the 

predominate climate states (Civilian 

Radioactive Waste Management System, 

Management and Operating Contractor, 

‘‘Future Climate Analysis—10,000 years 

to 1,000,000 Years After Present,’’

MOD–01–001 Rev. 00, 2002). To the 

extent that climate is controlled by 

changes in solar radiation arising from 

variations in the Earth’s orbit [op. cit.], 

it is reasonable to assume that climate 

patterns during the next 1 million years 

would follow a similar cycle. Deep 

percolation rates depend on both 

precipitation and temperature and their 

associated effects on evaporation and 

plant transpiration. Today, the mean 

precipitation, measured at Yucca 

Mountain, is 125 millimeters/year (mm/ 

year) (4.9 inches/year) (Thompson, R. 

S., K. H. Anderson, and P. J. Bartlein, 

‘‘Quantitative Paleoclimatic 

Reconstructions from Late Pleistocene 

Plant Macrofossils of the Yucca 

Mountain Region,’’ U.S. Geological 

Survey Open-File Report 99–338, U.S. 

Geological Survey, Denver, CO, 1999). 

About 4 percent of that water reaches 

the repository horizon. This 

corresponds to an estimated deep 

percolation rate of 5 mm/year (0.20 

inches/year) when averaged over the 

repository footprint (Zhu, C., J. R. 

Winterle, and E. I. Love, ‘‘Late 

Pleistocene and Holocene Groundwater 

Recharge from the Chloride Mass 

Balance Method and Chlorine-36 Data,’’

Water Resources Research, Vol 39, No. 

7, page 1182, 2003). Examination of 

locations in the United States, 

analogous to Yucca Mountain in some 

future intermediate and monsoon 

climates, suggests potential 

precipitation rates of between 266 and 

321 mm/year [10.5 and 12.6 inches/ 

year] (Thompson, R. S., K. H. Anderson, 

and P. J. Bartlein, ‘‘Quantitative 

Paleoclimatic Reconstructions from Late 

Pleistocene Plant Macrofossils of the 

Yucca Mountain Region,’’ U.S. 

Geological Survey Open-File Report 99–

338, U.S. Geological Survey, Denver, 

CO, 1999). 

Estimates of deep percolation rate as 

a fraction of precipitation have been 

calculated for various climate 

conditions. Between 5 to 20 percent of 

precipitation could reach the repository 

depth under intermediate/monsoon to 

‘‘full glacial’’ climate conditions. The 

larger percentage reflects ‘‘full glacial’’

conditions (Mohanty, S., R. Codell, J. M. 

Menchaca, et al., System-Level 

Performance Assessment of the 

Proposed Repository at Yucca Mountain 

Using the TPA Version 4.1 Code, 

CNWRA 2002–05 Revision 2, Center for 

Nuclear Waste Regulatory Analyses, San 

Antonio, TX, 2004). Given that average 

deep percolation at Yucca Mountain is 

about 4 percent of precipitation, under 

current conditions, and assuming 

between 5 to 20 percent for the fraction 

of precipitation that remains as deep 

percolation under intermediate/ 

monsoon climates, one may estimate 

higher average water flow to the 

repository than observed today. On this 

basis, the NRC proposes that DOE 

represent the effects of climate change 

after 10,000 years by assuming that deep 

percolation rates vary between 13 to 64 

mm/year (0.5 to 2.5 inches/year) 1. DOE 

would implement this assumption in its 

performance assessment by sampling 

values of deep percolation rates within 

this range, and, for a given calculation, 

by assuming the deep percolation rate 

remained constant, at the sampled rate, 

after 10,000 years. 

Thus, NRC proposes that DOE use a 

time-independent deep percolation rate, 

after 10,000 years, based on a log 

uniformly distributed range of deep 

percolation rates from 13 to 64 mm/year 

(0.5 to 2.5 inches/year). This ‘‘average’’

deep percolation rate represents the 

average amount of water flowing to the 

repository horizon. Specifying a rate 

that is constant over time, however, 

does not imply that this same rate 

should necessarily be held constant 

spatially over the entire repository 

horizon. To the contrary, current 

understanding of site behavior (e.g., 

NRC staff and DOE staff representations 

of infiltration and percolation processes 

at Yucca Mountain) shows significant 

variation in current deep percolation 

rates across the repository horizon. This 

would be expected to continue to occur 

into the far future. NRC expects DOE to 

continue such calculations of spatial 

variation, subject to the constraint that, 

across the repository footprint, the 

‘‘average’’ overall percolation rate 

would remain within the range and 

distribution specified by NRC. 

