Text

Redacted Pennsylvania State University Breazeale Nuclear Reactor-Response to U.S. NRC Request for Additional Information Dated September 9, 2008
	ML092650603
Person / Time
Site:	Pennsylvania State University
Issue date:	10/31/2008
From:	Unlu K; Pennsylvania State Univ
To:	William Kennedy; Office of Nuclear Reactor Regulation
	Kennedy W, NRR/ADRA/DPR/PRT, 415-2784
References
	TAC MC9534
	Download: ML092650603 (77)
	v • d • e

PENNSTATE OMM KENAN IUNLO, Ph.D.

Director, Radiation Science and Engineering Center Professor, Department of Mechanical and Nuclear Engineering The Pennsylvania State University University Park, PA 16802-2304 Phone: (814) 865-6351 Fax:

(814) 863-4840 E-mail: k-unlu(ipsu.edu October 31, 2008 US Nuclear Regulatory Commission ATTN: Mr. William Kenney Office of Nuclear Reactor Regulation Mail Stop 012-G13 One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738

Reference:

Pennsylvania State University Breazeale Nuclear Reactor Docket No.50-005, License No. R-2 USNRC Request for Additional Information (RAI) dated September 9, 2008

Subject:

Response to RAI

Dear Mr. Kennedy:

The attachment to this letter answers the questions presented in the RAI dated September 9, 2008. If there are any questions regarding the information submitted, please contact Mr. Mark A. Trump, Associate Director for Operations at RSEC. I declare under penalty of perjury that the foregoing is true and correct.

Executed on 001-il 31, 19-09 Sincerely yours, Kenan Unlii Director, Radiation Science and Engineering Center Professor, Department of Mechanical and Nuclear Engineering cc:

E.J. Pell (w/o)

A.A. Atchley (w/o)

D. Sathianathan (w/o)

M.A. Trump (w/o)

Enclosures College of Engineering An Equal Opportunity University October 31, 2008 KENAN UNLO, Ph.D.

Director, Radiation Science and Engineering Center Professor, Department of Mechanical and Nuclear Engineering The Pennsylvania State University University Park, PA 16802-2304 US Nuclear Regulatory Commission.

ATTN: Mr. William Kenney Office of Nuclear Reactor Regulation Mail Stop 012-G13 One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738

Reference:

Pennsylvania State University Breazeale Nuclear Reactor Docket No.50-005, License No. R-2 Phone: (814) 865-6351 Fax:

(814) 863-4840 E-mail: k-unlu@psu.edu USNRC Request for Additional Information (RAI) dated September 9, 2008

Subject:

Response to RAI

Dear Mr. Kennedy:

The attachment to this letter answers the questions presented in the RAI dated September 9, 2008. Ifthere are any questions regarding the information submitted, please contactMr. Mark A. Trump, Associate Director for Operations at RSEC. I declare under penalty of perjury that the foregoing is true and correct.

Executed on _---'()_C_:fr,_h_-er-----:;J'-'-I.....L1-.:/2P ot __ ---'

Sincerely yours,

/t;t!1~J //J~

Kenan Unlii Director, Radiation Science and Engineering Center Professor, Department of Mechanical and Nuclear Engineering cc:

EJ. Pell (w/o)

A.A. Atchley (w/o)

D. Sathianathan (w/o)

M.A. Trump (w/o)

Enclosures College of Engineering An Equal Opportunity University

PSU RESPONSE TO NRC RAI CHAPTER 2 2.1 General meteorological information for the site, other than extremes, is not included in the description of site characteristics. Provide site information on temperature ranges, humidity, and average wind speed, or justify its exclusion.

Temperatures at State College are representative of those in other valley sections of Central Pennsylvania, averaging about 4 degrees lower than those in southeastern counties and 2 degrees higher than in areas farther to the northwest. The seasonal temperature change pattern is very regular, and yearly or even monthly deviations from the norm are relatively small. In summer, the days are sometimes oppressive due to a combination of high temperatures, high relative humidity and light winds, however, temperatures generally cool to comfortable levels during the night so that heat waves of the variety, occasionally experienced in the southeastern part of the Commonwealth are extremely rare. Historical temperature data is shown in the table below. (Source PSU Weather Station website)

The Climate of State College, Pennsylvania: 1882-1990 (Source PSU Weather Station website)

Monthly Temperatures (Degrees F)

E IlAveragsl.

]j Extremes Dae 1~~1 en]Low II Wrms Year IIColdest Year]

=Date H*

=i Me an

=ow*

Warmest[ea January 134.01i 26.3 18.8j 45.3

[

1950 5.4 1977 February]. ___5 27.5 19-.0 44.8 1925 6.1 1934 1 March 145_1I 36.3

=259.8 1945 17.51 19601 April 58.2i 4

7.

6 II 68.4 Jt 1941 30.6 1982I May 169.911 59.0 148._

78.3

]71911 419 1967 I June 8]

6I7=2 56.4_

84.2 1[

1934 751.7 1927 July 8.0 71.2 66 87.7 L1955 56.8 1918 1 August 1 680.01_

69.2 II 58.8_

86.1 J

1938 46.9 1893 4eptemberl734 62.6 52.1[

80.8 j[

1930 1[

46.3 1 1963 October I61.81.51.5 I 41.51 71.8

___J 1963 I

33.8 1987 November]=4851 40.4 32.5I-5 56.6

]

1975 26.4 1984 IDecemberl36.811 30.0 J2 45.5

][

_1923 12.0 11989 Page 1 of 40 PSU RESPONSE TO NRC RAI CHAPTER 2 2.1 General meteorological information for the site, other than extremes, is not included in the description of site characteristics. Provide site information on temperature ranges, humidity, and average wind speed, or justify its exclusion.

Temperatures at State College are representative ofthose in other valley sections of Central Pennsylvania, averaging about 4 degrees lower than those in southeastern counties and 2 degrees higher than in areas farther to the northwest. The seasonal temperature change pattern is very regular, and yearly or even monthly deviations from the norm are relatively small. In summer, the days are sometimes oppressive due to a combination of high temperatures, high relative humidity and light winds, however, temperatures generally cool to comfortable levels during the night so that heat waves of the variety occasionally experienced in the southeastern part of the Commonwealth are extremely rare. Historical temperature data is shown in the table below. (Source PSU Weather Station website)

The Climate of State College, Pennsylvania: 1882-1990 (Source PSU Weather Station website)

DODD Monthly [~~Dn Temperatures (Degrees F)

I II ~~g~DL II Extremes II II I

I Date IIHigh11 Mean I[Low II Warmest II Year JI Coldest II Year I I J~nuary 1134.011 26.3 1118.811 45.3 II 1950 II 5.4

]1 1977 I I February 11}5.511 27.5 II 19*qJL 44.8 II 1925 II 6.1 II 1934 j I March j145~1 36.3 1127AII 59.8 II

1~ul 17.5.-JI 1960 I 1 April 1158.211 47.9 1137.611*

68A II 1941 II 30.6 II 1982 I L May 1169.911 59.0 1148.211 78.3 11-1911 II 41.9 II 1967 I 1 June 1177.811 67.2 115~1 84.2 JI 1934 II 51.7 II 1927 I I July 1182.011 71.2 1160.611 87.7 II 1955 II 56.8 II 1918 I I August 1180.0 II 69.2 1158.811 86.1

~I 1938.-.-11 46.9 II 1893 I I Septemberl I 73 All-62.6 II 52.1 II 80.8 JI 1930 II 46Ul 1963 I I October 1161.810~1141.511 71.8 ~I 1963 II 33.8 11 1987 I INovemberl148.511 40.4 It 32.511 56.6.

II 1975 II 26A II 1984 I IDecemberI136.8]

30.0 1122.811 45.5 II 1923 II 12.0 II 1989 I Page 1 of 40

PSU RESPONSE TO NRC RAI Typical wind direction and speed distributions can be interpreted from the two figures below. (Source Office of State Climatologist website)

WANO ROSE PLOT:

DISPAY OATAPERIODS:

XUNV - U*mity Putk Ahprnt - -STATE COLLEGE, PA Wind Speed Direction D.+/- from-11ty cbsei'naz Mm S.uadnlabd 1991 - Je 1996 & =2 - 2l5 (blowing from) o'erteo pesd

.1111991

- dt60199*.nd Lda:hade 49.141; Lostuea 7F7AW 11112002 - 12031r=S

.OBSERVATlONS: CALM VAN DO:

67,401 hours0.00464 days 0.111 hours 6.630291e-4 weeks 1.525805e-4 months 22,470/c

-4AOEr WIND SPEED:

."',5.64 knots 6%"

COMdWTS:

AllDosdy obisnvato.

of

-cam win*s we inou~ded. ach cl reeadi*g as asesigned a wind daeteton by alineer inter-4 polation baxed onthe meest

en time) observed noncal-

-PotettpnsidlflhJt99 to 6W30I996 tie apot " closed Rbe3X - 0700 LT, tilmief bme iports ev act wsod.ib EAST:

WINO ROSE PREARED SY:

The Office Ofthe Pennsylvania State CilMatologiSt

%Wt'C SPEED MOELR (Knots)

AIeamde McGimaim

-.22 le m

17-21 11 -V May2007 "M

7-11 r-4-7

0-4

11nnytvanta State

°°"

Cats (0-2I Re,,--

Vecor...

SOUTH...2 2M1 degrees Wind Class Frequency Distribution

-UJ-V - State Colege, PA 30-1991 - J-1996 e, 2002--

2005 26.4 25--

22.5 21.6 2'0-18.7 15-10_

8.9 1.4 Calms 3- '4 4-7 7 -'11 11-17 17 12

-2 (0 - 2)

Wind Class (Knots)

(Source Office of State Climatologist website)

Page 2 of 40 PSU RESPONSE TO NRC RAI Typical wind direction and speed distributions can be interpreted from the two figures below. (Source Office of State Climatologist website)

MNO ROSE PLOT:

J(UNV - llnIArsltJPorkAitport -"STATE COLLECE. PAN MeuS *.u.._, U91-J_IW6.. DJ2-Dl5 DISPlAY:

DATA PERIODS; Wind Speed Direction Dot. flO'" hourly ""1"AIiorw (blowing from) a"" _...,.,.,. periods:

f---------------------------'-----'---=--'-----i 11111991-6I3OI1996"...-.d Resulart vector I 261 degre.s WRPLOT........ - Laku s,\\lironrnlnuf $ott...

- .... * ~*NORi'H******.....

~_.. -. -1 00 _. - -.

4%

SOUTH L.1tude: *. M"N; LongItUde: n.arw aewtltion: 12'- (31Jm) 6%

WNDSP£EO (Knals)

~22 17-21 11 - 17 7-11 D

4*7 0-4 Clllms (0-2):

22.47%

11112002 - 1213112005

~ aB S ERVAT10N S:

C.AOAWlN O$:

67.401 hours0.00464 days 0.111 hours 6.630291e-4 weeks 1.525805e-4 months 22,47%

~ E WINO SPEED:

5.64 knots COMrrIENTS:

An houdy observation. of calm. winds are included. Each celmreadingW'u asrigned a wind direction by a linear inter-polation hued on the nearest (in time) observed non-calm wind *.

For the pe:riod.ll1J1991 to 613011996 the tirport ww cu.d for 0lXI-07OO LT, tblmfol'll those JePOrts am DOt <<VaiW:Ile.

WINO ROSE PREPNIED ElY:

Th. Ollie. ofth.

Pennsytvanla Stat.

Clim2tolOsUt MOORER:

Al... nd.. Mc:Ginaio May 2007 "nsYIVanla Sl ~,t ~

Wind Class Frequency Distribution 26.4 Wind Class (Knots)

(Source Office of State Climatologist website)

Page 2 of40 KU'NV - State College, FA 1991-JurMl996 Be 2002.-2005

PSU RESPONSE TO NRC RAI Relative humidity data for 2007 is shown graphically below and represents typical variations.

State College 2007 Humidity Data 120 100 I

80 60 40

-HIGHEST RELATIVE HUMIDITY %

LOWEST RELATIVE HUMIDITY %

AVG DAILY RELATIVE HUMIDITY %

20 0

0) 0 Date (Source WWW.Weatherdata.com)

CHAPTER 4 4.1 Section 4.2.2, Control Rods, Page IV-12. Describe how the transient rod responds to a scram signal and loss of site power.

See page IV-12 (last paragraph). A three-way solenoid valve applies air to the transient rod air piston in the rod drive cylinder to allow operation in normal (cylinder following) and pulse (rapid ejection to pre-positioned cylinder index) modes. On a scram signal or loss of safety system power the solenoid de-energizes and vents air from the cylinder resulting in gravity return of the rod to the rod bottom position. See also SAR Section 4.5.1 and Table 4-1 for scram times and reactivity insertion rates. See also the answer to question 13.12 which discusses protective system response on a loss of facility power.

Page 3 of 40 PSU RESPONSE TO NRC RAI Relative humidity data for 2007 is shown graphically below and represents typical variations.

State College 2007 Humidity Data 120 100 80

?;o

'6 *e

-HIGHEST RELATIVE HUMIDITY %

60 i

LOWEST RELATIVE HUMIDITY %

~

40 AVG DAILY RELATIVE HUMIDITY %

20 0....

0 0

~

M

~

5S

~

iii is

~

Date (Source WWW.Weatherdata.com)

CHAPTER 4 4.1 Section 4.2.2, Control Rods, Page IV-12. Describe how the transient rod responds to a scram signal and loss of site power.

See page IV -12 (last paragraph). A three-way solenoid valve applies air to the transient rod air piston in the rod drive cylinder to allow operation in normal (cylinder following) and pulse (rapid ejection to pre-positioned cylinder index) modes. On a scram signal or loss of safety system power the solenoid de-energizes and vents air from the cylinder resulting in gravity return of the rod to the rod bottom position. See also SAR Section 4.5.1 and Table 4-1 for scram times and reactivity insertion rates. See also the answer to question 13.12 which discusses protective system response on a loss of facility power.

Page 3 of 40

PSU RESPONSE TO NRC RAI 4.2 Section 4.3, Reactor Pool, Page IV-18.

a. Describe the operating restrictions and controls regarding the location of the reactor during operation. Address the effects of radiation damage to the concrete pool walls and epoxy liner for the extended 20-year operational life.

Operating procedures provide controls for reactor operating positions in the reactor pool.

A position evaluation process is used to qualify new positions. The process considers factors to ensure the new position does not cause reactor operational issues, ALARA concerns, unexpected reactivity coupling, or create undesired activation of wall materials.

Currently 4 positions are qualified: Rabbit one, D20 Tank, Fast Neutron Irradiation (FNI) and Fast Flux Tube (FFT).

Reactor operations do not result in significant radiation exposure of the walls or coatings of the pool as the reactor is not operated in close proximately to the wall.

Also during the 2007 pool drain, testing of the south pool was conducted using micro-gravity and penetrating radar to examine the structure for voids. No indications of degradation or voids were reported.

To address continued protection of the concrete from water damage, the pool coating system was upgraded. A multi-stage modification was conducted on the pool walls and floor. The divider wall was injected with hydro-active grout to stop through wall leakage; the entire pool was hydro-lazed to remove loose coatings and a layer of epoxy concrete repair was applied to both sides divider wall (Belzonna 4111 Magma-Quartz);

and finally the entire pool was coated with a nuclear grade waterproof polyurea liner (InstaCote@ ML-1). This liner material had been previously evaluated by a nuclear utility to 200 MRAD with no visible degradation and retained adequate elasticity. Other areas of the pool which had signs of previous repair were investigated and in some cases old repair material was removed and new concrete repair material was used (Belzonna@

4111 Magma-Quartz) before the application of the polyurea liner.

As the original epoxy paint lasted over twenty years with little evidence of degradation from age or radiation (and remains largely intact and in-place), it is anticipated the new coating will provide similar or improved protection. The concrete walls and floor of the pool show no signs of additional deterioration in areas of higher radiation exposure as compared to area of low exposure and areas with previous water damage have been upgraded. Water infiltration that can result in slow degradation of the concrete has been addressed by the new pool coating and water loss is monitored on a daily basis (during operation).

Page 4 of 40 PSU RESPONSE TO NRC RAI 4.2 Section 4.3, Reactor Pool, Page IV-18.

a. Describe the operating restrictions and controls regarding the location of the reactor during operation. Address the effects of radiation damage to the concrete pool walls and epoxy liner for the extended 20-year operational life.

Operating procedures provide controls for reactor operating positions in the reactor pool.

A position evaluation process is used to qualify new positions. The process considers factors to ensure the new position does not cause reactor operational issues, ALARA concerns, unexpected reactivity coupling, or create undesired activation of wall materials.

Currently 4 positions are qualified: Rabbit one, D20 Tank, Fast Neutron Irradiation (FNI) and Fast Flux Tube (FFT).

Reactor operations do not result in significant radiation exposure of the walls or coatings of the as the reactor is not in close to the wall.

Also during the 2007 pool drain, testing of the south pool was conducted using micro-gravity and penetrating radar to examine the structure for voids. No indications of degradation or voids were reported.

To address continued protection of the concrete from water damage, the pool coating system was upgraded. A multi-stage modification was conducted on the pool walls and floor. The divider wall was injected with hydro-active grout to stop through wall leakage; the entire pool was hydro-lazed to remove loose coatings and a layer of epoxy concrete repair was applied to both sides divider wall (Belzonna 4111 Magma-Quartz);

and finally the entire pool was coated with a nuclear grade waterproof polyurea liner (InstaCote ML-1). This liner material had been previously evaluated by a nuclear utility to 200 MRAD with no visible degradation and retained adequate elasticity. Other areas of the pool which had signs of previous repair were investigated and in some cases old repair material was removed and new concrete repair material was used (Belzonna 4111 Magma-Quartz) before the application of the polyurea liner.

As the original epoxy paint lasted over twenty years with little evidence of degradation from age or radiation (and remains largely intact and in-place), it is anticipated the new coating will provide similar or improved protection. The concrete walls and floor of the pool show no signs of additional deterioration in areas of higher radiation exposure as compared to area of low exposure and areas with previous water damage have been upgraded. Water infiltration that can result in slow degradation of the concrete has been addressed by the new pool coating and water loss is monitored on a daily basis (during operation).

Page 4 of 40

PSU RESPONSE TO NRC RAI

b. Provide an evaluation of the age-related degradation of the concrete and reinforcing steel and the ability of the pool to maintain structural integrity in the event of design basis seismic activity for the extended 20-year operational life.

This evaluation should include a discussion of the potential damage and leakage rate from design basis seismic activity.

As noted in the discussion of the above (4.2.a), the integrity of the pool walls and floor was evaluated during the 2007 pool drain and refurbishment. The concrete walls and floor of the pool show no signs of structure deterioration from age. No cracking of the structure was in evidence and in general the epoxy coating applied in the 1970's was intact and tightly adherent over the vast majority of the pool structure. Some surface and sub-surface (under the epoxy coating) water damage was evident in areas where leakage that occurred in the 1960s and early 1970s was repaired. These areas likely had additional degradation in the 30+ years since the prior inspection and repair. The degradation was located in surface areas of the concrete and structural steel was not exposed. The old repair material in the degraded areas was removed to expose sound concrete where appropriate and repaired as described in question 4.2.a response above (Belzonna 4111 Magma-Quartz). Future water infiltration that can result in slow deterioration has been addressed by the new pool coating and water level is monitored on a daily basis (during operation). Based on the observed condition of the structure and testing (penetrating radar and micro-gravity in south pool) there is no indication of structural deterioration that would affect the reactor pool's ability to withstand the exceedingly low seismic activity expected in this area (see SAR Section 2.5.3). We have no specific knowledge of any seismic criteria applied during the original design. Pool construction drawings, photographs, and penetrating radar show a robust design with the significant use of steel reinforcement in the original construction and recent inspection show no sign of structural deterioration.

Below are two images from the original pool drawings showing the placement of rebar in the exterior pool wall, floor, and the divider wall.

Page 5 of 40 PSU RESPONSE TO NRC RAI

b. Provide an evaluation of the age-related degradation of the concrete and reinforcing steel and the ability of the pool to maintain structural integrity in the event of design basis seismic activity for the extended 20-year operational life.

This evaluation should include a discussion of the potential damage and leakage rate from design basis seismic activity.

As noted in the discussion of the above (4.2.a), the integrity of the pool walls and floor was evaluated during the 2007 pool drain and refurbishment. The concrete walls and floor of the pool show no signs of structure deterioration from age. No cracking of the structure was in evidence and in general the epoxy coating applied in the 1970's was intact and tightly adherent over the vast majority of the pool structure. Some surface and sub-surface (under the epoxy coating) water damage was evident in areas where leakage that occurred in the 1960s and early 1970s was repaired. These areas likely had additional degradation in the 30+ years since the prior inspection and repair. The degradation was located in surface areas of the concrete and structural steel was not exposed. The old repair material in the degraded areas was removed to expose sound concrete where appropriate and repaired as described in question 4.2.a response above (Belzonna 4111 Magma-Quartz). Future water infiltration that can result in slow deterioration has been addressed by the new pool coating and water level is monitored on a daily basis (during operation). Based on the observed condition of the structure and testing (penetrating radar and micro-gravity in south pool) there is no indication of structural deterioration that would affect the reactor pool's ability to withstand the exceedingly low seismic activity expected in this area (see SAR Section 2.5.3). We have no specific knowledge of any seismic criteria applied during the original design.. Pool construction drawings, photographs, and penetrating radar show a robust design with the significant use of steel reinforcement in the original construction and recent inspection show no sign of structural deterioration.

Below are two images from the original pool drawings showing the placement of rebar in the exterior pool wall, floor, and the divider wall.

Page 5 of 40

PSU RESPONSE TO NRC RAI Details of Penn State Reactor Concrete Pool Wall Construction Page 6 of 40 PSU RESPONSE TO NRC RAI Details of Penn State Reactor Concrete Pool Wall Construction Page 6 of 40

PSU RESPONSE TO NRC RAI 4.3 Section 4.5.1, Normal Operating Conditions, Page IV-20. Provide an analysis to show worst-case reactivity effects of improperly locating the core in the pool, i.e.,

potential interaction between fuel storage and reactor core, or describe the controls (procedural requirements, interlocks, physical barriers, etc.) that prevent interaction between the core and any fuel in storage.

The reactor core at the PSBR has four currently allowed operating locations:

Location Name Description Reactivity Effect (Typical)

RI Rabbit 1 Open pool in the south end away from None, reference..

walls location FNI Fast Dry 10" diameter tube with square face

-$0.41 Neutron shielded internally from thermal Irradiator neutrons and gammas with boron and lead.

FFT Fast Flux Dry 6" diameter tube with round face

-$0.30 Tube shielded internally from thermal neutrons and gammas with boron and lead.

D20 Thermal 24" diameter tank of heavy water

+$0.85 Column Qualification of a new operating location is governed by operating procedures. New locations are analyzed for reactivity coupling effects in addition to stresses and radiation effects.

Only the D 2 0 tank offers a positive reactivity effect of all other locations in the pool.

Movement of the reactor is performed only at STANDBY or SHUTDOWN. STANDBY is a condition defined by procedure that has $4.50 to $5.50 of core reactivity withdrawn.

Criticality typically occurs at $7.00+/-0.50 depending on core design and time in core life.

SHUTDOWN is defined as a condition in which the reactor is subcritical by at least

$1.00 from the reference core condition.

If the reactor were at STANDBY ($5.50) and moved against the D 20 Tank, it would remain shutdown. Alternatively, if the reactor were at full power and accidentally moved away from the FNI (largest negative reactivity -$0.41 for 2008 Core 53A) or against the D 20 Tank the resulting transient would be well within the analysis done in the SAR for the Reactivity Addition Accident.

Page 7 of 40 PSU RESPONSE TO NRC RAI 4.3 Section 4.5.1, Normal Operating Conditions, Page IV-20. Provide an analysis to show worst-case reactivity effects of improperly locating the core in the pool, i.e.,

potential interaction between fuel storage and reactor core, or describe the controls (procedural requirements, interlocks, physical barriers, etc.) that prevent interaction between the core and any fuel in storage.

The reactor core at the PSBR has four currently allowed operating locations:

Location Name Description Reactivity Effect (Typical)

R1 Rabbit 1 Open pool in the south end away from None, reference..

walls location FNI Fast Dry 10" diameter tube with square face

-$0.41 Neutron shielded internally from thermal Irradiator neutrons and gammas with boron and lead.

FFT Fast Flux Dry 6" diameter tube with round face

-$0.30 Tube shielded internally from thermal neutrons and gammas with boron and lead.

D20 Thermal 24" diameter tank of heavy water

+$0.85 Column Qualification of a new operating location is governed by operating procedures. New locations are analyzed for reactivity coupling effects in addition to stresses and radiation effects.

Only the D20 tank offers a positive reactivity effect of all other locations in the pool.

Movement of the reactor is performed only at STANDBY or SHUTDOWN. STANDBY is a condition defined by procedure that has $4.50 to $5.50 of core reactivity withdrawn.

Criticality typically occurs at $7.00+/-0.50 depending on core design and time in core life.

SHUTDOWN is defined as a condition in which the reactor is subcritical by at least

$1.00 from the reference core condition.

If the reactor were at STANDBY ($5.50) and moved against the D20 Tank, it would remain shutdown. Alternatively, if the reactor were at full power and accidentally

. moved away from the FNI (largest negative reactivity -$0.41 for 2008 Core 53A) or against the D20 Tank the resulting transient would be well within the analysis done in the SAR for the Reactivity Addition Accident.

Page 7 of40

PSU RESPONSE TO NRC RAI Page 8 of 40 PSU RESPONSE TO NRC RAI Page 8 of 40

PSU RESPONSE TO NRC RAI 4.4 Section 4.5.1, Normal Operating Conditions, Page IV-20. What prevents movement of fuel elements during operation?

Under all conditions (both operating and secured):

Downward motion of fuel only elements is prevented and the element is supported by the lower grid plate.

