ML20028H418

Informs Commission of Staff Intent to Deny GE & Westinghouse 900820 Petitions Requesting Reconsideration & Reversal of Denial of Specific Exemption from Financial Assurance Instrument Requirements of Decommissioning Rule

ML20028H418
Person / Time
Issue date:	12/24/1990
From:	Taylor J NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:
References
SECY-90-420, NUDOCS 9101030006
Download: ML20028H418 (73)

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POLICY ISSUE December 24, 1990 m-%

20 (NEGATIVE CONSENT)

For:

The Comissioners From; James M. Taylor Executive Director for Operations

Subject:

GENERAL ELECTRIC AND WESTINGHOUSE PETITION FOR RECONSIDERATION Of COMMISSION'S DENIAL OF REQUEST FOR EXEMPTION FROM REQUIREMENTS OF THE DECOMMISSIONING RULE Forpose:

To inform the Commission of the staff's intent to deny the General Electric Company (GE) and Westinghouse Electric

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Corporation (Westinghouse) requests (Enclosure 1) that the Comission reconsider and revers; the denial of specific exemption fron the financial assurance instrument rewirements of certain parts of the deco missioning ryle.

Background:

The Comission promulgated decomissioning financial I

assurance regulations on June 27, 1988.

In the rulemaking,

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the Cumission determined that public tealth and safety are best protected if its regulations require licensees to

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provide reasonable assurances that, at the tino of termination of operations, adequate funds for decontamination and decommissioning are in place. The regulations provide that licensees had until July 27, 1990, 2 years from the effective d.;te of the regulations, before they had t) subnit information regarding fintncial assurance.

On liarch 16, 1990, GE Nuclear Energy Division reqdested that theNuclearToegulatoryCommission(NRC)grantthecompany specific exemptions frc.n the financial assurance instrument requirements in 10 CFR Parts 50 and 70s by allowing GE to act as a self-guarantor to satisfy the requests.

On July 27, k

1990, GE Aerospace Operations Division requested an exemption from financial assurance instrement requirements in 10 CFR Parts 30 and 40 and allowing the company 5.0 act as a self-guarantor.

On May 25, 1990, Westinghouse requested an exemption from 10 CFR Parts 30, 40, 50, and 70 financial assuiance instrumt:nt requiraa.ents of the rula, by permitting

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Westinghouse to suit'y the requirements through a self-l guarantee.

(See inc w uies to SECY-90-217.)

On June 19, 1990, the stafi submitted SECY-90 217 recommending that the Commission disapprovi the GE and other requests for exemptions.

The Commission deermined (Enclosure 2) to adopt the staff recommendatic'i vid deny the requests, and GE i

Nuclear Energy Division and Westinghouse were notified by Mr. R. M. Bernero, by letter dtted July 31, 1990. GE Aerospace Operations Division w s notified by letter by i

Mr. R. M. Bernero or August 21, 1990, denying its request for i

exemption. Mr. R. M. Bernero etr11er granted both GE Nuclear C.agy Division and Westinghouse a time extension to the July 27,1990, filing deadline (Enclosure 3).

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Un August 20, 1990, GE and Westinghouse each submitted a Petition for Reconsideration, in wWh they requestad the Comission to reconsider and reverse the denial of specific

-exemption from the financial assurants otrument requirements of the decomissioning rule (Enclosur) tb by allowing the companies to submit a self-guarantee.

TM 'wo companies also requested a time extension to the August M. 1990, filing deadline, until 15 days after the decision o3 the request for petition for reconsideration is made.

The tfed extension requestshavebeengranted(Enclosure 3).

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Discussioni

'he fundamental issue first raised in cne Requetn for ixemptions, i.e., the appropriatene;,s of a selb guon.;' tee

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3 mechanism to provide the Comminion with adequate asvtance of decommissioning funding by a licensee, continues to be raised in the Petitions for Reconsideration. The Commission in its rulemaking explicitly considered a full range of financial assurance options.

The Csmmission explicitly included the financial assurance methods that would be available to the licensees to meet their requirements under the rule.

The methods included a parent company guarantee that is providea in Appendix A of 10 CFR Part 30, and included a prepayrent method which may be in the-form of a trust, escrow accour.t. :overnment fund, certificate of demit, or deposit of covernn...o securities as well as surety met 1ods and insurance, LW weluded the self-guarantee, which is equivalent to an f nmi 0 reserve. The rule says that the self-guarantee, inter # reserve dues not provide reasonable assurance that adequatefundswIllbeavailableatthetimeofdecommissioning.

Except as noted below, GE and Westinghouse's arguments do not add an' material considerations that were not considered when the 2 oposti for internal reserve was rejected, in advancini GE's and Westingh:use's argument to reverse the denD1 of t'nir Request for Sp cific Exemptions, they argue that ;he self. guarantor mechara m, including annual l

The Commissioners 3

recertification, is b-good or better than other mechanisms allowed by the rule b cause:

1) GE or Westinghouse would be the insurer either as the self-guarantor or as the parent-company guarantor (the latter being allowed by the N

rule); 2) the same assets would be relied upon in either of the two cases; and 3) it is not true that the parent-company guarantee adds more assurance of the availability of adequate decommissioning funding than would the self-guarantee mechanism. The staff disagrees with the petitioners' arguments because, under a parent-subsidiary corporate structure, a parent company can isolate its assets from claims against assets of a subsidiary in bankruptcy.

That is, if a subsidiary that is not a paper corporation, i.e., one with assets external to the parent company, has extremely large claims made against its assets, the subsidiary can settle these claims under bankruptcy law such that claimants may receive only a fraction of the full value of their claims.

Corporate law in tMs ce e would leave a parent company f ree h om these claims, and possessing assets to assure the timely decomissioning of its subsidiary's f acility. While the total corporate assets of the parent and subsidiary have not changed, the way claims are settled segregates these total assets.

Because of this segregation, the parent company guarantee provides more assurance of the availability of adequate decommissioning funding than does a self guarantee.

GE-and Westinghouse also argue that compliance with the financial assurance rule would result in costs to them that are in excess of the costs to competitors who must comply with the rule.

The staff disagrees because the decommissioning 2

financial assurance regulations allow the use of a full range of acceptable financial mechanisms. The petitioners may use any of them. The particular mechanism selected by I

a licensee will depend on the individual business and financial situation of the licensee.

If the petitioners consider the costs of other mechanisms to be prohibitive, they have the option of restructuring their corporation and using a parent company guarantee. The purpose of allowing several different mechanisms is to provide flexibility to licensees and at the same time provide the high level of decommissioning financial assurance that the Commission intended.

i GE and Westinghouse also cited various financial assurance submittals that have been filed for staff review, as new evidence to support their Requests for Reconsideration. They assert that the new evidence shows, as additional special circumstances providing bases for exemptions under 10 CFR 50.12(a)(2)(iii) and 50.12(a)(2)(vi), that other licensees, similarly situated, are permitted by the rule to meet the financial assurance requirements at a much lower cost and that cost disparities and other anomalies are arising which 1

The Commissioners 4

appear not to have been considered by the Comm

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the rule was adopted.

Specifically referenced apetitor parent company guarantees and statements of int.nt.

'he companies questioned the adequacy of the various financial assurance submittals, stating that their self-guarantee plus an annual recertification mechanism provided more financial assurance than their competitors' submittals.

In reference to the argument that the decommissioning rule creates cost disparities, i.e., an increased cost burden imposed on the l

petitioner compared to others who are similarly situated, the competitors' submittals are still under review by the NRC staff, it is inappropriate for companies to prejudge the acceptability of any submittal before staff review. The examples cited may well prove not to be in compliance with the rule.

The staff continues to believe that the GE and Westinghouse requests are tantamount to seeking an informhi rule change because their proposal was explicitly considered in the rulemaking and was rejected.

If GE and Westinghouse wish to pursue the acceptability of self guarantees in relation to the decommissioning rule, they should submit a petition for rulemaking, Recommendations:

That the Commission:

1.

Note:

that the staff intends to inform GE and Westinghouse that their requests for reversal of the denial of specific exemption from the financial assurance requirements of the decommissionina rule have been denied. The staff intends to send a letter within 10 working days of the date of this paper unless otherwise instructed by the Commission.

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The Comissioner:

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Note:

that the staff intends to treat similar requests in like fashion and unles: directed otherwise will only consult with the Comission on those 7equests that present unusual considerations.

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/ms M. Tay[or xecutive Director for Operations

Enclosures:

1.

Draft Letter;and SER-in response to GE-Petition of 8/20/90;;

Draft Letter and SER in

' response to Westinghouse Petition of 8/20/90 GE Petition dtd 8/20/90 Westinghouse Petition dtd 8/20/90 2.

SRM-7/30/90 3.

'.R. M. Bernero. letters to GE and Westinghouse 6/29/90; 7/31/90;

--8/21/90; 8/27/90

' SECY MOTE:

In the absence of instructions 3 the contrary,-

SECY will notify the staff on Friday, January 11, 1991,.that the Commission'by negative consent assents-

- to the action proposed in this paper.

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- ENCLOSURE 1 I

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p Mr. Bertram Wolfe--

DRAFT Vice President and General Manager General Electric Company 175 Curtner Avenue San Jose, CA 95125

SUBJECT:

RESPONSE TO PETITION FOR RECONSIDERATION OF COMMISSION DENIAL OF REQUEST FOR EXEMPTION FROM FINANCIAL ASSURANCE REQUIREMENTS OF THE DECOMMISSIONING RULE

-This concerns the request for reconsideration and reversal of the Commission's decision to deny-your request for specific exemptions from the financial assurance instrument requirements of the decommissioning rule.

Your. request asked that General Electric Company (GE) satisfy-the financial assurance requirements through the use of a self-guarantee and annual recertification mechanism.