The Commission considers it 

appropriate to specify these constraints 

on how DOE must account for the 

effects of climate change during the 

period after 10,000 years because this 

approach: (1) Is consistent with EPA’s 

proposal for treatment of climate change 

after 10,000 years; (2) specifies, in a 

straightforward way, how DOE shall 

represent climate change in its 

performance assessment; (3) results in a 

mean deep percolation rate of 

approximately 32 mm/year 2 (1.3 

inches/year), a rate that is 

approximately six times greater than the 

current rate, representing wetter and 

cooler conditions (e.g., interglacial and 

monsoon climate states); and (4) 

provides information on the relative 

significance of the deep percolation rate 

Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 53317 

(e.g., results of the performance 

assessment when the deep percolation 

rate is assumed to be at the low value 

of the range versus the high value of the 

range). 

III. Discussion of Proposed 

Amendments by Section 

Section 63.2s Definitions 

This section would be modified to 

revise the definition of ‘‘performance 

assessment’’ to exclude the limitation of 

‘‘10,000 years after disposal,’’ consistent 

with EPA’s modified definition of 

‘‘performance assessment.’’ This section 

also would be modified to include a 

definition for ‘‘weighting factor’’ that 

conforms the weighting factors to be 

used in dose calculations to the values 

EPA proposes. 

Section 63.111 Performance Objectives 

for the Geologic Repository Operations 

Area Through Permanent Closure 

This section specifies requirements 

for radiation exposures for the geologic 

repository operations area. This section 

would be modified to require use of the 

definition for ‘‘weighting factor’’ in 

§ 63.2 when calculating doses to meet 

the requirements of part 20 of this 

chapter. 

Section 63.114 Requirements for 

Performance Assessment 

This section specifies the 

requirements for the performance 

assessment used to demonstrate 

compliance with the requirements 

specified at § 63.113(b), (c), and (d). 

This section would be revised to 

conform to EPA’s proposed standards 

that specify what DOE must consider in 

the performance assessment for the 

period after 10,000 years. 

Section 63.302 Definitions for Subpart 

L 

The definition for the ‘‘period of 

geologic stability’’ would be modified to 

clarify that this period ends at 1 million 

years after disposal. 

Section 63.303 Implementation of 

Subpart L 

This section provides a functional 

overview of this subpart. This section 

would be revised to conform to EPA’s 

proposed standard that specifies the 

arithmetic mean of the projected doses 

to be used for determining compliance 

for the period within 10,000 years after 

disposal and the median value of the 

projected doses to be used for 

determining compliance for the period 

after 10,000 years and through the 

period of geologic stability. 

Section 63.305 Required 

Characteristics of the Reference 

Biosphere 

This section specifies characteristics 

of the reference biosphere to be used by 

DOE in its performance assessments to 

demonstrate compliance with the 

requirements specified at § 63.113. This 

section would be modified to conform 

to EPA’s proposed standards, which 

specify the types of changes DOE shall 

account for in the performance 

assessment for the period after 10,000 

years and through the period of geologic 

stability. 

Section 63.311 Individual Protection 

Standard After Permanent Closure 

This section specifies the dose limit 

for individual protection after 

permanent closure for any geologic 

repository at the Yucca Mountain site. 

This section would be modified to 

conform with the public health and 

environmental radiation standards EPA 

proposes for the peak dose after 10,000 

years and through the period of geologic 

stability. 

Section 63.321 Individual Protection 

Standard for Human Intrusion 

This section directs DOE to estimate 

the dose resulting from a stylized 

human intrusion drilling scenario and 

specifies the dose limit that any geologic 

repository at the Yucca Mountain site 

must meet as the result of a hypothetical 

human intrusion. This section would be 

modified to conform with the public 

health and environmental radiation 

standards EPA proposes for the peak 

dose after 10,000 years and through the 

period of geologic stability. 

Section 63.341 Projections of Peak 

Dose 

This section has been removed. 

Section 63.342 Limits on Performance 

Assessments 

This section specifies how DOE will 

identify and consider features, events, 

and processes in the dose assessments 

described in subpart L to part 63. This 

section would be modified to conform 

to EPA’s proposed standards, which 

specify the types of changes DOE shall 

account for in the performance 

assessment for the period after 10,000 

years and through the period of geologic 

stability. A range of values has been 

specified that DOE shall use to represent 

the effects of climate change after 10,000 

years and through the period of geologic 

stability. 

