Regulatory Improvements to the Nuclear Materials Management and Safeguards System, 32453-32466 [E8-12830]

Agencies

• NUCLEAR REGULATORY COMMISSION

[Federal Register Volume 73, Number 111 (Monday, June 9, 2008)]
[Rules and Regulations]
[Pages 32453-32466]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-12830]


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NUCLEAR REGULATORY COMMISSION

10 CFR Parts 40, 72, 73, 74 and 150

[NRC-2007-0002]
RIN 3150-AH85


 Regulatory Improvements to the Nuclear Materials Management and 
Safeguards System

AGENCY: Nuclear Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is amending its 
regulations related to licensee reporting requirements for source 
material and special nuclear material (SNM) to the Nuclear Materials 
Management and Safeguards System (NMMSS). The amendments lower the 
threshold of the quantities of SNM and certain source materials that 
require the submission of material status reports to the NMMSS. Also, 
the amendments modify the types and timing of submittals of some 
transaction reports to the NMMSS. The amendments also require licensees 
to reconcile any material inventory discrepancies that NRC identifies 
in the NMMSS database. The amendments reduce some regulatory burden by 
reducing the current reporting requirements related to the export of 
certain source material and SNM. However, the annual reporting 
requirements are new requirements for licensees who possess 350 grams 
or less of SNM. These amendments are needed to improve the accuracy of 
the material inventory information maintained in the NMMSS.

DATES: This final rule is effective on January 1, 2009.

FOR FURTHER INFORMATION CONTACT: Neelam Bhalla, Office of Federal and 
State Materials and Environmental Management Programs, U.S. Nuclear 
Regulatory Commission, Washington, DC 20555-0001, telephone (301) 415-
6843, e-mail, nxb@nrc.gov.

SUPPLEMENTARY INFORMATION: 

I. Background
II. Discussion
    A. Special Nuclear Material Transfer Reports
    B. Special Nuclear Material Status Reports
    C. Source Material Transfer Reports
    D. Source Material Status Reports
    E. Reconciliation of Submitted Inventories
    F. Reporting Identification Symbol and Holding Accounts
    G. Reduction in Reporting Requirements for Export of Material 
Shipments
    H. Who Would This Action Affect?
    I. How Would the Information Be Reported?
III. Summary of Public Comments on the Proposed Rule
IV. Summary of Amendments by Section
V. Criminal Penalties
VI. Agreement State Compatibility
VII. Voluntary Consensus Standards
VIII. Environmental Impact: Categorical Exclusion
IX. Paperwork Reduction Act Statement
X. Public Protection Notification
XI. Regulatory Analysis
XII. Regulatory Flexibility Certification
XIII. Backfit Analysis
XIV. Congressional Review Act

I. Background

    The Nuclear Materials Management and Safeguards System (NMMSS) is 
the national database used in the United States by Nuclear Regulatory 
Commission (NRC) licensees, the Agreement State licensees, and 
Department of Energy (DOE) contractors to report the possession of 
certain special nuclear material (SNM) and source material. The NMMSS 
was created as a result of comprehensive

[[Page 32454]]

accounting procedures developed by the Atomic Energy Commission in 
response to the passage of the Atomic Energy Act of 1954 and began 
processing of facility submittals in 1965. The DOE is responsible for 
maintaining the NMMSS database. The NMMSS database supports NRC 
domestically in the review of licensee material control and accounting 
programs, and internationally as the U.S. Government database for 
collecting and reporting information required by international 
treaties. The NRC reporting requirements related to the NMMSS are 
primarily contained in 10 CFR Parts 40, 72, 74, 75, and 150.
    The NMMSS database uses licensee submittals to serve two important 
functions: (1) Meeting international reporting obligations, and (2) 
assisting in the oversight of licensee material control and accounting 
(MC&A) programs required by 10 CFR Parts 40, 72, 74, 75, 76, and 150.
    With regard to international commitments, the United States has 
committed to a national accountancy and control system for nuclear 
materials through treaties with nuclear trading partners and the 
International Atomic Energy Agency (IAEA). The NMMSS is part of the 
overall program to help satisfy these international commitments by 
constituting the national database used by NRC and the Agreement State 
licensees, and DOE contractors to report the possession of certain 
quantities of SNM and source material. The information submitted to the 
NMMSS is then reported externally by the United States in order to 
satisfy these treaty requirements. The NMMSS also maintains accounting 
data on U.S. peaceful use exports and imports of nuclear materials that 
have occurred since 1965.
    With respect to NRC's oversight of the MC&A at licensed facilities, 
the NMMSS is the national database that serves as the central 
collection and processing point for inventory, shipment, and receipt 
information required to be reported by commercial and Federal 
Government facilities. Applicable NRC reporting requirements are 
specified in 10 CFR Parts 40, 72, 74, 75, and 150. As a result of these 
reporting requirements, the NMMSS can provide the NRC staff with a 
projection of quantities of reportable materials located, shipped, or 
received at a particular licensee site.
    In October 2001, the DOE Office of the Inspector General (OIG) 
issued a report based on an audit of the NMMSS for DOE-owned nuclear 
materials.\1\ One of the findings of that report was that DOE could not 
fully account for DOE-owned nuclear materials loaned or leased to 
licensees. A similar audit conducted by NRC's OIG also raised concerns 
over the accuracy of material inventories in the NMMSS.\2\ In the 
report, the NRC OIG recommended that the scope of licensee reporting be 
expanded to include a requirement that smaller licensees (those 
possessing less than 350 grams of SNM) submit inventory information to 
the NMMSS annually.
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    \1\ This report entitled, ``Accounting for Government Owned 
Nuclear Materials Provided to Non-Department Domestic Facilities'' 
(October 26, 2001), is available at https://www.ig.doe.gov/documents/
calendaryear2001/ig-0529.pdf.
    \2\ This report entitled, ``Audit of NRC's Regulatory Oversight 
of Special Nuclear Materials'' (OIG-03-A-15, May 23, 2003), is 
available at https://www.nrc.gov/reading-rm/doc-collections/insp-gen/
2003/03-a-15.pdf.
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    As a result of its audit, NRC took immediate steps to verify and 
reconcile inventories in the NMMSS database by issuing a bulletin, NRC 
Bulletin 2003-04: ``Rebaselining of Data in the Nuclear Materials 
Management and Safeguards System.'' (Agencywide Documents Access and 
Management System (ADAMS) Accession Number ML0732760009.) The bulletin 
was sent to all NRC and Agreement State licensees then holding NMMSS 
accounts and requested that they provide inventory information to the 
NMMSS. The NRC staff also conducted site visits to review selected 
licensees' submitted information in comparison to actual physical 
inventories. The review concluded that licensees did not submit or 
update inventories to the NMMSS for several years (or decades) because 
they possessed or transferred materials that did not meet minimum 
reporting thresholds. These efforts also helped identify accounts with 
zero balances. The rebaselining efforts resulted in decreasing the 
number of active accounts and supported a further review and 
reconciliation of material inventories in the remaining accounts.
    At the end of these efforts, NRC determined that enhanced reporting 
of inventory information by those licensees not presently required to 
do so would provide greater assurance about the accuracy of licensee 
inventory information maintained in the database. NRC believes that 
licensee inventories must be submitted regularly and reconciled in 
comparison to values projected by the NMMSS database to maintain the 
usefulness of the database for international and domestic regulatory 
needs.