)

Lateral motion of the fuel elements is constrained by (lower end of fuel) by a pin in the lower grid plate and (upper end of fuel) by the upper grid plate.

)

Control rods are vertically supported by the rod drive mechanism with a below core safety plate installed to prevent the rod from falling through the core in the event of mechanism failure.

Control rod lateral motion is constrained by both the upper and lower grid plates (note the transient rod fits inside a guide tube that penetrates through both the upper and lower grid plates)

)

Procedures require the reactor be secured or in standby ($4.50 to $5.50 with scrammable reactivity available and >$ 1.00 shutdown) when moving the reactor tower.

Page 9 of 40 PSU RESPONSE TO NRC RAI 4.4 Section 4.5.1, Normal Operating Conditions, Page IV-20. What prevents movement of fuel elements during operation?

Under all conditions

~

~ Downward motion of fuel only elements is prevented and the element is supported by the lower grid plate.

~ Lateral motion of the fuel elements is constrained by (lower end of fuel) by a pin in the lower grid plate and (upper end of fuel) by the upper grid plate.

~ Control rods are vertically supported by the rod drive mechanism with a below core safety plate installed to prevent the rod from falling through the core in the event of mechanism failure.

~ Control rod lateral motion is constrained by both the upper and lower grid plates (note the transient rod fits inside a guide tube that penetrates through both the upper and lower grid plates)

~ Procedures require the reactor be secured or in standby ($4.50 to $5.50 with scrammable reactivity available and ~$1.00 shutdown) when moving the reactor tower.

Page 9 of 40

PSU RESPONSE TO NRC RAI 4.5 Section 4.5.1, Normal Operating Conditions, Page IV-22, Figure 4-12. What is in position E-6 in Core Loading #52? What are the configuration restrictions regarding what may be loaded into core grid positions, i.e., must all fuel positions be filled with fuel, or can positions be vacant or filled with other reflectors or experiments? How is Technical Specification (TS) 5.2 interpreted regarding any restrictions?

Position E-6 in core loading 52 (as well as the current loading 53a) is a normally vacant core position (water hole). The position is used for loading of experiments.

TS Section 5 Design Features describes several features of the facility. TS 5.2 Reactor Core describes fuel/core configuration and reflector. TS 5.2 is interpreted when used in conjunction with TS 1.1.45 and 5.1 to limit the types and concentrations of fuel, fuel spacing, and reflector to be consistent with the facility design and safety analysis. This specification is not interpreted to limit core physical configurations. Positions in the core grid may be vacant or contain experiments. Experiments loaded into the core must be evaluated in accordance with SOP-5 Experiment Evaluation and Authorization which evaluates the experiment for safety and compliance with Technical Specifications (See also TS 3.7 Limitations of Experiments.

4.6 Section 4.5.3, Operating Limits, Page IV-25. Describe any burnup limits on the fuel and how it is determined when to retire fuel from use in the core.

The fuel at the PSBR has bumups ranging from Because of the changing requirements for the reactor core, both older and newer fuel elements are typically used in any given core. Only fuel that has failed the PSBR inspection procedure (based on Technical Specifications 3.1.6 limits) is automatically retired from service.

4.7 Section 4.5.3, Operating Limits, Page IV-25. Provide an evaluation of the applicability of the General Atomics pulsing temperature limit of 830'C to the Penn State Breazeale Reactor (PSBR), and if applicable, describe the impact on the technical specifications and safety analyses. (

Reference:

"Pulsing Temperature Limit for TRIGA LEU Fuel," TRD 070.01006.05, Rev. A.)

Penn State has reviewed General Atomics (GA) publication TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel" and found no basis for additional SAR or Technical Specifications limitations based on the conclusions in the paper.

The Penn State Breazeale Reactor (PSBR) is a 1MW TRIGA Mark III reactor that is capable of pulsing to approximately 2000MW. The reactor has been pulsed over 8000 times since its installation in 1965. The current core (53A - 2008) has 103.5 fuel elements with a maximum normalized power of 1.68 at 600K average fuel temperature.

The reactivity worth of the Transient Rod (pulsing rod) is $2.94 (as measured on 6/6/2008). The measured peak power and temperature for this pulse was 1357MW and 460'C with the instrumented element in the position of maximum elemental power Page 10 of 40 PSU RESPONSE TO NRC RAI 4.5 Section 4.5.1, Normal Operating Conditions, Page IV-22, Figure 4-12. What is in position E-6 in Core Loading #52? What are the configuration restrictions regarding what may be loaded into core grid positions, i.e., must all fuel positions be filled with fuel, or can positions be vacant or filled with other reflectors or experiments? How is Technical Specification (TS) 5.2 interpreted regarding any restrictions?

Position E-6 in core loading 52 (as well as the current loading 53a) is a normally vacant core position (water hole). The position is used for loading of experiments.

TS Section 5 Design Features describes several features of the facility. TS 5.2 Reactor Core describes fuel/core configuration and reflector. TS 5.2 is interpreted when used in conjunction with TS 1.1.45 and 5.1 to limit the types and concentrations of fuel, fuel spacing, and reflector to be consistent with the facility design and safety analysis. This specification is not interpreted to limit core physical configurations. Positions in the core grid may be vacant or contain experiments. Experiments loaded into the core must be evaluated in accordance with SOP-5 Experiment Evaluation and Authorization which evaluates the experiment for safety and compliance with Technical Specifications (See also TS 3.7 Limitations of Experiments.

4.6 Section 4.5.3, Operating Limits, Page IV-25. Describe any burnup limits on the fuel and how it is determined when to retire fuel from use in the core.

rangmg ecause of the changing requirements for the reactor core, both older and newer fuel elements are typically used in any given core. Only fuel that has failed the PSBR inspection procedure (based on Technical Specifications 3.1.6 limits) is automatically retired from service.

4.7 Section 4.5.3, Operating Limits, Page IV-25. Provide an evaluation of the applicability of the General Atomics pulsing temperature limit of 830°C to the Penn State Breazeale Reactor (PSBR), and if applicable, describe the impact on the technical specifications and safety analyses. (

Reference:

"Pulsing Temperature Limit for TRIGA LEU Fuel," TRD 070.01006.05, Rev. A.)

Penn State has reviewed General Atomics (GA) publication TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel" and found no basis for additional SAR or Technical Specifications limitations based on the conclusions in the paper.

The Penn State Breazeale Reactor (PSBR) is a 1MW TRIGA Mark III reactor that is capable of pulsing to approximately 2000MW. The reactor has been pulsed over 8000 times since its installation in 1965. The current core (53A - 2008) has 103.5 fuel elements with a maximum normalized power of 1.68 at 600K average fuel temperature.

The reactivity worth of the Transient Rod (pulsing rod) is $2.94 (as measured on 6/612008). The measured peak power and temperature for this pulse was 1357MW and 460°C with the instrumented element in the position of maximum elemental power Page 10 of 40

PSU RESPONSE TO NRC RAI density (MEPD). Given a maximum peak-to-measured pulse fuel temperature ratio of 1.6, the maximum temperature in the core is no more than 460'C

1.6 = 736'C.

In the April 2008 General Atomics (GA) publication TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel", GA specifically reaffirms their support for the 1150'C safety limit for stainless steel clad TRIGA fuel. In addition, they recommend a lower temperature constraint for enhanced fuel reliability in pulsing TRIGA reactors of 830'C. This is not a new safety limit, but a way to limit fuel growth during pulsing and extend the useful life of the fuel. For the maximum peak-to-measured pulse fuel temperature ratio of 1.6 referenced in the same document, the result would be a measured temperature constraint of 518'C during a reactor pulse.

Fuel inspection failures (growth or bend > 0.125" IAW TS 3.1.6 or difficulty removing fuel through the top grid plate) of 12 weight percent uranium (w/o) elements have occurred at the Breazeale Reactor. While no destructive analysis was conducted, a causal analysis was performed by the staff in 1996. The analysis concluded that operating with "new" 12w/o elements in the B-ring should be avoided due to the hydrogen migration from pulsing and continued operation at high peaking factors. From 1996 onward, only used 8.5w/o elements are used in the B-ring and 12w/o elements are limited to the C-ring and outward. Elements from the set of 12w/o elements that had prior use in the B-Ring are not used in the C-Ring either. This fuel management guidance is expected to provide enhanced fuel reliability and fewer inspection failures.

In addition, current procedures require the Director's approval for pulsing greater than

$2.50 and demonstration pulses are limited to $2.00. The table below shows values from Core 53A, which are typical for the Penn State Reactor.

TR Reactivity Peak Power Measured Maximum Fuel Pulsed Fuel Temperature Temperature (1.6x Measured)

$1.50 105 MW 207 0C 331 0C

$2.00 251 MW 286 0C 458 0C

$2.50 638 MW 373 0C 5970C

$2.75 1065 MW 4070C 651 0C

$2.94 1357 MW 460°C 736°C Page 11 of 40 PSU RESPONSE TO NRC RAI density (MEPD). Given a maximum peak-to-measured pulse fuel temperature ratio of 1.6, the maximum temperature in the core is no more than 460°C

1.6 = 736°C.

In the April 2008 General Atomics (GA) publication TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel", GA specifically reaffirms their support for the 1150°C safety limit for stainless steel clad TRIGA fuel. In addition, they recommend a lower temperature constraint for enhanced fuel reliability in pulsing TRIGA reactors of 830°C. This is not a new safety limit, but a way to limit fuel growth during pulsing and extend the useful life of the fuel. For the maximum peak-to-measured pulse fuel temperature ratio of 1.6 referenced in the same document, the result would be a measured temperature constraint of 518°C during a reactor pulse.

Fuel inspection failures (growth or bend> 0.125" lAW TS 3.1.6 or difficulty removing fuel through the top grid plate) of 12 weight percent uranium (w/o) elements have occurred at the Breazeale Reactor. While no destructive analysis was conducted, a causal analysis was performed by the staff in 1996. The analysis concluded that operating with "new" 12w/o elements in the B-ring should be avoided due to the hydrogen migration from pulsing and continued operation at high peaking factors. From 1996 onward, only used 8.5w/o elements are used in the B-ring and 12w/o elements are limited to the C-ring and outward. Elements from the set of 12w/o elements that had prior use in the B-Ring are not used in the C-Ring either. This fuel management guidance is expected to provide enhanced fuel reliability and fewer inspection failures.

In addition, current procedures require the Director's approval for pulsing greater than

$2.50 and demonstration pulses are limited to $2.00. The table below shows values from Core 53A, which are typical for the Penn State Reactor.

TR Reactivity Peak Power Measured Maximum Fuel Pulsed Fuel Temperature Temperature (1.6x Measured)

$1.50 105MW 207°C 331°C

$2.00 251 MW 286°C 458°C

$2.50 638MW 373°C 597°C

$2.75 1065 MW 407°C 651°C

$2.94 1357 MW 460°C 736°C Page 11 of 40

PSU RESPONSE TO NRC RAI 4.8 Section 4.6, Thermal-Hydraulic Design, Page IV-25. Provide a thermal-hydraulic analysis of the PSBR to demonstrate that natural convection provides adequate cooling to maintain clad temperatures below 500 °C, as stated in the basis for the fuel temperature safety limit of 1150 0C. Include a discussion of the analysis methods and correlations used to determine the minimum Critical Heat Flux Ratio (CHFR) for steady-state and transient operation (including the reactivity insertion accident). (

Reference:

"TRIGA Reactor Thermal-Hydraulic Study," TRD 070.01006.04, Rev. A.)

The Penn State Breazeale Nuclear Reactor is an open-pool TRIGA reactor with a hexagonal fuel pitch. The reactor has80-110 fuel elements per core loading. The elements are stainless steel clad 8.5 or 12 weight percent Zrl.0H165U fuel. The thermal performance of this fuel has been analyzed many times since its first use over fifty years ago. The performance of the fuel in the Penn State reactor was investigated by Haag and Levine in 197310. The analysis showed nucleate boiling starting at 15% power and continuing up to full power.

The SAR (page XIII-9) states:

The measured fuel temperature, ttt, depends on the temperature at the cladding surface mid-plane, to. Because of the subcooled boiling above 200kW, this temperature rises very slowly. The At is proportional to (q -)o"',

where the At is the difference between tc and the coolant saturation temperature. (14) As a result, it is assumed that the surface of the cladding is superheated by a fixed At degrees and thus at 1MW, tc =140°C. This should be correct within +/-10C at 1MW for all NPj's greater than 1 and less than 3.

Reference 14 in the SAR is El-Wakil "Nuclear Heat Transport" ANS 1978.

The figure below shows the behavior of pool water as the heat flux rises. (DOE-HDBK-1012/2-92 DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow, Volume 2 of 3). The figure illustrates the small cladding temperature rise and change (less then 60 'C) for the large heat flux (over a factor of 10) between the onset of nucleate boiling and the departure from nucleate boiling or Critical Heat Flux (CHF).

Therefore as long as the reactor stays in a region of sub-cooled nucleate boiling, cladding temperature will be closely tied to saturation temperature (at -2 atmospheres) in the core and the cladding will stay below 500'C as stated in the SAR. If the heat flux reaches CHF, cladding temperatures will rise rapidly.

Page 12 of 40 PSU RESPONSE TO NRC RAI 4.8 Section 4.6, Thermal-Hydraulic Design, Page IV-25. Provide a thermal-hydraulic analysis of the PSBR to demonstrate that natural convection provides adequate cooling

. to maintain clad temperatures below 500°C, as stated in the basis for the fuel temperature safety limit of 1150 °C. Include a discussion of the analysis methods and correlations used to determine the minimum Critical Heat Flux Ratio (CHFR) for steady-state and transient operation (including the reactivity insertion accident). (

Reference:

"TRIGA Reactor Thermal-Hydraulic Study," TRD 070.01006.04, Rev. A.)

The Penn State Breazeale Nuclear Reactor is an open-pool TRIGA reactor with a hexagonal fuel pitch. The reactor has80-110 fuel elements per core loading. The elements are stainless steel clad 8.5 or 12 weight percent Zr1.0H1.65U fuel. The thermal performance of this fuel has been analyzed many times since its first use over fifty years ago. The performance of the fuel in the Penn State reactor was investigated by Haag and Levine in 1973 10. The analysis showed nucleate boiling starting at 15% power and continuing up to full power.

The SAR (page XIII-9) states:

The measured fuel temperature, tIC, depends on the temperature at the cladding surface mid-plane, tc. Because of the subcooled boiling above 200kW, this temperature rises very slowly. The ilt is proportional to (q "')0.33, where the ilt is the difference between tc and the coolant saturation temperature. (14) As a result, it is assumed that the surface of the cladding is superheated by a fixed ilt degrees and thus at 1 MW, tc = 140°C. This should be correct within +/-1 ooe at 1 MW for all NPj's greater than 1 and less than 3.

Reference 14 in the SAR is EI-Wakil "Nuclear Heat Transport" ANS 1978.

The figure below shows the behavior of pool water as the heat flux rises. (DOE-HDBK-1012/2-92 DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow, Volume 2 of3). The figure illustrates the small cladding temperature rise and change (less then 60°C) for the large heat flux (over a factor of 10) between the onset of nucleate boiling and the departure from nucleate boiling or Critical Heat Flux (CHF).

Therefore as long as the reactor stays in a region of sub-cooled nucleate boiling, cladding temperature will be closely tied to saturation temperature (at ~2 atmospheres) in the core and the cladding will stay below 500°C as stated in the SAR. If the heat flux reaches CHF, cladding temperatures will rise rapidly..

Page 12 of 40

PSU RESPONSE TO NRC RAI 0-4 Figure 13 from DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow, Volume 2 of 3 A PSU specific CHF analysis has not been performed. However, the CHF conditions for four other TRIGA reactors was analyzed in GA document "TRIGA Reactor Thermal-Hydraulic Study" TRD 070.01006.04 and can be compared to the Penn State Breazeale Reactor.

MNRC (UC Davis) reactor has a hexagonal pitch like Penn State, but it is an enclosed core (less flow through the core).

" WSU and TAMU have partially open-sided cores like Penn State (which is open on all sides), but a square pitch of 1.530" yielding a channel flow area for the hot rod of 0.7390-0.7772in 2 (this gives less flow in the channel, PSU is 1.7" pitch and flow area of 0.8355in2).

OSU has top and bottom grid plate designs much like those at Penn State, but is enclosed on the sides by thereflector (lower flow into core overall).

The TRD 070.01006.04 CHFR results for the four reactors are summarized below:

Hot Ch2nnel CHFU hit r2tPd now~r~

Reactor Rated STAT RELAP Minimum Power (McAdams/Bernath)

(Bernath/Groenveld Power at 1986/2006)

CHF WSU 1.0 MW 4.03/3.41 2.76/5.68/3.50 2.76 MW OSU 1.0 MW 4.25/2.77 2.36/6.40/3.70 2.36 MW TAMU 1.0 MW 4.43/3.62 2.87/6.14/3.59 2.87 MW MNRC 2.0 MW 2.45/1.80 1.75/3.59/1.97 3.50 MW The GA document recommends Groenveld 2006 be used to analyze hexagonal pitch TRIGA reactors. Bernath is more limiting, so both are shown above.

Page 13 of 40 PSU RESPONSE TO NRC RAI

",:;:@;S3:t,\\L-' --+f~-------'----------""~-------'-'----------'-'-~)------'

i;~~':1rQ

']:i?;g;

\\!"Qt?;9~'1~g;~~~9~~;J

',""'~

ir~"'~)'f

.'ter::r,:1,f2e~c,tl:J roe' 0,dIJf\\er::.e",.ce,:\\~,Fi;:

Figure 13 from DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow, Volume 2 of3 A PSU specific CHF analysis has not been performed. However, the CHF conditions for four other TRIGA reactors was analyzed in GA document "TRIGA Reactor Thermal-Hydraulic Study" TRD 070.01006.04 and can be compared to the Penn State Br~azeale Reactor.

MNRC (UC Davis) reactor has a hexagonal pitch like Penn State, but it is an enclosed core (less flow through the core).

WSU and TAMU have partially open-sided cores like Penn State (whiCh is open on all sides), but a square pitch of 1.530" yielding a channel flow area for the hot rod ofO.7390-0.7772in2 (this gives less flow in the channel, PSU is!.7" pitch and flow area of 0.8355in2).

OSU has top and bottom grid plate designs much like those at Penn State, but is enclosed on the sides by the.reflector (lower flow into core overall).

The TRD 070.01006.04 CHFR results for the four reactors are summarized below:

Hot Channel CHFR (at rated power)

Reactor Rated STAT RELAP Minimum Power (McAdams/Bernath)

(Bernath/Groen veld Power at 1986/2006)

CHF WSU 1.0MW 4.03/3.41 2.76/5.68/3.50 2.76MW OSU 1.0MW 4.25/2.77 2.36/6.40/3.70 2.36MW TAMU 1.0MW 4.43/3.62 2.87/6.14/3.59 2.87MW MNRC 2.0MW 2.4511.80

1. 75/3.59/1.97 3.50MW The GA document recommends Groenveld 2006 be used to analyze hexagonal pitch TRIGA reactors. Bernath is more limiting, so both are shown above.

Page 13 of 40

PSU RESPONSE TO NRC RAI The conditions for the Penn State reactor are less restrictive than those shown above due to the open-sided core and the larger channel size due to the hexagonal pitch, so the margin to CHF should be higher than any of those shown above.

The CHF issue is also addressed in the Fundamental Approach to TRIGA Steady-State Thermal-Hydraulic CHF Analysis -E.E. Feldman (Argonne National Laboratory-2007).

Once again, the Penn State reactor is not specifically analyzed, but hexagonal pitch TRIGA reactors are analyzed in general. Different flow models are used to produce rod powers for the transition into Critical Heat Flux. Using the older General Atomics (GA) code STAT and the Bernath correlation, the lowest rod power that will cause a transition into CHF is 37. 1kW. Using the recommended RELAP5 code and the Groenveld 2006 correlation, CHF occurs at 62. 1kW.

Since the Technical Specification limit for MEPD at Penn State is 24.7kW, there is a 50% margin to CHF in the most conservative prediction, so no further analysis is warranted and the cladding will not exceed 500'C.

Regarding the question of a transient analysis (reactivity insertion accident), a Penn State specific CHF analysis for pulsing has not been performed.

General Atomics performed extensive pulsing experiments and analysis of TRIGA reactors. In Fuel elements for Pulsed TRJGA Reactors GA document E-117-393, Simnad and others conclude that for a pulse with a peak fuel temperature of almost 1 000°C, the maximum cladding temperature only reaches 180'C at a peak heat flux of 0.0125Kw/cm. The figure below is from'E-117-393.

1000r 25, 0

MAXIMUM IUEL TEMPERATURE '*d x:x

.ju 5) 6 00 MAXIMUM HEAT' FLUX (W/cm')

0

-400 10

2

-COOLANT VELOCITY (kG/S)-

MAXiMUM CLAD TEMPERkTUR9 (CC) 6L.

1,t"

'O' 10' I10V TIME FROM 'BEGINNING:'OF ROD MOTION (siec) tandlr.

pulse hot-element at rcore.edge-m-akixiimu teiiiperature,; heat Iflux. and coolant velocity Niersusi tie' fiom first rod motion.

Figure 14 from GA E-i 17-393 Fuel Elements for Pulsed Reactors - Simnad 1976 Page 14 of 40 PSU RESPONSE TO NRC RAI The conditions for the Penn State reactor are less restrictive than those shown above due to the open-sided core and the larger channel size due to the hexagonal pitch, so the margin to CHF should be higher than any of those shown above.

The CHF issue is also addressed in the Fundamental Approach to TRiGA Steady-State Thermal-Hydraulic CHF Analysis -E.E. Feldman (Argonne National Laboratory-2007).

Once again, the Penn State reactor is not specifically analyzed, but hexagonal pitch TRIGA reactors are analyzed in general. Different flow models are used to produce rod powers for the transition into Critical Heat Flux. Using the older General Atomics (GA) code STAT and the Bernath correlation, the lowest rod power that will cause a transition into CHF is 37.lkW. Using the recommended RELAP5 code and the Groenveld 2006 correlation, CHF occurs at 62.1kW.

Since the Technical Specification limit for MEPD at Penn State is 24.7kW, there is a 50% margin to CHF in the most conservative prediction, so no further analysis is warranted and the cladding will not exceed 500°C.

Regarding the question of a transient analysis (reactivity insertion accident), a Penn State specific CHF analysis for pulsing has not been performed.

General Atomics performed extensive pulsing experiments and analysis of TRIGA reactors. In Fuel elements for Pulsed TRiGA Reactors GA document E-117-393, Simnad and others conclude that for a pulse with a peak fuel temperature of almost 1000°C, the maximum cladding temperature only reaches 180°C at a peak heat flux 2

ofO.0125Kw/cm. The figure below is from E-117-393.

MAXiMUM HEAT',t;Lux (IV/em')

'COOLANT VELOCITY (kGIii)

'5 0,

-"--_":'_-.L.._.J' ", '

,;0:

,lit' W'

'10*'

10' TIME /RO:M:B:~GfNNING'OF ROD MOTION (soc)

'10'

'FIg;,15:, ~~'Pl!lse, hot-elliJ;lent at';core:edlf!!-malrlmum'temP.Eirature" lIe'at 'flux. and coolant velocity ve'rauB' time' fromfirs,t,rod ~otio,n,,

Figure 14 from GA E-117-393 Fuel Elements/or Pulsed Reactors - Simnad 1976 Page 14 of 40

PSU RESPONSE TO NRC RAI The conclusions show relatively low heat flux and considerable margin for cladding temperature even for pulse events approaching the fuel safety limit. Therefore an additional PSU specific analysis is not warranted.

4.9 Core Configuration Control. Discuss any restrictions regarding reactor condition for fuel movement and explain the purpose of TS 3.2.5.

SOP-3 Core Loading and Fuel Handling provides guidance on core condition during fuel loading.

The following precautions are applicable to the question:

The core neutron source shall be positioned so that the neutron detector measures core multiplication.

The reactor shall be in STANDBY condition.

The minimum count rate interlock may be defeated by momentarily pushing the LOW COUNT RATE INTERLOCK DEFEAT pushbutton.

There shall be a minimum of three operable control rods in the reactor core.

Anytime an element or group of elements is placed in a grid position adjacent to a control rod, that control rod shall be scrammed to check its operability before further operation is performed.

Using adequate lighting, all elements loaded into peripheral positions in the core shall be visually examined for correct seating on the bottom grid plate as each element is loaded.

The visual examination of the peripheral elements shall not be made from the reactor bridge, except in the case of elements that can be viewed using the TV camera and monitor.

When the keff of the core is less than or equal to 0.99 with all control rods at their upper limit, the fuel may or may not be arranged in a close packed array.

The source and detector shall be arranged such that the koff of the subcritical assembly shall always be monitored to assure compliance with klff < 0.99 when all control rods are fully withdrawn.

As noted above, SOP-3 requires the reactor be at "Standby" (defined as $4.50 to $5.50 of reactivity removed by control rods) to provide insertable reactivity in the event of an unexpected increase in count rate. TS 3.2.4 Reactor Safety System and Reactor Interlocks require that a source level interlock prevent rod withdrawal without neutron induced signal on the log power channel. TS 3.2.5 recognizes that during fuel loading/unloading source count rate may fall below the interlock setpoint preventing the withdrawal of control rods. TS 3.2.5 allows for momentary defeat of the interlock for control rod withdrawal to "Standby".

Page 15 of 40 PSU RESPONSE TO NRC RAI The conclusions show relatively low heat flux and considerable margin for cladding temperature even for pulse events approaching the fuel safety limit. Therefore an additional PSU specific analysis is not warranted.

4.9 Core Configuration Control. Discuss any restrictions regarding reactor condition for fuel movement and explain the purpose of T8 3.2.5.

SOP-3 Core Loading and Fuel Handling provides guidance on core condition during fuel loading.

The following precautions are applicable to the question:

The core neutron source shall be positioned so that the neutron detector measures core mUltiplication.

