ML24197A244

Draft for ACMUI Review - Regulatory Basis Financial Assurance Requirements for Disposition of Category 1-3 Byproduct Material Radioactive Sealed Sources

ML24197A244
Person / Time
Issue date:	01/31/2025
From:	Advisory Committee on the Medical Uses of Isotopes
To:
References
RIN 3150-AK85, NRC-2022-0106
Download: ML24197A244 (85)

Text

FINANCIAL ASSURANCE REQUIREMENTS FOR DISPOSITION OF CATEGORY 1-3 BYPRODUCT MATERIAL RADIOACTIVE SEALED SOURCES

Regulatory Basis Docket ID: NRC-2022-0106 RIN: 3150-AK85

January 2025

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Contents Abbreviations and Acronyms.................................................................................................. v ii Definition of Terms (as Used in This Document).................................................................... ix Executive Summary................................................................................................................... xi

1. Introduction.......................................................................................................................... 1

2. Background and Existing Regulatory Framework........................................................... 2 2.1 General Background...................................................................................................... 3 2.2 The Existing Regulatory Framework.............................................................................. 3 2.2.1 NRC Regulatory Program................................................................................... 3 2.2.2 Agreement State Regulatory Program............................................................... 5 2.3 The NRCs Integrated Source Management Portfolio.................................................... 5 2.4 NRC Evaluations of Financial Assurance R equirements and Commission Direction.... 6 2.4.1 SECY-16-0046 (Scoping Study)......................................................................... 6 2.4.2 SECY-16-0115 and Associated SRM-SECY-16-0115....................................... 7

3. Statement of Regulatory Concerns.................................................................................... 8 3.1 Licensees Unprepared for Costs Associated with Disposition of Some Category 1-3 Sources.......................................................................................................................... 8 3.2 Inadequate Financial Assurance to Support Disposition of Category 1-3 Sources due to Bankruptcy or Other Unforeseen Circumstances....................................................... 9 3.3 Lack of Regulatory Incentives to Provide Timely Disposal of Disused Category 1-3 Sources.......................................................................................................................... 9 3.4 Disposition Costs for Some Category 1-3 Sources Borne by the Federal Government/Taxpayers Instead of Licensees.............................................................. 10

4. Evaluation of Rulemaking Alternatives........................................................................... 11 4.1 Alternative 1The Status Quo..................................................................................... 11 4.2 Alternative 2Financial Assurance Based on Device Type and Disposition Pathway 11 4.3 Alternative 3Fixed Financial Assurance Based on Source Category....................... 13 4.4 Alternative 4Financial Assurance Determined by a Parametric Formula................. 15 4.5 Alternative 5Financial Assurance Based on a Decommissioning Funding Plan....... 17 4.6 Alternatives 6a, 6b (NRC Selected) and 6cHybrid Approach (Combines Alternatives 2, 3 and 5).................................................................................................................... 20

5. Basis for Proposed Changes............................................................................................ 24 5.1 Proposed Changes....................................................................................................... 25 5.2 Benefits of the Rulemaking.......................................................................................... 25 5.2.1 A More Risk-Informed Regulation.................................................................... 25 5.2.2 Helps Ensure Licensees Are Prepared for Radioactive Sealed Source Disposition and Provides Protection for Unforeseen Circumstances............... 27 5.2.3 Facilitates Timely Disposition of Disused Category 1-3 Sources.................... 27

iii 5.2.4 Helps Ensure Dispositioning Costs for Category 1-3 Sources Are Borne by Those That Receive the Associated Economic Benefits.................................. 27 5.2.5 Responsive to Government Accountability Office, Radiation Source Protection and Security Task Force, and Other Recommendations.................................. 28

6. Backfitting and Issue Finality Analysis........................................................................... 29

7. Stakeholder Involvement.................................................................................................. 29

8. Cost/Impact Considerations............................................................................................. 30 8.1 Analytical Methodology and Analysis Assumptions..................................................... 30 8.1.1 NRC Implementation........................................................................................ 33 8.1.2 NRC Operations............................................................................................... 33 8.1.3 Agreement States Implementation................................................................... 33 8.1.4 Agreement States Operations........................................................................... 33 8.1.5 Industry Implementation................................................................................... 33 8.1.6 Industry Operations.......................................................................................... 33 8.1.7 Other Government (DOE/NNSA) Operations................................................... 34 8.2 Summary of Evaluated Alternatives and Cost.............................................................. 34 8.2.1 Alternative 1: No ActionThe Status Quo...................................................... 34 8.2.2 Alternative 2: Financial Assurance Based on Device Type and Disposition Pathway............................................................................................................ 34 8.2.3 Alternative 3: Fixed Financial Assurance Based on Source Category............. 34 8.2.4 Alternative 4: Financial Assurance Determined by a Parametric Formula....... 34 8.2.5 Alternative 5: Financial Assurance Based on a Decommissioning Funding Plan 35 8.2.6 Alternative 6: Hybrid Approach (Combines Alternatives 2, 3, and 5) (includes NRC Selected Alternative 6b)........................................................................... 35

9. Uncertainty Analysis......................................................................................................... 38 9.1 Uncertainty Analysis Assumptions............................................................................... 39 9.2 Uncertainty Analysis Inputs.......................................................................................... 39 9.3 Uncertainty Analysis Results........................................................................................ 39

10. Rulemaking Cost Justification......................................................................................... 41

11. Cumulative Effects of Regulation.................................................................................... 41

12. Regulatory Flexibility Act.................................................................................................. 4 2

13. Environmental Analysis.................................................................................................... 42

14. NRC Strategic Plan............................................................................................................ 42

15. Conclusion......................................................................................................................... 42

16. References......................................................................................................................... 43 Appendix AData Tables...................................................................................................... A -1

iv Appendix BSummary and Tables of Costs for Alternative 6b by the NRC, Agreement States, and Industry................................................................................................................ B-1 Appendix CDetailed Description of Alternative 2............................................................. C-4 Appendix DSealed Source/Device Disposition Funding Parametric Calculation WorksheetAlternative 4...................................................................................................... D-1

List of Figures

Figure 1: Incremental net costs for Alternative 6b (7 percent discount rate)............................... 39 Figure 2: Tornado diagramtotal net costs7 percent NPV (Alternative 6b)........................... 40

List of Tables

Table ES-1: Summary Table of Alternatives and Benefits (Costs)............................................. xii Table 1: Advantages and Disadvantages of Alternative 2.......................................................... 13 Table 2: Financial Assurance Requirements for Alternative 3 (per Source or Device), in 2023 Dollars......................................................................................................................................... 14 Table 3: Advantages and Disadvantages of Alternative 3.......................................................... 15 Table 4: Advantages and Disadvantages of Alternative 4.......................................................... 17 Table 5: Advantages and Disadvantages of Alternative 5.......................................................... 19 Table 6: Financial Assurance Requirements for Alternatives 6a, 6b, and 6c (per Source or Device), in 2023 Dollars.............................................................................................................. 21 Table 7: Advantages and Disadvantages of Alternatives 6a, 6b, and 6c.................................... 23 Table 8: Summary Table of Alternatives and Benefits (Costs)................................................... 36 Table 9: Uncertainty Results Descriptive Statistics7 Percent NPV......................................... 40

v

Abbreviations and Acronyms

Am-241 americium-241

Am/Be americium/beryllium

BLS U.S. Bureau of Labor Statistics

Bq becquerel

CFR Code of Federal Regulations

Ci curie

Co-60 cobalt-60

CPI Consumer Price Index

CRCPD Conference of Radiation Control Program Directors, Inc.

Cs-137 cesium-137

DFA decommissioning financial assurance

DFP decommissioning funding plan

DOE U.S. Department of Energy

ECB engineered concrete barrier

FR Federal Register

FTE full-time equivalent

FY fiscal year

GAO Government Accountability Office

GTCC greater than Class C

H&S Health and Safety

IAEA International Atomic Energy Agency

ISMP Integrated Source Management Portfolio

LLW low-level waste

mCi millicurie

vii NIOSH National Institute for Occupational Safety and Health

NNSA National Nuclear Security Administration

NSTS National Source Tracking System

NPV net present value

NRC U.S. Nuclear Regulatory Commission

OAS Organization of Agreement States

ORS Office of Radiological Security

OSRP Off-Site Source Recovery Program

PERT program evaluation and review technique

RSS radioactive sealed source

SCATR Source Collection and Threat Reduction

SECY Office of the Secretary of the Commission

SRM staff requirements memorandum

U.S.C. United States Code

WBL Web-Based Licensing

WCS Waste Control Specialists

viii Definition of Terms (as Used in This Document)

Applicant Any person, including a current licensee, who submits an application for a license or license amendment to the U.S. Nuclear Regulatory Commission (NRC) or an Agreement State for the use of byproduct material.

Decommission To remove a facility or site safely from service and reduce residual radioactivity to a level that permits (1) release of the property for unrestricted use and termination of the license or (2) release of the property under restricted conditions and termination of the license (see Title 10 of the Code of Federal Regulations (10 CFR) 30.4, Definitions).

Decommissioning Funding Plan A document that contains a site-specific cost estimate for decommissioning, describes the method for providing assurance of funds for decommissioning, describes the means for adjusting both the cost estimate and funding level over the life of the facility, and contains the certification of financial assurance and the signed originals of the financial instruments provided as financial assurance (see 10 CFR 30.35(e)).

Disposition (of a radioactive sealed source)

Transfer of a radioactive sealed source to an authorized recipient for reuse, recycling, storage, or disposal.

Disused Radioactive Sealed Source A source that is no longer being used and is not intended to be used in the application(s) for which it is authorized.

Financial Assurance A guarantee or other financial arrangement provided by a licensee to ensure that funds are available for decommissioning when needed.

Person (1) Any individual, corporation, partnership, firm, association, trust, estate, public or private institution, group, Government agency other than the NRC or the U.S. Department of Energy, except that the Department shall be considered a person within the meaning of the regulations in 10 CFR part 30 to the extent that its facilities and activities are subject to the licensing and related regulatory authority of the NRC pursuant to section 202 of the Energy Reorganization Act of 1974 (88 Stat. 1244), any State or any political subdivision of or any political entity within a State, any foreign government or nation or any political subdivision of any such government or nation, or other entity; and (2) any legal successor, representative, agent, or agency of the foregoing (see 10 CFR 30.4).

ix

Executive Summary

The U.S. Nuclear Regulatory Commission (NRC) is considering revising the requirements in Title 10 of the Code of Federal Regulations (10 CFR) 30.35, Financial Assurance and Recordkeeping for Decommissioning. The rulemaking would establish new decommissioning financial assurance (DFA) requirements for the disposition of Category 1-3 byproduct material radioactive sealed sources (RSSs). 1

The NRCs regulations in 10 CFR 30.35 require a fi xed dollar amount of financial assurance or a decommissioning funding plan (DFP) for licensees possessing byproduct material with a half-life greater than 120 days and at activity levels above certain thresholds. However, the thresholds for sealed byproduct material are such that many licensees possessing Category 1-3 byproduct material RSSs are not required to provide financial assurance for decommissioning.

The Commission approved initiation of this rulemaking in Staff Requirements Memorandum (SRM) SECY-16-0115, Staff Requirements - SECY-16-0115Rulemaking Plan on Financial Assurance for Disposition of Category 1 and 2 Byproduct Material Radioactive Sealed Sources, dated December 8, 2021.2 The next step in the NRCs rulemaking process is the development of a regulatory basis that serves as a precursor to the proposed rule. This regulatory basis document summarizes the current regulatory framework, describes the regulatory issues, and evaluates alternatives for establishing financial assurance requirements. This regulatory basis also includes a cost benefit analysis that considers impacts to the NRC, Agreement States, and industry (i.e., licensees) for each alternative.

Licensees subject to 10 CFR Parts 50, 52, 72, 76 and 10 CFR Part 70, Subpart H, would be exempt from this rulemaking for the facilities and activities covered under those licenses. These licensees are already required to prepare a decommissioning plan and demonstrate sufficient financial assurance for decommissioning these facilities, including the disposition of any Category 1-3 byproduct material RSSs.

The NRC staff considered several regulatory alternatives and is recommending that the agency conduct a rulemaking as described in Alternative 6b of this regulatory basis. Under Alternative 6b, the NRC would establish fixed DFA amounts for the disposition of many common Category 1-3 byproduct material source and device types, while in more complex situations, licensees would be required to prepare a DFP. The rulemaking would align with the existing criteria in 10 CFR 30.35, which only require DFA for radionuclides with a half-life greater than 120 days. The staffs recommended alternative would only apply to licensees possessing Category 1-3 byproduct material sources or devices that are subject to the requirements in 10 CFR Part 37, Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material.3 This includes

1 Category 1 and category 2 quantities of radioactive material, consistent with the IAEA Code of Conduct on the Safety and Security of Radioactive Sources, are defined in Appendix A, Category 1 and Category 2 Radioactive Materials, to 10 CFR Part 37 Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material. Category 3 sources are defined in the IAEA Code of Conduct on the Safety and Security of Radioactive Sources.

2 Agencywide Documents Access and Management System (ADAMS) Accession No. ML21342A032.

3 The regulations in 10 CFR Part 37 apply to any licensee that possesses an aggregated Category 1 or 2 quantity of radioactive material listed in Appendix A, Category 1 and Category 2 Radioactive Materials, to 10 CFR Part 37.

Specific requirements for access to material, use of material, transfer of material, and transport of material are included.

xi licensees that possess Category 1 and 2 byproduct material sealed sources, and Category 3 sources that could, in aggregate, exceed a Category 2 quantity of radioactive material.

The staffs recommended alternative would result in an updated, risk-informed approach that best addresses the direction provided by the Commission in SRM-SECY-16-0115 and the regulatory concerns identified by the NRC staff. The NRC staff determined Alternative 6b was the most risk-informed choice because it has significantly lower costs than all but one other alternative (Alternative 6c), while focusing DFA requirements on the sources with the greatest potential radiological risk, including some Category 3 sources. The NRC staff collected and analyzed extensive data on Category 1-3 device characteristics, disposition pathways, and costs to develop this approach, which would require predictable, easy-to-determine DFA amounts for many affected licensees. In selecting this alternative, the NRC staff is considering the associated regulatory burden and implementation costs, and addressing Commission direction to mitigate potential adverse impacts on existing and future licensees. The staff will seek and consider comments from stakeholders and the public on all the alternatives presented in this regulatory basis.

At this stage, the staff holds that the qualitative benefits from conducting the rulemaking described in Alternative 6b would justify the potential cost impacts to licensees, Agreement States, and the NRC. Alternative 6b would result in projected costs totaling $44.0 million over the 15-year analysis period using a 7 percent discount factor. Table ES-1 provides the different alternatives with their respective costs. The staff will prepare a regulatory analysis of the qualitative and quantitative costs and benefits that considers public comments received on this regulatory basis for the proposed rule, consistent with NUREG/BR-0058, Regulatory Analysis Guidelines of the U.S.

Nuclear Regulatory Commission, Draft Report for Comment.

Table ES-1 Summary Table of Alternatives and Benefits (Costs)

Net Benefits (Costs) in 2023 Dollars DESCRIPTION Undiscounted 7% NPV 3% NPV

Alternative 1Status Quo (No Action Taken)

$0 $0 $0

Alternative 2Financial Assurance Based on Device Type and Disposition Pathway Alternative 2 Total Net Benefits (Cost) ($138,556,100) ($81,059,500) ($108,443,800)

Alternative 3Fixed Financial Assurance Based on Source Category Alternative 3 Total Net Benefits (Cost) ($165,555,700) ($99,000,800) ($131,009,800)

Alternative 4Financial Assurance Determined by a Parametric Formula Alternative 4 Total Net Benefits (Cost) ($140,994,600) ($86,185,800) ($112,766,700)

Alternative 5Financial Assurance Based on a Decommissioning Funding Plan Alternative 5 Total Net Benefits (Cost) ($492,971,800) ($258,933,600) ($367,074,600)

xii Net Benefits (Costs) in 2023 Dollars DESCRIPTION Undiscounted 7% NPV 3% NPV

Alternative 6aHybrid Approach for All Category 1-3 Licensees (Combines Alternatives 2, 3, and 5)

Alternative 6a Total Net Benefits (Cost) ($99,569,300) ($63,456,800) ($81,275,800)

Alternative 6bHybrid Approach Limited to Category 1-3 Licensees Subject to 10 CFR Part 37 (Combines Alternatives 2, 3, and 5) (NRC Selected)

Alternative 6b Total Net Benefits (Cost) ($68,944,400) ($44,034,200) ($56,278,600)

Alternative 6cHybrid Approach Limited to Category 1 and 2 Licensees (Combines Alternatives 2, 3, and 5)

Alternative 6c Total Net Benefits (Cost) ($65,467,100) ($42,109,400) ($53,623,300)

Note: Values are rounded to the nearest hundred. Values in parentheses, e.g., (), denote a cost of negative value.

DOE = U.S. Department of Energy; NPV = net present value.

xiii

1. Introduction

The U.S. Nuclear Regulatory Commission (NRC) es tablished regulations in Title 10 of the Code of Federal Regulations (10 CFR) Part 30, Rules of General Applicability to Domestic Licensing of Byproduct Material, that set forth the technical and financial criteria for decommissioning licensed nuclear materials facilities that use sealed and unsealed byproduct radioactive materials. The requirements in 10 CFR 30.35, Financial Assurance and Recordkeeping for Decommissioning, require a fixed dollar amount of financial assurance or a decommissioning funding plan (DFP) for licensees possessing byproduct material with a half-life greater than 120 days and at activity levels above certain thresholds. The thresholds that require financial assurance for sealed byproduct material are seven orders of magnitude higher than for unsealed material. As a result, many licensees that possess byproduct material radioactive sealed sources (RSSs), including many Category 1-3 RSSs, are not required to provide financial assurance for decommissioning. 4 If financial assurance is required, it is intended to support site decommissioning, not necessarily the disposition of an individual RSS that has become disused or unwanted.

In SECY-16-0115, Rulemaking Plan on Financial Assurance for Disposition of Category 1 and 2 Byproduct Material Radioactive Sealed Sources, dated October 7, 2016, 5 the staff sought Commission approval to initiate a rulemaking to require financial assurance for the disposition of Category 1 and 2 byproduct material RSSs. The Commission approved initiation of such a rulemaking in Staff Requirements Memorandum (SRM) SECY-16-0115, dated December 8, 2021.6

Consistent with the Commissions direction and the NRCs rulemaking process, the staff has prepared this regulatory basis, which does the following:

• Provides background information on policies, laws, and regulations related to the issue.

