ML14239A647
| ML14239A647 | |
| Person / Time | |
|---|---|
| Site: | Aerotest |
| Issue date: | 08/26/2014 |
| From: | Harshaw K, Silberg J Aerotest, Nuclear Labyrinth LLC |
| To: | Atomic Safety and Licensing Board Panel |
| SECY RAS | |
| References | |
| 50-228-LT, ASLBP 14-931-01-LT-BD01, RAS 26410 | |
| Download: ML14239A647 (204) | |
Text
August 26, 2014 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of )
)
Aerotest Operations, Inc. ) Docket No. 50-228-LT
)
Aerotest Radiography and )
Research Reactor ) ASLBP No. 14-931-01-LT-BD01 UNOPPOSED MOTION TO FILE A REDACTED, PUBLICLY AVAILABLE TRANSCRIPT FROM AUGUST 12, 2014 HEARING On August 12, 2014, a hearing was held in the above-captioned matter and a hearing transcript was issued for review on August 13, 2014.1 As directed by the Presiding Officer, Aerotest Operations, Inc. and Nuclear Labyrinth, LLC (the Companies) reviewed the transcripts and have identified the Companies confidential business information that should be withheld from public disclosure under 10 C.F.R. § 2.390.2 Attached to this motion is the proposed redacted transcript. Counsel for the Companies certify that the redactions are limited to information that is exempt from disclosure pursuant to 10 C.F.R. § 2.390.
I hereby certify that I have consulted with the NRC Staff counsel on the proposed redacted transcript and NRC Staff counsel stated that they do not object to the redactions.
1 Aerotest Operations, Inc. (Aerotest Radiography and Research Reactor) Official Transcript of Proceedings (August 12, 2014).
2 Email from Kathleen Schroeder, Law Clerk, Atomic Safety and Licensing Board, re: Aerotest Proposed Transcript Corrections and Redacted Transcript (Aug. 18, 2014).
404736575v1
Respectfully Submitted
/signed electronically by/
Jay E. Silberg Kimberly A. Harshaw Counsel for Aerotest Operations, Inc. and Nuclear Labyrinth, LLC 2
404736575v1
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of )
) Docket No. 50-228-LT Aerotest Operations, Inc. ) License No. R-98
)
(Aerotest Radiography and )
Research Reactor) )
CERTIFICATE OF SERVICE I hereby certify that the foregoing Unopposed Motion to File a Redacted, Publicly Available Transcript from August 12, 2014 Hearing has been served through the E-Filing system on the participants in the above-captioned proceeding this 26th day of August 2014.
/Signed electronically by/
Kimberly A. Harshaw 3
404736575v1
Official Transcript of Proceedings NUCLEAR REGULATORY COMMISSION PROPRIETARY INFORMATION
Title:
Aerotest Operations, Inc.
Aerotest Radiography and Research Reactor Docket Number: 50-228-LT ASLBP Number: 14-931-01-LT-BD01 Location: Rockville, Maryland Date: Tuesday, August 12, 2014 Work Order No.: NRC-983 Pages36-223 NEAL R. GROSS AND CO., INC.
Court Reporters and Transcribers 1323 Rhode Island Avenue, N.W.
Washington, D.C. 20005 (202) 234-4433
GFFICIAL USE ONL¥ PROPRIE~AR¥ INFOR~.~ION 36 1 UNITED STATES OF AMERICA 2 NUCLEAR REGULATORY COMMISSION 3 +++++
4 ATOMIC SAFETY AND LICENSING BOARD 5 +++++
6 HEARING 7 ---------------------------x 8 In the Matter of: Docket No.
9 AEROTEST OPERATIONS, INC. 50-228-LT 10 ASLBP No.
11 (Aerotest Radiography and 14-931-01-LT-BD01 12 Research Reactor) 13 ---------------------------x 14 Tuesday, August 12, 2014 15 16 Nuclear Regulatory Commission 17 Hearing Room T-3 B45 18 11545 Rockville Pike 19 Rockville, Maryland 20 21 BEFORE:
22 E. ROY HAWKENS Presiding Officer 23 24 25 OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONLY PROPRIE~ARY INFOR~~~ION 37 1 APPEARANCES:
2 On Behalf of the Companies:
3 KIMBERLY A. HARSHAW, ESQ.
4 JAY E. SILBERG, ESQ.
5 of: Pillsbury Winthrop Shaw Pittman LLP 6 2300 N Street, N.W.
7 Washington, D.C. 20037-1122 8 (202) 663-9410 (Harshaw) 9 (202) 663-8063 (Silberg) 10 kimberly.harshaw@pillsburylaw.com 11 jay.silberg@pillsburylaw.com 12 13 On Behalf of the Nuclear Regulatory Commission:
14 ANITA GHOSH, ESQ.
15 SUSAN UTTAL, ESQ.
16 CATHERINE KANATAS, ESQ.
17 of: Office of the General Counsel 18 Mail Stop 15 D21 19 U.S. Nuclear Regulatory Commission 20 Washington, D.C. 20555-0001 21 (301) 415-4113 (AG) 22 anita.ghosh@nrc.gov 23 susan.uttal@nrc.gov 24 catherine.kanatas@nrc.gov 25 OFFICIAL YSE ONLY PROPRIE~ARY INFORMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONLY PROPRIETARY INFORMATION 38 1 C-0-N-T-E-N-T-S 2
3 Opening Statement by Ms. Harshaw 43 4 Opening Statement by NRC Staff 58 5
6 WITNESS DIRECT CROSS REDIRECT 7 Michael Anderson 74 192 8 David Michael Slaughter 88 121 192 9 Jocelyn Lian 89 198 10 Anneliese Simmons 124 198 11 Alexander Adams 170 198 12 13 14 Closing Statement by NRC Staff 204 15 Closing Statement by Ms. Harshaw 212 16 17 18 19 20 21 22 23 24 25 OFFIGIAL USE ONLY PROPRIETARY INFO~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONL¥ PROPRIE~AR¥ INFOR~ION 39 1 P R 0 C E E D I N G S 2 9:59 a.m.
3 JUDGE HAWKENS: We're on the record now.
4 Good morning. My name is Roy Hawkens. I'm the 5 Presiding Officer in this case entitled Aerotest 6 Operations, Incorporated; Aerotest Radiography and 7 Research Reactor, docket number 50-228-LT.
8 Would counsel please introduce themselves 9 starting with the applicants?
10 MS. HARSHAW: Good morning. I'm Kimberly 11 Harshaw, Pillsbury Law.
12 JUDGE HAWKENS: Good morning.
13 MR. SILBERG: Jay Silberg, also with 14 Pillsbury.
15 JUDGE HAWKENS: Good morning, sir. The NRC 16 Staff?
17 MS. GHOSH: Good morning. My name is Anita 18 Ghosh. I'm with the NRC Staff.
19 MS. UTTAL: Susan Uttal, NRC Staff.
20 MS. KANATAS: CatherineKanatas, NRCStaff.
21 JUDGE HAWKENS: Thank you. Good morning.
22 We're here today in response to the 23 Commission's order in CLI-14-05 that directed the 24 Licensing Board to compile a hearing record in this 25 case, preside at the hearing, and certify the record OFFIGIAL USE ONL¥ PRGPRIE~AR¥ INFORMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
~G~F~F~I~G~I~A~L~U~S~E-YG~N~L~¥--~P&GPRI~AR¥ INFGR~~TIGN 40 1 to the Commission.
2 The Applicants, Aerotest Operations, 3 Incorporated and Nuclear Labyrinth, LLC, which I'll 4 hereafter refer to as the Companies challenge the 5 Staff's denial of their license transfer application 6 which the Staff denied on the ground that the 7 Companies failed to satisfy the financial 8 qualification requirements, in particular, the Staff 9 found the Companies failed to show an ability to pay 10 operating costs or the annual cost for spent fuel 11 storage.
12 This proceeding will be conducted in 13 accordance with Subpart M of 10 CFR Part 2, and it 14 will be closed to the public because of the likelihood 15 that proprietary information will be extensively 16 discussed.
17 At the outset I'll review the itinerary 18 for today, which is also summarized in the Board's 19 July 25th order. First, in accordance with the 20 parties' agreements we' 11 admit all pre-filed exhibits 21 enback by reference to the exhibit lists which the 22 court reporter will then bind into the transcript.
23 Second, we'll hear opening statements by 24 counsel, first by the Companies, and second by counsel 25 for the NRC Staff. Third, the Company witnesses will GFFIGIAL USE GNL¥ PRGPRIETAR¥ INFGR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE ONL¥ PROPRIETAR¥ INFOR~~TION 41 1 be examined followed by an examination of the Staff 2 witnesses. And, finally, we' 11 have closing statements 3 by the NRC Staff, followed by a closing statement by 4 the Companies.
5 Counsel will have the opportunity to 6 provide a list of suggested questions for me to 7 consider posing to their witness. At the time they 8 have them ready they can provide them to the Board's 9 law clerk, Ms. Kathy Schroeder, and would ask that 10 they be legible because what you give her will 11 ultimately be put into the hearing docket for this 12 case.
13 And, finally, if at any time during the 14 proceeding counsel or their witnesses would like to 15 take a break, please let me know and I will happily 16 accommodate that. That goes for the court reporter, as 17 well.
18 Any questions at this point by counsel, 19 any administrative or procedural matters?
20 MR. SILBERG: None from the Applicants.
21 MS. GHOSH: None for the Staff.
22 JUDGE HAWKENS: Thank you. The first order 23 of business will be admitted into evidence the pre-24 filed exhibits on the exhibit list the parties 25 submitted to the electronic hearing docket.
NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE GNLY PRGPRIETARY INFGR~~TIGN 42 1 First for the Companies, at the top of 2 your pre-filed exhibit list is the case name and 3 docket numbers, followed by the title Aerotest and 4 Nuclear Labyrinth Revised Hearing Exhibits, which was 5 submitted July 18, 2014, and is identified as Exhibit 6 AOIOOOR. Is the exhibit list I just described an 7 accurate and complete list of the exhibits counsel for 8 the Companies request to admit into evidence?
9 MS. HARSHAW: Yes, Your Honor.
10 JUDGE HAWKENS: Does counsel for the Staff 11 object to admitting the pre-filed exhibits on the 12 Companies' exhibit list into evidence?
13 MS. GHOSH: No, Your Honor.
14 JUDGE HAWKENS: The exhibits on the list 15 are admitted into evidence and the court reporter is 16 instructed to bind the exhibit list into the 17 transcript. And I note that a number of the exhibits 18 do contain proprietary information, and that fact is 19 indicated in the exhibit description on the list.
20 For the NRC Staff at the top of your pre-21 filed exhibit list is the case name and docket 22 numbers, followed by the title NRC Staff Hearing 23 Exhibits Revised July 18, 2014, and submitted July 18, 24 2014. Is the list I just described an accurate and 25 complete list of the exhibits the Staff requests to GFFICIAL USE GNLY - PRGPRIETARY INFGRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF+/-CIA~ USE ON~¥ PROPRIETARY INFORMATION 43 1 admit into evidence?
2 MS. GHOSH: Yes, Your Honor.
3 JUDGE HAWKENS: Do counsel for the 4 Companies have any objections to those being admitted 5 into evidence?
6 MS. HARSHAW: No, Your Honor.
7 JUDGE HAWKENS: The exhibits on the list 8 are admitted into evidence. The court reporter is 9 instructed to bind the exhibit list into the 10 transcript and like the Company exhibits, a number of 11 these exhibits contain proprietary information and 12 that fact is indicated both in the NRC exhibit number 13 and in the description.
14 Let's proceed to opening statements. We' 11 15 be starting with the Companies. I'd like to hear from 16 you from the podium, please. Each side for their 17 opening statements will have 10 minutes exclusive of 18 questions, and to assist you in keeping track of time 19 Ms. Schroeder will raise the amber -- at the end 20 she'll raise the 10-minute, the red light, and at the 21 two minute warning she'll raise the amber sign 22 indicating you have two minutes left. We'll now hear 23 from the Companies.
24 MS. HARSHAW: Good morning, Your Honor.
25 This case is about an existing company, OFFICIA~ USE ON~¥ ~R~PRIETAR¥ INFO~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF!G!AL USE ONLY PROPRrET~¥ !NFOR~~T!ON 44 1 Aerotest Operations, that have been providing critical 2 services to DOD and NASA suppliers for over 40 years 3 until the NRC compelled its shutdown in 2010. In 4 particular, this case is about the NRC's denial of the 5 indirect transfer of the operating license of the 6 Aerotest Research and Radiography Reactor to Nuclear 7 Labyrinth.
8 There are two areas of controversy in this 9 case. First is whether Aerotest and Nuclear Labyrinth 10 will have sufficient funding to conduct activities 11 following the license transfer. Second is whether the 12 companies will have sufficient funds to cover the 13 annual cost of spent fuel storage following the 14 license transfer.
15 What is required for financial 16 qualifications? 10 CFR 50.33(f) requires for an 17 operating license that the Applicants submit 18 information that demonstrates that they have 19 reasonable assurance of obtaining the funds necessary 20 to cover operating costs. They do so by submitting a 21 five-year projection of costs and identifying the 22 source of funds to cover those costs.
23 Furthermore, NRC guidance states that they 24 should provide a reliable basis for the operating 25 costs, such as past operating costs, and that they OFF!GIAL USE ONLY PROPRIETARY !NFOR~.T!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGIAL USE ONL¥ PROPRIE~R¥ INFORMATION 45 1 should identify the source of the funding, the amount 2 that's committed, the amount that's potentially 3 committed, and the conditions under which the 4 potentially committed funds could become committed.
5 And what is reasonable assurance? Well it 6 is not absolute certainty. The Commission has said 7 that it is enough for Applicants to rely on plausible 8 assumptions and forecasts. Furthermore, the Commission 9 has said that in the context of financial 10 qualifications reasonable assurance is less than the 11 extremely high assurance that the Commission requires 12 for safety.
13 What is required for spent fuel 14 management? For a research reactor there's no specific 15 requirement for the licensee to have a spent fuel 16 management fund. For a power reactor there is such a 17 requirement at 10 CFR 50.54 (bb) . But even in that 18 case, this funding is not required to be submitted, 19 this mechanism is not required to be submitted to the 20 NRC until close to the time that the reactor has gone 21 to shutdown. This provision does not apply to a 22 research reactor.
23 Throughout this process, the NRC Staff has 24 taken the most pessimistic view of the information 25 submitted by the Companies. In every instance where OFFIGIAL USE ONL¥ PROPRIETAR¥ INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE GNLY PRGPR~E~ARY INFORMA~IGN 46 1 the Staff identified an uncertainty, they assumed an 2 unfavorable outcome, and this is inconsistent with an 3 appropriate application of the reasonable assurance 4 standard.
5 Furthermore, the Staff has asserted the 6 information the Companies should not be considered.
7 However, each time the Companies have submitted 8 information, the Staff has raised new questions and 9 objections, including in its Safety Evaluation Report 10 its response to areas of controversy, and the 11 testimony; and, yet, they object to Aerotest 12 responding to these new objections. The Companies have 13 been dealing with a moving target.
14 Now, what did the Companies submit? The 15 Companies submitted cost and revenue projections that 16 were based on plausible assumptions and forecasts. The 17 Companies reviewed the regulations, they reviewed 18 guidance, and their reviewed their past submittal in 19 the x-ray application, including the RAis to make sure 20 they submitted information required to meet the 21 regulations.
22 The submitted cost and revenue projections 23 for the first five years of operations that were based 24 on Dr. Slaughter's extensive due diligence, his market 25 analysis, and the historical costs and revenue of the GFFICIAL USE GNLY PRGPRIE~ARY INFGRMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONL¥ PROPRIETAR¥ INFORMATION 47 1 facility. They identified that the source of funds to 2 cover these costs was for the first year Autoliv would 3 provide cash to cover restarting the facility, and the 4 return of customers. And for subsequent years they 5 would rely on revenues for customers.
6 They relied on a plausible assumption that 7
9 the x-ray application, the Companies did not submit 10 contracts or letters of intent.
11 The Staff found the application 12 insufficient and repeatedly requested committed 13 sources of funds. The Companies explained that it was 14 not practical to obtain such commitment, but they 15 stated that they were confident customers would return 16 22 Furthermore, prior to its shutdown, 23 Aerotest had been providing services to customers for 24 decades .
- OFFICIAL YSE ONL¥ PROPRIETAR¥ INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIA~ YSE ONb¥ PROPRIETARY INFOR~.TION 48 1
I I
I ... _ .. _ _ _ _
I I
8 Staff's insistence on committed sources of funds in 9 these circumstances put the Companies in a classic 10 catch-22.
11 The Staff unreasonably and arbitrarily 12 rejected the Companies' projects. They rejected nine 13 years of historical data that was submitted, and they 14 relied on only two of the communications that the 15 Companies submitted that showed interest of the 26 16 communications. There is no indication that they would 17 have been willing to rely on anything other than a 18 contract or a letter of intent.
19 In fact, they specifically state, "Without 20 more communications like the two provided, the Staff 21 cannot conclude that the Companies' historic customers 22 will return and, thus, that the Companies' revenue 23 projections are reasonable."
24 The Companies' revenue projections were 25 supported by reasonable analyses of the fuel OFFICIA~ YSE ON~Y - PROPRIETAR¥ INFO~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL YSE GNLY PRGPRIETARY INFGRMATIGN 49 1 inventory. The Staff questioned whether there would be 2 operational limitations on the reactor as a result of 3 the damaged aluminum fuel that was found, and how 4 would these limitations affect the revenue 5 projections? The Companies said, number one, the 6 transaction would not close if the ARRR was not fully 7 operational. And, number two, they were performing 8 reviews and analyses of the fuel, and they did not 9 expect to need any new fuel.
10 During that time, Dr. Slaughter performed 11 careful review of every fuel element to determine its 12 suitability for use. He studied the historical 13 placement and environment of the fuel. He developed a 14 computer model that projected that, indeed, the core 15 would be operational not only at the level required to 16 provide the services but at full license power level.
17 He also performed burnup calculations. The Staff knew 18 these analyses were ongoing and never requested this 19 information, and they didn't perform any analyses of 20 its own. And now they newly claim that it cannot 21 approve the license transfer based on the damaged 22 aluminum fuel.
23 The Companies developed a reasonable plan 24 for spent fuel management based on plausible 25 assumptions and forecasts. Initially, the Companies GFFICIAL YSE GNLY PRGPRIETARY INFORMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF!GIAL USE ONLY PROPRIETARY !NFORMAT!GN 50 1 did not submit this information because, as I said, 2 there's no specific requirement to have such a fund.
3 And, second, they didn't have to submit this 4 information in the x-ray application. Although there 5 is no requirement for a research reactor to have a 6 spent fuel management fund, the NRC requests in an RAI 7 that the Companies submit such a plan. So, the 8 Companies submitted their plan which included 9 collecting fees over the life of the reactor, placing 10 those fees in a trust fund, and also -
- 14 The Companies reasonably relied on the 15 reactor operating for its extended license to collect 16 these funds. There was going to be minimal costs 17 associated with providing spent fuel management, and 18 they would be relying on resources already on site to 19 do the tasks required to manage the fuel.
20 Furthermore, the Companies noted in its 21 initial statement of position that since it submitted 22 its application, the DOE has changed its strategy 23 regarding spent fuel management. The DOE's current 24 strategy provides for interim storage beginning in 25 2021 for shutdown plants. And, thus, even if the OFF!G!AL USE ONLY PROPRIETARY INFOR~~!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~ICIAL USE GNL¥ - PRGPRIE~AR¥ IN~GRMATIGN 51 1 reactor shut down prematurely, there would be minimal 2 time required for spent fuel management.
3 Consistent with its position throughout 4 this proceeding, the Staff took the most pessimistic 5 view on spent fuel management, and assumed a worst 6 case scenario, and demanded that the Company provide 7 funds to address the scenario. The Staff presumed that 8 the reactor would never start and the Companies would 9 have to provide funding for 42 years.
10 In sum, throughout this proceeding the 11 Staff has taken the most unfavorable position possible 12 in every respect of this application. This position is 13 not called for given the totality of the information 14 the Companies have submitted.
15 The Companies relied on 17 company providing services, Dr. Slaughter's extensive 18 experience in this field, 20 time in which they could provide them. Thank you.
21 JUDGE HAWKENS: Thank you. Before you sit, 22 I didn't want to interrupt with questions during your 23 opening statement, but I have a few for you.
24 Based on your opening statement and 25 material in your pleading you said a number of times, G~FICIAL USE GNL¥ - PRGPRIETAR¥ IN~ORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 52 1 The Staff -- there was material and the Staff -- in 2 the record and the Staff would have liked to see, but 3 the Companies didn't provide it because the Staff 4 didn't request it, or the Companies were unaware it 5 was necessary in order to meet the financial 6 qualification standard.
7 In the Safety Evaluation Report it says 8 and I quote, "The purpose of the public meeting on 9 December 19th, 2012 was to insure the Applicants 10 understood the financial assurance requirements for 11 license transfer approval." It sounds like there was 12 not a meeting of the minds on what was required after 13 that meeting. Why is that?
14 MS. HARSHAW: At that meeting we didn't 15 discuss every piece of information that the Staff 16 ultimately decided the application on. They did in 17 that meeting discuss that they would like to see more 18 letters of intent, and that is why we submitted the 19 customer communications. We didn't --we've told them 20 all along that we didn't -- it would impractical to 21 obtain letters of intent. We told them we would 22 provide what we could provide.
23 JUDGE HAWKENS: You are fully aware, 24 though, the burden was on the Companies to satisfy the 25 regulatory standard for financial qualifications.
GFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G~AL USE ONLY PROPR~ETARY ~NFORMAT~ON 53 1 MS. HARSHAW: We are, and we believe that 2 the totality of the information that we have submitted 3 meets that burden.
4 JUDGE HAWKENS: All right. Let me move 5 questions to allegedly new evidence in the record. In 6 your concluding statement of position you say that the 7 Staff's objection to information that was not included 8 in the application or the RAI responses is incorrect 9 as a matter of law, and as a matter of reasonable 10 process.
11 Now on page 7 of your statement of areas 12 of controversy, you said the Companies, "submit that 13 upon license transfer as described in the application 14 and the Companies' responses to the NRC Staff's RAis, 15 there will be sufficient funding to conduct activities 16 authorized by the license." That certainly suggests 17 that you were relying exclusively on material you 18 submitted to the Staff when they were considering the 19 application.
20 MS. HARSHAW: Generally, when you submit an 21 application to the Staff, it's a summary of the 22 information that you rely on. You don't necessarily 23 submit every single piece of paper, calculation. You 24 summarize your basis in the application, and that's 25 what we did in this case. Now we've provided OFF~CIAL USE ONLY PROPRIETARY INFOR~~T~ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
PROPRIETARY INFORMAT!~ 54 1 additional explanation for information in our 2 testimony.
3 JUDGE HAWKENS: When the Commission 4 referred this case to the ASLBP it said that the case 5 focuses on "whether the Staff appropriately 6 interpreted our regulations and applied them correctly 7 to the undisputed facts common to the two 8 proceedings." And this Board guided by the 9 Commission's order, and also guided by the Companies' 10 statement of areas of controversy said on page 2 of 11 its May 22nd order that this adjudication, "will focus 12 on whether the Staff appropriately interpreted the 13 regulations and applied them correctly to the record 14 facts." Does that suggest to you that we should just 15 consider facts that were submitted to the Staff at the 16 time the application was considered? And, if not, why 17 not?
18 MS. HARSHAW: Your Honor, I interpret that 19 to be the Commission is going to make a decision on 20 the record facts that we develop during this hearing.
21 If you intended that it be the information submitted 22 on the docket by January 23rd when we submitted our 23 last piece of information, I would have expected the 24 Commission's order to say information on January 23rd 25 that was submitted by the Applicants. And I interpret OFFICI:ZI.. L USE ONLY PROPRIETARY INFORMP..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE ONLY PROPRIETARY INFOR~.TION 55 1 the Commission's decision to talk about the facts 2 common to -- when they're talking about the facts 3 common to the two proceedings, they're talking about 4 the foreign ownership issues. The facts that we're 5 talking about here are not common to the two 6 proceedings.
7 JUDGE HAWKENS: Can you conceive of a case 8 where there's so much new material information 9 submitted at the adjudicative level where it would 10 make good sense to simply remand the NRC Staff 11 directing them to consider an application -- a new de 12 novo in light of the new evidence?
13 MS. HARSHAW: I'm not familiar with a case 14 like that. I certainly think that if the Staff wants 15 to review a particular condition on a particular piece 16 of information, such as the model, that they can have 17 a license condition that says we want to review your 18 model. I don't believe that in this case it's 19 warranted because that information is we have a 20 commitment that we're not going to start the reactor 21 unless it's operational, so I don't see that it's 22 warranted to remand the --
23 JUDGE HAWKENS: In your rebuttal statement 24 you take the position the NRC Staff acted improperly 25 in submitting new information in the hearing in the OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETAR¥ INFOR~~TIGN 56 1 form of new challenges to the Companies' application.
2 It seems a little bit to me that's the pot calling the 3 kettle black.
4 MS. HARSHAW: The Staff did not in the SER 5 state that they were denying the application on the 6 basis of there not being enough fuel, or us having to 7 purchase new fuel. We told them we didn't believe we 8 had to purchase new fuel. We told them we weren't 9 going to go through with the transaction if we needed 10 new fuel, so it was reasonable for us to rely on the 11 fact that we believed the Staff was accepting our 12 commitment that we weren't going to go through with 13 the transaction where the reactor was not operational.
14 JUDGE HAWKENS: But if new information came 15 to light where it was conclusive that you could not 16 start up and become operational, wouldn't it be 17 appropriate for the Staff to submit that into the 18 record so the Commission could make a final decision 19 based on all the information?
20 MS. HARSHAW: Likely, if we had concluded 21 that, we would have notified the Staff that we're 22 withdrawing our application, because we would not go 23 through with the transactions. It's in neither side's 24 interest, neither Nuclear Labyrinth or Aerotest to go 25 through with a transaction where the reactor is not OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMz.I~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF!C!AL USE QNLY PRQPR!ETARY INFQRMAT!QN 57 1 operational.
2 JUDGE HAWKENS: So, I understand your 3 answer to my question was yes?
4 MS. HARSHAW: Yes.
5 JUDGE HAWKENS: Okay. In your briefs you 6 chided the Staff several times for not suggesting 7 license conditions. I was wondering if a company has 8 ever suggested licensing conditions?
9 MS. HARSHAW: We did not suggest license 10 conditions, but we did suggest providing certain 11 information that would have been amenable to a license 12 condition.
13 JUDGE HAWKENS: And what were those 14 suggestions?
15 MS. HARSHAW: Well, first, that we wouldn't 16 start the reactor -- we wouldn't go through with the 17 transfer if the facility was not operational. We've 18 also provided information on we would provide a 19 schedule for getting purchase orders or funding, that 20 sort of thing.
21 JUDGE HAWKENS: In retrospect, do you think 22 it would have been -- you would have better advised to 23 have explicitly suggested those licensing conditions?
24 MS. HARSHAW: It would have been helpful if 25 both sides had been discussing licensing conditions.
QFF!C!AL USE ONLY PRQPR!ETARY !NFOR~~T!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONLY PROPRIETARY INFOR~~TION 58 1 JUDGE HAWKENS: I take that a yes, also.
2 MS. HARSHAW: Yes.
3 JUDGE HAWKENS: All right. That's all I 4 have. Thank you.
5 MS. HARSHAW: Thank you.
6 JUDGE HAWKENS: I'd like to hear now from 7 the Staff.
8 MS. GHOSH: Good morning, Your Honor.
9 JUDGE HAWKENS: Good morning.
10 MS. GHOSH: My name is Anita Ghosh, and I 11 represent the NRC Staff. The purpose of this 12 proceeding has been clearly explained by both you and 13 the Commission. The purpose is to determine whether 14 the Staff appropriately interpreted the Commission's 15 regulations, and applied them correctly to the record 16 facts in its denial of the Companies' license transfer 17 application.
18 As set forth by your May 2014 order, there 19 are two litigable areas of controversy in this 20 proceeding. First, whether the Staff correctly 21 concluded that the Companies failed to demonstrate 22 that they have, or with reasonable assurance will have 23 sufficient funding to conduct activities authorized by 24 the license if the license is indirectly transferred.
25 And, second, whether the Staff correctly concluded OFFIGIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 59 1 that the Companies failed to demonstrate that there 2 will be sufficient funds to cover the annual cost of 3 spent fuel storage until the Department of Energy 4 accepts the spent fuel. Therefore, at issue here are 5 the legal and factual conclusions stated by the Staff 6 expressly or by a logical inference for denying the 7 application and the reasons relied on by the Staff in 8 support of those conclusions.
9 The appropriateness of the Staff's denial 10 is determined based on the information that the 11 Companies provided at the time of the denial. In their 12 initial rebuttal, statements of position, and 13 testimony the Companies introduced new information 14 that was not submitted when the Staff denied the 15 license transfer application on July 24th, 2013. This 16 new information is essentially a supplement to the 17 denied application and should not be considered in 18 this proceeding because it was neither submitted to 19 the Staff, nor relied on by the Staff in making its 20 legal and factual conclusions in denying the 21 Companies' application.