II. Discussion

    The NRC staff has had extensive interactions with the NMMSS 
operator and industry representatives since the issuance of NRC 
Bulletin 2003-04. On the basis of these efforts and an evaluation of 
the current regulations related to the NMMSS reporting, the NRC staff 
concluded that many of the discrepancies in NMMSS information resulted 
because: (1) Many licensees (those that possess less than 350 grams of 
SNM) infrequently ship and/or receive reportable materials, and (2) 
many licensees do not meet the current regulatory threshold for annual 
reporting of SNM or source material and lose institutional awareness of 
the NMMSS over time. As a result, for many licensees there are no 
requirements to periodically confirm the accuracy of values projected 
by the NMMSS.
    This conclusion led NRC to embark on an effort to amend its 
regulations to enhance the accuracy of the NMMSS database. The 
amendments lower the threshold of quantities of special nuclear 
materials and certain source materials requiring the submission of both 
status and transaction reports to the NMMSS. Another amendment to keep 
the NMMSS data more current modifies reporting requirements in Sec.  
40.64 to require licensees involved in enrichment services, 
downblending material initially enriched in uranium-235 (U\235\) 
isotope 10 percent or more, or mixed-oxide (MOX) fuel fabrication of 
uranium, to report the transfer, receipt, inventory adjustment, 
inventory, and material balance information for source material. These 
changes to NMMSS reporting requirements will improve the accuracy of 
material balance (inputs/outputs) information. Currently, licensees are 
only required to report source material subject to international treaty 
requirements. However, source material reporting is an important part 
of the material balance equation because these materials are used as an 
input material in the downblending of uranium, in MOX fuel fabrication, 
and in the uranium enrichment cycle. This type of facility reporting 
will facilitate the evaluation of the prior and ending source material 
balances of licensees that engage in activities that change the SNM 
values of materials.
    The NRC staff considered other possible consequences posed by 
inaccurate NMMSS information associated with these holders of small 
quantities of SNM. Gram quantities of SNM held by many small quantity 
licensees do not appear to pose a significant challenge to the 
promotion of security from an MC&A perspective. However, if periodic 
reporting and evaluation of small licensee balances are not required, 
it could reduce public

[[Page 32455]]

confidence in the primary tool used by the NRC in the oversight of 
small licensee MC&A activities since NRC would not have assurance that 
projected material balances are representative of the quantities of 
materials at these sites.
    The following sections summarize the significant changes to the 
regulations and the NRC's basis for those changes.

A. Special Nuclear Material Transaction Reports

    Currently, licensees are required by Sec.  74.15(a) to report to 
the NMMSS whenever they transfer or receive one gram or more of SNM. 
The revision adds a requirement that a licensee must also report to the 
NMMSS whenever it makes an on-site adjustment to the SNM inventory 
involving a quantity of one gram or more SNM. The inventory adjustments 
may be due to decay, or normal operational losses. The adjustments must 
be made, at a minimum, when the licensee reports its physical 
inventory. Domestic MC&A safeguards will be enhanced by this change and 
NMMSS generated inventories will more accurately reflect actual 
facility inventory values. The required reporting of these adjustments 
will improve the accuracy of the NMMSS database.
    Additionally, Sec. Sec.  72.78 and 74.15 require submission of 
material transaction reports for the transfer and receipt of SNM but do 
not specify the time frames in which the reports must be made. However, 
the reporting time frames are specified in NUREG/BR-0006, 
``Instructions for the Preparation and Distribution of Material 
Transaction Reports.'' In contrast, for source material transactions 
under Sec.  40.64(a), nuclear material transaction reports are required 
to be submitted by the close of business the next working day for the 
transfer of source material, and within ten days of receipt for the 
receipt of source material. Therefore, for consistency between those 
provisions and also with the guidance documents, Sec. Sec.  72.78 and 
74.15 are amended to require each licensee who transfers SNM to submit 
a nuclear material transaction report no later than the close of 
business the next working day, and to require each licensee who 
receives the material to submit a nuclear material transaction report 
within ten days after the material is received. Consistent with this 
change, 10 CFR Part 150 is amended to require licensees who transfer 
SNM to submit a nuclear material transaction report to NMMSS no later 
than the close of business the next working day. Currently, Sec.  
150.16(a) requires licensees only to submit the SNM transaction report 
``promptly'' after the SNM transfer takes place. By changing 
``promptly'' to ``no later than the close of business the next working 
day,'' the regulation will be unambiguous.
    A revision is also made to the section headings of Sec. Sec.  
72.78, 74.15 and 150.16. Currently, Sec. Sec.  72.78 and 74.15 are 
entitled ``Nuclear material transfer reports,'' and Sec.  150.16 is 
entitled ``Submission to Commission of nuclear material transfer 
reports.'' The amended heading of Sec. Sec.  72.78 and 74.15 is 
``Nuclear material transaction reports.'' Section 150.16 is now 
entitled ``Submission to Commission of nuclear material transaction 
reports.'' The amended section headings more accurately reflect the 
requirements contained in these sections for both receipt and transfer 
of nuclear material, and are consistent with the name of the submitted 
report.