• Explains how a change in the regulations could resolve the issue.

• Identifies different approaches that could address the regulatory issue and evaluates the cost and benefits of the rulemaking and the alternatives.

• Provides the scientific, policy, legal, and technical information used to support the evaluation.

• Explains limitations on the scope and quality of the regulatory basis, such as known uncertainties in the data or methods of analysis.

• Discusses stakeholder interactions and views, to the extent known.

4 For example, two of the most common radionuclides tracked in the National Source Tracking System (NSTS) are cobalt (Co)-60 and cesium (Cs)-137. For Co-60 in sealed form, the threshold quantity for Category 2 radioactive material is 8.1 Ci (0.3 TBq), while the 10 CFR 30.35 threshold for financial assurance is 10,000 Ci (370 TBq). For Cs-137 in sealed form, the threshold quantity for Category 2 radioactive material is 27 Ci (1.0 TBq), while the 10 CFR 30.35 threshold for financial assurance is 100,000 Ci (3,700 TBq).

5 ML16200A223.

6 ML21342A032.

1 The purpose of this rulemaking is to impr ove the regulatory framework by amending 10 CFR 30.35 to require affected licensees to provide decommissioning financial assurance (DFA) for the disposition of Category 1-3 byproduct material RSSs with half-lives greater than 120 days. Requiring financial assurance for the disposition of these Category 1-3 byproduct material RSSs would do the following:

• Help ensure affected licensees are prepared for RSS disposition and facilitate timely disposition of disused RSSs.

• Ensure adequate financial resources are available to support RSS disposition in the event of unforeseen circumstances, such as licensee bankruptcy.

• Help ensure dispositioning costs for Category 1-3 RSSs are borne by those who receive the associated economic benefits.

• Address recommendations on this issue provided by the Government Accountability Office (GAO), the interagency Radiation Source Protection and Security Task Force, and other groups.

In addition, this rulemaking would provide an updated, risk-informed approach that addresses the regulatory concerns identified by the NRC staff while providing appropriate flexibility to affected licensees in meeting the new requirements.

The scope of this rulemaking includes solely byproduct material and the associated financial assurance requirements in 10 CFR 30.35. While more than 99 percent of Category 1 and 2 RSSs tracked in the NRCs NSTS are byproduct material, a small percentage are special nuclear material or source material. 7 Financial assurance requirements for special nuclear material are provided in 10 CFR 70.25, Financial assurance and recordkeeping for decommissioning. Financial assurance requirements for source material are provided in 10 CFR 40.36, Financial assurance and recordkeeping for decommissioning.

2. Background and Existing Regulatory Framework

This section briefly discusses the background and existing regulatory framework relative to the DFA requirements for byproduct material RSSs. Spec ifically, this section discusses the statutes, regulations, Commission policies, and recent staff activities that are relevant to development of this regulatory basis. An extensive discussion regarding the history of the NRCs DFA regulations in 10 CFR 30.35 is provided in the regulatory basis for another recent rulemaking effort, Decommissioning Financial Assurance Requirements for Sealed and Unsealed Radioactive Materials, issued April 2022 (82 FR 25157). 8 That discussion is not repeated here.

Additional information regarding that rulemaking effort can be found in SECY-23-0062,

7 Plutonium-238 and plutonium-239 sealed sources, which are subject to 10 CFR Part 37 requirements, are tracked in the NSTS and are special nuclear material. NSTS tracks four extra radionuclides (actinium-227, polonium-210, thorium-228, and thorium-229) which are not subject to 10 CFR Part 37 requirements. Thorium-228 and thorium-229 sealed sources are source material.

8 ML21235A480.

2 Proposed Rule: Decommissioning Financial Assurance for Sealed and Unsealed Radioactive Materials, dated July 24, 2023. 9

2.1 General Background

The NRC or an Agreement State regulates uses of nuclear materials, including Category 1-3 RSSs, through licensing, inspection and enforcement of regulations including requirements for DFA. In 10 CFR 30.4, Definitions, the NRC defines decommissioning as the process whereby a facility or site is safely removed from service and residual radioactivity is reduced to a level that permits (1) release of the property for unrestricted use and termination of the license or (2) release of the property under restricted conditions and termination of the license.

Decommissioning activities are initiated when any one of the following events occurs:

• The license expires.

• The licensee decides to permanently cease operations at the entire site or in any separate building or outdoor area that contains residual radioactivity, such that the building or outdoor area is unsuitable for release in accordance with NRC requirements.

• No principal activities have been conducted at the site for a period of 24 months.

• No principal activities have been conducted for a period of 24 months in any separate building or outdoor area that contains residual radioactivity, such that the building or outdoor area is unsuitable for release in accordance with NRC requirements.

DFA is a guarantee or other financial arrangement provided by a licensee to ensure that funds are available for decommissioning when needed. The NRC provides guidance for meeting DFA requirements in NUREG-1757, Volume 3, Revision 1, Consolidated Decommissioning Guidance: Financial Assurance, Recordkeeping, and Timeliness, issued February 2012.10 The NRC uses DFA requirements to ensure that the decommissioning of licensed nuclear facilities is performed in a safe and timely manner, and to ensure that adequate funds are available to complete decommissioning. The NRCs overall objective with respect to decommissioning is to protect public health and safety and the environment during the decommissioning process and after the property is released.

2.2 The Existing Regulatory Framework

2.2.1 NRC Regulatory Program

The NRC regulations in 10 CFR 30.35 are intended to ensure adequate financing for the decommissioning of facilities containing byproduct material above prescribed thresholds. The regulations in 10 CFR 30.35 and Appendix B, Quantities of Licensed Material Requiring Labeling, to 10 CFR Part 30 are used together to determine the amount of DFA required for sealed byproduct material. The requirements in 10 CFR 30.35(b) state that licensees possessing byproduct material with a half-life greater than 120 days and in quantities specified in 10 CFR 30.35(d) shall either submit a DFP according to 10 CFR 30.35(e) or submit a DFA certification in the amount prescribed by 10 CFR 30.35(d). A funding amount of $113,000 is required for licensees having possession limits greater than 10 10 but less than or equal to 1012

9 ML23010A137.

10 ML12048A683.

3 times the applicable quantities defined in of 10 CFR Part 30, Appendix B, in sealed sources or plated foils. Licensees having possession limits exceeding 10 12 times the applicable quantities defined in 10 CFR Part 30, Appendix B, in sealed sources or plated foils must base their financial assurance on a DFP.

The thresholds in 10 CFR 30.35 that require financial assurance for sealed radioactive material are seven orders of magnitude higher than for unsealed material. As a result, many licensees that possess byproduct material RSSs, including many Category 1-3 RSSs, are not required to provide financial assurance for decommissioning. For licensees possessing multiple RSSs subject to the requirements in 10 CFR 30.35, the sum of fractions rule applies when determining whether financial assurance is required. 11 Licensees that possess both sealed and unsealed material must consider the thresholds for each type of material when determining financial assurance requirements.

The history and basis for the 120-day half-life criterion is discussed in the NRCs April 2022 Decommissioning Financial Assurance Requirements for Sealed and Unsealed Radioactive Materials: Regulatory Basis, referenced above. This criterion is consistent with the agencys regulation of low-level waste (LLW) disposal through onsite decay-in-storage. The NRC previously had two decay-in-storage license cond itions: one was for medical licensees and the other for nonmedical licensees. Both license conditions authorized decay-in-storage for waste containing radioactive material with half-lives less than or equal to 120 days, provided additional conditions were met.4F12 As noted in the April 2022 regulatory basis, the NRCs licensing experience and other technical studies indicate that (1) radioactive materials with very short half-lives do not require a major decommissioning effort, and (2) radioactive materials with half-lives less than or equal to 120 days will significantly decay in a few years.

Regulatory requirements for a DFP can be found in 10 CFR 30.35(e), and guidance for DFPs is provided in NUREG-1757, Volume 3. A DFP outlines the work required to decommission a facility, provides a site-specific cost estimate for the decommissioning, and states that the funds necessary to complete the decommissioning have been obtained. The DFP should be based on the costs required for an independent contractor to meet the criteria for unrestricted or restricted use and should include (1) key assumptions used to develop the cost estimate, (2) the method for providing assurance of funds for decommissioning, (3) the volume of material containing residual radioactivity that will require remediation, and (4) the certification of financial assurance and the signed originals of the financial instruments provided as financial assurance.

Decommissioning costs are estimated using generally accepted costs for labor, materials, waste management and disposal, and other necessary st eps. Additionally, materials licensees are required to include a contingency factor due to the uncertainty often associated with contamination levels, waste disposal costs, and other associated decommissioning costs.

Licensees that use DFPs must specify the means (i.e., the method and frequency) by which they will periodically adjust their cost estimates and associated funding levels over the life of

11 For example, a fixed financial assurance amount of $113,000 applies to 10 CFR Part 30 licensees authorized to possess or use a combination of sealed sources with a half-life greater than 120 days if R divided by 1010 is greater than 1 (where R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30).

12 See Appendix E, Standard License Conditions, to NUREG-1556, Volume 20, Consolidated Guidance About Materials Licenses: Guidance About Administrative Licensing Procedures, Final Report, issued December 2000 (ML010250252). Additional information on the NRCs decay-in-storage rulemakings appears in the discussions of 10 CFR 35.92, Decay-in-storage, in 51 FR 36951 and 67 FR 20299.

4 their facilities. In general, cost estimates should be updated with the current prices of goods and services at least every 3 years or when the amounts or types of material at the facility change.

The review and approval of DFPs prepared under 10 CFR 30.35(e) is resource intensive for both the licensee and the regulatory agency. The DFP requirements in 10 CFR 30.35(e) were intended for major facilities possessing large quantities of radioactive material with half-lives greater than the 120-day criterion because they require a significant decommissioning effort.

However, other licensees possessing smaller quantities of radioactive material that are subject to the fixed DFA amounts prescribed in 10 CFR 30.35(d) may elect to prepare a DFP if they can demonstrate through a DFP that a lower amount of financial assurance is sufficient.

2.2.2 Agreement State Regulatory Program

Section 274 of the Atomic Energy Act of 1954, as amended, authorizes the NRC to enter into agreements with individual States, known as Agreement States. The NRC discontinues its authority and the Agreement State assumes authority for administering a regulatory program for the safe use of radioactive materials within their borders. For the duration of such agreements, the Agreement States have the authority to regulate the materials covered by the agreement for the protection of public health and safety and the environment from radiation hazards. The Agreement States are required to adopt regulations in accordance with the compatibility category designation assigned to each NRC regulation, as discussed in NRC Management Directive 5.9, Adequacy and Compatibility of Program Elements for Agreement State Programs, dated April 26, 2018. 13 The provisions of 10 CFR 30.35 relating to decommissioning funding, including 10 CFR 30.35(a), (b), (e), and (g), are classified as Category Health & Safety (H&S). Category H&S is not required for purposes of compatibility. However, the State must adopt program elements in this category that embody the basic health and safety aspects of the NRCs program elements.

2.3 The NRCs Integrated Source Management Portfolio

The Integrated Source Management Portfolio (ISMP) is a suite of information technology tools used by the NRC and Agreement State programs to conduct materials licensing, oversight, and radioactive source accountability. The key systems that comprise the ISMP include the NSTS, the Web-Based Licensing (WBL) System, and the License Verification System. The NSTS is a secure online national registry used to track Category 1 and Category 2 radioactive sources.

The NSTS does not include Category 3 radioactive sources. 14 Currently, Category 3 quantities of radioactive materials are not defined in NRC regulations. However, radionuclides and threshold activities for Category 3 sources are defined in the International Atomic Energy Agency (IAEA) Code of Conduct on the Safety and Security of Radioactive Sources (hereafter Code of Conduct).15

The WBL is a materials licensing system and provides a single platform for the NRC andparticipating Agreement States 16to manage the licensing information of entities that are authorized to possess or use radioactive mate rials. The License Verification System enables

13 ML18081A070.

14 In SRM-SECY-17-0083, Staff RequirementsSECY-17-0083Re-Evaluation of Category 3 Source Security and Accountability in Response to SRM-COMJMB-16-0001, dated December 21, 2021 (ML21355A290), the Commission approved the staffs recommendation not to amend the regulations to require inclusion of Category 3 sources in the NSTS.

15 See http://www-pub.iaea.org/MTCD/publications/PDF/Code-2004_web.pdf.

16 Agreement States can elect to use WBL or their own system to manage their licensing information.

5 licensees that have been credentialed for system access to verify certain information about licensees authorized to possess, use, or transport radioactive materials.

The staff used the NSTS to identify how many Category 1 and Category 2 sources licensees possess. As of May 2024, the NSTS lists approximately 84,000 such sources. Of these sources, approximately 91.5 percent are Co-60 sources, 4 percent are iridium-192 sources, 3.5 percent are Cs-137 sources, and the remaining approximately 1 percent are a variety of radionuclides, including americium (Am)-241 and americium/beryllium (AmBe) sources. The devices that contain these sources are used for medical, industrial, academic, and research and development purposes. Some devices, like a gamma camera, may contain a single source, while others, like a blood irradiator, may contain multiple sources (often two or three sources each). Gamma stereotactic irradiators, used to treat cancer, may contain as many as 200 Co-60 sources, with a total source activity exceeding 6,000 curies (222 terabecquerels). Panoramic irradiators used for the sterilization of medical, pharmaceutical, and food products also contain numerous Co-60 sources, and several irradiators are licensed to contain as much as 5 million curies (185 petabecquerels) of source activity.

2.4 NRC Evaluations of Financial Assurance Requirements and Commission Direction

2.4.1 SECY-16-0046 (Scoping Study)

The NRC staff conducted a scoping study to det ermine whether additional financial planning requirements for end-of-life management for some radioactive byproduct material, particularly RSSs, were needed. The scoping study is documented in SECY-16-0046, Results of the Byproduct Material Financial Scoping Study, dated April 7, 2016. 17 The NRC staff recommended in the scoping study that the NRC expand the financial assurance requirements in 10 CFR 30.35 to include all Category 1 and 2 byproduct material RSSs tracked in the NSTS.18

In SECY-16-0046, the NRC staff cited a number of studies noting the potential for increased safety and security risks when disused sources ar e not promptly dispositioned. For example, a 2006 report from the Radiation Source Protection and Security Task Force (Task Force) 19 noted that some NRC licensees may not have sufficient f unds set aside to cover the costs of disposal or other appropriate disposition, potentially resulting in prolonged storage and possible misuse or abandonment. The report also noted that high di sposal costs may prompt licensees to delay disposal, either by choice or economic necessity. The 2010 Task Force report 20 reiterated that while secure storage is a temporary measure, the longer sources remain disused or unwanted the chances increase that they will bec ome unsecured or abandoned. The 2014 Task Force report21 recommended that the NRC evaluate the need for sealed source licensees to address the eventual disposition/disposal costs of Category 1 and 2 quantities of radioactive sources through source disposition/disposal financial planning or other mechanisms. SECY-16-0046

17 ML16067A367.

18 Nationally Tracked Source Thresholds are listed in Appendix E, Nationally Tracked Source Thresholds, to 10 CFR Part 20, Standards for Protection Against Radiation. Tracking of these sources is required by 10 CFR 20.2207, Reports of transactions involving nationally tracked sources. The NSTS tracks approximately 84,000 Category 1 and 2 RSSs held by both NRC and Agreement State licensees. More than 99 percent of RSSs tracked in the NSTS are byproduct material.

19 ML062190349.

20 ML102230141.

21 ML14219A642.

6 also cited recommendations from other groups for the NRC to expand its financial assurance requirements for Category 1-3 RSSs, including the 2010 report of an interagency working group led by the NRC22 and a 2014 report issued by the LLW Forum Disused Sources Working Group.23

In addition to considering stakeholder feedback as part of the scoping study, the staff reviewed current NRC regulations and guidance in the area of financial assurance, relevant internal and external reports, and information obtained through discussions with subject matter experts. The staff noted in SECY-16-0046 that it agreed with the assessments of numerous state and Federal partners, organizations such as the Organization of Agreement States (OAS), the Conference of Radiation Control Program Directors, Inc. (CRCPD), the Task Force, and other commenters that providing financial assurance for the disposition of RSSs supports safety and security goals, helps facilitate timely disposit ion of disused RSSs, and ensures that licensees appropriately consider the full cost of using these RSSs.

2.4.2 SECY-16-0115 and Associated SRM-SECY-16-0115

On October 7, 2016, the NRC staff sought Commission approval to initiate rulemaking in SECY-16-0115.24 In SECY-16-0115, the staff proposed to r equire financial assurance for the disposition of Category 1 and 2 byproduct material RSSs, noting that these new requirements would do the following:

• Ensure that licensees possessing these risk-significant RSSs are financially prepared for the costs of end-of-life dispositioning.

• Complement the existing regulatory framework to ensure safe and secure management of Category 1 and 2 byproduct material RSSs by facilitating timely disposition when these RSSs become disused or unwanted.

• Help ensure that dispositioning costs are borne by those who receive the associated economic benefits from the use of these sources.

On December 8, 2021, the Commission approved initiation of rulemaking in SRM-SECY 0115.25 The Commission approved the staffs recommendation to expand the financial assurance requirements in 10 CFR 30.35 to require financial assurance for the disposition of Category 1 and 2 byproduct material RSSs tracked in the NSTS. In addition, the Commission directed the staff to do the following:

• Carefully explore options to mitigate potential adverse impacts on existing and future licensees, particularly medical users, and those who benefit from the use of these radioactive materials.

• Consider and seek public comment on whether financial assurance requirements should also be extended to Category 3 sources.

22 ML100050105.

23 ML14084A394.

24 ML16200A223.

25 ML21342A032.

7

• Develop and seek public comment on a risk-informed basis for establishing financial assurance for the disposition of RSS, considering factors such as the overall risk and total cost of disposal when determining the appropriate requirements.

3. Statement of Regulatory Concerns

This section examines the regulatory concerns that are to be addressed as a part of this rulemaking to expand the DFA requirements in 10 CFR 30.35 to include disposition of Category 1-3 byproduct material RSSs.