22 As the Staff's witnesses have testified 23 and will discuss in further detail today, the Staff 24 reviewed the Companies' application, asked three sets 25 of Requests for Additional Information, and held a OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G!AL USE QNL¥ PRQPR!ETAR¥ !NFORMAT!QN 60 1 public meeting to insure that the Companies understood 2 the financial qualifications requirements for approval 3 of their application. However, in evaluating the 4 Companies' application, the Staff determined that the 5 Companies did not meet the financial qualifications 6 requirements.
7 The fundamental purpose of the 8 Commission's financial qualifications requirement is 9 the protection of public health and safety, and the 10 common defense and security. The Staff's legal 11 pleadings misstated a portion of the LES case in 12 stating that "an Applicant must demonstrate that it is 13 extremely unlikely that there will be under-funding 14 that will lead to a health, safety, or common defense 15 or security risk. To clarify, this is not the 16 Applicant's burden, and the Staff in its review did 17 not require the Companies to demonstrate this in their 18 license transfer application."
19 Instead, the Staff reviewed the Companies' 20 application in accordance with the Commission's Part 21 50 financial qualifications requirements and the 22 applicable guidance in NUREG-1537. Under 10 CFR 23 Section 50.33(f) (2), Applicants must submit 24 information that demonstrates that the Applicant 25 possesses or has reasonable assurance of obtaining the QFF!G!AL USE QNL¥ PRQPR!ETAR¥ !NFQR~~T!QN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFIGIAL YSE QNL¥ - PRQPRIE~AR¥ INFQ~QN 61 1 funds necessary to cover estimated operation costs for 2 the period of the license.
3 Further, Applicants must submit estimates 4 for total annual operating costs for each of the first 5 five years of operation of the facility and sources of 6 funds to cover these costs.
7 The Commission has stated that simply the 8 submission of five-year costs and revenue projections 9 is not sufficient. Whether these projections are 10 reasonable is always under question under Section 11 50.33 (f) (2) . Reasonable level of projections must be 12 based on plausible assumptions and forecasts, and not 13 rely on assumptions seriously at odds with governing 14 realities or involve relevant uncertainties 15 significantly greater than those that usually cloud 16 business outlooks.
17 The Commission may also request additional 18 and more detailed financial information regarding the 19 Applicant's ability to continue to conduct the 20 activities authorized by the license. This authority 21 to request additional financial information applies 22 with even greater force to Applicants that are newly 23 formed entities, such as Nuclear Labyrinth.
24 In contrast to other license transfer 25 applications, the Companies' application was unique in QFFIGIAL YSE QNL¥ PRQPRIETAR¥ INFQR~~TIQN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!GIAL USE GNLY PRGPR!ETARY !NFGR~~T!GN 62 1 that it involved a newly formed entity, a shutdown 2 reactor, uncertainty regarding whether prior customers 3 would return, uncertainty regarding operability of the 4 reactor in light of damaged fuel, and insufficient 5 funds to cover annual spent fuel storage costs until 6 2055.
7 Based on these facts, the Staff could not 8 conclude that the Companies demonstrated that they 9 possessed or have reasonable assurance of obtaining 10 the funds necessary to cover estimated operation costs 11 for the period of the license. Therefore, the Staff 12 acted reasonably in denying the Companies 1 license 13 transfer application.
14 Contrary to the Companies 1 assertions, the 15 Staff requested and considered both committed and 16 potential sources of funds. The Companies argue that 17 their historical revenue data was reasonable, and that 18 the Staff completely disregarded this information.
19 While the Staff did consider historical data, it also 20 considered Aerotest 1 s more recent performance 21 information which indicated uncertainty regarding 22 whether previous customers would, in fact, return.
23 For example, the Companies only provided 24 written statements from two customers to support their 25 assertion that previous customers were interested in GFFIGLn..L USE GNLY PRGPRIETARY INFGRMZ'..TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~W!G~~ YSE GNLY PRGPR!E~ARY INFGRMA~GN 63 1 returning even after the reactor was shutdown in 2010.
2 The application also indicated uncertainty 3 about when and if the facility would resume operations 4 in light of recently discovered damaged fuel. Given 5 these uncertainties, the Staff determined that relying 6 on historical data alone as a basis for future revenue 7 projections was not reasonable.
8 The Companies assert that the issue of 9 uncertainty regarding operability of the reactor in 10 light of damaged fuel is an inappropriate attempt by 11 the Staff to provide post-hoc rationalization for 12 denying the license transfer. In support of this 13 argument in their concluding statement of position the 14 Companies point to the Staff's response to the 15 Companies areas of controversy where the Staff 16 indicated in a footnote that the damaged fuel was not 17 the reason for the denial; that the Staff has an 18 ongoing obligation to protect the health and safety of 19 the public.
20 To clarify, the Staff's concerns regarding 21 the damaged fuel were, indeed, part of the Staff's 22 basis for denying the license transfer, and are not 23 post-hoc rationalizations. As the Staff's witnesses 24 have testified and will discuss again today, their 25 concerns about the damaged fuel existed at the time of GFFIGIA~ USE GNLY PRGPRIE~ARY INFGRMA~IGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFOR~~TION 64 1 the denial. They're noted in multiple RAis, form the 2 basis of their conclusions, and is documented in their 3 safety evaluation.
4 The Companies provided minimal information 5 in their application regarding how the damaged fuel 6 would affect operability of the reactor in their cost 7 and revenue projections. However, as part of this 8 proceeding, the Companies have attempted to supplement 9 their application with testimony and exhibits 10 containing new information regarding these issues. The 11 Staff did not have this new information to consider 12 when it was reviewing the Companies' application.
13 Therefore, it is not relevant to the reasonableness of 14 the Staff's denial, and should not be considered.
15 Moreover, as Staff witness, Mr. Alexander 16 Adams, has testified and will discuss again today, 17 even with this new information there is still 18 uncertainty regarding operability of the reactor. Mr.
19 Adams will also clarify that some of the assumptions 20 that he made in his written testimony have been 21 modified after reading the new information in Dr.
22 Slaughter's rebuttal testimony.
23 Finally, in its review of the Companies' 24 application the Staff also evaluated the cost of spent 25 fuel storage in part because the Companies proposed OFFICIAL USE ONLY PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE GNLY PROPRIETARY INFOR~~T~N 65 1 premature shutdown of the reactor as a possible 2 alternative in the event that sources of funding were 3 not realized. This raised an additional concern 4 because the Companies indicated that funds to cover 5 the cost of spent fuel storage would be collected 6 annually from fees from customers. Thus, if the 7 Companies prematurely shut down because they are 8 unable to obtain sufficient revenue and exhaust their 9 committed funds after the end of the first year, the 10 Companies would still be liable for approximately an 11 additional $4 million in spent fuel storage costs 12 until 2055, and would not have accumulated sufficient 13 funding to cover these costs. Therefore, the Companies 14 could potentially experience a large liability, no 15 funds with which to pay it. This would be a 16 significant health and safety issue for the public.
17 The Companies stated in their application 18 that the spent fuel would not be accepted by the DOE 19 until at least 2055. The Staff relied on this date of 20 2055 in its safety evaluation. The 2021 proposed end 21 date for Aerotest spent fuel storage obligation is new 22 information that was not before the Staff at the time 23 of its decision and should not be considered.
24 Based on all of the information the 25 Companies provided at the time of the Staff's denial, OFFICIAL USE ONLY PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFIGIAL USE ONLY PRGPRIE~ARY INFQR~~~IQN 66 1 the Staff reasonably concluded that, one, the 2 Companies did not demonstrate that they have or with 3 reasonable assurance will have sufficient funding to 4 conduct activities authorized by the license if the 5 license is indirectly transferred. And, two, the 6 Companies did not demonstrate that there will be 7 sufficient funds to cover the annual cost of spent 8 fuel storage until the Department of Energy accepts 9 the spent fuel.
10 The evidence presented today by the 11 Staff's witnesses and in their written testimony will 12 demonstrate, and does demonstrate that the Staff's 13 denial of the Companies' application should be upheld.
14 Thank you.
15 JUDGE HAWKENS: Thank you. I have a few 16 questions for you, as well.
17 My first one I think you addressed in your 18 opening statement, but it goes to what the -- how you 19 respond to the Companies' assertion that you're 20 improperly advancing post-hoc rationalizations in 21 support of the Agency's decision?
22 MS. GHOSH: In terms of the damaged fuel I 23 think that was their argument. As I stated, this was 24 misstated in our footnote in the areas of controversy.
25 The damaged fuel was part of the Staff's basis. It GFFIGIAL USE QNLY PRQPRIE~RY INFGRW~~IQN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONLY PROPRIETARY INFORMATION 67 1 wasn't the only reason, and it wasn't the primary 2 basis, but it was part of the basis. It was in the 3 Staff's safety evaluation, and it was noted throughout 4 their RAis.
5 JUDGE HAWKENS: It's your position it was 6 not a post-hoc rationalization.
7 MS. GHOSH: That's correct.
8 JUDGE HAWKENS: You argue that Staff's 9 decision should be evaluated based solely on the 10 information in the application and the RAI responses 11 it reviewed. Correct?
12 MS. GHOSH: Correct.
13 JUDGE HAWKENS: Now, a lot of the 14 information which the Companies have put forward was 15 not put forward with such specificity at the Agency 16 review level, but the nuggets for the idea were 17 certainly there. To the extent the ideas were already 18 submitted by the Companies and considered by the 19 Staff, is there any principle that bars them now from 20 just submitting information that supplements and 21 expands those ideas?
22 MS. GHOSH: I think that if they're 23 explaining something that was already in their 24 application or RAI, that would be acceptable. But to 25 the extent that they're introducing new evaluations, OFFICIAL YSE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFICIAL USE QNLY PRQPRIETARY INFQRMATIQN 68 1 new information, new details that was not provided, 2 the Staff's concern, essentially, with the damaged 3 fuel was the uncertainty regarding operability of the 4 reactor. And as the Staff's witnesses will explain 5 later, the term "operability" appears to be different, 6 the Staff seems to have a different definition of what 7 operability means. So, the fuel evaluations, that's 8 completely new information that the Staff would have 9 to evaluate during the course of their evaluation.
10 That would seem to me to be a supplement. And 11 throughout the Staff's process of reviewing an 12 application, there is a process there where if the 13 Staff has questions they would ask additional RAis, 14 and that's not something that, you know that 15 process that the Staff follows doesn't really lend 16 itself to proceeding where they're trying to 17 essentially supplement their application.
18 JUDGE HAWKENS: Well, it does appear that 19 there is new and material information that arose after 20 the Staff made its decision. It could be argued that 21 perhaps the Staff should have deferred making a 22 decision until Dr. Slaughter concluded his 23 examination. Did the Staff ever give any consideration 24 to that?
25 MS. GHOSH: The Staff did consider that QFFICIAL USE QNLY PRQPRIETARY INFQR~aiGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIG~L USE ONL¥ - PROPRIE~AR¥ INFORMA~ION 69 1 but, again, the damaged fuel is only one part of their 2 denial. The primary reasons were that under the 3 regulations the Companies did not meet the (f) (2) 4 standards requiring submission of five-year cost and 5 revenue projections.
6 JUDGE HAWKENS: Right. But again, when you 7 say the main reason, you have several independent 8 reasons.
9 MS. GHOSH: I have several.
10 JUDGE HAWKENS: And one of them goes to the 11 damaged fuel because that goes to successful startup, 12 and successful ability to operate.
13 MS. GHOSH: That's correct.
14 JUDGE HAWKENS: So, I'll go back to that 15 question. Why did you not suggest that you defer a 16 final decision until Dr. Slaughter had finished the 17 examination of the fuel and the core?
18 MS. GHOSH: Even with those evaluations the 19 Staff would have denied the license transfer based on 20 the other reasons.
21 JUDGE HAWKENS: Does the Staff typically 22 use license conditions for license transfer 23 applications?
24 MS. GHOSH: The Staff has my 25 understanding that they have before. The LES OFFICIAL USE ONL¥ PROPRIE~AR¥ INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFORMATION 70 1 proceeding, I think that was a Part 70 case, and that 2 was a materials uranium enrichment facility. I think 3 the underlying concern with license conditions in this 4 case is that Nuclear Labyrinth and the Companies 5 essentially were not able to provide sufficient 6 demonstration of meeting the (f) ( 2) requirements, the 7 reasonable five-year cost and revenue projections. A 8 license condition must be verified through a 9 ministerial act, and not through like some sort of 10 substantial evaluation. And their demonstration of 11 sources of funds was you would need like a 12 carefully drawn license condition, but even with that 13 it would be difficult to come up with a license 14 condition there would just be too much for the 15 Staff to verify to have a viable license condition.
16 Usually, it's some sort of contract that-- there's a 17 draft contract, and then the Staff could just easily 18 look at the contract and say okay, this is the final 19 contract that has gone through.
20 JUDGE HAWKENS: I think I heard Ms. Harshaw 21 indicate, though, that there was never any time where 22 the Staff and the Companies sat down to discuss the 23 possibility of licensing conditions. Is that correct?
24 MS. GHOSH: That is correct.
25 JUDGE HAWKENS: I'll also ask this of your OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
Q~~ICIAL USE GNLY PRGPRIETARY IN~OR~~TION 71 1 witness, but let me ask this to you. The ability to 2 provide -- demonstrate revenue to successfully operate 3 for five years, and then there's the ability to have 4 sufficient revenues to maintain spent fuel until the 5 spent fuel is taken by Department of Energy. As to the 6 latter, as to both, but especially as to the latter, 7 that would require a successful startup and a 8 demonstration of successful ability to operate.
9 Now, when I ask about the possibility of 10 licensing conditions you went principally to the 11 their inability, in your view, to be able to 12 demonstrate a sufficient customer base to show that 13 they could satisfy five years of successful operation 14 at the outset. My question is, though, would it be 15 possible, perhaps, to have constructed a condition 16 that condition license transfer on the outcome of an 17 independent assessment by the Staff on whether the 18 licensee would be able to safely operate, and the 19 length of time for which you will have sufficient fuel 20 to operate, and that would be based on an evaluation, 21 an independent evaluation coupled with an evaluation 22 of Dr. Slaughter's analysis. And that, to me, possibly 23 could satisfy your concern that there must be a 24 ministerial act to confirm that the condition will be 25 satisfied.
O~~ICIAL USE ONLY PROPRIETARY IN~ORMl'~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!G+/-AL USE GNLY 1 MS. GHOSH: To clarify, I'm not sure if it 2 would be a ministerial act to review the evaluations.
3 I think there would be some sort of substantive review 4 of that, but I might be misunderstanding your 5 question.
6 JUDGE HAWKENS: Okay. Maybe, perhaps I 7 should pose it to Mr. Adams?
8 MS. GHOSH: Perhaps. I think so, yes.
9 JUDGE HAWKENS: All right. I have no 10 further questions for you. Thank you.
11 MS. GHOSH: Thank you.
12 JUDGE HAWKENS: Let's proceed to examine 13 the witnesses. Would counsel for both sides please 14 introduce their witnesses, starting with the 15 Companies.
16 MS. HARSHAW: I'd like to introduce Mr.
17 Michael Anderson. He is the President of Aerotest and 18 the Vice President and General Counsel of Autoliv.
19 JUDGE HAWKENS: Good morning, Mr. Anderson.
20 MS. HARSHAW: and I have Dr. Slaughter. He 21 is the President of Nuclear Labyrinth, and a research 22 professor at the University of Washington.
23 JUDGE HAWKENS: Good morning, Dr.
24 Slaughter.
25 MS. HARSHAW: Washington State.
GFF!G!AL USE GNLY PRGPR!ETARY !NFGRMAT!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF+/-CIAL USE GNLY PRGPRIETARY INFGRMATIGN 73 1 JUDGE HAWKENS: Thank you both for 2 traveling to join us today. NRC Staff?
3 MS. GHOSH: I'd like to introduce Anneliese 4 Sirrunons and Jocelyn Lian. They were the primary 5 reviewers of the safety evaluation and the Companies' 6 application.
7 JUDGE HAWKENS: Good morning, and welcome.
8 MS. GHOSH: I'd also like to introduce 9 Alexander Adams, and he is the Branch Chief of the RTR 10 Branch.
11 JUDGE HAWKENS: Thank you for being here, 12 Mr. Adams. Good morning.
13 For convenience and because it may be 14 necessary while I'm asking questions of a particular 15 witness, I may want to ask questions of witnesses who 16 are not on the stand, let's swear in all the witnesses 17 at once. So, if everybody would please stand and raise 18 their right hand.
19 Do you solemnly swear or affirm that the 20 statements you make in today's hearing will be true 21 and correct to the best of your knowledge and belief?
22 Thank you. The record will reflect that 23 each witnesses responded in the affirmative.
24 We're examining the Companies' witnesses 25 first, starting with Mr. Anderson.
GFFICIAL USE GNLY PRGPRIETARY INFGRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFICIAL USE QNL¥ PRQPRIETAR¥ INFGRMATIQN 74 1 MR. ANDERSON: Good morning.
2 JUDGE HAWKENS: Good morning. Are you 3 ready, sir?
4 MR. ANDERSON: I'm ready.
5 JUDGE HAWKENS: All right. Please when you 6 answer the question, speak into the mic to assist the 7 court reporter.
8 MR. ANDERSON: All right.
9 JUDGE HAWKENS: And Mr. Anderson, as well 10 as to the rest of the witnesses, many of the 11 questions, perhaps most of them are framed so they can 12 be answered yes or no, so if you listen carefully, if 13 they can be answered yes or no, that would be 14 sufficient. If I have additional follow-up, I'll ask 15 you for additional information, or if you feel that 16 it's critical that you put additional information on 17 the record, please let me know. But keep in mind that 18 we have the benefit of your initial testimony and your 19 rebuttal testimony with numerous pleadings and 20 exhibits, so there's quite a bit of evidence available 21 to the Commission, so these questions have been 22 tailored to fill in the gaps.
23 MR. ANDERSON: Okay.
24 JUDGE HAWKENS: Thank you. Aerotest Reactor 25 was shutdown in the fall of 2010. Is that correct?
QFFICIAL USE GNL¥ PRQPRIETAR¥ INFGRM1~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF!G~L USE ONLY PROPRIE~ARY !NFOR~~~ION 75 1 MR. ANDERSON: That's correct.
2 JUDGE HAWKENS: And when the application 3 for this transaction was submitted in 2012, the 4 reactor was shut down for about two years and it was 5 uncertain when it would return to service. Is that 6 correct?
7 MR. ANDERSON: That's correct.
8 JUDGE HAWKENS: The application was denied 9 in July of 2013. Correct?
10 MR. ANDERSON: (No audible response).
11 JUDGE HAWKENS: And at the time of the 12 denial it was still uncertain when the reactor could 13 return to service, in part because of the damaged 14 fuel. Is that correct?
15 MR. ANDERSON: I believe that's correct.
16 JUDGE HAWKENS: The application reported 17 18 Is that correct?
19 MR. ANDERSON: Yes.
20 JUDGE HAWKENS: How did your-- how did the 21 information in the application and the RAI responses 22 indicate with specificity the prior customers' intent 23 or ability to resume business transactions with 24 Aerotest?
25 MR. ANDERSON: Well, we attempted to OFFIGIAL USE ONLY PROPRIE~ARY INFORMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
PROPRIETARY INFORMATION 76 1 solicit from customers, from prior customers 2 indications that they would consider returning to 3 Aerotest. We had transmitted a letter indicating that 4 the company could no longer provide services, and in 5 response we received a number of what we believed were 6 indications that prior customers would consider 7 returning if the reactor was in a position to restart.
8 JUDGE HAWKENS: Your direct testimony 9 provides a list of Aerotest's top customers in terms 10 of revenue over the 2003-2000 time frame, and the 11 ranges of revenues for that period. Is that correct?
12 MR. ANDERSON: That's correct.
13 JUDGE HAWKENS: This information was not 14 before the Staff when it made its decision on the 15 Companies' license transfer application. Is that 16 correct?
17 MR. ANDERSON: I don't recall.
18 JUDGE HAWKENS: Did you have access to this 19 information when the license transfer application was 20 submitted in 2012?
21 MR. ANDERSON: We would have had access, 22 yes.
23 JUDGE HAWKENS: Assuming this precise 24 information was not in the application or the RAI 25 responses, what would the reason for that be?
PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGI&k USE ONLY PROPRIETARY INFOR~~~ON 77 1 MR. ANDERSON: I don't know.
2 JUDGE HAWKENS: Your direct testimony 3 states you believe the top past customers would return 4 to Aerotest because they verbally indicated to 5 employees at Aerotest a desire to purchase testing 6 services from Aerotest. Is that correct?
7 MR. ANDERSON: In part, yes.
8 JUDGE HAWKENS: Please explain why the 9 Companies, if that's the case, provided only two 10 letters from previous customers to the Staff when it 11 conducted its initial evaluation.
12 MR. ANDERSON: I believe we provided 26. I 13 think the Staff reviewed the 2 6 and felt that only two 14 of those 26 indicated to them that there was a desire 15 or would be a consideration of returning to Aerotest.
16 We disagree with that, but I believe that's the 17 sequence of events.
18 JUDGE HAWKENS: Did the Companies ask other 19 previous customers of Aerotest to submit similar 20 letters?
21 MR. ANDERSON: I don't know for sure.
22 JUDGE HAWKENS: In retrospect, do you think 23 that would have been a good practice?
24 MR. ANDERSON: When I say I don't know for 25 sure, I don't know that the managers of the Company OFFIGL'I.I~L USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 78 1 did or didn't. Yes, I believe that our goal, or the 2 goal at that time was try to get as much information 3 and show as much support from our customers as we 4 could receive.
5 JUDGE HAWKENS: The two letters from your 6 previous customers which the Staff took under 7 consideration indicated thei found other providers for 8 radiography services. Is that correct?
9 MR. ANDERSON: I believe that's true.
10 JUDGE HAWKENS: Do you know what type of 11 arrangements these past customers had -- currently 12 have with your competitors?
13 MR. ANDERSON: No.
14 JUDGE HAWKENS: Is it correct that Aerotest 15 did not employ long-term neutron radiography 16 contracts?
17 MR. ANDERSON: That is correct.
18 JUDGE HAWKENS: Would you characterize that 19 as a market reality in the neutron radiography 20 business?
21 MR. ANDERSON: Yes. I would characterize it 22 that it's normal that there aren't long-term 23 contracts.
24 JUDGE HAWKENS: Your direct testimony 25 states that OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
1 GFFICIAL USE ONLY PROPRIETARY INFORMATION 79 I Correct?
3 MR. ANDERSON: I believe that's correct, 4 yes.
5 JUDGE HAWKENS: Is there evidence in the 6 application or the RAI responses to support a 7 conclusion that Aerotest can provide radiography 8 services that are substantially identical to those 9 provided by other facilities at one quarter the cost?
10 MR. ANDERSON: I believe so. I mean, I 11 would have to look back at the RAI responses and the 12 application, but I believe all the source information 13 is there.
14 JUDGE HAWKENS: Okay. As we ask these 15 questions, if counsel for the Companies, if they hear 16 a response that he assumes so, if you're able to 17 identify and bring it to our attention so we can put 18 that particular comment on the record later, I'd be 19 grateful.
20 25 MR. ANDERSON: I can't say, specifically.
- -------- OFFICIAL USE ONLY PROPRIETARY INFO~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF~G+/-AL USE ONL¥ PROPR~E~AR¥ ~NFOR~.T~ON 80 1 I don't recall, specifically.
2 JUDGE HAWKENS: That's fair. That's fair.
3 Would you say as a matter of common sense it's the 4 reality of the market that price is a significant 5 driving factor with respect to customer decisions?
6 MR. ANDERSON: Yes, I would.
7 JUDGE HAWKENS: It's approaching four years 8 now since the Aerotest reactor shut down. What's the 9 basis for your position that upon restart Aerotest's 10 costs would increase and equal those of other 11 facilities to account for inflation?
12 MR. ANDERSON: Well, I -- yes, that's --
13 it's a good question, it's a fair question. 1111111
- 1111111 . . . . . . . -
- 21 JUDGE HAWKENS: Mr. Anderson, you were also 22 involved in developing the license transfer 23 application for X-Ray Industries that the NRC Staff 24 approved. Is that correct?
25 MR. ANDERSON: That's correct.
OFF~CIAL USE ONL¥ PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GF~!G*AL USE ONLY PROPRIETARY INFORMAT!ON 81 1 JUDGE HAWKENS: Is it true that in their 2 respective applications X-Ray Industries was described 3 as an established company with considerable assets, 4 whereas, Nuclear Labyrinth you described as a newly 5 formed company with minimal assets?
6 MR. ANDERSON: That's correct.
7 JUDGE HAWKENS: Is it true that X-Ray 8 Industries was described in this application as an 9 entity that could rely on a parent or affiliate for 10 funding support?
11 MR. ANDERSON: I don't recall that, 12 specifically.
13 JUDGE HAWKENS: Is it true there was no 14 assertion that Nuclear Labyrinth would rely on a 15 parent or affiliate for support?
16 MR. ANDERSON: I believe that's correct.
17 JUDGE HAWKENS: Is it true that X-Ray 18 Industries had a long record of operation, revenue, 19 and profits; whereas, Nuclear Labyrinth as a new 20 entity has no record of operation, revenue, and 21 profits?
22 MR. ANDERSON: It's correct, if I can make 23 one clarifying point, though. X-Ray Industries wasn't 24 the company that would have taken their shares of 25 Aerotest stock. It was a newly formed entity that they OFFICIAL USE ONLY PROPRIETARY INFORMl.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
Q~~ICIAL USE QNLY PRQPRIETARY IN~QRMATIQN 82 1 created.
2 JUDGE HAWKENS: All right, thank you. Is it 3 true that to meet its predicted costs, Nuclear 4 Labyrinth would be dependent on revenue that in turn 5 was contingent on the Aerotest reactor being returned 6 to service in the future?
7 MR. ANDERSON: I believe that's correct.
8 JUDGE HAWKENS: The X-Ray Industries 9 license transaction was predicated, in part, on X-Ray 10 Industries obtaining a commitment by the Department of 11 Defense to provide for interim storage of the 12 reactor's spent fuel upon cessation of operations. Is 13 that correct?
14 MR. ANDERSON: It's almost correct. If I 15 can explain 16 JUDGE HAWKENS: Please, do.
17 MR. ANDERSON: The purchase agreement gave 18 X-Ray Industries kind of an out at the end if they 19 weren't satisfied with the transaction. The Department 20 of Defense interim storage issue wasn't a specific 21 contingency in the agreement, but it was a significant 22 issue that arose at the end of the transaction. It was 23 a significant issue to X-Ray Industries.
24 JUDGE HAWKENS: And with the Nuclear 25 Labyrinth license transfer application, Aerotest and Q~~ICIAL USE QNLY PRGPRIETARY IN~QRMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGIAL USE ONLY PROPRIETARY INFORMATION 83 1 Nuclear Labyrinth would be responsible for interim 2 storage costs of spent fuel. Is that correct?
3 MR. ANDERSON: Correct.
4 JUDGE HAWKENS: Does the Nuclear Labyrinth 5 license transfer application provide that DOE would 6 take the fuel in 2055?
7 MR. ANDERSON: I know the 2055 date has 8 been spoken about several times. I don't think anyone 9 has a lot of confidence in that date. It could be 10 earlier, it could be later. The date, I believe, 11 appears in the application.
12 MR. SILBERG: Excuse me, Your Honor. Do you 13 want us to interrupt where we can point out 14 information in the record, or do that at the end of 15 questioning?
16 JUDGE HAWKENS: I'd prefer you doing it at 17 the end of the questioning unless you think it's 18 essential to make it clear for whoever is reviewing 19 the transcript, so I'll leave that to your judgment.
20 Mr. Anderson, at the time this application 21 was being considered to your knowledge had DOE ever 22 committed to taking the fuel before 2055?
23 MR. ANDERSON: Not to my knowledge.
24 JUDGE HAWKENS: In the event of a premature 25 shutdown of the Aerotest reactor, what alternatives do OFFIGIAL USE ONLY PROPRIETARY INFGR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF~G~A~ USE ON~Y PROPR~ETARY ~NFORMAT~ON 84 1 the Companies have to safely manage spent fuel?
2 MR. ANDERSON: Well, I think that depends 3 on how premature shutdown is defined. If the operator 4 I'm sorry, if the reactor has been operating for a 5 period of time, the fund that Nuclear Labyrinth has 6 indicated that they're going to create for fuel 7 storage will be funded. If the reactor shut down the 8 day after the transaction closed, I think then they're 9 in a different situation.
10 JUDGE HAWKENS: And can you describe that 11 situation, please?
12 MR. ANDERSON: Well, then I think funding 13 becomes an issue.
14 JUDGE HAWKENS: And given that funding 15 would be an issue, how would Aerotest insure the 16 safety, public safety and health, again, in the 17 example that you came up with, in a year after the 18 transfer was effected, how would they manage the spent 19 fuel until say 2055 when Department of Energy accepted 20 it?
