NRC's Financial Qualifications for Reactor Licensing

July 31, 2015

Gerald Brock

Download this Public Interest Comment (PDF)


In June 2015, the Nuclear Regulatory Commission sought public comment on a draft regulatory basis for a proposed rulemaking to amend the financial qualifications standard for new reactor licensing from the current “reasonable assurance” to the proposed “appears to be financially qualified.” I appreciate the opportunity to comment and encourage NRC to proceed with the proposed rulemaking.

President Obama’s EO 13563 states that regulations “must identify and use…the least burdensome tools for achieving regulatory ends.” Furthermore, the order states that “agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” EO 13579 extended retrospective review to Independent Regulatory Agencies. That order states “To the extent permitted by law, independent regulatory agencies should comply” with the provisions of EO 13563 and states that “independent regulatory agencies should consider how best to promote retrospective analysis of rules… and to modify… or repeal them in accordance with what has been learned.”

Although the current NRC materials do not place this proceeding in the context of President Obama’s retrospective review order, this is a good example of retrospective review. The NRC has observed that the link between the current financial requirements and the regulatory goal of increased safety is weak to non-existent and that non-regulated merchant plants find the current rules particularly burdensome. The NRC has stated:

The current NRC reactor FQ [financial qualification] requirements and review process were developed before the electricity markets in the United States were deregulated. While the current rules contemplate applications from non-utility merchant plants, no nuclear power merchant plant applicant has received an initial license as of the writing of this regulatory basis document. All current nuclear power reactor licensees were found to be financially qualified at initial licensing on the basis of their status as rate-regulated utilities.

The NRC is properly asking if the current rules are “outmoded, ineffective, insufficient, or excessively burdensome” in accordance with EO 13563. To some extent, NRC has already answered the question with its reactor construction and oversight process that provides detailed direct evaluation of safety-related characteristics rather than the vague indirect effects created by financial qualifications. The question is whether any form of financial qualification test at the licensing stage can provide a meaningful increase in safety beyond that already provided through the reactor oversight programs. As explained below, I believe that the proposed new financial qualification standard is better than the current financial qualification standard but that simply abolishing the financial qualifications requirement for licensing would be an improvement over the proposed new standard.

I make three arguments in this comment: (1) the statutory language for license qualifications is similar to that found in other statutes and does not show a specific Congressional intent for the NRC to examine financial qualifications; (2) Even qualifications that are not particularly burdensome create the risk of delay and litigation and should only be used if they clearly contribute to the regulatory decision process; (3) The proposed standard of “appears to be financially qualified” is unnecessary for regulatory decision making because there is a market test of financial qualifications that is more accurate than regulatory review.