' After careful consideration of your petition, the Commission denies the request exemptions. (see attached Safety Evaluation Report)your request for specific for: reversal of the Commission's decision to deny When the Nuclear Regulatory Commission promulgated the decommissioning financial assurance regulations on June 27,'1988, careful consideration was given to which financial assurance mechanisms would best provide protection of public health and safety.

As we stated in our letter to you on July 31, 1990, the acceptable methods-do not.

include acting as:a self-guarantor, which is equivalent to establishing an Linternal' reserve. The use of an internal reserve.was' carefully considered by the Commission and:it concluded that the mechanism ~does not provide rease..able assurance that funds will be available when.needed to pay the cost of

-decommissioning.

While the Commission recogn zes t e-curren _s rong. financial condition of GE, i

h t t it does not agree that your proposal of a self-guarantee with annual financial

.recertification:is as reliable as the mechanism!, provided in the Conmission regulations, i.e.. 10.CFR 30.35, 40.36, and 70.25, for assuring adequate funds

,will be available at decommissioning. Strict application of the rule is

-necessary-to achieve the rule's underlying purpose. Accordingly, your request

- for an exemption under 50.12(a)(2)(11)-is denied.. Further, having considered and found unpersuasive your argumei ts that new evidence indicates that compliance

'by GE would result.in-costs'"siqni antly in excess of those incurred by

-..omalies not considered by the Commission when licensees similarly-situated" 4.

it adopted the rule, the Commission denies your request for an exemption under-50.12(a)(2)(iii):and50.12(a)(2)(vi).-

2

. NRC continues' to-believe that the GE request is tantamount to seeking an

! informal rule change because-its proposal was explicitly considered in the rulemaking and was rejected.

If GE wishes to pursue the acceptability of self guarantees:in relation to the decommissioning rule, it should submit a petition for: rulemaking..

.In-a letter dated August 27, 1990, NRC granted your request for a time extension toJthe August 31, 1990, filing deadline.

We said the NRC_would notify you of-the Commission's decision regarding your petition request and that the extension would expire 15 days from the time you~are notified.

Therefore, you should comply with the financial assurance requirements of the decommissioning rule

'by'(insert date of 15 days following EDO signature),

Sincerely, James-M. Taylor.

Executive Director for Operations

Enclosure:

As stated

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SAFETY EVALUATION REPORT RELATED TO GENERAL ELECTRIC'S PETITION FOR RECONSIDERATION AND REVERSAL OF COMMISSION'S DENIAL OF REQUEST FOR SPECIFIC EXEMPTIONS FROM THE FINANCIAL ASSURANCE INSTRUMENT 1

REQUIREMENTS OF THE DECOMh!SSIONING RULE The Safety Evaluation Report attached to the letter to of July 31, 1990, is hereby incorporated by reference. On August 20, 1990, General Electric Company (GE) requested the Nuclear Regulatory Commission (NRC) to-reconsider and reverse the denial of specific exemptions from the financial assurance requirements of the decommissioning rule by allowing GE to submit a company guarantee and annual finanical recertification to satisfy the requirements.

GE bases its Petition for Reconsideration on three grounds, 50.12(a)(2)(ii), 50.12(a)(2)(iii), and 50.12(a)(2)(vi).

GE argued in its request for specific exemptions that in accordance with 950.12(a)(2)(ii), the application of the decommissioning rule in the particular circumstances would not serve the underlying purposes of the rule. This ground was addressed in the initial rejection.

In the Petition for Reconsideration GE argues that in accordance with 650.12(a)(2)(ii), the application of the decommisnioning rule in the particular circumstances is not necessary to achieve the underlying purpose of the rule and alleges that this ground was not addressed in the_ initial rejection.

GE argues that a financial assurance mechanism such as its self-guarantee with an annual financial recertification is just as reliable as those provided in the regulation (e.g., parent company guarantee is being offered) and that strict application of the rule is "not necessary" to achieve [its] underlying purpose to assure funds are available for decommissioning and an exemption must be granted.

Strict application of the rule is necessary to achieve the underlying purpose to assure funds are available for decommissioning because separating the decommissioning funds from the corporate assets offers the greatest assurance that decommissioning funds will be available when needed.

i GE argues in accordance with 550.12(a)(2)(iii) that compliance with the dacommissioning rule would result in undue hardship or other costs that are significantly in excess _of those contemplated when the rule was adopted, or that are significantly_ in excess of those incurred-by others similarly situated.

GE alleges that new evidence shows that competitors-and others similarly situated to GE are permitted by the rule to meet the financial assurance requirements at a much lower cost than GE and thus GE.should be granted an exemption.

Such competitors and others similarly_ situated include fuel fabricator facilities utilizing-parent company guarantees, resulting-in lower-costs to the fuel fabricator because reliance of decommissioning expenses falls primarily on the-l L

resources of its subsidiary, and non-utility university reactor _ licensees l-utilizing statements-of intent, i.e., no-cost promises to seek approariations L

from respective state legislatures.

In reference to this argunent t1at the decommissioning rule creates cost disparities, i.e., an increased cost ~ burden i.

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2 imposed on the petitioner compared to others similarly situated, the competitors'

.submittals are still under reylew by the NRC staff. -It is inappropriate to

-prejudge the acceptability of any submittal before staff review. The rule does not impose an increased cost burden on the petitioner since the petitioner may establish a parent company / subsidiary corporate structure as that established by those similarly situated.

- GE also argues on the ground of 550.12(a)(2)(vi) that "there are present material circumstances not considered when the regulation was adopted for which it would be in the public interest to grant an exemption." GE alleges that new evidence shows that cost disparities and other anomalies (permitted financial assurance mechanisms such as letter of credit, line of credit and promise to seek future funding from a state legislature which are less trustworthy than a GE self-guarantee with an annual financial recertification) are arising which appear not to have been considered by the Comission when the rule was adopted.

The decomissioning rule does not create anomalies that were not considered by the Comission when the rule was adopted.

In publishing the decomissioning

. rule, the Comission determined that public health and safety can best be protected if its regulations require licensees to use methods which produce o

reasonable assurance. The Comission did not include an internal reserve as an allowable method, including-ar. internal reserve with an annual recreditation e

method. Acting as a self-guam ntor is equivalent to using an internal reserve.

The Comission concluded that an internal reserve does not provide _ reasonable assurance that funds will be available when needed.to pay the cost of decommis-sioning, and hence does not provide reasonable assurance that decomissioning will be carried out in a manner that protects public health and safety (53 FR 24033). Statements of intent from a Federal, State, or local government licensee, lines and letters of credit are widely recognized funding assurance mechanism 1 and were' determined by the Comission ac adequate to assure that funds will be

-available when needed for decommissioning.

Lines and letters of credit and statements of intent, i.e., external funding, are more trustworthy then an -

internal fund.f i.e., self-guarantee, because separating the decommissioning funds from licensees' corporate assets provides the greatest assurance that decommissioning funds will be available when needed.

GE' argues that the self-guarantor mechanism, including annual recertification, is.as good or better than other mechanisms allowed by the rule because':

1) GE would be the insurer either as the self-guarantor or as the parent-guarantor (the latter being allowed by the rule); 2) the same assets would be relied upon in either of the two cases; and 3) it 13 not true that the parent-company guarantee adds more assurance of the availability of adequate' decommissioning tunding than would, the self-guarantee mechanism.

NRC disagrees with the petitioner's arguments because, under a-parent-subsidiary corporate structure, a parent company can isolate its assets from claims against assets of a subsidiary in bankruptcy. That is, if a subsidiary that is not a paper corporation,-1.e., one with assets external 'o tN parent company, has extremely i

large claims against-its assets, the subsidiary car settle these claims under bankruptcy law such that claimants may receive onl," a fraction of the full value of-their claims. Corporate law in this case would leave a parent company free from these claims and possessing assets to assure timely decommissioning of its subsidiary's facility. While the total corporate assets of the parent and I

,-r-g y

3 subsidiary have not changed, the way claims are settled segregates 'these total

' assets.

Because of this segregation, the parent company guarantee provides more assurance than does a self-guarantee.

The petitioner has mistakenly equated its prime responsibility, to ensure that the decommissioning funds.are available when needed, to the secondary responsibility of a: parent company to ensure.that the same-funds are available upon the default of its subsidiary. The Commission has determined that parent-

- company guarantees are adequate to provide reasonable assurance that upon default of the primarily responsible subsidiary. funds will be available for

' decommissioning. The Commission has also determined that self-guarantees are

- not adequate to ensure such availability of funds.

- NRC continues to believe that the GE request is tantamount to seeking an informal rule change because its aroposal was ex) licitly considered in the rulemaking and was rejected.

If GE wisaes to pursue tie acceptability of self guarantees in

- relation to the decommissioning rule, it should submit a petition for rulemaking.

Based on the above, the petition for reconsideration is hereby denied.

9 t

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Mr. R. J. Slember DRAFT Vice President and General Manager Energy Systems Business Unit Westinghouse Electric Corporation Box 355 Pittsburgh, Pennsylvania 15230

SUBJECT:

RESPONSE TO PETITION FOR RECONSIDERATION OF COMMISSION DENIAL OF REQUEST FOR EXEMPTION FROM FINANCIAL ASSURANCE REQUIREMENTS OF THE DECOMMISSIONING RULE This concerns the request for reconsideration and reversal of the Commission's decision to deny your request for specific exemptions from the financial assurance instrument requirements of the decommissioning rule.

Your request asked that Westinghouse Electric Corporation (Westinghouse) satisfy the financial assurance requirements through the use of a self-guarantee and annual recertificatio:..achanism.

Af ter careful consideration of your petition, the Commission denies the request for reversal of the Commission's decision to deny your request for specific exemptions (see attached Safety Evaluation Report).