IV. Agreement State Compatibility 

Under the ‘‘Policy Statement on 

Adequacy and Compatibility of 

Agreement State Programs’’ approved by 

the Commission on June 30, 1997, and 

published in the Federal Register on 

September 3, 1997 (62 FR 46517), this 

rule is classified as Compatibility 

Category ‘‘NRC.’’ Compatibility is not 

required for Category ‘‘NRC’’

regulations. The NRC program elements 

in this category are those that relate 

directly to areas of regulation reserved 

to the NRC by the Atomic Energy Act of 

1954, as amended (AEA), or the 

provisions of Title 10 of the Code of 

Federal Regulations. An Agreement 

State may not adopt program elements 

reserved to NRC. 

V. Plain Language 

The Presidential memorandum, dated 

June 1, 1998, entitled, ‘‘Plain Language 

in Government Writing,’’ directed that 

the Government’s writing be in plain 

language. This memorandum was 

published on June 10, 1998 (63 FR 

31883). NRC requests comments on this 

proposed rule specifically with respect 

to the clarity and effectiveness of the 

language used. Comments should be 

sent to the address listed under the 

heading of ADDRESSES, above. 

VI. Voluntary Consensus Standards 

The National Technology Transfer 

and Advancement Act of 1995 (Pub. L. 

104–113) requires that Federal agencies 

use technical standards that are 

developed or adopted by voluntary 

consensus standards bodies unless the 

use of such a standard is inconsistent 

with applicable law or otherwise 

impractical. In this proposed rule, NRC 

would implement site-specific 

standards proposed by EPA and 

developed solely for application to a 

proposed geologic repository for highlevel radioactive waste at Yucca 

Mountain, Nevada. This action does not 

constitute the establishment of a 

standard that establishes generally 

applicable requirements. 

VII. Finding of No Significant 

Environmental Impact: Availability 

Pursuant to Section 121(c) of the 

Nuclear Waste Policy Act, this proposed 

rule does not require the preparation of 

an environmental impact statement 

under Section 102(2)(c) of the National 

Environmental Policy Act of 1969 or 

any environmental review under 

subparagraph (E) or (F) of Section 102(2) 

of such act. 

VIII. Paperwork Reduction Act 

Statement 

This proposed rule does not contain 

new or amended information collection 

requirements subject to the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

53318 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

et seq.). Existing requirements were 

approved by the Office of Management 

and Budget (OMB), approval number 

3150–0199. 

Public Protection Notification 

NRC may not conduct nor sponsor, 

and a person is not required to respond 

to, a request for information nor an 

information collection requirement, 

unless the requesting document 

displays a currently valid OMB control 

number. 

IX. Regulatory Analysis 

The Commission has prepared a draft 

regulatory analysis on this proposed 

regulation. The analysis examines the 

costs and benefits of the alternatives 

considered by the Commission, 

consistent with the options that are 

open to NRC in carrying out the 

statutory directive of EnPA. The 

Commission requests public comment 

on the draft regulatory analysis. 

Comments on the draft analysis may be 

submitted to NRC, as indicated under 

the ADDRESSES, heading. The analysis is 

available for inspection in the NRC PDR, 

11555 Rockville Pike, Rockville, MD 

20852. Single copies of the regulatory 

analysis may be obtained from Lydia 

Chang, Office of Nuclear Material Safety 

and Safeguards, U.S. Nuclear Regulatory 

Commission, Washington, DC 20555–

0001, telephone (301) 415–6319, e-mail 

lwc1@nrc.gov. 

X. Regulatory Flexibility Certification 

In accordance with the Regulatory 

Flexibility Act of 1980 [5 U.S.C. 605(b)], 

NRC certifies that this proposed rule 

will not, if issued, have a significant 

economic impact on a substantial 

number of small entities. This proposed 

rule affects only the licensing of one 

entity, DOE, which does not fall within 

the scope of the definition of ‘‘small 

entities’’ set forth in the Regulatory 

Flexibility Act nor the Small Business 

Size Standards set out in regulations 

issued by the Small Business 

Administration at 13 CFR part 121. 