3.1 Licensees Unprepared for Costs Associated with Disposition of Some Category 1-3 Sources

End-of-life costs for dispositioning Category 1-3 RSSs can be significant. These can include costs for interim storage, packaging and conditioning, and transportation, as well as costs associated with the selected disposition option. Depending on the characteristics of the RSS and the associated device, dispositioning may include options such as return to the manufacturer or supplier for reuse or recycling, transfer to another licensee, disposal at a commercial LLW facility, decay in storage, or transfer to the U.S. Department of Energy (DOE) for subsequent management and disposal. If a licensee has not anticipated and planned for the cost of dispositioning, it may represent a significant financial burden.

Several reports prepared by the Federal Government and external stakeholders have noted the potential for licensees to be unprepared for the costs associated with RSS disposition. For example, a 2023 report by the GAO on improving the security of certain disused sources26 noted that licensees possessing large cesium-137 sources face a financial challenge in disposing of their sources and typically rely on government subsidies to help with disposal. This GAO report further stated that it may cost $200,000 to $220,000 to dispose of waste from a category 2 quantity of cesium-137, according to a broker. Furthermore, some licensees [the GAO] spoke with said they were unaware of disposal options and their costs when acquiring these sources.

A 2014 report by the LLW Forums Disused Sources Working Group27 stated that contributing to the accumulation of disused sources is the fact that some users are unaware of and/or fail to adequately budget for the eventual disposition of sources. Other reports are discussed in SECY-16-0046, as summarized in section 2.4.1.

The 2023 GAO report also described additional challenges of dispositioning RSSs containing Am-241. First, unlike Co-60 and Cs-137, RSSs that contain Am-241 exceed Class C LLW disposal concentrations at Category 3 quantities. Consequently, all Category 1-3 RSSs containing Am-241 are generally unacceptable for commercial disposal. Although the DOE can dispose of transuranic waste in greater concentrations than commercial disposal sites, the DOE is prohibited from accepting Am-241 of foreign origin, which includes many Am-241 sources produced after 2003. Therefore, many RSSs that contain Am-241 currently have no permanent disposal pathway and must be stored indefinitely, either by the user or after return to the manufacturer.

26 GAO-24-105998, High-Risk Radioactive Material: Opportunities Exist to Improve the Security of Sources No Longer in Use, November 2023, available at https://www.gao.gov/products/gao-24-105998 27 ML14084A394.

8 The current DFA regulations in 10 CFR 30.35 do not require many licensees that possess Category 1-3 byproduct material RSSs to provide any financial assurance. Other licensees that meet the appropriate thresholds in 10 CFR 30.35 must provide a fixed amount of financial assurance or a DFP, as discussed in section 2.2.1. However, these fixed amounts were last updated in 200328 and may not be adequate to provide for site decommissioning and disposition of a licensees RSSs. Consequently, the current 10 CFR 30.35 requirements may not adequately ensure that licensees conduct the necessary financial planning for the disposition of their Category 1-3 byproduct material RSSs.

3.2 Inadequate Financial Assurance to Support Disposition of Category 1-3 Sources due to Bankruptcy or Other Unforeseen Circumstances

The current DFA regulations in 10 CFR 30.35 may be inadequate to provide for proper management and disposition of Category 1-3 byproduct material RSSs in the event of licensee bankruptcy or other unforeseen circumstances. As noted in section 3.1, many licensees that possess these sources are not currently requir ed to provide any financial assurance. Other licensees may provide a fixed amount of financial assurance to support overall site decommissioning. However, these fixed amounts were last updated over 20 years ago and were not intended to address the high disposition costs associated with some Category 1-3 RSSs. If a licensee experiences financial distress and does not have adequate financial assurance in place, Federal or State authorities may be required to intervene and provide the necessary resources for RSS disposition.

3.3 Lack of Regulatory Incentives to Provide Timely Disposal of Disused Category 1-3 Sources

Licensees may choose indefinite long-term storage of disused RSSs for a variety of reasons, including the cost of other disposition options, lack of a disposal pathway, or limited availability of an appropriate transportation c ontainer. The 2022 Task Force Report29 noted that many sealed source users have little incentive to dispose of their disused sources, preferring to store them potentially until facility decommissioning. The 2018 Task Force Report30 stated that while implementation of 10 CFR Part 37 (or compatib le Agreement State requirements) provides reasonable assurance that sources are secure in storage, permanent disposal represents the most effective means of risk reduction.

The Commissions policy is that LLW disposal is preferred to storage.31 The current lack of DFA requirements for many licensees that possess Category 1-3 byproduct material RSSs may not adequately support the Commissions policy of favoring disposal over long-term storage of these sources when they become disused. As discussed in section 5.2.3, expanded DFA requirements can help to incentivize prompt disposition of RSSs, although they cannot force licensees to dispose of their RSSs prior to decommissioning.

28 NRC, Financial Assurance for Materials Licensees, 68 FR 57327 (October 3, 2003).

29 ML22213A157.

30 ML18276A155.

31 Low-Level Radioactive Waste Management and Volume Reduction (77 FR 25760 at 25781; May 1, 2012).

9 3.4 Disposition Costs for Some Category 1-3 Sources Borne by the Federal Government/Taxpayers Instead of Licensees

The DOEs National Nuclear Security Administration (NNSA) implements programs to remove excess RSSs that pose a potential threat to public health, safety, and national security. These programs include the Off-Site Source Recovery Program (OSRP) and the Source Collection and Threat Reduction (SCATR) program. 32 The SCATR program is an initiative to reduce the number of unused radioactive sealed sources stor ed by licensees and provides funding to assist with disposal of sealed sources at commercial LLW disposal facilities. The OSRP focuses on high-activity (typically Category 1 or 2) sources that are not otherwise commercially disposable.33 While acknowledging the safety and security concerns associated with disused sources, the NNSA noted in comments 34 provided on the NRC staffs scoping study that increased government involvement in efforts to address RSS management and disposal is not sustainable. The NNSA stated that additional fi nancial planning requirements could encourage the use of available commercial disposal options, or defray the cost of packaging and transportation, thereby reducing the funding required for NNSA-sponsored RSS recovery and management programs. The 2022 Task Force Report35 noted that, since 2001, OSRP has recovered approximately 6,830 Category 1 and 2 sources across the United States... However, as viable commercial disposal options increase, the need for Government involvement to recover disused sources should diminish.

The 2014 Disused Sources Working Group report36 stated the following:

an unintended consequence of both the [Global Threat Reduction Initiative]/OSRP and SCATR programs is that they may provide a disincentive for licensees to promptly reuse, recycle, or dispose of their disused sources. Licensees have gained the economic benefit of using the sealed sources, butmay not bear the full cost of disposal as these programs may subsidize the packaging, transport, and disposal of sources.

Licensees should consider and plan for the full lif e-cycle costs associated with use of RSSs, including the cost of disposition when the RSSs become disused. However, the lack of DFA requirements under 10 CFR 30.35 for many licensees that possess Category 1-3 byproduct material RSSs may support the reliance on gov ernment-sponsored programs for the disposition of these sources. This is particularly true for certain types of devices that are often recovered by the OSRP, such as some self-shielded irradiators containing Cs-137 or Co-60 sources.

Licensees may determine that, given the likelihood that the NNSA will recover these devices at taxpayer expense, there is no need to make financial preparations for their disposition.

In some cases, such as for devices that would be classified as Greater-Than-Class-C (GTCC) waste under 10 CFR Part 61, Licensing Requirements for Land Disposal of Radioactive Waste, the OSRP may represent the only disposition option, aside from indefinite storage.

Nonetheless, even for these devices, licensees can provide funding to defray the cost of OSRP recovery efforts. The NNSA maintains a self-ship option under which licensees fund the cost of removing and transporting a device to the NNSA or its contractors, for subsequent management

32 The SCATR program is funded by the NNSA and administered by the CRCPD. Additional information on the SCATR program is available at https://crcpd.org/scatr.

33 Additional information on the OSRP is available at https://osrp.lanl.gov.

34 ML15310A044.

35 ML22213A157.

36 ML14084A394.

10 under the OSRP. However, the lack of DFA requirements under 10 CFR 30.35 for many licensees that possess these devices does not prov ide an incentive to plan for this alternative.

4. Evaluation of Rulemaking Alternatives

In SRM-SECY-16-0115, the Commission directed the staff to initiate a rulemaking to expand the financial assurance requirements in 10 CFR 30.35 to require financial assurance for the disposition of Category 1 and 2 byproduct material RSSs tracked in the NSTS, to consider and seek public comment on whether financial assu rance requirements should also be extended to Category 3 sources, and to take other actions as described in section 2.4.2. The staff considered multiple alternatives to address the Commissions direction. This section summarizes the six alternatives that the NRC considered.

4.1 Alternative 1The Status Quo

The status quo considers no changes to the current process for assessing a licensees DFA requirements. The status quo is the baseline from which the staff evaluated the five other alternatives.

4.2 Alternative 2Financial Assurance Based on Device Type and Disposition Pathway

Under this alternative, the NRC would establ ish financial assurance requirements based on the type of device(s) and RSSs a licensee possesse s and the expected disposition pathway. The NRC would exempt radionuclides with a half-life of 120 days or less from these requirements, because these radionuclides are not currently considered when developing DFA. By making these changes, the NRC and the Agreement States would require licensees to use information about the device(s) and RSSs they possess to determine the amount of DFA required.

For most licensees, Alternative 2 would require DFA for each Category 1-3 byproduct material device the licensee possesses, depending on device type and characteristics. For example, a licensee that possesses both a stereotactic irradiator and a self-shielded irradiator would be required to provide a different amount of DFA for each device. For other licensees expected to have a relatively large RSS inventory, such as manufacturers, distributors, or waste collectors, this alternative would require that financial assurance be provided through a site-specific DFP. 37 In addition, all licensees would have the option of providing a site-specific DFP to support a DFA amount different from the amount determined by using the decision steps described below.

Alternative 2 would be implemented with decision steps that a licensee would use to determine the required amount of DFA. The decision steps lead to different requirements depending on the licensee type, device type, planned disposition (e.g., disposal site), source activity, and device characteristics. Depending on those factors, the ru le would either require a fixed amount of DFA, direct the licensee to evaluate a short equation to determine the DFA amount, or direct the licensee to prepare a site-specific DFP. Appendix C to this regulatory basis further describes the decision steps and required calculations.

In developing this alternative, the NRC staff sought to incorporate all the available information that was collected and analyzed regarding device characteristics, disposition pathways, and

37 The requirements for preparing DFPs currently in 10 CFR 30.35 and the associated guidance in NUREG-1757, Volume 3, would be supplemented to include the attributes discussed in the description of Alternative 5.

11 disposal costs. The intent was to develop fixed DFA amounts or simple calculations to determine a DFA amount that most licensees could use instead of preparing a DFP. The advantage of this alternative is that it tailors DFA requirements to the main cost contributors while causing less burden on licensees and regulatory staff than requiring a DFP from each licensee.

This alternative is risk-informed for two reasons. First, it uses the 10 CFR Part 37 and the IAEA Code of Conduct sealed source risk categorization system to define some of the DFA categories and, in general, requires more DFA for devices with higher risk sources. Second, the alternative is risk-informed because it balances financial risks with the regulatory burden of licensees developing and regulators reviewing site-specific DFPs. It minimizes the financial risk to the regulators of requiring insufficient financial assurance and the financial risk to licensees of providing excessive financial assurance by using all of the available information to tailor DFA amounts as closely as possible to the anticipated device dispositioning costs without requiring a DFP. Section 5.2.1 contains additional discussion of these risks.

However, this alternative would result in a more complex regulation and additional implementation effort by licensee and regulatory staff compared to the NRCs recommended option. For this reason, the NRC is recommending this alternative as part of a hybrid approach (see Alternative 6b).

Table 1 lists the advantages and disadvantages cons idered by the NRC for this alternative.

12 Table 1: Advantages and Disadvantages of Alternative 2

Advantages

• Leverages extensive information collect ed and analyzed by the NRC staff to assign realistic DFA requirements across a broad range of devices.

• Links DFA requirements to radiological risk, as represented by the 10 CFR Part 37 and IAEA Code of Conduct risk-based categories.

• Simple implementation for many licensees possessing sources or devices that are assigned a fixed DFA amount.

• Provides a DFA estimate tailored to the final disposition scenario for some devices (i.e., disposal through the DOE/NNSA or a commercial LLW disposal facility).

• Reduces risks associated with under-or over-payment of DFA by tailoring required DFA amounts to estimated disposition costs.

• More accurately estimates DFA requirements compared to Alternative 3, which assigns a fixed DFA amount based on source category alone.

• Imposes less burden on licensees and regulatory staff than Alternative 5, which requires a DFP from each licensee.

Disadvantages

• Has greater complexity than other alternatives and would result in greater regulatory costs for NRC, Agreement States, and licensees compared to the staffs recommended alternative (Alternative 6b).

• Would require additional education and training efforts during initial implementation.

• Includes fixed amounts and equations used to calculate DFA that would become outdated over time and require periodic updates.

• Bases fixed DFA amounts on averages for groups of devices that may not accurately represent the dispositioning cost for all individual cases.

4.3 Alternative 3Fixed Financial Assurance Based on Source Category

For this alternative, the NRC would base DFA requirements on the source category (i.e., Category 1, 2, or 3). Category 1 and Category 2 quantities of radioactive material are those meeting the thresholds defined in both the IAEA Code of Conduct and in Appendix A to 10 CFR Part 37. Category 3 sources, defined in the Code of Conduct, are considered less

13 dangerous than Category 1 and 2 sources. Radionuclides with a half-life of 120 days or less would be exempt from these requirements.

The NRC would implement three levels of DFA requirements, as shown in table 2: one for Category 1 RSSs or devices,38 a lower level for Category 2 RSSs or devices, and the lowest level for Category 3 RSSs or devices. The DFA requirements in table 2 are based on estimates for a representative sample of devices in each category. The estimates were based on information from LLW brokers, disposal sites, device manufacturers, and the NNSAs OSRP and SCATR programs. In general, the estimates are based on a mixture of dispositioning pathways. For some device types that could have multiple possible dispositioning pathways (e.g., either commercial disposal or dispositi oning by the NNSA for eligible devices), the NRC staff averaged estimated costs for viable pathways. For other devices with one dominant pathway (e.g., return-to-manufacturer agreements for stereotactic radiosurgery devices), the NRC staff used the cost of the dominant dispositioning pathway.

The advantage of this alternative is that it creates a simple, risk-informed regulation that would require predictable, easy-to-determine DFA amounts. This alternative is risk-informed because the required amounts of DFA are determined by the quantity of radioactive material in the device that meets or exceeds threshold categories (i.e., Category 1, 2, or 3), and those categories are based on radiological risk. However, this alternative would result in DFA requirements that do not directly account for several of the main cost drivers associated with source dispositioning (e.g., need for a Type B transportation cask, need for crane rental and other operations to remove a device from a building). Consequently, this alternative will significantly over-or under-estimate DFA r equirements for many types of devices and disposition scenarios. In cases where DFA amounts are significantly underestimated, there is increased regulatory risk that the amount will be inadequate to provide for device disposition. If DFA amounts are significantly overestimated, the associated financial burden on licensees is higher than necessary and licensees may instead opt to prepare a DFP 39 (which also adds additional burden on licensees and regulators). For the cost estimates discussed in section 8.2, the NRC staff assumed that 25 percent of license es would elect to submit a DFP instead of providing the fixed DFA amounts in table 2. The NRC staff is not recommending this approach due to the significant disadvantages discussed above and noted in table 3; however, the NRC staff is recommending certain aspects of this alte rnative, such as the use of fixed DFA amounts where possible, as part of a hybrid approach (see Alternative 6b).

Table 2: Financial Assurance Requirements for Alternative 3 (per Source or Device), in 2023 Dollars

Source (or Device) Category DFA Amount Category 1 $1,000,000 Category 2 $300,000 Category 3 $20,000

Table 3 lists the advantages and disadvantages cons idered by the NRC for this alternative.

38 The activity may be considered for a single source if the source can safely be removed from the device; however, if sources cannot safely be removed from the device, the source activity in the device should be summed.

39 The requirements for preparing DFPs currently in 10 CFR 30.35 and the associated guidance in NUREG-1757, Volume 3, would be supplemented to include the attributes discussed in the description of Alternative 5.

14 Table 3: Advantages and Disadvantages of Alternative 3

Advantages

• Ties DFA requirements directly to radiological risk, as represented by the 10 CFR Part 37 and IAEA Code of Conduct risk-based categories.

• Simple implementation.

• For licensees electing to use the fixed DFA amounts in table 2, would result in less regulatory burden for both licensees and regulatory staff.

Disadvantages

• Does not link DFA requirements directly to the cost of source dispositioning, so the specified DFA amounts will significantly ove r-or under-estimate actual costs for many disposition scenarios.

• Would expect many licensees to opt for a DFP in instances where the DFA amount is overestimated, increasing burden on licensees and regulators.

• Increased regulatory risk that the DFA amount will be inadequate to provide for device disposition (in cases where the fixed DFA value is an underestimate).

• Includes fixed DFA amounts that would become outdated over time and require periodic updates.

4.4 Alternative 4Financial Assurance Determined by a Parametric Formula

The NRC developed an alternative based upon a method employed by the State of Florida that assigns risk factors to several facility attributes to determine costs for license decommissioning in the event of abandonment or insolvency. 40 The NRC methodology is based on parametric factors for the disposition of Category 1-3 RSSs and devices. This alternative involves establishing a new framework for determining DFA amounts for the final disposition of each individual source or device. It would provide licensees with an updated, risk-informed approach for determining DFA requirements for source dispos ition based on certain characteristics of the sources, devices, and available dispositioning options. This approach would be flexible enough to be modified as needed to address potential changes associated with a licensees business interests while the license remains in effect. Radionuclides with a half-life of 120 days or less would be exempt as these radionuclides are not currently considered when developing DFA.

The parametric factors consider the activity of the source or device, labor, packaging and transportation requirements, disposal costs, and final disposition pathway for assessing DFA requirements for source/device disposition. Parametric factors are assigned for each of these categories based on 2023 cost estimates obtained from waste brokers and disposal facilities (see appendix D). The parametric factors are then multiplied together. The product of this calculation is the required DFA amount for a given source or device.