When the Nuclear Regulatory Comission promulgated the decommissioning financial assurance regulations on June 27, 1988, careful consideration was given to which financial assurance mechanisms would best provide protection of public health and safety.

As we stated in our letter to Theodore Stern on July 31, 1990, the acceptable methods do not include acting as a self-guarantor, which is equivalent to establishing an internal reserve. The use of an internal reserve was carefully considered by tne Comission and it concluded that the mechanism does not provide reasonable assurance that funds will be available when needed to pay the cost of decommissioning.

While the Commission recognizes the current strong financial condition of Westinghouse, it does not agree that your proposal of a self-guarantee with annual financial recertification is as reliable as the mechanisms provided in the Comission regulations, i.e.,10 CFR 30.35, 40.36, and 70.25, for assuring ddequate funds will be available at decommissioning. Strict application of the rule is necessary to achieve the rule's underlying purpose. Accordingly, your request for an exemption under 50.12(a)(2)(ii) is denied.

Further, having considered and found unpersuasive your arguments that new evidence indicates that compliance by Westinghouse would result in costs "significantly in excess of those incurred by licensees similarly situated" or anomalies not considereo by the Comission when it adopted the rule, the Commission denies your request for an exemption under 50.12(a)(2)(iii) and 50.12(a)(2)(vi).

2 NRC continues to-believe that the. Westinghouse request is tantamount i

- to an informal rule change, because its proposal was explicitly considered in-the rulemaking:and was rejected.

If Westinghouse wishes to pursue the acceptability;of skif guarantees in relation to the decommissioning rule, Lit:should submit a petition for rulemaking.

In a letter dated August 27, 1990, NRC granted your request for a time extension to the, August 31, 1990, filing deadline. We said the NRC would notify you of the Commission's decision regarding your petition request and that the extension would expire 15 days from the time you are notified.

Therefore, you should comp (ly with the financial assurance requirements of the decommissioning by insert date of 15 days following EDO signature).

Sincerely, James H. Taylor Executive Director for Operations

Enclosure:

As stated s

l.

s SAFETY EVALUATION REPORT RELATED TO WESTINGHOUSE'S PETITION FOR RECONSIDERATION AND REVERSAL 0F COMMISSION'S DENIAL OF REQUEST FOR SPECIFIC EXEMPTIONS FROM THE FINANCIAL ASSURANCE INSTRUMENT REQUIREMENTS OF THE DECOMMISSIONING RULE The Safety Evaluation Report attached to the letter to Theodore Stern on July 21,1990, is hereby incorporated by reference. On August 20, 1990, Westinghouse requested the Nuclear Regulatory Comission (NRC) to reconsider

.and reverse the denial of specific exemptions from the financial assurance requirements of the decomissioning rule by allowing Westinghouse to act as a self-guarantor to satisfy the requirements.for Reconsideration on three grounds, 55 Westin

$50.12(a)(2)(vi).

Westinghouse argued in its request for specific exemptions that in accordance with 550.12(a)(2)(ii), the application of the decomissioning rule in the particular circumstances would not serve the underlying purposes of the rule.

This ground was addressed in the initial rejection.

In the Petition for Reconsideration Westinghouse argues that in accordance with $50.12(a)(2)(ill, the application of the decomissioning rule in the particular circumstances is not necessary to achieve the underlying purpose of the rule end alleges that this ground was not addressed in the initial rejection. Westinghouse argues that a financial assurance mechanism such as its self-guarantee with an annual financial recertification is just as reliable as those provided in the regulation (e.g., parent company guarantee is being offered) and that strict application of the rule is "not necessary" to achieve [its] underlying purpose 'o assure funds are available for decomissioning and an exemption must be granced.

Strict application of the rule is necessary to achieve the underlying purpose to-assure funds are available for decomissioning because separating the decomissioning funds from the corporate assets offers the greatest assurance that decomissioning funds will be available when needed.

Westinghouse argues in accordance with 550.12(a)(2)(iii) that compliance with the.decomissioning rule would result in undue hardship or other costs.that are:significantly in excess of these contemplated when the rule was adopted, or that are significantly in excess of those incurred by others similarly situated. Westinghouse alleges that new evidence shows that competitors and others similarly situated to _ Westinghouse are permitted by the rule to meet

.the financial assurance requirements at a much lower cost than Westinghouse-and thus Westinghouse snould be granted an exemption.

Such competitors and others similarly situated include fuel fabricator facilities utilizing parent i

l company guarantees, resulting in lower costs to the fuel fabricator because r.,liance of decomissioning expenses falls primarily on the resources of its L

l.

subsidiary, and non-utility university reactor licensees utilizing statements l

of intent, i.e., no-cost promises to seek appropriai. ions from respective state I

2 legislatures.

In reference to this argument that the-decomissioning rule creates cost disparities, i.e., an increased cost burden imposed on the petitioner compared to others similarly situated, the competitors' submittals

.are still under. review by the NRC staff.

It is inappropriate to prejudge the acceptability _ of any submittal before staff review. The rule does not impose an increased cost burden on the petitioner since the petitioner may establish a parent company / subsidiary corporate structure as that established by those

- similarly situated.

Westinghouse also argues on.the ground of.950.12(a)(2)(vi) that "there are present material circumstances not considered when the regulation was adopted

<for which it would be in the public interest to grant an exemption."

Westinghouse alleges that new evidence shows that cost disparities and other anomalies (permitted financial: assurance mechanisms such as letter of credit, line of credit and promise to seek future funding from a state legislature which are less trustworthy than a Westinghouse self-guarantee with an annual financial recertification) are aris.ing which appear not to have been considered by the Comission when the rule'was adopted.

The decomissioning rule does not create anomalies that were not considered by the Comission when the rule was adopted.

In publishing the decomissioning rule, the-Comission determined that public health and safety can best be

protected if its regulations require licensees to use methods which produce reasonable assurance. -The Comission did not include an internal reserve as an allowable method, including an internal reserve with an annual recteditation method._' Acting as:a self-guarantor is. equivalent to using an internal reserve.

The Comission concluded that an internal reserve does not provide reasonable assurance that funds will be available when-needed to pay the cost of decomis-sioning, and hence does not provide reasonable assurance that decomissioning will be carried out in a manner that protects public health and safety (53 FR 24033). Statements of intent from a~ Federal, State, or local government licensee, lines and~ 1etters.of credit are widely recognized funding assurance mechanisms L and were determined by the Comission as adequate to assure that funds will be

available when needed for-decomissioning. Lines and letters of credit and statements;of intent, i.e., external funding, are more trustworthy then an internal, fund, i.e.,. self-guarantee, because separating-the decomissioning funds from-licensees' corporate assets provides the greatest assurance that decomissioning funds will be available when needed.

I i-Westinghouse' argues that the self-guarantor mechanism,cincluding annual I~

= recertification, is as good or better than other mechanisms allowed by the i

rule because:

1) Westinghouse would be the insurer either as the self-guarantor or as the parent-guarantor (the latter being allowed by the rule); 2) the same l

E assets would be relied upon in either of the two cases; and 3) it is not true that the parent-company guarantee adds more assurance of the availability of adequate decommissioning funding than would the self-guarantee mechanism. :NRC disagrees with the petitioner's arguments because, under a parent-subsidiary corpor_ ate. structure, a parent company can isolate its assets from claims against assets of a subsidiary in bankruptcy. That-is, if a subsidiary that is not a paper corporation, i.e., one-with assets external to the parent company, has extremely large. claims against its assets,-the subsidiary can settle these claims under bankruptcy law such that claimants may receive only a fraction of the

t 3

full value of their claims.

Corporate law in this case would leave a parent company free from these claims and possessing assets to assure timely decomissioning of its subsidiary's facility.

While the total corporate assets of the parent and subsidiary have not changed, the way claims are settled segregates these total assets.

Because of this segregation, the parent company guarantee provides more assurance than does a self-guarantee.

The petitioner has mistakenly equated its prime responsibility, to ensure that the decomissioning funds are available when needed, to the secondary responsibility of a parent company to ensure that the same funds are available upon'the default of its subsidiary. The Comission has determined that parent-company guarantees are adequate to provide reasonable assurance that upon default of the primarily responsiole subsidiary, funds will be available for decomissioning.

The Commission has also determined that self-guarantees are not adequate to ensure such availability of funds.

NRC continues to believe that the Westinghouse request is tantamount to an informal rule change because its proposal was explicitly considered in the rulemaking and was rejected.

If Westinghouse wishes to pursue the acceptability of self guarantees in relation to the decomissioning rule, it should submit a petition for rulemaking.

Based on the above, the petition for reconsideration is hereby denied.

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i GE Nuclear Energy

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August 20,-1990

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4 Mr. Samuel Chilk Secretary U.S. Nuclear Regulatory Commission Washington, D.C.

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Re Petition for Reconsideration

Dear Mr. Secretary:

hra General ' Electric Company-("GE") hereby requests that the Commission reconsider and reverse the denial _of specific exemption from the financial assurance instrument requirements /* ',"

of Parts 50 and 70 of the~ Commission's amended-decommissioning c,

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rule,=so-that_GE can satisfy _the financial assurance requirements by_ submitting a company guarsntee which otherwise meets or exceeds the-criteria for qualifying parent company guarantees under 10 C.F.R. Part 30, Appendix A.

GE's request for specific j

exemptions _was filed on March 16, 1990 and denied by letter from Mr. R.M. Bernero, Director of Nuclear Material Safety-and Safeguards, dated July 31, 1990.

A statement in support of the present Petition is enclosed.

.GE further asks that the Commission immediately grant GE a

temporary' extension of time to the current deadline, August 31,

~1990,;for its implementation of financial instruments for decommissioning funding,.and that such extension remain in force untilififteen'(15) days after-GE= receives notification of the Commission ruling on:this Petition.

Si erely yours, 15s !'