XI. Backfit Analysis 

NRC has determined that the backfit 

rule (§§ 50.109, 70.76, 72.62, or 76.76) 

does not apply to this proposed rule 

because this amendment would not 

involve any provisions that would 

impose backfits, as defined in the 

backfit rule. Therefore, a backfit analysis 

is not required. 

List of Subjects in 10 CFR Part 63 

Criminal penalties, High-level waste, 

Nuclear power plants and reactors, 

Reporting and recordkeeping 

requirements, Waste treatment and 

disposal. 

For the reasons set out in the 

preamble and under the authority of the 

Atomic Energy Act of 1954, as amended; 

the Energy Reorganization Act of 1974, 

as amended; the Nuclear Waste Policy 

Act of 1982, as amended; and 5 U.S.C. 

553, the NRC is proposing to adopt the 

following amendments to 10 CFR part 

63. 

PART 63—DISPOSAL OF HIGH-LEVEL 

RADIOACTIVE WASTES IN A 

GEOLOGIC REPOSITORY AT YUCCA 

MOUNTAIN, NEVADA 

1. The authority citation for part 63 

continues to read as follows: 

Authority: Secs. 51, 53, 62, 63, 65, 81, 161, 

182, 183, 68 Stat. 929, 930, 932, 933, 935, 

948, 953, 954, as amended (42 U.S.C. 2071, 

2073, 2092, 2093, 2095, 2111, 2201, 2232, 

2233); secs. 202, 206, 88 Stat.1244, 1246 (42 

U.S.C. 5842, 5846); secs. 10 and 14, Pub. L. 

95–601, 92 Stat. 2951 (42 U.S.C. 2021a and 

5851); sec. 102, Pub. L. 91–190, 83 Stat. 853 

(42 U.S.C. 4332); secs. 114, 121, Pub. L. 97–

425, 96 Stat. 2213g, 2238, as amended (42 

U.S.C. 10134, 10141); and Pub. L. 102–486, 

sec. 2902, 106 Stat. 3123 (42 U.S.C. 5851); 

sec. 1704, 112 stat. 2750 (44 U.S.C. 3504 

note). 

2. Section 63.2 is amended by revising 

paragraph (1) of the definition of 

‘‘performance assessment’’ and by 

adding a new definition for ‘‘weighting 

factor,’’ in alphabetical order, to read as 

follows: 

§ 63.2 Definitions. 

* * * * * 

Performance assessment means an 

analysis that: 

(1) Identifies the features, events, 

processes (except human intrusion), and 

sequences of events and processes 

(except human intrusion) that might 

affect the Yucca Mountain disposal 

system and their probabilities of 

occurring; 

* * * * * 

Weighting factor for an organ or tissue 

is the proportion of the risk of stochastic 

effects resulting from irradiation of that 

organ or tissue to the total risk of 

stochastic effects when the whole body 

is irradiated uniformly. For calculating 

the effective dose equivalent, the values 

in Appendix A of 40 CFR part 197 are 

to be used. 

3. In § 63.111, paragraph (a)(1) is 

revised to read as follows: 

§ 63.111 Performance objectives for the 

geologic repository operations area 

through permanent closure. 

(a) * * * 

(1) The geologic repository operations 

area must meet the requirements of part 

20 of this chapter. Calculation of doses 

to meet the requirements of part 20 of 

this chapter shall use the definition for 

‘‘weighting factor’’ in § 63.2. 

* * * * * 

4. Section 63.114 is revised to read as 

follows: 

§ 63.114 Requirements for performance 

assessment. 

(a) Any performance assessment used 

to demonstrate compliance with 

§ 63.113 for 10,000 years after disposal 

must: 

(1) Include data related to the geology, 

hydrology, and geochemistry (including 

disruptive processes and events) of the 

Yucca Mountain site, and the 

surrounding region to the extent 

necessary, and information on the 

design of the engineered barrier system 

used to define, for 10,000 years after 

disposal, parameters and conceptual 

models used in the assessment. 

(2) Account for uncertainties and 

variabilities in parameter values, for 

10,000 years after disposal, and provide 

for the technical basis for parameter 

ranges, probability distributions, or 

bounding values used in the 

performance assessment. 

(3) Consider alternative conceptual 

models of features and processes, for 

10,000 years after disposal, that are 

consistent with available data and 

current scientific understanding and 

evaluate the effects that alternative 

conceptual models have on the 

performance of the geologic repository. 