40 See Bond Risk Factors Calculation WorksheetMarch 2014, Rule 64E-5.217, Florida Administrative Code, Bureau of Radiation Control, Florida Department of Health, available at https://www.flrules.org/gateway/reference.asp?No=Ref-05470.

15 If the licensee believes that the resulting DFA amount is excessive or does not accurately reflect their circumstances, it may present evidence (i.e., a DFP that is unique to its license) for an alternative DFA amount.

The advantage of this alternative is that it provides a risk-informed regulation based on a methodology that is relatively simple to use and relies on source activity and disposal options provided by the applicant or licensee. This alte rnative is risk-informed because the required amounts of DFA are determined, in part, by the quantity of radioactive material in the device that meets or exceeds threshold categories (i.e., Category 1, 2, or 3), and those categories are based on radiological risk. NRC or Agreement State regulators will need to review the parametric factors periodically to account for in creases or decreases in costs. Periodically updating the parametric factors and revising (as necessary) will place an additional burden on both the regulators and the licensee.

In developing this alternative, the NRC sta ff incorporated information regarding device characteristics, disposition methods and pathways, and disposal costs. The intent was to develop a simple formula to estimate DFA amount s that would not require most licensees to prepare a DFP. The advantage of this alternative is that it tailors DFA requirements to major cost contributors while causing less burden on licensees and regulatory staff compared to some other alternatives, such as Alternative 5, which requires a DFP from each licensee. However, this alternative would result in a more complex regulation and additional implementation effort compared to the staff-recommended option (Alternative 6b). In addition, the parameter values were selected based on a limited data set for devices, disposition scenarios, and costs. The population of devices using Category 1-3 byproduct material RSSs is very diverse, and disposition data for many device types are limited or unavailable for a variety of reasons (some devices are typically kept in storage upon bec oming disused, commercial disposal is unavailable or cost prohibitive, etc.). Cons equently, the NRC staff was unable to validate the parametric model for device types dissimilar fr om those used to develop the model, and, as a consequence, the formula could significantly ove r-or under-estimate disposition costs for some types of devices. For these reasons, the NRC st aff is not recommending this alternative.

Table 4 lists the advantages and disadvantages cons idered by the NRC for this alternative.

16 Table 4: Advantages and Disadvantages of Alternative 4

Advantages

• Ties DFA requirements to radiological risk, as represented by the 10 CFR Part 37 and IAEA Code of Conduct risk-based categories. Increases parametric factors for sealed sources with increasing radiological risk.

• Has parametric factors based on key variables that drive disposal costs.

• Methodology is relatively simple to use and relies on source activity and disposal options provided by the applicant or licensee.

• Has parametric factors based on recent (2023) disposal cost estimates (albeit for a limited group of Category 1-3 RSSs and devices).

• DFA requirements are adjustable over time by adjusting the parametric factors (e.g., parameters can be adjusted to reflect increased disposition costs based on changes in the consumer price index (CPI) or disposal rate schedules).

Disadvantages

• Selection of parameter values was based on a limited data set and the NRC staff was unable to validate the parametric model for device types dissimilar from those used to develop the model. Consequently, the parametric formula could significantly over-or under-estimate disposition costs for some types of devices.

• Has greater complexity than other alternatives and would result in greater regulatory costs for NRC, Agreement States, and licensees compared to the staffs recommended alternative (Alternative 6b).

• Requires periodic review and update of parametric factors by the regulator (e.g., labor, transportation, and disposal costs may change frequently), which would result in increased burden on licensees and regulators, as resources would be needed to periodically review each license, update the DFA calculation, and adjust the associated DFA amounts.

• Would require additional education and training efforts during initial implementation.

• Parameter values based on commercial disposal estimates and limited actual device disposal experience.

4.5 Alternative 5Financial Assurance Based on a Decommissioning Funding Plan

The amount of DFA required to ensure adequate funding for source/device disposition may vary between licensees and involve unique circumstanc es. This alternative would require all licensees possessing Category 1-3 byproduct material RSSs to develop a case-specific DFP to determine the amount of DFA required to support disposition.

A cost estimate for the DFP should include a substantial level of detail to allow the NRC staff to fully evaluate the adequacy of the estimate. The requirements for preparing DFPs currently in 10 CFR 30.35 and the associated guidance in NUREG-1757, Volume 3, would be

17 supplemented to clarify that DFPs for licensees that possess Category 1-3 byproduct material RSSs must contain the following:

• A detailed cost estimate for the disposition of Category 1--3 byproduct material RSSs or devices, in an amount reflecting the following:

- The isotope and source/device activity (initial and current) that will be transported and dispositioned.

Any agreements with manufacturers or suppliers for the return of the radioactive source or device.

The cost for an independent contractor to perform all source disposition activities.

The cost of reciprocity fees (if applicable), rigging, packaging, loading, transportation, and source storage/disposition at an appropriate end destination facility that can accept the material under its license.

• Identification of and justification for the key assumptions contained in the source disposition cost estimate:

A description of the method of providing assurance of funds for source/device disposition, including means for adjusting cost estimates and associated funding levels periodically over the life of the facility.

A certification by the licensee that financial assurance for source/device disposition has been provided in the amount of the cost estimate for source disposition.

A signed original of the financial instrument obtained to satisfy the financial assurance requirements (unless a previously submitted and accepted financial instrument continues to cover the cost estimate for source/device disposition).

At the time of license renewal and at intervals not to exceed 3 years, the DFP must be resubmitted with adjustments as necessary to account for changes in costs. Approval of an updated DFP is needed prior to adjusting the amount of financial assurance downward. The DFP must update the information submitted with the original or prior approved plan and must specifically consider the effect of the following events on disposition costs:

• Changes in the disposition pathway(s) for the Category 1-3 RSSs included in the DFP.

• Availability and costs to rent or otherwise procure transportation casks.

• Facility modifications required for source/device removal.

• Changes in authorized possession limits, sources, or devices.

• Cost estimates obtained from LLW brokers, commercial disposal sites, or other entities that differ from previous estimates.

18 Licensees that already meet the threshold for preparing a DFP under the current 10 CFR 30.35 requirements (see section 2.2.1) and that possess Category 1-3 byproduct material RSSs would need to update their DFPs to address the new requirements.

The advantage of this alternative is that it pr ovides a risk-informed, customized approach for determining the DFA amount needed to ensure adequate funding for RSS/device disposition.

Further, it allows for added flexibility to address differences among licensees and changes over time. However, a significant disadvantage is that the preparation, review, and approval of the DFP may be resource intensive for both the licensee and the NRC or Agreement State regulator. This approach would place additional burden on the NRC, particularly regional staff, and the Agreement States that would review and approve each licensees initial DFP and DFP renewals every 3 years. However, this approach could result in long-term cost savings for some licensees as costs for developing and maintaining a DFP could be less than the default costs determined by certain other alternatives NRC considered, such as the fixed amounts proposed in Alternative 3.

For these reasons, the NRC is recommending this alternative as part of a hybrid approach (see Alternative 6b).

Table 5 lists the advantages and disadvantages cons idered by the NRC for this alternative.

Table 5: Advantages and Disadvantages of Alternative 5

Advantages

• Provides an accurate assessment of DFA requirements for source/device disposition that considers a licensees unique circumstances.

• Adaptable to the diverse types of licensees/uses for Category 1-3 byproduct material RSSs.

• Adjustable over time and can be updated as licensees add or remove sources/devices from the license, or to account for changing disposition costs.

• May provide a cost savings for some licensees (e.g., if a fixed DFA amount specified by the NRC represents an overestimate).

Disadvantages

• Would result in the highest implementat ion costs for the NRC, Agreement States, and licensees compared to the other alternatives, due to the need for initial preparation/review and periodic updates to DFPs for all affected licensees.

• Imposes unnecessary burden on licensees and regulators if RSS/device disposition costs can be adequately estimated through another method, such as a fixed DFA amount.

19 4.6 Alternatives 6a, 6b (NRC Selected) and 6cHybrid Approach (Combines Alternatives 2, 3 and 5)

This alternative considers combining Alternatives 2, 3, and 5 into a hybrid approach in which fixed DFA amounts are provided for many comm on source and device types, while in other instances licensees are required to prepare a DFP. The staff considered three variations of this alternative: Alternative 6a applies to all li censees possessing Category 1-3 byproduct material RSSs; Alternative 6b only applies to Category 1-3 licensees that are subject to the physical protection requirements in 10 CFR Part 37 41 (includes all Category 1 and 2 licensees and a limited number of Category 3 licensees); and Alt ernative 6c applies to licensees possessing only Category 1 or 2 byproduct material RSSs that are subject to the physical protection requirements in 10 CFR Part 37.

For these three alternatives, licensees posse ssing the byproduct material RSSs and devices shown in table 6 could determine the required DFA amount by using the fixed values provided in the table. For example, a licensee with a stereotactic radiosurgery device and a Category 2 self-shielded irradiator would be required to provide DFA in the amount of $1,300,000 based on the values for these devices in table 6 (i.e., $1,000,000 for the stereotactic irradiator and $300,000 for the Category 2 self-shielded irradiator). For device or source types not specifically listed in table 6, such as panoramic irradiators, licensees would be required to prepare a DFP.

As shown in table 6, sources or devices c ontaining Am-241 (including Am/Be sources) are excluded from using the fixed DFA amounts for some categories because the limited disposal pathways for RSSs containing Am-241 (as discuss ed in section 3.1) make the disposal costs too variable to establish a fixed DFA amount. However, some categories where Am-241 sources are more common have established di sposition pathways through which licensees typically can return Am-241 sources or devices to the manufacturer. For those device categories (i.e., where the column in table 6 titled Inc ludes Am-241 shows yes), Am-241 and Am/Be sources can use the fixed DFA amounts in table 6.

In addition to licensees that possess sources or devices not found in table 6, certain categories of licensees expected to have a relatively lar ge RSS inventory would be required to prepare a DFP, such as manufacturers, distributors, and waste collectors of Category 1-3 byproduct material RSSs. For these licensee types, the costs associated with source disposition are expected to be high and to vary considerably depending on each licensees circumstances. All licensees would have the option to prepare a DFP instead of using table 6 to determine the DFA amount, at their discretion.

41 10 CFR Part 37 applies to any licensee that possesses an aggregated Category 1 or Category 2 quantity of radioactive material listed in 10 CFR Part 37, Appendix A. It includes specific requirements for access to material, use of material, transfer of material, and transport of material.

20 Table 6: Financial Assurance Requirements for Alternatives 6a, 6b, and 6c (per Source or Device), in 2023 Dollars

Source or Includes Device Am-241 Category 1-3 Byproduct Material Source or Device Type DFA Amount Category*

1, 2 No Stereotactic radiosurgery device $1,000,000 1 No Self-shielded irradiator $500,000 2 No Self-shielded irradiator $300,000 2 No Calibrator $200,000 2 No Fixed-gauge or portable gamma camera requiring rental of a Type B shipping container $140,000 2 No Cs-137 or Co-60 source not in a device, requiring rental of a Type B shipping container $140,000 2 No Fixed gauge not requiring rental Type B shipping container $40,000 2 No Portable gamma camera not requiring rental of Type B shipping container $20,000 2, 3 Yes Well-logging device $20,000 3 Yes Portable gauge $10,000 Other Category 3 sources or devices except:

• items requiring rental of a Type B shipping container 3 No (DFP required) $10,000

• items requiring building modification, forklift, or crane to remove from site (DFP required)

• The activity may be considered for a single source if the source can safely be removed from the device; however, if sources cannot safely be removed from the device, the source activity in the device should be summed.

Similar to Alternative 3, the DFA requirements in table 6 are based on estimates for a representative sample of devices in each category. The estimates were based on information from LLW brokers, disposal sites, device manufacturers, and the NNSA OSRP and SCATR programs. In general, the estimates are based on a mixture of dispositioning pathways. For some device types that could have multiple possible dispositioning pathways (e.g., either commercial disposal or dispositioning by the NNSA for eligible devices), the NRC staff averaged estimated costs for viable pathways. For other devices with one dominant pathway (e.g., return-to-manufacturer agreements for stereotactic radiosurgery devices) the NRC staff used the cost of the dominant dispositioning pathway.

For Alternatives 6a, 6b and 6c, the NRC would supplement the requirements for preparing DFPs currently in 10 CFR 30.35 and the associated guidance in NUREG-1757, Volume 3, to include the attributes discussed in the description of Alternative 5 above. Licensees that already meet the threshold for preparing a DFP under the current 10 CFR 30.35 requirements (see section 2.2.1) and that possess byproduct material RSSs would need to update their DFPs as appropriate to address the new requirements.

Alternatives 6a, 6b, and 6c balance incorporating the NRC staffs efforts to develop tailored DFA amounts through collection and analysis of availabl e data with the need to control regulatory costs for licensees, NRC staff, and Agreement State staff. These alternatives are risk-informed for three reasons. First, they are informed by radiological risk because they use the 10 CFR Part 37 and IAEA Code of Conduct sealed s ource risk categorization system to define some of the DFA categories and, in general, require more DFA for devices with higher risk sources. Second, they are informed by financia l risks because the staff used the best available

21 information to set DFA amounts that limited ri sk for the regulators of licensees providing insufficient financial assurance and the risk to licensees of providing excessive DFA. Finally, these alternatives are risk-informed because they limit the implementation costs for the regulators and most licensees by making fixed DFA amounts available without the need for calculations or triennial updates, as required for a DFP. For example, although Alternative 5, in which each licensee develops a DFP, results in more site-specific DFA requirements than Alternatives 6a, 6b, or 6c, the NRC staff determined that the risk of modest over-or under-funding of DFA does not justify the Alternative 5 regulatory burden of requiring each licensee to submit a DFP.

Alternatives 6a, 6b, and 6c would provide a simple, risk-informed regulation that requires predictable, easy-to-determine DFA amounts for most licensees. The only difference between these alternatives is the affected group of licensees. As previously discussed, all of the alternatives apply only to licensees possessing by product material RSSs with half-lives greater than 120 days. Within that group, Alternative 6a would apply to all licensees possessing Category 1-3 RSSs, Alternative 6b would only apply to licensees that are subject to the physical protection requirements in 10 CFR Part 37 (i.e., primarily Category 1 and 2 licensees with a limited number of Category 3 licensees), and Alte rnative 6c would apply only to licensees possessing Category 1 and 2 RSSs that are subject to the physical protection requirements in 10 CFR Part 37.

Alternative 6a would apply to a larger group of licensees than Alternatives 6b or 6c. Excluding licensees that only possess radionuclides with a half-life less than 120 days and those that already prepare DFPs, the NRC staff expects Alternative 6a to apply to approximately 4,600 licensees. Alternative 6b would apply to a smaller group of licensees. In 2016, the NRC reported to Congress that there were approximately 1,400 licensees subject to 10 CFR Part 37 requirements.42 Alternative 6c would apply to the smallest number of licensees because it does not include any Category 3 sources. Accounting for licensees that only have short-lived radionuclides and those that already prepare DFPs, the NRC staff expects that Alternative 6c would apply to approximately 990 licensees that have Category 1 or 2 byproduct material RSSs.

The reduced number of affected licensees in Al ternatives 6b and 6c would result in reduced regulatory burden on industry, NRC, and Agreement State resources compared to Alternative 6a. This can be seen by comparing t he costs shown in table ES-1 of the Executive Summary of this regulatory basis. Alternative 6a would result in a projected cost totaling

$63.5 million using a 7 percent discount factor. Alternative 6b would result in a projected cost totaling $44 million using a 7 percent discount factor. For Alternative 6c, the cost is further reduced to $42.1 million due to the additional reduction in the number of affected licensees.

The fixed amounts provided in table 6 are based on the NRC staffs analysis of the major cost drivers associated with disposition of many common source and device types. For more complex situations, such as source manufacturers and distributors or devices for which disposition costs are expected to vary significantly, a DFP is required to ensure an accurate determination of the required DFA amount. The NRC staff attempted to limit the need for licensees to prepare a DFP where possible, given the additional burden associated with preparing, reviewing, and updating DFPs on both licensee and regulatory staff. Based on available data regarding the number of diffe rent types of licensed devices, the NRC staff

42 ML16347A398. For consistency with the report to Congress, the NRC did not make any adjustments to the approximate number of licensees. Although the staff expects the number to have increased slightly from 2016 to the present, the staff expects that increase to be offset by the number of licensees that only have radionuclides with half-lives less than 120 days and would be excluded from the current rulemaking.

22 estimates that, under Alternative 6a, approximately 97 percent of licensees affected by the rule could use table 6 and approximately 3 percent would be required to develop DFPs. For both Alternatives 6b and 6c, the NRC staff estimate s that approximately 90 percent of affected licensees could use table 6 and approximately 10 percent would be required to develop a DFP.

The NRC staff expects a larger fraction of affected licensees to be able to use table 6 under Alternative 6a (as compared to Alternatives 6b or 6c) because Alternative 6a applies to more Category 3 sources or devices, which are more likely to be included in table 6. The fraction of affected licensees that can use table 6 is the same under Alternatives 6b and 6c because both alternatives are dominated by Category 1 or 2 sources, and the relatively small number of Category 3 licensees affected by Alternative 6b does not change the expected use of table 6 appreciably compared to Alternative 6c.

Table 7 lists the advantages and disadvantages t he NRC considered for Alternatives 6a, 6b, and 6c.

Table 7: Advantages and Disadvantages of Alternatives 6a, 6b, and 6c

Advantages

• For all variations, leverages extensive information collected and analyzed by the NRC staff to assign realistic fixed DFA amounts for many common RSSs and devices.

• All variations link DFA requirements to radiological risk, as represented by the 10 CFR Part 37 and IAEA Code of Conduct risk-based categories.

• All variations provide a simple approach using fixed DFA amounts for most affected licensees, while requiring DFPs in more complex scenarios in which disposition costs are expected to vary significantly.

• All variations result in lower costs fo r licensees, the NRC, and Agreement States compared to Alternatives 2 through 5 (i.e., Alternative 6c has the lowest costs, followed by Alternative 6b and Alternative 6a).

• Alternative 6b is informed by radiologica l risk by focusing on sources subject to 10 CFR Part 37 physical protection requirements.

• All variations provide licensees that are eligible to use the fixed DFA values with the flexibility to prepare a DFP if they so choose.