21 MR. ANDERSON: Yes, I don't have an answer 22 for that. We entered this transaction believing that 23 that was a possibility. I mean, I think the parties to 24 the transaction believe that the business will be a 25 going concern for the life of the license. And if we OFF~C~A~ USE ON~Y PROPR~ETARY ~NFOR~.T~ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
Q~F!G!AL USE QNL¥ PRQPR!ETAR¥ !NFGRM.'l\,.!l'!QN 85 1 didn't think that that was how it was going to work 2 out, I don't think any of us would have entered into 3 it in the first place.
4 JUDGE HAWKENS: In your direct testimony 5 you stated the license transfer was contingent, among 6 other things, on Nuclear Labyrinth completing an 7 investigation of the reactor fuel core to confirm to 8 its reasonable satisfaction it can sustain operational 9 power. Is it correct that Nuclear Labyrinth had not 10 completed its investigation during the time in which 11 the Staff was considering the license transfer 12 application?
13 MR. ANDERSON: That is true.
14 JUDGE HAWKENS: Did you ever consider 15 requesting the Staff to defer its decision pending the 16 completion of Nuclear Labyrinth's investigation?
17 MR. ANDERSON: I did not.
18 JUDGE HAWKENS: Given that the 19 investigation was not complete at the time the Staff 20 denied the application, what basis was there for the 21 Staff to have concluded that the core as presented in 22 the license transfer application was able to operate?
23 MR. ANDERSON: Well, I think at that point 24 the evidence was that it had been in operation I guess 25 two years before.
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OFFICIAL USE ONL¥ - PROPRIETAR¥ INF~RMATION 86 1 JUDGE HAWKENS: Any other information, to 2 your knowledge --
3 MR. ANDERSON: Not that --
4 JUDGE HAWKENS: that would provide them 5 with reasonable assurance that the reactor would 6 operate, and operate safely?
7 MR. ANDERSON: Other than that, not that I 8 can -- I think that --
9 JUDGE HAWKENS: Dr. Slaughter represented 10 in the application and information submitted incident 11 to it that the transaction would not go forward unless 12 it were concluded that the reactor was operational.
13 MR. ANDERSON: Correct.
14 JUDGE HAWKENS: Could that have been a 15 basis on which the Staff could have taken into 16 consideration in making its conclusion?
17 MR. ANDERSON: Could have been, yes.
18 JUDGE HAWKENS: Mr. Anderson, did you ever 19 consider at any time during this process suggesting a 20 licensing condition?
21 MR. ANDERSON: No, not specifically. We 22 have a number of times tried to determine if there was 23 a way between the NRC and ourselves we could come to 24 an agreement, we could satisfy the issues that they 25 had, and somehow get the process moving forward.
OFFICI..'li...L USE ONL¥ - PROPRIETAR¥ INFORMA.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION 87 1 JUDGE HAWKENS: Okay. That concludes my 2 questions for you at this time. Anything further you'd 3 like to say to supplement or clarify any of your 4 responses, Mr. Anderson?
5 MR. ANDERSON: I don't believe so.
6 JUDGE HAWKENS: At this point, counsel, is 7 there anything you'd like to say to clarify or 8 supplement his responses?
9 MS. HARSHAW: Yes, I think a lot of the 10 questions that you were asking Mr. Anderson are more 11 appropriate to ask Dr. Slaughter, and I'm sure you 12 intend to do so with respect to when the fuel analyses 13 were complete, and the basis for operability of the 14 reactor.
15 JUDGE HAWKENS: All right. Thank you, Mr.
16 Anderson. You may step down.
17 MR. ANDERSON: Thank you.
18 JUDGE HAWKENS: And if Dr. Slaughter would 19 step forward, I'd be grateful. Thank you. A reminder, 20 please speak into the mic for the benefit of the court 21 reporter. And a reminder as well that the questions 22 are tailored specifically to elicit in many cases yes 23 or no answers. And if you would answer with a yes or 24 no, unless you're asked to supplement, or unless you 25 feel it's critical to supplement, I'd be grateful.
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OFFIGIA~ USE ON~Y PROPR~~ARY INFOR~.TION 88 1 DR. SLAUGHTER: Yes, Your Honor.
2 JUDGE HAWKENS: Dr. Slaughter, the 3 Companies state that you have decades of familiarity 4 with the research reactor business.
5 DR. SLAUGHTER: Yes.
6 JUDGE HAWKENS: Have you ever successfully 7 operated a research reactor at profit?
8 DR. SLAUGHTER: No.
9 JUDGE HAWKENS: Your direct testimony 10 provides the cost estimates for the first five years 11 of operating expenses and sources of revenue to cover 12 those expenses.
13 DR. SLAUGHTER: Yes.
14 JUDGE HAWKENS: Do you have special 15 qualifications for providing those estimates?
16 DR. SLAUGHTER: Yes.
17 JUDGE HAWKENS: Can you describe them, 18 please?
19 DR. SLAUGHTER: My training and while I've 20 been working in research reactors is also to 21 administer them and to manage, and to bring in 22 reimbursed costs at the University, so I have been 23 involved in market studies, ultimately with clients, 24 facilitating people that use the University reactors 25 to provide services, and those services have to be OFFIGIA~ USE ON~Y PRGPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 89 cost, have to be reimbursed so I have developed a considerable amount of knowledge on the workings and the costs associated with it, and the administrative fees that are associated with these type of reactors.
JUDGE HAWKENS: The Companies question that Staff's methodology for developing the revenue projection, and claim that yours is reasonable. Can you provide any support in either financial literature, NRC guidance documents, or business practices that support favoring one revenue prediction over the other?
DR. SLAUGHTER: Well, basically what I would end up doing is looking specifically at what the particular service, or what the reactor can and cannot do, and its breakdown. Specifically, I would also look at what the clients need and focus on the requirements, and it could include cost, it could include the fact of timing and quality, all of those.
Then the third is looking at can the reactor provide that those particular issue, or in combination of those. So, I think the idea of these type of fundamentally economic and related to commercial businesses. While universities do not -- are non-profit, in general, they also work within the business structure.
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GFFICIAL YSE QNL¥ PRGPRIE~R¥ INFQRMATIQN 90 1 Also, I'm a Vice President of Research 2 where we look at services requiring them. Ultimately, 3 we look at having services provided to us. We're 4 looking both at cost, the idea of delivering a service 5 in a timely manner in order for it to be effective in 6 the obligation or mission that we're going to. And 7 certainly the quality is of importance, so I look at 8 it from both sides, as providing service, and also 9 obtaining a service.
10 JUDGE HAWKENS: Why were your predictions 11 of revenue and costs preferred over those of the 12 Staff?
13 DR. SLAUGHTER: Well, the -- when I've 14 taken a look at the quality of the responses as far as 15 wanting -- over the years of dedicated service area 16 test, their ability to provide a service at a cost 17 that's reasonable.
24 It's more than acceptable. It is probably the best in the industry.
25 And then, ultimately, the quality. Neutron
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OFFICIAL USE ONLY PROPRIE~AR¥ INFOR~~~+/-ON 91 1 Aerotest had worked extensively in this area. They 2 are very good, if not the top, in the nation on 3 producing quality neutron radiography.
4 JUDGE HAWKENS: Did you say they were not 5 the top, or if not the top?
6 DR. SLAUGHTER: They are the top.
7 JUDGE HAWKENS: They are the top.
8 DR. SLAUGHTER: They are the top.
9 JUDGE HAWKENS: In your direct testimony 10 you provide information related to Nuclear Labyrinth's 11 plans to expand its mission to include detection and 12 interrogation of explosive materials and contraband.
13 Was this information in the license transfer 14 application, or RAI responses?
15 DR. SLAUGHTER: I believe they were in the 16 initial application, yes.
17 JUDGE HAWKENS: Your direct testimony 18 discusses damaged fuel that was found in the reactor.
19 Does the application or the RAI responses provide 20 information about costs to account for the damaged 21 fuel and the possibility of future damage to the fuel?
22 DR. SLAUGHTER: At that time, I don't 23 believe I -- I was in the middle of the assessment. I 24 did not believe based on what I had already seen that 25 there would, in fact, be a need. The financials did OFFICIAL USE ONLY PROPRIE~ARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ - PROPRIETAR¥ INFGR~~T*GN 92 1 not represent the idea of the damaged fuel and what 2 would be required to do it. It was my belief based on 3 my analysis at the time and continuing the analysis 4 that, in fact, the it would not impact the 5 financials. Any cost associated with the damaged fuel 6 would actually occur before the transfer, it would be 7 covered before the transfer occurs, before the 8 closure.
9 JUDGE HAWKENS: The application states the 10 license transfer will not close until the reactor is 11 fully operational?
12 DR. SLAUGHTER: The idea that it has 13 yes, the idea that it has sufficient fuel is 14 extremely important. Without it, there's no business.
15 JUDGE HAWKENS: Your direct testimony 16 states that whether the reactor can support commercial 17 operations won't be confirmed until after the 18 transaction is closed. Can you reconcile those two 19 statements?
20 DR. SLAUGHTER: Yes. One is determining if 21 there is sufficient fuel in -- and sufficient number 22 of elements that would be able to sustain license 23 operation. And the second one is that the transfer is 24 an operational one, that in order for the reactor to 25 go up and follow procedure it would have to -- we OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~C~AL USE GNLY PRGPR~ETARY ~NFGRMAT~QN 93 1 would have to approach to critical. And then, 2 ultimately go through the procedure of the tech spec 3 limitations, and then into service. The first is 4 dealing with do I have sufficient fuel in the 5 elements, and the second is fulfilling the obligation 6 of the NRC in bringing the reactor to critical, and 7 ultimately in its position to where it can go into 8 service.
9 JUDGE HAWKENS: Is there a chance that 10 despite your calculations after the transactions 11 closes, Aerotest and Nuclear Labyrinth will determine 12 that the reactor is not fully operational?
13 DR. SLAUGHTER: There's always a chance, 14 but it's unlikely. The fuel inventory and the 15 integrity of the cladding that is with the elements 16 are selected for continuing service, I do not believe 17 there is that chance, no.
18 JUDGE HAWKENS: But if that occurred, is it 19 correct that the Companies would be liable for all 20 costs, including fuel storage costs?
21 DR. SLAUGHTER: That is correct.
22 JUDGE HAWKENS: Can you conceive of a 23 license condition that could address that eventuality 24 perhaps to the Staff's and the Companies' 25 satisfaction? And I'm not asking you to tell me what GFF~C~AL USE GNLY
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G¥F!G!AL USE ONLY PROPR!E~ARY INFOR~~TION 94 1 it is right now, but do you think there is a 2 possible --
3 DR. SLAUGHTER: Yes, I do.
4 JUDGE HAWKENS: Did you ever suggest one?
5 DR. SLAUGHTER: No. We did have discussions 6 in which -- within the Companies what would be a type 7 of arrangements that might be useful, that would 8 proceed on if there was an impediment, that we could 9 actually come to an agreement between the NRC to go 10 forward and still be able to have both parties be 11 satisfied with their obligations.
12 JUDGE HAWKENS: The ability of the reactor 13 to operate appears to depend, in part, on the status 14 of the fuel and the appropriate core design. Would you 15 agree to that?
16 DR. SLAUGHTER: It's based on the fuel, and 17 a number of proposed fuel designs, but not necessary 18 specific to the one that I proposed.
19 JUDGE HAWKENS: Okay. But you did propose 20 a new core for them.
21 DR. SLAUGHTER: Yes.
22 JUDGE HAWKENS: Okay. Would the new core 23 design affect safety conditions in the core?
24 DR. SLAUGHTER: No. The reason why is 25 because in order for that proposed core, until the OFFIGIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ - PROPRIETAR¥ INFOR~~TION 95 1 proposed core goes through, approaches to critical, 2 and then ultimately meets the restrictions of the tech 3 spec and SAR, then it goes into service. If it does 4 not, then another proposed core. So, the question is 5 no proposed core will go out without making sure that 6 they have completed and are within the proper 7 envelope, operating envelope that is described in the 8 SAR. So, in its proposed core, for example, Aerotest 9 has 81 proposed cores that went into service, so it 10 was proposed when they started. They ultimately had to 11 insure that, in fact, it met the requirements. If they 12 didn't they would have to do whatever minor changes, 13 but throughout their history since they went critical 14 in 1964, they've had proposed 81 cores, and they have 15 placed into service those 81 cores because it met the 16 obligation. I suspect they've probably proposed a 17 number of them that did not, and could not go into 18 service.
19 JUDGE HAWKENS: How many of any of those 20 that went into service required license applications, 21 or license amendment applications?
22 DR. SLAUGHTER: None. It followed within 23 the SAR obligations following the proper procedures 24 and guidance.
25 JUDGE HAWKENS: Understand. Is the OFFICIAL USE ONL¥ PROPRIETAR¥ INFORM1.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFORMA~ION 96 1 information regarding the new core or the new core 2 design calculations in the application or the RAI 3 responses?
4 DR. SLAUGHTER: In the application or RAI 5 -- the calculations? No, they were --
6 JUDGE HAWKENS: They are not. Did you ever 7 consider suggesting to counsel that they defer, asking 8 the Staff to defer the determination on the license 9 application until those calculations were completed?
10 DR. SLAUGHTER: No, because my belief was 11 -- no, I did not. My belief was that we had indicated 12 that we were not interested unless we had satisfied 13 ourselves. The transaction would not go forward unless 14 I was satisfied that I actually had sufficient fuel, 15 uranium-235 loading, as well in acceptable packaging 16 and cladding, so I did not. No.
17 JUDGE HAWKENS: Your direct testimony gave 18 four reasons why you believe former customers will 19 return to the Aerotest reactor, and new customers will 20 come.
21 DR. SLAUGHTER: Yes.
22 JUDGE HAWKENS:
24 DR. SLAUGHTER: Yes.
25 JUDGE HAWKENS: - .. -
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10 or the RAI responses?
11 DR. SLAUGHTER: I'm not sure.
12 JUDGE HAWKENS: If you're not sure, do you 13 in retrospect do you think it should have, if it 14 were not there?
15 DR. SLAUGHTER: Yes.
16 JUDGE HAWKENS: Were your assertions that 17 customers will return supported by any research or 18 analysis?
19 DR. SLAUGHTER: Excuse me, I'm sorry. Could 20 you repeat that?
21 JUDGE HAWKENS: You assert the customers 22 will return.
23 DR. SLAUGHTER: Yes.
24 JUDGE HAWKENS: Prior customers will 25 return, and new customers will come.
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OFFIGIAL USE ONL¥ PROPRIETAR¥ INFORMATION 98 1 DR. SLAUGHTER: True.
2 JUDGE HAWKENS: Is that supported by any 3 research or analysis?
4 DR. SLAUGHTER: Yes. I did a market study.
5 Not only did I do the study on the function of 6 Aerotest, but also looking at the clients and what 7 their needs are, and the -- and, ultimately, what is 8 the critical aspects of production.
9 JUDGE HAWKENS: Okay. Can you hold up that.
10 I'm going to come back to you about the study that you 11 did a little bit later.
12 DR. SLAUGHTER: Yes.
13 JUDGE HAWKENS: And I' 11 give you the 14 opportunity to fully discuss that then.
15 Your direct testimony states Department of 16 Energy could take the spent fuel as early as 2021.
17 DR. SLAUGHTER: Yes.
18 JUDGE HAWKENS: Is there any evidence in 19 the license application which shows a commitment by 20 DOD to take it that early?
21 MR. SILBERG: Excuse me. Did you say DOD or 22 DOE, sir?
23 JUDGE HAWKENS: If I said DOD, I meant to 24 say Department of Energy. Thank you.
25 DR. SLAUGHTER: Excuse me. Try that again, OFFIGIAL USE ONL¥ PROPRIETAR¥ INFORMP~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFORMA~ION 99 1 please. I'm sorry.
2 JUDGE HAWKENS: Is there any evidence in 3 the license application to indicate DOE has made a 4 cormnitment to take the fuel as early as 2021?
5 DR. SLAUGHTER: No.
6 JUDGE HAWKENS: Does the license 7 application indicate that DOE will not take the fuel 8 before 2055?
9 DR. SLAUGHTER: No, I don't believe that 10 there's one saying that they will not take it any 11 earlier.
12 JUDGE HAWKENS: Do you recall how it's 13 phrased in the application?
14 DR. SLAUGHTER: No, I do not.
15 JUDGE HAWKENS: Your testimony indicates a 16 20 DR. SLAUGHTER: That is correct.
21 JUDGE HAWKENS: Was that information in the 22 application or the RAI responses?
23 DR. SLAUGHTER: Yes, I think it's in the 24 initial budget and finances. How much detail and 25 description is not clear. It is put into the OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFICIAL USE ~NL¥ PRQPRIETAR¥ INFQRMATIQN 100 1 financials.
2 JUDGE HAWKENS: You may have mentioned this 3 earlier, but how long have you held the position of 4 Vice President of Research at MSI Photogenics?
5 DR. SLAUGHTER: Five, six years.
6 JUDGE HAWKENS: So, you held that position 7 at the time the application was being considered?
8 DR. SLAUGHTER: Yes.
9 JUDGE HAWKENS: * - ... ...
13 Is that correct?
DR. SLAUGHTER: A portion of it, yes.
14 JUDGE HAWKENS: A portion of it. 1111111 1111111 -
- Is that correct?
18 DR. SLAUGHTER: Right. And then also the 19 patent holder of the technology which we're advancing.
20 JUDGE HAWKENS:
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GFF~IAL USE GNLY PRGPRIETARY INFGRMATIGN 101 1
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OFFICIAL YSE ONL¥ l?ROPRIETAR¥ INFORMA-!I'ION 102 1 timing of the experiment when you're doing development 2 work is critical. As of right now, I have not been 3 able to provide any of the research. People have 4 approached me to give them a schedule availability so 5 that these type of resources can be available to me.
6 JUDGE HAWKENS: Did you expressly inform 7 the NRC Staff in the application or the RAI responses 8 that you had a high level of confidence based on your 9 discussions with the President, 13 DR. SLAUGHTER: I don't recall during the 14 submission of the application. I'm not sure.
15 JUDGE HAWKENS: Do you think that would 16 have been something that would have been well to bring 17 to their attention explicitly and precisely?
18 DR. SLAUGHTER: Yes, I do.
19 JUDGE HAWKENS: As part of the application, 20 the Companies state 23 Please explain the basis for that particular figure.
24 DR. SLAUGHTER: Right. That is the current 25 level of research that I currently do, as well as the OFFICIAL YSE ONL¥ PROPRIETAR¥ INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF~G~AL USE QNLY PRQPR~ETARY INFQRMl'..-T-I--GN 10 3 1 services that I send out to other university reactors, 2 or any reactors that can meet the particular 3 experimental obligations. For example, we go to 4 Lowell, Mass and use their neutron radiography beam in 5 order to do some of our work. That type of work can be 6 put directly into Aerotest. But it is part of my 7 modeling, part of my research, part of the services 8 that are required for the neutron development, 9 detector development.
10 JUDGE HAWKENS:
12 18 JUDGE HAWKENS: To your knowledge, was the 19 basis of this figure discussed in the application or 20 the responses to the RAis?
21 DR. SLAUGHTER: I don't believe so.
22 JUDGE HAWKENS: Talking a little bit about 23 training revenues. The application stated the 24 anticipated funds from training were 1111111* Is that 25 correct?
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Q~~IGIAL USE GNL¥ PRGPRIETAR¥ IN~GRMJ\~TIGN 104 1 DR. SLAUGHTER: Yes.
2 JUDGE HAWKENS: And the Companies stated 3 this figure was based on 2011 earnings. Is that 4 correct?
5 DR. SLAUGHTER: It is based on -- yes.
6 JUDGE HAWKENS: Can you tell me what was 7 included in that figure?
8 DR. SLAUGHTER: It is basically, I believe, 9
11 This is the traditional cost that they actually have 12 done over a number of years. This is neutron 13 radiography training of the licenses.
14 JUDGE HAWKENS: All right. And neutron 15 radiography training that requires an operating 16 reactor, or that requires -- or that can allow a 17 shutdown reactor?
18 DR. SLAUGHTER: In the case in these 19 several years they have a bank of neutron radiographs 20 they have been using. It does not necessarily require 21 an operating reactor to do the training.
22 JUDGE HAWKENS: Okay. And in 2011 it was 23 shut down, so it necessarily would be shut down 24 training.
25 DR. SLAUGHTER: Right.
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OFFIGIAL YSE ONLY PROPRIETARY INFORMA.TION 105 1 JUDGE HAWKENS: In 2011, Aerotest had sales 2 of 11111111 Do you recall that?
3 DR. SLAUGHTER: In my due diligence, I 4 think that's true.
5 JUDGE HAWKENS: The Companies stated 6 there's no indication the Staff's projected revenues 7 credited this 1111111 revenue. However, the Staff's 8 safety evaluation notes on page 6 that Aerotest had 9 sales of 1111111 in 2011, doesn't it? Do you recall 10 that?
11 DR. SLAUGHTER: Yes. While I'm not the 12 Company, but in my due diligence I do recall it, and 13 I do recall the statement, yes.
14 JUDGE HAWKENS: Okay. Are you aware of 15 anywhere in the application or the responses to the 16 RAis where the Companies provided information on how 17 that llllllllwas generated in 2011?
18 DR. SLAUGHTER: I am not.
19 JUDGE HAWKENS: Okay. In your rebuttal 20 testimony you state that revenue assumptions regarding 21 the number of radiographs in year two, which was 22 25 DR. SLAUGHTER: Yes.
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QFFI~IAL USE QNL¥ PRQPRIETAR¥ INFGRMATIQN 10 6 1 JUDGE HAWKENS: Is that correct? Can you 2 point out where in the application or the RAI 3 responses you included that during the second year of 4
5 6
operation, radiographs?
Aerotest DR.
would SLAUGHTER: I sell about don't believe it's in 7 there.
8 JUDGE HAWKENS: What evidence is in the 9 application or the RAI responses that supports the 10 assumption that 13 DR. SLAUGHTER:
22 JUDGE HAWKENS: That sounds like a good 23 common sense rationale. Was that rationale provided in 24 the application or the RAI responses?
25 DR. SLAUGHTER: I am not certain. The QFFICIAL USE QNL¥ PRQPRIETAR¥ INFQRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
1 particular responses I believe were in summary of, so 2 perhaps they were not in there.
3 JUDGE HAWKENS: The Companies stated that 4 operating costs are directly a proportion of the 5 services provided, and it was inappropriate for the 6 NRC Staff to compare its questionable revenue 7 estimates to the Companies' cost estimates. Is that 8 correct?
9 DR. SLAUGHTER: I think that's correct. I 10 think it's unfair.
11 JUDGE HAWKENS: Is it true that regardless 12 of the amount services provided by the reactor, 13 staffing costs alone for one year are about 11111111?
14 DR. SLAUGHTER: At the current staffing 15 levels, yes. That need not be the case if that was --
16 if there was limited work, or that it would shut 17 down. As the current levels of operation now, only to 18 prepare for, hopefully, a transfer and moving forward.
19 One doesn't necessarily have to retain those costs in 20 order to be safe and secure, and follow regulations.
21 JUDGE HAWKENS: Did the application provide 22 a breakdown for how the staffing costs in addition to 23 the radiography costs would be paid for?
24 DR. SLAUGHTER: I'm sorry, try that again.
25 JUDGE HAWKENS: Did the application, not GFFIGIAL USE GNLY PRGPRIETARY INFGRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
1 the information that's come in --
2 DR. SLAUGHTER: Yes.
3 JUDGE HAWKENS: as a result of the 4 adjudication, but did the application provide a 5 breakdown for how the staffing costs in addition to 6 the radiography costs would be paid for?
7 DR. SLAUGHTER: No, I don't think so.
8 JUDGE HAWKENS: In response to the Staff's 9 requests for additional information while the Staff 10 was considering the license application, why didn't 11 the Companies obtain communications from additional 12 prior customers to show the likelihood that they would 13 return?
14 DR. SLAUGHTER: I think they did. In fact, 15 they have a considerable number, I think 26 letters.
16 The distinction is what was required or accepted. I 17 think that when you read the letters you indicate the 18 fact that there is a significant desire to come back.
19 The distinction is that they may not be able to 20 without an understanding of timing, they may not be 21 able to actually authorize or indicate a more stronger 22 level of commitment. But I think they did.
23 JUDGE HAWKENS: To your knowledge, did the 24 Companies actually send out a wide mailing, or a wide 25 solicitation to previous customers to try to obtain OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION 109 1 these type of representations from the companies that 2 they would like to come back?
3 DR. SLAUGHTER: My belief is there has 4 always been communication. That's probably a question 5 more for Mike Anderson. The issue is that my 6 understanding is there has always been continual 7 communication. Has there been probably emails? I do 8 not know what the extent of the solicitation was.
9 JUDGE HAWKENS: Returning to your market 10 study question that I said I was going to come back 11 to, in your rebuttal testimony you state the cost and 12 revenue projections were based in part on a market 13 study to understand the key factors that make Aerotest 14 Operations attractive to customers and set it apart 15 from its competitors. When was this market study 16 performed?
17 DR. SLAUGHTER: It was done when I was 18 doing my due diligence. It's the data that I 19 collected, and I collected the -- it is my market 20 study with the data that I obtained from my due 21 diligence.
22 JUDGE HAWKENS: And when was your due 23 diligence performed in relation to the Staff 24 completing its review of the application and rendering 25 a final decision?
OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIA~ YSE ON~¥ PROP1UETAR¥ INFORMATION 110 1 DR. SLAUGHTER: It was completed before.
2 JUDGE HAWKENS: Okay.
3 DR. SLAUGHTER: In fact, it is part of 4 that element is, in fact, the financials, is present 5 in the fact of the evaluation of Aerotest itself and 6 the clients. So, it was all done before.
7 JUDGE HAWKENS: And what data did you use 8 to support the market study?
9 DR. SLAUGHTER: I- ... -
19 25 . .. - ...... ..
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I 13 17 JUDGE HAWKENS: Did you submit pricing data 18 for similar suppliers?
19 DR. SLAUGHTER: No, I did not.
20 JUDGE HAWKENS: Why?
21 DR. SLAUGHTER: I didn't think that it was 22 important in comparison to what we were offering, or 23 what I was offering and seeing. I just did not do it.
24 JUDGE HAWKENS:
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OFFIGIA~ USE GNL¥ PROPR-IE!J!AR¥ INFORMA!J!ION 112 1 DR. SLAUGHTER: 1111 IIIII Ill 1111 I
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- IIIII 19 JUDGE HAWKENS: In light of the fact that 20 the burden is on the applicant to demonstrate it 21 satisfies financial qualification requirements, don't 22 you think it would have prudent to put that study in 23 its entirety in the record before the Staff while it 24 was considering the application?
25 DR. SLAUGHTER: Given where we are now, OFFIGIA~ USE ONL¥ PROPRIE!J!AR¥ INFORMA!J!ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPR-IE!I!ARY INFORMA:'I'ION 113 1 yes.
2 JUDGE HAWKENS: To your knowledge, have 3 other suppliers ever had a prolonged shutdown like the 4 Aerotest reactor?
5 DR. SLAUGHTER: Not to my knowledge.
6 JUDGE HAWKENS:
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- 11111111 In light of that expressed sentiment, what 13 evidence did you provide to demonstrate that these and 14 other prior customers will return to Aerotest seeking 15 the same level of procurement as before?
16 DR. SLAUGHTER: Well, I looked at those 17 replies and I took them very seriously because there 18 is -- that is one of the reasons why we're looking 19 very closely at making sure that we are conservative 20 in our numbers, be able to cover the cost, because 21 there is going to be the idea of losing a supply line 22 is critical to these businesses. So, ultimately, there 23 was a consideration and has to be in the model that 24 not 100 percent would be coming back. That's one of 25 the reasons why the conservative number, because it is OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE GNL¥ - PRGPRIETARY INFGRMATIGN 114 1 only prudent given what has happened over the years.
2 We've been down for several years, Aerotest was down 3 for several years. They certainly do not want to put 4 themselves in a bind. I understand that. We will have 5 to earn that right, but in my financials I take that 6 into consideration, that there is not going to be the 7 old days of sole sourcing. There are going to be 8 clients that are afraid of what may happen in the 9 future. Yes, that is considered in the financials.
10 JUDGE HAWKENS: And is that conservatism 12 DR. SLAUGHTER: Yes, it is. It is.
13 JUDGE HAWKENS: NUREG-1537 states, "The 14 applicant should discuss how the facility can be 15 safely operated if some potential sources of funding 16 are not realized."
17 DR. SLAUGHTER: Yes.
18 JUDGE HAWKENS: How will the Aerotest 19 reactor be safely operated if less than of 20 our Aerotest 2009 customers return?
21 DR. SLAUGHTER: Because the basis of 22 operation of the is sufficient for full 23 operation of the facility. It is -- that isn't -- I 24 guess I'm confused because that line, a number of 25 radiographs is sufficient for its operation and will GFFICIAL USE GNLY PRGPRIET...n..RY INFGRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~~G~A~ USE GN~Y PRGPR~ETARY ~N~GRMA~4N 115 1 cover all costs. There is no deficit here that will be 2 realized.