(4) Consider only features, events, and 

processes consistent with the limits on 

performance assessment specified at 

§ 63.342. 

(5) Provide the technical basis for 

either inclusion or exclusion of specific 

features, events, and processes in the 

performance assessment. Specific 

features, events, and processes must be 

evaluated in detail if the magnitude and 

time of the resulting radiological 

exposures to the reasonably maximally 

exposed individual, or radionuclide 

releases to the accessible environment, 

for 10,000 years after disposal, would be 

significantly changed by their omission. 

(6) Provide the technical basis for 

either inclusion or exclusion of 

degradation, deterioration, or alteration 

processes of engineered barriers in the 

performance assessment, including 

those processes that would adversely 

affect the performance of natural 

barriers. Degradation, deterioration, or 

alteration processes of engineered 

barriers must be evaluated in detail if 

the magnitude and time of the resulting 

radiological exposures to the reasonably 

maximally exposed individual, or 

radionuclide releases to the accessible 

Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 53319 

environment, for 10,000 years after 

disposal, would be significantly 

changed by their omission. 

(7) Provide the technical basis for 

models used to represent the 10,000 

years after disposal in the performance 

assessment, such as comparisons made 

with outputs of detailed process-level 

models and/or empirical observations 

(e.g., laboratory testing, field 

investigations, and natural analogs). 

(b) Any performance assessment used 

to demonstrate compliance with 

§ 63.113 for the period of time after 

10,000 years through the period of 

geologic stability must be based on the 

performance assessment specified in 

paragraph (a) of this section. 

5. In Section 63.302, the definition of 

‘‘period of geologic stability’’ is revised 

to read as follows: 

§ 63.302 Definitions for Subpart L. 

* * * * * 

Period of geologic stability means the 

time during which the variability of 

geologic characteristics and their future 

behavior in and around the Yucca 

Mountain site can be bounded, that is, 

they can be projected within a 

reasonable range of possibilities. This 

period is defined to end at 1 million 

years after disposal. 

* * * * * 

6. Section 63.303 is revised to read as 

follows: 

§ 63.303 Implementation of Subpart L. 

(a) Compliance is based upon the 

arithmetic mean of the projected doses 

from DOE’s performance assessments 

for the period within 10,000 years after 

disposal for: 

(1) § 63.311(a)(1); and 

(2) §§ 63.321(b)(1) and 63.331, if 

performance assessment is used to 

demonstrate compliance with either or 

both of these sections. 

(b) Compliance is based upon the 

median of the projected doses from 

DOE’s performance assessments for the 

period after 10,000 years of disposal and 

through the period of geologic stability 

for: 

(1) § 63.311(a)(2); and 

(2) § 63.321(b)(2), if performance 

assessment is used to demonstrate 

compliance. 

7. Section 63.305, paragraph (c) is 

revised to read as follows: 

§ 63.305 Required characteristics of the 

reference biosphere. 

* * * * * 

(c) DOE must vary factors related to 

the geology, hydrology, and climate 

based upon cautious, but reasonable 

assumptions consistent with present 

knowledge of factors that could affect 

the Yucca Mountain disposal system 

during the period of geologic stability 

and consistent with the requirements for 

performance assessments specified at 

§ 63.342. 

* * * * * 

8. Section 63.311 is revised to read as 

follows: 

§ 63.311 Individual protection standard 

after permanent closure. 

(a) DOE must demonstrate, using 

performance assessment, that there is a 

reasonable expectation that the 

reasonably maximally exposed 

individual receives no more than the 

following annual dose from releases 

from the undisturbed Yucca Mountain 

disposal system: 

(1) 0.15 mSv (15 mrem) for 10,000 

years following disposal; and 

(2) 3.5 mSv (350 mrem) after 10,000 

years, but within the period of geologic 

stability. 

(b) DOE’s performance assessment 

must include all potential 

environmental pathways of 

radionuclide transport and exposure. 

9. Section 63.321 is revised to read as 

follows: 

§ 63.321 Individual protection standard for 

human intrusion. 

(a) DOE must determine the earliest 

time after disposal that the waste 

package would degrade sufficiently that 

a human intrusion (see § 63.322) could 

occur without recognition by the 

drillers. 

(b) DOE must demonstrate that there 

is a reasonable expectation that the 

reasonably maximally exposed 

individual receives, as a result of human 

intrusion, no more than the following 

annual dose: 

(1) 0.15 mSv (15 mrem) for 10,000 

years following disposal; and 

(2) 3.5 mSv (350 mrem) after 10,000 

years, but within the period of geologic 

stability. 