The reactor shall be in STANDBY condition.

The minimum count rate interlock may be defeated by momentarily pushing the LOW COUNT RATE INTERLOCK DEFEAT pushbutton.

There shall be a minimum of three operable control rods in the reactor core.

Anytime an element or group of elements is placed in a grid position adjacent to a control rod, that control rod shall be scrammed to check its operability before further operation is performed.

Using adequate lighting, all elements loaded into peripheral positions in the core shall be visually examined for correct seating on the bottom grid plate as each element is loaded.

The visual examination of the peripheral elements shall not be made from the reactor bridge, except in the case of elements that can be viewed using the TV camera and monitor.

When the keff of the core is less than or equal to 0.99 with all control rods at their upper limit, the fuel mayor may not be arranged in a close packed array.

The source and detector shall be arranged such that the keff of the subcritical assembly shall always be monitored to assure compliance with keff::: 0.99 when all control rods are fully withdrawn.

As noted above, SOP-3 requires the reactor be at "Standby" (defined as $4.50 to $5.50 of reactivity removed by control rods) to provide insertable reactivity in the event of an unexpected increase in count rate. TS 3.2.4 Reactor Safety System and Reactor Interlocks require that a source level interlock prevent rod withdrawal without neutron induced signal on the log power channel. TS 3.2.5 recognizes that during fuel loading/unloading source count rate may fall below the interlock setpoint preventing the withdrawal of control rods. TS 3.2.5 allows for momentary defeat of the interlock for control rod withdrawal to "Standby".

Page 15 of 40

PSU RESPONSE TO NRC RAI CHAPTER 5 5.1 Section 5.2, Primary Coolant System, Page V-1. In the first paragraph, which system is responsible for the 40 gpm recirculation of the pool water? At the bottom of page V-3, the last paragraph mentions a primary side flow rate of 400 gpm.

Section 5.2 Primary Coolant System briefly mentions that recirculation (40 GPM) along with natural circulation provide "some mixing of the pool water". This recirculation mentioned is a result of the Primary Coolant Cleanup System described in detail in Section 5.4. Cooling for the pool is provided by the Primary Coolant System which has a flow of 300 to 400 GPM.

5.2 Section 5.5, Primary Coolant Makeup Water System, Page V-7. What is the power source mentioned for the secondary heat exchanger pump that is independent of site electricity? No secondary pump is listed in Table 8-2 for equipment powered by the diesel generator.

The secondary coolant system pump(s) are located offsite (approximately 650 yards away at the University's waste water treatment plant) and are powered off the local power grid in that area. There is no installed backup power source for these pumps. The power supply is independent of facility power in that it is off different transformers but is not independent of the local power grid. Provisions exist at the secondary pump house to hook up external temporary power to pumps from a portable generator.

CHAPTER 11 11.1 The discussion in Chapter 11 of radiation sources of concern focuses almost entirely upon Argon-41, to the exclusion of other radionuclides. However, no mention is made of periodic confirmatory measurements of effluent to verify that Argon-41 is the only radionuclide being released. Provide a description of any confirmatory measurements regarding other radionuclides or justify why it is not needed.

With the exception of continuous air monitor operation, or specific monitoring designed for an experiment that might generate an effluent, no periodic confirmatory monitoring of airborne releases is conducted. Unusual indications on the air monitors have resulted in actions to analyze the cause (gamma spectrum analysis)

Any element that passes through or in the vicinity of the reactor core during operation may be activated by the high neutron flux levels. For this reason, engineering controls and Technical Specifications require a high degree of water purity to minimize unintended activation products that may result in loose surface contamination, release to the environment or increased radiation exposure to workers. Maintaining the pool water purity has historically prevented unintended activation, contamination, worker exposure and minimized environmental release. Water added to the pool is filtered through the purification system to prevent introduction of undesirable compounds that might result in release.

Page 16 of 40 PSU RESPONSE TO NRC RAI CHAPTER 5 5.1 Section 5.2, Primary Coolant System, Page V-1. In the first paragraph, which system is responsible for the 40 gpm recirculation of the pool water? At the bottom of page V-3, the last paragraph mentions a primary side flow rate of 400 gpm.

Section 5.2 Primary Coolant System briefly mentions that recirculation (40 GPM) along with natural circulation provide "some mixing of the pool water". This recirculation mentioned is a result of the Primary Coolant Cleanup System described in detail in Section 5.4. Cooling for the pool is provided by the Primary Coolant System which has a flow of 300 to 400 GPM.

5.2 Section 5.5, Primary Coolant Makeup Water System, Page V-7. What is the power source mentioned for the secondary heat exchanger pump that is independent of site electricity? No secondary pump is listed in Table 8-2 for equipment powered by the diesel generator.

The secondary coolant system pump(s) are located offsite (approximately 650 yards away at the University's waste water treatment plant) and are powered off the local power grid in that area. There is no installed backup power source for these pumps. The power supply is independent of facility power in that it is off different transformers but is not independent of the local power grid. Provisions exist at the secondary pump house to hook up external temporary power to pumps from a portable generator.

CHAPTER 11 11.1 The discussion in Chapter 11 of radiation sources of concern focuses almost entirely upon Argon-41, to the exclusion of other radionuclides. However, no mention is made of periodic confirmatory measurements of effluent to verify that Argon-41 is the only radionuclide being released. Provide a description of any confirmatory measurements regarding other radionuclides or justify why it is not needed.

With the exception of continuous air monitor operation, or specific monitoring designed for an experiment that might generate an effluent, no periodic confirmatory monitoring of airborne releases is conducted. Unusual indications on the air monitors have resulted in actions to analyze the cause (gamma spectrum analysis)

Any element that passes through or in the vicinity of the reactor core during operation may be activated by the high neutron flux levels. For this reason, engineering controls and Technical Specifications require a high degree of water purity to minimize unintended activation products that may result in loose surface contamination, release to the environment or increased radiation exposure to workers. Maintaining the pool water purity has historically prevented unintended activation, contamination, worker exposure and minimized environmental release. Water added to the pool is filtered through the purification system to prevent introduction of undesirable compounds that might result in release.

Page 16 of 40

PSU RESPONSE TO NRC RAI Any solid wastes (effluents) are packaged and disposed of consistent with NRC regulations.

Any liquid releases (if conducted - liquid is typically evaporated as discussed in Section 11.1.1.2) would be sampled, analyzed and transferred to the PA Broadscope license prior to release.

Section 11.1.1 Radiation Sources identifies multiple possible release sources and each source is addressed. Much discussion is focused on Argon-41 due to its prevalence in operation, half-life, and percentage of release. Specific Technical Specifications requirements are in place to evaluate and control the generation and release of Argon-41.

The facility undertakes multiple activities to evaluate and minimize the release of Argon-41.

New experiments that might off-gas or generate a release are evaluated for impact as part of the Experiment Authorization. During experiments that may generate gaseous release, additional monitoring may be implemented.

Absent an accident scenario or introduction of a contaminant to the reactor pool through an experimental process, Argon-41 remains the major release isotope of concern.

11.2 Section 11.1.4 states the survey equipment that is available and Section 11.1.6 mentions that unannounced radiation and contamination surveys are conducted, but neither section mentions the minimum frequency of such surveys (i.e., quarterly, annually). Specify the minimum survey frequency for the controlled areas of the PSBR along with the basis for the minimum survey frequency.

There is no internal procedural requirement for unannounced independent surveys by Environmental Health and Safety (EHS).

EHS radiation safety personnel perform unannounced radiation and contamination surveys of the facility with a frequency that varies by location and needs. The most regular survey performed by EHS is a (usually) weekly contamination and radiation survey of the facility. This survey includes areas throughout the whole building and the specific locations change slowly with time. The standard frequency for this survey is weekly, but due to other work issues probably only 48 - 50 are done a year.

The chosen frequency and locations are based upon "good health physics practices," the results of the RSO's twenty years of experience at PSU, and changing research and vendor support activities at the facility These surveys are in addition to the surveys performed after each use of un-contained radioactive material that are performed by the radioactive material user.

Additionally, operating procedures dictate that contamination surveys are performed daily (Monday through Friday working days) by the facility staff in multiple in the facility. Permanently installed radiation monitoring is also required to be operational per Technical Specifications.

Page 17 of 40 PSU RESPONSE TO NRC RAI Any solid wastes (effluents) are packaged and disposed of consistent with NRC regulations.

Any liquid releases (if conducted - liquid is typically evaporated as discussed in Section 11.1.1.2) would be sampled, analyzed and transferred to the P A Broadscope license prior to release.

Section 11.1.1 Radiation Sources identifies multiple possible release sources and each source is addressed. Much discussion is focused on Argon-41 due to its prevalence in operation, half-life, and percentage of release. Specific Technical Specifications requirements are in place to evaluate and control the generation and release of Argon-41.

The facility undertakes multiple activities to evaluate and minimize the release of Argon-

41.

New experiments that might off-gas or generate a release are evaluated for impact as part of the Experiment Authorization. During experiments that may generate gaseous release, additional monitoring may be implemented.

Absent an accident scenario or introduction of a contaminant to the reactor pool through an experimental process, Argon-41 remains the major release isotope of concern.

11.2 Section 11.1.4 states the survey equipment that is available and Section 11.1.6 mentions that unannounced radiation and contamination surveys are conducted, but neither section mentions the minimum frequency of such surveys (i.e., quarterly, annually). Specify the minimum survey frequency for the controlled areas of the PSBR along with the basis for the minimum survey frequency.

There is no internal procedural requirement for unannounced independent surveys by Environmental Health and Safety (EHS).

EHS radiation safety personnel perform unannounced radiation and contamination surveys of the facility with a frequency that varies by location and needs. The most regular survey performed by EHS is a (usually) weekly contamination and radiation survey of the facility. This survey includes areas throughout the whole building and the specific locations change slowly with time. The standard frequency for this survey is weekly, but due to other work issues probably only 48 - 50 are done a year.

The chosen frequency and locations are based upon "good health physics practices," the results of the RSO's twenty years of experience at PSU, and changing research and vendor support activities at the facility These surveys are in addition to the surveys performed after each use of un-contained radioactive material that are performed by the radioactive material user.

Additionally, operating procedures dictate that contamination surveys are performed daily (Monday through Friday working days) by the facility staff in multiple in the facility. Permanently installed radiation monitoring is also required to be operational per Technical Specifications.

Page 17 of 40

PSU RESPONSE TO NRC RAI 11.3 Tritium is an activation product that is generated in the D20 Thermal Column and is monitored periodically. Section 11.4 does not mention survey or monitoring methodology or frequency for tritium. Describe the tritium monitoring methodology and frequency or justify why it is not needed.

Operating procedures dictate monthly samples of the D20 tank. The D20 tank sample is mixed with liquid scintillation fluid and counted in a liquid scintillation system with comparison to a known standard.

11.4 No mention is made of the frequency or criteria for radiation surveys for posting in beam areas. Describe the minimum frequency or criteria for radiation surveys in these areas.

The Neutron Beam Laboratory has a permanently installed gamma monitoring system which is required to be operable by TS 3.6.1 Radiation Monitoring Information. This monitor will activate the Building Emergency Evacuation Sequence if the setpoint is exceeded. The Beam Port 4 neutron beam is not accessible to humans during reactor operation. Interlocks will shutdown the reactor if the cave door is opened (neutron beam port 4 has a large shield structure know as the "beam cave"). The SRO has administrative key control over the beam cave. Prior to entry into the beam cave following an irradiation, a SRO will move the reactor away, unlock the cave and survey the enclosure for radiation hazards prior to allowing experimenters to enter the cave.

Access to the Beam Port 7 neutron beam is prevented by permanently installed and locked test equipment and shielding. As noted in SAR Section 11.1.6, unannounced radiation and contamination surveys are conducted independently by EHS.

11.5 The Controlled Area and Restricted Area as defined in 10 CFR 20.1003 are not defined in the SAR. Describe the boundaries of the Controlled and Restricted Areas at the PSBR.

From 10 CFR 20.1003: "Restricted area means an area, access to which is limited by the licensee for the purpose ofprotecting individuals against undue risks from exposure to radiation and radioactive materials."

By the definition in 20.1003, PSU has only temporary restricted areas. For example, during some evolutions personnel are restricted from entering the reactor bay to minimize their exposure and to minimize distractions and exposures to operators. These restrictions are normally lifted within an hour.

The neutron beam lab is a restricted area when it is posted as a high radiation area. There is no purpose at this facility for a permanent restricted area as defined in 10CFR20.1003.

From 10 CFR 20.1003: Controlled area means an area, outside of a restricted area but inside the site boundary, access to which can be limited by the licensee for any reason."

In the sense of the Controlled Area defined in 10CFR20.1003, the area within the facility fence is always controlled by RSEC staff.

Page 18 of 40 PSU RESPONSE TO NRC RAI 11.3 Tritium is an activation product that is generated in the 0 20 Thermal Column and is monitored periodically. Section 11.4 does not mention surveyor monitoring methodology or frequency for tritium. Describe the tritium monitoring methodology and frequency or justify why it is not needed.

Operating procedures dictate monthly samples of the D20 tank. The D20 tank sample is mixed with liquid scintillation fluid and counted in a liquid scintillation system with comparison to a known standard.

11.4 No mention is made of the frequency or criteria for radiation surveys for posting in beam areas. Describe the minimum frequency or criteria for radiation surveys in these areas.

The Neutron Beam Laboratory has a permanently installed gamma monitoring system which is required to be operable by TS 3.6.1 Radiation Monitoring Information. This monitor will activate the Building Emergency Evacuation Sequence if the setpoint is exceeded. The Beam Port 4 neutron beam is not accessible to humans during reactor operation. Interlocks will shutdown the reactor if the cave door is opened (neutron beam port 4 has a large shield structure know as the "beam cave"). The SRO has administrative key control over the beam cave. Prior to entry into the beam cave following an irradiation, a SRO will move the reactor away, unlock the cave and survey the enclosure for radiation hazards prior to allowing experimenters to enter the cave.

Access to the Beam Port 7 neutron beam is prevented by permanently installed and locked test equipment and shielding. As noted in SAR Section 11.1.6, unannounced radiation and contamination surveys are conducted independently by EHS.

11.5 The Controlled Area and Restricted Area as defined in 10 CFR 20.1003 are not defined in the SAR. Describe the boundaries of the Controlled and Restricted Areas at the PSBR.

From 10 CFR 20.1003: "Restricted area means an area, access to which is limited by the licensee for the purpose of protecting individuals against undue risks from exposure to radiation and radioactive materials. "

By the definition in 20.1003, PSU has only temporary restricted areas. For example, during some evolutions personnel are restricted from entering the reactor bay to minimize their exposure and to minimize distractions and exposures to operators. These restrictions are normally lifted within an hour.

The neutron beam lab is a restricted area when it is posted as a high radiation area. There is no purpose at this facility for a permanent restricted area as defined in 1 OCFR20.1 003.

From 10 CFR 20.1003: Controlled area means an area, outside of a restricted area bitt inside the site boundary, access to which can be limited by the licensee for any reason. "

In the sense of the Controlled Area defined in 1 OCFR20.1 003 RSEC staff.

Page 18 of 40

PSU RESPONSE TO NRC RAI 11.6 Chapter 11 does not discuss radiological access control to the building.

Describe how access control for radiological areas of the building is accomplished.

All visitors granted access at the fence boundary must report directly to the lobby to sign in. Individuals or groups of individuals are issued electronic dosimetry for educational and monitoring purposes. Personnel going beyond the lobby are required to be badged and have issued dosimetry or electronic dosimetry. All areas of the building containing radioactive material or radiation areas are locked.

Temporary radiation areas are roped off and placarded, temporary high radiation areas are locked or attended.

11.7 Chapter 11.5 mentions the use of personal dosimetry for those individuals required to be monitored. However, no mention is made if the dosimetry is National Voluntary Laboratory Accreditation Program (NVLAP) certified as required by 10 CFR 20.1501(c). Confirm that personal dosimetry used at the PSBR is NVLAP certified appropriate for the radiation encountered at PSBR.

Penn State complies with 10 CFR 20.1501(c) and uses a NVLAP contract dosimetry supplier.

11.8 The annual doses on the area dosimeters are lower than natural background rates, implying that a correction for natural background is being made. Describe this correction and how was it determined.

The Penn State contract dosimetry supplier follows the standard practice of reporting the net exposure for personal and environmental monitoring dosimeters by subtracting off the exposure received by the control dosimetry from the exposure received by the individual dosimeter. This includes exposures received by dosimeters in transit from the vendor to Penn State and back to the vendor. The exposures reported on these dosimeters do not include natural background radiation.

11.9 Chapter 11 does not mention supplemental dosimetry for multi-badging use such as ring badges. Describe if supplemental badges are available for use.

Supplemental dosimetry is supplied on an as needed basis. Ring dosimeters are issued to, and required to be worn by, individuals who handle radioactive material in sufficient quantities that would indicate the possibility of the person exceeding 10% of the annual extremity limit.

Page 19 of 40 PSU RESPONSE TO NRC RAI 11.6 Chapter 11 does not discuss radiological access control to the building.

Describe how access control for radiological areas of the building is accomplished.

All visitors granted access at the fence boundary must report directly to the lobby to sign in. Individuals or groups of individuals are issued electronic dosimetry for educational and monitoring purposes. Personnel going beyond the lobby are required to be badged and have issued dosimetry or electronic dosimetry. All areas of the radi areas are locked.

Temporary radiation areas are roped off and placarded, temporary high radiation areas are locked or attended.

11.7 Chapter 11.5 mentions the use of personal dosimetry for those individuals required to be monitored. However, no mention is made if the dosimetry is National Voluntary Laboratory Accreditation Program (NVLAP) certified as required by 10 CFR 20.1501 (c). Confirm that personal dosimetry used at the PSBR is NVLAP certified appropriate for the radiation encountered at PSBR.

Penn State complies with 10 CFR 20.1501(c) and uses a NVLAP contract dosimetry supplier.

11.8 The annual doses on the area dosimeters are lower than natural background rates, implying that a correction for natural background is being made. Describe this correction and how was it determined.

The Penn State contract dosimetry supplier follows the standard practice of reporting the net exposure for personal and environmental monitoring dosimeters by subtracting off the exposure received by the control dosimetry from the exposure received by the individual dosimeter. This includes exposures received by dosimeters in transit from the vendor to Penn State and back to the vendor. The exposures reported on these dosimeters do not include natural background radiation.

11.9 Chapter 11 does not mention supplemental dosimetry for multi-badging use such as ring badges. Describe if supplemental badges are available for use.

Supplemental dosimetry is supplied on an as needed basis. Ring dosimeters are issued to, and required to be worn by, individuals who handle radioactive material in sufficient quantities that would indicate the possibility of the person exceeding 10% of the annual extremity limit.

Page 19 of 40

PSU RESPONSE TO NRC RAI 11.10 Section 11.1.5 indicates that personal dosimeters are mounted in select locations within the facility to monitor those areas. Describe the provisions made in the processing routines for these "non-personal" dosimeters that take into account their use in this manner or justify why such provisions are not needed.

The area dosimetry monitors are mounted in representative locations for information gathering purposes and are available to use in reconstructions of exposures -- although they never have been needed for that purpose. Based on prospective and retrospective analysis of facility exposures, only about six individuals at PSU would require dosimeters at this time.

According to a representative from the dosimetry provider, "area monitors should be identical to the whole body dosimeters that are being worn by the workforce. These dosimeters will provide good estimates of the occupational dose. The accuracy of the estimate can be improved if the dosimeters are placed on phantoms or plastic blocks to mimic the backscatter from a human body but this is really only helpful for albedo neutrons dosimeters or low energy photons fields. If the client fields are medium to high energy photons the phantom will have little effect." Since the radiation types expected to result in individual exposure do not fall into these types, and the area monitors are used only for historical trending, the bare dosimeters provide an adequate measurement of exposure in the areas measured.

11.11 Chapter 11 does not mention the use of "engineering controls" or minimization efforts for control of contamination. Describe how these factors are incorporated in the PSBR radiation protection program.

Specific engineered controls to minimize the spread of contamination in the reactor facility include the TRIGA fuel design and operating limits that prevent fuel element service failure and the purification system and coolant operational/Technical Specification limits that virtually eliminate radioactive material in the pool water and eliminate the pool as a source of contamination. Additionally engineering controls are well integrated into PSU's radiation safety program. Procedures and processes are designed to minimize the direct handling of radioactive material as much as reasonably achievable. Administrative controls are in place to ensure proper encapsulation of samples for exposure to the core and dry runs are conducted and continuous quality improvement initiatives are applied to situations in which risks of exposure or spread of contamination are reasonable.

11.12 Chapter 11 indicates that all persons using radioactive material or persons who are monitored receive appropriate Radiation Protection Office (RPO) training. The discussion does not mention the period of time before refresher radiological training is required. Describe the period of time that RPO training is valid before retraining is required.

For operators working under the R-2 license, there is a regular and detailed bi-annual retraining plan approved by the NRC.

All individuals, including those under the R-2 license receive annual refresher training in accordance with PSU's Pennsylvania broadscope license.

Page 20 of 40 PSU RESPONSE TO NRC RAI 11.10 Section 11.1.5 indicates that personal dosimeters are mounted in select locations within the facility to monitor those areas. Describe the provisions made in the processing routines for these "non-personal" dosimeters that take into account their use in this manner or justify why such provisions are not needed.

The area dosimetry monitors are mounted in representative locations for information gathering purposes and are available to use in reconstructions of exposures -- although they never have been needed for that purpose. Based on prospective and retrospective analysis of facility exposures, only about six individuals at PSU would require dosimeters at this time.

According to a representative from the dosimetry provider, "area monitors should be identical to the whole body dosimeters that are being worn by the workforce. These dosimeters will provide good estimates of the occupational dose. The accuracy ofthe estimate can be improved if the dosimeters are placed on phantoms or plastic blocks to mimic the backscatter from a human body but this is really only helpful for albedo neutrons dosimeters or low energy photons fields. If the client fields are medium to high energy photons the phantom will have little effect." Since the radiation types expected to result in individual exposure do not fall into these types, and the area monitors are used only for historical trending, the bare dosimeters provide an adequate measurement of exposure in the areas measured.

11.11 Chapter 11 does not mention the use of "engineering controls" or minimization efforts for control of contamination. Describe how these factors are incorporated in the PSBR radiation protection program.

Specific engineered controls to minimize the spread of contamination in the reactor facility include the TRIGA fuel design and operating limits that prevent fuel element service failure and the purification system and coolant operational/Technical Specification limits that virtually eliminate radioactive material in the pool water and eliminate the pool as a source of contamination. Additionally engineering controls are well integrated into PSU's radiation safety program. Procedures and processes are designed to minimize the direct handling of radioactive material as much as reasonably achievable. Administrative controls are in place to ensure proper encapsulation of samples for exposure to the core and dry runs are conducted and continuous quality improvement initiatives are applied to situations in which risks of exposure or spread of contamination are reasonable.

11.12 Chapter 11 indicates that all persons using radioactive material or persons who are monitored receive appropriate Radiation Protection Office (RPO) training. The discussion does not mention the period of time before refresher radiological training is required. Describe the period of time that RPO training is valid before retraining is required.

For operators working under the R-2 license, there is a regular and detailed bi-annual retraining plan approved by the NRC.

All individuals, including those under the R-2 license receive annual refresher training in accordance with PSU's Pennsylvania broadscope license.

Page 20 of 40

PSU RESPONSE TO NRC RAI CHAPTER 13 13.1 Section 13.1.A. TRIGA Fuel Temperature Analysis of the PSBR. Given all of the assumptions and uncertainties in deriving Equation (35), i.e., maximum clad temperature of 140+/-100C, axial peaking factor, A, & B, factors, Atg, experimental measurements, measured-to-peak factor of 1.6, temperature coefficient, initial pool temperature, correlation uncertainty, etc. What is the overall uncertainty in the maximum fuel temperature estimates provided by Equation 35 (or similar equations for other instrumented fuel elements)? Discuss the uncertainties in individual parameters used in deriving Equation (35) as necessary to establish the overall uncertainty and the corresponding safety margin.

The equations used in the SAR for determining the measured fuel temperatures are:

(33) 1-14 Unburned 12w/o element at steady state 1MW full power (34) 1-14 Unburned 12w/o element for pulsing (36) 1-13 Burned (2.2 MW-days) 12w/o element at steady state 1MW full power (37) 1-13 Burned (2.2 MW-days) 12w/o element for pulsing Equation (35) is just another form of equation (34). The inherent uncertainty in these equations can be determined by comparing the calculated values to those values measured during the work leading up to the writing of the SAR and is contained in Table 13-2.

Steady State Analysis:

1-13 G-8 1.56 412 411 0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-10 1.39 381 382

-0.24%

1-13 G-10 1.39 382 382 0.02%

1-14 G-8 2.01 455 467

-2.6%

1-14 G-8 2.01 466 467

-0.2%

1-14 G-10 1.84 372*

439

-18.1%*

1-14 G-10 1.84 418*

439

-5.1%*

1-14 G-10 1.84 450 439 2.4%

The steady state predictions are within 2.4% for new elements and 0.3% for used elements.

Note that the measured values 372 and 418'C for 1-14 were prior to pulsing.

The later measurements were performed after the element was conditioned by many pulses. 1-13 had already been conditioned by pulsing.

Page 21 of 40 PSU RESPONSE TO NRC RAI CHAPTER 13 13.1 Section 13.1.A. TRIGA Fuel Temperature Analysis of the PSBR. Given all of the assumptions and uncertainties in deriving Equation (35), i.e., maximum clad temperature of 140+/-1 ooe, axial peaking factor, Ao & Bo factors, I:1t9, experimental measurements, measured-to-peak factor of 1.6, temperature coefficient, initial pool temperature, correlation uncertainty, etc. What is the overall uncertainty in the maximum fuel temperature estimates provided by Equation 35 (or similar equations for other instrumented fuel elements)? Discuss the uncertainties in individual parameters used in deriving Equation (35) as necessary to establish the overall uncertainty and the corresponding safety margin.