3 JUDGE HAWKENS: Right. And maybe you didn't 4 hear the question. Let me repeat it.
5 DR. SLAUGHTER: All right.
6 JUDGE HAWKENS: How will it be safely 7 operated if less than of the 2009 customers 8 return?
9 DR. SLAUGHTER: Then there will be an 10 adjustment to the workforce, but also to the materials 11 and all of that that would be required to be reduced, 12 and scaled appropriately. So, it will still be able to 13 -- this isn't necessarily -- this is a projection.
14 JUDGE HAWKENS: Again, NUREG-1537 says, 15 "The applicant should discuss how the facility can be 16 safely operated if some potential sources of revenue 17 are not realized." Did you discuss in the application 18 what Aerotest would do in the event that you did not 19 bring of your 2009 revenue in in year two?
20 DR. SLAUGHTER: I am not certain we did.
21 JUDGE HAWKENS: Do you know how -- you 22 assumed 24 operate?
if you know, and still safely 25 DR. SLAUGHTER: I'd have to do the G~~~G~A~ USE GN~Y PRGPR~ETARY ~N~GRMAT~GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
Q~F~G~AL USE QNLY - PRGPR~ETARY ~NFQRMAT~QN 116 1 calculation and the evaluation, but we could go lower.
2 The question is is how low, and I don't know until I 3 actually do the evaluation. It could be significantly 4 lower.
5 JUDGE HAWKENS: But you have a reasonable 6 level of confidence that would come back.
7 DR. SLAUGHTER: The lowest 8 JUDGE HAWKENS: Based on the cost, the 9 efficiencies, and the quality --
10 DR. SLAUGHTER: Absolutely, I do.
11 JUDGE HAWKENS: -- of Aerotest.
12 DR. SLAUGHTER: I do.
13 JUDGE HAWKENS: The Companies described 14 your due diligence as including reviewing the 15 reactor's historical costs, production, processes, and 16 a visual inspection of every fuel element used in the 17 reactor. Is that correct?
18 DR. SLAUGHTER: Yes.
19 JUDGE HAWKENS: Was information regarding 20 the visual inspection of the fuel elements provided to 21 the Staff as part of the application?
22 DR. SLAUGHTER: My understanding that all 23 the information that when it comes to review -- all 24 information concerning the fuel has been provided by 25 the Staff, but not by through the application. It's QFF~G~AL USE GNLY PRQPR~ETARY ~NFQR~~T~QN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY - PROPRIETARY INFOR~~TION 117 1 provided by Aerotest as far as the inspection 2 obligations. They provided the same inspection disks 3 that I also reviewed of those elements inspections.
4 JUDGE HAWKENS: Was your inspection 5 performed after the Staff had made its decision on the 6 application?
7 DR. SLAUGHTER: No, it was much before. It 8 was there was two, in fact, inspections, the 2011 9 and 2 012 inspection. And the tapes I think are 10 comprehensive on the 2013 inspection, those tapes. But 11 I also reviewed the 2011 tapes that were provided to 12 me in my earlier due diligence.
13 MR. SILBERG: Excuse me, Your Honor. Could 14 we just have clarification, it's not clear to me 15 whether we're talking about inspections by Dr.
16 Slaughter, or by NRC, or by --
17 JUDGE HAWKENS: I'm referring to 18 inspections conducted by Dr. Slaughter pursuant to his 19 due diligence.
20 DR. SLAUGHTER: That was provided as the 21 inspections -- I provided the inspection tapes of the 22 2011 and 2012 NRC regulated obligated inspection. I 23 was provided those as part of my due diligence 24 process, so I did not make tapes. They were made in 25 the process of doing their normal regulatory OFFICL~I:r USE ONI:rY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
~~!A~ USE ON~Y PROPR-+/-E.!I'ARY INFORMATION 118 1 inspection, and then they provided me a full copy, as 2 the NRC with that.
3 JUDGE HAWKENS: The inspection was based on 4 prerecorded video.
5 DR. SLAUGHTER: Yes.
6 JUDGE HAWKENS: How did this affect your 7 ability to analyze areas you thought should receive 8 additional scrutiny, if there were any areas? If 9 you're looking at prerecorded video, how did that 10 affect your ability in conducting a comprehensive 11 inspection of the fuel elements to analyze areas you 12 thought should receive additional scrutiny?
13 DR. SLAUGHTER: No additional, but this was 14 particularly comprehensive given the nature of why 15 they were looking at that fuel. It included a number 16 of normal tests that normally take place in an 17 inspection, a visual inspection that looks for seeding 18 and also looks for bowing, looks for swelling, so it's 19 very comprehensive. It's completely 360 degrees full-20 length inspections. There would not be a need for an 21 additional inquiry.
22 Also, on top of that I took all those 23 elements where they particularly placed in the core 24 and went back historically where they had been, where 25 they were moved, ultimately, what the history of each OFFICIA~ USE ON~Y PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMA:TION 119 1 of those elements were. So, this particular inspection 2 was specifically very detailed.
3 JUDGE HAWKENS: In your rebuttal testimony 4 you propose a core with 64 aluminum and stainless 5 steel fuel elements. Correct?
6 DR. SLAUGHTER: Propose a core of 64, yes.
7 JUDGE HAWKENS: This information was not 8 provided to the Staff as part of the original 9 application, was it?
10 DR. SLAUGHTER: No, I don't believe it was.
11 JUDGE HAWKENS: When did you conclude the 12 core design analysis described in your rebuttal, in 13 March?
14 DR. SLAUGHTER: At the end of March.
15 JUDGE HAWKENS: End of March, 2014.
16 DR. SLAUGHTER: No. No, no, 2012. It would 17 be '13 as we I had completed it 2013, it was 2013, 18 March, 2013.
19 JUDGE HAWKENS: Did the application or the 20 RAI responses provide an analysis of the fuel 21 inventory demonstrating the reactor could be fully 22 operational with the existing fuel elements at the 23 time the application was considered?
24 DR. SLAUGHTER: Not before -- no, it does 25 not.
GFFICL~L USE ONL¥ PROPRIET..71... RY INFORMA:TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMATION 12 0 1 JUDGE HAWKENS: The Companies' position 2 that the Staff's financial analysis is arbitrary 3 because it assumes reactor would prematurely shut down 4 and prevent collection of fees for among other things 5 operations, and spent fuel storage. The Staff in 6 coming up with that potential conclusion state the 7 Companies said that if the financial projections are 8 not met, the reactor would shut down. Correct? Why is 9 the Staff acting arbitrarily in pointing out the 10 Companies' representation that if we don't have 11 sufficient funding, we'll have to shut down?
12 DR. SLAUGHTER: We did say that, yes. If we 13 do not have sufficient funding that we would shut 14 down.
15 JUDGE HAWKENS: It's correct, however, you 16 your position is that shutdown is simply not 17 plausible, and is not likely.
18 DR. SLAUGHTER: I believe that's correct.
19 It is not a reasonable, plausible outcome.
20 JUDGE HAWKENS: You state in the 21 application that effective Fitness for Duty criteria 22 and fuel management, the cracked cladding would be 23 avoided in the future. Is that correct?
24 DR. SLAUGHTER: That is true.
25 JUDGE HAWKENS: Was this provided to the OFFICIAL USE ONL¥ PROPRIET~n..RY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G!AL USE ONL¥ - PROPRIE~AR¥ INFORMATION 121 1 Staff as part of the application or RAI responses?
2 DR. SLAUGHTER: No, it was not.
3 JUDGE HAWKENS: In your rebuttal testimony 4 you also discuss an inspection and fuel management 5 program. Was that provided to the Staff in the 6 application or the responses?
7 DR. SLAUGHTER: No, I didn't think it was 8 necessary. That's usually normal protocols, so I 9 didn't think it was necessary.
10 JUDGE HAWKENS: That concludes my 11 questions. At this time, Dr. Slaughter, do you have 12 any -- before we go to the next witnesses, have 13 anything you'd like to add, supplement, further 14 explanation to your answers?
15 DR. SLAUGHTER: I don't believe so. No.
16 JUDGE HAWKENS: Counsel, do you have any 17 follow-up?
18 MS. HARSHAW: Yes, I would like to point 19 out the wording in the application regarding DOE's 20 commitment. We've been using this term commitment, but 21 there was no commitment. What was stating was in the 22 decommissioning trust fund, in the decommissioning 23 plan at page 60 of NRC008P, that it's currently 24 projected to be sometime after 2055 that DOE would 25 take the fuel. Furthermore, we said if offsite storage OFFIGIAL USE ONL¥ PROPRIETAR¥ !NFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
~ICIAL USE ONL¥ - PROPRIETAR¥ INFOR~.TION 122 1 is a possibility, then we can decommission earlier.
2 And then in our response to RAis at NRC02 6P at page 3, 3 we stated even in the unlikely event that fuel is not 4 sent until after 2055, we never stated that DOE had 5 committed to take it at 2055 or after. And DOE came 6 out with a different strategy following submission of 7 our application, which the Staff is well aware of.
8 MS. UTTAL: Your Honor, I don't want to get 9 into a fight about these dates at this point, but the 10 strategy that they speak of is not really applicable 11 to non-power reactors. That's the Staff's position at 12 this point, as indicated in our pleadings.
13 JUDGE HAWKENS: Right. I think those 14 arguments are pretty fleshed out in the pleadings that 15 are in the record.
16 MR. SILBERG: I would correct, though, that 17 there is absolutely nothing in the DOE January 2013 18 strategy that says it is not applicable to non-power 19 reactors. The provision that says that DOE intends to 20 begin accepting spent fuel from decommissioned 21 reactors by 2021 is unqualified by whether they're 22 power reactors or non-power reactors. It's simply 23 incorrect to say that it only applies to power 24 reactors.
25 JUDGE HAWKENS: All right, thank you. You OFFICL~L USE ONL¥ - PROPRIET~71.. R¥ INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE!!!ARY INFORMA.TION 12 3 1 may step down, Dr. Slaughter, thank you.
2 Let me ask counsel, we can proceed with 3 questions for the NRC Staff witnesses. Would anybody 4 like to take a quick break before we do that? All 5 right. You voted yes, the witnesses also. I have about 6 11:55. Would a 10-minute break suffice? Counsel 7 indicate it would suffice for both sides, NRC Staff.
8 Let's meet back again at five minutes after 12: 00 9 then. Thank you.
10 (Whereupon, the above-entitled matter went 11 off the record at 11:52 a.m., and resumed at 12:05 12 p.m.)
13 JUDGE HAWKENS: We' 11 start by asking 14 questions direction of Ms. Lian and Ms. Simmons.
15 Based on the time it took to question the prior 16 witnesses, I would guess I have about 45 minutes of 17 questions for them. Counsel, do you want to just 18 proceed and see how it goes? And if you want to stop 19 at any point for lunch, you can certainly interrupt me 20 and we can stop at that point. Staff?
21 MS. UTTAL: Sure. If it's going to be 22 only 45 minutes or so, that would be fine.
23 MR. SILBERG: That's fine.
24 JUDGE HAWKENS: You good with that? Good, 25 thank you. Ms. Lian and Ms. Simmons, please come up OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ON~¥ PROPRIETARY INFORMATION 124 1 to the witness box. Good morning. Let me know when 2 you're properly situated.
3 All right. A reminder that our questions 4 are framed, in many cases, so that they're susceptible 5 of a yes or no answer. So unless you think it's 6 critical to follow up to that or if I have additional 7 questions, I will certainly ask them.
8 Many of these questions I want both of you 9 to consider. I will direct them to Ms. Lian 10 principally because I think you were the ultimate 11 reviewer and analyst, whereas, if I understand 12 correctly, Ms. Simmons provided a lot of the facts and 13 provided drafting information; is that correct?
14 MS. LIAN: Yes.
15 JUDGE HAWKENS: All right. So in some 16 cases, I' 11 direct you to a particular individual. If 17 the other individual has a different answer, please 18 chime in. Otherwise, if I need to ask both of you 19 expressly, I will.
20 It's the staff's view the company's 21 assumption underlying the revenue projections are 22 seriously lodged with governing realities and do not 23 resolve uncertainties surrounding the transfer and 24 that these uncertainties remain significantly greater 25 than those that usually cloud business outlooks.
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GFF!G!AL USE GNLY PRGPRIETARY !NFGRM..'II..T!GN 12 5 1 This question is directed to you both. Do 2 you have experience running a research reactor?
3 MS. LIAN: No, I do not.
4 MS. SIMMONS: No, I don't.
5 JUDGE HAWKENS: Do you have experience 6 running a business that provides neutron radiography 7 services?
8 MS. LIAN: No, I do not.
9 MS. SIMMONS: No, I do not.
10 JUDGE HAWKENS: Do you have experience 11 running any business?
12 MS. LIAN: I tried to start a company 13 before, but I did not continue it. So it could be 14 possibly yes.
15 MS. SIMMONS: Yes, I was a management 16 consultant, self employed, for about seven years.
17 JUDGE HAWKENS: Have you ever developed 18 revenue projections for a business, such as Aerotest?
19 MS. LIAN: Not Aerotest. Not business, 20 not Aerotest, I have not.
21 MS. SIMMONS: I developed revenue 22 projections but not for a test reactor.
23 JUDGE HAWKENS: Have you previously 24 performed a financial qualification review for 25 commercial research reactors, such as Aerotest?
GFF!G!Z... L USE GNLY PRGPR!ETARY !NFGR~.. TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~ICIAL USE GNLY PRGPRIE!J!ARY IN~GRMA!J!IGN 12 6 1 MS. LIAN: No, I have not.
2 MS. SIMMONS: I conducted a number of 3 financial qualifications reviews but not for a 4 commercial research and test reactor.
5 JUDGE HAWKENS: Would each of you please 6 describe your education and training on how to develop 7 financial projections for businesses that are not 8 currently operating?
9 MS. LIAN: So you want specific for 10 business not operating. I have a --
11 JUDGE HAWKENS: For both, operating and 12 non-operating.
13 MS. LIAN: So I obtained my master's in 14 business administration from the University of 15 Maryland back in 2010. During this time, I have 16 developed two business plans and plans for running a 17 business. In addition, I was contracted out as a 18 student consultant for two established companies to do*
19 the market analysis, custom behavior analysis, and 20 comparative analysis in order to develop a strategy 21 for the companies moving forward.
22 So in that regard, yes, I did a company 23 revenue projection. And as far as my business plan 24 goes, yes, I did market analysis study to develop a 25 revenue projection and also cost projection for my G~~ICIAL USE GNLY PRGPRIE!J!ARY INFGRMA!J!IGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONL¥ PROPR-IE!l!-AR¥ INFORM.ll..TION 12 7 1 business.
2 JUDGE HAWKENS: Thank you. Ms. Simmons?
3 MS. SIMMONS: First of all, your Honor, 4 I'd like to clarify my previous response. I have done 5 a financial qualifications review for Aerotest for the 6 x-ray transfer, so that was an --
7 JUDGE HAWKENS: Thank you. All right.
8 MS. SIMMONS: As for -- just to clarify 9 your question, operating reactor and a non-operating 10 reactor, I've done a number of financial 11 qualifications reviews for license transfers of 12 operating power reactors, including x-ray. For 13 non-operating or potential revenue-generating 14 reactors, I've conducted financial qualifications 15 reviews for new reactors, so those are reactors that, 16 you know, have not been constructed yet. So those 17 would be looking at projections far into the future, 18 even after construction.
19 JUDGE HAWKENS: Thank you. Ms. Lian, am 20 I pronouncing your name correctly?
21 MS. LIAN: Yes.
22 JUDGE HAWKENS: You stated the companies 23 did not demonstrate their revenue projections were 24 reasonable. Did you compare the revenue projections 25 with Aerotest's historical revenue?
OFFICIAL YSE ONL¥ PROPRIETAR¥ INFORM.ll..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~!GIA~ USE ON~Y PROPRIETARY UlFORM..l\,."J;!.!.G.N 12 8 1 MS. LIAN: Yes, I did.
2 JUDGE HAWKENS: And how did they compare?
3 MS. LIAN: Their revenue projection is --
4 let me see. Let me make sure I get it right. If you 5 don't mind, I' 11 look at it just to make sure I'm 6 speaking properly. I'm looking at their five-year 7 revenue projection compared to the historic data from 8 2003 to 2011. Their revenue numbers seems to be 9 consistent with the historic data.
10 JUDGE HAWKENS: Did you compare the 11 revenue projections with the projections provided in 12 the X-Ray Industry's license transfer application for 13 this transfer?
14 MS. LIAN: I review it, but I don't 15 remember exact detail. Ms. Simmons might have more 16 information on that.
17 JUDGE HAWKENS: Could you respond to that 18 question, Ms. Simmons?
19 MS. SIMMONS: Yes, we did. In both 20 instances, historical Aerotest financial information 21 was provided and it was consistent across both 22 applications.
23 JUDGE HAWKENS: Did you compare the 24 revenue projection with other commercial research 25 reactors?
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OFFICIAL USE ON~¥ PROPRIETARY HlFORMA.TI-ON 12 9 1 MS. SIMMONS: There really aren't many 2 other comparable facilities for nonpower reactors, so 3 we did not conduct that kind of a research.
4 JUDGE HAWKENS: The company's revenue 5 projections for radiography reflect the impact of the 6 prolonged shutdown by reducing historical revenues to 8 service during the period of 2005 to 2009. Is this an 9 unreasonable assumption? And I'll direct this to Ms.
10 Lian?
11 MS. LIAN: Well, it's kind of hard to 12 answer with a yes or no. When you develop this kind 13 of assumption, it is not unreasonable. But our 14 findings not really why. The unreasonableness comes 15 in that the company just did not provide information 16 to support that revenue projection.
17 JUDGE HAWKENS: So did I hear you 18 correctly that the revenue projection based on
- II 1111111 of the lowest annual revenue income in the 20 recent past is not unreasonable?
21 MS. LIAN: Again, it's kind of hard to 22 answer the question. Back in 2 0 0 9, if I would remind, 23 let everybody know, it wasn't an operating reactor.
24 It had its own business, its own customer base. So at 25 the time, yes, that revenue projection would be good.
NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORM.r...TION 13 0 1 If today the reactor is operational and still have 2 that customer base, that revenue assumption would be 3 reasonable. The issues that the reactor has to be 4 shut down two years at a time, it has no customer 5 base, the company just could not provide evidence to 6 support that revenue projection.
7 JUDGE HAWKENS: But they can make 8 predictions, correct?
9 MS. LIAN: They can make predictions, yes.
10 JUDGE HAWKENS:
IIIII.- ...
And let me ask you, IIIII 14 reasonable, notwithstanding that it's been shut down 15 for approaching four years, that all these factors 16 would combine to result in a return of prior customers 17 which had a lengthy history with Aerotest?
18 MS. LIAN: I want to make sure I captured 19 that. The pricing of Aerotest, Dr. Slaughter's 20 marketing analysis was not included in the 21 application. Therefore, I have no reason to believe 22 that that's the case.
23 But to answer the question, again, our 24 concern is there's no customer base. And the majority 25 of the funds the company has stated that will come OFFICIAL USE ONLY PROPRIETARY INFORM.r...TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF!G!AL USE QNLY PRQPR!ETARY !NFQRMP-..T!QN 131 1 from those customers, we have public health and safety 2 concern because they do need money to run the operator 3 reactor safely.
4 Hold on one second. Again, we understand 5 the reactor has been running for decades and to 6 provide service to a customer. However, we cannot 7 overlook the fact that those customers are using some 8 other suppliers. So the current relationship with 9 those suppliers sometimes can be more important than 10 historic relationship, and we have no way of knowing 11 how the competitor is going to react. So in that 12 case, there are more factors to look into, other than 13 just the Aerotest competitive advantage.
14 MS. SIMMONS: Perhaps just to add to that 15 answer, although that is one factor that, in and of 16 itself, may not be unreasonable regarding the 17 projections or the revenue levels at 2009, it still 18 didn't alter the staff's conclusion that the companies 19 have not met the requirements of the regulations, 20 which is to demonstrate sufficient revenue to cover 21 the five-year cost projection.
22 JUDGE HAWKENS: Well, that's correct, but 23 that's all locked up in the prediction that they would 24 have recurring.
25 MS. SIMMONS: I would agree --
OFF!GIAL USE QNLY PROPRIETARY INFQRMAT!QN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE ONLY PROPRIE!J!ARY INFORMA.!J!.+/-.GN 132 1 JUDGE HAWKENS: Do you agree that if, in 2 fact, they were able to get that back and 3 the reactor were operating and sustainable that this 4 would be a very different case? In fact, there's a 5 substantial possibility that you would have been 6 satisfied if they met their financial qualification 7 requirements?
8 MS. SIMMONS: Certainly, if customers 9 returned, that would be a different review, yes.
10 JUDGE HAWKENS: All right. The company's 11 research revenue was based on Dr. Slaughter's current 12 experience as the vice president of MSI Photogenics.
13 Why is it unreasonable to rely on his experience and 14 expertise for predicting research revenue?
15 MS. LIAN: In the application, the 16 companies did provide some information about research 17 funding. And in the application -- let me think.
18 Hold on one second .
- OFFICIAL USE ONLY PROPRIE!J!ARY INFOR~~!J!ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
PRGPR;tE!I!AR¥ INFGRMA!l!IGN 13 3 1
2 At that point, the staff believes, well, 3 I believe that they will not do any actions to obtain 4 research funding after transaction has occurred. And, 5 second, I
8 way of knowing when or how the funding is going to 9 come in.
10 JUDGE HAWKENS: The company's financial 11 plan incorporates collection of fees to cover future 12 spent fuel storage, as well as for purchase of new 13 fuel.
14 MS. LIAN: Yes.
15 JUDGE HAWKENS: What is unreasonable about 16 those plans?
17 MS. LIAN: Again, it goes back to the 18 financial qualifications. They have not shown us 19 sufficient customers will return for them to be 20 operational for the period of license. And the fees 21 collected for the spent fuel storage will depend on 22 customers returning and reactor operating. So you can 23 see we are in a weird situation that, yes, if it's 24 operational, we are making money, we will not have a 25 concern about spent fuel storage cost. But because we GFFICIAL YSE GNL¥ PRGPRIE!I!AR¥ ;tNFGR~~!I!;tGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGIAL USE ONLY PROPRIETARY INFO:R:MATl:ON 13 4 1 have that concern and the company's proposed only 2 decommissioning, that's why we raised the question 3 about spent fuel storage cost because it is not 4 covered in the decommissioning funding. That will be 5 provided by the seller.
6 JUDGE HAWKENS: The company submitted 7 historical financials for Aerotest for nine years of 8 operation; is that correct?
9 MS. LIAN: Yes.
10 JUDGE HAWKENS: And you may have answered 11 this already but if you'll do it again, why wasn't the 12 submission of historical revenue for the reactor a 13 sufficient basis to determine whether the company's 14 revenue projections were based on plausible 15 assumptions and forecasts?
16 MS. LIAN: Yes. Your Honor, I already 17 previously stated that historic information would be 18 useful if the reactor is still operating. At that 19 point, we would have no reason to believe that those 20 revenues would not continue. However, in this case, 21 the company, Aerotest, has shut down for over two 22 years, and we know it has no customers.
23 So the underlying assumption the customers 24 will return, the fact that the companies did not 25 provide sufficient information to demonstrate that it OFFIGI..'-I.:L USE ONLY NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~!GIAL USE ONLY PROPR!E~ARY !NFOR~!ON 135 1 may still reach revenue projection are unreasonable.
2 JUDGE HAWKENS: You stated the same data 3 inspires revenue predictions was sufficient in the 4 X-Ray Industry's license transfer application; is that 5 correct?
6 MS. LIAN: Yes.
7 JUDGE HAWKENS: And if I understand you 8 correctly from your prior answer, that was because, at 9 that point, there was an existing customer base for 10 Aerotest.
11 MS. LIAN: Right.
12 JUDGE HAWKENS: If X-Ray Industry's 13 transaction had gone forward and the Aerotest reactor 14 suddenly and unexpectedly lost its customer base, what 15 would have been the alternative source for funding of 16 operations and spent fuel storage?
17 MS. LIAN: Well, it's definitely a 18 hypothetical question right now, but the answer --
19 JUDGE HAWKENS: But that's something you 20 took into account, and maybe Ms. Simmons could answer 21 it, as well, if she wishes.
22 MS. LIAN: Right. Well, assuming 23 everything stayed the same, we would go back to the 24 time where X-Ray Industry's transfer occurred, I mean 25 application review occurred. X-Ray Industry actually OF~!G!AL USE ONLY PROPRIE~ARY INFORMAT!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIA~ YSE ONLY PRGPRIE!;DARY INFORM..l\..TIQN 13 6 1 provided a funding agreement of -- can I say the 2 number -- $850,000 in case of unexpected shutdown or 3 revenue shortage to cover the operating costs.
4 JUDGE HAWKENS: But that alone wouldn't 5 provide for spent fuel storage until 2055.
6 MS. LIAN: That is correct. Ms. Simmons 7 might have more information.
8 MS. SIMMONS: I think, as consistent with 9 what the companies have testified to, it's not a 10 requirement that we would look at spent fuel plans as 11 a normal part of a license transfer unless there's 12 some indication that there might be the specter of 13 premature shutdown. That's consistent with power 14 reactors, as well.
15 Ms. Lian is correct in that the X-Ray 16 transfer, consistent with what Mr. Anderson explained, 17 was an entirely different transfer. We had an 18 operating reactor. We had a very heavily-capitalized 19 parent company with a binding agreement from the 20 parent company.
21 It is speculative to know what would 22 happen if they entered into early shutdown. However, 23 the fact that there was this additional support 24 agreement would have provided a link to the parent 25 company. So I believe that the NRC has various legal OFFICIAL YSE ONLY PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY - PROPRIETARY INFORMAT~ON 137 1 opportunities to pursue, you know, additional 2 financing in different circumstances.
3 JUDGE HAWKENS: Thank you. Did you 4 contact any of Aerotest' s prior customers to determine 5 whether the company's projections were unreasonable?
6 MS. LIAN: I did not.
7 JUDGE HAWKENS: Do you have any 8 information other than that provided by the companies 9 as to the prices charged by other providers?
10 MS. LIAN: I do not have that information.
11 JUDGE HAWKENS: In your RAis, you inquired 12 about evidence of committed sources of funds, even 13 though the companies indicated it did not run its 14 business in this manner in the past and could not now 15 obtain commitments, given the current shutdown status 16 of the reactor. In the absence of committed funding, 17 did the staff consider a license condition of any 18 sort, or can you contemplate of any type of license 19 condition that would cover that contingency?
20 MS. LIAN: No, we did not consider 21 licensing condition. But before we answer the other 22 part, I would think it's a mischaracterization that we 23 only asked for committed source of funds. That was 24 part of the request for additional information, but we 25 did ask for any potential source of funds, as well.
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GFF!G+/-AL USE GNLY PRGPR!ETARY INFGRMAT-!GN 13 8 1 MS. SIMMONS: As for license conditions, 2 again, typically, we have these license conditions for 3 license transfers, but, as Ms. Ghosh testified, 4 typically, that's simply to verify that funding 5 agreements or financial support agreements have been 6 executed properly following the transaction and that 7 the reason is because we can't, the staff can't defer 8 its evaluation of findings until after an approval.
9 We have to make the finding prior to the approval of 10 the transfer, and then the license condition would 11 have to be ministerial, simply a verification.
12 It is hypothetical, but, as I understand 13 it, what has kind of been discussed is whether we 14 could craft a ministerial license condition in the 15 absence of sufficient sources of funds. It would be 16 my professional opinion that that would be very 17 challenging, given that there has been an insufficient 18 level of specificity about sources of funds, in order 19 to craft a very specific license condition.
20 JUDGE HAWKENS: In your revenue 21 projection, you rejected the research revenue from MSI 22 Photogenics because no evidence or documentation of 23 specific grants were provided. Were you aware at that 24 time that Dr. Slaughter was an officer of MSI 25 Photogenics and was experienced in obtaining and GFF!C!AL USE GNLY PRGPR!ETARY !NFGRMAT!GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGIA~ USE GN~¥ PRGPRIETAR¥ INFGRW..TIGN 13 9 1 managing research funds and that this experience was 2 relied upon at MSI Photogenics?
3 MS. LIAN: He include his position as an 4
I 5
MSI VP in his CV. However, I don 1 t recall him I
8 JUDGE HAWKENS: Would it be reasonable for 9 the companies to rely on his experience to provide 10 11 based on what you know now?
