ML20214K197

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Recommends That NRC Begin Proposed Rulemaking Re 10CFR30,40, 50,61,70 & 72, Notification to NRC of Cases of Bankruptcy Filing. Draft Package Encl
ML20214K197
Person / Time
Issue date: 11/26/1985
From: Minogue R
NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES)
To: Dircks W, Direks W
NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
Shared Package
ML20210C089 List:
References
FRN-51FR22531, RULE-PR-30, RULE-PR-40, RULE-PR-50, RULE-PR-61, RULE-PR-70, RULE-PR-72 AC16-1-02, AC16-1-2, NUDOCS 8608200010
Download: ML20214K197 (21)


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KGSteyer FPCardile NOV 261985 MEMORANDUM FOR: William J. Dircks Executive Director for Operations 1

FROM: Robert B. Minogue, Director Office of Nuclear Regulatory Research

SUBJECT:

CONTROL OF NRC RULEMAKING: RES REVIEW 0F NEW PROPOSED RES-SPONSORED RULEMAKING l

Based on our review of the new preposed RES-sponsored rulemaking.

  • Notification of NRC of Cases of Bankruptcy Filing," RES recommends that NRC should begin

" this specific rulemaking. This recommendation in draft form has been i

coordinated with the Office of Nuclear Material Safety and Safeguards.

t This proposed rulemaking would require 10 CFR 30, 40, 61. 70, and 72 licensees to notify the NRC in the event of the commencement of a bankruptcy proceeding l

involving the licensee. There is no action required of a licensee by these amendments unless and until a bankruptcy petition is filed.

The basis for our recommendation is as follows:

o Proceeding with rulemaking will result in NRC having timely knowledge of

.significant financial problems being experienced by materials licensees, specifically licensees involved in bankruptcy proceedings who may not have the resources for proper handling and securing of licensed material, so that NRC can take necessary actions to assure that the health and safety

! of the public is protected. Cases have occurred in which materials l

licensees filed for bankruptcy, abandoning property and licensed material, and NRC has not generally been aware that this happened. Among those licensees whose financial situation has jeopardized cleanup are included the J. C. Haynes Co., the Passes Co., Luminous Processes. Inc., and Allied Technology, Inc.

o Proceeding with rulemaking will enable NRC to be better aware of potential licensee problems in handling, securing, and disposing of licensed materials resulting from severe economic conditions and thus should result in reduction in NRC resources involved in such activities as enforcement

! actions and interface with a concerned public regarding contaminated sites.

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William J. Dircks 2 NOV 261985 o The impact of this rulemaking on industry is negligible since the United States Code already contains requirements that persons r.otify creditors of bankruptcy; thus this rule only consists of one additional notification, and that is simply a notification of NRC by mail at the time of bankruptcy filing. In addition, as noted above, the net impact on the NRC should be a reduction in resources.

o This action is consistent with previous Comission actions as contained in i proposed amendments to 10 CFR Parts 30, 40, 70, and 72 on deconnissioning i funding and in existing requirements in 10 CFR 61 on closure of low-level i waste sites. This action was requested in a memorandum from John G. Davis, Director, NMSS, to R. B. Minogue, Director, RES.

l The complete RES review package has been sent to OEDO (Attention: DEDROGR)and I to the Director, NMSS.

l original sianed 20BERT3. M 30003 Robert B. Minogue, Director Office of Nuclear Regulatory Research l FOR PREVIOUS CONCURRENCES SEE ATTACHED 1 2 -

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10: F. P. GILLESPIE, CHAIRMAN, RIRB -

F R0": K. R. Geller, Member, RIRE TITLE OF RULEMAKING: NOTIFICATION OF NRC 0F CASE OF BANKRUPTCY FILING REQUEST RIRB AGREE WITH RECOMMENDATIONS MEETING.