IWolfe'

/ci cc: Chairman Kenneth M. Carr-Commissioner Kenneth C. Rogers Commissioner James-R. Curtiss Commissioner'Forrest J. Remick James'M. Taylor, Executive Director for Operations 3

Robert M.-Bernero,-Director, Office of Nuclear Material Safety and Safeguards William Parlur, Esq.,-General Counsel Stuart Traby, Esq., Office of the General Counsel

e STATEMENT IN SUPPORT OF PETITION TO RECONSIDER DENIAL OF REQUEST FOR SPECIFIC EXEMPTIONS UNDER 10 C.F.R. PARTS 50 AND 70 A.

INTRODUCTION

' General Electric Company ("GE") hereby requests that the Commission reconsider its denial of GE's Request for Specific Exemptions (the " Request") from the financial assurance requirements of Parts Se and 70 of the Commission's amended decommissioning rule / and enable GE to satisfy the financial 1

assurance requirements by submitting a self-guarantee which otherwise meets or exceeds the criteria for qualifying parent company-guarantees under 10 C.F.R. Part 30, Appendix A

(" Appendix A").

GE incorporates herein by reference its Request for Specific Exemptions, dated March 16, 1990, a copy of which is attached hereto for the convenience of the commission.

The background, organization and financial standing of GE have not-changed in any material respect since March 16, 1990, and the licenses with respect to which relief is requested-under the present Petition are the same as those covered by the original-Request.

As discussed more fully hereinafter, GE submits that the bases for the denial of exemptions set forth in the Denial 1/.

General Requirements for Decommissioning Nuclear Facilities, 53 Fed. Reg. 24018 (June 27, 1988)

(" Decommissioning Rule" or " Rule").

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' 4-Letter and the supporting Safety Evaluation Report ("SER") do not-justify the denial.

Further, new information available now from financial assurance filings by other licensees since the end of July warrants reconsideration of the exemption request denial.

B.-

EXPANDED REGULATORY BASES FOR PETITION At the time GE's Request was submitted,. other licensees had not yet submitted to the NRC their financial assurance mechanisms.

Therefore, GE was limited to the-assertion that, because of its singular financial strength and stability, its self-guarantee would be the functional equivalent of a qualifying parent company guarantee under the Rule, and would achieve the NRC's stated purpose for the Rule (at least as well as, if not better than, the financial assurance mechanisms expressly permitted by the Rule).

That purpose, as set forth in the Statements of Consideration of the Rule, is "that there be reasonable assurance of-funds for decommissioning."' 53 Fed.-Reg. at 24031.

The GE? Request for Specific Exemptions was-filed pursuant to 10 C.F.R. Sections 50.12 and 70.14.

More specifically, GE asserted 1therein that specific exemptions were justified on the basis of "special circumstances" within the definition of

4 4-Section 50.12 (a) (2) (ii) of the Commission's regulations.because

"(a]pplication of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule."

Id.

50.12 (a) (2) (ii) (emphasis added). 2/

Based on newly developed evidence which was not available at the time the Request was submitted -- namely, the means used by other Part 50 and Part 70 licensees to provide financial assurances under the Rule -- GE can now expand its statement of special circumstances supporting the grant of specific exemptions to include that "(c]ompliance would result in.

. costs that are

. significantly in excess / of those incurred by others similarly situated" and 3

. that "[t]here are present.

. material circumstances not considered when the regulation was adopted for which it would be in the public interest to grant an exemption."

10 C.F.R. 50.12 (a) (2 ) (iii) and (vi).

1 2/

As noted in the GE's Request for Specific Exemptions,

-the specific exemption provision of Part 70 does not require a

- showing of special circumstances before the Commission may consider the appropriateness of the exemption.

See Request at 12-13 (comparing 10 C.F.R. 50.12 (a) (2) and 70.14 ).

3/

In considering the significance of costs, the Commission should look not only to the compliance costs in the first year, when these costs are at their lowest point due to certification for materials licenses.

Rather the Commission should recognize that annual costs will rise considerably over the decades that these licenses will remain in force, and that in absolute terms (though concededly not in comparison to GE's total income or assets -- GE is not claiming a " hardship" L

exists) these accumulated costs will be quite significant.

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4 As will'be shown more specifically below, one foreidn-owned fuel fabricator competitor of GE has complied with the Rule by providing a parent company guarantee which is cost-free to the licensee and its parents; and parent company guarantees have been provided by two-other competitors of GE in the nuclear business, whose re',ources are apparently enly those of its more smaller subsidiary companies.

Numerous non-utility (university) reactor licensees have complied with the Rule by promising to seek, in the future, appropriations from their respective state legislatures --

again, a mechanism which is cost-free to the licensee and, in GE's view, a considerably less reliable means of financial assurance than a GE celf-guarantee.

Thus, the Rule, if no exemption were i

granted, would over a period of years impose on-GE Nuclear Energy substantial costs (conservatively estimated, millions' of dollars over the terms of GE's licenses for non-refundable line-or letter-of-credit charges) which significantly exceed those to be borne by other similarly situated licensees, without providing any better protection for the public health and safety.

It is unlikely that the commission anticipated these disparate cost impacts when.

it adopted the Rule.

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C.

ANALYSIS AND DISCUSSION 1.

Arguments Made in the Request for Specific Exemptions Before going on to discuss new evidence in support of specific exemptions for GE, it may be helpful to summarize briefly the arguments set forth in GE's March 16, 1990 Request for Specific Exemptions.

GE first demonstrated through a number of exhibits, including its Annual Report for 1989, that its vast financial resources make it singularly well-qualified to provide adequate financial assurance of decommissioning through a self-guarantee, coupled with an appropriate financial test and annual certification thereto.

GE manifestly exceeds, in one instance by three orders of magnitude, the financial criteria in Appendix A for a parent company guarantor.

There can be no reasonable doubt about GE's current financial capabilities.

'The Request then asserted that the Decommissioning Rule should not be' applied so as to prohibit a non-electric-utility licensee with immense financial strength from giving a.

self-guarantee as.the means of providing " reasonable assurance that, at the time of termination of operations, adequate funds

=are.available so that decommissioning can be-carried out in a

"4/

(Emphasis supplied.)

53 Fed.

safe and timely manner.

Reg. at 24033.

The Request went on to point out that GE could, and intended to, provide a parent company guarantee to its wholly-owned subsidiary, Peuter-Stokes, secured by the very same assets which the Rule, anomalously, held could not be considered as a basis for decommissioning funding assurance under GE's own licenses.

It also pointed out that GE was penalized under the Rule for not creating a subsidiary to hold its licenses, or creating a new parent co provide a guarantee, and thus the Rule places form over substance.5/

The GE Request further explained why the self-guarantee proposal was not at odds with the rationale for the Commission's determination to delete the internal reserve from its list of acceptable funding mechanisms -- a decision which, according to the Rule's Statements of Consideration, was based primarily on financial considerations applicable to electric 4/

This is the commission's stated objective.

It was, and remains,.GE's positior that a self-guarantee and financial test by GE provides the requisite level of " reasonable assurance."

5/

GE suggested in its Request for Specific Exemptions that denial would create an incentive for licensees to establish a corporate subsidiary to carry out licensed activities solely in order to permit the licensee to provide a parent company guarantee.

Request at 22-23.

As amplified hereinafter, the financial assurance filings by other licensees substantiate this observation.

1.

6/

utility licensees, but not to GE.

It also distinguished the proposed self-guarantee from unmonitored self insurance or an internal reserve -- the key difference being the proposed annual recertification that GE continues to meet the Appendix A criteria (something more than licensees themselves must do).

Fircally, the Request gave examples of other instances under Federal law in which a self-guarantee, coupled with a financial test, was sufficient to satisfy concerns that funding wauld be available for future health and safety or environmental obligations.

2.

The Dissent by Commissioner Curtiss Commissioner Curtiss, the sole member of the commission to set forth his views concerning the GE Request for Specific Exemptions, strongly disapproved of the Staff's proposal to deny

-that request.

The views expressed by Commissioner Curtiss are both incisive and insightful, and GE hereby concurs in and adopts them.

He first noted that the Commission's grounds for rejecting the Staff proposal favoring the use of internal reserves for reactor licensees "would not seem to apply to a licensee that has exhibited the level of 6/

In this, GE relied on a 1985-Memorandum from the Commission's own Executive Legal Director, cited at pcges 18-19 of the Request.

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financial stability and assets of-GE."

In reaching this conclusion, Commissioner Curtiss recalled that the Commission's own special consultants had, even with respect to utility licensees, recommended that the use of internal reserves be accepted.

See NUREG/CR-3899, September 1984; see also NUREG-0584, Rev.

3, March 1983.

Commissioner Curtiss also recalled that, in the analogous field of low-level waste repository decommissioning funding, the Commission had, in 1982, "hmld open the possibility that the self-insurance approach could be-justified for licensees who demonstrate their financial qualifications."

Noting that."GE's assets and financial qualifications far exceed those required to satisfy the Appendix A financial tests for parent company guarantees" and that GE could, in fact, give such a parent company guarantee on behalf of its subsidiary, Reuter-Stokes, Commission 3r Curtiss concluded that the Rule created "an anomaly" as applied; Lastly, Commissioner Curtiss concluded-i that "the degree of financial assurance that we would have if we were--to: grant this exemption is no less than that which'would be afforded by the option of a parent company guarantee.

" the very argument at the heart of GE's March-16 Request.

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3.

Rebuttal of the Staff Position In the SER accompanying the July 31 letter denying the GE Request for Specific Exemptions, the Staff makes a number of statements which we belirsve are unsupportabla.

GE takes this opportunity to respond to those statements.

The Staff first asserts that "[a)cting as a self-guarantor is equivalent to setting _ up an internal reserve" and then Erecapitulates at length why the Commission had concluded in 1988 that an internal reserve was not an adequate funding assurance mechanism for utility reactor licensees.