The equations used in the SAR for determining the measured fuel temperatures are:

(33) I-14 Unburned 12w/o element at steady state 1MW full power (34) I-14 Unburned 12w/o element for pulsing (36) I-13 Burned (2.2 MW-days) 12w/o element at steady state 1MW full power (37) I-13 Burned (2.2 MW-days) 12w/o element for pulsing Equation (35) is just another form of equation (34). The inherent uncertainty in these equations can be determined by comparing the calculated values to those values measured during the work leading up to the writing of the SAR and is contained in Table 13-2.

Steady State Analysis:

~

~ ~ ~ ~ ~

~

1-13 G-8 1.56 412 411 0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-8 1.56 411 411

-0.12%

1-13 G-10 1.39 381 382

-0.24%

1-13 G-10 1.39 382 382 0.02%

~

~ ~ ~ ~ ~

~

1-14 G-8 2.01 455 467

-2.6%

1-14 G-8 2.01 466 467

-0.2%

1-14 G-I0 1.84 372*

439

-18.1%*

1-14 G-10 1.84 418*

439

-5.1 %*

1-14 G-I0 1.84 450 439 2.4%

The steady state predictions are within 2.4% for new elements and 0.3% for used elements.

Note that the measured values 372 and 418°C for I-14 were prior to pulsing.

The later measurements were performed after the element was conditioned by many pulses. I-13 had already been conditioned by pulsing.

Page 21 of 40

PSU RESPONSE TO NRC RAI Pulse Analysis:

&uel Coit

$'2. 5 Pulse l$7.5 lHuise 11!3

-816 0

443 12.9%

1-13 G-8 1.62 511 443 13.2%

1-13 G-10 1.54 453 422 6.7%

1-14 G-8 2.07 517 518

-0.1%

1-14 G-8 2.07 518 518 0.0%

1-14 G-10 1.8 456 453 0.7%

1-14 G-10 1.8 466 453 2.8%

The deviations for the burned element 1-13 are large in comparison to the unburned element 1-14. This is explained in the SAR as uncertainty in the gap temperature and the exact bum-up effect on the power distribution in the element.

Since the Penn Statereactor has set its Limiting Safety System Setting at 650'C, 500'C below the Safety Limit, all of the uncertainty is captured in this margin. If we assume a maximum measured temperature of 650'C and the maximum measurement uncertainty of 13.2%, the maximum temperature at the thermocouple location would be only 736°C, over 400'C below the safety limit. For steady state, the same 650'C maximum temperature with the maximum uncertainty of 2.4% would yield a maximum temperature at the thermocouple location would be only 666°C, 484°C below the safety limit.

13.2 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR. Explain how the measured-to-peak fuel temperature factor of 1.6 for pulses is derived from the profile described by Equation 4 and the parameters in Table 13-1.

The ratio of peak-to-measured temperature during a pulse can be determined by using equation (4) from the SAR. The values for new 8.5 & 12.0 w/o fuel elements are shown in the figure below.

Page 22 of 40 PSU RESPONSE TO NRC RAI Pulse Analysis:

~

~.~ ~

~

~ ~ ~

~

- ~

1-13 G-8 1.62 509 443 12.9%

1-13 G-8 1.62 511 443 13.2%

1-13 G-I0 1.54 453 422 6.7%

~

~ ~

~

~ ~ ~

~ -~

1-14 G-8 2.07 517 518

-0.1%

1-14 G-8 2.07 518 518 0.0%

1-14 G-I0 1.8 456 453 0.7%

1-14 G-I0 1.8 466 453 2.8%

The deviations for the burned element 1-13 are large in comparison to the unburned element 1-14. This is explained in the SAR as uncertainty in the gap temperature and the exact burn-up effect on the power distribution in the element.

Since the Penn State reactor has set its LimIting Safety System Setting at 650°C, 500°C below the Safety Limit, all of the uncertainty is captured in this margin. If we assume a maximum measured temperature of 650°C and the maximum measurement uncertainty of 13.2%, the maximum temperature at the thermocouple location would be only 736°C, over 400°C below the safety limit. For steady state, the same 650°C maximum temperature with the maximum uncertainty of 2.4% would yield a maximum temperature at the thermocouple location would be only 666°C, 484°C below the safety limit.

13.2 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR. Explain how the measured-to-peak fuel temperature factor of 1.6 for pulses is derived from the profile described by Equation 4 and the parameters in Table 13-1.

The ratio of peak-to-measured temperature during a pulse can be determined by using equation (4) from the SAR. The values for new 8.5 & 12.0 wlo fuel elements are shown in the figure below.

Page 22 of40

PSU RESPONSE TO NRC RAI Volumetric Heat Generation Rate during Pulsing 20 18 12 20 10 o-8.5w/o 8

-12.Ow/o 6

4 0.00 0.12 0.24 0.36 0.48 0.60 0.72 Fuel Element Radius (in)

Levine's paper Temperature Behavior of 12w/o U TRIGA Fuel (reference 3) states that:

"If a flux depression of this magnitude actually occurs within the 12w/o fuel, the temperature near the surface of the fuel (maximum fuel temperature during a pulse) would be approximately 1.6 times that measured. The 1.6 increase assumes that adiabatic conditions hold to 89% of the fuel radius."

This behavior is shown in Figure 14 from the document GA-6216 Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core. It shows that the peak temperature is at approximately 89% of the fuel radius immediately following the pulse.

Page 23 of 40 PSU RESPONSE TO NRC RAI Volumetric Heat Generation Rate during Pulsing 20 18 16 14 8.5w/o 12.0w/o

- 12

! 10

~

e E

.=

go 8

g 6

~

4 2

0 0.00 0.12 0.24 0.36 0.48 0.60 0.72 Fuel Element Radius (in1 Levine's paper Temperature Behavior of 12wlo U TRiGA Fuel (reference 3) states that:

"If a flux depression of this magnitude actually occurs within the 12w/o fuel, the temperature near the surface of the fuel (maximum fuel temperature during a pulse) would be approximately 1.6 times that measured. The 1.6 increase assumes that adiabatic conditions hold to 89% of the fuel radius."

This behavior is shown in Figure 14 from the document GA-6216 Characteristics of Large Reactivity Insertions in a High Performance TRiGA U-ZrH Core. It shows that the peak temperature is at approximately 89% of the fuel radius immediately following the pulse.

Page 23 of 40

PSU RESPONSE TO NRC RAI 150 0' U.

D%

FUEL M I1"

'WATER UJ t=-21-.0 SE.

Sz 30. SE

t

>3SEC, 6.0 SEC~"

'*t0.075:SEC t

ýi SEC/

..0.601I SEC, 0

6.l

0.2 0.3 0.4 0.5 0.6

'0.7 0.8 Go*

hO RADIUS, IN.

.Fig.. i4*Ternpýerazture distribution in fuel meat" oilowihg, pulse Figure 14 from GA-6216 Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core 13.3 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR. How is the temperature performance for new fuel batches determined? Does each new batch contain one or more instrumented fuel elements that undergo a calibration scheme? Is a most limiting instrumented fuel element selected from those available?

No specific tests are performed to determine the temperature performance of a new fuel batch (meaning shipment or manufacture run). The fuel performance in a new batch of elements is not tested independently, but rather as a part of a new core loading. Each new core loading is modeled using a set of proprietary computer codes (that have been benchmarked against a known core loading) to predict control rod worth, excess reactivity and normalized power. The results are compared to previous core loadings and the Technical Specifications for compliance. New fuel elements are loaded into a new core design conservatively to avoid flux and temperature peaking. The instrumented fuel elements are usually ordered with a new batch of fuel, but it is not a requirement. There is no calibration scheme beyond the in-core measurements and comparison to expected (and predicted) and historical parameter values. New instrumented elements are not assembled and irradiated unless needed to replace the in-use instrumented assembly.

Page 24 of 40 PSU RESPONSE TO NRC RAI

1500' TMAX:'t50,*C,T'='~50*C

',RAT'COMPUTER CODE 1,600' u:"