B. Special Nuclear Material Status Reports

    Currently, licensees are required by Sec.  74.13(a) to report 
annual SNM inventories to the NMMSS only if they are authorized to 
possess more than 350 grams of SNM. The amendments lower the reporting 
threshold to one gram or more, requiring a licensee who possesses, or 
who had possessed in the previous reporting period, one gram or more of 
SNM to report an annual inventory to the NMMSS. By lowering the 
reporting threshold, NRC will improve its knowledge of the location and 
presence of SNM possessed by licensees. The staff considered changing 
the current 350-gram threshold to a number of values that were less 
than 350 grams but more than one gram. However, these approaches were 
rejected because they would still result in a number of licensees that 
would not have to report inventory regularly and ultimately cause a 
variation of the same problem i.e., that NRC would not have adequate 
input regarding inventories held by these licensees. The staff also 
considered lowering the inventory/material balance threshold to less 
than one gram of SNM. This method was not pursued because it would 
``mis-align'' NRC regulations with DOE and with international entities 
with whom the U.S. has treaty agreements in place. Also, the licensee 
community would potentially have an additional burden to develop new 
(less than one gram) measurement techniques. Finally, the staff 
established the new threshold at one gram of SNM because: (1) 
International entities (those with which the United States has 
treaties) recognize one gram as the basic measuring unit for SNM; (2) 
one gram is a threshold value accepted by DOE and would meet its 
reporting expectations for licensees possessing government-owned 
material; (3) a one gram threshold would address the NRC OIG concern 
about ensuring that NRC has interaction with and reporting from small-
quantity licensees; and (4) the one gram threshold for inventory/
material balance reporting would align with the present one gram 
requirement for licensees reporting shipments and receipts 
(transactions) of SNM.
    The submission of material balance reports under the current rule 
is linked to the performance and conduct of annual physical inventories 
and related reports required by Sec. Sec.  74.19(c), 74.31(c)(5), 
74.33(c)(4), or 74.43(c)(6) and in March and September for those 
subject to Sec.  74.51. Those provisions are linked for the convenience 
of licensees, since both reports contain the same minimum threshold 
requirements of more than 350 grams. However, the activities associated 
with performing, documenting, and maintaining records associated with a 
physical inventory, as required by Sec.  74.19(c), are different and 
more encompassing than those associated with preparing and submitting a 
material status report required by Sec.  74.13. Because the staff does 
not plan to revise Sec.  74.19(c) as part of this rulemaking, it would 
therefore no longer be possible to link the reporting requirements of 
the two rules since a physical inventory under Sec.  74.19(c) is only 
implicated if a licensee is authorized to possess greater than 350 
grams of SNM.
    Thus, Sec.  74.13 is revised to continue to permit licensees 
authorized to possess greater than 350 grams of SNM to submit material 
status reports along with their physical inventory reports as required 
by Sec. Sec.  74.19(c), 74.31(c)(5), 74.33(c)(4), or 74.43(c)(6) and in 
March and September of each year, for those subject to Sec.  74.51. 
However, for those licensees who are authorized to possess 350 grams or 
less of SNM, the rule requires the submission of material balance 
reports no later than March 31 of each year. The NRC finds that this 
schedule will eliminate any reporting problems related to 
inconsistencies in reporting quantities that persist between Sec. Sec.  
74.13 and 74.19, but will also maintain the intended flexibility and 
efficiency of the current rule.

C. Source Material Transaction Reports

    Currently, Sec.  40.64(a) requires submission of a Nuclear Material 
Transaction Report whenever a licensee transfers, receives, or adjusts 
the inventory of foreign obligated source material by one kilogram or 
more. Foreign obligated materials are those

[[Page 32456]]

nuclear materials that are subject to tracking by international 
treaties. Also, reports are required for the import and export of one 
kilogram or more of any source material, regardless of obligation. 
However, the current requirements do not require reporting when 
material is utilized. The revision amends the rule to require reporting 
when a licensee utilizes one kilogram or more of source material in 
enrichment services, in downblending material initially enriched in the 
U\235\ isotope to 10 percent or more, or in MOX fuel fabrication, 
regardless of obligation. The NRC staff believes that source material 
reporting is an important part of the material balance equation because 
these materials are used as an input material in the downblending of 
uranium, in MOX fuel fabrication, and in the uranium enrichment cycle. 
This amendment to NMMSS reporting will facilitate the evaluation of the 
prior and ending balances of licensees that engage in activities that 
change the SNM values of their inventories and thus will improve the 
accuracy of the NMMSS data.

D. Source Material Status Reports

    Currently, Sec.  40.64(b) requires annual source material inventory 
reports of foreign obligated source material for licensees authorized 
to possess more than 1,000 kilograms of source material. The revision 
lowers this value to one kilogram or more of foreign obligated source 
material. A lowered reporting threshold will provide the NRC with 
better knowledge of the location and presence of foreign obligated 
source material possessed by the licensees. The revision also requires 
the licensees to report annual source material inventory when a 
licensee utilizes one kilogram or more of any source material in 
enrichment services, in downblending material initially enriched in the 
U\235\ isotope to 10 percent or more, or in MOX fuel fabrication, 
regardless of the obligation. Based on a review of the rebaselining 
efforts, the NRC staff has concluded that many licensees did not submit 
or update inventories to the NMMSS for several years, because they 
possessed or transferred materials that did not meet the minimum 
reporting thresholds. By lowering the reporting threshold from 1000 
kilograms to 1 kilogram of foreign obligated material, the staff 
believes the information maintained in the NMMSS database will be more 
current and reliable and help fulfil U.S. obligations under bilateral 
agreements.

E. Reconciliation of Submitted Inventories

    Many facilities that presently report inventory and material 
balance information also participate in a periodic reconciliation 
process with the NMMSS to address any differences between NMMSS 
generated inventory values and the facility reported inventory values. 
Currently, the reconciliation process is not explicitly required by 
regulations; however, it is considered to be an integral part of 
routine NMMSS operations. To address this issue, the amendments to 
Sec. Sec.  40.64(b), 72.76(a), 74.13(a), 150.17(a) and 150.17(b) 
require licensees to reconcile any inventory discrepancies identified 
by NRC in the NMMSS database within 30 days of being notified of a 
discrepancy by NRC. In the amendments to Sec. Sec.  40.4, 72.3, 74.4 
and 150.3, a new definition, ``reconciliation,'' is added to describe 
the process by which licensees' reports are evaluated and compared by 
NRC to the projected material balances by the NMMSS. The NMMSS 
projected balances are the NMMSS calculated material balances based on 
the transfer, receipt, or other adjustments reported to the NMMSS by 
the licensees during the previous reporting period. The process is 
considered complete when a licensee resolves any differences between 
the reported inventory and the inventory projected by the NMMSS 
database. This requirement will help maintain the accuracy of 
information in the NMMSS database.

F. Reporting Identification Symbol (RIS) and Holding Accounts

    NRC currently assigns a NMMSS account number called a Reporting 
Identification Symbol (RIS) to each licensee for submitting information 
to the NMMSS. The revisions to Sec. Sec.  40.64(b) and 74.13(a) require 
licensees to report inventory of source material and SNM, respectively, 
not only for their primary RIS account but also source and SNM 
inventories in associated holding accounts. Holding accounts were 
established by a few licensees to identify the material that the 
licensee was not actively using. Currently, licensees are not required 
to acknowledge shipments and receipts, or to report inventory 
information pertaining to the holding accounts to the NMMSS. The 
revisions will enhance MC&A safeguards because of the increased 
accuracy and availability of inventory information to the NRC staff.

G. Reduction in Reporting Requirements for Export of Material Shipments

    Currently, licensees who export reportable quantities of SNM or 
source material file both the shipper's and receiver's information on 
two separate forms when exporting nuclear material, as described in 
NUREG/BR-0006. Based on the NRC inspector observations, the current 
additional requirement to report a foreign facility description of the 
same transactions has not been useful in assuring the accuracy of 
domestic MC&A information and it is not necessary to meet international 
reporting requirements. Consequently, this requirement can be 
eliminated to reduce burden without adverse effects on safety or 
security or the NMMSS database. This change is reflected in the 
amendments to Sec. Sec.  40.64, 74.15 and 150.16 and will be reflected 
in the revised NUREG/BR-0006.
    In the amendment, licensees are required to file only the shipper's 
information form unless there is a significant shipper/receiver 
difference or a theft or diversion is identified. In this context 
``significant'' refers to a difference, for SNM, that requires 
resolution as described in Sec. Sec.  74.31, 74.43, or 74.59, as 
applicable. For source material, the quantities delineated in Sec.  
40.64(c)(1) involving a theft or unlawful diversion would be the 
threshold quantities for additional reporting. This change to the 
reporting requirement will reduce the licensee's reporting burdens when 
shipping nuclear materials without significantly impacting the quality 
of the information reported to the database.