12 MS. LIAN: His experience would definitely 13 help. Again, however, our concern is the 14 reasonableness of his revenue projection. We need to 15 have some evidence for him to show us that the funding 16 will be available. But at the end, if we look at 17 bigger picture, the majority of the research, the 18 funding is depending on the reactor being operational 19 and providing service, radiography service, which is 20 task one. If we have included the research fund 21 identified by the companies in the applications, 22 there 1 s some of their research, plus our projection of 23 the revenue that could be generated, is still 24 significantly less than the projected annual operating 25 cost of IIIII GFFICIA~ USE GN~¥ PRGPRIETAR¥ INFGR~~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIG+/-AL USE GNLY PRGPRIE!l!ARY- INFGRMA!I!-IGN 14 0 1 JUDGE HAWKENS: Let me just ask the 2 question one more time. I want to make sure I got the 3 right answer, which this is one that's susceptible of 4
5 yes or no.
to rely on Would it be reasonable for the companies Ill ....
I I
8 MS. SIMMONS:
?
I think the companies could Ill 9 rely on it, but the question would be whether the NRC 10 staff could rely on simply a title and position as a 11 source of funds.
12 JUDGE HAWKENS: Did the staff ever ask him 13 for additional information, saying this is not enough?
14 MS. LIAN: Yes.
15 JUDGE HAWKENS: For the research revenues?
16 MS. LIAN: Well, actually, we actually 17 asked the question in more general terms. We asked 18 the -- if you look at the Exhibit 24P, we did ask them 19 to provide any source of fund and that would include 20 research and training and even commercial services.
21 And then we did have a public meeting, and we 22 discussed those items with them, as well.
23 JUDGE HAWKENS: It appears that, from the 24 safety evaluation, there wasn't a complete 25 understanding in all the parties' minds as to what the GFFICIAL USE GNLY PRGPRIE~ARY INFGR~~~IGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
1 staff required further to satisfy the financial 2 requirements. Would you agree with that? I'll 3 retract that question. You can't look into their 4 minds.
5 MS. LIAN: Right. But I can provide 6 information that we asked for three separate requests 7 additional information, a public meeting, and we were 8 available by the phone, I mean by the phone when they 9 requested. So we really have no indication that the 10 companies did not understand our requirement.
11 MS. SIMMONS: And just to add to that, 12 NUREG-1537 does specify, it's not a requirement but it 13 does indicate that, if grants are available, that 14 documentation would be provided.
15 JUDGE HAWKENS: You testified that the 16 Aerotest reactor h a d - in 2011 while the reactor 17 was shut down; is that correct?
18 MS. LIAN: Yes.
19 JUDGE HAWKENS: Did you ask the applicant 20 what the source of this revenue was?
21 MS. LIAN: I could go back and answer that 22 question in a different way. Again, we have requested 23 multiple times for the company to provide us revenue 24 projection and any documentation for them to support 25 those projections. And when they provided t h i s . in OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFlGIAL USE QNLY PRQPRIETARY INFQRMATIQN 142 1 their historic financial statement, there was no 2 explanation of where that, we should s a y . come from 3 because we know. is for the training.
4 And so, in a way, yes, we did ask for more 5 information. But, again, just to bring back what I 6 mentioned before-- I'll take it back. So we have no 7 way of knowing if this extra . . is a one-time revenue 8 or is a recurring thing, so we could not have put that 9 forward. In addition, even if we include that
- in 10 the totality of the potential revenue, it is still a 11 lot less than the lowest annual operating cost of 12 ...
13 JUDGE HAWKENS: You concluded the total 14 estimated cost for the first five years are 15 approximately 16 MS. LIAN: Yes.
17 JUDGE HAWKENS: And your total revenue, 18 based on your calculations, was 19 approximately. And, thus, the revenue did not cover 20 the operating costs?
21 MS. LIAN: That's correct. I do want to 22 clarify that it's not, it is not what we believe the 23 companies will make in year two to year five because 24 we just don't have that kind of information. But it's 25 really a summation for all the information that we QFFIGIAL USE QNLY PRQPRIETARY INFQRMATIQN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GF~IGIAL USE ONLY PROPR!-E!!!ARY INFORMATION 14 3 1 could gather and determine at the time of the review.
2 JUDGE HAWKENS: It's the company's 3 position it not an appropriate comparison in light of 4 the fact that the estimated cost is directly 5 proportionate to the amount of services performed.
6 How do you respond to that, that that's an 7 inappropriate comparison?
8 MS. LIAN: Well, at the time -- well, we 9 know that, at the time, 2011, the reactor was shut 10 down and it still incurred about . . of operating 11 costs. So, yes, I agree that it's a variable cost 12 associated with providing service~. However, we have 13 no basis to know, if the reactor is totally shut down, 14 what the number would be. So at the time, all we had 15 was 1111* That's during the reactor shutdown.
16 JUDGE HAWKENS: So that could well be an 17 inappropriate comparison?
18 MS. SIMMONS: The staff -- I think what 19 we're hearing today is that there's directly 20 proportional reduction in costs based on the amount of 21 service provided. I would characterize that as new 22 information that we didn't have at the time of the 23 application. So we didn't have that information to 24 evaluate.
25 JUDGE HAWKENS: In your view, do you think OFFIGIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!C!AL USE GNL¥ PRGPR!ETAR¥ !NFGRMAT!GN 144 1 it would be worthwhile for the case to be remanded to 2 the staff in light of the new and material information 3 that's in the record to reconsider de novo in light of 4 that new information, or is it the staff's position, 5 which appears from some of their testimony, that it 6 simply doesn't matter?
7 MS. LIAN: Well, I would say that the 8 companies, to this day, still have not addressed our 9 concern, which is the majority of customers will 10 return. I understand the companies provided several 11 statements on why they believe the customers will 12 return. However, as I previously stated, the 13 companies' advantage certainly is they're very 14 attractive to customers, but we have other factors we 15 still have to consider.
16 JUDGE HAWKENS: You mentioned relationship 17 with their current provider. Other than that, what 18 are the factors?
19 MS. LIAN: We also know that there's 20 always a cost associated with transferring a change of 21 supplier, whether it's time or monetary. And also, as 22 of today, the reactor has shut down for four years.
23 Even for some initial difficulty when you switch a 24 supplier, we have no reason to believe that those 25 difficulties still exist. So the current relationship GFF!C!AL USE ONLY PRGPR!ETAR¥ !NFGR~~T!GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF!GIAL USE GNL¥ PRGPRIETAR¥ INFGRM.r...TIGN 14 5 1 is really important because, again, a cost of 2 switching suppliers and what the suppliers might do in 3 response to Aerotest's strategy on pricing.
4 JUDGE HAWKENS: You didn't 5 provide anything your decision that compared the 6 potential costs of switching suppliers, did you?
7 MS. LIAN: No, I did not because the 8 underlying assumption that we are evaluating is if the 9 customers will return, and the best evidence would be 10 from those customers that express interest in 11 returning.
12 JUDGE HAWKENS: I don't have a lot of 13 experience and no expertise in financial matters like 14 this, but, as a run-of-the-mill consumer, to me, a 15 - - * *
- MS. LIAN: You are not wrong in looking at 24 it that way. However, there are factors to consider 25 GFFIGIAL USE GNL¥ PRGPRIETAR¥ INFGR~~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL YSE GNLY PRGPRIE!l'ARY INFGRW~!l'IGN 14 6 1 JUDGE HAWKENS: I'm sorry to interrupt.
2 I'll ask it a different way. Why does your concern 3 about alleged relationship and alleged potential cost 4 of returning, which, to me, seems to be a very heavy I
5 7
weight on this side, -
MS. LIAN:
I'll provide two reasons for
?
8 that, and Ms. Simmons can put in to it. First, yes, 9 the comparative advantage that Aerotest is proposing 10 is very attractive to customers. The customers might 11 return, but, at the same time, we don't know when and 12 what level of revenue they're bringing in. So in that 13 case, if we look at Nuclear Labyrinth as a 14 newly-formed entity, it only has - working 15 capital. So if the customers do not return in a 16 timely manner to support, to cover the operating 17 costs, then we will run into issues. So that's one.
18 JUDGE HAWKENS: And I hate to interrupt.
19 Keep in mind what else you want to tell me, but 20 Aerotest seemed to have built into their prediction 21 which predictions have to be based somewhat on 22 speculation. There's nothing wrong with predictions 23 in the economic sphere, but they tried to put in a 24 conservatism of of the lowest revenue in 25 recent years. Why is that unreasonable?
~o~F~F~I~C~I~A~Lr4YHS~E~G~~~~L~Yr---P~R~O~PRIETARY INFOR~~~IGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORW..TION 14 7 1 MS. SIMMONS: It may not be unreasonable, 2 but we don't have that information in sufficient 3 detail to evaluate it. We've heard today that there's 4 been a market analysis. And, yes, it's somewhat 5 speculative. But if the staff were to re-review this 6 with detailed information about pricing of other 7 competitors, you know, if he's competing with 8 university generators, they may not have the same 9 price pressures as a commercial reactor.
10 So without that information before us at 11 the time of this denial, we just didn't have that 12 information to make a determination one way or 13 another. And just simply to say, you know, a lot of 14 this is based on the operability of the reactor, which 15 even today is still in question.
16 JUDGE HAWKENS: I interrupted you, Ms.
17 Lian. I didn't want to cut you off. Are you 18 satisfied with your answer, or is there more you'd 19 like to add?
20 MS. LIAN: Yes, I am. I might add more 21 later.
22 JUDGE HAWKENS: All right. You stated 23 that, without the results of the company's evaluation, 24 there was still a possibility the reactor would incur 25 future costs related to replacement of aluminum fuel OFFICIAL USE ONLY PROPRIETARY INFORW..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONLY PROPRIETARY INFORM..'l.\..TION 14 8 1 elements.
2 MS. LIAN: Yes.
3 JUDGE HAWKENS: Did you request the 4 company submit the fuel evaluations it was performing?
5 MS. LIAN: I did not specifically request 6 that.
7 JUDGE HAWKENS: Did you consider 8 postponing your final decision on the application 9 pending submission of the fuel evaluation so you could 10 make an informed decision?
11 MS. LIAN: We considered at the time.
12 However, based on our information specifically, even 13 if we don't have any damaged fuel, they still have not 14 provided sufficient evidence that their revenue 15 projection is reasonable and can cover the operational 16 costs.
17 JUDGE HAWKENS: So if I hear you 18 correctly, in light of the new material evidence, 19 there is a possibility that, upon review, the staff 20 could conclude that Dr. Slaughter's analyses are 21 correct and the core can restart and be fully 22 operational?
23 MS. SIMMONS: Well, that would be a 24 technical review. Certainly, as I think Ms. Lian was 25 alluding to, in terms of the financial qualifications OFFICIAL YSE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G~A~ USE GN~¥ PRGPR~ETAR¥ ~NFGRM..'Zb.T~ON 14 9 1 review, there's still unanswered questions about the 2 ability to make the five-year custom revenue 3 projection showing and the spent fuel costs. For 4 example, the support agreement provided by the seller 5 has expired, so, you know, we really would be talking 6 about a complete review.
7 JUDGE HAWKENS: The companies developed a 8 financial plan that includes collection of spent fuel 9 storage fee over the course of the extended 20-year 10 license period and placing these fees in a trust to 11 cover spent fuel management. Assuming the reactor 12 were able to start up and prove fully operational, is 13 there any basis for concluding the companies' plan is 14 not based on plausible assumptions and reasonable 15 forecasts?
16 MS. LIAN: Even if the reactor is 17 operational, we still have concern about their revenue 18 projection. So in that case --
19 JUDGE HAWKENS: All right. Let me --
20 MS. LIAN: -- we still have 21 JUDGE HAWKENS: rephrase that.
22 Assuming that their projections were correct about the 23 * - returning, is there any basis for 24 concluding their plan for accruing funds for spent 25 fuel storage is not plausible?
OFF~G~A~ USE GN~¥ PROPR~ETARY ~NFGRD~T~GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMP-..-TION 150 1 MS. LIAN: Based on that information 2 alone, I have no reason to believe that that's not 3 reasonable.
4 JUDGE HAWKENS: Let me ask counsel -- I'm 5 about halfway done with my questions for these 6 witnesses. I can charge right through, or we can take 7 a break for lunch. I don't want people to be 8 uncomfortable.
9 MS. UTTAL: I would ask that we take a 10 break for lunch.
11 JUDGE HAWKENS: Do counsel for the 12 companies have any objection to that?
13 MR. SILBERG: We don't, your Honor.
14 JUDGE HAWKENS: How much time would you 15 like for lunch? It's about 12:45 now. One hour?
16 MS. UTTAL: Okay.
17 JUDGE HAWKENS: Counsel for the companies?
18 We'll take a recess, reconvene in an hour at 1:45.
19 Thank you. We're in recess.
20 (Whereupon, the above-entitled matter went 21 off the record at 12:46 p.m. and went back 22 on the record at 1:45 p.m.)
23 JUDGE HAWKENS: Ms. Lian and Ms. Simmons, 24 please return to the witness box. Good afternoon.
25 Are you ready to proceed?
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OFFIGIAL USE ONL¥ P:ROPRIE!!!AR¥ INFORMA!!!ION 151 1 MS. SIMMONS: Yes, sir.
2 MS. LIAN: Yes.
3 JUDGE HAWKENS: A reminder you both remain 4 under oath and a reminder that most of the questions 5 are framed in responses of yes or no. And if you'd 6 endeavor to keep it to yes or no, if possible, we'd be 7 grateful.
8 MS. LIAN: We'll try.
9 JUDGE HAWKENS: You testified the 10 companies did not provide a detailed list of its 11 opt-in customers between 2003 and 2010, did not 12 provide a specific revenue breakdown per customer 13 between that time period, and did not provide 14 information indicating that many of their top-ten 15 customers would have been customers of Aerotest for 16 more than 20 years. Were you aware that Aerotest had 17 been operating since 1966?
18 MS. LIAN: Yes.
19 JUDGE HAWKENS: Did you ask the companies 20 for information indicating that many of their top-ten 21 customers had been customers for more than 20 years?
22 MS. LIAN: I don't believe so.
23 JUDGE HAWKENS: You testified the details 24 regarding pricing and Aerotest's competitors were not 25 included in the application or the RAI responses. But OFFIGIAL USE ONL¥ PROP:RIETAR¥ INFO:R~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OF~+/-GIAb YSE ONbY PROPRIETARY INFORW..TION 152 1 the companies did state in the I
I I
I 6
.. _ Did you have any contradicted Aerotest's representation?
information that 7 MS. LIAN: We have no information on 8 anything --
9 JUDGE HAWKENS: Not at that time?
10 MS. LIAN: Exactly.
11 JUDGE HAWKENS: Did you request more 12 information and details regarding the pricing and 13 Aerotest's competitors in support of Aerotest's 14 assertions?
15 MS. LIAN: No.
16 JUDGE HAWKENS: Would this new information 17 on competitor pricing, in combination with the new 18 information on Aerotest' s long history of customer 19 service, had made a difference?
20 MS. LIAN: It would be hypothetical, but, 21 knowing what I know today, we would still have 22 concern. So I don't think it would make a difference.
23 MS. SIMMONS: Just to add to Ms. Lian's 24 response, it's not necessarily true that all of these 25 assertions made by the companies would necessarily pan OFFIGIAL YSE ONLY PROPRIETARY INFORW..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIA~ USE ON~¥
- PROPR~~~R¥ INFOR~~T!ON 153 1 out. Competitors, of course, can always lower their 2 prices in the event that a new participant enters the 3 market. So a lot of this is speculative without doing 4 further analysis.
5 JUDGE HAWKENS: You stated the information 6 provided in the application, in particular written 7 statements from past customers, is not supported by 8 information such as the specific terms, pricing, 9 quanti ties, timing, etcetera, in sufficient detail for 10 the staff to rely upon for reasonable assurance. Is 11 it reasonable to expect specific terms on pricing, 12 quantities, and timing when neither the licensee or 13 the customer knows when or if the reactor will resume 14 operations?
15 MS. LIAN: In that content, it might not 16 be possible to provide such information. But our 17 regulation really asks us to evaluate the financial 18 qualifications of a company. In that case, we will 19 need sufficient detail and evidence to make our 20 findings.
21 MS. SIMMONS: I think, given the 22 companies' statements that the nature of their 23 business makes it difficult, if not impossible, to 24 obtain letters of intent or long-term contracts, the 25 burden would be on the companies then to provide OFFIGIA~ USE ONL¥ PROPRIETAR¥ INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF+/-G+/-AL USE GNLY PRGPR!E!J'ARY !NFGRMA!J'!GN 154 1 something in the alternatives for the staff to rely on 2 to make reasonable assumptions about revenue 3 projections.
4 JUDGE HAWKENS: You state the staff cannot 5 predict when the reactor would become fully 6 operational and the companies did not provide evidence 7 of the time frame that future business would be 8 transferred back to the reactor after the license 9 transfer. But didn't the company state they would 10 spend the first year after license transfer restarting 11 the reactor and that the reactor would be providing 12 services in the second year after the license 13 transfer?
14 MS. SIMMONS: This was their assertion; 15 that's true.
16 JUDGE HAWKENS: You testified the 17 additional information provided by the companies that 18 gave a specific revenue breakdown per customer between 19 2003 and 2010 would not have changed the staff's 20 conclusion about financial qualification because past 21 customer revenue was highly variable from year to 22 year, which renders revenue projections even less 23 certain. Isn't it true that variation in individual 24 purchases is a reality in the neutron radiography 25 business and, in particular, in Aerotest's history of OFF!C!AL USE GNLY PROPR!E!J'ARY !NFGR~~!J'!GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 155 1 its neutron radiography business?
2 MS. LIAN: The information we know for 3 sure at the time is they do not use long-term 4 contracts. So we have no information on if the 5 customer revenue has a wide range of variables or not.
6 JUDGE HAWKENS: And didn't Dr. Slaughter 7 endeavor to take this into account by predicting only 8 of the lowest revenues in recent years 9 would be assumed?
10 MS. SIMMONS: According to his testimony 11 today, we have a little bit more information about why 12 he used Of course, that wouldn't change 13 the staff's conclusions in that we didn't feel that 14 his overall revenue projections were going to be 15 reasonable or were reasonably supported.
16 JUDGE HAWKENS: Do you have a view on what 17 percentage would have been a reasonable and plausible 19 MS. LIAN: I don't think today, with all 20 the information, we could have made any kind of 21 prediction on what's reasonable.
22 MS. SIMMONS: I think also the notion that 23 a single assumption about the percentage of customers 24 that would return would not be consistent with the 25 nature of the staff's review, which is based on the OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETARY INFORM..~TION 156 1 entire set of facts and circumstances. Although one 2 single element of an assumption may be correct, we 3 can't ignore the fact that there's uncertainty about 4 the operability of the reactor. We still have 5 uncertainty about the funding for spent fuel and all 6 of the other factors that are involved in the staff's 7 review. It's based on the totality of facts and 8 circumstances.
9 JUDGE HAWKENS: That's true. There seem, 10 in my view, to be two discrete reasons for denial: the 11 question about the ability to operate and have 12 sustained operations for the renewal period, which is 13 one reason; the second reason being their ability to 14 demonstrate in the first five years compliance with 15 the financial requirements.
16 So I think you have to put one aside.
17 It's true they're both independent reasons. But when 18 we're talking about their ability to demonstrate first 19 five years they have sufficient revenues for the cost, 20 we have to put that aside from the ability of the 21 reactor to start up successfully and have sustained 22 operations. I think you indicated earlier, as a 23 technical standpoint, that's beyond your expertise, in 24 any event. That was a call made by Mr. Adams, which 25 he'll testify to a little bit later.
OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GF~~G!AL USE GNL¥ PRGPR!ETAR¥ IN~GRMATIGN 157 1 MS. SIMMONS: True. Okay. So even for 2 the five-year cost and revenue showing that's required 3 by the regulations, the regulation does say for the 4 period of the license. So the five year is what the 5 Commission has required to make that showing.
6 JUDGE HAWKENS: And that there's a five 7 year, there's a presumption they'd be able to 8 continue.
9 MS. SIMMONS: That's correct. And, again, 10 I think, just to get back to the notion of this 11 singular fact of the of customers from 2009 12 returning, even in that more limited context, without 13 information about, very specific information about the 14 market, the fact that a university reactor does not 15 have the same competitive pressures and can lower 16 their prices, we don't know if the market is the same 17 as it's been or it will continue to be the same for 18 the next five years. The assumptions underlying those 19 revenue projections, the staff was unable to find 20 those reasonable.
21 JUDGE HAWKENS: You pointed out the 22 company had ; is 23 that correct?
24 MS. LIAN: Yes.
25 JUDGE HAWKENS: That was also true when G~~IGIAL USE GNL¥ NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
~IG+/-~ USE ONLY PROPRIETARY INFORMATION 158 1 you approved the X-Ray Industry's license transfer; is 2 that correct?
3 MS. SIMMONS: That's true.
4 JUDGE HAWKENS: Did you request an 5 explanation from the companies for the decline in 6 revenue in 2009?
7 MS. SIMMONS: Not specifically, no.
8 However, I believe that they provided information 9 that, due to the recession, that was an anomaly.
10 JUDGE HAWKENS: All right. And it appears 11 the revenue was, in fact, turning around in 2010; is 12 that correct?
13 MS. SIMMONS: No, I would not agree with 14 that statement. The revenue, as in NRC026P, in 2010, 15 okay, the reactor shut down later in the year, but 16 there was negative -- well, the staff looks at the 17 bottom line, and we see that - * -
19 20
- - And I'm responsive to your question, your Honor.
JUDGE HAWKENS: You not may sure not if that's have the 21 information at your fingertips, but it appears in 2010 22 the sales were higher than in 2009. But as you 23 indicated, the reactor was forced to shut down in 24 October; and, therefore, the companies were paying for 25 operating costs without the revenue for the last two OFFIGIAL USE ONLY PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!G!A~ USE QN~Y PROPR!ETARY !NFORMAT!ON 159 1 and a half months of the year.
2 MS. SIMMONS: That's correct, your Honor.
3 JUDGE HAWKENS: You state the NRC staff 4 puts great weight on the more recent financial and 5 performance information provided in the application; 6 is that correct?
7 MS. LIAN: Yes.
8 JUDGE HAWKENS: That puts an applicant, 9 like the companies, where the reactors have been shut 10 down for the past four years, in a very difficult 11 situation. Would you agree?
12 MS. LIAN: Yes.
13 JUDGE HAWKENS: How would you respond to 14 the assertion that this, effectively, ignores nearly 15 all the historical financial performance of Aerotest?
16 MS. LIAN: I would like to clarify that.
17 We did not ignore the historical financial 18 information. We used this historical financial 19 information to evaluate four different occasions. I 20 don't know if you want to go into specifics, but, at 21 the end, like I provided earlier, the fact that the 22 reactor is not operating has no base of customers. We 23 have to take that into consideration and consider only 24 recent financial information.
25 MS. SIMMONS: Just to add to Ms. Lian's OFF!G!A~ USE ON~Y r PROPR!ETARY !NFORMAT!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONLY PROPR-IE!I!ARY INFORMA!I!ION 16 0 1 response, I think that Aerotest is somewhat unique as 2 a Part 50 licensee. It is almost singularly reliant 3 on outside revenue. That's not true of the other 4 commercial nonpower reactors that have the backup of 5 very Dow Chemical, for example very 6 highly-capitalized corporations.
7 As to the importance of historical 8 financial information generally, I would just say 9 that, you know, companies are audited every year 10 because business conditions and economic conditions 11 can change very rapidly. So historical financial 12 information is important, but it can't --we see from 13 the operating experience of Aerotest, there was a 14 shutdown in 2010, and we have seen other situations 15 where there have been unexpected significant costs 16 that might occur, and we just have to make sure that 17 we're protecting public health and safety and allowing 18 for margin in their financial plan to accommodate 19 that.
20 JUDGE HAWKENS: Thank you. It's true the 21 condition has used license conditions to address 22 situations where the licensee has no current 23 recommitted funds; is that correct? For example, in 24 PFS and LES?
25 MS. SIMMONS: That's correct.
OFFIGil'~L USE ONLY PROPRIET..71..RY INFORMA!I!ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!G!A~ USE GN~Y PRGPR-!E!l!ARY !-NFGRMAT!GN 161 1 JUDGE HAWKENS: You stated you needed 2 independent information to determine the financial 3 condition of customers to assess their ability to 4 enter the business transaction with the companies; is 5 that correct?
6 MS. SIMMONS: Yes, I think that's 7 consistent with our testimony.
8 JUDGE HAWKENS: And where in the 9 regulation is that required? And I'll say I believe, 10 in your testimony, you said it was required by Section 11 50.33(f) (4) (2). Do you recall that?
12 MS. SIMMONS: There's regulation at 10 CFR 13 50. 3 3 (f) ( 4) and (f) ( 5) . Both of them have been 14 described by the Commission as something called a 15 safety valve. If we don't have enough information, 16 the staff, particularly in the area of a newly-formed 17 entity which is specific to 10 CFR 53 (f) ( 4), because 18 Nuclear Labyrinth is a newly-formed entity, we ask 19 additional information because they have no operating 20 history upon which the staff can rely to make its 21 finding. I think that's the component of the 22 testimony that you're --
23 JUDGE HAWKENS: So even absent an explicit 24 regulation that authorizes you to request that 25 information, you're saying that the regulations, in GFF!G!A~ USE GN~Y PROPRIETARY !NFGRMAT!GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PRO-PRIETARY INFORMJl..,TION 162 1 general, pursuant to the authority they can throw upon 2 you, give you that discretion to require this 3 information?
4 MS. SIMMONS: Absolutely.
5 JUDGE HAWKENS: When in the past has a 6 staff, to your knowledge, required independent 7 information on the financial condition of an 8 applicant's customer?
9 MS. SIMMONS: I can speak to an example.
10 We don't have a lot of example from nonpower reactors.
11 Many of the nonpower reactors are funded by the 12 university, so it's a different context to make a 13 finding. However, for power reactors, we have 14 required examples of contracts that they have in 15 place. For X-Ray Industry, of course we have the 16 operating history and no evidence that that would just 17 be discontinued, but we did have to look at the draft 18 support agreement, for example, in order to help us 19 make our finding for the X-Ray Industry's license 20 transfer.
21 So I don't think independent verification 22 is necessarily defined in our regulations. But that 23 is certainly something that assists the staff in 24 finding reasonable assurance.
25 JUDGE HAWKENS: And as you were OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE!I'ARY INFORMA..!J;!..!.ON 16 3 1 describing, Ms. Simmons, the other example, I didn't 2 hear a precise example where you asked for financial 3 condition of an applicant's customers.
4 MS. SIMMONS: I just want to clarify a 5 little bit about -- I just want to make sure I'm 6 answering your question, your Honor. I think that in 7 there there's the question about license conditions.
8 Is that the nature of your question about the examples 9 used for license conditions?
10 JUDGE HAWKENS: No, this was just you said 11 you needed independent information to determine the 12 financial condition of customers to assess their 13 ability to enter into business transactions with 14 Aerotest, and I was asking can you provide an example 15 in the past where the staff has required independent 16 information on the financial condition of potential 17 customers.
18 MS. SIMMONS: I think that what I can say 19 is that we've asked for independent financial 20 information on any entities who are providing 21 financial support. For example, X-Ray Industries 22 itself, we required their long-term financial 23 information because they were providing a potential 24 source of funds. So that would be an example of what 25 we call a source of funds and looking for something OFFICIAL USE ONLY PROPRIE!I'ARY INFORW..!I'ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIA~ YSE ON~Y PROPRIETARY INFORMATION 164 1 independent to verify that.
2 JUDGE HAWKENS: Okay. You stated it's not 3 unreasonable to believe that past customers have taken 4 their business elsewhere.
5 MS. LIAN: Yes.
6 JUDGE HAWKENS: Did the customers ever 7 assert their customers had not gone elsewhere?
8 MS. LIAN: Can you repeat that question?
9 JUDGE HAWKENS: The customers -- I' 11 make 10 it in the affirmative. The customers never asserted 11 their customers had gone elsewhere, had they?
12 MS. LIAN: There was an indication on the 13 statement of interest from two customers that they're 14 using somebody else.
15 JUDGE HAWKENS: Right. In other words --
16 MS. LIAN: So they have --
17 JUDGE HAWKENS: you assumed their 18 customers had gone elsewhere?
19 MS. LIAN: Yes, and it's a logical 20 assumption that if a customer needs a service and 21 Aerotest is not providing, they would have gone 22 somewhere else.
23 JUDGE HAWKENS: The companies also stated 24 they acknowledged that customers have gone elsewhere, 25 and OFFICIA~ YSE ON~Y PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL YSE GNLY PRGPR:IETARY INFGRMA.TIGN 165 1
I 4 that representation by the companies?
5 MS. LIAN: Well, it's an assertion made by 6 the companies, whether or not we believe it. We 7 really need supporting document for that.
8 JUDGE HAWKENS: Again, why isn't it 9 plausible? I understand that you wanted supporting 10 documents, but why is not plausible to conclude that 11 a previous customer would return to a former supplier 12 with whom it had good relations for 10 or 20 years who 13 provided cheaper and quicker services?
14 MS. LIAN: I believe we kind of answered 15 that question, but maybe we can summarize it and Ms.
16 Simmons can add to it. Again --
17 JUDGE HAWKENS: I'm not asking you to 18 repeat the answer. We've addressed this. We probably 19 will have several more questions that implicate it, so 20 if you could just summarize it. And I ' 11 ask it 21 again. Why is it not at least plausible to conclude 22 that a previous customer would return to a supplier 23 with whom it had satisfactory relations for decades 24 who provided cheaper and quicker services?