r---~

0' OL-__

~

-L~~

~

__ -L __

~

~~~

~

Q q~~

0.2 O,?

0.4 9.50.6

~0.70.8 O;g 1:0 RADIUS,IN;

~

'fig.. J,4~T~mp.eratu~e d~9trib~tion 'inJuelme~doilowingj pulse Figure 14 from GA-6216 Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core 13.3 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR. How is the temperature performance for new fuel batches determined? Does each new batch contain one or more instrumented fuel elements that undergo a calibration scheme? Is a most limiting instrumented fuel element selected from those available?

No specific tests are performed to determine the temperature performance of a new fuel batch (meaning shipment or manufacture run). The fuel performance in a new batch of elements is not tested independently, but rather as a part of a new core loading. Each new core loading is modeled using a set of proprietary computer codes (that have been benchmarked against a known core loading) to predict control rod worth, excess reactivity and normalized power. The results are compared to previous core loadings and the Technical Specifications for compliance. New fuel elements are loaded into a new core design conservatively to avoid flux and temperature peaking. The instrumented fuel elements are usually ordered with a new batch of fuel, but it is not a requirement. There is no calibration scheme beyond the in-core measurements and comparison to expected (and predicted) and historical parameter values. New instrumented elements are not assembled and irradiated unless needed to replace the in-use instrumented assembly.

Page 24 of 40

PSU RESPONSE TO NRC RAI 13.4 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XII1-17.

How does the data in lines 9 & 10 of Table 13-2 demonstrate the increase in Atg diminishes to zero?

The phenomenon of plastic deformation of the fuel due to pulsing is well recognized in the TRIGA reactor community. General Atomics discusses an experiment that they performed in GA-6216 Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core-1965 (pp 30-32). This was 304 stainless steel clad 8.5 w/o fuel elements, like the Penn State reactor. The Penn State reactor also has 12.0w/o fuel elements. The performance of these elements under pulsing was evaluated by Levine, Geisler and Totenbier at Penn State (Temperature behavior of 12w/o Uranium TRIGA Fuel). Their work formed part of the basis of the current Safety Analysis Report (SAR). Both works show an increase in fuel temperature in an unused fuel element after pulsing. The fuel temperature increases asymptotically for pulses of the same magnitude to a limit after 10-20 pulses. The temperature will increase again if the pulse reactivity is increased above the previous pulses. Once the new fuel element has been pulsed at the maximum for 10-20 pulses, the temperature will no longer increase. This behavior is consistent with temporary swelling of the fuel and the ensuing permanent plastic deformation of the cladding forming a gap between the fuel and cladding where none was present. Penn State "conditions" new fuel elements in this manner to help ensure that fuel temperature behavior is consistent over core life.

This behavior can be seen in Figure 16 from GA-6216 shown below.

The pulses in Table 13-2 of the SAR (lines 9-11) show the initial temperature of 1-14 at 372'C moving to 450'C after a series of $2.00-$2.75 pulses. This behavior is in line with that of the fuel elements that were tested to develop the data shown in Figure 3 below.

The temperature for 1-14 increased by a decreasing amount for each set of pulses. After the first set, the temperature went from 372-418'C or 12%. The second change was 7%,

the third was 2%. Figure 4 below shows that the change in temperature due to repeated pulsing is not great after the first set of pulses are performed.

Page 25 of 40 PSU RESPONSE TO NRC RAI 13.4 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-17.

How does the data in lines 9 & 10 of Table 13-2 demonstrate the increase in Lltg diminishes to zero?

The phenomenon of plastic deformation of the fuel due to pulsing is well recognized in the TRIGA reactor community. General Atomics discusses an experiment that they performed in GA -6216 Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core-1965 (pp 30-32). This was 304 stainless steel clad 8.5 wlo fuel elements, like the Penn State reactor. The Penn State reactor also has 12.0w/o fuel elements. The performance of these elements under pulsing was evaluated by Levine, Geisler and Totenbier at Penn State (Temperature behavior of 12wlo Uranium TRIGA Fuel). Their work formed part of the basis of the current Safety Analysis Report (SAR). Both works show an increase in fuel temperature in an unused fuel element after pulsing. The fuel temperature increases asymptotically for pulses of the same magnitude to a limit after 10-20 pulses. The temperature will increase again if the pulse reactivity is increased above the previous pulses. Once the new fuel element has been pulsed at the maximum for 10-20 pulses, the temperature will no longer increase. This behavior is consistent with temporary swelling of the fuel and the ensuing permanent plastic deformation of the cladding forming a gap between the fuel and cladding where none was present. Penn State "conditions" new fuel elements in this manner to help ensure that fuel temperature behavior is consistent over core life.

This behavior can be seen in Figure 16 from GA-6216 shown below.

The pulses in Table 13-2 of the SAR (lines 9-11) show the initial temperature ofl-14 at 372°C moving to 450°C after a series of $2.00-$2.75 pulses. This behavior is in line with that of the fuel elements that were tested to develop the data shown in Figure 3 below.

The temperature for 1-14 increased by a decreasing amount for each set of pulses. After the first set, the temperature went from 372-418°C or 12%. The second change was 7%,

the third was 2%. Figure 4 below shows that the change in temperature due to repeated pulsing is not great after the first set of pulses are performed.

Page 25 of 40

PSU RESPONSE TO NRC RAI 600 FTER 4.00 ALSE L -x AFTER 3.00 I-cc 0-.

D w

I-w U.

400 600 800 o6oo REACTOR POWER, KW 1800 Fig. 16-Fuel temperature to-obtain a given steady state reactor power as a function of transient' size performed on fuel Figure 16 from GA-6216 F.

500, h50 h.~o I-.

CAIAM TIO kVR t00 3o0 L.

1.Li 30b 250 0..

(4 1.

0-150.1' OCOU pLS 0-iA12f' 4

SRD¶ 1

8.

,.'r.%te0

+

.12 Wr.% CIOREI BEFOIC P01111M1

+

12 WT.% CORK1 splMM 6 MUESA12 0

10ý wr.% cwg2 A'wr2I *11 lvuaz2 1eo L 1)00 01*

s;o 50 0

200 0oo0 600 800 1000 0

RF.ACTR0 POWEH (KO.

200 1.00 Ge00 8w 000 IIA1Yi0lI.OVll (ma)

Fiio;urc h-WF50 STATE MUIL T-li(°ATrURE VS. Pe"Wlo IKd-"L AS A.'F1'krP5 BY 1*.J1110(

Figures 3 and 4 from Levine Temperature Behavior of 12w/o Uranium TRIGA Fuel Page 26 of 40 i,

I 600 500

(.)

'0 400 ILl 0:,

j

~

0:

ILl 300

a.

E ILl I-

...J ILl j

200 IL 100 50 o

PSU RESPONSE TO NRC RAI BEFORE PULSING 1600 REACTOR POWER, KW Fig. 1 ?-Fuel temperature to' obtain a given steady state reactor,power as a function of tra)lsient' size per"formed on fuel Figure 16 from GA-6216

~o IBOO FiISU"~ fl.

S'I'F.ADY srATE tUHL TF.'..:tY.RA'l'UftE VS. PoW'JIlJ J.KV';!. AS Ai'iX;1'KD BY P\\JISHl(;

Figures 3 and 4 from Levine Temperature Behavior of 12wlo Uranium TRlGA Fuel Page 26 of 40

PSU RESPONSE TO NRC RAI 13.5 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page X111-17.

The equation at the bottom of page XIII-17 uses a ttc of 445 0C for element 1-14 loaded in core position G-8. Table 13-2 lists a ttc of 455 0C for element 1-14 loaded in core position G-8. Clarify which is the correct temperature.

The original data sheets are not available, but solving the equation at the top of page XIII-17 using 445'C yields NPj= 2.02 as shown in the text. The position of the RSEC staff is that, barring finding the original data sheets showing information to the contrary, 445'C is the correct temperature.

In addition, since the temperature in question was taken prior to pulsing, the conditions to reproduce it no longer exist. The temperature itself is only useful for determining NP for 1-14 in G-8 in Core 36 and therefore for determining the temperature drop across the fuel-cladding gap. The gap temperature drop is used to predict fuel temperatures using 1-14 as a standard fuel element in any core. This performance has been verified elsewhere in the SAR.

Corrected Table 13-2 Fuel Temperature Measurement Data for Loading 36 To = 21'C tpo(°C) Recorder / Meter Fuel Core ttc( 0C)

Pulse Pulse Pulse Pulse Element Position SS 1MW

$2.00

$2.25

$2.50

$2.75 1-13 G-8 412 353/379 392/421 436/467 478/509 1-13 G -8 411 1-13 G-8 411 343/381 387/421 431/461 478/511 1-13 G-8 411 350/381 389/419 435/466 478/511 1-14 G-8 445 389 427 468 517 1-14 G-8 466 395 434 482 518 1-13 G-10 381 323/333 359/371 399/412 430/453 1-13 G-10 382 311/332 357/373 400/416 439/453 1-14 G-10 372 339 375 415 456 1-14 G-10 418 1-14 G-10 450 348 391 425 466 1-14 G-10 433 342 373 411 449 Page 27 of 40 PSU RESPONSE TO NRC RAI 13.5 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-17.

The equation at the bottom of page XIII-17 uses a tIC of 445°C for element 1-14 loaded in core position G-8. Table 13-2 lists a tIC of 455°C for element 1-14 loaded in core position G-8. Clarify which is the correct temperature.

The original data sheets are not available, but solving the equation at the top of page XIII-17 using 445°C yields NPj = 2.02 as shown in the text. The position of the RSEC staff is that, barring finding the original data sheets showing information to the contrary, 445°C is the correct temperature.

In addition, since the temperature in question was taken prior to pulsing, the conditions to reproduce it no longer exist. The temperature itself is only useful for determining NP for 1-14 in G-8 in Core 36 and therefore for determining the temperature drop across the fuel-cladding gap. The gap temperature drop is used to predict fuel temperatures using 1-14 as a standard fuel element in any core. This performance has been verified elsewhere in the SAR.

Fuel Element 1-13 1-13 1-13 1-13 1-14 1-14 1-13 1-13 1-14 1-14 1-14 1-14 Page 27 of 40 Corrected Table 13-2 Fuel Temperature Measurement Data for Loading 36 To = 21°C tpo(OC) Recorder / Meter Core ttc(OC)

Pulse Pulse Pulse Position SS IMW

$2.00

$2.25

$2.50 G-8 412 353/379 3921421 436/467 G-8 411 G-8 411 343/381 387/421 4311461 G":8 411 350/381 3891419 435/466 G-8 445 389 427 468 G-8 466 395 434 482 G-IO 381 323/333 359/371 399/412 G-I0 382 311/332 357/373 400/416 G-I0 372 339 375 415 G-I0 418 G-I0 450 348 391 425 G-I0 433 342 373 411 Pulse

$2.75 478/509 478/511 478/511 517 518 430/453 439/453 456 466 449

PSU RESPONSE TO NRC RAI 13.6 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-22.

The maximum fuel temperature of 10950C in the first paragraph is calculated from Equation (35) using a To = 21'C. Describe any restrictions on the initial pool temperature during pulse mode operation to ensure the calculated 10950C is a conservative maximum?

The pool temperature provides a starting temperature for the fuel and is usually discounted in dealing with temperature increases due to reactor operation. In Equation (35) the pool temperature is added to the temperature increase due to pulsing. On page 22, the temperature of 1095°C is determined by multiplying the final measured pulse temperature by the internal fuel element correction factor of 1.6 (due to location of the fuel thermocouple). The more correct but less conservative approach Would be to multiply the only the fuel temperature increase by 1.6 and add the pool temperature.

There is no reason to think that the fuel at zero power multiplies the pool temperature by 1.6, so there is no reason to think that it does so at power. The internal temperature due to pulsing should be corrected by 1.6 only.

The result is a temperature difference due to the pulse described on page 22 ($3.50 pulse on core 36 with a maximum NP =2.2) of 665°C.

tpoj - TPoot = (72.2

dkp + 0.588)

tt 1400C Cf 499 -

1400C tpoj - TPoot = (72.2

0.007

2.5 + 0.588)

tpoj - TP001 =665'C.

The maximum temperature anywhere in the element (1-14) is given by:

tpoj* (1.6) - Tpoo1 = 6650 C

1.6 + Tpoo1 = 1064°C + TPooZ This shows that pool temperature could be as high as 86°C before the safety limit was approached.

Pool temperature is limited by Technical Specifications (3.3.6) to 60'C.

tpoj * (1.6) - Tpoo0 = 665-C

1.6 + 600C = 1064°C + 60'C = 1124 0C Therefore, no additional restriction on pool initial temperatures need be applied.

Page 28 of 40 PSU RESPONSE TO NRC RAI 13.6 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XII 1-22.

The maximum fuel temperature of 1095°C in the first paragraph is calculated from Equation (35) using a To = 21°C. Describe any restrictions on the initial pool temperature during pulse mode operation to ensure the calculated 1095°C is a conservative maximum?

The pool temperature provides a starting temperature for the fuel and is usually discounted in dealing with temperature increases due to reactor operation. In Equation (35) the pool temperature is added to the temperature increase due to pulsing. On page 22, the temperature of 1095°C is determined by multiplying the final measured pulse temperature by the internal fuel element correction factor of l.6 (due to location of the fuel thermocouple). The more correct but less conservative approach would be to multiply the only the fuel temperature increase by 1.6 and add the pool temperature.

There is no reason to think that the fuel at zero power multiplies the pool temperature by 1.6, so there is no reason to think that it does so at power. The internal temperature due to pulsing should be corrected by 1.6 only.

The result is a temperature difference due to the pulse described on page 22 ($3.50 pulse on core 36 with a maximum NP =2.2) of 665°C.

(

)

ttcj - 140°C tpoj -

Tpool = 72.2

dkp + 0.588 *

. C f

499 - 140°C tpoj -

TpOOl = (72.2

0.007

2.5 + 0.588)

1 The maximum temperature anywhere in the element (1-14) is given by:

tpoj * (1.6) -

TPOOl = 665°C

1.6 + TpOOl = 1064°C + TPOOl This shows that pool temperature could be as high as 86°C before the safety limit was approached.

Pool temperature is limited by Technical Specifications (3.3.6) to 60°C.

Therefore, no additional restriction on pool initial temperatures need be applied.

Page 28 of 40

PSU RESPONSE TO NRC RAI 13.7 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-22. Is Equation (28) referred to in the 2 nd paragraph the correct reference or should it be Equation (35)?

A typographical error exists in the SAR and the sentence should refer to Equation 35.

The paragraph should read:

Thus, in the future, Equation (35) can be used to evaluate and predict tpoj.

This requires placing 1-14 in the hottest spot in the core and running at 1MW to evaluate tt,. Then starting with a $2 pulse, verify Equation (35) and predict tpo 0 j for the high values of 6kp. The tpoj related to a $2 pulse will be more than 100°C below tpoj for a $2.75 pulse and even much lower than that for a $3.50 pulse...

13.8 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-24.

Should the second line in Table 13-6 be position G-10?

A typographical error exists in the SAR and the table should read as shown below.

Table 13-6 Evaluation of NPj's from 1-13 Data 1-13 (2.2MWD depleted)

Core tt, [°C]

NPj Steady State NPj (Average ) Pulse Position Equation (36)

Equation (37)

G-8 411 1.56 1.62 G-10 382 1.39 1.54 For comparison, see 1-14 data in Table 13-3.

13.9 Section 13.1..B, Evaluation of the LSSS, Page XIII-25. In the last paragraph, the maximum fuel temperature for a $3.50 pulse is evaluated as 10950C using Equation (34) for element 1-14 and a NP of 2.2. Provide a similar calculation for element 1-15 showing the corresponding equation and values for element 1-15.

The instrumented fuel element 1-15 has approximately 200% of the burnup of element I-13 as of 2008. 1-16 is the instrumented element that feeds the safety system. The burnups are shown below.

Instrumented Current Burnup Last Core Loaded Fuel Element

[MWD/MTU]

1-13 Core 48A (1998) 1-15 Core 53A (2008) 1-16 Core 53A (2008)

Page 29 of 40 PSU RESPONSE TO NRC RAI 13.7 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-22. Is Equation (28) referred to in the 2nd paragraph the correct reference or should it be Equation (35)?

A typographical error exists in the SAR and the sentence should refer to Equation 35.

The paragraph should read:

Thus, in the future, Equation (35) can be used to evaluate and predict tpoj.

This requires placing 1-14 in the hottest spot in the core and running at 1MW to evaluate ttc. Then starting with a $2 pulse, verify Equation (35) and predict tpoj for the high values of 8kp. The tpoj related to a $2 pulse will be more than 100°C below tpoj for a $2.75 pulse and even much lower than that for a $3.50 pulse...

13.8 Section 13.1.A, TRIGA Fuel Temperature Analysis of the PSBR, Page XIII-24.

Should the second line in Table 13-6 be position G-10?

A typographical error exists in the SAR and the table should read as shown below.

Table 13-6 Evaluation ofNPj's from 1-13 Data 1-13 (2.2MWD depleted)

Core ttc [0C]

NPj Steady State NPj (Average) Pulse Position Equation (36)

Equation (37)

G-8 411 1.56 1.62 G-IO 382 1.39 1.54 For comparison, see 1-14 data in Table 13-3.

13.9 Section 13.1.B, Evaluation of the LSSS, Page XIII-25. In the last paragraph, the maximum fuel temperature for a $3.50 pulse is evaluated as 1095°C using Equation (34) for element 1-14 and a NP of 2.2. Provide a similar calculation for element 1-15 showing the corresponding equation and values for element 1-15.

The instrumented fuel element 1-15 has approximately 200% of the bumup of element 1-13 as of2008. 1-16 is the instrumented element that feeds the safety system. The bumups are shown below.

Page 29 of40 Instrumented Fuel Element 1-13 1-15 Current Burnup Last Core Loaded Core 48A Core 53A Core 53A

PSU RESPONSE TO NRC RAI The equation used for 1-13 in the SAR is tpoj = 1.475x10 4

NPj

dkpuise + 80

NPj + To (37)

This was developed using equation (4) and different shape coefficients for the radial power shape. Plotting this flatter power shape shows a peak-to-measured fuel temperature during a pulse of 1.1 - 1. This is much lower than the 1.6-1 for a fresh element. The maximum fuel temperature anywhere in the element is highest for the lowest bumup elements due to the extra peaking. Performing the calculation in Section 13.1.B, Evaluation of the LSSS, Page XIII-25, would yield (for 1-13 or 1-16) 842°C.

The maximum temperature for 1-15 should be even lower since there is considerably more bumup and therefore an even flatter power shape.

13.10 Section 13.1.2, Insertion of Excess Reactivity, Page XIII-33. Provide a more detailed explanation of how the data for the maximum measured $2.25 pulse temperature for element 1-15 and Core Loading 47 was used to calculate the maximum fuel temperature for the reactivity insertion accident at an initial power of 1.15 MW.

What is the NP for the location of element 1-15 in Core Loading 47? Is the reactivity insertion accident based on the TS NP limit of 2.2 and maximum elemental power density of 24.7 kW?

The two temperature profiles (pulse and steady state) are assumed to be additive. Since the shapes of the profiles are somewhat opposite, the resulting combined profile is lower than adding two profiles of similar shapes. The figure below shows an example of the phenomenon. The precise shapes of the profiles are only approximated and do not represent any specific element or core loading. The figure shows only one possible result of the phenomenon with a measured pulse peak temperature of 380'C and a measured steady state temperature of 650'C. The right end of the plot shows the edge of the interior of the fuel meat and does not include the cladding or the gap. The temperature drop for pulsing outside of the adiabatic limit is shown for illustration only.

Page 30 of 40 PSU RESPONSE TO NRC RAI The equation used for 1-13 in the SAR is tpoj = 1.475xl04

NPj

dkpulse + 80

NPj + To (37)

This was developed using equation (4) and different shape coefficients for the radial power shape. Plotting this flatter power shape shows a peak-to-measured fuel temperature during a pulse of 1.1 - 1. This is much lower than the 1.6-1 for a fresh element. The maximum fuel temperature anywhere in the element is highest for the lowest bumup elements due to the extra peaking. Performing the calculation in Section 13.1.B, Evaluation of the LSSS, Page XIII-25, would yield (for 1-13 or 1-16) 842°C.

The maximum temperature for I-IS should be even lower since there is considerably more bumup and therefore an even flatter power shape.

13.10 Section 13.1.2, Insertion of Excess Reactivity, Page XIII-33. Provide a more detailed explanation of how the data for the maximum measured $2.25 pulse temperature for element 1-15 and Core Loading 47 was used to calculate the maximum fuel temperature for the reactivity insertion accident at an initial power of 1.15 MW.

What is the NP for the location of element 1-15 in Core Loading 47? Is the reactivity insertion accident based on the TS NP limit of 2.2 and maximum elemental power density of 24.7 kW?

The two temperature profiles (pulse and steady state) are assumed to be additive. Since the shapes of the profiles are somewhat opposite, the resulting combined profile is lower than adding two profiles of similar shapes. The figure below shows an example of the phenomenon. The precise shapes of the profiles are only approximated and do not represent any specific element or core loading. The figure shows only one possible result of the phenomenon with a measured pulse peak temperature of 380°C and a measured steady state temperature of 650°C. The right end of the plot shows the edge of the interior of the fuel meat and does not include the cladding or the gap. The temperature drop for pulsing outside of the adiabatic limit is shown for illustration only.

Page 30 of40

PSU RESPONSE TO NRC RAI Example Temperature Profile in a Fuel Element 1200 000

.so......

8000 6 00 E 600-Pulsing Temp.

Steady-StateTemp.

~ 400

-Combined Temp.

200 0

0 0.12 0.24 0.36 0.48 0.6 0.72 Fuel Element Radius [in]

1-15 in core 47 was in position G-8, the same as 1-13 in Core 36. The cores were similar in size (Core 36 had 92 fuel elements and Core 47 had 94 fuel elements) and 1-15 and I-13 were both well burned 12w/o elements. Table 13-6 in the SAR gives 1-13's NP in G-8 as 1.56 for core 36. This is a suitable estimate for 1-15 in G-8 in core 47 since the fuel loadings and locations are similar.

The analysis in the SAR is not based on either the MEPD of 24.7kW/element or the NP limit of 2.2. The instrumented element used for the measurements for Core 51 and all other pulse measurements in all other cores is in the position of MEPD (Technical Specifications allows for a different location, but adjustments to the analyses must be made) and maximum NP since Penn State uses a 12w/o instrumented element for safety channel monitoring. Instead, the analysis is based on actual core performance for very limiting core conditions (i.e. most reactive core loaded since 1995). This analysis was included in the SAR only as an example of the robustness of the TRIGA fuel design. The SAR discusses the reasons why this type of event is highly unlikely at the Penn State reactor.

The following analyses are included as additional examples of the stability of the fuel using more recent core designs and parameters.

Page 31 of 40 PSU RESPONSE TO NRC RAI Example Temperature Profile in a Fuel Element 1200 1000

~ 800 "8

CII...

a::

J e

IV

J CII 600 Q,

0 E

~

CII I-Jl:i

-- PuI5ing Temp.

Steady-State Temp.

'ii 400

J u..

-- Combined Temp.

200 0

0 0.12 0.24 0.36 0.48 0.6 0.72 Fuel Element Radius [in]

I-IS in core 47 was in position G-8, the same as 1-13 in Core 36. The cores were similar in size (Core 36 had 92 fuel elements and Core 47 had 94 fuel elements) and I-IS and 1-13 were both well burned 12w/o elements. Table 13-6 in the SAR gives I-13's NP in G-8 as 1.56 for core 36. This is a suitable estimate for I-IS in G-8 in core 47 since the fuel loadings and locations are similar.

The analysis in the SAR is not based on either the MEPD of 24.7kW/element or the NP limit of 2.2. The instrumented element used for the measurements for Core 51 and all other pulse measurements in all other cores is in the position of MEPD (Technical Specifications allows for a different location, but adjustments to the analyses must be made) and maximum NP since Penn State uses a 12w/o instrumented element for safety channel monitoring. Instead, the analysis is based on actual core performance for very limiting core conditions (i.e. most reactive core loaded since 1995). This analysis was included in the SAR only as an example of the robustness of the TRIGA fuel design. The SAR discusses the reasons why this type of event is highly unlikely at the Penn State reactor.

The following analyses are included as additional examples of the stability of the fuel using more recent core designs and parameters.

Page 31 of 40

PSU RESPONSE TO NRC RAI Core 51 (2000) was the most reactive core in recent years and can be considered a maximum as long as Penn State has a thermal column that adds positive reactivity. It also had the most reactive Transient Rod since 1995. The parameters for Core 51 are shown below:

Core 51 (2000) Parameter Value Control Rod Worth

$13.67 Critical Rod Worth

$7.14 Excess Reactivity (cold & clean core)

$6.53 Shutdown Margin

$2.46 Worth of Transient Rod

$3.08 Projected Measured Fuel Temperature at 535 0 C 1.15MW Projected Reactivity Loss at 1.15MW

$4.85 Peak Measured Pulse Temperature at $3.08 4650 C If the reactor could pulse from 1.15MW with the full worth of the Transient Rod, the two temperatures would be added to yield a final maximum temperature of approximately 1000°C. This would require and excess reactivity of $4.85+$3.08 = $7.93, which is far beyond the Technical Specifications limit of $7.00 The actual value is always lower due to the positive reactivity of the thermal column.

For a limiting analysis using a NP = 2.2, the partially burned element 1-16 (should perform similarly to 1-13 in the SAR) produces the hottest temperatures" Equation (37) from the SAR is used for this calculation. There is no reference power defect for 1.15MW. Since Core 51 was high reactivity core, those parameters can be used. There are two cases that can be considered using the Core 51 data. The first case is a pulse of full worth ($3.08) from the highest power that can be achieved with three rods (TR on the bottom). The second case is starting from 1.15MW and pulsing with as much worth as is left in the TR (assume a full $7.00 of excess reactivity). Both cases are prohibited by interlocks and procedures. The second case is physically improbable if not impossible.

Case 1:

Excess Reactivity - TR Worth = $6.52-$3.08 = $3.45 Reactor Power at $3.45 = 750kW Fuel Temperature at 750kW = 430'C Peak Pulse temperature for 1-16 at NP=2.2 and $3.08 = 670'C Final Fuel temperature (sum of 1MW SS and pulse) = 1 100°C Case 2:

Pulse reactivity remaining (1.15MW = $4.85) = $7.00-$4.85 = $2.15 Fuel temperature at 1.15MW = 535°C Peak Pulse temperature for 1-16 at NP=2.2 and $2.15 = 458°C Final Fuel temperature (sum of 1MW SS and pulse) = 993°C Both cases are below the safety limit for the fuel.

Page 32 of 40 PSU RESPONSE TO NRC RAI Core 51 (2000) was the most reactive core in recent years and can be considered a maximum as long as Penn State has a thermal column that adds positive reactivity. It also had the most reactive Transient Rod since 1995. The parameters for Core 51 are shown below:

Core 51 (2000) Parameter Value Control Rod Worth

$13.67 Critical Rod Worth

$7.14 Excess Reactivity (cold & clean core)

$6.53 Shutdown Margin

$2.46 Worth of Transient Rod

$3.08 Projected Measured Fuel Temperature at 535°C 1.15MW Projected Reactivity Loss at 1.15MW

$4.85 Peak Measured Pulse Temperature at $3.08 465°C If the reactor could pulse from 1.15MW with the full worth of the Transient Rod, the two temperatures would be added to yield a final maximum temperature of approximately 1000°C. This would require and excess reactivity of $4.85+$3.08 = $7.93, which is far beyond the Technical Specifications limit of $7.00 The actual value is always lower due to the positive reactivity of the thermal column.

For a limiting analysis using a NP = 2.2, the partially burned element 1-16 (should perform similarly to 1-13 in the SAR) produces the hottest temperatures. Equation (37) from the SAR is used for this calculation. There is no reference power defect for 1.15MW. Since Core 51 was high reactivity core, those parameters can be used. There are two cases that can be considered using the Core 51 data. The first case is a pulse of full worth ($3.08) from the highest power that can be achieved with three rods (TR on the bottom). The second case is starting from 1.15MW and pulsing with as much worth as is left in the TR (assume a full $7.00 of excess reactivity). Both cases are prohibited by interlocks and procedures. The second case is physically improbable if not impossible.

Case 1:

Excess Reactivity - TR Worth = $6.52-$3.08 = $3.45 Reactor Power at $3.45 = 750kW Fuel Temperature at 750kW = 430°C Peak Pulse temperature for 1-16 at NP=2.2 and $3.08 = 670°C Final Fuel temperature (sum of IMW SS and pulse) = 1 100°C Case 2:

Pulse reactivity remaining (1.15MW = $4.85) = $7.00-$4.85 = $2.15 Fuel temperature at 1.15MW= 535°C Peak Pulse temperature for 1-16 at NP=2.2 and $2.15 = 458°C Final Fuel temperature (sum of IMW SS and pulse) = 993°C Both cases are below the safety limit for the fuel.

Page 32 of40

PSU RESPONSE TO NRC RAI 13.11 Section 13.1.3, Loss of Coolant, Page X111-34. Provide an estimate of the radiation doses from a loss-of-coolant accident outside the Controlled Area.

The Loss of Coolant Accident as described in the facility SAR analyzes a loss of pool water The pool drains and no operator action is assumed. The closest uncontrolled area is the fenceline to the north of the reactor pool. The fence is about 100 feet from the core in its normal location at the R1 position in the south half of the reactor pool. The exposure rate at this point was calculated using MCNP 5.0 and checked by hand using an analytical method as described by Foderero in the Photon Shielding Manual(1976). The MCNP calculations were higher, so they will be used here.

Three scenarios are shown in the figures below. The first case is the activity in the core and related exposure rate at the fence (following a LOCA) for a power history for 168MWH/week for the week prior to the LOCA. This is far beyond what is possible given an excess reactivity limit of $7.00 due to xenon poisoning. The second case is for 40MWH/week. This is probably a practical limit for operations considering fission product poisoning. The month with the highest usage in the last four years was July 2008 with a weekly average of 25MWH/week. The average use is 14MWH/week. The third case is for 20MWH/week. This is an appropriate case for the way the Penn State reactor tends to operate since greater than ninety-five percent of all months are below this level of operation. Core activity is calculated using a method found in McClellan facility SAR.

Page 33 of 40 PSU RESPONSE TO NRC RAI 13.11 Section 13.1.3, Loss of Coolant, Page XIII-34. Provide an estimate of the radiation doses from a loss-of-coolant accident outside the Controlled Area.

The Loss of Coolant Accident as described in the SAR analyzes a loss of pool The pool drains "

no operator actIOn IS The closest uncontrolled area is the fence line to the north of the reactor pool. The fence is about 1 00 feet from the core in its normal location at the Rl position in the south half of the reactor pool. The exposure rate at this point was calculated using MCNP 5.0 and checked by hand using an analytical method as described by Foderero in the Photon Shielding Manual(1976}. The MCNP calculations were higher, so they will be used here.

Three scenarios are shown in the figures below. The first case is the activity in the core and related exposure rate at the fence (following a LOCA) for a power history for 168MWHlweek for the week prior to the LOCA. This is far beyond what is possible given an excess reactivity limit of $7.00 due to xenon poisoning. The second case is for 40MWHlweek. This is probably a practical limit for operations considering fission product poisoning. The month with the highest usage in the last four years was July 2008 with a weekly average of 25 MWHIweek. The average use is 14MWH1week. The third case is for 20MWHlweek. This is an appropriate case for the way the Penn State reactor tends to operate since greater than ninety-five percent of all months are below this level of operation. Core activity is calculated using a method found in McClellan facility SAR.

Page 33 of 40

PSU RESPONSE TO NRC RAI 13.12 Section 13.1.7, Loss of Normal Electric Power, Page XIII-44. Assuming the reactor is operating, describe if and how the reactor would shutdown on loss of on-site electrical power with the diesel generator functioning, and without the diesel generator functioning. How does loss of power to the facility exhaust system, emergency exhaust system, or the continuous air monitors cause a shutdown?

If the reactor is operating and a loss of power to the facility occurs, the UPS will power the critical reactor safety and instrumentation systems (including the radiation monitor system). No automatic scam is initiated by a loss of facility power.

The facility exhaust fans, emergency exhaust fans, and the continuous air monitor pumps receive backup power from a standby facility diesel generator. The diesel was installed to provide fire system and emergency lighting supplies. With the availability of excess capacity on this diesel, the reactor UPS and other important loads were added (normal and emergency ventilation, air monitor pumps). These capabilities are not assumed nor relied upon to continue operation in the case of loss of site power.

On a loss of facility power, DCC-X will initiate a scram if it senses loss of both facility exhaust system fans (determined by position switches on the fan louvers). If the diesel re-powers the fans before the louvers close on both fans the reactor will continue to operate and operator action to shutdown the reactor is dictated by procedure.

On loss of power to both facility exhaust fans, DCC-X will initiate a reactor scram when it senses the louvers are closed.

Page 34 of 40 PSU RESPONSE TO NRC RAI 13.12 Section 13.1.7, Loss of Normal Electric Power, Page XIII-44. Assuming the reactor is operating, describe if and how the reactor would shutdown on loss of on-site electrical power with the diesel generator functioning, and without the diesel generator functioning. How does loss of power to the facility exhaust system, emergency exhaust system, or the continuous air monitors cause a shutdown?

If the reactor is operating and a loss of power to the facility occurs, the UPS will power the critical reactor safety and instrumentation systems (including the radiation monitor system). No automatic scam is initiated by a loss of facility power.