Disadvantages

• Uses fixed DFA amounts that would bec ome outdated over time and require periodic updates.

• Does not include some features of Alternative 2, such as a DFA estimate tailored to the final disposition scenario for some dev ices (i.e., disposal through the DOE/NNSA or a commercial LLW disposal facility).

• Bases fixed DFA amounts on averages for groups of devices that may not accurately represent the dispositioning cost for all individual cases.

23 The NRC staff recommends Alternative 6b as the method to pursue for this rulemaking. The staff chose this alternative because it provides the best balance between ensuring funds are available for RSS disposition and the associated regulatory burden borne by the NRC, Agreement States, and industry. As shown in tabl e ES-1, the NRC staff expects that all versions of Alternative 6 would impose less cost and regulatory burden than other alternatives. The staff achieved this by distilling the available informat ion on the key factors driving RSS dispositioning costs into an easy-to-use table of DFA amounts that are expected to cover most licensees. The staff developed table 6 based on the best information it could gather from waste brokers, disposal sites, device and source manufacturers, and the DOE/NNSA on the key components of the costs to disposition various types of sources and devices. The staff developed best estimate DFA requirements to ensure adequate funding would be available to disposition sources without placing unnecessary burden on licensees.

Among the variations of Alternative 6, the NRC st aff determined that Alternative 6b provides the most risk-informed choice because it focuses on higher risk RSSs (i.e., Category 1, Category 2, and certain Category 3 sources) while minimizing costs and regulatory burden for the NRC, Agreement States, and industry. By including only those Category 3 sources that aggregate 43 to a Category 2 quantity in a single location, Alternative 6b is responsive both to recommendations from the GAO, the Task Force, and other intragovernmental and external groups who advocated including Category 3 sources and to the Commissions direction in SRM-SECY 0115 to mitigate potential adverse impacts on existing and future licensees, particularly medical users. Only one alternative (Alternative 6c) had a lower expected cost than the staffs selected alternative, Alternative 6b. The NRC staff chose Alternative 6b instead of the lower cost Alternative 6c as the staff found the difference in cost between the two alternatives (approximately $1.9 million using a 7 percent discount factor) to be reasonable because Alternative 6b would provide an overall greater benefit by applying to the Category 3 sources that could be aggregated to Category 2 quantities of radioactive material.

Alternative 6b would result in an updated, risk-informed approach that best addresses the direction provided by the Commission in SRM-SECY-16-0115. The NRC staff collected and analyzed extensive data on Category 1-3 device characteristics, disposition pathways, and costs to develop this approach, which addresses the regulatory concerns noted in section 3. In selecting this alternative, the NRC staff is considering the associated regulatory burden and implementation costs, and addressing Commission direction to mitigate potential adverse impacts on existing and future licensees. The staff will seek and consider comments from stakeholders and the public on all the alternatives presented in this regulatory basis, as noted in section 7.

5. Basis for Proposed Changes

This section explains the proposed changes to NRC regulations and discusses the rationale used to support those changes. This section also discusses how the proposed changes could resolve the issues identified in section 3 of this regulatory basis.

43 This term is used consistently with the definition of aggregation in 10 CFR 37.5, Definitions: accessible by the breach of a single physical barrier that would allow access to radioactive material in any form, including any devices that contain the radioactive material, when the total activity equals or exceeds a category 2 quantity of radioactive material.

24 5.1 Proposed Changes

Under the proposed rulemaking described in Alternative 6b, the NRC would establish DFA requirements in 10 CFR 30.35 for the dispositio ning of Category 1-3 byproduct material RSSs with a half-life of greater than 120 days. The proposed rulemaking in Alternative 6b would only apply to licensees that are subject to the requirements in 10 CFR Part 37. This includes licensees that possess Category 1 and 2 byproduct material sealed sources, and Category 3 sources that could, in aggregate, exceed a Category 2 quantity of radioactive material. The proposed changes would provide fixed DFA amounts for many common source and device types, while in other instances licensees would be required to prepare a DFP.

Licensees subject to 10 CFR Parts 50, 52, 72, 76 and 10 CFR Part 70, Subpart H, would be exempt from this rulemaking for the facilities and activities covered under those licenses. These licensees are already required to prepare a decommissioning plan and demonstrate sufficient financial assurance for decommissioning these facilities, including the disposition of any Category 1-3 byproduct material RSSs. In additi on, for Alternatives 6b and 6c, licensees not subject to the requirements in 10 CFR Part 37 would be exempt from this rulemaking.

Category 3 quantities of radioactive material are not defined in NRC regulations. NRC would revise 10 CFR 30.4, Definitions, to include a definition for Category 3 quantities of radioactive material. This definition would be consistent with the IAEA Code of Conduct. 17 A new Appendix F to Part 30 - Category 3 Radioactive Material would include a table of radionuclides and activities corresponding to Category 3 thresholds for radioactive material. The table would refer to the same 16 radioactive materials (14 single radionuclides and 2 combinations) that make up category 1 and category 2 material, as defined in Appendix A to 10 CFR Part 37.

The rulemaking would align with the existing criteria in 10 CFR 30.35 that only require DFA for radionuclides with a half-life greater than 120 days. The requirements for preparing DFPs currently in 10 CFR 30.35 and the associated guidance in NUREG-1757, Volume 3, would be supplemented to include the attributes discusse d in the description of Alternative 5 above.

Affected licensees that already meet the threshold for preparing a DFP under the current 10 CFR 30.35 requirements (see section 2.2.1) and that are subject to the new DFA requirements would need to update their DFPs as appropriate to address the new requirements.

The rulemaking would not change the existing fixed DFA amounts in 10 CFR 30.35, discussed in section 2.2.1, for licensees that meet the applicable thresholds for sealed and unsealed byproduct material. These fixed amounts are inte nded to support overall site decommissioning, not the disposition of individual Category 1-3 RSSs or devices. Consequently, a small number of licensees may be subject to the existing fixed DFA amounts (e.g., $113,000 for sealed byproduct material) and the new DFA requirements for their Category 1-3 byproduct material RSSs. As with any licensee, these licensees hav e the option to prepare a DFP if they determine a DFP would result in a lower total DFA requirement.

5.2 Benefits of the Rulemaking

5.2.1 A More Risk-Informed Regulation

A risk-informed approach to regulatory decision-making represents a philosophy whereby risk insights are considered, together with other factors, to establish requirements that better focus licensee and regulatory attention on issues commensurate with their importance to public health and safety. This approach reduces unnecessary conservatism in regulation. The rulemaking

25 would advance the NRCs commitment to maintain up-to-date regulations by updating the financial assurance requirements currently in 10 CFR 30.35, which the NRC has found are not commensurate with anticipated dispositioning co sts for Category 1-3 byproduct material RSSs.

Thus, a rulemaking would ensure that the DFA requirements reflect more realistic dispositioning costs for affected licensees that possess these RSSs.

The alternatives described in this regulatory basis document consider radiological, financial, and regulatory risks. All of the alternatives considered by the NRC staff link DFA requirements to radiological risk, as represented by the 10 CFR Part 37 and IAEA Code of Conduct risk-based categories. In general, these alternatives require more DFA for devices with higher category sources (i.e., sources posing greater radiological risk).

The working group also considered the financial risks to licensees and regulatory authorities if the rule required significantly more or less DFA than a realistic assessment of the source disposition costs. In SRM-SECY-16-0115, the Commission specifically directed the staff to carefully explore options to mitigate potential adverse impacts on existing and future licensees, particularly medical users, and those who benefit from the use of these radioactive materials.

The rule could cause financial risks for licensees if it required too much DFA because that money would be unavailable to the licensee for other purposes. In contrast, requiring less DFA than needed could have financial risks for regulators that could need to draw on the DFA funds to disposition sealed sources. Alternatives 2, 4, 5, and 6 would provide more realistic cost estimates for some licensees than Alternative 3, which bases DFA requirements solely on the source category, by incorporating information about the main cost drivers for sealed source dispositioning (e.g., source preparation, packaging, transportation, and disposal costs).

In addition, the NRC staff considered the r egulatory risk of imposing a burden on licensee, Agreement State, and NRC resources that is not needed to achieve the regulatory objectives.

While Alternative 5 would result in the DFA requirements most tailored to each licensees situation, the alternative would create significant regulatory burden for licensees that must develop the plans, and regulators that must review the plans.

The NRC staff recommends Alternative 6b because the staff determined that it provides the best balance of managing these radiological, financial, and regulatory risks. As described in section 4.6, the staff estimates that under Alternative 6b, approximately 90 percent of licensees would be able to use a table of fixed DFA amounts, which would limit the regulatory burden for both licensees and regulatory staff. As explained in further detail in section 4.6, the NRC staff developed those fixed DFA amounts based on multiple sources of information to ensure adequate funding would be available to dispositi on sources without imposing an unnecessary burden on licensees. Because the staff sought to develop best estimates of the disposal costs, the staff expects Alternative 6b should limit financ ial risks for both regulators and licensees that could result from significant variation between DFA amounts and actual disposition costs.

The NRC staff further risk-informed Alternative 6b by limiting the new DFA requirements to those licensees that are subject to 10 CFR Part 37 requirements. By limiting the applicability to those licensees, the NRC staff projects a signific ant reduction in regulatory burden for the NRC, Agreement States, and licensees as compared to Alternative 6a. As explained in greater detail in section 4.6, the staff determined Alternative 6b was the most risk-informed choice because it has significantly lower costs than all but one othe r alternative (Alternative 6c), while focusing DFA requirements on the sources with the greatest potential radiological risk (i.e., all Category 1 and 2 sources, and Category 3 sources that could, in aggregate, exceed a Category 2 quantity of radioactive material). In addition, Alternative 6b avoids the need for licensees or regulatory

26 staff to perform any additional determination of whether the DFA requirements would apply, beyond what they already do to determine whether 10 CFR Part 37 requirements apply.

The NRC staff determined Alternative 6b was the most risk-informed choice because it is the lowest cost alternative that still addresses the most risk-significant Category 3 sources. In addition, the NRC staff determined that by including Category 1, Category 2, and the most risk-significant subset of Category 3 sources, Alternative 6b was the most responsive to recommendations from the GAO, the Task Force, and other intragovernmental and external groups, as well as to Commission direction in SRM-SECY-16-0115. For all those reasons, the NRC staff selected Alternative 6b as its recommended rulemaking alternative.

5.2.2 Helps Ensure Licensees Are Prepared for Radioactive Sealed Source Disposition and Provides Protection for Unforeseen Circumstances

The rulemaking would increase the likelihood that licensees subject to the expanded DFA requirements will be prepared for end-of-life disposition costs of risk significant sources. As noted in section 3.1, end-of-life costs for dis positioning Category 1-3 byproduct material RSSs can be significant and may represent a significant financial burden if not anticipated by licensees. Requiring DFA for the disposition of these RSSs would help ensure that affected licensees appropriately consider and plan for the costs associated with disposition. In addition, the expanded DFA requirements would ensure that funds are available for RSS disposition in the event of licensee bankruptcy or other unforeseen circumstances. This would help ensure that Category 1-3 byproduct material RSSs are promptly and effectively managed in these types of scenarios.

5.2.3 Facilitates Timely Disposition of Disused Category 1-3 Sources

The rulemaking would help facilitate timely disposition of disused Category 1-3 byproduct material RSSs and reduce the reliance by some licensees on indefinite long-term storage. The rulemaking would require affected licensees to provide an appropriate amount of DFA, based on the devices they possess, to support disposal at a commercial LLW facility, transfer to the NNSA for management through the OSRP, or return to an authorized recipient. While requirements for DFA cannot force licensees to disposition Category 1-3 RSSs prior to decommissioning, the requirements can provide an incentive for prompt disposition. If licensees elect to disposition their RSSs promptly, they may be able to reduce or eliminate DFA requirements once some or all of their RSSs are dispositioned. If licensees elect to wait until decommissioning, they should be able to efficiently and promptly disposition their RSSs as a plan for disposition will have already been considered.

By requiring affected licensees to consider and plan for RSS disposition and the associated costs, the rulemaking may help reduce the use of long-term storage as a management option, supporting the Commissions policy that disposal is preferred to storage. 44

5.2.4 Helps Ensure Dispositioning Costs for Category 1-3 Sources Are Borne by Those That Receive the Associated Economic Benefits

The rulemaking would help ensure that disposition costs related to the use of Category 1-3 byproduct material RSSs are borne by those t hat receive the associated economic benefits, reducing the reliance by some licensees on programs such as the OSRP administered by the

44 Low-Level Radioactive Waste Management and Volume Reduction (77 FR 25760 at 25781; May 1, 2012).

27 NNSA. As noted in section 5.2.3, the rulemaking would require licensees subject to the new requirements to provide an appropriate amount of DFA for the devices they possess to support disposal at a commercial LLW facility, transfer to the NNSA for management through the OSRP, or return to an authorized recipient for reuse or recycling. In cases where the OSRP may represent the only disposition option, such as for certain devices that would be classified as GTCC waste, the rulemaking would require a fixed DFA amount or a DFP that is based on the OSRPs self-ship option.45 The rulemaking would not exempt licensees from providing DFA based on an assumption that disposition costs will be covered by the OSRP or other government programs. By requiring affected licens ees to provide DFA to support disposition of their Category 1-3 byproduct material RSSs, even for sources that are likely to be disposed through the OSRP, the rulemaking would help ensure these licensees plan appropriately for the full life-cycle costs associated with using Category 1-3 sources.

The GAOs 2023 report on improving the security of certain disused sources46 noted that according to NNSA officials, the [OSRP] could be streamlined if the private sector was able to take on more financial responsibility for disposition. For fiscal year (FY) 2023, the NNSA estimated costs of $26 million to package, transport, and disposition risk-significant RSSs through the OSRP and SCATR programs. As a result of this rulemaking, the NRC expects the NNSA will benefit from an averted cost due to reduced resources needed for their OSRP and SCATR programs. This averted cost is based on two assumptions: (1) the need for these programs will be reduced as affected licensees plan for the disposition of Category 1-3 RSSs to meet the new DFA requirements, including increased use of commercial disposal options when available, and (2) more licensees will use the self-ship option for sources disposed through the OSRP, which will transfer a significant portion of OSRP costs from the NNSA to licensees for these disposals. Section 8.1 contains further di scussion of the calculation of averted costs.

5.2.5 Responsive to Government Accountability Office, Radiation Source Protection and Security Task Force, and Other Recommendations

This rulemaking would address recommendations from the GAO, the Task Force, and other intragovernmental and external groups to ex pand the NRCs financial assurance requirements for RSSs. The GAOs 2023 report identified financial assurance requirements as a leading worldwide practice that could help address some disposal challenges. The report noted that the NRC has taken a step to promote the disposal of high-risk radioactive sources by initiating a rulemaking to revise its financial assurance rules to cover more radioactive sources. The GAO further recommended that the NRC comprehensively assess leading practices that, if implemented, would minimize the time that disused sources are in a licensees possession.

These practices include financial assurances for all category 1, 2, and 3 sources. Consistent with the Commissions direction in SRM-SECY-16-0115, the NRC has assessed in this regulatory basis several alternatives for expanding financial assurance requirements for Category 1-3 byproduct material RSSs. The staffs recommended alternative would establish DFA requirements in 10 CFR 30.35 for the dispositioning of Category 1-3 byproduct material RSSs with a half-life of greater than 120 days. The recommended alternative would only apply to licensees that are subject to the physical protection requirements in 10 CFR Part 37. This includes licensees that possess Category 1 and 2 byproduct material sealed sources, and

45 The NNSA maintains a self-ship option in which licensees fund the cost of removing and transporting a device to the NNSA or its contractors, for subsequent management under the OSRP.

46 GAO-24-105998.

28 Category 3 sources that could, in aggregate, exceed a Category 2 quantity of radioactive material.

This rulemaking also addresses the recommendation made by the Task Force in its 2014 Report47 related to financial planning for disposal of sealed sources. Specifically, the Task Force recommended that the NRC evaluate the need for sealed source licensees to address the eventual disposition/disposal costs of Category 1 and 2 quantities of radioactive sources through source disposition/disposal financial planning or other mechanisms. The NRC completed the actions associated with this recommendation as noted in the 2018 Task Force report48 by completing the scoping study discussed in section 2.4.1 and providing recommendations to the Commission as discussed in section 2.4.2. However, the Task Force continues to follow this issue and has request ed periodic updates from the NRC following the Commissions direction in SRM-SECY-16-0115 to proceed with rulemaking.

As noted in section 2.4.1, the rulemaking is also responsive to recommendations from other groups to expand the NRCs financial assurance requirements for Category 1-3 RSSs, including recommendations in the 2010 report of an interagency working group led by the NRC49 and a 2014 report issued by the LLW Forum Disused Sources Working Group. 50 Finally, the rulemaking addresses guidance in the IAEA Code of Conduct, paragraph 22(b), that every Member States regulatory body ensures that arrangements are made for the safe management and secure protection of radioactive s ources, including financial provisions where appropriate, once they have become disused.

6. Backfitting and Issue Finality Assessment

There are no backfitting or issue finality provisions in 10 CFR Part 30. Facilities and activities subject to Parts 50, 52, 72, 76, and Subpart H to Part 70 would be exempt from this rulemaking.

As a result, all alternatives considered in this regulatory basis would not impact any entities' activities authorized under Parts 50, 52, 72, and 76 and Subpart H of Part 70. Therefore, the alternative(s) would not meet the definition of "backfitting" under Part 50, Subpart H of Part 70, Part 72, and Part 76, so they would not constitute backfitting, nor would they affect the issue finality of a Part 52 approval.

7. Stakeholder Involvement

During the development of this regulatory basis, the NRC conducted outreach to certain stakeholders, including the CRCPD, the Advisory Committee on the Medical Uses of Isotopes, LLW disposal facility operators, LLW brokers, and sealed source/device manufacturers and distributors. The NRC also coordinated with the NNSA and the CRCPD to discuss costs associated with the OSRP and SCATR programs, respectively. The purpose of these meetings was to help the NRC develop and receive feedback on the alternatives presented in this regulatory basis.