(c) DOE’s analysis must include all 

potential environmental pathways of 

radionuclide transport and exposure, 

subject to the requirements at § 63.322. 

§ 63.341 [Removed] 

10. Section 63.341 is removed. 

11. Section 63.342 is revised to read 

as follows: 

§ 63.342 Limits on performance 

assessments. 

(a) DOE’s performance assessments 

conducted to show compliance with 

§§ 63.311(a)(1), 63.321(b)(1), and 63.331 

shall not include consideration of very 

unlikely features, events, or processes, 

i.e., those that are estimated to have less 

than one chance in 10,000 of occurring 

within 10,000 years of disposal (less 

than one chance in 100,000,000 per 

year). In addition, DOE’s performance 

assessments need not evaluate the 

impacts resulting from any features, 

events, and processes or sequences of 

events and processes with a higher 

chance of occurrence if the results of the 

performance assessments would not be 

changed significantly in the initial 

10,000 year period after disposal. 

(b) For performance assessments 

conducted to show compliance with 

§§ 63.321(b) and 63.331, DOE’s 

performance assessments shall exclude 

the unlikely features, events, and 

processes, or sequences of events and 

processes, i.e., those that are estimated 

to have less than one chance in 10 and 

at least one chance in 10,000 of 

occurring within 10,000 years of 

disposal (less than one chance in 

100,000 per year and at least one chance 

in 100,000,000 per year). 

(c) For performance assessments 

conducted to show compliance with 

§§ 63.311(a)(2) and 63.321(b)(2), DOE’s 

performance assessments shall project 

the continued effects of the features, 

events, and processes included in 

paragraph (a) of this section beyond the 

10,000 year post-disposal period 

through the period of geologic stability. 

DOE must evaluate all of the features, 

events, or processes included in 

paragraph (a) of this section, and also: 

(1) DOE must assess the effects of 

seismic and igneous scenarios subject to 

the probability limits in paragraph (a) of 

this section for very unlikely features, 

events, and processes. Performance 

assessments conducted to show 

compliance with § 63.321(b)(2) are also 

subject to the probability limits in 

paragraph (b) of this section for unlikely 

features, events, and processes. 

(i) The seismic analysis may be 

limited to the effects caused by damage 

to the drifts in the repository and failure 

of the waste package. 

(ii) The igneous analysis may be 

limited to the effects of a volcanic event 

directly intersecting the repository. The 

igneous event may be limited to that 

causing damage to the waste packages 

directly, causing releases of 

radionuclides to the biosphere, 

atmosphere, or ground water. 

(2) DOE must assess the effects of 

climate change. The climate change 

analysis may be limited to the effects of 

increased water flow through the 

repository as a result of climate change, 

and the resulting transport and release 

of radionuclides to the accessible 

environment. The nature and degree of 

climate change may be represented by 

constant climate conditions. The 

analysis may commence at 10,000 years 

after disposal and shall extend to the 

53320 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

period of geologic stability. The 

constant value to be used to represent 

climate change is to be based on a loguniform probability distribution for 

deep percolation rates from 13 to 64 

mm/year (0.5 to 2.5 inches/year). 

(3) DOE must assess the effects of 

general corrosion on the engineered 

barriers. DOE may use a constant 

representative corrosion rate throughout 

the period of geologic stability or a 

distribution of corrosion rates correlated 

to other repository parameters. 

Dated at Rockville, Maryland, this 1st day 

of September, 2005. 

For the Nuclear Regulatory Commission. 

Annette Vietti-Cook, 

Secretary of the Commission. 

[FR Doc. 05–17778 Filed 9–7–05; 8:45 am] 

BILLING CODE 7590–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 225 

[Regulation Y; Docket No. R–1235] 

Capital Adequacy Guidelines for Bank 

Holding Companies; Small Bank 

Holding Company Policy Statement; 

Definition of a Qualifying Small Bank 

Holding Company 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) is 

proposing to raise the asset size 

threshold and revise the other criteria 

for determining whether a bank holding 

company (BHC) qualifies for the Board’s 

Small Bank Holding Company Policy 

Statement (Regulation Y, Appendix C) 

(Policy Statement) and an exemption 

from the Board’s risk-based and leverage 

capital adequacy guidelines for BHCs 

(Regulation Y, Appendices A and D) 

(Capital Guidelines). The proposal 

would increase the asset size threshold 

from $150 million to $500 million in 

consolidated assets for determining 

whether a BHC would qualify for the 

Policy Statement and an exemption 

from the Capital Guidelines; modify the 

qualitative criteria used in determining 

whether a BHC that is under the asset 

size threshold nevertheless would not 

qualify for the Policy Statement or the 

exemption from the Capital Guidelines; 

and clarify the treatment under the 

Policy Statement of subordinated debt 

associated with trust preferred 

securities. 