H. Who Would This Action Affect?

    Currently, licensees possessing more than 350 grams of SNM report 
inventory and material balance information annually to the NMMSS. The 
lowering of the threshold to one gram of SNM and one kilogram of source 
material subject to treaty obligations will affect approximately 200 
additional NRC and Agreement State licensees who presently possess 
between one and 350 grams of SNM.
    New requirements associated with source material reporting will 
also apply to licensees that perform uranium enrichment services, 
downblend material initially enriched in the U\235\ isotope to 10 
percent or more, and perform MOX fuel fabrication. However, the actual 
impact on these licensees will be minimal because much of the source 
material used for these type of processes has associated treaty 
obligations and is subject to the current reporting requirements.

[[Page 32457]]

    Finally, the reduction in reporting requirements associated with 
export of SNM and source material will impact approximately 17 NRC and 
Agreement State licensees that export such materials. This change to 
the reporting requirements as specified in NUREG/BR-0006 will result in 
a reduction of about 1,700 reports per year, from the current number of 
3,400 reports per year to the NMMSS, without impacting the quality of 
information in the NMMSS database.

I. How Would the Information be Reported?

    Licensees may continue to submit foreign obligated source material 
information pursuant to Sec.  40.64(b) as a statement and may submit 
the statement with other reports that the licensee is required to 
submit, such as the SNM material balance report. However, source 
material and SNM transaction reports must be submitted by filing the 
Nuclear Material Transaction Reports form in computer-readable format 
as specified in NRC NUREG/BR-0006. Additional source and SNM inventory 
and material balance reports must be submitted in computer-readable 
format as specified in the NRC NUREG/BR-0007, ``Instructions for the 
Preparation and Distribution of Material Status Reports.'' Specific 
details about the forms and format for these reports are contained in 
the NRC NUREG/BR-0006 and 0007. Additionally, reporting software is 
available to the licensees free of charge from the NMMSS contractor.

III. Summary of Public Comments on the Proposed Rule

    The NRC received 5 comment letters on the proposed rule. The 
commenters were all representatives of industry. Copies of the public 
comments are available for review in the NRC Public Document Room, 
11555 Rockville Pike, Rockville, MD. A review of the comments and the 
NRC staff's responses follow:
    Comment 1: Four commenters indicated that the proposed language in 
10 CFR 74.15(a) regarding on-site inventory adjustments needed to be 
clarified. As written, the commenters were concerned that frequent 
(daily to monthly) reporting would be necessary to account for decay 
and burnup in the reactor core. Commenters described this as an 
unnecessary reporting burden with no commensurate benefit or 
improvement in SNM accountability. Two of the licensees suggested 
revised language that would clarify the rule text to make it clear that 
the adjustments would be submitted to coincide with the submission of 
the annual or semi-annual Material Balance Report. One commenter 
requested that the rule state that its current practice of bi-monthly 
adjustments is acceptable.
    Response: NRC agrees with the commenters that the rule language 
needs to be clarified. Early in the comment period, the NRC posted a 
Frequently Asked Question on the Ruleforum Web site after several 
licensee inquiries during the comment period. The question and answer 
was also included in a special edition of the NMMSS News in March 2007. 
The answer stated that the NRC expects that a licensee, at a minimum, 
report all inventory adjustments no later than when the licensee 
reports its physical inventory results to NMMSS (i.e., 12 months for 
power reactors). The NRC has revised the final rule language to clarify 
the timing of the inventory adjustments. Licensees are allowed to 
adjust inventory on a more frequent basis than what is required by the 
regulations. Therefore the commenter is correct to assume that it is 
acceptable to continue to report its adjustments with its bi-monthly 
inventory data. However, the NRC does not agree that this option needs 
to be acknowledged in the final rule text. A licensee can always do 
more than required by the regulations as long as it meets the minimum 
requirements.
    Comment 2: One commenter requested that 10 CFR 73.67(g)(2)(ii) be 
revised to remove a reference to Sec.  70.54 because that section of 
the regulations no longer exists. The commenter noted that the correct 
reference should be to Sec.  74.15. The commenter requested that the 
inadvertent omission be picked up in this rule since changes are being 
made that affect Sec.  74.15.
    Response: The NRC agrees with the commenter that the correction 
should be made. In a final rule published in 2002 (67 FR 78130; 
December 23, 2002), the NRC deleted Sec.  70.54 in its entirety. The 
requirements in that section are now covered by the requirements found 
in Sec.  74.15. The 2002 rulemaking was part of an effort to move all 
of the MC&A requirements into 10 CFR Part 74. References to the deleted 
sections were revised to reference the new locations in 10 CFR Part 74. 
The reference to Sec.  70.54 contained in Sec.  73.67(g)(2)(ii) should 
have been changed to Sec.  74.15 in the 2002 rulemaking but was 
overlooked. Because this is a minor conforming change and no purpose 
would be served by seeking public comment on the correction, the 
Commission, under 5 U.S.C. 553(b)(3)(B), finds that good cause exists 
to dispense with notice and comment procedures for this correction. The 
NRC has made the correction to the rule text.
    Comment 3: One commenter stated that complete reconciliation of all 
reports submitted to NMMSS may not be practical due to reporting 
precision and errors caused by rounding. The commenter stated that the 
rule should be limited to reconciliation of the ending inventory 
balances in the Material Status Reports (742 section A line 81 and 742 
section B) between the licensee and NMMSS. The commenter noted that 
this limitation would be consistent with the Discussion section of the 
proposed rule.
    Response: The staff disagrees that reconciliation is limited to the 
ending inventory balance. The commenter is correct that reconciliation 
of licensee submittals is partially a review of database ending values, 
based on other licensee submittals, compared to the ending balances 
reported by the licensee in the Material Status Report, section A line 
81 and section B. However, the reconciliation effort also includes 
section A Line 80 (government-owned materials, if any) of the Material 
Status Report and a comparison of the Total line values listed on Form 
742C, the Physical Inventory Listing. Additionally, to correct any 
identified inconsistencies in these ending values, a licensee may find 
it necessary to review previous submittals made during the period being 
reconciled. No changes to the rule language have been made.
    Comment 4: One commenter stated that a definition for `holding 
accounts' should be added to 10 CFR Part 74. The commenter stated that 
the addition of holding accounts to a licensee's reporting requirements 
should be clarified such that the excess material from a reload 
campaign or any other inventory that may be held at a supplier is not 
considered a `holding account' under the new requirement.
    Response: The staff does not find it appropriate to add such a 
definition to the regulations because other types of NMMSS accounts are 
not separately defined. However, the NRC has included further 
description of `holding accounts' in both NUREG/BR-0006 and NUREG/BR-
0007. The staff agrees with the commenter that material that is held at 
a supplier is not considered a holding account.
    Comment 5: One commenter stated that the 10-day rule for submitting 
receipt data conflicts with the 10-business day submittal required by 
DOE and that the revised reporting requirements should be consistent 
with the DOE reporting requirements and specify 10 business days for 
submittal of receipt data.
    Response: The NRC disagrees with the commenter. The 10 days versus 
10