IN RES RULEMAKING REVIEW PACKAGE M3DIFY RECOMMENDATIONS IN NDT FARTICIPATING*

RES RULEMAKING REVIEW

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RES INDEPENDENT REV1EW BOARD VOTING SHEET TO: RIRB FROM: F. P. Gillespie TITLE OF RULEMAKING: NOTIFICATION OF NRC 0F CASE OF BANKRUPTCY FILING

., AGREE WITH REC 0!91ENDATIONS "

IN RES RULEMAKING REVIEW PACKAGE NOT PARTICIPATING.

MODIFY RECOMMENDATIONS IN RES RULEMAKING REVIEW

- PACKAGE AS INDICATED BELOW COMMENTS AND SUGGESTIONS:

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R[5 INDEPEND[f.1 5,i t l[W BOARD VOTING St:((1 TO: F. P. GILLESPIE , CHAlRMAN, RIRB .

FROM: W. M. Morrison, Member, RIRB TITLE OF RULEMAKING: NOTIFICATION OF NRC 0F CASE OF BANKRUPTCY FILING REQUEST RIRB AGREE WITH RECO MENDATIONS MEETING.

IN RES RULEMAKING REVIEW PACKAGE MODIFY RECOMMENDATIONS IN NOT PARTICIPATING-RES RULEMAKING REVIEW .

- PACKAGE AS INDICATED BELOW COMMENTS AND SUGGESTIONS:

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ROUTWIG AND TRANSMITTAL SUP NOV 5 1985 N C.*~"*.'.? *CU,"** ** **** **'*

3 F. P. Gillespie. Chairman, RIRB 3, K. R. Go11er, Member, RIRB

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)( meteen rge Note and Retum For camerence por commesten t at As Reevested For Correc6en Propero Reply cweviet. For veur enfermetion see me t.. c- r _ru_ sinneture

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8MARM *N OaAavv g CoM. d RIRB members are requested to conduct an independent review of the attached RES rulemaking review package and provide the Chairman, RIRB, with their voting sheets indicating their positions on the rulemaking.

Responses by c.o.b. NOV 14 25 '

will be appreciated. RCS ^ wilt use the voting sheets to assemble the complete RES review package for eventual transmittal to the OEDO and the Director of the user office.

Do mot wee this form os e RECORD of approvels, eencurrences, desposefs, esserences, and simiter actens FRoet: (Neme. erg symael. Agency / Post) Room No.---Sidg.

RCS staff ptene no.

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TASK LEADER REVIEW PACKAGE WITH DIVISION DIRECTOR CONCURRENCE

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DFRoss l FPGillespie GAArlotto KGSteyer William J. Dircks FPCardile MEriOR4riDON FOR:

Executive Director for Operations FRO,.: kobert B. Minogue Director Office of Nuclear kegulatory Research Sd3 JECT: CONTROL OF hkC RULEl% KING: RES REVIEW OF HEW PROPOSED RES-SP0llSORED RULEIMKIhu Based on our review of the new propcsed RES-sponsored ruleunking. *nctification of tiRC of Cases of Bankruptcy Filing," RES reco:anends tnat NRC should begin this spccific rulemaking. This recocinend4 tion in draft foro has been

" ccordinated with the Office of Nuclear haterial Safety and Safeguards.

This proposed ruler;sking would require 10 CFA 30, 40, 61, 70, and 72 licensees to notif., the hkC in the event of the cc:.awncer.cnt of a bankruptcy proceeding involving the licensee. There is no action required of a licensee by these amt.dmnts unicss and until a bankruptcy petition is filed.