In addition, the Agreement States participated in the development of this regulatory basis. In accordance with Management Directive 5.3, Agreem ent State Participation in Working Groups,

47 ML14219A642.

48 ML18276A155.

49 ML100050105.

50 ML14084A394.

29 dated June 22, 2016,51 the staff provided early opportunities for Agreement State engagement on this rulemaking. A representative from the OAS served on the working group that prepared the regulatory basis. Additionally, the Agreement States had an opportunity to review a draft of this regulatory basis and provide comments. The OAS Board, as well as the Agreement States of _____ and _______, provided specific comments. The NRC considered these comments in developing this regulatory basis, as described below: Pending OAS review.

• xxxxxx

The rulemaking process will provide opportuni ties for broader public engagement. The NRC is issuing this regulatory basis for public comment. The staff will consider comments provided by stakeholders and the public on the regulatory basis when preparing the proposed rule, which will also be issued for public comment. The NRC staff plans to hold public meetings during the comment periods for both the regulatory basis and the proposed rule to provide information on these products and describe the process for submitting public comments. During the public engagement process, the NRC will spec ifically seek and consider public comments in the areas directed by the Commission in SRM-SECY-16-0115.

8. Cost/Impact Considerations

In this rulemaking, the NRC considers the potential costs for the industry, the NRC, Agreement States, and other external stakeholders result ing from alternative methods to address the identified issues. The regulatory basis stage of the rulemaking process provides an initial evaluation of these proposed impacts. The NRC will provide a more detailed evaluation of the benefits and costs with the proposed rule.

This section discusses cost and other impacts related to the rulemaking to establish DFA requirements for Category 1-3 byproduct material RSSs. This section discusses potential impacts on the four impacted entities: (1) the NRC, (2) the Agreement States, (3) licensees, and (4) the DOE/NNSA. The analyses presented in this section are based on the NRC staffs preliminary assessment. The staff will carry out a more detailed cost/impact evaluation as part of the regulatory analysis developed in accordance with NUREG/BR-0058, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission, Draft Report for Comment, during the proposed rule phase of the rulemaking.

8.1 Analytical Methodology and Analysis Assumptions

In this rulemaking, the NRC is examining the potential costs and benefits for licensees, external stakeholders, Agreement States, and the NRC concerning the expanded financial assurance requirements for the disposition of Category 1-3 byproduct material RSSs. This section explains the process used to evaluate the expected costs and benefits of each alternative compared to the regulatory baseline (Alternative 1), which reflects the expected outcome if the NRC takes no regulatory action. Whenever possible, all cost s and benefits are expressed in monetary terms.

The total costs and benefits are then calculated to determine whether the difference between them results in a net positive benefit. Sometimes, it is not possible to express costs and benefits in monetary terms, so they are not monetized. To clarify, this analysis uses specific sign conventions. The benefits of the chosen alternative are denoted as positive, while its costs are negative. Negative results are shown in parent heses (e.g., a negative $500 is represented by the symbol ($500)). All monetized costs are expr essed in 2024 dollars to agree with the NRCs

51 ML18073A142.

30 current annual labor rates for all rulemaking activities. The NRC staff assumes publication of the final rule in calendar year 2027.

In accordance with NUREG/BR-0058, net present value (NPV) calculations are used to determine how much society will need to invest today to ensure that the designated dollar amount is available in a given year in the fu ture. By using NPVs, costs and benefits are valued to a reference year for comparison, regardless of when the cost or benefit is incurred in time.

Based on U.S. Office of Management and Budget Circular A-4, Regulatory Analysis, dated November 9, 2023, and consistent with NRC past practice and guidance, present-worth calculations in this analysis use 3 percent and 7 percent real discount rates. A 3 percent discount rate approximates the real rate of return on long-term government debt, which serves as a proxy for the real rate of return on savings to reflect reliance on a social rate of time preference concept. A 7 percent discount rate appr oximates the marginal pretax real rate of return on an average investment in the private sector and is the appropriate discount rate whenever the main effect of a regulation is to displace or alter the use of capital in the private sector. A 7 percent rate is consistent with an opportunity cost of capital concept to reflect the time value of resources directed to meet regulatory requirements.

The cost analysis time horizon after the rule is active is from 2028 through 2043 (15 years). For the NRC and its impacted licensees, the analysis period is 15 years, based on the standard licensing period for 10 CFR Part 30 licensees. The Agreement States can take up to 3 years to implement the rule (i.e., 2028 through 2030).

For the purposes of this analysis, the staff applied strict incremental cost principles to develop labor rates that include only labor and material costs directly related to the implementation and operation of the proposed rule requirements. This approach is consistent with the guidance in NUREG/CR-3568, A Handbook for Value-Impact Assessment, issued December 1983, and with general cost-benefit methodology. The NRCs incremental labor rate is $152 per hour.

The staff used the 2023 U.S. Bureau of Labor Statistics (BLS) Occupational Employment and Wages data (www.bls.gov), which provide labor categories and the mean hourly wage rate by job type. The labor rates used in the analysis reflect total hourly compensation, which includes wages and nonwage benefits (using a burden factor of 2.4, which is applicable for contract labor and conservative for regular utility employees). The staff used the BLS data tables to select appropriate hourly labor rates for the estimated procedural, licensing, and utility-related work necessary during and after implementation of the proposed alternative. The table in appendix A summarizes the BLS labor categories the staff used to estimate industry labor costs to implement this proposed rule and lists the industry labor rates used in the analysis.

During its research, the NRC staff found that disposition costs for devices containing Category 1-3 RSSs vary widely based on numerous factors such as the source activity (curies),

size and weight of the device, difficulty of removing the device from the facility (e.g., potential crane, rigging and labor charges), type of transportation container required, LLW class for commercial disposal, and permitting and reciprocity fees, among other variables. The descriptions of Alternatives 2 and 4 above contain further discussion of these factors. In general, Category 1 devices tend to be the most expensive to disposition, with some costs exceeding $1 million dollars. Disposition costs for Category 2 devices can range from $40,000

31 to over $1 million dollars, while costs for dispositioning most Category 3 devices are typically less than $20,000.

This analysis makes the following assumptions:

• The NRC assumes that impacted licensees will continue to be responsible for funding disposition costs for their Category 1-3 byproduct material RSSs either at or before decommissioning. Therefore, the costs of the rule do not include the costs of device dispositioning except for the small fraction of devices that are dispositioned by the NNSA/OSRP program. The NRC staff assumes that, as a result of this rule, half of the number of devices currently recovered from U.S. licensees and dispositioned annually by the OSRP will instead be funded by licensees using the OSRP self-ship option, which will result in an averted cost of $7.5 milli on per year to the DOE/NNSA and an increased industry cost of $7.5 million per year.

• Impacted licensees will incur the cost of acquiring and maintaining a financial assurance instrument. The NRC staff assumed a 3 percent initiation fee to secure the financial instrument. In addition, the annual maintenance costs on the various DFA instruments available to licensees can vary from 0.75 to 3.0 percent. This analysis is using a blended weight of 1.25 percent.

• The estimated compliance date for the rule is 2028, by which time NRC licensees must comply.

• Agreement States will have 3 years to promulgate the rule. The NRC assumes implementation to be spread evenly over the period 2028-2030 (one-third of total Agreement State licensees will implement t he rule in each of the years 2028, 2029, and 2030). The NRC staff estimates that each Agreement State will take 444 full-time equivalent (FTE) labor hours to update its regulations and guidance to complete the rulemaking.

• The NRC staff estimates a 1 percent annual growth rate in the number of new licensees that the rule will impact.

• As part of the industry implementation cost, licensees may need to prepare an initial DFP or DFA estimate in the first year of compliance. The NRC staff estimates a cost of 40-80 labor hours per licensee, depending on the alternative for the licensee to generate the initial DFP or DFA estimate. The NRC staff estimates that regulatory officials will need 60-100 hours to review the initial DFP or DFA estimates for licensees.

• Each alternative will have some licensees needing to submit an update to their DFPs every 3 years, at an estimated cost of 40 labor hours per licensee. In addition, regulatory officials will need 30 hours3.472222e-4 days <br />0.00833 hours <br />4.960317e-5 weeks <br />1.1415e-5 months <br /> to review these updates.

• The NRC assumes that the DOE/NNSA will benefit from an averted cost of $7.5 million annually due to reduced resources needed for its OSRP and SCATR programs. This averted cost is based on two assumptions: (1) the need for these programs will be reduced as affected licensees plan for the disposition of Category 1-3 RSSs as part of meeting the new DFA requirements, including increased use of commercial disposal options when available, and (2) more licensees will use the self-ship option for sources

32 disposed through the OSRP, which will transfer a significant portion of OSRP costs from the NNSA to licensees for these disposals.

• For Alternatives 2-5 and Alternative 6a, the NRC assumes that 4,600 licensees will be impacted (NRC and Agreement State licensees combined). That number is based on the estimated total number of licensees possessing Category 1-3 byproduct material RSSs, adjusted downward for licensees that already submit DFPs and licensees that only have radionuclides with a half-life less than 120 days. Fewer licensees will be impacted by Alternative 6b (1,400 licensees) and Alternative 6c (990 licensees), as discussed in section 4.6.

Affected attributes for the NRC, the Agreem ent States, industry, and the DOE/NNSA are identified in sections 8.1.1 - 8.1.7.

8.1.1 NRC Implementation

The NRC will incur the cost of implementing the proposed and final rules and developing and issuing licensing guidance to comply with the new requirements.

8.1.2 NRC Operations

The NRC will incur the cost of reviewing licensee submittals to meet the DFA requirements (i.e., DFPs or estimates based on a table of fixed DFA amounts). Licensees that prepare DFPs will be required to submit updates to their DFPs every 3 years.

8.1.3 Agreement States Implementation

The Agreement States will have 3 years to adopt the regulatory changes. The Agreement States will incur the cost of implementing the rule and developing and issuing licensing guidance to comply with the new requirements.

8.1.4 Agreement States Operations

Agreement States will incur the cost of reviewing licensee submittals to meet the DFA requirements. Licensees that prepare DFPs will be required to submit updates to their DFPs every 3 years.

8.1.5 Industry Implementation

The industry (NRC and Agreement State licensees) will incur implementation costs on the initiation fees associated with their chosen financial assurance instrument. In addition, licensees will incur the cost of determining their DFA requirements based on a table of fixed DFA amounts (by device) or through developing an initial DFP in the first year of compliance.

8.1.6 Industry Operations

Industry will incur annual maintenance costs on their chosen financial assurance instrument. In addition, licensees that prepare DFPs will need to update their DFPs every 3 years. The

33 industry will also incur the costs associated with the self-ship option for sources or devices that are dispositioned through the OSRP.

8.1.7 Other Government (DOE/NNSA) Operations

As noted in section 3.4, the DOE/NNSA Office of Radiological Security (ORS) has borne the substantial cost of disposition of risk-significant disused sources. The NRC staff reached out to ORS officials, who provided estimated costs of $26 million for the OSRP and SCATR programs in FY 2023. This included FY 2023 costs of approximately $15 million for 88 domestic removals under the OSRP. The NRC staff projects that $7.5 million in DOE/NNSA funds can be saved annually over the course of the analysis period. This estimate is based on the assumption that, as a result of this rule, half of the number of devices currently recovered from U.S. licensees and dispositioned annually by the OSRP will inst ead be funded by licensees using the OSRP self-ship option, which will result in an avert ed cost of $7.5 million per year to the DOE/NNSA and an increased industry cost of $7.5 million per year.

The ORS staff noted that its experience and stakeholder engagements suggest that adopting financial assurance requirements would benefit national security and public health and safety as licensees would be disincentivized from storing s ources for longer than needed at their facilities, and the requirements would help reduce significant pressure on Federal resources into the future. This rulemaking would facilitate the trans ition from the DOE/NNSA taxpayer expense to the commercial sector as more commercial disposition options become available and encourage improved end-of-life management requirements of Category 1-3 RSSs.

8.2 Summary of Evaluated Alternatives and Cost

8.2.1 Alternative 1: No ActionThe Status Quo

This alternative would maintain the current regul atory framework. It would avoid the costs that the final rule provisions would impose. This alternative is equivalent to the status quo and serves as a baseline against which other alternatives can be measured.

8.2.2 Alternative 2: Financial Assurance Based on Device Type and Disposition Pathway

This alternative would establish DFA requirements based on the methods described in appendix C (i.e., table of fixed DFA amounts, use of an equation, or preparation of a DFP). This alternative was not cost effective, with an overall cost of a 7 percent NPV of $81.1 million.

8.2.3 Alternative 3: Fixed Financial Assurance Based on Source Category

This alternative would establish fixed DFA requirements corresponding to the source category.

Alternatively, licensees would have the option of preparing a DFP. This alternative was not cost effective, with an overall cost of a 7 percent NPV of $99.0 million.

8.2.4 Alternative 4: Financial Assurance Determined by a Parametric Formula

This alternative would use a parametric equation to determine the DFA amount. Alternatively, licensees would have the option of preparing a DFP. This alternative was not cost effective, with an overall cost of a 7 percent NPV of $86.2 million.

34 8.2.5 Alternative 5: Financial Assurance Based on a Decommissioning Funding Plan

This alternative would require all applicants or licensees to prepare a case-specific DFP. This alternative was not cost effective, with an ov erall cost of a 7 percent NPV of $258.9 million.

8.2.6 Alternative 6: Hybrid Approach (Combines Alternatives 2, 3, and 5) (includes NRC Selected Alternative 6b)

This alternative would establish fixed DFA r equirements corresponding to the device type for many common devices. Licensees with other ty pes of devices would be required to prepare a DFP. The staff considered three variations of this alternative: Alternative 6a applies to all licensees possessing Category 1-3 byproduct material RSSs; Alternative 6b only applies to Category 1-3 licensees subject to the physical protection requirements in 10 CFR Part 37 (includes all Category 1 and 2 licensees, and a limited number of Category 3 licensees);

Alternative 6c only applies to licensees possess ing Category 1 or 2 byproduct material RSSs that are subject to the physical protection requirements in 10 CFR Part 37. As discussed in section 4.6, the staff selected Alternative 6b as its recommended approach.

Alternative 6a (Hybrid Approach for All Category 1-3 Licensees) resulted in an overall cost of

$63.4 million with a 7 percent NPV over the 15-year analysis period. Industry cost was primarily driven by an industry self-ship cost of ($52.1 million), which in turn was offset by the DOE subsidy. The three other main cost contributors were industry implementation (with a cost of

$38.2 million), Agreement States implementat ion ($12.7 million), and industry operation

($8.4 million).

Alternative 6b (Hybrid Approach Limited to Category 1-3 Licensees Subject to 10 CFR Part 37) had a negative value of $44.0 million. The three main cost contributors were industry self-ship ($52.1 million), industry im plementation ($29.9 million), and industry operation

($5.6 million).

Alternative 6c (Hybrid Approach Limited to Category 1 and 2 Licensees) had a negative value of $42.1 million. The three main cost contributors were industry self-ship ($52.1 million), industry implementation ($29.8 million), and Agreement States implementation ($4.1 million).

Costs and benefits for each alternative are provided in table 8 below. As shown in table 8, the staffs recommended alternative (Alternative 6b) to establish DFA requirements for Category 1-3 byproduct material RSS licensees subject to the physical protection requirements in 10 CFR Part 37 would have a projected cost of approx imately ($44.0 million) over 15 years with a 7 percent NPV. Most of the costs incurred by the NRC, Agreement States, and industry would be during the first 3 years of implementing the final rule. The costs to the industry would include affected licensees having to review their current DFA requirements, including DFPs as applicable, for any needed revisions to comply with the final rule. Affected licensees would also incur costs associated with their chosen financial assurance instrument, and licensees with DFPs would incur costs associated with periodic updates. Benefits result from an averted cost of $7.5 million per year to the DOE/NNSA due to reduced funding needs for the OSRP and SCATR programs, as described in section 8.1.7.