[[Page 32458]]

business days has been NRC practice for many years, as documented in 
previous versions of NUREG/BR-0006. Allowing 10 business days could 
cause delays associated with facility closure during holiday periods. 
The commenter has not provided an adequate reason for changing the 
reporting time. The rule only applies to Agreement State and NRC 
licensees and certificate holders and does not apply to DOE sites. Even 
if the requirements applied to DOE sites, there would be no conflict 
because by filing the report within 10 days, the 10 business days would 
also be met.
    Comment 6: One commenter stated that it is currently using ``V'' 
RISs for waste containers for which safeguards have been terminated and 
that operations would be adversely impacted if it had to use holding 
accounts instead of ``V'' RISs. The commenter argued that significant 
resources would be needed to inventory all items currently in the ``V'' 
RIS (thousands of waste drums) before returning them to active 
inventory. The commenter stated that DOE allows the use of ``V'' RISs 
for waste containers for which safeguards have been terminated and this 
allowance for waste containers should be allowed by the rule. The 
commenter stated that the costs associated with adding waste items to 
active inventory must be evaluated against the benefits obtained from 
increasing the level of accountability.
    Response: The NRC disagrees with the commenter. Waste containers 
should be properly accounted for in a licensee's inventory. A licensee 
could have kilogram quantities of special nuclear material in waste 
drums and this material should be accounted for. Lack of knowledge of 
the contents of waste containers is both a safety and security concern.
    The rule only applies to Agreement State and NRC licensees and 
certificate holders and does not apply to DOE sites. For NRC and 
Agreement State licensees, the ``V'' accounts are limited to those 
licensees authorized for land disposal of radioactive waste and are not 
considered to be `holding accounts'. These licensees do not need to 
report and reconcile the values of source and special nuclear material 
in their account with the NMMSS database. The fact that the commenter 
has a ``V'' account is an artifact of the facility previously being 
operated by DOE. Because the facility is under NRC jurisdiction, the 
``V'' account should be changed to an ``H'' account.
    Comment 7: One commenter stated that it is operating under an 
exemption to the reporting requirements of 10 CFR Part 74 for material 
balance and inventory reports and that the exemption remains in effect 
until the reporting guidance is revised and appropriate programming 
changes are made to the NMMSS software. Therefore, the commenter stated 
that its site systems have not been upgraded for this purpose and that 
it could not report data to NMMSS in the proposed licensee format until 
October 2009.
    Response: This comment is beyond the scope of the rulemaking. This 
is a licensing issue that the commenter should discuss with its NRC 
Project Manager.
    Comment 8: One commenter stated that it prefers to continue to 
report and reconcile NMMSS data as is currently submitted and to 
certify the NMMSS-generated M-742 report. The commenter stated that the 
existing method of reporting meets the intent of the reporting 
requirements and there is no benefit in altering its current reporting 
method.
    Response: The commenter has not provided adequate information to 
determine if the process it currently uses meets the intent of the 
regulation. The commenter should discuss this with its NRC Project 
Manager.

IV. Summary of Amendments by Section

Section 40.4 Definitions

    Section 40.4 is amended to add a definition of ``reconciliation.'' 
Reconciliation is defined to mean the process by which licensee 
inventory submittals are compared to values projected by the NMMSS, and 
the process is considered complete when the licensee resolves any 
differences between the two values, including foreign obligated 
materials.

Section 40.64 Reports

    Section 40.64(a) is amended to (1) require licensees who utilize 
one kilogram or more of source material, regardless of obligation, in 
enrichment services, downblending uranium that has an initial 
enrichment of the U\235\ isotope of 10 percent or more, or in the 
fabrication of MOX fuels, complete and submit a Nuclear Material 
Transaction Report; and (2) require licensees who export source 
material to complete only the licensee portion of the transaction 
report unless there is an indication of loss, theft, or diversion of 
the source material, in which case both the licensee's and the foreign 
facility's information on the form must be reported.
    Section 40.64(b) is amended to (1) lower reporting thresholds for 
possession and reporting of inventory of foreign obligated source 
material to one kilogram; (2) require each licensee who possesses one 
kilogram or more of uranium or thorium source material in the operation 
of enrichment services, downblending uranium that has an initial 
enrichment of the U\235\ isotope of 10 percent or more, or in the 
fabrication of MOX fuels, to complete and submit, in computer-readable 
format, Material Balance and Physical Inventory Listing Reports 
concerning all source material (both foreign obligated and non-
obligated) that the licensee has received, produced, possessed, 
transferred, consumed, disposed, or lost in the previous reporting 
period; (3) resolve any inventory discrepancies within 30 calendar days 
of notification of the discrepancy identified by the NRC; (4) require 
inventory reporting not only in the (RIS) account but also in all 
associated holding accounts; and (5) correct the NRC address for 
obtaining the reporting instructions.

Section 72.3 Definitions

    Section 72.3 is amended to add a definition of ``reconciliation.'' 
Reconciliation is defined to mean the process by which licensee 
submittals are compared to projected values developed by the NMMSS, and 
the process is considered complete when the licensee resolves any 
differences between the two values, including foreign obligated 
materials.

Section 72.72 Material Balance Inventory and Records Requirements for 
Stored Materials

    Section 72.72(a) is amended to (1) correct the reference for SNM to 
Sec.  74.13(a) (the current reference to Sec.  74.13(a)(1) is incorrect 
because there is no paragraph (a)(1) in Sec.  74.13); and (2) require 
licensees to keep records showing the receipt, inventory, disposal, 
acquisition, and transfer of source material in quantities as specified 
in Sec.  40.64.

Section 72.76 Material Status Reports

    Section 72.76(a) is amended to (1) require reports on source 
material as specified in Sec.  40.64; (2) require licensees to resolve 
any discrepancies identified during the report review (3) and 
reconciliation process within 30 calendar days of submission of the 
information; and correct the NRC address for obtaining the reporting 
instructions.

Section 72.78 Nuclear Material Transfer Reports

    The section heading is revised to read, ``Nuclear material 
transaction reports.'' The amendment is consistent with the

[[Page 32459]]

name of the report (transaction report) and describes requirements for 
both receipt and transfer of nuclear materials.
    Section 72.78(a) is amended to (1) add a reporting requirement when 
a licensee adjusts the inventory of SNM as specified by Sec.  74.15 or 
source material as specified by Sec.  40.64; and (2) correct the NRC 
address for obtaining the reporting instructions.