DATES: Comments must be received no 

later than November 7, 2005. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1235, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: 202/452–3819 or 202/452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Barbara Bouchard, Deputy Associate 

Director (202/452–3072 or 

barbara.bouchard@frb.gov), Mary 

Frances Monroe, Manager (202/452–

5231 or mary.f.monroe@frb.gov), 

William Tiernay, Supervisory Financial 

Analyst (202/872–7579 or 

william.h.tiernay@frb.gov), Supervisory 

and Risk Policy; Robert Maahs, 

Manager, Regulatory Reports (202/872–

4935 or robert.maahs@frb.gov); or 

Robert Brooks, Supervisory Financial 

Analyst (202/452–3103 or 

robert.brooks@frb.gov), Applications, 

Division of Banking Supervision and 

Regulation; or Mark Van Der Weide, 

Senior Counsel (202/452–2263 or 

mark.vanderweide@frb.gov), Legal 

Division. For the hearing impaired only, 

Telecommunication Device for the Deaf 

(TDD), contact 202/263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Board issued the Policy 

Statement in 1980 to facilitate the 

transfer of ownership of small 

community-based banks in a manner 

that is consistent with bank safety and 

soundness. The Board generally has 

discouraged the use of debt by BHCs to 

finance the acquisition of banks or other 

companies because high levels of debt at 

a BHC can impair the ability of the BHC 

to serve as a source of strength to its 

subsidiary banks. The Board has 

recognized, however, that small BHCs 

have less access to equity financing than 

larger BHCs and that, therefore, the 

transfer of ownership of small banks 

often requires the use of acquisition 

debt. Accordingly, the Board adopted 

the Policy Statement to permit the 

formation and expansion of small BHCs 

with debt levels that are higher than 

what would be permitted for larger 

BHCs. The Policy Statement contains 

several conditions and restrictions that 

are designed to ensure that small BHCs 

that operate with the higher levels of 

debt permitted by the Policy Statement 

do not present an undue risk to the 

safety and soundness of their subsidiary 

banks. 

Currently, the Policy Statement 

applies to BHCs with pro forma 

consolidated assets of less than $150 

million that (i) are not engaged in any 

nonbanking activities involving 

significant leverage; (ii) are not engaged 

in any significant off-balance sheet 

activities; and (iii) do not have a 

significant amount of outstanding debt 

that is held by the general public 

(‘‘qualifying small BHCs’’). Under the 

Policy Statement, qualifying small BHCs 

may use debt to finance up to 75 percent 

of the purchase price of an acquisition 

(that is, they may have a debt-to-equity 

ratio of up to 3:1), but are subject to a 

number of ongoing requirements. The 

principal ongoing requirements are that 

a qualifying small BHC (i) reduce its 

parent company debt in such a manner 

that all debt is retired within 25 years 

of being incurred; (ii) reduce its debt-toequity ratio to .30:1 or less within 12 

years of the debt being incurred; (iii) 

ensure that each of its subsidiary 

insured depository institutions is well 

capitalized; and (iv) refrain from paying 

dividends until such time as it reduces 

its debt-to-equity ratio to 1.0:1 or less. 

The Policy Statement also specifically 

provides that a qualifying small BHC 

may not use the expedited applications 

procedures or obtain a waiver of the 

stock redemption filing requirements 

applicable to BHCs under the Board’s 

Regulation Y (12 CFR 225.4(b), 225.14, 

and 225.23) unless the BHC has a pro 

forma debt-to-equity ratio of 1.0:1 or 

less. 

The Board adopted the risk-based 

capital guidelines in 1989 to assist in 

the assessment of the capital adequacy 

of BHCs. The risk-based capital 

guidelines establish for BHCs minimum 

ratios of tier 1 capital and total capital 

to risk-weighted assets. One of the 

Board’s principal objectives in adopting