Tht basis for our recontatndation is as follows:

o Proceeding with ruleraaking will result in kRC having tiuely knowledge of significant financial problems being experienced by materials licensees, specifically licensees involved in bankruptcy proceedings who say not have the resources for proper handling and securing of licensed material, so that NRC can take necessary actions to assure that the health and safety of the public is protected. Cases have occurred in which materials licensees filed for bankruptcy, abandoning property and licensed material, and NRC has not generally been aware that this happened, o Proceeding with rulecaking will enable NRC to be better aware of potential licensee problems in handling, securing, and disposing of licensed materials resulting from severe economic conditions and thus should result in reduction in NRC resources inycived in such activities as enforcement actions and interface with a concerned public regarding contaminated sites.

o The impact of this rultuaking on industry is negligibic since the United States Code already contains requirenents that persons notify creditors of bankruptcy, thus this rule only consists of one additional notifica- of tion, and that is simply a notification of NRC by mail at the tiac bankruptcy filing. In addition, es noted abcVe, tht net impact on the NRC should be a reduction in resources.

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o This action is consistent with previous Cornission actions as contained in 1 proposed swndmants tc 10 CFR Parts 30, 40, 70, and 72 on dccorrissioning funding and in existing requirci..ents in 10 CFR 61 on closure of low-levc1 waste sites. This actior, was requested in a memoranduu frott John G.

UcVis, Director, hi.55, to :. b. slinogut., Director, RES S : E- i __. '.-

DEDROGr.) and Tne complete RES review packasc has been sent to OEuo (Attention:

to the Dirtetor,li."55.

Robert b, Hinoguc, Director Difice of i.uclear Regul.tcry Research losures:

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TITLE:

Requirements for Notification of HRC of Cases of Bankruptcy Filing CFR CITATION:

10 CFR 30, 40, 61, 70, 72 ABSTRACT:

The proposed rule would require licensees to notify the appropriate regional office of the NRC within a certain time period in the event of a bankruptcy proceeding involving the licensee. There is no action required of a licensee by these amendments unless and until a bank-ruptcy petition is filed. Notification of the NRC in cases of bankruptcy would alert the Commission so that it may deal with potential hazaros to the public health and safety posed by a licensee that does not have the resources to properly handle licensed radioactive material or clean up possible contamination. Cases have occurred in which materials licensees have filed for bankruptcy and NRC has not generally been aware of this.

The net overall impact on industry of this rule should be negligible since this rule only consists of one additional notification beyond that already required by the United States Code and that is simply a notification of NRC by mail. The net effect on HRC should be a reduction in staff resources since it would put NRC in a better reactive mode for proceeding with necessary enforcement actions. The benefit of the rule is that it will assist in protection of the public health and safety by reducing the risk of radiation exposure to the public and workers by enabling NRC to be aware of potential licensee problems in handling and disposing of radioactive materials caused by severe economic problems.

TIMETABLE:

NPRM 05/15/86 NPRM Comment Period Begin 05/15/86 NPRM Conment Period End 07/15/86 Final Action 04/30/87 LEGAL AUTHORITY:

42 USC 2201 EFFECTS ON SMALL BUSINESS AND OTHER ENTITIES: Yes l

AGENCY CONTACT:

Frank Cardile Office of Nuclear Regulatory Research Washington, DC 20555 301 443-7815 i

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Enclosure'1' I

Draft Staff Recomen'd ation Related to -

' The New Proposed RE5-5)onsored Rulemaking .

on " Amendments to 10 C'R 30, 40, 61, 70, and 72 Requiring Licensees to Notify NRC in Cases of Bankruptcy Filing" ,

Based on the detailed review of the new proposed rulemaking it is the staff's

. draft recommendation that the.NRC hs ould proceed with this rulemaking, '

specifically that a Notice of Proposed Rulemaking.(NPRH) be prepared for publi-cation in the Federal Register. This proposed rulemaking would require 10 CFR 30, 40, 61, 70, and 72 licensees to notify the NRC in the event of the 4

commencement of a bankruptcy proceeding involving the licensee. . There is no action required of a licensee by these amendments unless and until a bank- "

l ruptcy petition is filed.

This draft recommendation is based on the staff finding that there is a need for the rulemaking, that it is important relative to accomplishing NRC's mandate of protecting public health and safety, that it is consistent with applicable policies, and that it provides a benefit without imposing an undue

' cost. These findings are discussed below.