The facility exhaust fans, emergency exhaust fans, and the continuous air monitor pumps receive backup power from a standby facility diesel generator. The diesel was installed to provide fire system and emergency lighting supplies. With the availability of excess capacity on this diesel, the reactor UPS and other important loads were added (normal and emergency ventilation, air monitor pumps). These capabilities are not assumed nor relied upon to continue operation in the case of loss of site power.

On a loss of facility power, DCC-X will initiate a scram ifit senses loss of both facility exhaust system fans (determined by position switches on the fan louvers). lithe diesel re-powers the fans before the louvers close on both fans the reactor will continue to operate and operator action to shutdown the reactor is dictated by procedure.

On loss of power to both facility exhaust fans, DCC-X will initiate a reactor scram when it senses the louvers are closed.

Page 34 of 40

PSU RESPONSE TO NRC RAI Loss of power to the emergency exhaust alone would cause no automatic action; operator action to comply with the Technical Specification limits would be required.

The continuous air monitor instrumentation is powered from UPS. The air pumps are powered from the diesel backed distribution. Loss of power to the air pumps alone would require operator action to comply with the Technical Specification limits.

Page 35 of 40 PSU RESPONSE TO NRC RAI Loss of power to the emergency exhaust alone would cause no automatic action; operator action to comply with the Technical Specification limits would be required.

The continuous air monitor instrumentation is powered from UPS. The air pumps are powered from the diesel backed distribution. Loss of power to the air pumps alone would require operator action to comply with the Technical Specification limits.

Page 35 of40

PSU RESPONSE TO NRC RAI Questions Related to Financial Qualifications and Decommissioning Pursuant to 10 CFR 50.33(f)(2), "applicants to renew or extend the term of an operating license for a nonpower reactor shall include the financial information that is required for an initial license." To comply with this requirement, please provide the following updated and supplemental information to the 2005 Pennsylvania State University (the University) application for a renewed license for the PSBR.

1. Under 10 CFR 50.33(d), certain information is required by an applicant, the University, as applicable. The application states that the University is a non-profit university, organized under the laws of the Commonwealth of Pennsylvania. To comply with 10 CFR 50.33(d), please state the organizational form of the University (e.g.,

corporation) and if a corporation provide the information required under 10 CFR 50.33(d)(3). If none of the provisions of 10 CFR 50.33(d) are applicable, please so state.

None of the business descriptions listed in 10CFR50.33(d)(3) are exactly applicable. The Pennsylvania State University was originally chartered by an act of the Legislature of the Commonwealth of Pennsylvania on February 22, 1855. The Morrill Act of 1862 (known as the Land Grant Act) of the Congress of the United States was accepted by the Pennsylvania Legislature in 1863 and Penn State was thereafter designated as the institution in Pennsylvania to receive the benefits of the act.

The Board of Trustees of The Pennsylvania State University is the corporate body established by the charter with complete responsibility for the government and welfare of the University and all the interests pertaining thereto including students, faculty, staff, and alumni.

Penn State's 32-member Board of Trustees is composed of the following: Five trustees serve in an ex officio capacity by virtue of their position within the University or the Commonwealth of Pennsylvania. They are the President of the University; the Governor of the Commonwealth; and the state secretaries of the departments of Agriculture; Education; and Conservation and Natural Resources. Six trustees are appointed by the Governor; nine trustees are elected by the alumni; six are elected by organized agricultural societies within the Commonwealth; and six are elected by the Board of Trustees representing business and industry endeavors. More details as to the current membership of the Board and bibliographic information are available at http://www.psu.edu/trustees/selection.html.

The Pennsylvania State University is not owned, controlled, or dominated by an alien, a foreign corporation, or foreign government.

Page 36 of 40 PSU RESPONSE TO NRC RAI Questions Related to Financial Qualifications and Decommissioning Pursuant to 10 CFR 50.33(f)(2), "applicants to renew or extend the term of an operating license for a non power reactor shall include the financial information that is required for an initial license." To comply with this requirement, please provide the following updated and supplemental information to the 2005 Pennsylvania State University (the University) application for a renewed license for the PSBR.

1. Under 10 CFR 50.33(d), certain information is required by an applicant, the University, as applicable. The application states that the University is a non-profit university, organized under the laws of the Commonwealth of Pennsylvania. To comply with 10 CFR 50.33(d), please state the organizational form of the University (e.g.,

corporation) and if a corporation provide the information required under 10 CFR 50.33(d)(3). If none of the provisions of 10 CFR 50.33(d) are applicable, please so state.

None of the business descriptions listed in 10CFR50.33(d)(3) are exactly applicable. The Pennsylvania State University was originally chartered by an act of the Legislature of the Commonwealth of Pennsylvania on February 22, 1855. The Morrill Act of 1862 (known as the Land Grant Act) of the Congress of the United States was accepted by the Pennsylvania Legislature in 1863 and Penn State was thereafter designated as the institution in Pennsylvania to receive the benefits of the act.

The Board of Trustees of The Pennsylvania State University is the corporate body established by the charter with complete responsibility for the government and welfare of the University and all the interests pertaining thereto including students, faculty, staff, and alumni.

Penn State's 32-member Board of Trustees is composed of the following: Five trustees serve in an ex officio capacity by virtue of their position within the University or the Commonwealth of Pennsylvania. They are the President of the University; the Governor of the Commonwealth; and the state secretaries of the departments of Agriculture; Education; and Conservation and Natural Resources. Six trustees are appointed by the Governor; nine trustees are elected by the alumni; six are elected by organized agricultural societies within the Commonwealth; and six are elected by the Board of Trustees representing business and industry endeavors. More details as to the current membership of the Board and bibliographic information are available at http://www. psu. edu/trusteesl selection.html.

The Pennsylvania State University is not owned, controlled, or dominated by an alien, a foreign corporation, or foreign government.

Page 36 of 40

PSU RESPONSE TO NRC RAI

2. As required by 10 CFR 50.33(f)(2), "the applicant shall submit estimates for total annual operating costs for each of the first five years of operations of the facility." Since the information provided in the University's 2005 submittal for a renewed license is now out of date, provide the estimated operating costs for each of the years 2009 to 2013 (the first full five-year period after the projected date of license renewal) as well as the University's sources of funding to cover the operating costs for the PSBR for the above five years.

Radiation Science and Engineering Center (RSEC) Operational Costs have remained relatively stable over the last several years at approximately $1.4 M per year. The reactor support costs are the major portion of this budget but are not separated from the Center.

O&M costs are about $300,000 per year (does not include utilities or building maintenance provided by the University) and unburdened salaries and student support is approximately $1.IM. Approximately $700,000 is sourced from the College of Engineering in salary support and $700,000 from service activities. In 2007, the University provided nearly$200,000 in additional support for refurbishment and upgrade of the reactor pool coatings. Research activities provide additional monies for new equipment, support, and use.

Year Estimated Costs*

FY 2009

$1.47M FY 2010

$1.54M FY 2011

$1.62M FY 2012

$1.70M FY 2013

$1.79M

Assumes unburdened salary cost, does not include utilities or RSEC building maintenance For information on The Pennsylvania State University financial sources see the attached "Audited Financial Statements" document for Fiscal Year Ended June 30, 2007.

3. The application indicates that the cost for decommissioning the reactor was

$10,540,718 in 2006 dollars. To comply with 10 CFR 50.75(d), please update the application to 2008 to include: (1) a current (2008) cost estimate for decommissioning the facility showing costs of labor, waste disposal, other items (such as energy, equipment, and supplies), a contingency factor (normally 25%), and total decommissioning costs in 2008 dollars to meet the NRC's radiological release criteria; (2) a statement of the decommissioning method to be used (e.g., DECON); and (3) a full identification of the specific means of adjusting the cost estimate (e.g., consumer price index, waste burial cost data from NUREG-1307, or labor price index) periodically over the life of the facility and a numerical example updating the 2008 cost estimate.

The decommissioning costs of any license are hard to quantify after completion and even harder to predict. For this reason the costs of previous decommissionings are taken as a basis for estimating PSU's future costs. Actual detailed costs were obtained from the Georgia Institute of Technology and estimates were obtained from the University of Virginia.

Page 37 of 40 PSU RESPONSE TO NRC RAI

2. As required by 10 CFR 50.33(f)(2), "the applicant shall submit estimates for total annual operating costs for each of the first five years of operations of the facility." Since the information provided in the University's 2005 submittal for a renewed license is now out of date, provide the estimated operating costs for each of the years 2009 to 2013 (the first full five-year period after the projected date of license renewal) as well as the University's sources of funding to cover the operating costs for the PSBR for the above five years.

Radiation Science and Engineering Center (RSEC) Operational Costs have remained relatively stable over the last several years at approximately $1.4 M per year. The reactor support costs are the major portion of this budget but are not separated from the Center.

O&M costs are about $300,000 per year (does not include utilities or building maintenance provided by the University) and unburdened salaries and student support is approximately $1.1M. Approximately $700,000 is sourced from the College of Engineering in salary support and $700,000 from service activities. In 2007, the University provided nearly $200,000 in additional support for refurbishment and upgrade of the reactor pool coatings. Research activities provide additional monies for new equipment, support, and use.

Year FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Estimated Costs *

$1.47M

$1.54M

$1.62M

$1.70M

$1.79M

Assumes unburdened salary cost, does not include. utilities or RSEC building maintenance For information on The Pennsylvania State University financial sources see the attached "Audited Financial Statements" document for Fiscal Year Ended June 30, 2007.

3. The application indicates that the cost for decommissioning the reactor was

$10,540,718 in 2006 dollars. To comply with 10 CFR 50.75(d), please update the application to 2008 to include: (1) a current (2008) cost estimate for decommissioning the facility showing costs of labor, waste disposal, other items (such as energy, equipment, and supplies), a contingency factor (normally 25%), and total decommissioning costs in 2008 dollars to meet the NRC's radiological release criteria; (2) a statement of the decommissioning method to be used (e.g., DECON); and (3) a full identification of the specific means of adjusting the cost estimate (e.g., consumer price index, waste burial cost data from NUREG-1307, or labor price index) periodically over the life of the facility and a numerical example updating the 2008 cost estimate.

The decommissioning costs of any license are hard to quantify after completion and even harder to predict. For this reason the costs of previous decommissionings are taken as a basis for estimating PSU's future costs. Actual detailed costs were obtained from the Georgia Institute of Technology and estimates were obtained from the University of Virginia.

Page 37 of40

PSU RESPONSE TO NRC RAI The costs for decommissioning of the Georgia Institute of Technology 5 MW reactor were Georgia Institute of Technology 5 MW reactor Decommissioning Costs provided by Bill Miller, project manager in 2001.

Basic Tasks Cost Consultant Support & Characterization

$242,100 Decommissioning Contract

$5,948,282 Executive Engineer

$728,682 ALARA Allowance

$39,171 Special Costs*

$161,718 Resident Inspector

$21,511 Total

$7,141,464

Health Physicist Overtime, video record, relocate rad storage area.

University of Virginia Reactor Decommissioning Estimates (Included parts of other licenses) provided by Paul E. Benneche in 2003.

Basic tasks Cost Outside consultant site characterization and plan preparation.

$250,000 External contract for decommissioning the facility (initial

$4,500,000

$3.5M, current estimate of $4.5M.)

Internal costs (This includes about 10 - 15 person years for overseeing UV's program and complying with reactor license requirements.)

(Assuming $80,000

1.38 (for benefits)

15 years =

1,656,000)

$1,656,000

As described in a personal communication from Paul Benneche, the internal costs to UV were not well documented. However he estimated 10 - 12 person-years for UV to oversee the decommissioning. Fifteen person-years assumed.

Total

$6,406,000 There was considerable discussion concerning the applicability of these Georgia Tech and University of Virginia numbers to the Penn State reactor facility. For the purposes of this plan, PSU feels that accepting the higher number will overestimate the cost, but is a prudent course of action.

The expectation of hiring an outside contractor is contrary to one of Penn State's basic assumptions for decommissioning. Penn State expects that the decontamination and decommissioning would be performed by reactor staff and tradesmen from the Office of Physical Plant with radiological services and oversite provided by Environmental Health and Safety. Special tasks for which PSU does not have the expertise will of course be contracted out. This may result in significant savings as compared to the above estimate.

The actual decision as to the best personnel to use for decommissioning this facility will Page 38 of 40 PSU RESPONSE TO NRC RAI The costs for decommissioning of the Georgia Institute of Technology 5 MW reactor were Georgia Institute of Technology 5 MW reactor Decommissioning Costs provided by Bill Miller, project manager in 2001.

Basic Tasks Cost Consultant Support & Characterization

$242,100 Decommissioning Contract

$5,948,282 Executive Engineer

$728,682 ALARA Allowance

$39,171 Special Costs*

$161,718 Resident Inspector

$21,511 Total

$7,141,464

Health PhYSICISt OvertIme, vIdeo record, relocate rad storage area.

University of Virginia Reactor Decommissioning Estimates (Included parts of other licenses) provided by Paul E. Benneche in 2003.

Basic tasks Cost Outside consultant site characterization and plan preparation.

$250,000 External contract for decommissioning the facility (initial

$4,500,000

$3.5M, current estimate of$4.5M.)

Internal costs (This includes about 10 - 15 person years for overseeing UV's program and complying with reactor license requirements.)

(Assuming $80,000

1.38 (for benefits)

15 years =

1,656,000)

$1,656,000

As described in a personal communication from Paul Benneche, the internal costs to UV were not well documented. However he estimated 10 - 12 person-years for UV to oversee the decommissioning. Fifteen person-years assumed.

Total

$6,406,000 There was considerable discussion concerning the applicability of these Georgia Tech and University of Virginia numbers to the Penn State reactor facility. For the purposes of this plan, PSU feels that accepting the higher number will overestimate the cost, but is a prudent course of action.

The expectation of hiring an outside contractor is contrary to one of Penn State's basic assumptions for decommissioning. Penn State expects that the decontamination and decommissioning would be performed by reactor staff and tradesmen from the Office of Physical Plant with radiological services and oversite provided by Environmental Health and Safety. Special tasks for which PSU does not have the expertise will of course be contracted out. This may result in significant savings as compared to the above estimate.

The actual decision as to the best personnel to use for decommissioning this facility will Page 38 of 40

PSU RESPONSE TO NRC RAI be made after the decision to decommission has been made. The decision will be based on the level of expertise of the available staff, the finances of the situation, and many other less quantifiable factors.

Based on Penn State's long standing policy, PSU will decontaminate the facility to the point where it will be suitable for free release with no institutional controls.

To estimate the current (2008) costs, we assume accuracy of the 2001 costs and add an annual 5% inflation adjustment to bring the current estimate to about $10M. In addition PSU adds a 25% contingency factor to bring the total current costs to about $12.6 M.

4. The application states that the University is using a self-guarantee to fund and carry out its decommissioning activities. The NRC staff recognizes that the University is using the self-guarantee for the PSBR and five other NRC-licensed facilities. For renewal of the PSBR license, please provide the following:

a. An updated self-guarantee, including the current (2008) decommissioning cost estimate for the PSBR and the most recent decommissioning cost estimates for the other NRC-licensed facilities covered by the self-guarantee. The updated submittal must include all the documentation listed in Section A. 14.3 of NUREG-1757, Vol. 3, "Consolidated NMSS Decommissioning Guidance."

b. Documentation that the signator of the self-guarantee, if not the Chief Executive Officer or Chief Financial Officer (e.g., corporate controller), has the authority to bind the University in the self-guarantee.

c. If the updated self-guarantee agreement will be in the same format used in the applicant's July 12, 2007 self-guarantee agreement, make the following revisions to the 2007 format:

(1) Delete the word "beneficiary" in the first paragraph and in Recital 13.

(2) To comply with Section II.B(3) of Appendix C to 10 CFR 30 in Recital 8, change the time period that the guarantor agrees to submit financial statements and financial test data annually from 180 days to 90 days of the close of the University's fiscal year.

(3) Delete Recital 10 as these requirements for transfer of ownership of the licensed activity are already covered under 10 CFR 50.80, 30.34(b), and 70.32(a) (3), which requires prior NRC approval.

In early 2008, the Commonwealth of Pennsylvania was awarded Agreement State Status.

For this reason, PSU now has only two NRC regulated license. PSU is will of course provide the necessary funds for decommissioning these licenses. The current estimates for decontamination and decommissioning are shown below. The two letters that supply the required certifications and recitals are attached.

Page 39 of 40 PSU RESPONSE TO NRC RAI be made after the decision to decommission has been made. The decision will be based on the level of expertise of the available staff, the finances of the situation, and many other less quantifiable factors.

Based on Penn State's long standing policy, PSU will decontaminate the facility to the point where it will be suitable for free release with no institutional controls.

To estimate the current (2008) costs, we assume accuracy of the 2001 costs and add an annual 5% inflation adjustment to bring the current estimate to about $1 OM. In addition PSU adds a 25% contingency factor to bring the total current costs to about $12.6 M.

4. The application states that the University is using a self-guarantee to fund and carry out its decommissioning activities. The NRC staff recognizes that the University is using the self-guarantee for the PSBR and five other NRC-licensed facilities. For renewal of the PSBR license, please provide the fol/owing:

a. An updated self-guarantee, including the current (2008) decommissioning cost estimate for the PSBR and the most recent decommissioning cost estimates for the other NRC-licensed facilities covered by the self-guarantee. The updated submittal must include aI/ the documentation listed in Section A. 14.3 of NUREG-1757, Vol. 3, "Consolidated NMSS Decommissioning Guidance."

b. Documentation that the signa tor of the self-guarantee, if not the Chief Executive Officer or Chief Financial Officer (e.g., corporate controller), has the authority to bind the University in the self-guarantee.

c. If the updated self-guarantee agreement will be in the same format used in the applicant's July 12, 2007 self-guarantee agreement, make the following revisions to the 2007 format:

(1) Delete the word "beneficiary" in the first paragraph and in Recital 13.

(2) To comply with Section II.B(3) of Appendix C to 10 CFR 30 in Recital 8, change the time period that the guarantor agrees to submit financial statements and financial test data annually from 180 days to 90 days of the close of the University's fiscal year.

(3) Delete Recital 10 as these requirements for transfer of ownership of the licensed activity are already covered under 10 CFR 50.80, 30.34(b), and

70. 32 (a)(3), which requires prior NRC approval.

In early 2008, the Commonwealth of Pennsylvania was awarded Agreement State Status.

F or this reason, PSU now has only two NRC regulated license. PSU is will of course provide the necessary funds for decommissioning these licenses. The current estimates for decontamination and decommissioning are shown below. The two letters that supply the required certifications and recitals are attached.

Page 39 of 40

PSU RESPONSE TO NRC RAI License #

License Description Estimate based Certified Amounts and Docket #

on year 2001 or Current Cost dollars Estimates R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,864 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329 Penn State's 2008 final financial statements are not available within 90 days of the close of the University's fiscal year. This is because of the length of time necessary for auditing the finances of this large and complex institution. The audited financial statement for Fiscal Year 2007 is attached.

References:

1. TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel"

2. DOE-HDBK-1012/2-92 "DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow", Volume 2 of 3

3. Levine, S. "Temperature Behavior of 12w/o U TRIGA Fuel"

4. GA-6216 "Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core" -1965

5.

Levine, Geisler and Totenbier, "Temperature behavior of 12w/o Uranium TRIGA Fuel"

6.

Foderero, A. "Photon Shielding Manual" (1976)

7. El-Wakil "Nuclear Heat Transport" ANS 1978

8.

TRD 070.01006.04 "TRIGA Reactor Thermal-Hydraulic Study"

9. Feldman, E.E. "Fundamental Approach to TRIGA Steady-State Thermal-Hydraulic CHF Analysis" (Argonne National Laboratory-2007).

10. Haag, J. A., and Levine, S. H., "Thermal Analysis of The Pennsylvania State University Breazeale Nuclear Reactor," Nucl. Technology, vol. 19, p. 6 (July 1973).

Page 40 of 40 PSU RESPONSE TO NRC RAI License #

License Description Estimate based Certified Amounts and Docket #

on year 2001 or Current Cost dollars Estimates R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,864 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329 Penn State's 2008 final financial statements are not available within 90 days of the close of the University's fiscal year. This is because of the length of time necessary for auditing the finances of this large and complex institution. The audited financial statement for Fiscal Year 2007 is attached.

References:

1.

TRD 070.01006.05 "Pulsing Temperature Limit for TRIGA LEU Fuel"

2. DOE-HDBK-I012/2-92 "DOE Fundamentals Handbook, Thermodynamics, Heat Transfer, and Fluid Flow", Volume 2 of3

3. Levine, S. "Temperature Behavior of 12w/o U TRIGA Fuel"

4. GA-6216 "Characteristics of Large Reactivity Insertions in a High Performance TRIGA U-ZrH Core" -1965

5. Levine, Geisler and Totenbier, "Temperature behavior of 12w/o Uranium TRIGA Fuel"

6.

Foderero, A. "Photon Shielding Manual" (1976)

7. EI-Wakil "Nuclear Heat Transport" ANS 1978

8. TRD 070.01006.04 "TRIGA Reactor Thermal-Hydraulic Study"

9. Feldman, E.E. "Fundamental Approach to TRIGA Steady-State Thermal-Hydraulic CHF Analysis" (Argonne National Laboratory-2007).

10. Haag, J. A., and Levine, S. H., "Thermal Analysis of The Pennsylvania State University Breazeale Nuclear Reactor," Nucl. Technology, vol. 19, p.6 (July 1973).

Page 40 of 40

PENNSTATE Joseph J. Doncsecz Corporate Controller The Pennsylvania State University 408 Old Main University Park, PA 16802-1505 814-865-1355 Fax: 814-863-0701 October 29, 2008 William Kennedy Research and Test Reactors Branch A Division of Policy and Rulemaking Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 License numbers:

R-2 The Pennsylvania State University, University Park, PA SNM-95 The Pennsylvania State University, University Park, PA I am the Corporate Controller of the Pennsylvania State University (the "University") located at 408 Old Main, University Park, PA 16802, a non-profit University. This letter is in support of the University's use of the self-guarantee financial test to demonstrate financial assurance, as specified in 10 CFR Part 50. The University has no parent company.

The University guarantees, through the self-guarantee submitted to demonstrate compliance under 10 CFR Part 50 and 70 the decommissioning of the facilities and licenses listed below that are owned or operated by the University. The current cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility:

Certified Amounts or License #

Estimate based Current Cost and Docket #

License Description on year 2001 estimat an okt#dollars Estimates (5% per year increase)

R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,863 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329 I hereby certify that the University is currently a going concern, and that it possesses positive tangible net worth in the amount of $4,404,363,000.

This fiscal year of the University ends on June 30. A copy of the University's most recent financial statement is enclosed.

The University is not required to file a Form 10-K with the U.S. Securities and Exchange Commission.

An Equal Opportunity University PENN STATE

~

October 29,2008 William Kennedy Joseph J. Doncsecz Corporate Controller Research and Test Reactors Branch A Division of Policy and Rulemaking Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 License numbers:

The Pennsylvania State University 408 Old Main University Park, PA 16802-1505 814-865-1355 Fax: 814-863-0701 R-2 The Pennsylvania State University, University Park, PA SNM-95 The Pennsylvania State University, University Park, PA I am the Corporate Controller of the Pennsylvania State University (the "University") located at 408 Old Main, University Park, PA 16802, a non-profit University. This letter is in support of the University's use of the self-guarantee financial test to demonstrate financial assurance, as specified in 10 CFR Part 50. The University has no parent company.

The University guarantees, through the self-guarantee submitted to demonstrate compliance under 10 CFR Part 50 and 70 the decommissioning of the facilities and licenses listed below that are owned or operated by the University. The current cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility:

Estimate based Certified Amounts or License #

License Description on year 2001 Current Cost and Docket #

Estimates dollars (5% per year increase)

R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,863 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329 I hereby certify that the University is currently a going concern, and that it possesses positive tangible net worth in the amount of $4,404,363,000.

This fiscal year of the University ends on June 30. A copy of the University's most recent financial statement is enclosed.

The University is not required to file a Form 10-K with the U.S. Securities and Exchange Commission.

An Equal Opportunity University

The University satisfies the following self-guarantee test from 10 CFR 30 Appendix E:

0 The current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution is AA.

a Name of rating service: Standard & Poor's Date of issuance of bond: April 10, 2008 Date of maturity of bond: August 15, 2029 I hereby certify that the content of this letter is true and correct to the best of my knowledge.

Sincerely, Joseph J. Doncsecz Corporate Controller Copy to: Eric Boeldt, Radiation Safety Officer, University Park Kenan Unlu, Director, Radiation Science and Engineering Center

Enclosures:

Self-Guarantee Agreement Audited Financial Statement 2

The University satisfies the following self-guarantee test from 10 CFR 30 Appendix E:

The current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution is AA.

Name of rating service: Standard & Poor's Date of issuance of bond: April 10, 2008 Date of maturity of bond: August 15, 2029 I hereby certify that the content of this letter is true and correct to the best of my knowledge.

Sincerely, HJ

/

Joseph J. Doncsecz Corporate Controller Copy to: Eric Boeldt, Radiation Safety Officer, University Park Kenan Unlu, Director, Radiation Science and Engineering Center

Enclosures:

Self-Guarantee Agreement Audited Financial Statement 2

The Pennsylvania State University Financial Assurance for Cost of Decommissioning Activities Self-Guarantee Agreement Guarantee made by The Pennsylvania State University, a nonprofit University, organized under the laws of the Commonwealth of Pennsylvania, herein referred to as "guarantor," to the U. S.

Nuclear Regulatory Commission, on behalf of the University as licensee.

Recitals

1.

The guarantor has full authority and capacity to enter into this self-guarantee by the bylaws of the Trustees of the Pennsylvania State University.

2.

This self-guarantee is being issued to comply with regulations issued by NRC, an agency of the U. S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Parts 50 and 70, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Parts 50 and 70 provide assurance that funds will be available when needed for required decommissioning activities.

3.

The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities shown.

Certified Amounts or License #

Estimate based Current Cost and Docket #

License Description on year 2001 Estimates (5% per year increase)

R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,863 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329

4.

The guarantor meets or exceeds the following financial test criteria for a nonprofit University that issues bonds. Specifically, the current rating for our most recent uninsured, uncollateralized, and unencumbered bond issuance was AA as issued by Standard & Poor's, and agrees to comply with all notification requirements as specified in 10 CFR Part 50, 70, and Appendix A to 10 CFR Part 30

5.

The guarantor does not have a parent company holding majority control of its voting stock.

The Pennsylvania State University Financial Assurance for Cost of Decommissioning Activities Self-Guarantee Agreement Guarantee made by The Pennsylvania State University, a nonprofit University, organized under the laws ofthe Commonwealth of Pennsylvania, herein referred to as "guarantor," to the U. S.

Nuclear Regulatory Commission, on behalf of the University as licensee.

Recitals

1.

The guarantor has full authority and capacity to enter into this self-guarantee by the bylaws of the Trustees of the Pennsylvania State University.

2.

This self-guarantee is being issued to comply with regulations issued by NRC, an agency of the U. S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Parts 50 and 70, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Parts 50 and 70 provide assurance that funds will be available when needed for required decommissioning activities.

3.

The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities shown.

Estimate based Certified Amounts or License #

License Description on year 2001 Current Cost and Docket #

Estimates dollars (5~operyear increase)

R-2 Research Reactor

$7,141,464

$10,048,757 050-0005 SNM-95 Special Nuclear Material

$15,000

$21,106 70-113 Sub total

$10,069,863 25% contingency fund

$2,517,466 Total Estimated Costs:

$12,587,329

4.

The guarantor meets or exceeds the following financial test criteria for a nonprofit University that issues bonds. Specifically, the current rating for our most recent uninsured, uncollateralized, and unencumbered bond issuance was AA as issued by Standard & Poor's, and agrees to comply with all notification requirements as specified in 10 CFR Part 50, 70, and Appendix A to 10 CFR Part 30

5.

The guarantor does not have a parent company holding majority control of its voting stock.

6.

Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 70 for decommissioning of the facilities identified above.

7.

Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to the NRC that the guarantor shall:

(a) carry out the required decommissioning activities, as required by the licenses listed above.

8.

The guarantor agrees to submit revised financial statements, financial test data annually within 180 days of the close of its fiscal year.

9.

The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to the NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 30.

Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.

10.

(deleted)

11.

The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Parts 50 and 70 within 30 days.

12.

The guarantor, as well as its successors and assigns and agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Parts 50 and 70.

13.

The guarantor agrees that it shall be liable for all litigation costs incurred by the NRC in any successful effort to enforce the agreement against the guarantor.

14.

The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to the NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor

15.