35 Table 8: Summary Table of Alternatives and Benefits (Costs)

Net Benefits (Costs) in 2023 Dollars DESCRIPTION Undiscounted 7% NPV 3% NPV

Alternative 1Status Quo (No Action Taken)

$0 $0 $0

Alternative 2Financial Assurance Based on Device Type and Disposition Pathway NRC Implementation ($3,831,900) ($2,883,300) ($3,381,800)

NRC Operation ($2,066,300) ($824,800) ($1,369,600)

NRC Totals ($5,898,200) ($3,708,100) ($4,751,300)

Agreement State Implementation ($22,468,900) ($14,989,900) ($18,820,100)

Agreement State Operation ($17,333,400) ($6,919,200) ($11,488,900)

Agreement States Totals ($39,802,300) ($21,909,100) ($30,309,000)

Industry Implementation ($58,455,900) ($40,749,800) ($49,918,300)

Industry Operation ($34,399,700) ($14,692,400) ($23,465,200)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($205,355,600) ($107,555,200) ($152,933,700)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 2 Total Net Benefits (Cost) ($138,556,100) ($81,059,500) ($108,443,800)

Alternative 3Fixed Financial Assurance Based on Source Category NRC Implementation ($4,115,500) ($3,085,500) ($3,626,500)

NRC Operation ($3,438,000) ($1,372,400) ($2,278,700)

NRC Totals ($7,553,500) ($4,457,900) ($5,905,200)

Agreement State Implementation ($46,160,700) ($30,794,300) ($38,663,800)

Agreement State Operation ($3,438,000) ($1,372,400) ($2,278,700)

Agreement States Totals ($49,598,700) ($32,166,700) ($40,942,600)

Industry Implementation ($61,125,700) ($42,543,000) ($52,161,100)

Industry Operation ($47,277,800) ($19,833,200) ($32,001,000)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($220,903,500) ($114,489,100) ($163,712,300)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 3 Total Net Benefits (Cost) ($165,555,700) ($99,000,800) ($131,009,800)

Alternative 4Financial Assurance Determined by a Parametric Formula NRC Implementation ($4,209,800) ($3,152,700) ($3,707,700)

NRC Operation ($1,375,200) ($549,000) ($911,500)

NRC Totals ($5,585,000) ($3,701,600) ($4,619,200)

Agreement State Implementation ($25,670,800) ($17,126,300) ($21,502,200)

Agreement State Operation ($11,535,900) ($4,605,000) ($7,646,200)

36 Net Benefits (Costs) in 2023 Dollars DESCRIPTION Undiscounted 7% NPV 3% NPV

Agreement States Totals ($37,206,700) ($21,731,300) ($29,148,400)

Industry Implementation ($70,291,800) ($48,650,600) ($59,834,600)

Industry Operation ($27,911,100) ($12,102,300) ($19,164,400)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($210,703,000) ($112,865,800) ($158,549,300)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 4 Total Net Benefits (Cost) ($140,994,600) ($86,185,800) ($112,766,700)

Alternative 5Financial Assurance Based on a Decommissioning Funding Plan NRC Implementation ($6,471,100) ($4,765,000) ($5,658,300)

NRC Operation ($13,751,900) ($5,489,500) ($9,115,000)

NRC Totals ($20,222,900) ($10,254,500) ($14,773,300)

Agreement State Implementation ($44,830,200) ($29,906,800) ($37,549,400)

Agreement State Operation ($115,359,300) ($46,049,600) ($76,462,100)

Agreement States Totals ($160,189,400) ($75,956,400) ($114,011,500)

Industry Implementation ($168,448,300) ($114,235,200) ($142,106,000)

Industry Operation ($144,111,100) ($58,487,500) ($96,183,800)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($425,059,400) ($224,835,600) ($317,840,000)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 5 Total Net Benefits (Cost) ($492,971,800) ($258,933,600) ($367,074,600)

Alternative 6aHybrid Approach for All Category 1-3 Licensees (Combines Alternatives 2, 3, and 5)

NRC Implementation ($3,435,500) ($2,600,700) ($3,039,900)

NRC Operation ($388,600) ($155,100) ($257,600)

NRC Totals ($3,824,200) ($2,755,800) ($3,297,500)

Agreement State Implementation ($19,110,800) ($12,750,400) ($16,007,800)

Agreement State Operation ($3,260,200) ($1,301,400) ($2,160,900)

Agreement States Totals ($22,371,000) ($14,051,800) ($18,168,700)

Industry Implementation ($54,725,400) ($38,244,300) ($46,784,400)

Industry Operation ($18,648,800) ($8,404,900) ($13,025,200)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($185,874,200) ($98,762,100) ($139,359,900)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 6a Total Net Benefits (Cost) ($99,569,300) ($63,456,800) ($81,275,800)

Alternative 6bHybrid Approach Limited to Category 1-3 Licensees Subject to 10 CFR Part 37 (Combines Alternatives 2, 3, and 5) (NRC Selected)

NRC Implementation ($2,115,100) ($1,659,200) ($1,900,800)

NRC Operation ($418,500) ($167,100) ($277,400)

37 Net Benefits (Costs) in 2023 Dollars DESCRIPTION Undiscounted 7% NPV 3% NPV

NRC Totals ($2,533,600) ($1,826,300) ($2,178,200)

Agreement State Implementation ($7,922,900) ($5,287,400) ($6,637,200)

Agreement State Operation ($3,510,900) ($1,401,500) ($2,327,100)

Agreement States Totals ($11,433,900) ($6,688,900) ($8,964,400)

Industry Implementation ($42,297,500) ($29,897,200) ($36,344,200)

Industry Operation ($12,679,500) ($5,621,800) ($8,791,800)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($167,477,000) ($87,631,900) ($124,686,200)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 6b Total Net Benefits (Cost) ($68,944,400) ($44,034,200) ($56,278,600)

Alternative 6cHybrid Approach Limited to Category 1 and 2 Licensees (Combines Alternatives 2, 3, and 5)

NRC Implementation ($1,919,700) ($1,519,900) ($1,732,300)

NRC Operation ($298,500) ($119,200) ($197,900)

NRC Totals ($2,218,200) ($1,639,100) ($1,930,200)

Agreement State Implementation ($6,267,600) ($4,183,200) ($5,250,800)

Agreement State Operation ($2,504,300) ($999,700) ($1,659,900)

Agreement States Totals ($8,771,900) ($5,182,900) ($6,910,700)

Industry Implementation ($42,297,500) ($29,897,200) ($36,344,200)

Industry Operation ($12,179,500) ($5,390,200) ($8,438,200)

Industry Self-Ship Cost ($112,500,000) ($52,112,900) ($79,550,300)

Industry Totals ($166,977,000) ($87,400,200) ($124,332,700)

Other Government (DOE) $112,500,000 $52,112,900 $79,550,300 Alternative 6c Total Net Benefits (Cost) ($65,467,100) ($42,109,400) ($53,623,300)

Note: Values are rounded to the nearest hundred. Values in parentheses, e.g., (), denote a cost of negative value.

DOE = U.S. Department of Energy; NPV = net present value.

As a result of this rulemaking, some licensees would need to provide DFA that have not been required to do so in the past. Other licensees would be required to increase their DFA amount or prepare a DFP, or both. The NRC and Agreement State resources will be needed to review the new or revised DFA estimates or DFPs associated with this rulemaking. The NRC is requesting feedback from the public on this document to assist in identifying the overall cost that may result from the proposed rule to amend 10 CFR Part 30.

9. Uncertainty Analysis

The NRC completed a Monte Carlo sensitivity anal ysis using the specialty software @Risk.

The Monte Carlo approach answers the question, What distribution of net benefits results from multiple draws of the probability distribution assigned to key variables?

38 9.1 Uncertainty Analysis Assumptions

The cost/impact consideration section uses estimate s of values that are sensitive to licensees unique situations. The staff analyzed the variables that have the greatest amount of uncertainty.

To perform this analysis, the staff used a Monte Carlo simulation analysis using the @Risk software program. This was done to determine the robustness of the costs and net benefits of the rulemaking. The NRC examined how anticipat ed savings change due to uncertainties associated with the NRCs analytical assumptions and input data shown in appendix B to this document.

9.2 Uncertainty Analysis Inputs

The probability distributions chosen to represent the different variables in the analysis were bounded by the range-referenced input and the NRC staffs professional judgment. When defining the probability distributions for use in a Monte Carlo simulation, summary statistics are used to characterize the distributions. These summary statistics include the minimum, most likely, and maximum values of a program evaluation and review technique (PERT) distribution.

The staff used the PERT distribution to reflect the relative spread and skewness of the distribution defined by the three estimatesthe minimum, most likely, and maximum. Figure 1 provides the probability distribution function and the descriptive statistics of the inputs used in the uncertainty analysis. Appendix B to this document shows the inputs.

9.3 Uncertainty Analysis Results

Figure 1 depicts the results of the uncertainty analysis of Alternative 6b net costs using a 7 percent discount rate. This figure displays the histogram of the incremental net cost for rulemaking to resolve the identified issues. The uncertainty analysis graph shows that the Alternative 6b mean net cost is ($44.0 million) in 2023 dollars with a 90 percent confidence level that the costs are between ($49.8 million) and ($40.1 million) using a 7 percent discount rate.

Note that there will be differences in totals due to the software used to perform the uncertainty analysis.

Figure 1: Incremental net costs for Alternative 6b (7 percent discount rate)

39 Table 9: Uncertainty Results Descriptive Statistics7 Percent NPV

Uncertainty Incremental Cost-Benefit (2023 dollars)

Result Minimum Maximum Mean Std Dev 0.05 0.95

Total Industry ($90,201,776) ($85,883,480)

Cost ($93,901,977) ($85,107,193) ($87,632,166) $1,330,039 Total NRC ($1,954,787) ($1,699,135)

Costs ($2,084,786) ($1,574,944) ($1,826,280) $77,364 Total Agreement ($13,765,133) ($3,735,313) ($6,688,888) $1,658,862 ($9,892,367) ($4,541,352)

States Cost Total Costs ($57,361,619) ($38,559,405) ($44,034,455) $2,976,714 ($49,780,468) ($40,143,202)

Examining the range of the resulting output distribution provided in table 9 makes it possible to discuss the potential incremental costs and benefits of the regulatory basis more confidently.

Figure 2 shows a tornado diagram for Alternative 6b that identifies the key variables whose uncertainty has the most significant impact on total costs for this proposed rule. This figure ranks the variables based on their contribution to cost uncertainty. Three variables (1) Agreement State licensees staff weighted labor rate, (2) Initial hours for the NRC, Agreement States, and licensees to implement the new DFA requirements, and (3) Agreement State rulemaking working group supportdrive the most uncertainty in the costs. The remaining key variables show diminishing variation.

Agreement State licensees staff weighted labor rate

Initial hours for the NRC, Agreement States, and licensees to implement the new DFA requirements

Agreement State rulemaking working group support

Recurring hours for NRC and Agreement States to assess compliance for licensees that prepare a DFP due to the rule

Figure 2: Tornado diagramtotal net costs7 percent NPV (Alternative 6b)

40

10. Rulemaking Cost Justification

This regulatory basis supports a rulemaking to revise 10 CFR 30.35 to establish new financial assurance requirements for the disposition of Category 1-3 byproduct material RSSs with a half-life of greater than 120 days. The staffs recommended alternative would only apply to licensees subject to the physical protection requirements in 10 CFR Part 37. This includes licensees that possess Category 1 and 2 byproduct material sealed sources, and Category 3 sources that could, in aggregate, exceed a Category 2 quantity of radioactive material. The proposed changes would provide fixed DFA am ounts for many common source and device types, while in other instances licensees would be required to prepare a DFP.

The staffs recommended alternative (Alternat ive 6b) would have a projected cost of approximately $44.0 million over 15 years with a 7 percent NPV. Most of the costs incurred by the NRC, Agreement States, and industry would be during the first 3 years of implementing the final rule. The costs to industry would include affected licensees reviewing their inventory of Category 1-3 byproduct material RSSs to determine the applicable DFA requirements to comply with the final rule, including revising their existing DFPs as appropriate, and obtaining a financial assurance instrument for the required DFA amount.

This rulemaking, in the NRC staffs view, would have a number of benefits. The proposed changes to 10 CFR 30.35 would provide a risk-informed method for determining DFA amounts for affected licensees that possess Category 1-3 byproduct material RSSs. In addition, the new DFA requirements should: (1) help ensure these licensees are prepared for RSS disposition and facilitate timely disposition of disused RSSs, (2) ensure adequate financial resources are available to support RSS disposition in the event of unforeseen circumstances, such as licensee bankruptcy, (3) help ensure dispositioning costs for Category 1-3 RSSs are borne by those who receive the associated economic benefits, and (4) address recommendations on this issue provided by the GAO, the Task Force, and other groups. The rulemaking would also help address concerns raised by the DOE/NNSA, whic h, since 2003, has implemented a program to remove excess RSSs that posed a potential threat to public health, safety, and national security.

The DOE/NNSA has stated that additional financi al planning requirements could encourage the use of available commercial disposal options, or defray the cost of packaging and transportation, thereby reducing the funding required for NNSA-sponsored RSS recovery and management programs. Finally, the new requirem ents may help reduce the use of long-term storage as a management option, supporting the Commissions policy that disposal is preferred to storage.

11. Cumulative Effects of Regulation

The NRC has implemented a program to address the possible cumulative effects of regulation in the development of regulatory bases for rulemakings. The cumulative effects of regulation are an organizational effectiveness challenge that re sults from licensees implementing several complex positions, programs, or requirements within a prescribed implementation period and with limited available resources. The NRC inte racts with outside stakeholders throughout the rulemaking process in order to resolve issues that can lead to implementation challenges and contribute to the cumulative effects of regulation. Feedback from stakeholders is important to help the NRC make better informed decisions on mitigating the impact of the cumulative effects of regulation.

41

12. Regulatory Flexibility Act

The Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act, requires the NRC to consider the impact of its rulemakings on small entities and evaluate alternatives that would accomplish regulatory objectives without unduly burdening small entities or erecting barriers to competition. In developing the proposed rule, the staff will evaluate how many small entities it anticipates this rulemaking would affect and what steps the NRC can take to mitigate the economic impacts on small entities. The staff will use public comments received on this document to inform this analysis.

13. Environmental Analysis

This rulemaking would revise 10 CFR 30.35 to establish new financial assurance requirements for the disposition of Category 1-3 byproduct material RSSs with a half-life of greater than 120 days. Pursuant to 10 CFR 51.21, Criteria for and identification of licensing and regulatory actions requiring environmental assessm ents, the NRC will develop an environmental assessment along with this rulemaking to determine whether issuing this rule would result in any significant impacts.

14. NRC Strategic Plan

The recommended rulemaking would support the NRCs 2022-2026 Strategic Plan (NUREG-1614, Volume 8, issued April 2022) 52 in relation to the strategic goal of ensuring the safe and secure use of radioactive materials and the strategic goal of inspiring stakeholder confidence in the NRC. The rulemaking would support Safety and Security Strategy 1.2.1, Maintain and further risk-inform the current r egulatory framework using information gained from operating experience, lessons learned, external and internal assessments, technology advances, research activities, and changes in the threat environment. As discussed in section 2.4, this rulemaking was proposed based on an internal assessment documented in SECY-16-0046 and after considering recommendations from the interagency Radiation Source Protection and Security Task Force as well as other external groups. The changes that are proposed to 10 CFR 30.35 are risk-informed compared to the current regulatory framework, as discussed in section 5.2.1. In addition, the planned rulemaking would support the strategic goal of inspiring stakeholder confidence in the NRC through Stakeholder Confidence Strategy 3.1.2, Provide a fair and timely process to allow pub lic involvement in NRC decision-making. As discussed in section 7, the rulemaking process will provide several opportunities for public engagement, including public comment periods for this regulatory basis and the subsequent proposed rule. Public meetings will take place during the comment periods for both the regulatory basis and the proposed rule to facilitate public involvement in the rulemaking process.

15. Conclusion

The NRC staff finds that there is sufficient r egulatory basis to proceed with rulemaking to establish new DFA requirements for the dispos ition of Category 1-3 byproduct material RSSs.

Specifically, the proposed rulemaking in Alternat ive 6b, which would affect licensees subject to 10 CFR Part 37 requirements, would result in an updated, risk-informed approach that best addresses the direction provided by the Commission in SRM-SECY-16-0115 and the regulatory

52 ML22067A170.

42 concerns identified by the NRC staff. The NRC staff collected and analyzed extensive data on Category 1-3 device characteristics, disposition pathways, and costs to develop this approach, which would require predictable, fixed DFA am ounts for many affected licensees while requiring DFPs in more complex scenarios. In selecting th is alternative, the NRC staff is considering the associated regulatory burden and implementation costs, and addressing Commission direction to mitigate potential adverse impacts on existing and future licensees.

At this stage, the staff holds that the qualitative benefits from conducting the rulemaking would justify the potential cost impacts to licensees, Agreement States, and the NRC. The staff will seek and consider comments from stakeholders and the public on all the alternatives presented in this regulatory basis. In addition, the staff w ill prepare a regulatory analysis of the qualitative and quantitative costs and benefits that considers public comments received on this regulatory basis for the proposed rule, consistent with NUREG/BR-0058.

16. References

10 CFR Part 20. U.S. Code of Federal Regulations, Standards for Protection Against Radiation, Part 20, Chapter I, Title 10, Energy.

10 CFR Part 30. U.S. Code of Federal Regulations, Rules of General Applicability to Domestic Licensing of Byproduct Material, Part 30, Chapter I, Title 10, Energy.

10 CFR Part 31. U.S. Code of Federal Regulations, General Domestic Licenses for Byproduct Material, Part 31, Chapter I, Title 10, Energy.

10 CFR Part 32. U.S. Code of Federal Regulations, Specific Domestic Licenses to Manufacture or Transfer Certain Items Containing Byproduct Material, Part 32, Chapter I, Title 10, Energy.

10 CFR Part 37. U.S. Code of Federal Regulations, Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material, Part 37, Chapter I, Title 10, Energy.

10 CFR Part 40. U.S. Code of Federal Regulations, Domestic Licensing of Source Material, Part 40, Chapter I, Title 10, Energy.

10 CFR Part 50. U.S. Code of Federal Regulations, Domestic Licensing of Production and Utilization Facilities, Part 50, Chapter I, Title 10, Energy.

10 CFR Part 51. U.S. Code of Federal Regulations, Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions, Part 51, Chapter I, Title 10, Energy.

10 CFR Part 52. U.S. Code of Federal Regulations, Licenses, Certifications, and Approvals for Nuclear Power Plants, Part 52, Chapter I, Title 10, Energy.

10 CFR Part 61. U.S. Code of Federal Regulations, Licensing Requirements for Land Disposal of Radioactive Waste, Part 61, Chapter I, Title 10, Energy.

10 CFR Part 70. U.S. Code of Federal Regulations, Domestic Licensing of Special Nuclear Material, Part 70, Chapter I, Title 10, Energy.

43 10 CFR Part 72. U.S. Code of Federal Regulations, Licensing Requirements for the Independent Storage of Spent Nuclear Fuel, High-Level Radioactive Waste, and Reactor-Related Greater Than Class C Waste, Part 72, Chapter I, Title 10, Energy.

10 CFR Part 76. U.S. Code of Federal Regulations, Certification of Gaseous Diffusion Plants, Part 76, Chapter I, Title 10, Energy.

Atomic Energy Act of 1954, as amended (42 U.S.C. 2011, et seq.).

Energy Reorganization Act of 1974, as amended (42 U.S.C. 5801, et seq.).

Florida Administrative Code, Florida Department of Health, Bureau of Radiation Control, Bond Risk Factors Calculation WorksheetMarch 2014, Rule 64E-5.217.

International Atomic Energy Agency, Code of Conduct on the Safety and Security of Radioactive Sources, January 2004.

Low-Level Radioactive Waste Forum, Inc., Report of the Disused Sources Working Group: A Study of the Management and Disposition of Sealed Sources from a National Security Perspective, March 2014 (Agencywide Documents Access and Management System Accession No. ML14084A394).

Office of the Federal Register, Federal Register, Low-Level Radioactive Waste Management and Volume Reduction, 77 FR 25760, May 1, 2012.

Office of the Federal Register, Federal Register, Final Rule: Medical Use of Byproduct Material, 51 FR 36932 and 36951, October 16, 1986.

Office of the Federal Register, Federal Register, Final Rule: Medical Use of Byproduct Material, 67 FR 20299, April 24, 2002.

Office of the Federal Register, Federal Register, Financial Assurance for Materials Licensees, 68 FR 57327, October 3, 2003.

Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

U.S. Department of Energy, Comment (10) of Arthur Atkins on Behalf of the U.S. Department of Energy, National Nuclear Security Administration, on Financial Planning for Management of Radioactive Byproduct Material, October 21, 2015 (ML15310A044).