The need for this proposed rulemaking is that NRC_should have timely knowleoge of significant financial problems being experienced by materials licensees so that the health and safety of the public is protected. Licensees experiencing severe economic hardship, in particular licensees involved in bankruptcy proceedings, may not be capable of meeting costs for proper handling of t licensed radioactive material and for facility decontamination in a safe manner. This can result in spread of contamination and problems with waste disposal activities. Cases have occurred in which materials licensees filed for bankruptcy vacating property, abandoning licensed material, and being unable to dispose of waste, and the NRC has not generally been aware that this has happened. There are presently no regulatory requirements that licensees notify the NRC when filing for bankruptcy. Hence, currently, NRC has no means i

by which it can be made aware of such situations. As a result of the problems which have occurred, NMSS has requested, in a memorandum from J. G. Davis, NNSS to R. B. Minogue, RES, (see Enclosure 5) that RES undertake rulemaking in this area.

This action is consistent with previous Comission actions as contained in

' proposed amendments to 10 CFR Parts 30, 40, 70, and 72 on funding for decomissioning and as contained in existing requirements .in 10 CFR 61 on funding of the closure of low-level waste burial sites. '

Benefits of proceeding with the NPRM include providing industry and the public The the opportunity for input to decisions made in the NRC rulemaking process.

benefit of the rule itself is that NRC will have in place a specific require-ment concerning notification of NRC that a licensee has filed a petition for bankruptcy. This will assure NRC's mission of protecting public health and safety is carried out by enabling NRC to be aware of potential licensee problems in handling and disposing of radioactive materials due to severe i

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financial problems and thus reducing the risk of radiation exposure to the  !

i public and workers. With regard to impacts of this rule, no action is. required of a licensee.by the rule (and there would thus be no NRC action) unless and until a bankruptcy petition is filed. The net effect of this rule on NRC should be a reduction in staff resources since it would put NRC in a better reactive mode for proceeding with necessary enforcement actions and interfaces with a concernec public regarding contaminated sites. The net overall cost to industry should be negligible since persons are already required by the United States Code to notify creditors of bankruptcy, thus this rule only consists of one additional notification and that is simply a notification to NRC by mail.

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Enclosure 3 PRELIMIhARY VALUE/ IMPACT STATEMENT FOR TASK-502-1 NOTICE OF PROPOSED RULEMAKING - AMENDMENTS TO 10 CFR 30, 40,61, 70, AND 72 REQUIRING LICENSEES

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TO NOTIFY NRC IN CASES OF BANKRUPTCY FILING

1. PROPOSED ACTION 1.1 Description Current HRC regulations contain requirements for issuance of licenses and terms and conditions of those licenses with regard to design of facilities and use of material. The issue to be addressed in this rulemaking is that a licensee who is experiencing severe economic hardship may not be capable of

-- carrying out his licensed activities in a manner which protects public health f

and safety. In particular, there can be problems when a licensee involved in bankruptcy proceedings cannot meet costs for proper handling of licensed radioactive material and for decontamination of his facility in a safe manner.

Improper materials handling or decontamination activities can lead to spread of contamination throughout a licensee's facility and the potential for dispersion of material to unrestricted areas. It can also result in i

difficulties with the licensee's waste disposal activities. ,

30, 40, 61, The proposed action consists of amendments to 10 CFR Parts 70, and 72 which would require licensees to notify the NRC in the event that the licensee files for bankruptcy.

1.2 Need for Proposed Action The necessity of addressing the issue indicated in section 1.1 is that HRC should have timely knowledge of significant financial problems being i

experienced by materials licensees 50 that NRC can take necessary actions to ,

i assure that the health and safety of the public is protected. Cases have l

occurred in which material licensees filed for bankruptcy and the NRC has not generally been aware that this has happened. Among those licensees whose l

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financial situation has jeopardized cleanup are included the J. C. Haynes Co.,

the Pesses Co., Luminous Processes, Inc., and Allied Technology, Inc. This has resulted in situations in which NRC inspectors have found belatedly that a licensee has vacated property and abandoned licensed material or that a licensee has been unable to decontaminate his facility and properly dispose of the waste.