Section 73.67 Licensee Fixed Site and In-Transit Requirements for the 
Physical Protection of Special Nuclear Material of Moderate and Low 
Strategic Significance

    Paragraph (g)(2)(ii) is revised to correct the reference to Sec.  
70.54. Section 70.54 was removed from the regulations in a previous 
revision. The correct reference is to Sec.  74.15.

Section 74.2 Scope

    Section 74.2(a) is amended to lower the applicable threshold of 
general reporting and recordkeeping requirements of subpart B of 10 CFR 
Part 74 to each person who possesses one gram or more of SNM.

Section 74.4 Definitions

    Section 74.4 is amended to add a definition of ``reconciliation.'' 
Reconciliation is defined to mean the process by which licensee 
submittals are compared to projected values developed by NMMSS, and the 
process is considered complete when the licensee resolves any 
differences between the two values, including foreign obligated 
materials.

Section 74.13 Material Status Reports

    Section 74.13(a) is amended to (1) lower reporting thresholds from 
authorization to possess more than 350 grams of SNM to possession of 
one gram or more of SNM, or possession of one gram or more of SNM in 
the inventory reporting period; (2) require inventory reporting to 
include not only the primary Reporting Identification Symbol (RIS) 
account but also SNM in any associated holding accounts; (3) require 
licensees to resolve any discrepancies identified during the report 
review and reconciliation process within 30 calendar days of 
notification of a discrepancy identified by the NRC; (4) require 
licensee submission of material balance reports no later than March 31 
of each year for reports not covered under Sec. Sec.  74.19, 
74.31(c)(5), 74.33(c)(4), 74.43(c)(6), or 74.51; and (5) correct the 
NRC address for obtaining the reporting instructions.

Section 74.15 Nuclear Material Transfer Reports

    The section heading is revised to read, ``Nuclear material 
transaction reports.'' The amendment is consistent with the name of the 
report (transaction report) and describes requirements for both receipt 
and transfer of nuclear materials.
    Section 74.15(a) is amended to (1) add a reporting requirement when 
the inventory of SNM is adjusted in a quantity of one gram or more; (2) 
specify that each licensee who transfers SNM must submit a Nuclear 
Material Transaction Report no later than the close of business the 
next working day, and each licensee who receives the material must 
submit a Nuclear Material Transaction Report within ten (10) days after 
the material is received; and (3) correct the NRC address for obtaining 
the reporting instructions.
    The current paragraph (c) is redesignated as a new paragraph (d). A 
new paragraph (c) is added to Sec.  74.15 to require licensees who 
export one gram or more of SNM to complete only the supplier's portion 
of the form unless a significant shipper-receiver difference as 
described in Sec. Sec.  74.31, 74.43, or 74.59 is identified.

Section 150.3 Definitions

    Section 150.3 is amended to add a definition of ``reconciliation.'' 
Reconciliation is defined to mean the process by which licensee 
submittals are compared to projected values developed by the NMMSS, and 
the process is considered complete when the licensee resolves any 
differences between the two values, including foreign obligated 
materials.

Section 150.8 Information Collection Requirements: OMB Approval

    In Section 150.8 paragraph (c)(1) is revised, paragraph (c)(2) is 
redesignated as a new paragraph (c)(3), and a new paragraph (c)(2) is 
added to describe that in Sec.  150.17, DOE/NRC Form 742 and its 
computer-readable format are approved under OMB control number 3150-
0004, and DOE/NRC Form 742C and its computer-readable format are 
approved under OMB control number 3150-0058.

Section 150.16 Submission to Commission of Nuclear Material Transfer 
Reports

    The section heading is revised to read, ``Submission to the 
Commission of nuclear material transaction reports.'' The amendment is 
consistent with the name of the report (transaction report) and 
describes requirements for both receipt and transfer of nuclear 
materials.
    Section 150.16(a) is revised to add a new paragraph (a)(1) that 
generally retains the requirements of current paragraph (a), but is 
amended to (1) require reporting when the inventory of SNM is adjusted 
in a quantity of one gram or more; (2) specify that for transfer of 
SNM, the information be submitted no later than the close of next 
business day; (3) require completion of only the licensee's portion of 
the form for exporting SNM unless a significant shipper-receiver 
difference as described in Sec. Sec.  74.31, 74.43, or 74.59 is 
identified; and (4) correct the NRC address for obtaining the reporting 
instructions.
    The new paragraph (a)(2) in Sec.  150.16 describes the material 
transaction reporting requirements for the source material. Currently, 
source material transaction reporting requirements are described in 
Sec.  150.17(a), under the heading ``Submission to Commission of source 
material reports.'' Moving these requirements to Sec.  150.16 will help 
licensees locate the material transaction reporting requirements for 
both SNM and source material in Sec.  150.16.
    The new Sec.  150.16(a)(2) also (1) requires a licensee who 
utilizes any uranium or thorium source material, regardless of 
obligation, in a quantity of one kilogram or more, in enrichment 
services, downblending uranium that has an initial enrichment of the 
U\235\ isotope of 10 percent or more, or in the fabrication of MOX 
fuels, to submit source material transaction reports; (2) requires 
licensees to file only the licensee's portion of the form when 
exporting one kilogram or more of source material, unless there is an 
indication of theft or diversion as described in Sec.  40.64(c), in 
which case both the receiver's and shipper's portion of the form must 
be completed; (3) requires the shipper's portion of the form to be 
completed for imports; and (4) corrects the NRC address for obtaining 
the reporting instructions.

Section 150.17 Submission to Commission of Source Material Reports

    The section heading is revised to read, ``Submission to Commission 
of nuclear material status reports.'' This amendment will help 
licensees locate the reporting requirements for material status reports 
for both source material and SNM. This format is similar to the 
reporting formats for source and SNM status reporting in 10 CFR Parts 
40, 72, and 74.
    Section 150.17(a) is amended to require each licensee who is in 
possession of, or had possessed in the previous reporting period, SNM 
in a quantity of one gram or more, to annually complete and submit in

[[Page 32460]]

computer-readable format Material Balance and Inventory Reports 
concerning special nuclear material that the licensee has received, 
produced, possessed, transferred, consumed, disposed of, or lost. It 
also requires licensees to resolve any discrepancies identified during 
the report review and reconciliation process within 30 calendar days of 
notification of a discrepancy identified by NRC.
    Section 150.17(b) is amended to (1) lower the annual inventory 
reporting threshold from the current 1000 kilogram of foreign obligated 
source material to one kilogram; (2) add a reporting requirement that a 
licensee who utilizes one kilogram or more of any source material in 
enrichment services, in downblending material initially enriched in the 
U\235\ isotope to 10 percent or more, or in MOX fuel fabrication is 
required to submit material balance and physical inventory listing 
reports concerning source material that the licensee has received, 
produced, possessed, transferred, consumed, disposed, or lost; (3) 
require licensees to resolve any discrepancies identified during the 
report review and reconciliation process within 30 calendar days of 
notification of a discrepancy identified by NRC; and (4) correct the 
NRC address for obtaining the reporting instructions.