That entire discussion is inapposite to the GE case.

The GE Request made clear that GE

- was offering more than an internal reserve; and, as the Commission's Executive Legal Director made clear in 1985, the self-guarantee mechanism, when coupled with an annual financial test, offers a significantly greater level of assurance than does an uncertified form of self-insurance or internal reserve.

There can be no doubt of GE's present financial. capacity to-fund decommissioning of all its facilities at which NRC licensed activities take place.

Bankruptcy or insolvency, or even financial calamity which could threaten a licensee's capacity to fund future decommissioning, are not overnight 4

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'i 10 events, especially not!for a company the-size and scope of GE.

The annual recertification that the Appendix A financial criteria. require will continue to apply.

This will provide continuing assurance to the commission that GE's internal financial capabilities either remain intact or, at worst, will not-cease to exist until long after the Commission will have been forewarned and have been able to compel GE tx) take-compensatory action.-

This is particularly true in light of the

' Appendix A test-which GE would use -- a test which requires maintenance of a. superior bond rating and is, therefore, quite sensitive to. changes in financial standing.

The SER goes on'to suggest that GE's current, concededlf excellent financial. standing and stability should be-discounted

- because GE "is involved in many diversified financial activities that= involve financial risks that-are.similar-to~or greater than

. utility companies.d This assertion is at odds with the

. conclusions;of Moody-and Standard E1 Poor, two bond rating services.whose reputations depend upon their ability tus advise potential-landers which companies are most (and-least) likely-to pay off their long-term debts, with interest. LThese two bond 1 ratings services (whose judgments are-relied on-as part ofLthe-Appendix A: criteria):have both-awarded GE the highest possible bond rating -- a rating which few NRC licensees, whatever their line of activity,~ enjoy.-

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The SEF expresses concern about the " financial risks"-of GE's' diversified business.

We submit, however, that multiple, profitable business sectors are a sourco of financial strength and stability, not a source of increased risk.

The SER's

. comparison of GE's. financial risk to that of a regulated nucAcar utility (which is, typically, subject tc after-the-fact prudency reviews.and rate base exclusions) is conclusory and unpersuasive and reaches a result wholly at odds with the conclusions reached by those who' risk their own investment funds with cuch companies.

Furthermore, the SER fails to provide any rationale for why the GE-proposal for a self-guarantee does not provide the NRC with'an adequate assurance of decommissioning funding.

Under the principles which underlie the Commission's Backfit Rule, 10 C.F.R. 50.109, the Commission will not compel a liconeee to exceed adequate protection of the public health and safety without a' supporting cost / benefit analysis.7/

In!this instance, although the SER apparently concedes that GE can provide-adequate e

I 7/-

.The Rule's Backfit Analysis states that the Commission determined that the -backfits imposed undet the Rule " ara necessary to ensure the_. adequate protection of the public health-

and safety."

53 Fed. Reg. at 24043.

GE recpactfully submits thatrit<has amply demonstrated that, as the Rule is applied to GE, the additional costs it imposes a're not necessary to ensure such " adequate protection."

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13 assurance of decomnissioning funding as of today,8/ it does not i

present any evidence that GE Vould (or, with annual certification of a finaheial test, even could) fail to provide such adequate assurance in the future, Notwithstanding all this, +.he SER made no attempt to present a cost / benefit justification of the denial of GE's request.

The SER states that the principal objecti7n to the GE proposal is "that the public interest would not be enhanced by eliminating the requirement the.t a licensee must establisi en external reserva for funding decommissiening."

Yot, even if that were so (and GE views the elimination of needless expenditures as enhancing the public interesti, that is not the stancard for denial of a specific exenption request under Sections 50.12 and 70.14.

To merit an exemption, it la 8/

As curlier noted, the GE Request for Exemptions cited as its basis for specific exemptions "special circumstances" as defined by Section 50.12(a) (2) (ii), because application of the parent company guarantee provision "in the particular circumstLnces (of GE's more than adequate available resources) would not servo the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule."

(Emphasis added). GE submits that either ground is sufficient to justify the grant of a specific exemption and, moreover, that GE qualifies under both grounds.

The Staff has addressed only whether application of the regulation would serve the underlying purpose of the Rule, ignoring whether application of the parent company guarantea restriction to a licensee capable of demonstrating more than adequate available funding for decommissioning is necessary to achieve the underlying purpose of the Rule.

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syf t leiant t '; r the requesear to show that it can achieve the

-I same regst\\nto? y parpose and not present an undue risk to the public health and safety.

D The SER also suggests that granting the GE Request might vaube an undue " expenditure ci staf f titae and resources necessary to monitor" GE's financial status.

Wish respect to t

GE, at least, Because GE is giving a parent company guarattse

);

m i nancial for Reuter-Stokes, the Stai?. Will have to monitor GE'S 1 status each p ar in any event; accor'ingly, this Staff chjsstion appeacs baseluss.

Nor is it " speculation" by t E (at the SER Q

characterizes it) that Staf f resources could be cons arved by

=

estuolishilg a more stringent financial test for rvelf-guarantors.

For example, it is doubtrus that many licensees have even AA bond r

ratings or tangible not wort'.t of more than $1 billion.

There is 5

alto no explanation in the SER of why establishing a higher financial threshold for self-guarantors would mcke the Rule m

unworkable or ineffective to ach!. eve its stated purpose.

E The SER neems to for.us en the supposed benefit of a K

financial mechanlam to " provide an independent commitment beyond W

K that of thin 1.icenote to expend fundu."

It is worth examining some of these third par'cy " independent commitments" which the SER suggests vi:.1 pre vide better financial assurance

than GE's self-guarantoa.

One such acchanism, sati s f actory under the Rulo and the Regulatory Guido (NUREG-3.66), in a letter of credit from an entity whose letter-of-exndit operations are examined and regulated by a fodoral or stato agency.

NUREG-3.66, at 3.2.2.2.

Another is a line of credit, fer which the Regulatory Guido sets forth no critoria at all.

nUREG-3.66, at 3.2.2.3.

There is no hRC financial test, moreover, for the londing institutions which grant linos-and i

letters-of-credit -- another " anomaly" in light of contemporary concerns about the health of nany londing institutions.

The point in that the hule permits a number of " independent I

commitments" which may be a great deal loss trustworthy than a GE self-guarantoo, even without an annual financial recortification.

By the same token, one can legitimately vender how much greater comfort the comminuion (or the public) should take in a university roactor licensoo's undertaking to sock an appropriation for decommissioning from a stato legislaturo at some unspecified, but timely, point in the future -- another financial assuranco mechanism which the Rule permits.

It is difficult to support the proposition that a promise to sr.1

futu'.o funding from a stato logislature (and how many states have AAA bond ratings?) is a more secure form of financial

assurance than a self-guarantee from GE.

Since those licensees can comply with the Rule at no cost, the disparate cost impact of the Rule, to the detriment of GE, could hardly be more manifest.

The SER then points out that, for materials licensees, the Commisr, ion's proposed rule included no scif-guarantee with a financial test as an acceptabic funding assurance mechanism, but that the final Rule included a par *nt company guarantee mechanism i

(with a financial test) based on the corporate guarantees allowed by the Environmental Protection Agency

(" EPA").

See 40 C.F.R.

Parts 264, 265.

What the SER neglects to point out is that the referenced EPA regulations, unlike the Rule, permit a self-guarantee by the regulated entity.

Since the future financial assurance purpose of the EPA regulations is the same as that of the Rule, the SER's failure to explain why the NRC requires a more stringent regime than EPA constitutes a significant void in its supporting rationale.

Finally, the SER disputes GE's statement that penalizing GE for itself being the NRC licensee, instead of creating a subsidiary to hold the licenses -- so that GE could then provide a parent company guarantee to such subwidiary (thereby complying with the Rule) -- places " form over substance."

The

SER says this GE argument is invalid because "the parent company 1

will provide an independent comsituent beyond that of the licensee to expend funds."9/

We submit, however, that the proper issue, from a " reasonable assurance" standpoint, is whether the assets available for decommindioning funding are, and will continue to be, adequate to cover the eventual cost of t

decommissioning.

Clearly, GE is no less firmly obligeted to bear the cost of decommissioning because it is the licensee, rather than the parent of the licensee.

Thus, notwithstanding the SER's premise that an independent commitment must, somehow, provide better protection for the public, GE reiterates its view that tne Rule places form over substance.10/

Indeed, the Rule punishes the financially otrong and secure licensees and rewards the creation of narrowly-based licensee / subsidiaries whose only assets are those facilities at which licensed activities occur, as evidenced by compliance filings made public to date, as detailed below.

In that sense, the Rule is clearly inconsistent with the public interest.

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See discussion above concerning the worth of some of the " independent commitments" permitted by the Rule.

10/

It is interesting to note that, if GE were to set up a subsidiary licensee, the " diversified financial activities" which the SER suggests are so risk-laden would remain within the GE corporate family.

Yet unquestionably GE would qualify to provide a parent company guarantee under the Rule.

When submitted to comparative analysis of the financial assurance methods available to similarly situated licensees, the Rule is riddled with inconsistencies allowing some licensees to rely on rather dubious financial assurances and compelling others, like GE, to establish redundant levels of financial protection.

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4.

New Evidence Available Although it is not stated in the SER, it is difficult to escape the conclusion that a major, if not the principal, reason for the Staff's recommendation to deny the GE Request for Specific Exemptions was a concern that, if the GE and Westinghouse Requests were granted, it would invite numerous other licenses requests for similar relief.

To avoid a major commitment of resources to the review of such requests, the Staff would be compelled to draw a new " bright line" for financial assurance by licensees.11/

Logically, as'shown above, it should be enough if the licenses his the same assets and other financial qualifications which would suffice to enable it to provide a parent comp'.ny 4

guarantee if its licensed activities had a multi-level rorporate structure.