The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Parts 50 and 70 and obtain written approval of such assurance from the NRC within 90 days after a notice of cancellation by the 2

6.

Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 70 for decommissioning of the facilities identified above.

7.

Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to the NRC that the guarantor shall:

(a) carry out the required decommissioning activities, as required by the licenses listed above.

8.

The guarantor agrees to submit revised financial statements, financial test data annually within 180 days of the close of its fiscal year.

9.

The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to the NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 30.

Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.

10.

{deleted}

11.

The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Parts 50 and 70 within 30 days.

12.

The guarantor, as well as its successors and assigns and agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Parts 50 and 70.

13.

The guarantor agrees that it shall be liable for all litigation costs incurred by the NRC in any successful effort to enforce the agreement against the guarantor.

14.

The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to the NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor

15.

The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Parts 50 and 70 and obtain written approval of such assurance from the NRC within 90 days after a notice of cancellation by the 2

guarantor is received by the NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.

16.

The guarantor expressly waives notice of acceptance of this self-guarantee by the NRC. The guarantor also expressly waives notice of amendments or modifications of the decommissioning requirements.

17.

If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self guarantee is in effect.

18.

The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "A" or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service.

I hereby certify that this self-guarantee is true and correct to the best of my knowledge.

Effective date:

OCT 2 9 2008 Pennsylvania State University:

Joseph J. Doncsecz Corporate Controller 3

guarantor is received by the NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.

16.

The guarantor expressly waives notice of acceptance of this self-guarantee by the NRC. The guarantor also expressly waives notice of amendments or modifications of the decommissioning requirements.

17.

If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self guarantee is in effect.

18.

The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "A" or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service.

I hereby certify that this self-guarantee is true and correct to the best of my knowledge.

Effective date:

OCT 2 92008 Pennsylvania State University:

Hi~*

Joseph J. Doncsecz Corporate Controller 3

PENNSTATE Audited Financial Statements The Pennsylvania State University Fiscal Year Ended June 30, 2007 PENN STATE

'Audited.

Financial Statements The Penr)s}t!vania State University Fiscal Year Ended June 30, 2007

THE PENNSYLVANIA STATE UNIVERSITY UNIVERSITY OFFICERS as of September 28, 2007 GRAHAM B. SPANIER President of the University RODNEY A. ERICKSON Executive Vice President and Provost of the University RODNEY P. KIRSCH Senior Vice President for Development and Alumni Relations HAROLD L. PAZ Chief Executive Officer, The Milton S.

Hershey Medical Center, and Senior Vice President for Health Affairs, and Dean of the College of Medicine EVA J. PELL Senior Vice President for Research and Dean of the Graduate School GARY C. SCHULTZ Senior Vice President for Finance and Business/Treasurer THE PENNSYLVANIA STATE UNIVERSITY UNIVERSITY OFFICERS as of September 28, 2007 GRAHAM B. SPANIER President of the University RODNEY A. ERICKSON Executive Vice President and Provost of the University RODNEY P. KIRSCH Senior Vice President for Development and Alumni Relations HAROLD L. PAZ Chief Executive Officer, The Milton S.

Hershey Medical Center, and Senior Vice President for Health Affairs, and Dean of the College of Medicine EVAJ. PELL Senior Vice President for Research and Dean of the Graduate School GARY C. SCHULTZ Senior Vice President for Finance and Businessffreasurer

CONTENTS The University Dollar 2

Letter of Transmittal 4

Independent Auditors' Report 5

Consolidated Financial Statements:

Statements of Financial Position 6

Statements of Activities 8

Statements.of Cash Flows 10 Notes To Consolidated Financial Statements 11 CONTENTS The University Dollar Letter of Transmittal Independent Auditors' Report Consolidated Financial Statements:

Statements of Financial Position Statements of Activities Statements*of Cash Flows Notes To Consolidated Financial Statements 2

4 5

6 8

10 11

UNIVERSITY DOLLAR SOURCES Investment income and gains, net 11.Oc Commonwealth of Pennsylvania appropriations 8.4c Hospital operations 21.4c Private gifts, grants and contracts 8.Oc Auxiliary enterprises 7.5c Tuition and fees, net of discounts 27.2c 2

SOURCES Hospital operations 21.4c Government grants and contracts 12.2c UNIVERSITY DOLLAR Investment income and gains, net 11.0c Tuition and fees, net of discounts 27.2c 2

Commonwealth of Pennsylvania appropriations 8.4c Private gifts, grants and contracts 8.0c Auxiliary enterprises 7.5c

2006-2007 USES Research 19.4c Hospital operations 25.Oc Academic support 8.1c Institutional support 7.Oc 1W Student services 3.7c Public service and other 2.9c Instruction 25.6c APPLICATION BY OBJECT Salaries wages and fringe benefits Other expenses 0

20 40 60 80 100 3

2006-2007 Hospital operations 25.0c Research 19.4c Instruction 25.6c APPLICATION BY OBJECT Salaries wages and fringe benefits Other expenses o

20 39.4C 40 3

60 USES Academic support S.lc Institutional support 7.0c Public service and other 2.9c 60.6c 80 100

PENNSTATE Joseph J. Doncsecz The Pennsylvania State University 814-865-1355

.Corporate Controller 408 Old Main Fax: 814-863-0701 University Park. PA 16802-1505 September 28, 2007 Dr. Graham Spanier, President The Pennsylvania State University

Dear Dr. Spanier:

The audited consolidated financial statements of The Pennsylvania State University and subsidiaries (the "University") for the fiscal year ended June 30, 2007 are presented on the accompanying pages. These financial statements represent a complete and permanent record of the finances of the University for the year.

These financial statements have been examined by Deloitte & Touche LLP, Certified Public Accountants of Philadelphia, Pennsylvania, and their report has been made a part of this record.

Respectfully submitted, Joseph J. Doncsecz Corporate Controller Albert G. Horvath Vice President for Finance & Business Gary C. Shultz Senior President for nce & Business/Treasurer 4

An Equal Opportunity University PENN STATE

~

Joseph J. Doncsecz Corporate Controller September 28, 2007 Dr. Graham Spanier, President The Pennsylvania State University

Dear Dr. Spanier:

The Pennsylvania State University 408 Old Main University Park. PA \\6802-1505 814-865-1355 Fax: 814-863-0701 The audited consolidated financial statements of The Pennsylvania State University and subsidiaries (the "University") for the fiscal year ended June 30, 2007 are presented on the accompanying pages. These financial statements represent a complete and permanent record of the finances of the University for the year.

These financial statements have been examined by Deloitte & Touche LLP, Certified Public Accountants of Philadelphia, Pennsylvania, and their report has been made a part of this record.

Respectfully submitted, Joseph J. Doncsecz Corporate Controller Albert G. Horvath Vice President for Finance & Business Gary C. Shultz

.~~t[ Jl~["".

Senior.

President for.

nce & Business/Treasurer 4

An Equal Opportunity University

Deloitte D e o t

e Deloitt e &-Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 USA Tel: +1 215 246 2300 Fax: +1 215 569 2441 www.deloitte.com INDEPENDENT AUDITORS' REPORT To the Board of Trustees of The Pennsylvania State University University Park, PA We have audited the accompanying consolidated statements of financial position of The Pennsylvania State University and subsidiaries (the "University") as of June 30, 2007 and 2006, and the related consolidated statements of activities and cash flows for the years then ended.

These financial statements are the responsibility of the management of the University. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but are not for the purpose of expressing an opinion on the effectiveness of the University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 9 to the consolidated financial statements, during the year ended June 30, 2007, the University adopted Statement of Financial Accounting Standard ("SFAS") No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans". As discussed in Note 2, during the year ended June.30, 2006, the University adopted Financial Accounting Standards Board Interpretation ("FIN") No. 47, "Accounting for Conditional Asset Retirement Obligations".

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the University as of June 30, 2007 and 2006, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

September 28, 2007 Member of Deloitte Touche Tohmatsu 5

Deloittee Oeloitt e & Touche LLP

/

INDEPENDENT AUDITORS' REPORT To the Board of Trustees of The Pennsylvania State University University Park, PA 1700 Market Street Philadelphia, PA 19103-3984 USA Tel: +12152462300 Fax: +1 2155692441 www.deloitte.com We have audited the accompanying consolidated statements of financial posItlOn of The Pennsylvania State University and subsidiaries (the "University") as of June 30, 2007 and 2006, and the related consolidated statements of activities and cash flows for the years then ended.

These financial statements are the responsibility of the management of the University. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but are not for the purpose of expressing an opinion on the effectiveness of the University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 9to the consolidated financial statements, during the year ended June 30, 2007, the University adopted Statement of Financial Accounting Standard ("SFAS") No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans". As discussed in Note 2, during the year ended June.30, 2006, the University adopted Financial Accounting Standards Board Interpretation ("FIN") No. 47, "Accounting for Conditional Asset Retirement Obligations".

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the University as of June 30, 2007 and 2006, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

September 28, 2007 Member of Deloitte Touche Tohmatsu 5

THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS JUNE 30, 2007 AND 2006 (in thousands)

June 30, 2007 June 30, 2006 Current assets:

Cash and cash equivalents - in short-term operating portfolios 622,875

$ 428,798 Cash and cash equivalents - in operating investment portfolios 59,978 36,719 Deposits 21,104 18,121 Accounts receivable, net of allowances of $24,139 and $19,599 333,058 305,601 Contributions receivable, net 42,456 37,774 Loans to students, net of allowances of $4,886 and $5,008 11 "305 11,075 Inventories 27,916 27,093 Prepaid expenses and other assets 48,857 44,609 Investments held under securities lending program 309,682 220,032 Total current assets 1,477,231 1,129,822 Noncurrent assets:

Deposits held by bond trustees 18,268 18,625 Contributions receivable, net 91,863 72,666 Loans to students, net of allowances of $12,564 and $12,262 28,793 27,111 Deferred bond costs 5,106 5,606 Total investment in plant, net 2,552,935 2,426,556 Beneficial interest in perpetual trusts 17,078 15,676 Investments 3,066,165 2,606,418 Total noncurrent assets 5,780,208 5,172,658 Total assets i

$ 6.302.480 See notes to consolidated financial statements.

6 THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS JUNE 30, 2007 AND 2006 (in thousands)

June 30, 2007 June 30, 2006 Current assets:

Cash and cash equivalents - in short-term operating portfolios Cash and cash equivalents - in operating investment portfolios Deposits Accounts receivable, net of allowances of $24,139 and $19,599 Contributions receivable, net Loans to students, net of allowances of $4,886 and $5,008 Inventories Prepaid expenses and other assets Investments held under securities lending program Total. current assets Noncurrent assets:

Deposits held by bond trustees Contributions receivable, net Loans to students, net of allowances of $12,564 and $12,262 Deferred bond costs Total investment in plant, net Beneficial interest in perpetual trusts Investments Total noncurrent assets Total assets See notes to consolidated financial statements, 6

622,875

$ 428,798 59,978 36,719 21,104 18,121 333,058 305,601 42,456 37,774 11;305 _

11,075 27,916 27,093 48,857 44,609 309,682 220,032 1,477,231 1,129,822 18,268 18,625 91,863 72,666 28,793 27,111 5,106 5,606 2,552,935 2,426,556 17,078 15,676 3,066,165 2,606,418 5,780,208 5,172,658

$ 7,257.439

$ 6,302.480

THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LIABILITIES AND NET ASSETS JUNE 30, 2007 AND 2006 (in thousands)

Current liabilities:

Accounts payable and other accrued expenses Deferred revenue Long-term debt Present value of annuities payable Accrued postretirement benefits Liability under securities lending program Total current liabilities Noncurrent liabilities:

Deposits held in custody for others Deferred revenue Long-term debt Present value of annuities payable Accrued postretirement benefits Refundable United States Government student loans Other liabilities Total noncurrent liabilities Total liabilities June 30, 2007 348,112 193,148 50,937 5,282 28,944 309,682 936,105 34,088 22,396 860,569 36,907 805,618 32,894 124,499 1,916,971 2,853,076 June 30, 2006 347,576 165,293 47,590 4,691 28,036 220,032 813,218 31,864 841 773,610 32,106 658,909 33,104 117,482 1,647,916 2,461,134 938 1,215,547 1,463,639 2,680,124 400,361 760,861 3,841,346

$ 6.502.480 Net assets:

Unrestricted -

Undesignated Designated for specific purposes Net investment in plant Total unrestricted Temporarily restricted Permanently restricted Total net assets 950 1,453,003 1,524,097 2,978,050 587,469 838,844 4,404,363 Total liabilities and net assets See notes to consolidated financial statements.

7 THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LIABILITIES AND NET ASSETS JUNE 30, 2007 AND 2006 (in thousands)

June 30. 2007 June 30. 2006 Current liabilities:

Accounts payable and other accrued expenses Deferred revenue Long-term debt Present value of annuities payable Accrued postretirement benefits Liability under securities lending program Total current liabilities Noncurrent liabilities:

Deposits held in custody for others Deferred revenue Long-term debt Present value of annuities payable Accrued postretirement benefits Refundable United States Government student loans Other liabilities Total noncurrent liabilities Total liabilities Net assets:

Unrestricted -

Undesignated Designated for specific purposes Net investment in plant Total unrestricted Temporarily restricted Permanently restricted Total net assets T otalliabilities and net assets See notes to consolidated financial statements.

7 348,112 347,576 193,148 165,293 50,937 47,590 5,282 4,691 28,944 28,036 309,682 220,032 936,105 813,218 34,088 31,864 22,396 841 860,569 773,610 36,907 32,106 805,618 658,909 32,894 33,104 124,499 117,482 1,916,971 1,647,916 2,853,076 2,461,134 950 938 1,453,003 1,215,547 1,524,097 1,463,639 2,978,050 2,680,124 587,469 400,361 838,844 760,861 4,404,363 3,841,346

~ 71,~Z,~~

~ gl~Q2,~aQ

THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 (in thousands)

Temporarily Permanently Unrestricted Restricted Restricted Revenues and other support:

Tuition and fees, net of discounts of $91,906 Commonwealth of Pennsylvania -

Appropriations Special contracts Department of General Services projects United States Government grants and contracts Private gifts, grants and contracts Endowment income, net Other investment income, net Sales and services of educational activities Recovery of indirect costs Auxiliary enterprises Hospital operations Other sources Net assets released from restrictions Total revenues and other support Expenses and losses:

Educational and general -

Instruction Research Public service Academic support Student services Institutional support Total educatonal and general Auxiliary enterprises Hospital operations Write-offs and disposals of assets Actuarial adjustment on annuities payable Total expenses and losses

$ 1,057,691 327,715 108,448 7,688 360,026 197,160 116,526 127,615 40,599 109,634 291,773 832,328 16,339 26,394 3,619,936 826,097 625,519 79,035 261,816 121,785 225,420 2,139,672 267,671 806,062 5,004 3,218,409 38,455 163,911 11,416 1,091 (26,394) 188,479 75,218 10,472 153 1,412 87,255 Total

$1,057,691 327,715 108,448 7,688 360,026 310,833 290,909 139,184 40,599 109,634 291,773.

832,328 18,842 3,895,670 826,097 625,519 79,035 261,816 121,785 225,420 2,139,672 267,671 806,062 5,004 10,643 3,229,052 666,618 (103,601) 563,017 Increase in net assets before cumulative effect Cumulative effect of adoption of new accounting principle Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 401,527 (103,601) 297,926 2,680,124 1,371 1,371 187,108 187,108 9,272 9,272

. 77,983 77,983 400,361 760,861 3,841,346

$ 2,978,050 587,469 838,844

$4,404,363 See notes to consolidated financial statements.

8 THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 (in thousands)

Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and other support:

Tuition and fees, net of discounts of $91,906

$ 1,057,691

$1,057,691 Commonwealth of Pennsylvania -

Appropriations 327,715 327,715 Special contracts 108,448 108,448 Department of General Services projects 7,688 7,688 United States Govemment grants and contracts 360,026 360,026 Private gifts, grants and contracts 197,160 38,455 75,218 310,833 Endowment income, net 116,526 163,911 10,472 290,909 Other investment income, net 127,615 11,416 153 139,184 Sales and services of educational activities 40,599 40,599 Recovery of indirect costs 109,634 109,634 Auxiliary enterprises 291,n3 291,n3 Hospital operations 832,328 832,328 Other sources 16,339 1,091 1,412 18,842 Net assets released from restrictions 26,394 (26,394)

Total revenues and other support 3,619,936 188,479 87,255 3,895,670 Expenses and losses:

Educational and general -

Instruction 826,097 826,097 Research 625,519 625,519 Public service 79,035 79,035 Academic support 261,816 261,816 Student services 121,785 121,785 Institutional support 225,420 225,420 Total educational and general 2,139,672 2,139,672 Auxiliary enterprises 267,671 267,671 Hospital operations 806,062 806,062 Write-ofts and disposals of assets 5,004 5,004 Actuarial adjustment on annuities payable 1,371 9,272 10,643 Total expenses and losses 3,218,409 1,371 9,272 3,229,052 Increase in net assets before cumulative effect 401,527 187,108 n,983 666,618 Cumulative effect of adoption of new accounting principle (103,601)

(103,601)

Increase in net assets 297,926 187,108 n,983 563,017 Net assets at the beginning of the year 2,680,124 400,361 760,861 3,841,346 Net assets at the end of the year

$ 2,978,050 587,469 838,844

$4,404,363 See notes to consolidated financial statements.

8

.THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2006 (in thousands)

Temporarily Permanently Unrestricted Restricted Restricted Revenues and other supporlt Tuition and fees, net of discounts of $87,784 Commonwealth of Pennsylvania -

Appropriations Special contracts Department of General Services projects United States Government grants and contracts Private gifts, grants and contracts Endowment income, net Other investment income, net Sales and services of educational activities Recovery of indirect costs Auxiliary enterprises Hospital operations Other sources Net assets released from restrictions Total revenues and other support Expenses and losses:

Educational and general -

Instruction Research Public service Academic support Student services Institutional support Total educational and general Auxiliary enterprises Hospital operations Write-offs and disposals of assets Actuarial adjustment on annuities payable Total expenses and losses Increase in net assets before cumulative effect Cumulative effect of adoption of new accounting principle Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 949,774 312,026 102,279 43,776 355,396 187,748 75,178 45,626 40,427 106,975 272,703 753,704 18,280 23,628 3,287,520 26,942 64,751 4,592 365 (23,628) 73,022 41,307 10,158 197 276 51,938 Total

$ 949,774 312,026 102,279 43,776 355,396 255,997 150,087 50,415 40,427 106,975 272,703 753,704 18,921 3,412,480 807,442 616,707 74,148 266,168 113,785 229,027 2,107,277 254,698 719,097 4,563 6,476 3,092,111 320,369 (44,372) 275,997 807,442 616,707 74,148 266,168 113,785 229,027 2,107,277 254,698 719,097 4,563 3,085,635 201,885 (44,372 157,513 1,728 1,728 71,294 71,294 4,748 4,748 47,190 47,190 2,522,611 329,067

$ 2,680,124 400,361 713,671 3,565,349 760,861

$3,841,346 See notes to consolidated financial statements.

9 THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2006 (in thousands)

Temporarily Permanently Unrestricted Restricted Restricted Total Revenu_ and other support:

Tunion and fees, net of discounts of $87,784 949,774

$ 949,774 Commonwealth of Pennsylvania -

Appropriations 312,026 312,026 Special contracts 102,279 102,279 Department of General Services projects 43,776 43,776 United States Govemment grants and contracts 355,396 355,396 Private gifts, grants and contracts 187,748 26,942 41,307 255,997 Endowment income, net 75,178 64,751 10,158 150,087 Other investment income, net 45,626 4,592 197 50,415 Sales and services of educational activities 40,427 40,427 Recovery of indirect costs 106,975 106,975 Auxiliary enterprises 272,703 272,703 Hospital operations 753,704 753,704 Other sources 18,280 365 276 18,921 Net assets released from restrictions 23,628 (23,628)

Total revenues and other support 3,287,520 73,022 51,938 3,412,480 Expenses and 1088_=

Educational and general -

Instruction 807,442 807,442 Research 616,707 616,707 Public service 74,148 74,148 Academic support 266,168 266,168 Student services 113,785 113,785 Institutional support 229,027 229,027 Total educational and general 2,107,277 2,107,277 Auxiliary enterprises 254,698 254,698 Hospital operations 719,097 719,097 Write-OilS and disposals of assets 4,563 4,563 Actuarial adjustment on annuities payable 1,728 4,748 6,476 Total expenses and losses 3,085,635 1,728 4,748 3,092,111 Increase in net assets before cumulative effect 201,885 71,294 47,190 320,369 Cumulative effect of adoption of new accounting principle (44,372)

(44,372)

Increase in net assets 157,513 71,294 47,190 275,997 Net assets at the beginning of the year 2,522,611 329,067 713,671 3,565,349.

Net assets at the end of the year

$ 2,680,124 400,361 760,861

$3,841,346 See notes to consolidated financial statements.

9

THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2007 AND 2006 (in thousands)

Cash flows from operating activities:

Increase in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities -

Actuarial adjustment on annuities payable Contributions restricted for long-term investment Interest and dividends restricted for long-term investment Net realized and unrealized gains on long-term investments Depreciation and amortization expense Write-offs and disposals of assets Contributions of land, buildings and equipment Buildings and equipment provided by Pennsylvania Department of General Services Contribution to government student loan funds Provision for bad debts Cumulative effect of adoption of new accounting principle Increase in deposits Increase in receivables Increase in inventories Increase in prepaid expenses and other assets Increase in accounts payable and other accrued expenses Increase in deferred revenue Increase in accrued postretirement benefits Net cash provided by operating activities Cash flows from Investing activities:

Purchase of land, buildings and equipment Decrease in deposits held by bond trustees Advances on student loans Collections on student loans (Increase)/decrease in investments held under securities lending program Increase/(decrease) in liability under securities lending program Purchase of investments Proceeds from sale of investments Net cash used by investing activities Cash flows from financing actMtls:

Contributions restricted for long-term investment Interest and dividends restricted for long-term investment Payments of annuity obligations Proceeds from issuance of bonds Principal payments-on notes, bonds and capital leases Proceeds related to government student loan funds, net of collection costs Net cash provided by financing activities Net increasel(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year June 30, 2007 June 30, 2006 563,017 275,997 10,644 (91,184)

(20,955)

(270,579) 169,762 5,330 (2,625)

(1,785) 254 23,871 103,601 (2,984)

(69,063)

(824)

(5,428) 7,904 49,410 44,015 512,381 (254,048) 357 (13,465) 10,346 (89,650) 89,650 (2,399,093) 2,195,405

_.. (460,498) 91,184 20,955 (5,327) 179,464 (121,303) 480 165,453 217,336 485,517 682,853 6,476 (72,616)

(17,177)

(99,805) 168,340 5,227 (9,323)

(14,027) 254 15,310 44,372 (1,713)

(31,688)

(9,123)

(11,644) 4,044 15,500 70,507 338,911 (285,405) 209 (14,177) 11,434 12,524 (12,524)

(2,771,709) 2,639,922 (419,726) 72,616 17,177 (4,732) 4,820 (33,411) 584 57,054 (23,761) 489,278 465,517 See notes to consolidated financial statements.

10 THE PENNSYLVANIA STATE UNIVERSITY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2007 AND 2006 (in'thousands)

June 30, 2007 cash flows from operating actMtl.. :

Increase in net assets 563,017 Adjustments to reconcile change in net assets to net cash provided by operating activities -

Actuarial adjustment on annuities payable 10,644 Contributions restricted for long-term investment (91,184)

Interest and dividends restricted for long-term investment (20,955)

Net realized and unrealized gains on long-term investments (270,579)

Depreciation and amortization expense 169,762 Write-offs and disposals of assets 5,330 Contributions of land, buildings and equipment (2,625)

Buildings and equipment provided by Pennsylvania Department of General Services (1,785)

Contribution to govemment student loan funds 254 Provision for bad debts 23,871 Cumulative effect of adoption of new accounting principle 103,601 Increase in depoSits (2,984)

Increase in receivables (69,063)

Increase in inventories (824)

Increase in prepaid expenses and other aSsets (5,428)

Increase in accounts payable and other accrued expenses 7,904 Increase in deferred revenue 49,410 Increase in accrued postretirement benefits 44,015 Net cash provided by operating activities 512,381 C_h flows from Investing actlvltl.. :

Purchase of land, buildings and equipment (254,048)

Decrease in deposits held by bond trustees 357 Advances on student loans (13,465)

Collections on student loans 10,346 (Increase)/decrease in investments held under securities lending program (89,650)

Increase/(decrease) in liability under securities lending program 89,650 Purchase of investments (2,399,093)

Proceeds from sale of investments 2,195,405 Net cash used by investing activities (460,498)

Cash flows from financing actMtl.. :

Contributions restricted for long-term investment 91,184 Interest and dividends restricted for long-term investment 20,955 Payments of annuity obligations (5,327)

Proceeds from issuance of bonds 179,464 Principal payments'on notes, bonds and capital leases (121,303)

Proceeds related to govemment student loan funds, net of collection costs 480 Net cash provided by financing activities 165,453 Net increaseJ(decrease) in cash and cash equivalents 217,336 Cash and cash equivalents at the beginning ~f the year 465,517 Cash and cash equivalents at the end of the year 682,853 See notes to consolidated financial statements.

10 June 30, 2006 275,997 6,476 (72,616)

(17,177)

(99,805) 168,340 5,227 (9,323)

(14,027) 254 15,310 44,372 (1,713)

(31,688)

(9,123)

(11,644) 4,044 15,500 70,507 338,911 (285,405) 209 (14,177) 11,434 12,524 (12,524)

(2,771,709) 2,639,922 (419,726)

. 72,616 17,177 (4,732) 4,820 (33,411) 584 57,054 (23,761) 489,278 465,517

THE PENNSYLVANIA STATE UNIVERSITY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

1. THE UNIVERSITY AND RELATED ENTITIES The Pennsylvania State University ("the University"), which was created as an instrumentality of the Commonwealth of Pennsylvania, is organized as a non-profit corporation under the laws of the Commonwealth. As Pennsylvania's land grant university, the University is committed to improving the lives of the people of Pennsylvania, the nation and the world through its integrated, tri-part mission of high-quality teaching, research and outreach.

The financial statements of the University include, on a consolidated basis, the financial statements of The Milton S. Hershey Medical Center ("TMSHMC"), a not-for-profit corporation, (see Note 10 for additional information about TMSHMC) and The Corporation for Penn State and its subsidiaries ("the Corporation").

The Corporation is a non-profit member corporation organized in 1985 for the exclusive purpose of benefiting and promoting the interests of the University, the Corporation's sole member. The Corporation's assets and revenues consist primarily of the assets and revenues of The Pennsylvania College of Technology ("Penn College"), a wholly-owned subsidiary of the Corporation.

AJI material transactions between the University, TMSHMC and the Corporation have been eliminated.

2.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the University, as summarized below, are in accordance with the recommendations for accounting and reporting included in the Audit and Accounting Guide for Not-for-Profit Organizations issued by the American Institute of Certified Public Accountants.

Basis of Presentation The University's financial statements include statements of financial position, statements of activities and statements of cash flows. Net assets and the changes in net assets are classified as permanently restricted, temporarily restricted or unrestricted.

Permanently restricted net assets consist primarily of the historical amounts of endowed gifts. Additionally, contributions receivable and remainder interests, which are required by donors to be permanently retained, are included at their estimated present values.

Temporarily restricted net assets consist primarily of contributions receivable and accumulated endowment gains which can be expended, but for which restrictions have not yet been met. Such restrictions include time restrictions imposed by donors or implied by the nature of the gift or by interpretations of law.

Unrestricted net assets are all the remaining net assets of the University.

As permitted, donor-restricted gifts that are received and either spent or deemed spent within the same year are reported as unrestricted revenue. Gifts of long-lived assets are reported as unrestricted revenue. Gifts specified for the acquisition or construction of long-lived assets are reported as unrestricted net assets when the assets are placed in service.

11 THE P*ENNSYLVANIA STATE UNIVERSITY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEA R SEN D E D J U N E 3 0, 2 0 0 7 AND 2 0 0 6

1. THE UNIVERSITY AND RELATED ENTITIES The Pennsylvania State University ("the University"), which was created as an instrumentality of the Commonwealth of Pennsylvania, is organized as a non-profit corporation under the laws of the Commonwealth. As Pennsylvania's land grant university, the University is committed to improving the lives of the people of Pennsylvania, the nation and the world through its integrated, tri-part mission of high-quality teaching, research and outreach.

The financial statements of the University include, on a consolidated basis, the financial statements of The Milton S. Hershey Medical Center ("TMSHMC"), a not-for-profit corporation, (see Note 10 for additional information about TMSHMC) and The Corporation for Penn State and its subsidiaries ("the Corporation").

The Corporation is a non-profit member corporation organized in 1985 for the exclusive purpose of benefiting and promoting the interests of the University, the Corporation's sole member. The Corporation's assets and revenues consist primarily of the assets and revenues of The Pennsylvania College of Technology ("Penn College"), a wholly-owned subsidiary of the Corporation.

All material transactions between the University, TMSHMC and the Corporation have been eliminated.

2.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the University, as summarized below, are in accordance with the recommendations for accounting and reporting included in the Audit and Accounting Guide for Not-for-Profit OrganizatJons issued by the American Institute of Certified Public Accountants.

Basis of Presentation The University's financial statements include statements of financial position, statements of activities and statements of cash flows. Net assets and the changes in net assets are classified as permanently restricted, temporarily restricted or unrestricted.

Permanently restricted net assets consist primarily of the historical amounts of endowed gifts. Additiona)ly, contributions receivable and remainder interests, which are required by donors to be permanently retained, are included at their estimated present values*,

Temporarily restricted net assets consist primarily of contributions receivable and accumulated endowment gains which can be expended, but for which restrictions have not yet been met. Such restrictions include time restrictions imposed by donors or implied by the nature of the gift or by interpretations of law.

Unrestricted net assets are all the remaining net assets of the University.

As permitted, donor-restricted gifts that are received and either spent or deemed spent within the same year are reported as unre.stricted revenue. Gifts of long-Ijved assets are reported as unrestricted revenue. Gifts specified for the acquisition or construction of long-lived assets are reported as unrestricted net assets when the assets are placed in service.

11

The University maintains various funds and accounts, including endowments, funds functioning as endowments, departmental funds and related accumulated gains, in accordance with the principles of "fund accounting." This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with specified activities or objectives. Separate accounts are maintained for each fund. Gifts are recorded in funds and investment income is distributed to funds throughout the year. Income distributed to funds may be a combination of capital appreciation and earnings pursuant to the University's total return investment policy.

Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts on the financial statements and the disclosure of contingencies and 'commitments. Actual results could differ from those estimates.

Revenue Recognition Tuition revenue is recognized in the fiscal year in which the substantial portion of the educational term occurs. Revenues for auxiliary enterprises are recognized as the related goods and services are delivered and rendered. Grant revenues are recognized as the eligible grant activities are conducted. Payments received in advance for tuition, goods and services are deferred.