There are presently no regulatory requirements that licensees notify the NRC when filing for bankruptcy. Hence, currently, NRC has no means by which it can be made aware of such situations. As a result of the problems which have occurred, NM55 has requested RES (memorandum J. G. Davis, NM55, to R. B. Minogue, RES, 5/29/85) to undertake rulemaking in this area.

There is some urgency to get on with this effort due to the large number l

of fuel cycle and materials licensees (greater than 3000) and the fact that a number of these situations, including those noted above, have already occurred. As noted above,' the NRC needs to have means in place so that it is alerted and can take necessary action to deal with potential hazards to the i public health and safety that may be posed by a licensee that does not have the resources to properly secure his licensed material or to clean up possible contamination.

1.3 Value/ Impact of Proposed Action The effect of the rulemaking, including benefits and costs, on the NRC, incustry, and public is discussed in this section.

1.3.1 NRC The benefit of the rule to NRC is that it would have in place a specific requirement concerning notification of NRC that a licensee has filed a petition for bankruptcy. This will assure NRC's mission of protecting public health and safety is carried out by reducing the risk of radiation exposure to l

3 the public and workers by enabling NRC to be aware of potential licensee

, problems in handling and disposing of radioactive materials due to-severe

financial problems. Prompt identification of these situations can result in reduction in NRC resources involved in such activities as enforcement actions and interfaces with a concerned public regarding contaminated sites.

Impact on NRC staff will be the staff time necessary to complete rulemaking. This is discussed below in section 6. With regard to

. implementation of a final rule, as noted in section 2 no NRC activity is necessary unless and until a licensee submits a notification to the NRC. At that time there may be staff resources involved in reacting to this notification. However, even in the absence of this rule, NRC would still have

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to react to any health and safety problems brought about by bankruptcy. As noted above, a benefit of this rule is that it would put NRC in a better reactive mode and reduce time involved. Thus, the net effect of this rule should be a reduction in staff resources.

l 1.3.2 Industry Industry will benefit in that in situations of this type prompt and clear NRC actions can take place regarding materials handling and disposal. In addition, the rulemaking process will assure that industry has an input to the decisionmaking regarding the issue of notification of NRC regarding bankruptcy.

With regard to the impact of a final rule, as noted in section 2, there is no action required of a licensee unless and until a bankruptcy petition is

! fileo. Hence, there is no impact from this rule unless bankruptcy filing occurs. Even in the event of bankruptcy, the impact of this rule on licensees is small since licensees are required by the United States Code to' notify creditors of bankruptcy, hence this rule only consists of one additional notification. In aadition, the required action consists only of a notification by mail to the NRC representing less than one-half person-day of l

ef. fort. The net overall ccst to the industry is negligible.

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1.3.3 Public The benefit to the public will be a reduced risk of potential radiation exposuret resulting from improper handling or disposal of radioactive wastes or facility decontamination due to the improved capability of NRC to react in a tinely way to potential severe financial problems to protect public health and safety. This reduction in risk would apply to both the general public and workers who might be involved at the facility. The risk could result from either direct exposure to contamination or releases of radioactivity from a I

contaminated facility.

2. TECHNICAL APPROACH The issue will be addressed through rulemaking in the following way.

Under the proposed regulations, each licensee would be required by regulation

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to notify the appropriate regional office of the NRC within a certain time period in the event of the commencement of a bankruptcy proceeding involving the licensee. According to the United States Code a bankruptcy case is l

l commenced by filing a petition with a court by or against a person for the purpose of judging him bankrupt. There is no action required of a licensee by these amendments unless and until a bankruptcy petition is filed.