However, in light of the fact that GE so vest 11t exceeds the applicable Appendix A criteria, GE's Request expressed-a willingness to " discuss with the NRC differant financial criteria from those in Appendix A if the Commtssion determines that such a distinction is' appropriate 23r 14 11/

Because of the t10e constraints involved in complying i.

with, or obtaining'an exemption from, the Rule, GE did not file a petition for rulemaking and, therefore, did not feel compelled to propose such a new "line."

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4 18-guarantee method other than the parent company guarantee."

Request at 8 n.7.

GE contemplated that the KRC might, out of an abundance of caution or residual adherence to the view that an

" independent commitment" by a third party was somehow safer than a self-guarantee, decide to establish higher bond rating or

- tangible net worth thresholds for self-guarantees than for parent company guarantees.

GE also believed that, however high those thresholds might conceivably be set, GE would qualify.

However, the Staff did not respond to the invitation to discuss such an approach with GE.

Now that July 27, 1990 has passed, and affected licensees have submitted to the NRC their financial assurance mechanisms, the validity of the GE position (and the paucity of other NRC licensees who could themselves meet substantially higher financial test thresholds for a self-guarantee) has become increasingly clear.

There are, for example, relatively few non-utility reactor licensees.

Of these, the largest number are state or state-supported colleges and universities which have complied with the Rule by providing " statements of intent" under Section 50.75(a) (2) (iv).

The annual cost to licensees of providing such " statements of intent" is zero.

One private university reactor licensee sought a specific oxemption under Section 50.12 (a) (2) (ii) and (iii).

_ _ _ _ _ _ _. _.. ~. _.... _ _ _ _ _ _ _ _. _

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~19-As to those few reactor licensees which are neither utilities nor universities, GE and Westinghouse have both sought specific exemptions.

Both are among the industrial giants of the United States, each having billions of dollars in tangible not worth.

It is clear that any concern over a flood of requests by reactor licensees for permission to provids self-guarantees could easily be dispelled by the simple device

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of establishing sufficiently demanding financial test criteria so that only the most financially secure licensees could qualify.

This could be accomplished through internal staff guidance on dealing with exemption requests, rather than a formal amendment to the Rule.

The same approach would also provide an appropriate remedy as to materials licensees, the great multitude of whom are relatively small in terms of assets and have no bond ratir.gz at all, of the more financially substantial materials licensees, five are nuclear fuel fabricators.

GE and Westinghouse are two of these.

A third fabricator, now a subsidiary of an ultirste foreign parent, has elected to comply with the Rule by submitting payment surety bonds, rather than a parent company guarantee.

Another fabricator complied with the Rule by providing a bank letter of credit for its $750,000 certification amount.

The fifth fuel fabricator has sought to comply with the Rule by submitting a parent company guarantee from its p

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There is, of course, no annual cost involved in such a parent company guarantee.

As a result, this fuel fabricator is able to comply with the Rule at a cost which (unless specific exemptions are granted to other financially-qualified fuel fabricators) is less than that for any of its domestic competitors.

GZ submits that the Commission, in adopting the Rule, could not have anticipated such disparate effects on similarly situated entities.

This disparity of treatment also occurs in non-fuel fabrication areas of the nuclear business.

We would note, in this regard, that the parent company guarantee submitted by one business competitor is provided by a corporation which described itself us inactive other than to function as a parent holding company for its investments in its subsidiaries.

One of those subsidiaries is the licensee on whose behalf the guarantee is submitted and whose financial information supports the cuarantee

-- in effect, a form of self-guarantee.

Another competitor furnished a parent company guarantee from a newly-formed holding i

company, a subsidiary of the licensee's former direct parent, which appears to have no assets other than the stock of the l

licensee.

Again, the effect is a self-guarantee.

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Plain 1v, this disparity in treatment of GE, under the Rule as thus far applied, places GE at a significant cost disadvantage with these competitors.

In sum, new evidence which has becomo available since July 27, 1990 strongly suggests that it would not be unduly burdensome on the Staff to evaluate self-guarantee requests from 4

that limited number of licensees whose own assets and financial condition are so strong that their capacity to fund decommissioning is beyond reasonable dispute.

Relatively few licensees are so burdened by the present rule, in terms of the annual cost of providing the required financial assurance, to even have the incentive to seek such relief.

Fewer still (especially if a more stringent financial test from that in Appendix A vere applied) could make the requisite showing of financial capacity.

Therefore, any concern that granting the GE and Westinghouse requests for specific exemptions would lead to a flood of exemption requests lacks practical foundation.

Moreover, the new evidence now available demonstrates the existence of additional special circumstances for relief, under Section 50.12 (a) (2), which could not be demonstrated prior to July 27, 1990, based on the public record then available to GE.

[

This evidence, consisting of what other licensees are doing to comply with the Rule's financial assurance requirements, shows not only that others, similarly situated to GE, are permitted by

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Regulatory requirements i

that entail needless expenditures by licensees are never in the public interest, and GE petitions the commission to eliminate such vaste in this-instance.

5.

Extenbion of Time to Comply GE is also petitioning the commission to grant it an immediate temporary extension of time from the August 31, 1990 compliance deadline for implementation of financial assurance instruments, as established by the NRC's July 31 letter denying the GE Request for Specific Exemptions.

In a sense, this-extension request is itself a request for a specific exemption from the Rule.

Viewed in that context, under Section 50.12 (a) (2) (v),

there are special circumstances for such a temporary exemption.

If its Petition for Reconsideration were denied, GE could have a line~ or letter of credit in place within fifteen (15) days after receiving notification thereof.

No valid basis exists to deny this extension request.

The SER concedes that GE "is one of the most financially stable companies in the United States" and " easily meets" the parent company guarantee financial test.

As the licensee, GE is

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already obligated to assure that timely and safe decommissioning i

occurs, surely nothing will take place within the brief period

required for the Commission to address this Petition for r

Reconsideration that will either (i) accelerate the time when GE must decommission its facilities at which NRC licensed activities are conducted or (ii) materially reduce GE's financial capacity to conduct such decommissioning.

Therefore, there is no public interest served by cospelling the licenses to irrevocably expend the funds necessary to implement a financial assurance-instrument until after the Commission has ruled on this Petition.

D.

CONCLUSIO:' AND REQUEST TCR RELIEF A careful reading of the SER which accompanied the letter

-denying GE's Request for Specific Exemptions has persuaded GE that the Staff did not grasp the thrust of GE's arguments presented in that Request.

Rather than deal with the adequacy of the GE proposals to protect the public health and safety, the SER restates remarks in the Rule's Statements of Consideration which the GE Request had distinguished as inapplicable to GE's specific-situation.

GE believes that it was an appreciation of the fact that the legitimLte goal of the Rule is adequate financial protection (rather than just more financial protection, even if redundant) which lad Commissioner Curtiss to i

-disapprove so strongly of the denial of GE's Request.

The Commission clearly has the legal authority to grant the relief requested by GE.

Moreover, granting these specific exemptions to GE will present no undue risk to the public health

and safety, so that no policy reason exists to deny GE relief from the Rule.

Manifestly, GE is currently able to provide reasonable assurance of decommissioning funding from its own resourcou and, by meeting on a continuing basis whatever reasonable financial tes' the commisaion might establish for self-guarantors, GE can provide such reasonable assurance into the future until decommissioning has been completed.

Moreover, the evidence provided by the various means by which licensees have sought to comply with the financial assurance instrument requirement of the Rule demonstrates the unnecessarily burdensome and disparate impact which the Rule will have vis-a-vis GE, while yielding no tangible benefit to public health and safety.

Based on the foregoiru, GE requests that the Commission (1) grant its Petition for Reconsideration of the denial of GE's Request for Specific Exemptions and (ii) grant to GE specific exemptions from the currently permitted.

it of financial assurance methods in parts 50 and 70, thereby enabling GE to comply with the Rule by means of a self-guarantee coupled with an annually recertified financial test which satisfies or exceeds that applicable to parent company guarantees under the Rule.

J 4 a

GE further C7 quests a temporary extension of time from the August 31, 1990 deadline for having in place the financial instrumarts currently required to establish ar,surance of funds for decommissioning under Parts 50 and 70, respectively.

We ask that such an extension remain in force until fifteen (15) days after GE receives notification of the commission's ruling on this Petition for Reconsideration, in order for GE to have time to implement the commission's ruling.

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$ldy,,,g,n,a Westinghouse Energy Systems Electric Corporallon Business Unit R J Ve-w August 20, 1990 yet menev w Ieneprner Mr'. Samuel Chilk Secretary U. S. Nuclear Regulatory Commission Washington, D. C.

20555 Petition for Peconsideration Re:

Dear Mr. Secretary:

Vestinghouse Electric Corporation hereby subrnits this Petition f or Reconsineration of the denial of the Westinghoure Request for Exemptions from the financial assurance instrument requirements of 10 CPR Parts 'O,for E The Vestinghouse Request 31, 1990.

A document in 40, 50 and 70.

25,1P90 and denied by letter dated July support of the Petition for Reconsideration is enclosed.

The intent of the requested exertptions is to pertrit Westinghouse to satisfy the financial assurance requirements by submitting a for a self guarantee which otherwisc rnects or exceeds the criteriai A.

qualifying parent cottpany guarantee under 10 CTR Part 3 f $1:ecial exeir.ption provisions of Commission regulations and a showi to achieve the underlying purpose of the rule.

Vestinghouse niso requests a temporary extension from the financia I

instrument filing deadline Commis:aien rules on the Petition.