25 MS. SIMMONS: It's not necessarily GFFICIAL YSE GNLY PR:GPRIETARY INFGRMATIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G¥~ICIAL USE GNLY PRGPRIE'l'ARY IN~GRMA'l'IGN 166 1 implausible in a vacuum. However, given that these 2 entities may have other factors that we've enumerated, 3 we can't rely on that fact alone to make our finding.
4 JUDGE HAWKENS: You stated the staff 5 requested the companies provide a support agreement 6 for six months of operation and maintenance, in 7 addition to the 12-month funding agreement with 8 Autoliv; is that correct?
9 MS. LIAN: I think so, yes.
10 JUDGE HAWKENS: And you may not remember 11 without looking at the request for additional 12 information, but the RAI did not use the words "in 13 addition to." It requested draft financial support 14 agreement between Nuclear Labyrinth and Aerotest to 15 cover operations and maintenance costs for a period of 16 six months and provide evidence of Nuclear Labyrinth's 17 ability to provide the amount stated in the agreement.
18 MS. LIAN: Give us one second, and we can 19 look at that.
20 MR. SILBERG: Excuse me, your Honor. So 21 we can follow, what RAI is that and which RAI number 22 is that?
23 JUDGE HAWKENS: Let me -- try NRC Exhibit 24 024P at two.
25 MR. SILBERG: Thank you.
GF~ICIZ!~L USE GNLY PRGPRIE'l'..71~RY IN~GRMA'l'IGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONLY PROPRIETARY INFOR~~TION 167 1 MS. SIMMONS: Could you repeat your 2 question, your Honor?
3 JUDGE HAWKENS: You stated the NRC staff 4 requested the companies provide a support agreement 5 for six months of operation and maintenance, in 6 addition to the 12-month funding agreement with 7 Autoliv. And the question is did the RAI use the 8 words "in addition to?"
9 MS. SIMMONS: Oh, I see. You're on page, 10 just to clarify, NRC024P, page two.
11 JUDGE HAWKENS: Correct.
12 MS. SIMMONS: Okay. The final chapter or 13 the final paragraph here. To clarify that RAI, your 14 Honor, the RAI B refers to two different things. The 15 first sentence is consistent with the staff's practice 16 of as king for additional financial assurance. And the 17 second sentence is, to the best of my recollection, is 18 that Nuclear Labyrinth, oh, is some draft contract 19 about their ability to provide anything that would be 20 provided, the financial support for six months.
21 JUDGE HAWKENS: Did the companies comply 22 with that request by providing the requested support 23 agreement and source of funds being the -
24 transferred from Autoliv?
25 MS. LIAN: Yes, that's the funding NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE GNLY PRGPRIEg;!ARY UlFORMAg;!IQN 168 1 agreement it provided, lllllfrom the seller.
2 JUDGE HAWKENS: You stated the revenues 3 from research without an operational reactor could not 4 cover spent fuel management costs. Did the companies 5 ever state it was their intent that revenues from 6 research alone would cover spent fuel management 7 costs?
8 MS. LIAN: I might have to my 9 recollection is the companies stated that they can 10 still continue to operate, generating revenue after 11 the reactor is shut down and decommissioning. As far 12 as we know, the commercial services cannot be 13 continued without an operating reactor, so that leaves 14 them with only training and research. And in part, 15 only part of the research can be done without the 16 reactor.
17 JUDGE HAWKENS: Did you ever consider a 18 license condition to address the circumstance of the 19 reactor's inability to start up or have sustained 20 operations?
21 MS. SIMMONS: No, we didn't consider such 22 a license condition, nor was it requested.
23 JUDGE HAWKENS: That concludes my 24 questions for now. Do you have anything you'd like to 25 follow up on relating to any question I asked?
GFFICIAL USE ONLY PRGPRIEg;!ARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY - PROPRI~RY INFORMATION 169 1 MS. SIMMONS: I think, you know, I think, 2 your Honor, we'd just like to say that the staff's 3 analysis was really based on the totality of facts and 4 circumstances. A lot of the discussion today has been 5 on some of the very particular elements of the review, 6 and it would not be accurate to characterize the 7 staff's financial qualifications finding on any 8 particular element that may or may not be supported.
9 But in its entirety, a number of factors, 10 the uncertainty about the reactor, the uncertainty 11 about the funding for spent fuel, the inability to 12 meet the regulation which is a showing of five-year 13 cost and revenue projections that are reasonable, you 14 know, those were the factors that were the basis of 15 our conclusion.
16 JUDGE HAWKENS: Thank you. You may step 17 down. Did counsel for the companies have any -- oh, 18 excuse me -- counsel for the NRC staff have anything 19 they'd like to add to fill in, based on the questions 20 I asked the witnesses?
21 MS. UTTAL: No.
22 JUDGE HAWKENS: Thank you. Mr. Adams, 23 please step forward. Are you ready, sir?
24 MR. ADAMS: I'm ready, your Honor.
25 JUDGE HAWKENS: All right. And a GFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF~C~A~ YSE ON~Y PROPR~E'I!ARY ~NFORMAT~ON 17 0 1 reminder, sir, you remain under oath. Your testimony 2 states the Aerotest reactor core typically consists of 3 about 85 fuel elements.
4 MR. ADAMS: At the time the reactor was 5 shut down, yes.
6 JUDGE HAWKENS: And what was the basis for 7 that number? Was it just historical --
8 MR. ADAMS: That was based on what was 9 actually in the core.
10 JUDGE HAWKENS: Actually in the core.
11 Thank you. Did you review historical records to 12 determine whether the Aerotest core is operated with 13 fewer fuel elements?
14 MR. ADAMS: Yes.
15 JUDGE HAWKENS: And what was the result of 16 that review?
17 MR. ADAMS: Over history, the number of 18 elements in the reactor had varied with a core down, 19 somewhere down in the sixty-some element range on 20 initial startup.
21 JUDGE HAWKENS: Do you believe the number 22 of fuel elements used in the core can change depending 23 on fuel management strategies, such as changing where 24 the fuel elements are placed?
25 MR. ADAMS: Yes.
OFF~C~A~ YSE ON~Y - PROPR~ETARY ~NFORMAT~ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONL¥ - PROPRIE~AR¥ INFGR~.~ION 171 1 JUDGE HAWKENS: Do you agree the number of 2 fuel elements used in the core can change based on the 3 enrichment and burn-up of the fuel elements?
4 MR. ADAMS: Yes.
5 JUDGE HAWKENS: Do you agree the stainless 6 steel clad fuel elements have a higher U-235 7 enrichment than the aluminum fuel elements?
8 MR. ADAMS: It's not enrichment, your 9 Honor. It's the density of the fuel. There's more 10 uranium in the stainless steel elements than the 11 aluminum fuel elements initially.
12 JUDGE HAWKENS: All right. Thank you.
13 The companies stated they were evaluating the impacts 14 of the damaged fuel and the transaction would not 15 close if there were limitations on the ability of the 16 reactor to operate. Did you request additional 17 information on that evaluation, such as a report or 18 copy of the evaluation, to remove the alleged 19 uncertainty regarding the impact of the damaged fuel 20 on operations?
21 MR. ADAMS: There was an RAI that asked 22 the impact of the damaged fuel, and the answer to that 23 RAI was that a report would be provided in March of 24 2013.
25 JUDGE HAWKENS: When was that report OFFICIAL YSE ONL¥ PROPRIE~AR¥ INFO~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIA~ USE ON~¥ PROPRIE!I!AR¥ INFORMA!I'ION 172 1 provided?
2 MR. ADAMS: The report was not provided.
3 JUDGE HAWKENS: Has Dr. Slaughter provided 4 in this proceeding a copy of that report?
5 MR. ADAMS: Dr. Slaughter has provided 6 additional information. I can't tell you if that was 7 the report.
8 JUDGE HAWKENS: Did you ever consider 9 conditioning the license transfer on the outcome of 10 that evaluation?
11 MR. ADAMS: No.
12 JUDGE HAWKENS: Why is that?
13 MR. ADAMS: At the time the license 14 transfer was denied, all we knew was that there was 15 damaged fuel. The commitment that was made in 16 response to the RAI to provide a report was not, the 17 report was not provided. Therefore, there was really 18 no basis to put a license condition in place.
19 JUDGE HAWKENS: You testified regarding 20 the potential causes for the swelling and the cracked 21 cladding; is that correct?
22 MR. ADAMS: That is correct.
23 JUDGE HAWKENS: And I think you also 24 acknowledged that your testimony is speculative and 25 can't be confirmed in the absence of additional OFFICIAL USE ON~Y - PROPRIE~AR¥ INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIG+/-A~ USE ON~Y PROPRIETARY INFQRMATION 173 1 analyses; is that correct?
2 MR. ADAMS: That is correct.
3 JUDGE HAWKENS: Has the staff performed 4 any independent assessment of whether the licensee has 5 enough fuel to operate at a length of time for which 6 it will have enough fuel to operate?
7 MR. ADAMS: Yes and no. First off, 8 there's a question of what does operate mean? From 9 our point of view, there's three aspects to successful 10 operation. One is that the reactor core that's 11 designed is safe. The other one is that the reactor 12 core that's designed can meet its design power level.
13 And the third is that the reactor can operate, in this 14 case, for the term of the license.
15 JUDGE HAWKENS: So those are the three 16 aspects that a staff's assessment --
17 MR. ADAMS: Yes. There was 18 JUDGE HAWKENS: you performed the 19 independent assessment on 20 MR. ADAMS: I did not perform the 21 independent assessment because, at the time of the 22 license transfer denial, that information was not 23 provided by the companies.
24 JUDGE HAWKENS: Is it true that the 25 purpose of Dr. Slaughter's core design analysis was to OFFIGIA~ USE ON~Y PROPRIETARY INFOR~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFICIAL USE ONLY PROPRIETARY ;tNFORMl'~TION 17 4 1 address the staff's assertion that there was 2 uncertainty as to whether or not there would be 3 sufficient fuel in the core to support the companies' 4 financial qualification analysis?
5 MR. ADAMS: Yes.
6 JUDGE HAWKENS: Is it also true the level 7 of assurance the Commission finds reasonable to 8 require regarding a licensee's ability to meet 9 financial obligations is less than the high assurance 10 the Commission requires regarding the safety of 11 reactor design, construction, and operation?
12 MR. ADAMS: I see that to be a financial 13 question to be addressed by the financial experts, but 14 my understanding is yes.
15 JUDGE HAWKENS: In light of that, was it 16 unreasonable to expect the companies would submit 17 benchmarking of the model quality assurance measures 18 and a safety analysis in response to an assertion by 19 the staff that there was uncertainty regarding whether 20 there was sufficient fuel to operate the reactor and 21 how long it could operate, given that this was in the 22 context of a financial qualification requirements 23 inquiry?
24 MR. ADAMS: I was looking at the safety of 25 the core and the ability of the core to perform the OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF!GIAL USE ONLY PROPR!ETARY INFORMATION 17 5 1 functions of an operational reactor core.
2 JUDGE HAWKENS: So you were looking at it, 3 principally, with your technical hat on, as opposed to 4 wearing your financial qualifications hat?
5 MR. ADAMS: I don't believe I own a 6 financial qualifications hat.
7 JUDGE HAWKENS: Thank you. All right.
8 Can you cite to any cases where the staff or the 9 Commission has required the information provided to 10 establish financial qualifications be subject to 11 quality assurance measures, such as the types of 12 benchmarking and technical models that you are looking 13 for here?
14 MR. ADAMS: I am not aware of that, but 15 this is the first time I've come across a proceeding 16 like this.
17 JUDGE HAWKENS: You stated that Dr.
18 Slaughter's proposed core design appears reasonable; 19 is that correct?
20 MR. ADAMS: That is correct. But let me, 21 let me add to that. Reasonable related to just the 22 aspect can the core reach its operational power. The 23 company has provided no information to allow me to 24 make any determinations that the core could be 25 operated safely, nor do I believe there's sufficient OFFIGIAL USE ONLY PROPRIETARY !NFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETARY INFG-RMATI-ON 17 6 1 information to allow me to say that the core would be 2 able to run through the end of the renewed license 3 term of 2035.
4 JUDGE HAWKENS: For purposes of giving you 5 that assurance in the context of this license transfer 6 application, you have drafted licensing conditions to 7 satisfy those concerns?
8 MR. ADAMS: Given the information that was 9 available at the time the license transfer was denied, 10 I believe not.
11 JUDGE HAWKENS: Is it conceivable that 12 now, given the additional information that the 13 companies have presented, that you could?
14 MR. ADAMS: At this point, I don't believe 15 so because there is still a large amount of 16 information that's missing and the license conditions 17 I think can't be a substitute for the RAI question and 18 answer process that will allow the staff to gather the 19 technical information they need to make the 20 determinations.
21 JUDGE HAWKENS: Is it correct the staff 22 does not require every change in core design, does not 23 review every change in core design used at a research 24 reactor?
25 MR. ADAMS: That is partially true. So to OFFICIAL USE ONL¥ PROPRIETAR¥ INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONL¥ PROPRIE~AR¥ INFOR~~ 177 1 make a change in a core design, it's more complicated 2 than Dr. Slaughter's testimony of you keep putting 3 cores on the good plate until you find one that seems 4 to work. Any changes made to the reactor have to be 5 shown to be safe.
6 There's several ways a licensee can do 7 that. The licensee can submit a license amendment 8 application to the staff that the staff would review 9 and approve the application, and the licensee can also 10 attempt to use the regulations in 10 CFR 50.59, which 11 allows the licensee to make changes to the reactor 12 without prior NRC approval if the changes don't 13 involve a change to the license or technical 14 specifications and the change has to be made and 15 successfully go through the 50.59 questions. And even 16 in that case, a case of a 50.59 change, there is an 17 inspection review afterwards to make sure that the 18 regulations were followed.
19 JUDGE HAWKENS: Do you have any basis to 20 conclude that a license amendment is required here?
21 MR. ADAMS: In my testimony, I said that 22 a license amendment may be required. That was based 23 on the significance of the change from the current 24 operating core to the proposed operating core, changes 25 in fuel arrangement, the size of the core, the OFFICIAL YSE ONL¥ - PROPRIE~AR¥ INFOR~.~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORM.lb.TION 17 8 1 movement of control rod position in the core, the 2 concentrating of the higher weight percent stainless 3 steel fuel elements in the middle of the core. That 4 is a lot of changes to be made in one core. Dr.
5 Slaughter testified that there was something like 80 6 changes made over the life of the core, but I would 7 guess that those were very gradual changes. This is 8 a very significant change which has a lot of safety 9 aspects that need to be considered.
10 JUDGE HAWKENS: So it's conceivable a 11 license amendment could be required?
12 MR. ADAMS: It is, it is, I think, very 13 conceivable a license amendment could be required.
14 JUDGE HAWKENS: You stated you believe the 15 power that would be produced in the maximum fuel 16 element in the proposed core is greater than the power 17 that was previously produced in the maximum fuel 18 element in the current core. Do you recall that?
19 MR. ADAMS: I recall that. Based on the 20 limited information that was provided in the 21 testimony, that is a possible conclusion.
22 JUDGE HAWKENS: You did not perform 23 calculations to verify the statement?
24 MR. ADAMS: I did not. This was, again, 25 information that was provided after the denial of the OFFICIAL USE ONLY - PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMA.TION 17 9 1 license transfer. It was not an application that 2 would be subject to the staff's review and scrutiny.
3 And before I would do that type of review, I would 4 basically go back to the applicant with a series of 5 RAis to provide a lot more information. Frankly, at 6 that point, there is not sufficient information for me 7 to do an independent review even if I wanted to.
8 JUDGE HAWKENS: To your knowledge, is 9 there a limit for the power produced in the maximum 10 fuel element in the Aerotest safety analysis report or 11 NRC operating license or technical specifications?
12 MR. ADAMS: I don't know the answer to 13 that question.
14 JUDGE HAWKENS: You stated that, to get 15 the longest life out of the new fuel, the new fuel is 16 normally introduced at the outside of the core and 17 then gradually moved to the center; is that correct?
18 MR. ADAMS: That's correct.
19 JUDGE HAWKENS: Could you tell me the 20 basis for that statement?
21 MR. ADAMS: Well, there's a lot of choices 22 that you have to make when you design a core. And as 23 a reactor engineer, I dealt with those choices and 24 made those choices. So you can design a core to carry 25 out a number of different goals. The core that Dr.
OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~+/-GIAL USE ONLY PROPRIETARY INFORMATION 18 0 1 Slaughter designed, the goal was to allow the reactor 2 to reach its power level and introduce a usable flux.
3 To do that, he had to commit the new fuel to the 4 center of the core. And you can see, the stainless 5 steel in the center of the core, that would be the 6 part of the core that would be producing the most 7 power, would run the hottest, and that part of the 8 core would burn more fuel than the rest of the core.
9 If you keep doing that, eventually you're 10 going to end up with a number of medium burnt-up fuel 11 elements that you then start compensating for by 12 adding more fuel elements to the core and, over time, 13 the core grows larger and larger to produce the same 14 power. You saw it in the difference between the 15 85-element core that Aerotest had when they shut down 16 and the core that Dr. Slaughter designed. Both those 17 cores were producing the same amount of power, only 18 the one core needed a lot more fuel elements because 19 of the distribution of the fuel elements and the power 20 produced by the fuel elements.
21 JUDGE HAWKENS: There's nothing in the NRC 22 license requirements or regulations or the technical 23 specs that prohibit Dr. Slaughter's approach, is 24 there, in the core design?
OFFIGIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~FICIAL USE-GNL¥ - PROPRIE~AR¥ IN~OR~~~ION 181 1 JUDGE HAWKENS: You stated, I believe, 2 that the MCNP5 code calculation is not sufficient to 3 demonstrate that it's reasonable to assume that the 4 proposed core will achieve operable power levels; is 5 that correct?
6 MR. ADAMS: That is correct. However, 7 when I made that statement, the information I had in 8 the testimony was different than the information that 9 was presented later on in the rebuttal testimony. At 10 the time I made that statement, based on the 11 testimony, I was under the impression that the only 12 fuel available to Dr. Slaughter was the fuel that was 13 committed to the core.
14 JUDGE HAWKENS: In Dr. Slaughter's 15 rebuttal testimony, he provides an analysis showing 16 that there is significant excess U-235 loading in the 17 core, even after 20 years of operation; is that 18 correct?
19 MR. ADAMS: That's his assertion, yes. I 20 am not the information and the way it was 21 presented, it was not sufficient for me to come to a 22 conclusion if I agree with that statement or not. And 23 this would be a subject of additional RAis if the 24 staff is doing the licensing review.
25 JUDGE HAWKENS: His burn-up calculation, O~~ICIAL USE ONL¥ PROPRIE~AR¥ IN~OR~N NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONLY PROPRIETARY INFORM1>..TION 182 1 you have not done an independent assessment of it 2 because there has not been sufficient information 3 provided for you to do that?
4 MR. ADAMS: Yes. Again, this was 5 information that came after the license transfer was 6 denied, so this is the first time I've seen this 7 information. Also, it was a calculation based on 8 historical burn-up and grams of uranium in certain 9 parts of the core compared against 1964 grams of 10 uranium, which was not an easy argument to follow.
11 However, you know, that argument has to be looked at 12 very carefully. The best way to go about this would 13 have been to do the calculations to age the core to 14 see how the burn up on the core went to see how the 15 fuel elements would be added.
16 Reactor uses uranium. In, I think, Dr.
17 Slaughter's testimony, he estimated about 14 grams a 18 year. That 14 grams is used throughout the entire 19 core. It's not like an automobile, at the end of the 20 year you can top off the fuel tank and you're full 21 again. To replace those 14 grams, you have to add 22 individual fuel elements, which would be the aluminum 23 fuel elements, and you're restricted to where you can 24 add them in the core because of open core positions.
25 So because a certain fuel element has a OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GE~~G!A~ USE ON~Y PROPRIE!J!:ARY IN~ORMl\TION 183 1 certain number of grams, that's a necessary condition.
2 If you don't have enough grams of fuel, it doesn't 3 matter how you arrange them. However, it ' s not 4 sufficient. The other thing to consider is the effect 5 of adding fuel has to the core, the reactivity that's 6 added to the core by the fuel. There was not 7 sufficient information in Dr. Slaughter's rebuttal 8 testimony for me to be able to confirm the statements 9 that were made about sufficient fuel, and also that 10 also depends on the issue of will the aluminum fuel 11 last the lifetime of the core, given the significant 12 amount of fuel elements that we saw fail?
13 So it's two issues. Is there enough 14 uranium there? How is uranium added to the core as 15 the core ages? And will there be sufficient uranium 16 to go forward in the future if additional fuel fails?
17 I'm sorry I'm not giving you yes or no answers.
18 JUDGE HAWKENS: No, no, I understand.
19 That was a difficult question to provide a yes or no 20 answer to and let it go at that. But Dr. Slaughter 21 has provided a great deal of information as to a new 22 core design, and he represents his burn-up 23 calculations suggest with high probability there's 24 sufficient fuel to operate the core, and Aerotest 25 operations also has financial provisions in place to O~~IGI:A~ USE ON~Y PROPRIE!J!:ARY !N~ORM:A!J!!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G~Ah USE ~¥ PRGPR~ETAR¥ ~NFGRMAT~GN 184 1 buy new fuel periodically after it becomes available 2 in 2017.
3 If you had all that information available 4 to you, would that have made a difference in your 5 initial determination?
6 MR. ADAMS: Again, if they were able to 7 submit information that we would find acceptable, if 8 they were to make a case that the core meets all the 9 safety requirements from a hydraulic analysis, 10 accident analysis, if all that could be shown, I agree 11 that there is, at least initially, enough fuel 12 available to run the reactor. The more significant 13 question moving forward is what is the future of the 14 aluminum fuel elements, given the substantial amount 15 of elements that have failed in the past? And 16 although I think that you can make a reasonable 17 assumption as to why that fuel failed-- you know, why 18 it failed absolutely is not known nowhere in the 19 companies' testimony did they tell me that they were 20 able to predict the past fuel failures or they could 21 predict future fuel failures.
22 So if all that information could be given 23 to us and we could review it and agree, then many of 24 the issues surrounding the operability of the reactor 25 moving forward, you know, would be settled.
GFF~GI.71.. L USE GNL¥ PRGPR~ET...n.. RY ~NFGRW.T~GN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF!CIAL USE QNLY PRQPR!E!!!ARY INFQRMA!!!!QN 18 5 1 JUDGE HAWKENS: If that were the only 2 issue, putting aside financial qualification 3 requirements, the ability of the reactor to start up, 4 have sustained operations and sufficient fuel, if that 5 was a requirement for authorizing the license 6 transfer, would you, as the crew chief for the 7 technical group, say let's work with the applicant and 8 make this determination and, based on that 9 determination, we'll determine whether to authorize 10 the license transfer?
11 MR. ADAMS: I don't think that's an 12 unreasonable statement.
13 JUDGE HAWKENS: So if we went forward, if 14 the Commission were to go forward step by step with 15 this, and I'm asking this, I'm thinking out loud, but, 16 ultimately, the question to you, as the expert, would 17 it make sense to make that determination, that 18 technical determination first because that's critical 19 to the financial qualification, them satisfying those 20 requirements? If you don't operate and you don't 21 operate for the renewal period, you're not going to 22 have the funding necessary for operations or for spent 23 fuel. So the first step is to determine the 24 operation, sustained operation, and sufficient fuel?
25 MR. ADAMS: If the reactor cannot operate, QFF!C!AL USE QNLY PRQPR!E!!!ARY INFQRMA!!!!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 18 6 1 you can't authorize services, you cannot get revenue.
2 But, again, I believe the most significant issue of 3 the technical issues is what's going to happen in the 4 future to the aluminum clad fuel if we decide the 5 reactor could restart? The number of fuel elements 6 that failed is not a good, is not a good omen for the 7 remaining elements moving forth into the future.
8 JUDGE HAWKENS: But I don't hear you 9 ruling out the possibility that the staff had the 10 tools and the means to work with Aerotest to make that 11 determination.
12 MR. ADAMS: We would be -- I don't see any 13 reason why we wouldn't be willing to move forward and 14 have those discussions. At the end of the day, if we 15 would come to agreement on the technical issues, I 16 can't tell you that answer.
17 JUDGE HAWKENS: I understand. Dr.
18 Slaughter testifies that core loading and surveillance 19 will be necessary after the license transfer to 20 confirm the results of his analyses. Is it true that 21 all reactor licensees perform physics testing using 22 site-specific approach to critical procedures to 23 perform-- excuse me. Let me back up. Isn't it true 24 that all reactor licensees perform physics testing 25 using site-specific approach to critical procedures to OFFICIAL USE ONLY - PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFF~G~AL USE QNL¥ PRGPR~E!I!AR¥ ~NFQ..R:MZ:\ii'~QN 18 7 1 confirm that the core operates as designed?
2 MR. ADAMS: I can only answer you giving 3 my knowledge of research reactors. That is a true 4 statement that we would expect licensees to have a set 5 of procedures for performing the critical experiments, 6 the attributes that would need to be measured during 7 that critical experiment.
8 I'll also add that true critical 9 experiments are very rare. In all my years at NRC, 10 I've maybe seen less than a dozen of them.
11 JUDGE HAWKENS: Dr. Slaughter testified 12 he'll have several reserve fuel elements that can be 13 added to the core if the physics testing shows that 14 more fuel is needed; is that correct?
15 MR. ADAMS: That's correct.
16 JUDGE HAWKENS: It's also possible that 17 the physics testing could show that fewer fuel 18 elements are needed, thus increasing the number of 19* fuel elements in reserve; is that correct?
20 MR. ADAMS: That is also correct. The 21 history of core modeling versus what it actually takes 22 to get the reactor critical, I've seen estimates that 23 are low and I've seen estimates that are high so .
24 25 JUDGE HAWKENS: Would you expect Dr.
PRGPR~ET..:r*..R¥ ~NFORMAT~QN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~IG+/-Ab USE ONLY PROPRIETAR¥ IN~OR~~TION 188 1 Slaughter's MCNP5 calculation to be off by more than 2 the 20 reserve fuel elements in the Aerotest reactor 3 inventory?
4 MR. ADAMS: No.
5 JUDGE HAWKENS: Does the NRC staff have 6 the authority to permit the Aerotest reactor to start 7 up prior to the transfer to perform this confirmatory 8 activity?
9 MR. ADAMS: Could you ask that question 10 again, please?
11 JUDGE HAWKENS: Does the NRC staff have 12 the authority to permit the Aerotest reactor to start 13 up prior to the transfer to perform this confirmatory 14 activity?
15 MR. ADAMS: I believe that's a legal 16 question you're asking me, so I'm not 100-percent sure 17 where we are in legal space about the ability of the 18 reactor to restart at this point.
19 JUDGE HAWKENS: It is the NRC staff's 20 position that restarting the reactor is currently 21 prohibited; is that correct?
22 MR. ADAMS: Again, you're asking a legal 23 question. I believe, I believe that's correct, based 24 on the order that was issued at the time we denied the 25 license transfer and denied the license renewal. So, OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFORMA~ION 189 1 yes, I believe that's correct.
2 JUDGE HAWKENS: Here is a question I 3 believe does fall within your bailiwick. Absent staff 4 authorization to allow Aerotest to start up the 5 reactor to perform the confirmatory activities, what 6 further actions could the companies take at this point 7 to confirm their analyses?
8 MR. ADAMS: Well, the first thing they 9 would have to do is determine that the proposed core 10 is safe so either a safety analysis given to the NRC 11 staff or a successful 10 CFR 50.59 review. There's no 12 indication in the testimony from the companies that 13 either of those steps have been taken.
14 So once that happens, then they would be 15 allowed to -- again, given no legal blocks, at that 16 point, they would be allowed to conduct the critical 17 experiment.
18 JUDGE HAWKENS: Okay. And is it true that 19 bringing the core to criticality and testing it, 20 though, is essential, ultimately, to confirm Dr.
21 Slaughter's analyses?
22 MR. ADAMS: Yes.
23 JUDGE HAWKENS: Mr. Adams, that concludes 24 my questions. Do you have anything else to add on 25 reflection to supplement your answers to my questions?
OFFICIAL USE ONLY PROPRIE~ARY INFORMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PR-OPRIE!J!AR-Y INFORM..?t..TION 19 0 1 MR. ADAMS: Just a comment that the focus 2 that I'm having is on public health and safety. If 3 Dr. Slaughter becomes a licensee, this research 4 reactor will be unique in that this will be the only 5 licensee that is dependent on outside revenue to 6 protect public health and safety. You need resources 7 to protect public health and safety, and the source of 8 revenue for this reactor will be the outside work they 9 do. That's not only short-term public health and 10 safety but also public health and safety if the 11 revenues don't appear and the reactor has to be shut 12 down and the fuel has to be stored for a period of 13 time.