Notification of the NRC in cases of bankruptcy would alert the Commission so that it may deal with potential hazards to the public health and safety posed by a licensee that does not have the resources to properly secure the licensed material or clean up possible contamination. These NRC actions may include orders to modify or amend a license or other necessary action and could include limitations on licensed activity which would only permit storage of material. .

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3. PROCEDURAL APPROACH 3.1 Procedural Alternatives Potential hRC actions include:

o No Action o NUREG Report o Regulatory Guide, Branch Technical Position o Rulemaking 3.2 Value/ Impact of Procedural Approach One alternative is to take no action on this matter, however, current regulations in 10 CFR Parts 30, 40, 61, 70, and 72 do not address the situation of the potential health and safety implications of bankruptcy. As noted in detail in section 1.2 this has caused problems in the past and will likely do so in the future.

1 huREG reports are a convenient means for providing information, however, huREG reports usually contain only results of specific studies and are not suitable in this situation. Regulatory Guides or Branch Technical Positions could also be used, however, as pointed out above, there are no existing regulations on which to base such guidance. Lacking standards developed from a formal rulemaking in this area might leave any such guidance open to challenge.

Rulemaking would provide clearly implementable requirements regarding licensees' responsibility to notify the NRC in the case of a filing of a petition of bankruptcy. These standards would reduce uncertainty-in this area and provide for prompt action by licensees in future situations of this type with the result that liRC can take necessary action to protect the public health and safety. A formal rulemaking also has the advantage of offering the i

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' f best opportunity to allow all affected parties to provide input on-the development of such standards, as well as developing prescriptive standards with the weight of fornal rulemaking behind them. This can be accomplished with a ruleraaking that appears, based on the need expressed by NMSS, to be a It relatively straightforward rulemaking not involving significant resources.

is expected that the proposed rule would be issued by the EDO.

An alternative form of the rulemaking would be to combine it with related rulemaking. Currently, NRC has issued and proposed rules on decommissioning of nuclear facilities and an advanced notice of proposed rulemaking on However, it financial assurance for cleanup following accidental releases.

would be impractical to combine these efforts because the timing of combining them would be very difficult due to the varying stages that these efforts are In addition, at and because of differences in the nature of the rulemaking as noted above, this rulemaking addresses a specific topic and should be relatively straightforward in its development and issuance.

3.3 Decision on Procedural Approach Based on the above preparation of a proposed rule in this area is the staff's reconnended approach.

4. STATUTORY AUTHORITY 4.1 NRC Authority The proposed action involves 10 CFR Parts 30, 40, 61, 70 and 72. The proposed amendments will be issued under citations of authority presently codified for the respective parts. .

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4.2 ,Need for NEPA Review The proposed action will clarify existing regulations and is essentially administrative in nature. There will be no substantive or significant impact of an environmental nature. Thus, no environmental impact statement or appraisal is required.

5. RELATIONSHIP TU OTHER EXISTING OR PROPUSED REGULATIONS OR POLICIES The proposed action is related to existing regulations in 10 CFR 30, 40, t

61, 70, and 72 in the area of terms and conditions of licenses with regard 'o use of material. In the area of assurance of funding for use of material or facility cleanup the proposed action is related to proposed amendments to 10 CFR Parts 30, 40, 70, and 72 on decommissioning funding and to existing requirements in 10 CFR 61 on funding of the closure of low-level waste burial sites.

l 6. SUHhARY AND CONCLUSIONS The proposed action will specify procedures for licensee notification of the NRC in cases of filing for bankruptcy. This is necessary so that the NRC is aware of severe licensee economic conditions that can impact on his capability to handle radioactive materials and decontaminate his facility so that NRC can take timely and appropriate action to protect the public health and safety. The impact of this action is mininal.

1 NRC resources needed for the rulemaking consists of approximately 0.25 staff year in RES. Other offices can expect minor impact (approximately 0.1 l

staff year) on their workloads to review RES's work. It is estimated that a proposed rule would be issued for comment under W. J. Dircks signature by May 1986.

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