Sincerely,

' Mf sh A.(

Chairman Kentw(h H. Carr cc:

Comaissioner Kenneth C. Rogers Commissioner James R. Curtiss Commicsioner Forrest J. Remick James M. Taylor, Executive Director for OperationsDirector, Office of Nu Robert M. Bernero, Safety and Saf eguards Villiam Parler, Esq., Ceneral Cour sel Stuart Treby, Esq., Office of the Cencral Counsel 1

1

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PETITION FOR RECONSID!mATION OF DENIAL OF REQUEST TOR EXEMPTIONS UNDER 10 CPR PARTS 30, 40, 50 AND 70

+

August 20, 1990 I

i

. r j By Subs Westi,c.iouse Energy dystems Pittsburgh, Pennsylvania 15230 l

l

i I

PETITION FOR RECONSIDERATION Of DENIAL OF REQUEST i

I 40, 50 AND 70 POR EXEMPTIONS UNDER 10 CFR PARTS 30, Westinghouse Electric Corporation (* Westinghouse")

L hereby requests that the Nucleat Regulatory Commission reconsider its denial of the Westinghouse

(" Commission" or "NRC")

30, 40, 50 and 70 from Request For Exemptions Under 10 CPR Parts the financial assurance instrument requirements of the Commission's decommissioning rule, 53 red. Reg. 24018 (June 27, r

1988), and permit Westinghouse to satisfy these requirements by submitting a self-guarantee that meets or exceeds the NRC criteria for qualifying parent company guarantees under 10 CTR Westinghouse incorporates herein by

'Part 30, Appendix A.

25, 1990),

reference its original Request for Exemptions (Kay which the Commission denied by letter from Mr. R. M. Bernero, Director of Nuclear Material Safety and Safeguards, on July 31, 1990 (the " Denial Letter").

A.

Reasons To Grant Reconsideration In its Request For Exemptions, bestinghouse demonstrated that, as a large, respected company with a long history _of financial strength and stability, it easily meets or exceeds the criteria specified by the NRC'for parent company With a consolidated net guarantees of decommissioning costs.

worth of over $2 billion, Westinghouse enjoys a position of financial security matched by few other licensees, or by parent company guarantors of licensees, and is thus fully qualified to utilize a self-guarantee in place of the financial assurance I

instrument options specified in the decommissioning rule.

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e the explanation offered Westinghouse respectfully submits that forth in the Denial for the denial of the exemptions, as set

("SER") enclosed With Letter and the Safety Evaluation Report fails to justify that denial.

This failure, that letter, together with new information available from other licensee filings since the end of July 1990, warrants reconsideration of the denial.

The Staff's riawed Analysis l.

Under Part 50 of the NRC rtgulations, a licensee may i

obtain an exemption from a regulatory requirement by showing the existence of special circumstances, such as those present when

" application of the regulation in the particular circumstances would not serve the underlying purpose of the rule,or is not 10 CPR necessary to achieve the underlying purpose of the rule."

S 50.12(a)(2)(ii) (emphasis added).1 This provision thus offers two distinct bases for the granting of an exemption, either of The SER accompanying the k

which provides adequate justification.

Denial Letter, by not properly focusing on whether application of the regulation, as written, to Westinghouse is necessary to failed to address the achieve the underlying purpose of the rule, thrust of the Westinghouse filing and thu's failed to grant the legitimate request for exemptions.

The purpone of the financial assurance requirements of the decommissioning rule.is to provide " reasonable assurance" Parts 30, 40 and 70 centain similar exemption provisions without 1reference to "special circumstances."._

i i

ig 53 red.

that funds will be available for future decomm ss on n.

Among the methods deemed adequate by the 24031.

Reg. at Commission for providing such assurance is a guarantee from a licensee's parent company, if the parent company can meet ce Logically, therefore, a finanuial assurance financial tests.

company guarantee is just as reliable as a parent mechanism that Thus, when a licensee proposes to utilize must also be adequate.

such an alternative means of financial assurance, strict application of the rule is "not nece9sary to achieve (its}

" and an exemption mL,':t be granted.

underlying purpose, A self-guarantee by Westinghouse is indistinguishable, for purposes of providing " reasonable assurance" of the availability of funds for decommissi--8.ng, from a parent company As the staf f SER noted, n'estinghouse "is financially guarantee.

ily stable, has an excellent history of profit-making and eas If meets the financial test applicable to a parent guarantee.

r Westinghouse held its licenses through a subsidiary rather than

.g 3

directly, there is no question that Westinghouse would be r

by entitled to satisfy the financial assurance requirement Plainly, because submitting its guarantee as the parent company.

lied exactly the same assets and financial str'ength must be re upon whether Westinghouse guarantees itself or guarantees a is subsidiary, the Commission's refusal to allow a self-guarantee illogical, unfair, and improper under the exemption provisions The objections in the SER to the grant of the requested In equating a exemptions do not appropriately address the point.

self-guarantee with an internal reserve, and then arguing that.__

I the use of internal reserves by Westinghouse is not foolproof because creditors may be able to assert claims against Westinghouse, the staff overlooks the obvious applicability of Similarly, this objection to parent company guarantees as well.

when the SER addresses the involvement of Westinghouse in

" diversified financial activities," the same point is applicable te parent companies permitted under the regulations to give guarantees.2 The NRC has expressly permitted parent company It is guarantees despite the potential of financial risks.

arbitrary and capricious to deny the Wastinghouse exemption are equally applicable to request on the basis of objections that parent companies that are expressly permitted by the rule to give guarantees.3 The SER also asserts that Westinghouse must " provide a financial assurance mechanism that is segregated trem licensee corporation assets."

Why this is the case, the staff does not say other than to suggest that reserves cannot be protected from creditors' claims - a point equally applicable to parent The NRC regulation with corporations, as discussed.above.

financial diversification enhances, 2 Westinghouse believes that rather than diminishes, long term financial stability.

Regardless of the effects of these activities, however, they are the same whether a company chooses to conduce them directly or through subsidiaries.

I If the Commission is concerned about the financial condition of-3Westinghouse in the future, it would be simple to fashion a self-guarantee mechanism by which the Westinghouse financial position is updated on an annual basis, thus providing greater assurance See General Electric than ar unmonitored internal reserve.In Support Of Petition for Reconsideration Company Statement

_4

require that a respect to parent company guarantees does not parent company guarantor provide a financial assurance mechanis The notion is segregated from the parent company assets.

that that a company of the admitted financial strength of Westinghouse l

must segregate assets while a parent company guarantor need not

Again, do so appears to be the product of pointless formalism.

if Westinghouse were to create a subsidiary to hold its licenses, and then submit a parent company guarantee, there would indeed exist technical " segregation" of licensee assets and the The financial assurance mechanism l

financial assurance mechanism.

and no stronger, than if itself, however, would be no different, d

Plainly, in the case of Westinghouse acted as a self-guarantor.

Westinghouse, a " segregation" requirement does not promote and serves no purpose except to greater financial assurance, penalize Westinghouse unfairly for selecting its particular corporate structure. 4 In a reference to Environmental Protection Agency (" EPA")

regulations concerning financial responsibility for closure ofthe NR 4

facilities, the staff notes that guarantee was modeled on the EPA regulations which See 40 CPR 55 guarantees.self-guarantees, a fact not mentioned in the SER.

264.143(f), 264.145(f), 265.143(e), 265.145(e).

In Tact,

~

Westinghouse has acted as a self-guarantor unde In view of the efforts post-closure of toxic waste facilities.of the NRC and EPA to regulations regarding risk management, 1990) (attaching Carr, NRC, to William K. Reilly, EPA (June 21, draft of the to act as a Commission should reconsider Westinghouse's request self-guarantor under NRC rules as well..

i 2

i Thus, the claim that-a parent company guarantee is l

l from a self-guarantee because "the parent somehow different company will provide an independent commitment beyond that of What counts is the licensee to expend funds" is misconceived.

i financial soundness and reliability of the company providing the t

Whether that company chooses to organize i

financial assurance.

j itself as a parent and subsidiary or as a single business entity Westinghouse has met the testa for financial is irrelevant.

strength devised by the Commission, and thus should be deemed u

h qualified to bear financial responsibility for decommissioning, whether it is a parent or not.

Dissent By Commissioner Curtiss 2.

from the denial of the request for In a cogent dissent exemptions, commissioner Curtiss -- the only Commissioner to As provide written comments -- rejected the staff's arguments.

Commissioner Curtiss concluded, the staff's insistence on the unsupportable distinction between parent company guarantees and e

1

}

self-guarantees created an " anomaly" in the case of a licensee As he explained, "the degree of with great financial strength.

financial assurance that we would have if we were to grant this exemption is no less than that which woul'd be afforded by the "5

Westinghouse believes-option of a parent guarantee.

Although the remarks of Commissioner Curtiss were'specifically 5directed at the exemption request of General Electric, they are equally applicable to the request of Westinghouse, which was before the Commission St the time. i

4

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that the full Commission should adopt the persuasive reasoning of Commissioner Curtiss.

3.

New Evidence At the time Westinghouse filed its exemptions request,

)

Westinghouse did not have information concerning the plans for Now that other compliance to be utilized by other licensees.

financial assurance filings have become available for review, the inequitable operation of the rule as applied to Westinghouse in These filings make it clear that Westinghouse is manifest.

entitled to exemptions not only because application of the regulation is not necessary to serve the underlying purpose of the rule, but also under 10 CPR S 50.12(a)(2)(lii), which provides for exemptions when compliance would result in costs to the licensee "significantJy in excess of those incurred by others similarly situated."

Despite the enormous financial resources of Westinghouse compared to many other licensees, the Commission insists that Westinghouse bear the expense of obtaining a surety bond, letter of credit or other approved financial assurance 1

between this treatment of Westinghouse instrument.

The contrast and the filings authorized and submitted'by some of its competitors is startling.

One major competitor of Westinghouse submitted a

" parent company" guarantee involving a newly formed holding company which acquired the stock of the licensee only one week i

This new holding company, prior to the filing with the NRC.

