ML19298B445

Dodd-Frank Public Meeting Slides 10 30 2019

ML19298B445
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Issue date:	10/30/2019
From:	Office of Nuclear Material Safety and Safeguards
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Dodd-Frank Act and the Alternatives to the Use of Credit Ratings Proposed Rule 10 CFR Part 30 October 30, 2019 1

Agenda Opening Remarks Purpose of Public Meeting Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)

NRC Decommissioning Funding Assurance Requirements and the Use of Credit Ratings NRC Regulations Impacted by Dodd-Frank Staff Analysis Staff Recommendations to Address Dodd-Frank Requirements Overview of NRC Rulemaking Effort on Alternatives to the Use of Credit Ratings Discussion Questions Closing Remarks 2

Opening Remarks 3

Purpose of Public Meeting Provide an overview of:

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 The NRC staffs analysis of its impact on NRC regulations The NRCs rulemaking effort on Alternatives to the Use of Credit Ratings Provide an opportunity for public input 4

Dodd-Frank Wall Street Reform and Consumer Protection Act - July 21, 2010 promote the financial stability of the United States by improving accountability and transparency in the financial system, to end too big to fail, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS SEC. 939A. REVIEW OF RELIANCE ON RATINGS Each Federal Agency shall:

1. Review any regulation that requires use of credit-worthiness and references regarding credit ratings

2. Modify Regulations - remove reference to or requirement of reliance on credit ratings and substitute a standard of credit-worthiness that each respective agency shall determine as appropriate for such regulations

3. Transmit a report to Congress containing a description of modifications made to its regulations 5

NRC Decommissioning Funding Assurance Requirements and the Use of Credit Ratings NRC decommissioning funding assurance regulations:

Byproduct Material Licensees - 10 CFR 30.35(f)(2);

Source Material Licensees - 10 CFR 40.36(e)(2);

Production and Utilization Licensees -10 CFR 50.75(e)(1)(iii);

Special Nuclear Material Licensees - 10 CFR 70.25(f)(2); and Spent Fuel, HLW and GTCC Licensees - 10 CFR 72.30(e)(2).

Surety Instruments Prepayment External Sinking Fund Other Surety Methods Surety bond Letter of credit Insurance Self Guarantee (SG) and Parent Company Guarantee (PCG) 6

NRC Regulations Impacted by Dodd-Frank Financial Tests for Company use of PCGs and SGs (found in 10 CFR Part 30)

Appendix A - Parent Company Guarantee II.A.1. - no bond rating; 4 financial metrics; or II.A.2. - bond rating and 3 financial metrics Appendix C - Self Guarantee (with bonds)

II.A. - bond rating and 2 financial metrics (and one class of equity security registered with the SEC)

Appendix D - Self Guarantee (no bonds)

II.A. - no bond rating; 3 financial metrics 7

NRC Regulations Impacted by Dodd-Frank (cont.)

Self Guarantee for Colleges, Universities, and Hospitals Appendix E - Self Guarantee (colleges/universities)

II.A.(1) - bond rating only (for those that issue bonds)

II.A.(2) - minimum endowment funding requirement (for those that do not issue bonds)

Appendix E - Self Guarantee (hospitals)

II.B.(1) - bond rating only (for those that issue bonds)

II.B.(2) - 4 financial metrics 8

Staff Analysis In each instance in which a licensee chooses to use a Part 30 Appendix A, C, or E guarantee mechanism requiring a bond rating, staff believes:

Alternative qualification criteria currently exist within the NRC regulations that:

1) Meet the objective of the NRCs Decommissioning Funding Assurance requirements

2) Adequately qualify the licensee to ensure it meets financial qualifications necessary for use of such mechanism 9

Staff Recommendations to Address Dodd-Frank Requirements Appendix A - Parent Company Guarantee Strike Appendix A, II.A.2 in whole; rely on current Appendix A, II.A.1.

criteria Appendix C - Self Guarantee Strike Appendix C in its entirety; rely instead on current Appendix D criteria Appendix E - Self Guarantees for Colleges and Universities Strike Appendix E, II.A.(1) in its entirety; rely instead on current Appendix E, II.A.(2) criteria Appendix E - Self Guarantees for Hospitals Strike Appendix E, II.B.(1) in its entirety; rely instead on current Appendix E, II.B.(2) criteria 10

Overview of NRC Rulemaking Effort on Alternatives to the Use of Credit Ratings NRCs initial approach was to develop a Direct Final Rule July 2019 - Direct Final Rule was submitted to the Commission; became publicly available at that time NRC became aware of potential stakeholder feedback September 2019 - Commission approved staff's request to withdraw Direct Final Rule Staff in the process of developing a Proposed Rule with stakeholder input 11

Discussion Questions

1) Are there licensees that meet the current financial tests for a guarantee that would no longer be able to meet the financial tests as proposed by this rulemaking?

2) Would such licensees be able to meet the decommissioning funding assurance requirements using one or more other funding methods allowed for by regulation (prepayment, external sinking fund, surety bond, letter of credit, and insurance)? If so, what would be the cost of that method(s)?

3) Should the NRC consider alternative financial test criteria to assess an applicants or licensees use of a guarantee to provide reasonable assurance of funds for decommissioning? If so, please provide details.

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Closing Remarks 13

How Did We Do?

Email feedback to:

Gregory.Trussell@nrc.gov 14