V. Criminal Penalties

    For the purpose of section 223 of the Atomic Energy Act (AEA), the 
Commission is amending 10 CFR Parts 40, 72, 73, 74, and 150 under one 
or more of sections 161b, 161i, or 161o of the AEA. Willful violations 
of the rule will be subject to criminal enforcement.

VI. Agreement State Compatibility

    Under the ``Policy Statement on Adequacy and Compatibility of 
Agreement State Programs'' approved by the Commission on June 30, 1997, 
and published in the Federal Register on September 3, 1997 (62 FR 
46517), this rule is designated Compatibility Category ``NRC.'' The 
Compatibility Categories for the sections amended in this proposed rule 
would be the same as the sections in the current rule. The revisions to 
Sec. Sec.  40.64, 72.72(a), 72.76, 72.78, 73.67, 74.4, 74.13, 74.15, 
150.16 and 150.17 are designated as Category ``NRC,'' because these are 
areas of exclusive NRC regulatory authority. The following new 
sections, Sec. Sec.  40.4, 72.3 and 150.3, are also designated 
Compatibility Category ``NRC.'' Compatibility Category ``NRC'' is the 
NRC program elements that address areas of regulation that cannot be 
relinquished to Agreement States under the Atomic Energy Act or 
provisions of Title 10 of the Code of Federal Regulations. Although an 
Agreement State may not adopt program elements reserved to NRC, it may 
wish to inform its licensees of certain requirements via a mechanism 
that is consistent with the particular State's administrative procedure 
laws, but does not confer regulatory authority on the State.

VII. Voluntary Consensus Standards

    The National Technology Transfer and Advancement Act of 1995 (Pub. 
L. 104-113) requires that Federal agencies use technical standards that 
are developed or adopted by voluntary consensus standards bodies unless 
the use of such a standard is inconsistent with applicable law or 
otherwise impractical. In this final rule, the NRC is modifying current 
reporting requirements for source material and special nuclear material 
to the NMMSS. This action does not constitute the establishment of a 
standard that establishes generally applicable requirements.

VIII. Environmental Impact: Categorical Exclusion

    NRC has determined that this final rule is the type of action 
described in categorical exclusion 10 CFR 51.22(c)(1) for the changes 
to part 150 and as described in 10 CFR 51.22(c)(3)(iii) for the changes 
to parts 40, 72, 73, and 74. Therefore, neither an environmental impact 
statement nor an environmental assessment has been prepared for this 
final rule.

IX. Paperwork Reduction Act Statement

    This final rule contains new or amended information collection 
requirements that are subject to the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.). These requirements were approved by the 
Office of Management and Budget, approval numbers 3150-0020, 3150-0003, 
3150-0132, 3150-0123, 3150-0032, 3150-0004, and 3150-0058.
    Because the rule will reduce the burden for existing information 
collection requirements, the public burden for these information 
collections is expected to be decreased by 695 hours (NRC Form 741, -
1495 hours at 1.25 hours/response; NRC Form 742, +400 hours at 2 hours/
response; and NRC Form 742C, +400 hours at 2 hours/response). This 
reduction includes the time required for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed and completing and reviewing the information collection. Send 
comments on any aspect of these information collections, including 
suggestions for further reducing the burden, to the Records and FOIA/
Privacy Services Branch (T-5 F52), U.S. Nuclear Regulatory Commission, 
Washington, DC 20555-0001, or by Internet electronic mail to 
INFOCOLLECTS@NRC.GOV; and to the Desk Officer, Office of Information 
and Regulatory Affairs, NEOB-10202 (3150-0020, 3150-0003, 3150-0132, 
3150-0123, 3150-0032, 3150-0004, and 3150-0058), Office of Management 
and Budget, Washington, DC 20503.

X. Public Protection Notification

    The NRC may not conduct or sponsor, and a person is not required to 
respond to, a request for information or an information collection 
requirement unless the requesting document displays a currently valid 
OMB control number.

XI. Regulatory Analysis

    The Commission has prepared a regulatory analysis on this 
regulation. The analysis examines the costs and benefits of the 
alternatives considered by the Commission. The rule will affect about 
180 licensees who are currently required to file reports and 
approximately 200 additional NRC and Agreement State licensees. 
Affected licensees include enrichment facilities, fuel fabricators, 
laboratories, reactors, universities, colleges, medical clinics, and 
hospitals, some of which may qualify as small business entities as 
defined by 10 CFR 2.810. The rule will result in annual savings for the 
17 licensees subject to current reporting requirements because there is 
a reduction in the number of transaction forms submitted for certain 
export transactions. However, for the licensees possessing 350 grams or 
less of SNM, there is an additional cost from the regulations. The 
annual time required by these licensees to complete each inventory and 
material balance report is estimated at two hours. The total annual 
burden to perform the reporting and reconciliation for these 200 
licensees is 400 hours. The annual costs of the amendments for affected 
licensees are estimated to be $37,200 total or on average about $186 
per affected licensee.
    The analysis is available for inspection in the NRC Public Document 
Room, 11555 Rockville Pike, Rockville, MD. Single copies of the 
regulatory analysis are available from Neelam Bhalla, telephone (301) 
415-6843, e-mail, nxb@nrc.gov of the Office of Federal and State 
Materials and Environmental Management Programs.

[[Page 32461]]

XII. Regulatory Flexibility Certification

    In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 
605(b)), the Commission certifies that this rule does not have a 
significant economic impact on a substantial number of small entities. 
The rule would affect about 180 licensees who are currently required to 
file reports and approximately 200 additional NRC and Agreement State 
licensees. Affected licensees include enrichment facilities, fuel 
fabricators, laboratories, reactors, universities, colleges, medical 
clinics, and hospitals, some of which may qualify as small business 
entities as defined by 10 CFR 2.810. The rule will result in annual 
savings for the 17 licensees subject to current reporting requirements 
because there is a reduction in the number of transaction forms 
submitted for certain export transactions. However, for the licensees 
possessing 350 grams or less of SNM, there is an additional cost from 
the regulations. The annual time required by these licensees to 
complete each inventory and material balance report is estimated at two 
hours. No research or compilation is necessary because all information 
is transcribed from in-house records kept for other purposes. The total 
annual burden to perform the reporting and reconciliation for these 200 
licensees is 400 hours. Based on the regulatory analysis conducted for 
this action, the annual costs of the amendments for affected licensees 
are estimated to be $37,200 total or on average about $186 per affected 
licensee. NRC believes that the selected alternative reflected in the 
amendment is the least burdensome, most flexible alternative that 
accomplishes the NRC's regulatory objective.

XIII. Backfit Analysis

    NRC has determined that the backfit rule (Sec. Sec.  50.109, 70.76, 
72.62, or 76.76) does not apply to this final rule because this 
amendment does not involve any provisions that impose backfits as 
defined in the backfit rule. Therefore, a backfit analysis is not 
required.

XIV. Congressional Review Act

    In accordance with the Congressional Review Act of 1996, the NRC 
has determined that this action is not a major rule and has verified 
this determination with the Office of Information and Regulatory 
Affairs of OMB.