Unconditional contributions receivable are recognized when received and consist of written or oral promises to contribute to the University in the future.

Contributions receivable are recorded with the revenue assigned to the appropriate category of restriction. Contributions receivable are recorded after discounting to the present value of the future cash flows.

TMSHMC has agreements with third-party payors that provide for payments to TMSHMC at amounts different from its established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discounted charges and per diem payments. Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined or such estimates change.

TMSHMC has agreements with various Health Maintenance Organizations ("HMO's") to provide medical services to subscribing participants.

Under these agreements, TMSHMC receives monthly capitation payments based on the number of each HMO's participants, regardless of services actually performed by TMSHMC.

In addition, the HMO's make fee-for-service payments to TMHSMC for certain covered services based upon discounted fee schedules.

TMSHMC provides care to patients who meet certain criteria under its charity care policy without charge or at amounts less than its established rates.

12 The University maintains various funds and accounts, including endo~ments, funds functioning as endowments, departmental funds and related accumulated gains, in accordance with the principles of fund accounting." This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with specified activities or objectives. Separate accounts are maintained for each fund. Gifts are recorded in funds and investment income is distributed to funds throughout the year. Income distributed to funds may be a combination of capital appreciation and earnings pursuant to the University's total return investment policy.

. Basis of Accounting The financial statements of the University have been prepar~d on the accrual basis of accounting.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts on the financial statements and the disclosure of contingencies andCcommitments. Actual results could differ from those estimates.

Revenue Recognition Tuition revenue is recognized in the fiscal year in which the substantial portion of the educational term occurs. Revenues for auxiliary enterprises are recognized as the related goods and services are delivered and rendered. Grant revenues are recognized as the eligible grant activities are conducted.. Payments received in advance for tuition, goods and services are deferred.

Unconditional contributions receivable are recognized when received and consist of written or oral promises to contribute to the University in the future.

Contributions receivable are recorded with the revenue assigned to the appropriate category of restriction. Contributions receivable are recorded after discounting to the present value of the future cash flows.

TMSHMC has agreements with third-party payors that provide for payments to TMSHMC at amounts different from its established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discounted charges and per diem payments. Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined or such estimates change.

TMSHMC has agreements with various Health Maintenance Organizations ("HMO's") to provide medical services to subscribing partiCipants.

Under these agreements, TMSHMC receives monthly capitation payments based on the number of each HMO's participants, regardless of services actually performed by TMSHMC.

In addition, the HMO's make fee-for-service payments to TMHSMC for certain covered services based upon discounted fee schedules.

TMSHMC provides care to patients who meet certain criteria under its charity care policy without charge or at amounts less than its established rates.

12

Fair Value of Financial Instruments The University has provided fair value estimates for certain financial instruments in the notes to the financial statements.

Fair value information presented in the financial statements is based on information available at June 30, 2007 and 2006. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value. The carrying values of the amounts of the University's loans to students are also reasonable estimates of their fair value, because approximately 99%

of the total outstanding loans to students as of June 30, 2007 and 2006 have been made at the rates available to students for similar loans at such times. The fair value of investments is disclosed in Note 3.

The fair value of the University's bonds payable is disclosed in Note 6.

Cash Flows The following items are included as supplemental disclosure to the statements of cash flows for the years ended June 30:

2007 2006 Interest paid

$ 33,932,000

$ 34,326,000 Non-cash acquisitions of land, buildings and equipment 3,969,000 19,997,000 Non-cash construction costs/deferred lease obligation at TMSHMC 31,324,000 The University defines cash and cash equivalents based on the primary purpose of the investment portfolio that holds the investment. Due to the investment strategies of portfolio managers, there is $59,978,000 and

$36,719,000 of cash and cash equivalents held in operating investment portfolios at June 30, 2007 and 2006, respectively. These assets have been separately identified as cash and cash equivalents in the statements of financial position.

Inventories Inventories are stated at cost, generally on the first-in, first-out basis, which is lower than market.

Investments The University's investments are reported at fair market value in the accompanying financial statements.

Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair values with gains and losses included in the consolidated statements of activities. The University records derivative securities at market value with changes in market value reflected in the consolidated statements of activities.

The estimated fair value amounts for marketable debt and equity securities held by the University have been reviewed by the University and determined using available market information as supplied by the various financial institutions that act as trustees or custodians for the University. For non-liquid holdings, generally investments in real estate, venture capital and energy limited partnerships, estimated fair value is determined based upon financial information provided by the limited partnerships. This financial information includes assumptions and methods that were reviewed by University management. The University believes that the estimated fair value is a reasonable estimate of market value as of June 30, 2007 and 2006.

Because the limited partnerships are not readily marketable, the estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market existed, and such differences could be material.

13 Fair Value of Financial Instruments The University has provided fair value estimates for certain financial instruments in the notes to the financial statements.

Fair value information presented in the financial statements is based on information available at June 30, 2007 and 2006. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value. The carrying values of the amounts of the University's loans to students are also reasonable estimates of their fair value, because approximately 99%

of the total outstanding loans to students as of June 30, 2007 and 2006 have been made at the rates available to students for similar loans at such times. The fair value of investments is disclosed in Note 3.

The fair value of the University's bonds payable is disclosed in Note 6.

Cash Flows The following items are included as supplemental disclosure to the statements of cash flows for the years ended June 30:

Interest paid Non-cash acquisitions of land, buildings and equipment Non-cash construction costs/deferred lease obligation at TMSHMC 2007

$ 33,932,000 3,969,000 31,324,000 2006

$ 34,326,000 19,997,000 The University defines cash and cash equivalents based on the primary purpose of the investment portfolio that holds the investment. Due to the investment strategies of portfolio managers, there is $59,978,000 and

$36,719,000 of cash and cash equivalents held in operating investment portfolios at June 30, 2007 and 2006, respectively. These assets have been separately identified as cash and cash equivalents in the*

statements of financial pOSition.

Inventories*

Inventories are stated at cost, generally on the first-in, first-out basis, which is lower than market.

Investments The University's investments are reported at fair market value in the accompanying financial statements.

Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair values with gains and losses included in the consolidated statements of activities. The University records derivative securities at market value with changes in market value reflected in the consolidated statements of activities.

The estimated fair value amounts for marketable debt and equity securities held by the University have been reviewed by the University and determined using availal?le market information as supplied by the various financial institutions that act as trustees or custodians for the University. For non-liquid holdings, generally investments in real estate, venture capital and energy limited partnerships, estimated fair value is determined based upon financial information provided by the limited partnerships. This financial information includes assumptions and methods that were reviewed by University management. The University believes that the estimated fair value is a reasonable estimate of market value as of June 30, 2007 and 2006.

Because the limited partnerships are not readily marketable, the estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market existed, and such differences could be material.

13

Beneficial Interest in PerDetual Trusts The University receives endowment income from investments of $17,078,000 and $15,676,000 held by outside trustees at June 30, 2007 and 2006, respectively. The present value of expected future cash flows to the University from such investments has been recorded as permanently restricted net assets and related beneficial interest in perpetual trusts in the financial statements.

Investment in Plant Fixed assets, including collections, are stated at cost or fair market value at date of gift. Depreciation is computed over the estimated economic lives of the assets using the straight-line method. Total investment in plant as of June 30 is comprised of the following:

2007 2006 Land 90,930,000 87,447,000 Buildings 3,197,891,000 2,986,479,000 Improvements other than buildings 422,692,000 398,502,000 Equipment 805,238,000 782,585,000 Total plant 4,516,751,000 4,255,013,000 Less accumulated depreciation (1,963,816,000)

(1,828,457,000)

Total investment in plant, net

$ 2.552.935.00

$ 2,426,556,000 Asset Retirement Obligation Effective June 30, 2006, the University adopted Financial Accounting Standards *Board -("FASB")

Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations ("FIN 47"). FIN 47 provides an interpretation of Statement of Financial Accounting Standard ("SFAS") No. 143, Accounting for Retirement Obligations, by clarifying that conditional asset retirement obligations meet the definition of a liability even though uncertainty may exist about the timing or method of settlement. Under the provisions of FIN 47, the University is obligated to record a liability for conditional asset retirement obligations. The University performed an analysis of such obligations and determined that asbestos abatement costs represented the University's primary source of such liabilities. The University reviewed all facilities and determined the timing, method and cost of asbestos abatement using a variety of assumptions and estimates. As a result of this process, at June 30, 2006, the University recorded the cumulative effect of conditional asset retirement obligations totaling $44,372,000. The carrying value of the liability at June 30, 2007 is $44,248,000, which includes accretion expense of $2,096,000.

Accounting Pronouncements In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation establishes the accounting for uncertain tax positions, including recognition and measurement of their financial statement effects. The interpretation will be effective for the University in 2008. University management is currently evaluating the impact of FIN 48, which is not expected to be material.

Reclassifications Certain 2006 amounts have been reclassified to conform with 2007 presentation of Commonwealth of Pennsylvania-special contracts and United States government grants and contracts within the consolidated statement of activities.

14 Beneficial Interest in Perpetual Trusts The University receives endowment income from investments of $17,078,000 and $15,676,000 held by outside trustees at June 30, 2007 and 2006, respectively. The present value of expected future cash flows to the University from such investments has been recorded as permanently restricted net assets and related beneficial interest in perpetual trusts in the financial statements.

Investment in Plant Fixed assets, including collections, are stated at cost or fair market value at date of gift. Depreciation is computed over the estimated economic lives of the assets using the straight-line method. Total investment in plant as of June 30 is comprised of the following:

Land Buildings Improvements other than buildings Equipment Total plant Less accumulated depreciation Total investment in plant, net Asset Retirement Obligation 2007 90,930,000 3,197,891,000 422,692,000 805,238,000 4,516,751,000 (1,963,816,000)

$ 2.552,935.000 2006 87,44 7,000 2,986.4 79,000 398,502,000 782,585,000 4,255,013,000 (1,828.457,000)

$ 2.426.556.000 Effective June 30, 2006, the University adopted Financial Accounting Standards 'Board "("FASB")

Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations ("FIN 47"). FIN 47 provides an interpretation of Statement of Financial Accounting Standard ("SFAS") No. 143, Accounting for Retirement Obligations, by clarifying that conditional asset retirement obligations meet the definition of a liability even though uncertainty may exist about the timing or method of settlement. Uhder the provisions of FIN 47, the University is obligated to record a liability for conditional asset retirement obligations. The University performed an analysis of such obligations and determined that asbestos abatement costs represented the UniverSity's primary source of such liabilities. The University reviewed all facilities and determined the timing, method and cost of asbestos abatement using a variety of assumptions and estimates. As a result of this process, at June 30, 2006, the University recorded the cumulative effect of conditional asset retirement obligations totaling $44,372,000. The carrying value of the liability at June 30, 2007 is $44,248,000, which includes accretion expense of $2,096,000.

Accounting Pronouncements In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation establishes the accounting for uncertain tax positions, including recognition and measurement of their financial statement effects. The interpretation will be effective for the University in 2008. University management is currently evaluating the impact of FIN 48, which is not expected to be material.

Reclassifications Certain 2006 amounts have been reclassified to conform with 2007 presentation of Commonwealth of Pennsylvania-special contracts and United States government grants and contracts within the consolidated statement of activities.

14

3. INVESTMENTS Investments by major category as of June 30 are summarized as follows:

2007 2006 Money markets Fixed income:

U.S. government/agency U.S. corporate Foreign Other Equities Private partnerships Investments held under securities lending program Total

$ 286,910,000 392,430,000 278,725,000 66,704,000 617,334,000 1,002,935,000 481,105,000 309,682,000

$3,435,825,000

$ 243,016,000 482,256,000 312,048,000 59,013,000 319,499,000 836,011,000 391,294,000 220,032,000

$2,863,169.000)

Other fixed income investments consist of collateralized mortgage obligations, mortgage-backed securities, asset-backed securities and municipal bonds. Equity investments are comprised of domestic and foreign common stocks. Private partnerships consist primarily of interests in real estate, private equity, venture capital, energy and hedge fund limited partnerships.

The following schedule summarizes the investment return and its statement of activities for the year ended June 30, 2007:

classification in the consolidated Temporarily Restricted Permanently Restricted Dividends and interest Net realized-gains, including endowment spending Net unrealized gains Total returns Unrestricted

$ 130,700,000 38,690,000 74,751,000

$ 244.141,000 Total 4,243,000

$ 10,625,000 53,757,000 117,327,000

$ 175,327=0

$ 145,568,000 92,447,000 192,078,000

$ 430.093.000 The following schedule summarizes the investment return and its statement of activities for the year ended June 30, 2006:

classification in the consolidated Temporarily Restricted Permanently Restricted Dividends and interest Net realized gains, including endowment spending Net unrealized gains/(losses)

Total returns Unrestricted

$ 84,869,000 45,549,000 (9,614,000)

$120,804,000 Total 3,376,000 9,756,000 27,618,000 38,349,000

$ 69.343,000 599,000

$10.55.00Q0

$ 98,001,000 73,766,000 28,735,000

$ 200,502000 In the management of investments, the University authorizes certain of its investment managers to purchase derivative securities to attain a desired market position; and the University may directly invest in derivative securities to attain a desired market position. The University does not trade or issue derivative financial instruments other than through the investment management practices noted above. Gains and losses from derivative instruments are reported in the consolidated statements of activities. Futures contracts, which are fully cash collateralized, are marked to market daily and are included in the carrying value of the University's investments.

The market value of all derivative instruments is included in the market value of the University's investments. Futures contracts have minimal credit risk because the counterparties are the exchanges themselves. The University directly held no derivative securities at June 30, 2007. Fully cash collateralized derivative securities comprised approximately 3.0% of total investments at June 30, 2006.

15

3. INVESTMENTS Investments by major category as of June 30 are summarized as follows:

Money markets Fixed income:

U.S. government/agency U.S. corporate Foreign Other Equities Private partnerships Investments held under securities lending program Total 2007

$ 286,910,000 392,430,000 278,725,000 66,704,000 617,334,000 1,002,935,000 481,105,000 309.682.000

$3.435.825.000 2006

$ 243,016,000 482,256,000 312,048,000 59,013,000 319,499,000 836,011,000 391,294,000 220.032.000

$2.863.169.000 Other fixed income investments consist of collateralized mortgage obligations, mortgage-backed securities, asset-backed securities and municipal bonds. Equity investments are comprised of domestic and foreign common stocks. Private partnerships consist primarily of interests in real estate, private equity, venture capital, energy and hedge fund limited partnerships.

The following schedule summarizes the investment return and its classification in the consolidated statement of activities for the year ended June 30, 2007:

Dividends and interest Net realized:gains,including endowment spending Net unrealized gains Total returns Unrestricted

$130,700,000 38,690,000

. 74.751.000

$ 244.141.000 Temporarily Restricted Permanently Restricted 4,243,000

$ 10,625,000 53,757,000 117.327.000

$ 175.327.000

$ 10 625.000

$ 145,568,000 92,447,000 192.078.000

$ 430.093.000

. The following schedule summarizes the investment return and its classification in the consolidated statement of activities for the year ended June 30, 2006:

Temporarily Permanently Unrestricted Restricted Restricted Total Dividends and interest

$ 84,869,000 3,376,000 9,756,000

$ 98,001,000 Net realized gains, including endowment spending 45,549,000 27,618,000 599,000 73,766,000 Net unrealized gains/(losses)

(9,614,000) 38,349,000 28,735,000 Total returns

~ :l2Q,8Q4,QQQ

$ 69,343,QQQ

~ :lQ,355,QQQ

~ 2QQ,5Q2,QQQ In the management of investments, the University authorizes certain of its investment managers to purchase derivative securities to attain a desired market position; and the University may directly *invest in derivative securities to attain a desired market position. The University does not trade or issue derivative financial instruments other than through the investment management practices noted above. Gains and losses from derivative instruments are reported in the consolidated statements of activities. Futures contracts, which are fully cash collateralized, are marked to market daily and are included in the carrying value of the University's investments.

The market value of all derivative instruments is included in the market value of the University's investments. Futures contracts have minimal credit risk because the counterparties are the exchanges themselves. The University directly held no derivative securities at June 30, 2007. Fully cash collateralized derivative securities comprised approximately 3.0% of total investments at June 30, 2006.

15

Through an agreement with its primary investment custodian, the University participates in lending securities to brokers. Collateral is generally limited to cash, government securities, and irrevocable letters of credit.

Both the investment custodian and the security borrowers have the right to terminate a specific loan of securities at any time. The University receives lending fees and continues to eamn interest and dividends on the loaned securities. At June 30, 2007 and 2006, the University held $309,682,000 and $220,032,000, respectively, of cash and cash equivalents as collateral deposits for the securities lending program. The collateral is included as an asset and the obligation to return such collateral is presented as a liability in the consolidated statements of financial position.

The securities on loan had an estimated fair value of

$303,370,000 and $216,174,000 at June 30, 2007 and 2006, respectively.

4. POOLED ASSETS The University uses a "total return" approach to endowment fund investment management. This approach emphasizes total investment return (current income plus or minus realized and unrealized capital gains and losses) as the basis for endowment spending. The University has implemented an endowment income spending policy whereby a predetermined amount is paid out each fiscal year based upon a prescribed formula in accordance with Pennsylvania statutes.

Investments aggregating $1,587,197,000 and $1,303,476,000 at June 30, 2007 and 2006, respectively, for certain endowment funds and funds functioning as endowments are pooled on a market value basis, with each individual fund subscribing to or disposing of units on the basis of the market value per unit at the beginning of the month when the transaction takes place.

The following schedule summarizes certain information about pooled assets on a per unit basis as of June 30:

2007 2006 Market value per unit

$ 32.57

.$ 28.28 Annual net gains per unit

$ 4.29

$ 2.21 Average annual earnings per unit, exclusive of gains 1.42

$ 0.85

5. CONTRIBUTIONS RECEIVABLE Contributions recei vable are summarized as follows as of June 30:

2007 2006 In one year or less

$ 52,568,000

$ 45,258,000 Between one year and five years 64,024,000 47,666,000 More than five years 76.511.000 70,397.000 193,103,000 163,321,000 Less allowance (9,459,000)

(7,196,000)

Less discount (49,325,000)

(45.685.000)

Contributions receivable, net

$143900 Stoo0=

At June 30, 2007 and 2006, the University has received bequest intentions and certain other conditional promises to give of $30,748,000 and $14,160,000, respectively. These intentions and conditional promises to giv e are not included in the consolidated financial statements.

16.

Through an agreement with its primary investment custodian, the University participates in lending securities to brokers. Collateral is generally limited to cash, government securities, and irrevocable letters of credit.

Both the investment custodian and the security borrowers have the right to terminate a specific loan of securities at any time. The University receives lending fees and continues to eam interest and dividends on the loaned securities. At June 30, 2007 and 2006, the University held $309,682,000 and $220,032,000, respectively, of cash and cash equivalents as collateral deposits for the securities lending program. The collateral is included as an asset and the obligation to return such collateral is presented as a liability in the consolidated statements of financial position.

The securities on loan had an estimated fair value of

$303,370,000 and $216,174,000 at June 30, 2007 and 2006, respectively.

4. POOLED ASSETS The University uses a "total return" approach to endowment fund investment management. This approach emphasizes total investment return (current income plus or minus realized and unrealized capital gains and losses) as the basis for endowment spending. The University has implemented an endowment income spending policy whereby a predetermined amount is paid out each fiscal year b.ased upon a prescribed formula in accordance with Pennsylvania statutes.

Investments aggregating $1,587,197,000 and $1,303,476,000 at June 30, 2007 and 2006, respectively, for certain endowment funds and funds functioning as endowments are pooled on a market value basis, with each individual fund subscribing to or disposing of units on the basis of the market value per unit at the beginning of the month when the transaction takes place.

The following schedule summarizes certain information about pooled assets on a per unit basis as of June 30:

2007 Market value per unit

$ 32.57 Annual net gains per unit 4.29 Average annual earnings per unit, exclusive of gains 1.42

°5. CONTRIBUTIONS RECEIVABLE Contributions receivable are summarized as follows as of June 30:

In one year or less Between one year and five years More than five years Less allowance Less discount Contributions receivable, net 2007 52,568,000 64,024,000 76,511.000 193,103,000 (9,459,000)

(49,325,000)

$ 134.319,000 2006

$ 28.28 2.21 0.85 2006 45,258,000 47,666,000 70,397,000 163,321,000 (7,196,000)

(45,685,000)

$ 110440,000 At June 30, 2007 and 2006, the University has received bequest intentions and certain other conditional promises to give of $30,748,000 and $14,160,000, respectively. These intentions and conditional promises to give are not included in the consolidated financial statements.

16.

I

6. LONG-TERM DEBT The various bond issues, note payable and capital lease obligations that are included in long-term debt in the statements of financial position consist of the following:

The Pennsylvania State University Bonds Series 2007A Series 2007B Series 2005 Series 2004A Refunding Series 2003 Series of 2002 Refunding Series 2002 Refunding Series 2001 Series A of 2001 Series A of 1997 Series B of 1997 Pennsylvania Higher Educational Facilities Authority University Revenue Bonds (issued for The Pennsylvania State University)

Series 2006 Series 2004 Series 2002 Lycomina County Authority College Revenue Bonds (issued for Penn College)

Series 2005 Series 2003 Series 2002 Series 2000 Series 1997 Series 1993 Total bonds payable Unamortized bond premiums Note payable and capital leases Demand note payable Capital lease obligations Deferred lease obligation Total note payable and capital leases 2007 90,570,000 80,025,000 96,555,000 59,930,000 26,260,000 100,000,000 126,835,000 34,590,000 75,000,000 8,805,000 2006 98,175,000 60,980,000 28,130,000 100,000,000 140,760,000 42,235,000 75,000,000 86,750,000 9,475,000 4,650,000 5,215,000 5,965,000 4,700,000 5,410,000 6,250,000 15,225,000 6,495,000 29,995,000 39,370,000 11,300,000 11,954,000 828,739,000 24,704,000 10,000,000 16,739,000 31,324,000 58,063,000 15,555,000 9,565,000 30,325,000 39,370,000 11,530,000 11,565,000 775,775,000 17,399,000 10,000,000 18,026,000 28,026,000 Total long-term debt 17

6. LONG-TERM DEBT The various bond issues, note payable and capital lease obligations that are included in long-term debt in the statements of financial position consist of the following:

2007 2006 The Penns~vania State Universit~ Bonds Series 2007 A 90,570,000 Series 2007B 80,025,000 Series 2005 96,555,000 98,175,000 Series 2004A 59,930,000 60,980,000 Refunding Series 2003 26,260,000 28,130,000 Series of 2002 100,000,000 100,000,000 Refunding Series 2002 126,835,000 140,760,000 Refunding Series 2001 34,590,000 42,235,000 Series A of 2001 75,000,000 75,000,000 Series A of 1997 86,750,000 Series B of 1997 8,805,000 9,475,000 Penns~vania Higher Educational Facilities Authoritv Universit~ Revenue Bonds (issued for The Penns~vania State University)

Series 2006 4,650,000 4,700,000 Series 2004 5,215,000 5,410,000 Series 2002 5,965,000 6,250,000 L~coming Coun~ Authorit~Coliege Revenue Bonds (issued for Penn College)

Series 2005 15,225,000 15,555,000 Series 2003 6,495,000 9,565,000 Series 2002 29,995,000 30,325,000 Series 2000 39,370,000 39,370,000 Series 1997 11,300,000 11,530,000 Series 1993 11.954,000 11,565,000 Total bonds payable 828,739,000 775,775,000 Unamortized bond premiums 24,704,000 17,399,000 Note ga~able and cagital leases Demand note payable 10,000,000 10,000,000 Capital lease obligations 16,739,000 18,026,000 Deferred lease obligation 31,324,000 Total note payable and capital leases 58,063,000 28,026,000 Total long-term debt

~ 9:1 :1 !5Q6.QQQ

$ 82:1 !2QQ.QQQ 17

The Pennsylvania State University Bonds Series 2007A and 2007B - general obligation bonds issued in January 2007 for the purpose of funding various construction and renovation projects and for the advance refunding of the Series 1997A Bonds.

The University, in conjunction with the issuance of the Series 2007B bonds, legally defeased the Series A of 1997 Bonds, with an outstanding principal of $84,540,000, by irrevocably depositing $88,341,000 in an escrow fund to be used to pay the interest accrued, maturing principal on and the redemption price of the refunded bonds. As a result of the advance refunding transaction, amounts related to the Series 1997A Bonds have been removed from the University's June 30, 2007 statement of financial position.

Principal payments on the Series 2007A and 2007B bonds are due annually, in amounts ranging from

$2,770,000 to $5,955,000 through August 2027, with additional payments of $11,115,000 due August 2028 and $70,905,000 due August 2036. The bonds pay interest at rates ranging from 3.55% to 5.25%

and are subject to sinking fund redemption beginning August 2023 and early redemption provisions, at the option of the University, beginning August 2016.

Series 2005 - general obligation bonds issued in January 2005 for the purpose of funding various construction projects. Principal payments are due annually in amounts ranging from $1,670,000 to

$2,745,000 through September 2019, with additional payments of $15,990,000, $20,550,000 and

$32,485,000 due September 2024, 2029 and 2034, respectively. The bonds pay interest at rates ranging from 3.00% to 5.00% and are subject to sinking fund redemption beginning September 2020 and early redemption provisions, at the option of the University, beginning September 2015.

Series 2004A - general obligation bonds issued in April 2004 for the purpose of funding various construction projects. Principal payments are due annually in amounts ranging from $1,085,000 to

$1,825,000 through September 2019, with additional payments of $10,625,000, $13,635,000 and

$17,515,000 due September 2024, 2029 and 2034, respectively. The bonds pay interest at rates ranging from 2.50% to 5.00% and are subject to sinking fund redemption beginning September 2020 and early redemption provisions, at the option of the University, beginning September 2014.

Refunding Series 2003 - general obligation bonds issued in March 2003 for the purpose of refunding the Refunding Series 1993A and to pay costs associated with issuing the 2003 Refunding Bonds.

Principal payments are due annually in amounts ranging from $1,910,000 to $2,970,000 through March 2018. The bonds pay interest at rates ranging from 3.25% to 5.25% and are subject to early redemption provisions, at the option of the University, beginning March 2013.

Series of 2002 and Series A of 2001 - general obligation bonds issued in May 2002 for the purpose of funding a portion of the costs of the acquisition, construction, equipping, renovation and improvement of certain facilities of the University and April 2001 for the purpose of funding various construction projects, respectively. The bonds are currently paying interest on a variable rate basis; however, the University has the option to convert to another variable rate or to a fixed rate basis (such rates are generally determined on a market basis). The bonds currently pay interest at 3.71 %

with adjustment on a weekly basis to the rate the remarketing agent believes will cause the bonds to have a market value equal to the principal amount up to a maximum of 12%. The bondholders have the right to tender bonds at interest rate reset dates. The University, therefore, entered into standby bond purchase agreements with banks to provide liquidity in case of tender. The principal amount of the Series of 2002 bonds is due March 2032; and the principal amount of the Series A of 2001 is due April 2031. The bonds are not subject to sinking fund redemption; however, the University has the option to redeem the bonds prior to their scheduled maturity.

Refunding Series 2002 - general obligation bonds issued in May 2002 for the purpose of refunding the Second Refunding 1992A Series (such bonds were previously issued to refund the Second Refunding 1988 Series, 1989 Series and 1991 Series Bonds). Principal payments are due annually, in amounts ranging from $4,585,000 to $1*6,540,000 through August 2016. The bonds pay interest at rates ranging from 4.73% to 5.25%. The bonds are not subject to redemption prior to maturity.

18 The Pennsylvania State University Bonds Series 2007 A and 2007B - general obligation bonds issued in January 2007 for the purpose of funding various construction and renovation projects and for the advance refunding of the Series 1997 A Bonds.

The University, in conjunction with the issuance of the Series 2007B bonds, legally defeased the Series A of 1997 Bonds, with an outstanding principal of $84,540,000, by irrevocably depositing $88,341,000 in an escrow fund to be used to pay the interest accrued, maturing principal on and the redemption price of the refunded bonds. As a result of the advance refunding transaction, amounts related to the Series 1997A Bonds have been removed from the University's June 30,2007 statement of financial position.

Principal payments on the Series 2007 A and 2007B bonds are due annually, in amounts ranging from