U.S. Government Accountability Office, GAO-24-105998, High-Risk Radioactive Material:

Opportunities Exist to Improve the Security of Sources No Longer in Use, November 30, 2023.

U.S. Nuclear Regulatory Commission, Decommissioning Financial Assurance Requirements for Sealed and Unsealed Radioactive Materials: Regulatory Basis, April 2022 (ML21235A480).

U.S. Nuclear Regulatory Commission, Interagency Working Group Report on Financial Assurance for Disposition of Category 1, 2, and 3 Radioactive Sealed Sources, March 3, 2010 (ML100050105).

44 U.S. Nuclear Regulatory Commission, Management Directive 5.3, Agreement State Participation in Working Groups, June 22, 2016 (ML18073A142).

U.S. Nuclear Regulatory Commission, Management Directive 5.9, Adequacy and Compatibility of Program Elements for Agreement State Programs, April 26, 2018 (ML18081A070).

U.S. Nuclear Regulatory Commission, NUREG-1556, Volume 20, Consolidated Guidance About Materials Licenses: Guidance About Administrative Licensing Procedures, Final Report, December 2000 (ML010250252).

U.S. Nuclear Regulatory Commission, NUREG-1614, Volume 8, Strategic Plan: Fiscal Years 2022-2026, April 2022 (ML22067A170).

U.S. Nuclear Regulatory Commission, NUREG-1757, Volume 3, Revision 1, Consolidated NMSS Decommissioning Guidance: Financial Assurance, Recordkeeping, and Timeliness, Final Report, February 2012 (ML12048A683).

U.S. Nuclear Regulatory Commission, NUREG/BR-0058, Revision 5, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission, Draft Report for Comment.

U.S. Nuclear Regulatory Commission, NUREG/CR-3568, A Handbook for Value-Impact Assessment, December 1983 (ML062830096).

U.S. Nuclear Regulatory Commission, SECY-16-0046, Radioactive Byproduct Material Financial Scoping Study, April 7, 2016 (ML16067A367).

U.S. Nuclear Regulatory Commission, SECY-16-0115, Rulemaking Plan on Financial Assurance for Disposition of Category 1 and 2 Byproduct Material Radioactive Sealed Sources, October 7, 2016 (ML16200A223).

U.S. Nuclear Regulatory Commission, SECY-17-0083, Re-evaluation of Category 3 Source Security and Accountability in Response to SRM-COMJMB-16-0001 August 18, 2017 (ML17188A255).

U.S. Nuclear Regulatory Commission, SECY-22-0112, Proposed Rule: Radioactive Source Security and Accountability (3150-AK83; NRC-2022-0103), December 19, 2022 (ML22277A809).

U.S. Nuclear Regulatory Commission, SECY-23-0062, Proposed Rule: Decommissioning Financial Assurance for Sealed and Unsealed Radioactive Materials, July 24, 2023 (ML23010A137).

U.S. Nuclear Regulatory Commission, SRM-COMJMB-16-0001, Staff Requirements COMJMB-16-0001Proposed Staff Re-Evaluation of Category 3 Source Accountability, October 18, 2016 (ML16292A812).

U.S. Nuclear Regulatory Commission, SRM-SECY-16-0115, Staff RequirementsSECY 0115Rulemaking Plan on Financial Assurance for Disposition of Category 1 and 2 Byproduct Material Radioactive Sealed Sources, December 8, 2021 (ML21342A032).

45 U.S. Nuclear Regulatory Commission, SRM-SECY-17-0083, Staff Requirements SECY-17-0083Re-Evaluation of Category 3 Source Security and Accountability in Response to SRM-COMJMB-16-0001, December 21, 2021 (ML21355A290)

U.S. Nuclear Regulatory Commission, The Radiation Source Protection and Security Task Force Report, August 15, 2006 (ML062190349).

U.S. Nuclear Regulatory Commission, The 2010 Radiation Source Protection and Security Task Force Report, August 11, 2010 (ML102230141).

U.S. Nuclear Regulatory Commission, The 2014 Radiation Source Protection and Security Task Force Report, August 14, 2014 (ML14219A642).

U.S. Nuclear Regulatory Commission, The 2018 Radiation Source Protection and Security Task Force Report, October 17, 2018 (ML18276A155).

U.S. Nuclear Regulatory Commission, The 2022 Radiation Source Protection and Security Task Force Report, August 5, 2022 (ML22213A157).

U.S. Office of Management and Budget Circular A-4, Regulatory Analysis, dated November 9, 2023.

46

Appendix BSummary and Tables of Costs for Alternative 6b by the NRC, Agreement States, and Industry

Table B-1 NRC Implementation

Net Benefits (Costs)

Activity Undiscounted 7% NPV 3% NPV Costs associated with research, public hearings, stakeholder engagement, and legal proceedings ($1,446,000) ($1,182,100) ($1,323,700)

NRC review of its licensees financial assurance for licensees that use a table of fixed DFA amounts ($516,200) ($368,000) ($445,200)

NRC review of its licensees financial assurance for licensees that prepare a DFP due to the rule ($152,900) ($109,000) ($131,900)

Total ($2,115,100) ($1,659,100) ($1,900,800)

Table B-2 NRC Operation

Net Benefits (Costs)

Activity Undiscounted 7% NPV 3% NPV NRC review of its licensees financial assurance for licensees that prepare a DFP due to the rule (i.e., ($418,500) ($167,100) ($277,400) recurring updates to DFPs)

Total ($418,500) ($167,100) ($277,400)

Table B-3 Agreement State Implementation

Net Benefits (Costs)

Activity Undiscounted 7% NPV 3% NPV

Costs associated with research, public hearings, stakeholder engagement, and legal proceedings ($2,253,800) ($1,505,700) ($1,889,000)

Agreement States review of their licensees financial assurance for licensees that use a table of fixed DFA ($4,373,300) ($2,917,300) ($3,662,900) amounts

Agreement States review of their licensees financial assurance for licensees that prepare a DFP due to ($1,295,800) ($864,400) ($1,085,300) the rule Total ($7,922,900) ($5,287,400) ($6,637,200)

B-1 Table B-4 Agreement State Operation

Net Benefits (Costs)

Activity Undiscounted 7% NPV 3% NPV

Agreement States review of their licensees financial assurance for licensees that prepare a ($3,510,900) ($1,401,500) ($2,327,100)

DFP due to the rule (i.e., recurring updates to DFPs)

Total ($3,510,900) ($1,401,500) ($2,327,100)

Table B-5 Industry Implementation

Attribute Total Industry Costs (Costs)

Undiscounted 7% NPV 3% NPV NRC licensees labor expenditure incurred to determine the required DFA, using the table of ($628,400) ($448,000) ($542,000) fixed DFA amounts or by preparing a DFP Financial assurance instrument initiation fee for ($3,234,100) ($2,305,900) ($2,789,800)

NRC licensees Agreement State licensees labor expenditure incurred to determine the required DFA, using ($5,669,100) ($3,781,700) ($4,748,300) the table of fixed DFA amounts or by preparing a DFP Financial assurance instrument initiation fee for ($32,765,900) ($23,361,600) ($28,264,200)

Agreement State licensees Industry Totals ($42,297,500) ($29,897,200) ($36,344,200)

Table B-6 Industry Operation

Category Total Industry Costs (Costs) Undiscounted 7% NPV 3% NPV

Cost for maintaining a financial instrument for NRC and Agreement State licensees that use the table of fixed (7,250,000) (3,358,400) (5,126,600)

DFA amounts Cost for maintaining a financial instrument for NRC and Agreement State licensees that prepare a DFP due to (1,500,000) (694,800) (1,060,700) the rule Cost for NRC licensees to revise a DFP every 3 years due to the rule (418,500) (167,100) (277,400)

Cost for Agreement State licensees to revise a DFP every 3 years due to the rule (3,510,900) (1,401,500) (2,327,100)

Total (12,679,500) (5,621,800) (8,791,800)

B-2 Table B-7 DOE/NNSA Subsidy

Year Activity Net Benefits (Costs) Undiscounted 7% NPV 3% NPV

2028 NNSA Subsidy 7,500,000 $5,347,396 $6,469,566 2029 NNSA Subsidy 7,500,000 $4,997,567 $6,281,132 2030 NNSA Subsidy 7,500,000 $4,670,623 $6,098,186 2031 NNSA Subsidy 7,500,000 $4,365,068 $5,920,569 2032 NNSA Subsidy 7,500,000 $4,079,503 $5,748,125 2033 NNSA Subsidy 7,500,000 $3,812,620 $5,580,704 2034 NNSA Subsidy 7,500,000 $3,563,196 $5,418,160 2035 NNSA Subsidy 7,500,000 $3,330,090 $5,260,349 2036 NNSA Subsidy 7,500,000 $3,112,233 $5,107,135 2037 NNSA Subsidy 7,500,000 $2,908,629 $4,958,384 2038 NNSA Subsidy 7,500,000 $2,718,345 $4,813,965 2039 NNSA Subsidy 7,500,000 $2,540,509 $4,673,752 2040 NNSA Subsidy 7,500,000 $2,374,308 $4,537,623 2041 NNSA Subsidy 7,500,000 $2,218,979 $4,405,460 2042 NNSA Subsidy 7,500,000 $2,073,812 $4,277,145 Total 112,500,000 52,112,880 79,550,255

Table B-8 Industry Self-Ship Cost

Year Activity Net Benefits (Costs) Undiscounted 7% NPV 3% NPV

2028 Industry Self-Ship Cost (7,500,000) ($5,347,396) ($6,469,566) 2029 Industry Self-Ship Cost (7,500,000) ($4,997,567) ($6,281,132) 2030 Industry Self-Ship Cost (7,500,000) ($4,670,623) ($6,098,186) 2031 Industry Self-Ship Cost (7,500,000) ($4,365,068) ($5,920,569) 2032 Industry Self-Ship Cost (7,500,000) ($4,079,503) ($5,748,125) 2033 Industry Self-Ship Cost (7,500,000) ($3,812,620) ($5,580,704) 2034 Industry Self-Ship Cost (7,500,000) ($3,563,196) ($5,418,160) 2035 Industry Self-Ship Cost (7,500,000) ($3,330,090) ($5,260,349) 2036 Industry Self-Ship Cost (7,500,000) ($3,112,233) ($5,107,135) 2037 Industry Self-Ship Cost (7,500,000) ($2,908,629) ($4,958,384) 2038 Industry Self-Ship Cost (7,500,000) ($2,718,345) ($4,813,965) 2039 Industry Self-Ship Cost (7,500,000) ($2,540,509) ($4,673,752) 2040 Industry Self-Ship Cost (7,500,000) ($2,374,308) ($4,537,623) 2041 Industry Self-Ship Cost (7,500,000) ($2,218,979) ($4,405,460) 2042 Industry Self-Ship Cost (7,500,000) ($2,073,812) ($4,277,145)

Total (112,500,000) (52,112,880) (79,550,255)

B-3 Appendix CDetailed Description of Alternative 2

This appendix provides additional information about the approach described in section 4.2 for Alternative 2. That alternative would be implemented with a series of decision steps to determine which financial assurance requirement would apply. The decision steps would be applied sequentially until the decommissioning final assurance (DFA) requirement is determined (i.e., a licensee would stop following the decision steps once arriving at an applicable category).

(1) Licensees of the following types would be required to submit a DFP:

• manufacturers

• distributors

• waste collectors

• licensees possessing a panoramic irradiator

• licensees possessing a Category 1 or Category 2 sealed source or device 53 containing a radionuclide other than cobalt (Co)-60 or cesium (Cs)-137

• licensees possessing a Category 3 source that meets any of the following criteria:

• contains americium (Am)-241

• will be dispositioned54 in a device weighing more than 23 kilograms 55

• requires transportation in a Type B shipping container weighing more than 23 kilograms

2. Licensees that choose to self-ship eligible devices to the National Nuclear Security Administration (NNSA) for disposal would consult a table of DFA requirements based on information from the NNSA (table C-1):

Table C-1: DFA Requirements for Licensees Choosing to Send an Eligible Source or Device to the NNSA for Disposal

Requires Rental(a) Financial Requires of a Large(b) Assurance Device Type B Amount Basis Disassembly Transportation (2023 dollars)

Package

53 The activity may be considered for a single source if the source can safely be removed from the device; however, if sources cannot safely be removed from the device, the source activity in the device should be summed.

54 Sources that will be removed from the device before shipping and disposal do not meet this criterion.

55 This is the maximum weight in the National Institute for Occupational Safety and Health (NIOSH) lifting equation.

C-4 No 1,000 $1,000 packaging and transportation for a Type A container No $130,000 container rental Yes(c) 230,000 $50,000 crane, rigging, labor

$50,000 transportation for a large Type B container

$30,000 device disassembly No(c) 31,000 $1,000 packaging and transportation for a Type A container Yes $30,000 device disassembly

$130,000 container rental Yes(c) 260,000 $50,000 crane, rigging, labor

$50,000 transportation for Type B container No 20,000 Estimated transportation cost for a small Type B container No $130,000 container rental Yes 230,000 $50,000 crane, rigging, labor

$50,000 transportation for a large Type B container

$30,000 device disassembly No 50,000 $20,000 transportation for a small Type B container Yes $30,000 device disassembly

$130,000 container rental Yes 260,000 $50,000 crane, rigging, labor

$50,000 transportation for a large Type B container (a) This column pertains only to rental of a Type B transportation package. Licensees that have access to an appropriate transportation package (i.e., they own the container or borrow it from the device manufacturer) would use a no row in this table.

(b) For the purposes of this table, a large Type B transportation package is a package weighing more than 23 kilograms.

(c) It is unusual for transuranic sealed sources to require either device disassembly or rental of a large Type B container.

3. Licensees possessing the following types of sources or devices would consult a table of DFA requirements based on information from waste brokers and device manufacturers (table C-2):

• stereotactic irradiator

• portable gamma camera in the manufacturers designated shipping container (either Type A or Type B, as required)

• Category 3 source that meets each of the following three criteria:

• does not contain Am-241

• does not require rental of a Type B shipping package weighing more than 23 kilograms

C-5

• will be disposed of either without a device or in a device weighing less than 23 kilograms

Table C-2: DFA Requirements for Licensees with Listed Sources or Devices

Source or Device Type Financial Assurance (2023 Dollars)

Category 3 source meeting the three listed criteria 20,000 Portable gamma cameras in the manufacturers shipping container 20,000 Stereotactic irradiator 1,000,000

4. Licensees possessing Category 1 or 2 cobal t-60 (Co-60) or Cs-137 sources in a device not specifically mentioned in steps 1 and 2 would use the equations in table C-3 to calculate DFA requirements.

Table C-3: DFA Requirements for Category 1 or 2 Co-60 or Cs-137 Sources or Devices Not Specifically Listed in Steps 1 and 2

Device Disposal Site Location DFA Calculation (2023 dollars) Basis

$230,000 includes Texas $230,000 + $130,000 container rental Compact 1.1 x x$50 $50,000 crane, rigging, labor

$50,000 transportation for a large WCS Type B container Requires Outside Disposal approximated by WCS rental of a Texas $230,000 + activity fee and different large(a) Compact 1.3 x x$50 percentage fees for in-versus Type B out-of-compact disposal disposal $280,000 includes cask Northwest $130,000 container rental U.S. or $280,000 + $50,000 crane, rigging, labor Ecology Rocky x $200 $50,000 transportation for a large Mountain Type B container Compact $50,000 U.S. Ecology shipment fee, container fee, and ECB fee

$20,000 fee based on Texas $20,000 + transportation of a small(a) Type B Compact 1.1 x x$50 shipping container(b)

Does not WCS Disposal approximated by WCS require Outside activity fee and different rental of a Texas $20,000 +

large(a) Compact 1.3 x x$50 percentage fees for in-versus Type B out-of-compact disposal disposal Northwest $70,000 includes cask U.S. or $70,000 + $20,000 transportation for a Ecology Rocky x $200 small(a) Type B container(b)

Mountain $50,000 U.S. Ecology shipment Compact fee, container fee, and ECB fee

C-6 Device Disposal Site Location DFA Calculation (2023 dollars) Basis (a) In this context, large containers weigh more than 23 kilograms and small containers weigh 23 kilograms or less. Packages under 23 kilograms were considered portable based on the maximum weight in the NIOSH lifting equation.

(b) Sources or devices that do not require rental of a large Type B transportation cask were also assumed not to require crane rental, rigging, or labor to remove the device from the building. That corresponds to the more common case of licensees dispositioning smaller devices and could underestimate dispositioning costs for a relatively small number of licensees that disposition large devices in self-owned Type B shipping containers.

C-7 Appendix DSealed Source/Device Disposition Funding Parametric Calculation WorksheetAlternative 4

For Category 1-3 byproduct material sealed sources or devices with a half-life greater than 120 days, assign a cost factor for each section (A through E) based on planned source disposition.

A.

Activity1 Cost Multiplier Multiplier Used

A < Category 3 0

Category 3 < A < Category 2 50

Category 2 < A < 20x Category 2 150

20x Category 2 < A < Category 1 450

Category 1 < A < 10x Category 1 600

10x Category 1 < A DFP

1 Source/device activity values as a function of Category 1-3 thresholds based upon the International Atomic Energy Agency (IAEA) values (IAEA TECDOC-1344, Categorization of Radioactive Sources, July 2003).

B.

Packaging Cost Multiplier Multiplier Used

Type A Shipping Container Needed 4

Type B Shipping Container Needed 20

D-1 C.

Labor and Rigging Cost Multiplier Multiplier Used

- Labor Only 2

- Labor and Forklift 3

- Labor and Crane 4

D.

Destination Cost Multiplier Multiplier Used

- Manufacturer/NNSA 5

- Commercial Disposal Facility 20

- No Disposal Pathway DFP required

E.

Transportation Cost Multiplier Multiplier Used

- < 200 miles 1.05

- 200-1,000 miles 1.1

- > 1,000 miles 1.4

D-2 Calculate using Assigned Cost Multipliers:

A. Activity x

B. Packaging x

C. Labor and Rigging x

D. Destination x

E. Transportation x

Subtotal

Contingency Fee x

Product Total

If the Product Total is greater than 30,000, then DFA for sealed source/device disposition is required. The dollar value of the financial assurance is the product of the risk factors plus a contingency fee, if desired.

D-3