XV. Lists of Subjects

10 CFR Part 40

    Criminal penalties, Government contracts, Hazardous materials 
transportation, Nuclear materials, Reporting and recordkeeping 
requirements, Source material, Uranium.

10 CFR Part 72

    Administrative practice and procedure, Criminal penalties, Manpower 
training programs, Nuclear materials, Occupational safety and health, 
Penalties, Radiation protection, Reporting and recordkeeping 
requirements, Security measures, Spent fuel, Whistleblowing.

10 CFR Part 73

    Criminal penalties, Export, Hazardous materials transportation, 
Import, Nuclear materials, Nuclear power plants and reactors, Reporting 
and recordkeeping requirements, Security measures.

10 CFR Part 74

    Accounting, Criminal penalties, Hazardous materials transportation, 
Material control and accounting, Nuclear materials, Packaging and 
containers, Radiation protection, Reporting and recordkeeping 
requirements, Scientific equipment, Special nuclear material.

10 CFR Part 150

    Criminal penalties, Hazardous materials transportation, 
Intergovernmental relations, Nuclear materials, Reporting and 
recordkeeping requirements, Security measures, Source material, Special 
nuclear material.

    For the reasons set out in the preamble and under the authority of 
the Atomic Energy Act of 1954, as amended; the Energy Reorganization 
Act of 1974, as amended; and 5 U.S.C. 553; the NRC is adopting the 
following amendments to 10 CFR parts 40, 72, 73, 74, and 150:

PART 40--DOMESTIC LICENSING OF SOURCE MATERIAL

0
1. The authority citation for Part 40 continues to read as follows:

    Authority: Secs. 62, 63, 64, 65, 81, 161, 182, 183, 186, 68 
Stat. 932, 933, 935, 948, 953, 954, 955, as amended, secs. 11e(2), 
83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended, 3039, sec. 234, 
83 Stat. 444, as amended (42 U.S.C. 2014(e)(2), 2092, 2093, 2094, 
2095, 2111, 2113, 2114, 2201, 2232, 2233, 2236, 2282); sec. 274, 
Pub. L. 86-373, 73 Stat. 688 (42 U.S.C. 2021); secs. 201, as 
amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 
5841, 5842, 5846); sec. 275, 92 Stat. 3021, as amended by Pub. L. 
97-415, 96 Stat. 2067 (42 U.S.C. 2022); sec. 193, 104 Stat. 2835, as 
amended by Pub. L. 104-134, 110 Stat. 1321, 1321-349 (42 U.S.C. 
2243); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note).
    Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 
2951 (42 U.S.C. 5851). Section 40.31(g) also issued under sec. 122, 
68 Stat. 939 (42 U.S.C. 2152). Section 40.46 also issued under sec. 
184, 68 Stat. 954, as amended (42 U.S.C. 2234). Section 40.71 also 
issued under sec. 187, 68 Stat. 955 (42 U.S.C. 2237).


0
2. In Sec.  40.4, a new definition, Reconciliation, is added in 
alphabetical order to read as follows:


Sec.  40.4  Definitions.

* * * * *
    Reconciliation means the process of evaluating and comparing 
licensee reports required under this part to the projected material 
balances generated by the Nuclear Materials Management and Safeguards 
System. This process is considered complete when the licensee resolves 
any differences between the reported and projected balances, including 
those listed for foreign obligated materials.
* * * * *
0
3. In Sec.  40.64, paragraphs (a) and (b) are revised to read as 
follows:


Sec.  40.64  Reports.

    (a) Except as specified in paragraphs (d) and (e) of this section, 
each specific licensee who transfers, receives, or adjusts the 
inventory in any manner, of uranium or thorium source material with 
foreign obligations by one kilogram or more; or who imports or exports 
one kilogram or more of uranium or thorium source material; or who uses 
one kilogram or more of any uranium or thorium source material in 
enrichment services, downblending uranium that has an initial 
enrichment of the U\235\ isotope of 10 percent or more, or in the 
fabrication of mixed-oxide fuels, shall complete a Nuclear Material 
Transaction Report in computer-readable format as specified in the 
instructions in NUREG/BR-0006 and NMMSS Report D-24, ``Personal 
Computer Data Input for NRC Licensees.'' Each licensee who exports one 
kilogram or more of uranium or thorium source material shall complete 
in the format listed above the licensee's portion of the Nuclear 
Material Transaction Report unless there is indication of loss, theft, 
or diversion as discussed under paragraph (d) of this section, in which 
case both the licensee's and the foreign facility's information must be 
reported. Licensees who import one kilogram or more of uranium or 
thorium source material shall complete the supplier's and the 
licensee's portion of the Nuclear Material Transaction Report. Copies 
of the instructions may be obtained either by writing the U.S. Nuclear 
Regulatory

[[Page 32462]]

Commission, Division of Fuel Cycle Safety and Safeguards, Washington, 
DC 20555-0001, or by e-mail to RidsNmssFcss@nrc.gov. Each licensee who 
transfers the material shall submit a Nuclear Material Transaction 
Report in computer-readable format as specified in the instructions no 
later than the close of business the next working day. Each licensee 
who receives the material shall submit a Nuclear Material Transaction 
Report in computer-readable format in accordance with instructions 
within ten (10) days after the material is received. The Commission's 
copy of the report must be submitted to the address specified in the 
instructions. These prescribed computer-readable forms replace the DOE/
NRC Form 741 previously submitted in paper form.
    (b) Except as specified in paragraphs (d) and (e) of this section, 
each licensee who:
    (1) Possesses, or had possessed in the previous reporting period, 
at any one time and location, one kilogram or more of uranium or 
thorium source material with foreign obligations as defined in this 
part, shall document holdings as of September 30 of each year and 
submit to the Commission within 30 days, a statement of its source 
material inventory with foreign obligations as defined in this part. 
Alternatively, this information may be submitted with the licensee's 
material status reports on special nuclear material filed under part 72 
or 74 of this chapter, as a statement of its source material inventory 
with foreign obligations as defined in this part. This statement must 
be submitted to the address specified in the reporting instructions in 
NUREG/BR-0007, and include the Reporting Identification Symbol (RIS) 
assigned by the Commission to the licensee.
    (2) Possesses, or had possessed in the previous reporting period, 
one kilogram or more of uranium or thorium source material pursuant to 
the operation of enrichment services, downblending uranium that has an 
initial enrichment of the U\235\ isotope of 10 percent or more, or in 
the fabrication of mixed-oxide fuels shall complete and submit, in 
computer-readable format, Material Balance and Physical Inventory 
Listing Reports concerning all source material that the licensee has 
received, produced, possessed, transferred, consumed, disposed of, or 
lost. Reports must be submitted for each Reporting Identification 
Symbol (RIS) account including all holding accounts. Each licensee 
shall prepare and submit these reports as specified in the instructions 
in NUREG/BR-0007 and NMMSS Report D-24, ``Personal Computer Data Input 
for NRC Licensees.'' These reports must document holdings as of 
September 30 of each year