14 JUDGE HAWKENS: That sounded like a 15 combination technical hat and financial hat. But I 16 will accept it, and we thank you.
17 MR. ADAMS: Thank you.
18 JUDGE HAWKENS: Anything by NRC counsel?
19 MS. UTTAL: No, your Honor.
20 (Whereupon, the above-entitled matter went 21 off the record at 2:43p.m. and went back 22 on the record at 2:43p.m.)
23 JUDGE HAWKENS: I mentioned earlier I 24 wanted to give counsel the opportunity to provide 25 additional questions to Kathy Schroeder, so she and I OFFICIAL USE ONLY PROPRIETARY INFORMP~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFFIGIAL USE ONL¥ PROPRIETARY INFORMATION 191 1 can sit and determine whether additional questions are 2 appropriate to pose to the witnesses. Does counsel 3 have any questions prepared at this point? Would you 4 like to take a 10- or 15-minute break to prepare them?
5 MR. SILBERG: We have some prepared.
6 MS. UTTAL: We would like a 15-minute 7 break to prepare.
8 JUDGE HAWKENS: Would 15 minutes be 9 adequate?
10 MS. UTTAL: I believe so.
11 MR. SILBERG: I'll be happy to provide--
12 JUDGE HAWKENS: We'd be grateful. That 13 way, we could look at them now. We' 11 take a 14 15-minute break and resume at 3:00. We're in recess.
15 (Whereupon, the above-entitled matter went 16 off the record at 2:44 p.m. and went back 17 on the record at 3:30p.m.)
18 JUDGE HAWKENS: We have a few additional 19 questions we are going to pose to the witnesses. If 20 we could get both Dr. Slaughter and Mr. Anderson in 21 the witness box, please.
22 (Pause) 23 This question I'll pose to both of you.
24 Are you aware of anywhere in the NRC regulations or 25 guidance where it says an applicant only has to OFFIGIAL USE ONLY - PROPRIET~71.RY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFlCIAL USE ONLY PROPRrETARY lNFORMA.TlON 192 1 provide a summary of its support for the statements in 2 the application?
3 MR. ANDERSON: I am not aware.
4 DR. SLAUGHTER: I'm not either.
5 JUDGE HAWKENS: Again, addressed to both 6 of you, why was the detailed information provided in 7 this adjudication not provided during the critical 8 time period when the staff was reviewing the license 9 application?
10 MR. ANDERSON: I don't know that I have --
11 that I can speak specifically to that, except that I 12 feel like we worked very hard to respond to the 13 staff's questions and provide the information that we 14 felt they were asking for.
15 DR. SLAUGHTER: I agree with that 16 statement. I thought that we were responding to the 17 RAis, we were responding to the information necessary 18 for the application. I thought no different, and I --
19 but I believe we were doing that.
20 JUDGE HAWKENS: This is addressed to Dr.
21 Slaughter.
22 DR. SLAUGHTER: Yes.
23 JUDGE HAWKENS: You testified the fuel 24 analysis was your fuel analysis was completed 25 before the application was submitted, is that correct?
OFFIClAL USE ONLY PROPRlETARY lNFORMATlON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIETAR¥ INFORMATION 193 1 DR. SLAUGHTER: No. March of --
2 JUDGE HAWKENS: Okay. Before the final 3 decision on the application was issued.
4 DR. SLAUGHTER: That is correct. It was.
5 JUDGE HAWKENS: Why did you not submit 6 that analys*is as part of the application for the staff 7 to consider?
8 DR. SLAUGHTER: I thought that it was a 9 concern to my decision on moving forward with the 10 agreement between Autoliv and myself and the purchase 11 that we had sufficient fuel. I did not necessarily 12 believe that that was going to be submitted. That 13 could have been erroneous.
14 But I also understood and believe that the 15 same information that I reviewed and had available to 16 me was also available to the NRC and their staff. So 17 that's the reason.
18 JUDGE HAWKENS: Do you have anything to 19 add to that?
20 MR. ANDERSON: I don't have anything to 21 add.
22 JUDGE HAWKENS: Dr. Slaughter, the same 23 question regarding your market analysis, which was not 24 provided until after the staff had rendered a decision 25 on the application.
OFFICIAL USE ONL¥ PROPRIETAR¥ INFORW..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONL¥ PROPRIE!I!AR¥ INFORMATION 194 1 DR. SLAUGHTER: The market analysis is --
2 and not necessarily in the report -- is the data set 3 forth in the due diligence process that allows me to 4 understand and build the financials and also 5 understand the clients as well as understand some of 6 the critical issues that are going to be required in 7 order for them to come back.
8 I failed to submit the additional detailed 9 information. I was unaware that I was required to.
10 JUDGE HAWKENS: Dr. Slaughter, in doing 11 OFFICIAL YSE ONL¥ PROPRIETAR¥ INFOR~~'I'ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
Q~FIGIAL USE ONLY PROPRIETARY INFORM..'l\..TIGN 19 5 1
I I
I I
6 I
I I
- 14 JUDGE HAWKENS:
21 JUDGE HAWKENS: Dr. Slaughter, customers of Aerotest have stated their version to having a sole 22 supplier. Taking that into account, what's the basis 23 for thinking that Aerotest would recapture 24 of their previous business?
25 DR. SLAUGHTER:
QFFIGIAL USE ONLY PROPRIETARY INFORM..'l\..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE!I'ARY INFORMA!J:!ION 196 1
2 JUDGE HAWKENS: Of the lowest in recent 3 history.
4 DR. SLAUGHTER: That particular fact was 5 also figured in to assure that -- because I believe 6 that as well. Early on, when they come back, those 7 clients will come back. They will -- have to feel 8 comfortable and safe in bringing their product in and 9 not putting their particular their particular 10 product at risk.
11 So, yes, that is actually figured in the 12 current financials. And there is -- for some of them, 13 that is a significant concern. They do not want to be 14 left in a lurch, and we had to figure that in. I had 15 to figure that in, but we also know that we will gain 16 some. There will always be probably a small portion 17 that will have a second supplier making sure they have 18 infrastructure ready to go in case something goes 19 wrong with the primary supplier.
20 JUDGE HAWKENS: This question is directed 21 to whoever is best able to answer it. What is the 22 minimum operating cost for the reactor if it is not 23 operating? Or the minimum operating cost for Aerotest 24 if the reactor is not operating?
25 DR. SLAUGHTER: Well, it depends on the OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~G+/-A~ YSE GN~Y PRGPR+/-E!I'ARY l:NFGRMl'~!I'l:GN 19 7 1 conditions in which, for example, if you are going to 2 simply have it on warn, standby, or when it's not 3 operate -- you're saying 4 JUDGE HAWKENS: When it's shut down.
5 DR. SLAUGHTER: When it's shut down.
6 JUDGE HAWKENS: I mean, I , and 8 you were assuming the reactor would be shut down 9 during that year. Is that the minimum operating cost 10 for the reactor?
11 DR. SLAUGHTER: If it --
12 JUDGE HAWKENS: If it's not operating?
13 DR. SLAUGHTER: If it's not operating --
14 you're saying beyond the second year if it's not 15 operating.
16 JUDGE HAWKENS: Correct.
17 DR. SLAUGHTER: Oh, of course not. If you 18 look at -- the staffing would be different. Staffing 19 would be reduced. You wouldn't need that kind of 20 staffing. You certainly wouldn't need a lot of the 21 categories in -- which are in that budget. So it 22 wouldn't be considerably less.
I - 1111
- 1111
- I - 1111 *
- 1111 1111
- But that's -- I think that's still 25 very high.
OFFl:Gl:A~ YSE ON~Y PROPRl:E!I'ARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G~~+/-G~AL USE ONLY PR:GPR!ETARY !N~ORW.. T-+/-GN 198 1 JUDGE HAWKENS: That completes my 2 questions for you gentlemen. Thank you.
3 MR. SILBERG: Your Honor, could I -- just 4 to clarify the record. On the last question, I think 5 it would be helpful if the record is clear whether 6 that dollar amount that Dr. Slaughter mentioned was 7 for a permanently shutdown reactor prior to 8 decommissioning or one that is just not operating at 9 that period of time.
10 JUDGE HAWKENS: I'm a little bit out of my 11 water, because all I have is a question that was 12 proposed for me. But given the unusual circumstance, 13 I will ask counsel for NRC staff if they could address 14 that.
15 MS. UTTAL: I'm just wanting to know --
16 not decommissioning, just shutdown.
17 MR. SILBERG: So the assumption is we are 18 not into one of these early permanent shutdowns and 19 all we're doing is waiting to ship the fuel off to 20 DOE.
21 MS. UTTAL: No.
22 MR. SILBERG: Okay. Thank you.
23 JUDGE HAWKENS: Could I have the three 24 staff witnesses please come up to the witness box.
25 (Pause)
O~~!G!AL USE ONLY PROPRIETARY !NFORMJ.I..T!ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE GNL¥ l?ROPRIE!!'ARY INFORMJ\.!!'ION 19 9 1 Mr. Adams, did you review the 2011 and 2 2013 tapes of the inspections of the reactor fuel 3 discussed by Dr. Slaughter?
4 MR. ADAMS: No, I have not. The NRC 5 inspectors reviewed the tapes. I'm sorry, Your Honor.
6 Can I update that answer?
7 JUDGE HAWKENS: Yes.
8 MR. ADAMS: I believe I have seen some of 9 the tapes because I did conduct a site visit in 2012.
10 JUDGE HAWKENS: You reviewed them, but did 11 you reach any conclusions based on your review?
12 MR. ADAMS: I was -- if I saw the tapes, 13 and I think I saw some of the tapes to get a feel for 14 what was on the tapes. I have also seen the pictures 15 of the fuel that was an exhibit from the companies.
16 JUDGE HAWKENS: Mr. Adams, you testified 17 the companies responded to an RAI on the impact of 18 damaged fuel by promising to submit a report?
19 MR. ADAMS: Yes.
20 JUDGE HAWKENS: Are you able to identify 21 that RAI?
22 MR. ADAMS: One moment.
23 (Pause) 24 JUDGE HAWKENS: I may have the answer 25 here, although I'm having difficulty reading it. Try OFFICIAL USE ONLY PROPRIE!!'ARY INFORMJ\.!!'ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 200 1 NRC Exhibit 22P, RAI Number 2.
2 MR. ADAMS: RAI Number 2 sounds like a 3 good RAI number. What was the number again?
4 JUDGE HAWKENS: RAI Number 2, page 2. And 5 it's NRC Exhibit 22P.
6 MR. ADAMS: Yes.
7 JUDGE HAWKENS: And could you point out 8 where Aerotest does represent it will submit a report?
9 MR. ADAMS: Scroll down a little bit more.
10 (Pause) 11 Yeah. 26P, is it 5B?
12 (Pause) 13 Based on this, I am not sure if I spoke 14 correctly.
15 JUDGE HAWKENS: If subsequently you are 16 able to find that, please feel free to include it in 17 a final pleading that you submit.
18 MR. ADAMS: All right.
19 JUDGE HAWKENS: To your knowledge, did the 20 staff ever advise Dr. Slaughter that the core 21 calculation and fuel analyses -- its report would be 22 essential to this license transfer application?
23 MR. ADAMS: Are you addressing that to me?
24 JUDGE HAWKENS: If you're able to answer 25 it. If not, I will address it to your colleagues. If OFFICI,21~L USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF~G~AL USE ONL¥ PROPR~ETAR¥ ~N~ORMAT~ON 201 1 they know the answer, I'll --please 2 MR. ADAMS: I never made that statement.
3 MS. SIMMONS: No, that wasn't part of the 4 financial qualifications, except that that was related 5 to the revenue projections.
6 MS. LIAN: And a cost assumption.
7 JUDGE HAWKENS: This is directed to Ms.
8 Lian and Ms. Simmons. The NRC staff filed three RAis.
9 The companies answered each one. And if the last 10 response was not sufficient, why did not the staff ask 11 followup questions?
12 MS. LIAN: So you're correct. We have 13 asked three sets of requests for additional 14 information. The meeting again, phone calls were 15 necessary and requested. We have expressed our 16 expectations for financial -- evidence for financial 17 qualification and concluded the last round of RAis.
18 There was just not enough information to the 19 calculation that we could have determined a time did 20 not even come close to - So at that point we 21 concluded that it would not be more beneficial to ask 22 one more round of RAis.
23 JUDGE HAWKENS: All right. Ms. Simmons, 24 I believe you testified that the support agreement for 25 Autoliv had expired.
OFF~G~AL USE ONL¥ PROPRIETAR¥ ~NFORMAT~ON NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONLY, PROPRIE~AR¥ INFORMA~IGN 202 1 MS. SIMMONS: It's my understanding that 2 the support agreement expired in December of 2013. I 3
4 JUDGE HAWKENS: Can you tell me what that I
5 6
support agreement was .
MS. SIMMONS: .... _
9 to try to make the five-year pro forma showing.
10 MS. LIAN:
13 JUDGE HAWKENS: Have you asked Mr.
14 Anderson or Dr. Slaughter whether the agreement would 15 be extended?
16 MS. SIMMONS: Well, we denied the license 17 transfer, so we did -- we ceased asking additional 18 questions. Of course, there is a lot of new 19 information that has been provided in this proceeding.
20 JUDGE HAWKENS: So you have no reason to 21 think it wouldn't be extended.
22 MS. SIMMONS: Well, the --
23 JUDGE HAWKENS: Can you answer yes or no, 24 and then you can follow up.
25 MS. SIMMONS: I have no reason to believe OFFICIAL YSE ONLY - PROPRIE~ARY INFORM:z.I~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFF~GIAL USE ONLY PROPRIETARY INFOR~~ON 203 1 that they could not provide additional support 2 agreement.
3 JUDGE HAWKENS: Ms. Lian or Ms. Simmons, 4 I'm not sure who stated that competitors might lower 5 their prices to meet Aerotest's lower prices.
6 MS. LIAN: I think we both stated that.
7 JUDGE HAWKENS: All right. Which specific 8 competitors do you think might lower their prices?
9 MS. LIAN: That is way too hypothetical.
10 I'm not the representative of any of those suppliers, 11 so I cannot answer that question.
12 JUDGE HAWKENS: Do you know who Aerotest' s 13 principal competitors are?
14 MS. LIAN: I think we mentioned that.
15 MS. SIMMONS: New information was provided 16 that was more specific about their competitors that I 17 believe Mr. Adams also described in some of the new 18 adjudicatory information, yes.
19 JUDGE HAWKENS: It's correct, however, you 20 did not perform any investigation as to the likelihood 21 that a competitor would lower or undercut Aerotest's 22 prices, is that correct?
23 MS. SIMMONS: No.
24 JUDGE HAWKENS: I believe Ms. Simmons said 25 the staff couldn't find the revenue projections OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GF~GIAL gsE GNLY PRGPRIETARY INFGRMA~GN 204 1 reasonable because you didn't know how university 2 reactors might respond, is that correct?
3 MS. SIMMONS: That would be one element of 4 the staff's thought process on how competitors would 5 react, yes.
6 JUDGE HAWKENS: Okay.
7 MS. SIMMONS: That it's an unknown.
8 JUDGE HAWKENS: Was that particular issue 9 raised, either in the SER or the RAis?
10 MS. SIMMONS: Because the companies were 11 unable to meet the regulations, we didn't get into 12 that specific information.
13 JUDGE HAWKENS: All right. That concludes 14 my additional questions for you. Any additional 15 statements anyone wants to make to supplement your 16 response to my final questions?
17 MS. LIAN: Not at this moment.
18 MS. SIMMONS: Not at this moment. Thank 19 you.
20 MR. ADAMS: Not at this moment.
21 JUDGE HAWKENS: Thank you. We're ready 22 for closing statements, first by the staff and then by 23 the companies. Are counsel ready to proceed?
24 MS. GHOSH: Yes. Good afternoon, Your 25 Honor.
GFFIGIAL gsE GNLY PRGPRIETARY INFGR~~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFrCIAL USE ONLY PROPRrETARY INFOR~~TION 205 1 JUDGE HAWKENS: Good afternoon.
2 MS. GHOSH: Today we have heard testimony 3 from both the company's witnesses and the staff's 4 witnesses regarding whether staff appropriately 5 interpreted the Commission's financial qualifications, 6 regulations, and correctly applied them to the record 7 facts in its denial of the company's license transfer 8 application.
9 The evidence presented by the staff's 10 witnesses today, and in their written testimony, 11 clearly demonstrates that the staff has done so, and 12 that the staff's denial of the company's application 13 should be upheld.
14 The companies assert that the staff 15 inappropriately continued to look for committed 16 sources of funds as one of the only bases for 17 determining financial qualification. This assertion 18 is without merit. In accordance with the guidance in 19 NUREG-1537, the staff requested and considered both 20 committed and potential sources of funds.
21 The only committed sources of funds with 22 respect to operating costs provided by the companies 23 were from the 12-month funding agreement from Autoli v.
24 The companies provided 26 letters of interest, but the 25 staff considered these letters as potential sources of OFFICIAL USE ONLY PROPRIETARY INFORMl'~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMl'..TION 206 1 funds because these were not letters of intent 2 indicating some sort of funding commitment.
3 The companies also argue that their 4 revenue projection was reasonable because it was based 5 on historical revenue data, as well as Dr. Slaughter's 6 evaluation of Aerotest' s customer base and market.
7 However, the market study, its findings, the data 8 supporting it, were never provided to the staff during 9 its review of the application. Therefore, the staff 10 reasonably relied on all of the information provided 11 to the staff at the time of its review.
12 With respect to customers returning, the 13 staff was only provided with written statements from 14 two prior customers to support the company's assertion 15 that previous customers were interested in returning 16 even after the reactor was shut down in 2010.
17 Additionally, with respect to research 18 funding, the companies provided no documentation in 19 their application to verify the amount, timing, or 20 approval of research funding by MSI Photogenics 21 discussed in the application. Because of this lack of 22 support, the staff reasonably concluded that the 23 research revenue projection was uncertain.
24 For the first time, in his rebuttal 25 testimony Dr. Slaughter provided new information to OFFICI:.~L USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIAL USE ONL¥ PROPRIETAR¥ INFORMATION 207 1 the staff I
I I
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I This new information is not relevant to 7 the staff's conclusions related to research revenues 8 because it was not on record at the time the staff 9 denied the application.
10 Dr. Slaughter also testified regarding his 11 core evaluations and his new proposed core. However, 12 this new information is also not relevant to the 13 staff's July 24th, 2013, conclusions regarding 14 uncertainty of the operability of the reactor given 15 the damaged fuel elements, because this information 16 was not on the record when the staff denied the 17 application.
18 Finally, as the staff has testified, the 19 companies stated in their RAI response that if they --
20 they would prematurely shut down if they were unable 21 to obtain sufficient revenue and exhausted their 22 committed operational funds at the end of the first 23 year. Based on this, the staff concluded that the 24 companies would still be liable for approximately an 25 additional $4 million in spent fuel storage costs OFFICIAL USE ONL¥ PROPRIETAR¥ INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
QFFIGIA~ USE QN~Y PRQPRIE~ARY INFQR~~~IQN 208 1 until 2055 and would not have accumulated sufficient 2 funding to cover these costs. This would be a 3 significant health and safety concern for the public.
4 The Commission has recognized that the 5 Aerotest case is somewhat atypical, and that it stems 6 not from an intervention petition but from a challenge 7 to a staff's decision to deny the application. When 8 there is an intervention petition to a license 9 transfer, the transfer application is technically 10 still under review by the staff and is able to be 11 changed by the applicant.
12 However, when the applicant is challenging 13 staff's denial of its license transfer application, 14 such as here, the application's review by the staff 15 has been completed, and the application can no longer 16 be changed or modified by the applicant. Thus, the 17 companies may attempt to explain why the information 18 in their application should have led to the staff to 19 approve the application or point to information that 20 the staff may not have considered, but they cannot now 21 submit new information supplementing or modifying the 22 information relied on by the staff.
23 Much of the new information provided in 24 the testimony and exhibits from the company in this 25 proceeding was new information that was neither QFFICI.'-\.~ USE QNLY PRQPRIE~~RY INFQRMP~~IQN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 209 1 submitted nor relied on by the staff in making its 2 legal and factual conclusions in denying the company's 3 application. This information should not be 4 considered.
5 The underlying question in this proceeding 6 is whether the staff's licensing decision, the denial 7 of the indirect license transfer application, was 8 reasonable based on the information available at the 9 time of that denial.
10 The staff's witnesses have testified that 11 they thoroughly reviewed the company's application, 12 asked three sets of RAis, and even held a public 13 meeting to ensure that the companies understood the 14 final qualification requirements for approval of their 15 transfer application. We have also heard from the 16 staff witnesses that the company's five-year cost and 17 revenue projections were not sufficient, because they 18 were based on a funding commitment that covers only 19 one year of operating costs and unsupported and 20 unreasonable revenue projections for years 2 through 21 5.
22 The staff's witnesses have also testified 23 that the company's application was unique compared to 24 other license transfer applications, and that it 25 involved a newly formed entity, a shutdown reactor, OFFICIAL USE ONLY PROPRIETARY INFORMl'..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROP-RIE!J!ARY INFORMA!J!ION 210 1 uncertainty regarding customers returning, and 2 uncertainty regarding operability of the reactor in 3 light of the damaged fuel.
4 Finally, the application did not 5 demonstrate that there would be sufficient funds to 6 cover the annual cost of spent fuel storage until the 7 Department of Energy accepts the fuel in 2055.
8 Based on all of the information the 9 companies provided at the time of the staff's denial, 10 the staff reasonably concluded that, one, the 11 companies did not demonstrate that they have, or with 12 reasonable assurance will have, sufficient funding to 13 conduct activities authorized by the license if the 14 license is indirectly transferred; and, two, the 15 companies did not demonstrate that there will be 16 sufficient funds to cover the annual cost of spent 17 fuel storage until the Department of Energy accepts 18 the spent fuel.
19 Therefore, the staff's denial of the 20 company's indirect license transfer application should 21 be upheld.
22 Thank you.
23 JUDGE HAWKENS: Thank you. One question 24 for you, perhaps two. Are you able to give examples 25 of Licensing Board hearings where information provided OFFICIAL USE ONLY - PROPRIE!J!ARY INFORMA!J!ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~RY INFOR~ION 211 1 subsequent to the staff SER was excluded because it 2 was new?
3 MS. GHOSH: In our research, we couldn't 4 find a Licensing Board proceeding where there was a 5 denial of an application, where an applicant had later 6 supplemented an application.
7 JUDGE HAWKENS: Don't Licensing Boards 8 typically review on that type of information in 9 reaching their decisions?
10 MS. GHOSH: They usually do, but usually 11 there is an intervention petition that comes in before 12 the staff has made its final licensing decision. The 13 nature of this proceeding is different. In essence, 14 the staff has issued its decision. It made a final 15 decision. And, you know, it was based on everything 16 on the record at that time.
17 JUDGE HAWKENS: In the Honeywell case, the 18 Commission indicated that new information can be 19 considered insofar as it sheds light on the facts that 20 existed and events that occurred during the relevant 21 period of time. And although this is new information, 22 it seems to supplement the bottom line advanced by 23 Aerotest that the transaction wouldn't go forward 24 unless there was sufficient level of confidence that 25 the reactor would be operable, sufficient fuel, and it OFFICIAL USE ONLY PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY P~OPRIE~ARY INFORMA~ION 212 1 could be operated safely. And they also presented, 2 represented, and provided information indicating they 3 would have sufficient revenues to cover the costs.
4 So why isn't the new information, which 5 you say ought not be considered because it was not 6 before the staff at the time it made its decision, be 7 considered insofar as it sheds light on the facts that 8 existed and events that occurred during the relevant 9 period of time?
10 MS. GHOSH: Your Honor, I am not familiar 11 with the Honeywell case. But to the extent that new 12 information would shed light, there is a difference 13 between new information that kind of explains and then 14 new information which is completely supplementing what 15 the applicants previously told us. There is 16 information we didn't have at the time. This would 17 change our conclusions.
18 And to say that our conclusions, that the 19 staff's conclusions were somehow reasonable because 20 they didn't take into consideration, you know, a 21 number of evaluations that had been done, a market 22 study that had been done, this would have affected the 23 staff's analysis. So it's -- it just --
24 JUDGE HAWKENS: Isn't that all the more 25 reason to consider it at this point, so the Commission OFFICIAL USE ONLY PROPRIE~ARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFrCIAL YSE ONLY PROPRIETARY INFORMAT~ON 213 1 can make an accurate decision based on all of the 2 information before it?
3 MS. GHOSH: I think the purpose of this 4 proceeding is to determine whether the staff's 5 determination was reasonable at that time. And if 6 that's the scope of the proceeding, which the staff 7 believes it to be, then no, the new information, to 8 the extent that the companies have provided, is not 9 relevant. If this was an intervention petition, 10 before the staff had made its final decision, then, 11 yes, at that time, you know, some of this information 12 could supplement the application.
13 JUDGE HAWKENS: Thank you.
14 MS. GHOSH: Thank you.
15 MS. HARSHAW: Your Honor, this proceeding 16 has been a moving target for the applicants. We 17 developed our application based on the regs, the 18 guidance, and our experience with the X-ray 19 application and the governing realities of this 20 business.
21 Do we wish we had provided more 22 information at that time? Indeed, hindsight is 20/20, 23 but we can't read the staff's mind and we answered 24 every question that they asked. But every time we 25 provided information they had more questions. And as OFFICIAL YSE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ - PROPRIETAR¥ INFORMATION 214 1 you have heard by the witnesses today, the information 2 that we provided wouldn't change their mind. They 3 would want more information and more information.
4 They say that our assumptions are 5 reasonable, our forecasts are reasonable, but they 6 can't rely on our reasonable assumptions and forecasts 7 because they want to see contracts and letters of 8 intent. They say that we didn't provide information 9 we only provided two letters that showed interest 10 by customers.
11 Our very first RAI provided a number of 12 statements that showed interest by our customers, and 13 they didn't consider them. Then, we told them we 14 could not get letters of intent or contracts from all 15 of our customers, but then we did provide what we 16 could, provided 26 documents, and every one of these 17 show interest of some sort and support the fact that 18 customers were interested.
19 25 OFFICIAL USE ONL¥ PROPRIETARY INFOR~.TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL YSE ONLY PROPRIETARY INFOR~n~!GN 215 1
I I
I I
I I
8 NRC witnesses says that say that we 9 shouldn't focus on the one assumption of of 10 our customers returning, but that is the difference in 11 our analyses. The staff relied on two customers out 12 of hundreds coming back to perform their analyses, and 13 they have rejected our reasonable and plausible 14 assumption that given 16 They said that we should -- it was our 17 burden to provide they understood that the 18 realities of our business was that we couldn't provide 19 letters of intent and contracts, and that it was our 20 burden to provide some other mechanism. So we did.
21 We looked to NUREG-1577 for power reactors, that the 22 staff had said applied to the situation, and it says, 23 "If an applicant cannot meet these criteria," the 24 criteria being do they have contracts that cover all 25 their costs, "we'll look at other information, other OFFICIAL YSE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFIGIA~ USE ON~Y PROPRIETARY INFORMATLON 216 1 relevant information, information on cash or cash 2 equivalent that would be sufficient to cover fixed 3 operating costs during an outage of six months, the 4 amount of decommissioning funds collected or 5 guaranteed, and any other relevant factors."
6 So we put together a financial plan that I - *--
7 1
14 Furthermore, the company's plan was based 15 on a thorough analysis of the damaged fuel, as Dr.
16 Slaughter has testified, and we told the staff that we 17 were performing that analysis and they never asked for 18 it. And it was unreasonable for the staff to think we 19 were going to submit a detailed fuel analysis in the 20 context of a license proceeding, although they could 21 certainly have asked, and all of that information was 22 available to them.
23 We are not aware of any legal basis to say 24 that information we provided in this proceeding should 25 be excluded. The staff doesn't point to any case law OFFIGIA~ USE ON~Y PROPRIETARY INFORMATION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONL¥ PROPRIE~AR¥ INFOR~.~ION 217 1 that supports that, and in fact the Commission was 2 quite clear in ordering this proceeding that it didn't 3 matter that the proceeding was because it was 4 initiated by an applicant or an intervenor.
5 We asked that the proceedings be 6 consolidated, and we thought that was reasonable 7 because we were -- we had the same facts, and the 8 Commission said, "No, it doesn't matter that this was 9 initiated by an intervenor or an applicant. We're not 10 changing the rules." So why should we be changing the 11 rules when it comes to supplementing the record?
12 And, in fact, the staff says that the only 13 time that information has been allowed on the record 14 is when the staff has not approved the application 15 yet, which is untrue. The case that we cited, the 16 Missouri University case, that was a license amendment 17 that had already been approved by the staff, and the 18 intervenor was challenging it.
19 For all the reasons we have provided --
20 JUDGE HAWKENS: Can I ask you now-- I'll 21 let you finish, but I'd like to ask you to just 22 summarize the facts of that case, because I'm not as 23 familiar with it as you, and I'd be interested in 24 hearing a summary.
25 MS. HARSHAW: Okay. The companies, in OFFICIAL USE ONL¥ PROPRIE~AR¥ INFORMA~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIE~ARY INFORMA~+/-ON 218 1 totality, They 2 provided --
I I
I I
7 And one more item that I'd like to point 8 out is the staff has said that we have added new 9 information. But in response to our very first RAI, II-- -
10 which is NRC018, II II II II That was our very first response.
16 At that time, if they wanted more 17 information on that, they could have asked. And we 18 expanded on that information in our testimony, but 19 that was on the record. But it's clear that the staff 20 was not interested in finding out more information 21 about that.
22 That's all I have.
23 JUDGE HAWKENS: Thank you. Are you able 24 to summarize that Missouri case that you cited?
25 MS. HARSHAW: In the -- yes. In the OFFICIAL USE ONLY PROPRIE~ARY INFOR~~~ION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF!G!A~ USE ON~¥ PRGPR!E!J!AR.-¥ INFGRMP-..TION 219 1 Missouri case, I believe it was a materials case, 2 University of Missouri had submitted license 3 amendments, and the staff had approved them. And then 4 they were challenged by intervenors and they -- the 5 intervenors then the judge let additional 6 information into the proceeding, and the intervenor --
7 there was an appeal to the Commission, and the 8 Commission said that the presiding officer has the 9 ability to consider new information.
10 JUDGE HAWKENS: So there is -- you read 11 the case law there is no bright line rule which bars 12 the Commission's consideration of new evidence that 13 was not presented or new information or data not 14 presented to the staff during its consideration --
15 MS. HARSHAW: Right.
16 JUDGE HAWKENS: -- of the application.
17 MS. HARSHAW: And the Commission stated we 18 don't encourage having bare bones applications 19 submitted, which is what the intervenors were saying, 20 but we don't see any reason why the presiding officer 21 can't consider new information.
22 JUDGE HAWKENS: The new information, which 23 I believe includes the fuel analysis and calculations 24 done by Dr. Slaughter in his market research, there 25 may be additional new information. Would you OFFIGIA~ USE GN~¥ PROPRIETAR¥ !NFGRMP-..TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
1 characterize that as information falling into the 2 category of new as in the Missouri case, which a 3 reviewing body has the discretion to consider, or it 4 would be new in the sense of the Honeywell case, where 5 the Commission says it can be considered insofar as it 6 sheds light on the facts that existed and events that 7 occurred during the relevant period of time?
8 MS. HARSHAW: I think all of it falls into 9 the existed and sheds light on the information that 10 was available at the time. Dr. Slaughter used his 11 market study to develop the cost projections that were 12 submitted with the application. Now we are not 13 talking about a big, huge company that has a -- you 14 know, a wholesale department that does marketing 15 study.
16 We are just talking about one individual 17 who studied the market and is aware of the market and 18 used that information that he gathered to develop 19 revenue projections. He provided more detail on his 20 understanding in his testimony, so there is certainly 21 information that he used to develop his revenue 22 projections.
23 JUDGE HAWKENS: Thank you.
24 MS. HARSHAW: Thank you.
25 JUDGE HAWKENS: Let's discuss a few final OFFICIAL USE ONL¥ NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
OFFICIAL USE ONLY PROPRIETARY INFORMATION 221 1 scheduling and administrative matters. In our initial 2 scheduling order, the written post-hearing statements 3 are due within 20 days of the close of today' s 4 hearing. And by my calculation, that falls on Monday, 5 September 1st, Labor Day. And I propose they be filed 6 sooner rather than later, and, therefore, suggest they 7 be filed on Friday, August 29, which would be 17 days.
8 Can the companies support that schedule?
9 MR. SILBERG: I guess one question is when 10 we will see the transcript.
11 JUDGE HAWKENS: Let's discuss the 12 transcript, then. Keep that question in mind, and the 13 staff can be considering that question as well. We're 14 going to seek a one-day turnaround for the transcript, 15 so it should be available tomorrow, no later than 16 Thursday, August 14th. I would suggest a joint 17 request for transcript corrections within 10 days. Is 18 that reasonable?
19 MR. SILBERG: Yes.
20 JUDGE HAWKENS: Kathy, do you have a 21 calendar? What does the tenth day fall on, to make 22 sure we're not a weekend. Friday, August 22nd, will 23 that work for counsel for the companies?
24 MR. SILBERG: For transcript corrections?
25 JUDGE HAWKENS: The transcript OFFICIAL USE ONLY PROPRIETARY INFOR~~TION NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
G¥~!GIA~ USE GN~Y PRGPRIETARY !N~GRMATIGN 222 1 corrections. Joint transcript corrections, I'd 2 request, and, NRC staff, is that -- and assuming that 3 joint transcript corrections request is submitted on 4 the 22nd, would August 29th, a Friday, work for the 5 written post-hearing statements?
6 While they're talking, NRC staff, is that 7 -- can you support that?
8 MS. UTTAL: Yes.
9 MR. SILBERG: Ms. Harshaw said she can 10 support that.
11 (Laughter) 12 JUDGE HAWKENS: I feel your pain, Ms.
13 Harshaw. All right.
14 Did counsel have anything else before we 15 close the record, subject to transcript corrections?
16 Companies?
17 MR. SILBERG: No, we do not, Your Honor.
18 Thank you very much.
19 JUDGE HAWKENS: NRC staff?
20 MS. UTTAL: No.
21 JUDGE HAWKENS: Again, I'd like to thank 22 the witnesses for being here with us today and for 23 their testimony. I'd like to thank the counsel for 24 their advocacy. I know that, combined with all of the 25 exhibits and pleadings you've submitted and will G~FIGIA~ USE GN~Y PRGPRIETl-'~RY INFGRMl'~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
GFF~~lAL USE GNL¥ PRGPRIE!I'AR¥ lNFGRMA!I'-I-GN 223 1 submit will assist the Commission in the 2 decision-making process.
3 Let me also express my gratitude to the 4 Court reporter, Tobias Walter; to Karen Val loch, 5 Board's administrative assistant in the back who has 6 helped out with the logistics; Andy Welkie, our IT 7 expert and our Court Clerk of Court for the 8 hearing; and Kathy Schroeder, the Court's -- Board's 9 Law Clerk, who will be continuing to help counsel 10 until the record is certified to the Commission.
11 Thank you. We are adjourned.
12 (Whereupon, the above-entitled matter went 13 off the record at 3:51p.m.)
14 15 16 17 18 19 20 21 22 23 24 25 PRGPRIE!I'AR¥ INFGR~~TIGN NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
- uiill:ecfstates'NucleafRe9ulai:oiYComfilission"officiafHearfiig:exhT6If '* .
AEROTEST OPERATIONS, INC.
(Aerotest Radiography and Research Reactor)
ASLBP #: 14-931-01-LT-8001 Exhibit AOIOOOR Docket#: 05000228 Exhibit#: AOIOOO-R-OO-BD01 Identified: 8/12/2014 Aerotest Operations, Inc.
Admitted: 8/12/2014 Withdrawn:
Rejected: Stricken: Aerotest Radiography and Research Reactor)
Other:
Docket No. 50-228-LT ASLBP No. 14-931-0l-LT-BD01 Aerotest and Nuclear Labyrinth Revised Hearing Exhibits Submitted July 18, 2014 Aero test Witness Description Operations Exhibit # 1 AOIOOOR Aerotest Operations, Inc. Revised Hearing Exhibits List (July 18, 2014)
AOI002 Eric Leeds, NRC, letter to Dario Brisighella, Aerotest, Aerotest Operations, Inc. -Proposed Denial of Application for Renewal ofFacility License No. R-98 (TAC No. MD8177) (July 9, 2009) (ADAMS Accession No. ML090830578)
AOIIOO Anderson Pre-filed Direct Testimony of MichaelS. Anderson (Proprietary)
AOI101 Anderson Resume ofMichael S. Anderson AOI106 Anderson Funding Agreement (Proprietary)
AOI108 Anderson Figure of Facility (Proprietary)
AOI109 Anderson Updated Safety Analysis Report (February 28, 2005) (Chapter 1)
AOilll Anderson Fax from Aerotest to NRC: Letter Announcing Organizational Changes (May 4, 2000)
AOI112 Anderson NRC Memorandum, D. Matthews to J. Craig, appended to J. Craig Notice to Commissioner Assistants re: Indirect Transfer ofLicense (October 17, 2000) (ADAMS Accession No. ML040430500) 1 After coordinating with NRC Staff Counsel, duplicate exhibits were removed.
1
Exhibit AOIOOOR Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-BD01 Aerotest and Nuclear Labyrinth Revised Hearing Exhibits Submitted July 18, 2014 Aerotest Witness Description Operations Exhibit#1 AOI113 Anderson Inspection Report documenting URI (October 18, 2000)
AOI115 Anderson X-Ray License Transfer Application (January 7, 2010)
AOI117 Anderson Safety Evaluation by the Office ofNuclear Reactor Regulation for Indirect Transfer and Conforming Amendment, Proposed Acquisition of Aerotest Operations, Inc. for Aerotest Radiography and Research Reactor by X-Ray Industries, Inc., Facility Operating License No.
R-98, Docket No. 50-228 (July 7, 201 0)
AOI118R Anderson Response to Request for Additional Information Regarding Proposed Indirect License Transfer (TAC No. ME1887) (April1, 2010) (Proprietary) (Excerpts)
AOI119 Anderson Aerotest Operations, Inc. (Aerotest Radiography and Research Reactor), Order Approving Indirect Transfer ofFacility Operating License and Conforming Amendment (July 6, 2010)
AOI120 Anderson Order Extending the Effectiveness of the Approval of the Indirect Transfer of Facility Operating License (September 13, 2010)
AOI121 Anderson Decommissioning Cost Estimate for the Aerotest Radiography and Research Reactor (October 4, 2012) (Proprietary)
AOI122 Anderson DOE Contract and Amendment AOI123 Anderson Aerotest Historical Financial Data for years 2003-2011 (Proprietary) 2
Exhibit AOIOOOR Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-BD01 Aerotest and Nuclear Labyrinth Revised Hearing Exhibits Submitted July 18,2014 Aerotest Witness Description Operations Exhibit#1 AOI124 Anderson Sales by Year- 2003-2011 (Proprietary)
AOI125 Anderson Aerotest Brochure- Neutron Radiography AOI200 Slaughter Pre-filed Direct Testimony of Dr. David Michael Slaughter (Proprietary)
AOI201 Slaughter Curriculum Vitae of Dr. David Michael Slaughter AOI202 Slaughter Picture of ARRR Aluminum fuel element AOI203 Slaughter Picture of Damaged ARRR fuel AOI205 Slaughter Core Map 2010 (Proprietary)
AOI206 Slaughter Core Map - Proposed (Proprietary)
AOI207 Slaughter Core Design Calculation (Proprietary)
AOI208 Slaughter Five Years Projected Income Statement (Proprietary)
AOI209 Slaughter Year 1 Costs for Restarting the Reactor (Proprietary)
AOI210 Slaughter NUREG-1577, Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance, Rev. 1 (December 2001) (ADAMS Accession No.
I ML013330264) i 3
Exhibit AOIOOOR Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-BD01 Aerotest and Nuclear Labyrinth Revised Hearing Exhibits Submitted July 18, 2014 Aero test Witness Description Operations Exhibit # 1 AOI212 Slaughter NUREG-1537, Guidelines for Preparing and Reviewing Applications for the Licensing on Non-Power Reactors, Format and Content, Part 1 (February 1996) (Chapter 15)
AOI213 Slaughter Centennial Bank Letter of Credit (Proprietary)
AOI214 Slaughter Example Balance Sheet for 2na Year of Operation (Proprietary)
AOI216 Slaughter Department of Energy, Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste (January 2013)
AOI300 Slaughter Pre-Filed Rebuttal Testimony of David Michael Slaughter, Ph.D. (Proprietary)
AOI301 Slaughter AGNIR Report (Aug. 1966) (Proprietary)
AOI302 Slaughter Letter, M. Slaughter (Aerotest) to L. Kokajko (NRC), re: Response to Apparent Violation in NRC Inspection Report No. 50-228/2012-201; EA-13-108 (Nov. 1, 2013) 4
Submitted: July 18, 2014 In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No.14-931-01-LT-BD01 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014 NRC Exhjbjt # Wjtness/Panel Qescrjptjon NRC-001 Adams/Lian/Simmons Statement of Position (REDACTED)
NRC-001{P) 1 Adams/Lian/Simmons Statement of Position (PROPRIETARY)
NRC-002 Lian/Simmons Testimony (REDACTED)
NRC-002(P) Lian/Simmons lfestimony (PROPRIETARY)
NRC-003 Adams Testimony NRC-004 Lian Statement of Professional Qualifications NRC-005 Simmons Statement of Professional Qualifications NRC-006 Adams Statement of Professional Qualifications NRC-007 Adams/Lian/Simmons Letter from Daria Brisighella, President, Aerotest Operations, Inc., and Dr. David M.
Slaughter, Chief Executive Officer, Nuclear Labyrinth LLC, to NRC Document Control Desk, Application for Approval of Indirect Transfer of Control of License Pursuant to 10 C.F.R. § 50.80 (May 30, 2012) (Agencywide Documents Access and Management System (ADAMS) Accession No. ML12152A233)
NRC-008 Adams/Lian/Simmons Letter from Daria Brisighella, President, Aerotest Operations, Inc., and Dr. David M.
Slaughter, Chief Executive Officer, Nuclear Labyrinth LLC, to NRC Document Control Desk, Application for Approval of Indirect Transfer of Control of License Pursuant to 10 C.F.R. § 50.80, Attachments 1-11 (May 30, 2012) (ADAMS Accession No. ML12180A384) (REDACTED) (Application)
NRC-008(P) Adams/Lian/Simmons Letter from Dario Brisighella, President, Aerotest Operations, Inc., and Dr.
David M. Slaughter, Chief Executive Officer, Nuclear Labyrinth LLC, to NRC Document Control Desk, Application for Approval of Indirect Transfer of Control of License Pursuant to 10 C.F .R. § 50.80, Attachments 1-11 (May 30, 2012} (ADAMS Accession No. ML12152A234) (PROPRIETARY) (Application)
NRC-009 Adams/Lian/Simmons Aerotest Operations, Inc., Docket No. 50-228, Aerotest Radiography and Research Reactor (ARRR), Amendment to Facility Operating License, Amendment No. 1, License No. R-98 (ADAMS Accession No. ML12214A481) (ARRR License) 1 The "(P)" in an exhibit number denotes that the exhibit contains proprietary information.
Page 1
In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-8001 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014
~B~ i;;XIlltlllll: Witness/Panel Descriotion NRC-010 Adams ft\ppendix A to License No. R-98, Technical Specifications for the Aerotest Radiography and Research Reactor (ARRR) (ADAMS Accession No. ML12214A482)
(ARRR TS)
NRC-011 Lian/Simmons Letter from Michael S. Anderson, Vice President for Legal Affairs and General Counsel, Autoliv, Inc., to David Mathews, Director, NRR, and Marvin Mendonca, Senior Project Manager, NRR, NRC, Divestiture Plan Regarding Indirect Transfer of he Aerotest Radiography and Research Reactor (ARRR) (Jan. 29, 2004) (ADAMS
~ccession No. ML040340559)
NRC-012 Lian/Simmons Letter from Sandra L. Warren, Manager, Aerotest Operations, Inc., to Director, NRR, NRC (Apr. 14, 2000) (ADAMS Accession No. ML003704794)
NRC-013 Lian/Simmons Letter from Ledyard B. Marsh, NRC, to Ray Tsukimura, President, Aerotest Operations, Inc., Transfer of Ownership, (Oct. 18, 2000) (ADAMS Accession No. ML003756103)
NRC-014 Lian/Simmons Letter from David B. Matthews, NRC, to Michael Anderson, General Counsel, Autoliv, and Ray R. Tsukimura, President, Aerotest Operations, Inc., Divestiture Plan Regarding Indirect Transfer of the Aerotest Radiography and Research Reactor (ARRR) to Autoliv ASP, Inc., and Autoliv, Inc. (Oct. 7, 2003) (ADAMS Accession No. ML032550142)
NRC-015 Lian/Simmons Letter from Michael Anderson, Vice President for Legal Affairs and General Counsel, ft\utoliv, to David Mathews, NRC, RE: Divestiture Plan Regarding Indirect Transfer of he Aerotest Radiography and Research Reactor (ARRR) to Autoliv ASP, Inc., and ft\utoliv, Inc. (Dec. 4, 2003) (ADAMS Accession No. ML033440246)
I NRC-016 Adams/Lian/Simmons Letter from Jessie Quichocho, NRC, to Daria Brisighella, President, Aerotest Operations, Inc., and David M. Slaughter, Chief Executive Officer, Nuclear Labyrinth, LLC, Request to Aerotest Operations, Inc. and Nuclear Labyrinth LLC to Supplement he License Transfer Application (July 5, 2012) (ADAMS Accession No. ML121740317)
Page2
In the Matter of Aerotest Operations, Inc.
{Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No.14-931-01-LT-BD01 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014
~IS~ C2!illll;llllf vvtrnesstl""anet UeSCI NRC-017 Adams/Lian/Simmons Enclosure, Required Supplemental Information for the NRC Acceptance Review of he License Transfer Applications Which Was Submitted by Aerotest and Nuclear Labyrinth (July 5, 2012) (ADAMS Accession No. ML121740343) (RAI #1)
NRC-018 Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to NRC Document Control Desk, Response to Request to Aerotest Operations, Inc. and Nuclear Labyrinth LLC to Supplement the License Transfer Application (July 19, 2012)
(ADAMS Accession No. ML122021201) (REDACTED) (RAI Response #1)
NRC-018{P) Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to NRC Document Control Desk, Response to Request to Aerotest Operations, Inc. and Nuclear Labyrinth LLC to Supplement the License Transfer Application {July 19, 2012)
{ADAMS Accession No. ML122021202) {PROPRIETARY) {RAJ Response #1)
NRC-019 Lian/Simmons Letter from Alexander Adams, NRC, to Dario Brisighella, President, Aerotest Operations, Inc., and David M. Slaughter, Chief Executive Officer, Nuclear Labyrinth, LLC, Acceptance of Requested License Transfer Application (Aug. 14, 2012)
(ADAMS Accession No. ML12213A486)
NRC-020 Adams/Lian/Simmons Letter from Alexander Adams, NRC, to Dario Brisighella, President, Aerotest Operations, Inc., and David M. Slaughter, Chief Executive Officer, Nuclear Labyrinth, LLC, Request for Additional Information Re: Application for Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to 10 CFR 50.80 (Sept. 14, 2012) (ADAMS Accession No. ML12242A460)
NRC-021 Adams/Lian/Simmons Enclosure, Request for Additional Information Regarding the Indirect License Transfer Aerotest Radiography and Research Reactor Facility Operating License No.
R-98 Docket No. 50-228 (Sep. 14, 2012) (ADAMS Accession No. ML12242A479)
(REDACTED) (RAI #2)
NRC-021{P) Adams/Lian/Simmons Enclosure, Request for Additional Information Regarding the Indirect License Transfer Aerotest Radiography and Research Reactor Facility Operating License No. R-98 Docket No. 50-228 {Sep. 14, 2012) {ADAMS Accession No. ML12242A467) (PROPRIETARY) (RAJ #2)
-~
Page3
In the Matter of Aerotest Operations, Inc.
{Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-BD01 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014 Nt<l- t::Xhllltt '# wr*' :/..,anel Descriotion NRC-022 Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to NRC Document Control Desk, Response to Request for Additional Information Re: Application for Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to 10 CFR 50.80 (Oct. 15, 2012) (ADAMS Accession No. ML12291A508) (REDACTED) (RAI Response #2)
NRC-022(P) Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to NRC Document Control Desk, Response to Request for Additional Information Re: Application
~or Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to 10 CFR 50.80 (Oct. 15, 2012) (ADAMS
~ccession No. ML122920159) (PROPRIETARY) (RAJ Response #2)
NRC-023 Adams/Lian/Simmons Letter from Alexander Adams, NRC, to Dario Brisighella, President, Aerotest Operations, Inc., and David M. Slaughter, Chief Executive Officer, Nuclear Labyrinth, LLC, Request for Additional Information Re: Application for Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to 10 CFR 50.80 (Dec. 10, 2012) (ADAMS Accession No. ML12339A181)
NRC-024 Adams/Lian/Simmons Enclosure, Office of Nuclear Reactor Regulation Request for Additional Information Re: Application for Indirect License Transfer of Aerotest Radiography and Research Reactor Faciliy Operating License No. R-98 Docket No. 50-228 (Dec. 10, 2012)
(ADAMS Accession No. ML12339A189) (REDACTED) (RAI #3)
NRC-024(P) Adams/Lian/Simmons Enclosure, Office of Nuclear Reactor Regulation Request for Additional Information Re: Application for Indirect License Transfer of Aerotest Radiography and Research Reactor Faciliy Operating License No. R-98 Docket No. 50-228 (Dec. 10, 2012) (ADAMS Accession No. ML12339A185)
PROPRIETARY) (RAJ #3)
NRC-025 Lian/Simmons Summary of December 19, 2012, Meeting with Aerotest Operations, Inc., and Nuclear Labyrinth, LLC, On the Request for Additional Information on the Proposed ndirect License Transfer Application of the Aerotest Radiography and Research Reactor (Jan. 18, 2013) (ADAMS Accession No. ML13018A003)
Page4
In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-BD01 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014 NRC Exhibit# Witness/Panel Descriotion NRC-026 Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to the NRC Document Control Desk, Response to Request for Additional Information Re: Application for
/Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to CFR 50.80 (Jan. 10, 2013) (ADAMS Accession No. ML13015A395) (REDACTED) (RAI Response #3)
NRC-026(P) Adams/Lian/Simmons Letter from Jay Silberg, Counsel, Aerotest Operations, Inc., to the NRC Document Control Desk, Response to Request for Additional Information Re:
/Application for Approval of Indirect Transfer of Control of License of Aerotest Radiography and Research Reactor Pursuant to CFR 50.80 (Jan. 10, 2013)
(ADAMS Accession No. ML13015A397) (PROPRIETARY) (RAI Response #3)
NRC-027 Lian/Simmons Safety Evaluation by the Office of Nuclear Reactor Regulation, Indirect License iTransfer of Aerotest Radiography and Research Reactor Due to the Proposed
~cquisition of Aerotest Operations, Inc. by Nuclear Labyrinth, LLC, Facility Operating License No. R-98, Docket No. 50-228 (Jul. 24, 2013) (ADAMS Accession No. ML13129A001) (REDACTED) (Safety Evaluation (SE)).
Lian/Simmons
~
NRC-027(P) afety Evaluation by the Office of Nuclear Reactor Regulation, Indirect License ransfer of Aerotest Radiography and Research Reactor Due to the Proposed cquisition of Aerotest Operations, Inc. by Nuclear Labyrinth, LLC, Facility Operating License No. R-98, Docket No. 50-228 (Jul. 24, 2013) (ADAMS
/Accession No. ML13128A403) (PROPRIETARY) (Safety Evaluation (SE)).
NRC-028 Lian/Simmons Letter from Eric J. Leeds, NRC, to Michael Anderson, President, Aerotest Operations, Inc., Denial of License Renewal, Denial of License Transfer, and ssuance of Order to Modify License No. R-98 to Prohibit Operation of the Aerotest Radiography and Research Reactor, Facility Operating License No. R-98 (July 24, 12013) (ADAMS Accession No. ML13120A598)
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In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-8001 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014
~~~ t;XDIDIHf wr* .. ,........,/1-'anel uescrmtion NRC-029 Adams/Lian/Simmons NUREG-1537, Part 2, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors Standard Review Plan and Acceptance Criteria (Feb. 1996) (ADAMS Accession No. ML042430048) (excerpted) (NUREG-1537, Part 2)
NRC-030 Adams Letter from Sandra Warren, General Manager, Aerotest Operations, Inc., to Spyros Traiforos, NRC (Jan. 11, 2012) (ADAMS Accession No. ML12018A336)
NRC-031 Adams Letter from Sandra Warren, General Manager, Aerotest Operations, Inc., to Spyros Traiforos, NRC (Jan. 20, 2012) (ADAMS Accession No. ML12026A344)
NRC-032 Adams/Lian/Simmons Letter from Gregory Bowman, NRC, to Sandra Warren, General Manager, Aerotest Operations, Inc., NRC Non-Routine Inspection Report No. 50-228/2012-204 (Aug.
14, 2012) (ADAMS Accession No. ML12213A001)
NRC-033 Adams Letter from Sandra Warren, General Manager, Aerotest Operations, Inc., to Spyros Traiforos, NRC (Aug. 15, 2013) (ADAMS Accession No. ML13247A668)
NRC-034 Adams ~erotest Operations, Inc., Aerotest Radiography and Research Reactor (ARRR),
Updated Safety Analysis Report (USAR), Revision 0, Docket No. 50-228, License No. R-98 (ADAMS Accession No. ML050680420) (excerpted) (ARRR USAR).
NRC-035 Adams Letter from Alfredo Meren, Reactor Supervisor, Aerotest Operations, Inc., to NRC, Annual Summary of Changes, Tests and Experiments at Aerotest Radiography and Research Reactor (ARRR), Docket No. 50-228, for the period of 1 July 2011 to 30 June 2012 (July 31, 2012) (ADAMS Accession No. ML12242A343)
NRC-036 Adams Letter from Michael Anderson, Secretary, Aerotest Operations, Inc., to NRC Document Control Desk, Docket No. 50-228 Aerotest Radiography and Research Reactor License No. R-98 (Jan. 7, 2011) (ADAMS Accession No. ML110180463)
NRC-037 Adams Letter from Gregory Bowman, NRC, to Sandra Warren, General Manager, Aerotest Operations, Inc., NRC Non-Routine Inspection Report No. 50-228/2012-206 (Jan. 7, 2013) (ADAMS Accession No. ML12361A147)
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In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No. 14-931-01-LT-8001 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014
~~~ ~;.xcnm lf vv ;tt-'anel uescrmtton NRC-038 Adams Email from Tony Veca, General Atomics, to Alexander Adams, NRC, RE: Typical fuel prices (May 6, 2014) (ADAMS Accession No. ML141608044)
NRC-039 Adams TRIGA Reactor Fuel Price List (Jan. 2012) (ADAMS Accession No. ML141608051)
NRC-040 Lian/Simmons Letter from Sandra Warren, General Manager of Aerotest Operations, Inc., Closure of Aerotest Operations (Aug. 6, 2010) (ADAMS Accession No. ML14129A199)
NRC-041 Lian/Simmons Note to File from Spyros Traiforos, NRC, Summary of the Informal Conference Call of June 21, 2012, Between Aerotest Operations, Inc./Nuclear Labyrinth, and the NRC (July 15, 2012) (ADAMS Accession No ML12200A353)
NRC-042 Lian/Simmons NUREG-1537, Part 1, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors Format and Content (Feb. 1996) (ADAMS
~ccession No. ML042430055) (excerpted) (NUREG-1537, Part 1)
NRC-043 Adams Letter from Alfredo Meren, Reactor Supervisor, Aerotest Operations, Inc., to NRC, Annual Summary of Changes, Tests, and Experiments at Aerotest Radiography and Research Reactor (ARRR), Docket No. 50-228, for the Period of 1 July 2010 to 30 June 2011 (July 28, 2011) (ADAMS Accession No. ML11217A011)
NRC-044 Lian/Simmons Aerotest Operations, Inc., Consideration of Indirect Transfer and Conforming Amendment, 77 Fed. Reg. 72,889 (Dec. 6, 2012)
NRC-045(P) Adams/Lian/Simmons Rebuttal Statement of Position (PROPRIETARY)
NRC-046(P) Lian/Simmons Rebuttal Testimony (PROPRIETARY)
Page?
In the Matter of Aerotest Operations, Inc.
(Aerotest Radiography and Research Reactor)
Docket No. 50-228-LT ASLBP No.14-931-01-LT-BD01 2014 Evidentiary Hearing NRC Staff Hearing Exhibits- Revised: July 18,2014
~I:S~ t;XDIDil if Wltness/t-'anel uescrmtion NRC-047(P) Adams Rebuttal Testimony {PROPRIETARY)
NRC-048 Lian/Simmons Letter from Michael S. Anderson, Secretary, Aerotest Operations, Inc. to NRC, Report of Progress Made Toward Completion of the License Transfer (Sept 27, 201 0) (ADAMS Accession No. ML102720404)
NRC-049 Lian/Simmons Letter from Michael S. Anderson, Secretary, Aerotest Operations, Inc. to NRC, Report of Progress Made Toward Completion of the License Transfer (Oct 13, 201 0)
(ADAMS Accession No. ML102880066)
NRC-050 Adams NUREG-1537, Part 1, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors Format and Content, Chapters 4 and 13 (Feb.
1996) (ADAMS Accession No. ML042430055) (excerpted) (NUREG-1537, Part 1, I Chapters 4 and 13)
NRC-051 Adams NUREG-1537, Part 2, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors Standard Review Plan and Acceptance Criteria, Chapters 4 and 13 (Feb. 1996) (ADAMS Accession No. ML042430048) (excerpted)
(NUREG-1537, Part 2, Chapters 4 and 13)
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