I which is a subsidiary of the licensee's former direct parent, l

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.. _.. _ _. _ ~. _ _ _ _ _ _ _.

f the licensee.

i apparently has no assets other than the stock oof this The net effect The ultimate parent gave no guarantee.

llow the restructuring and " parent company" guarantee is to a tee, although the Westinghouse competitor to provide a self-guaran

't NRC regulations.

method used technically appears to comply with ided a l

Another major competitor of Westinghouse prov ibed in the filing guarantee by a holding company which was descrt holding itself as being " inactive other than serving as a paren being company" for the subsidiary-licensee which was lding The financial information used by the parent ho i

guaranteed.

Again, the net effect is to company was that of the subsidiary, lf-allow, apparently within Commission regulations, a se th of guarantee. In each of the above cases, the assets and net wor those of Westinghouse, the guarantor are substantially less than I

ified in p

although well within the financial amounts spec Moreover, the annual cost to these Commission regulations.

arantees" is FI competitors for providing the " parent company gu f credit, etc. will negligible, since the purchase of letters o not be undertaken.6 t

Other competitors of Westinghause whose assets, ne those of worth and financial strength are far less than 6 ommission regulations allow state entities to provide afu f

C indicating thatActing pursuantlicensees filed to this I

statement of intent will be obtained when necessary. provision, a numbe l

Such statements, of course, are least one private university asked for such statements of intent, th.

At essentially cost-free.an exemption on the basis of its financial st -

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Y'"Www>

i et the Westinghouse also filed parent company guarantees which me Thus, because of the form in which it chooses to do regulations.

business, Westinghcuse will be required to incur costs l

significantly in excess of those incurred by others similar y This provides both added evidence as to why cituated.

ary to application of the regulation to Westinghouse is not necess dent achieve the underlying purpose of the rule, and an indepen ity in reason for an exemption because of the significant dispar d

costs between Westinghouse and others similarly situate.

General [lectric Company Petition For Reconsiderati 4.

also has petitioned the General Electric Company ("GE")

st for Commission for reconsideration of its denial of GE's reque i

ments exemptions from the financial assurance instrument requ re The original GE request for exemptions, like of Parts 50 and 70.

sought permission to self-guarantee.

the Westinghouse request, discussion The GE Petition For Reconsideration presents further concerning the propriety of the requested exemptions. eat it Westinghouse agrees with the GE discussion and does not rep in this document.

Request For Extension of Time B.

Westinghouse also requests an e'xtension of time for i

ents compliance with the financial assurance instrument requ rem until fifteen days after the Commission has from August 31, 1990, If the Commission ruled on this Petition For Reconsideration.

h extension ultimately grants the Petition For Reconsideration, t e by Westinghouse will prevent the unnecessary expenditure of funds f

the current to secure a financial assurance instrument be ore.

If the Petition is denied, Westinghouse will deadline expires.

have time to take appropriate steps regarding compliance.

Westinghouse clearly is fully capable of meeting any the present time, and the decommissioning funding obligations at L'lef extension requested will not adversely affect that capability or the public interest.

C.

Conclusion For the reasons stated in this Petition for i

s Reconsideration and in the Westinghouse Request for Exempt on Westinghouse requests exemptions frcm the financial assuranco 50 and 70 to allow instrument requirements of Parts 30, 40, the Westinghouse to satisfy such requirements by submitting to Westinghouse further requests an Commission a self-guarantee.

rance extension of time for compliance with the financial assu requirements until fifteen days after the Commission instrument has ruled on this Petition for Reconsideration.

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8/20/90 I

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6 ENCLOSURE 2

astae$8e v

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'g UNITED ST ATC$

L NUCLEAR REGULA 'ORY COMMISSION

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WASHINQToN,0 C 20566 ReV.iEjd j

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July 30, 1990 ACTION - Bernero, NMSS l

omet os THE Cys:

Taylor I

st.astany Sneizek l

Thompson l

Blaha I

MEMORANDUM FORT James M. Taylor LBykoski.NMSS i

l Executive Director for operations

[ISSuolJ. Chilk, Secretary FROM:

/

l SUa7ECT!

SECY-90-217 - GEllERAL ELECTRIC REQUEST FOR j

SPECIFIC EXEMPTIONS Ul4 DER '10 CFR PARTS 50 AND 70 l

l j

l This is'to advise-you that the Commission (with Chairman Carr and

]

l Commissioners Rogers and Remick approving-and Commissioner Curtiss disapproving) has agreed with the staff's recommendation that the exemptions request be denied.

Commissioner Curt.iss would have granted the exemptions, subject to the requirement j

L that GE be required to rocertify on an annual basis that it meets the financial test criteria as required by 10 CFR Part 30

?

Appendix A,Section II.A.1 and A.2.c.

Commissioner Curtiss' additional comments are attached.

j t

Attachments.

I As stated.

cca Chairman Carr Commissioner Rogers Commissioner Curtiss Commissioner Remick OGC L

GpA l

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NOTE:

THIS SRM, SUBJECT SFCY PAPER, AND THE VOTE SHEETS-OF CHAIRMAN CARR, COMMISSIONERS ROGERS, AND CURTISS WILL BE MADE PUBLICLY AVAILADLE Ill 10 WORKIllG DAYS FRCM THE DATE OF THIS SRM l _.

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Commissioner Curtiss' comments on SF7Y-90-217:

I. disapprove the staff's propeaal to deny GE's request for an exemption from the reg"lations requiring licensees to establish external funds or use so...e oth1r ind3pendrat, external mechanism to ensure the availability of runds 4 or decommissioning.

Although T am aware of the fact chat the Commission specifically considered and rejected rulemaking proposals that would have permitted the use of internal reserves or "self-insuranco" for decommissioning funding, as GE proposes in its application for exemption, several considerations lead me to the conclusion that the concerns that the Commission had about internal reserves and self-insurance should not preclude GE from using such decommissioning funding methods here.

In particular, I would note the following:

=

a 1.

The NRC staff's consultant on methods to f.inance decommissioning has concluded that the use of internal reserves "is acceptable and provideo excellent assurance of avr.ilability of funds."

(RUREG/CR-3899 -

Utility Financial stability and the Availability of Funds for Decommissioning, September 1984, p. 13).

Despite the fact that internal reserves cannot be effectively protected from creditors in the event of bankruptcy by the licensee, the HRC staff concluded that the internal reserve approach provides reasonab,\\e assurance that decommissioning funds will be available when they are needed by licensees and recommended that the final-decommissioning rules allow the use of internal reserves (SECY-87-3 Wit Proposed Final Rules on Decommissioning, December 17, 1987, Appendix pp.

5-7, 8-13).

The Commission's concern in rejecting that staff recommendation -- that a financially-troubled licensen might find it necessary to divert its decommissioning reserves to other purposes -- would not seem to apply to a licensee that has exhibited the level of financial stability and assets of GE.

2.

In promulgating decommissioning. funding requirements in the low-level waste area, the Commission decided not to permit, on a generic basis, the "use of stand alone 4

self-insurance" to fund low-level waste site stabilization and closure.

'At the same time, the Commission did indicate that it would evaluato the use of financial tests and self-insurance " proposed by licensees on a case-by-case basis."

(Statements of Consideration: Licensing Requirements for Land Disposal of Low-Level Waste, 47 Fed. Rect 57446, December 27, 1982).

Thus, despite its lack of confidence that the self-insurance approach would provide the necessary reasonable assurance that.gli licensees would have site closure funds available when needed, the Commission held open the possibility that the self-insurance approach could be. justified for licensees who

. (SECYe90-217) demonstrate their financial qualit$ cations.

In my view, the logic of the apr+each taken for low-level waate decommissioning app 12e6 Vith equul forco here, whore GE has made just such a demonstration with regard to the licenses which it holds.

3.

While the decommissioning regulations do not allow the use of internal reserves or self-guarantees, they do permit non-licensee parent company guarantees where a parent organization meets certain financial tests net out in 10 CFR part 30, Appendix A.

GE's assets and financial qualifications far exceed those required to satisfy these financial testa for parent company guarantees.

In fact, GE will satisfy the

==

decomadssioning funding requirements for a GE

-m subsidiary, Reuter-Stokes, by providing a parent company guarantee based on GE's own internal financial capabilities.

It would be an anomaly to permit GE to provide an internally-funded parent company guarantee for a subsidiary but require GE to establish external reserves to fund decommisioning where GE itself is the named licensee.

4.

Finally, it appears to me that the degree of financial assurance that we would have if we were to grant thir exemption is no less than that which would be afforded by the optinn of a parent company guarantee, an option that is explicitly allowco by the decommissioning rules.

In fact, the very concerns that have been expressed about granting this type of exemption -- that a company might declare bankruptcy, thereby placing decommissioning funds at the risk of creditors' superior claims -- are no different than the situation that we would face under the option of a parent company guarantee.

The commission found that risk to be tolerable for a parant company guarantee; I see no reason to differentiate the situation here, particularly in view of the undisputed financial health of the applicant.

For the foregoing reasons, I would grant the exemption, subject to tne requiremont that GE be required to recertify on an annual basis that it meets the financial test critoria as required by 10 CFR part 30, App. A, sections II.A.1 and A.2 C.

1

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9 a

ENCLOSURE 3 3

d'be see h,.

UNITED $TATES v

i8 NUCLEAR REGULATORY COMM6SSION

(

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WASHING TON. D, C. 20S65

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fir. Bertram Wolfe Vice President and Mneral Manager General Electric Coirpany 175 Curtner Avenue-San Jose, CA 95125

SUBJECT:

RESP 0(SE TO REQUEST FOR SPECIFIC EXEMPTIONS On March 16, H90, the General Electric Company (GE) requested that the

. Nuclear Regulatory CoHnissioni (NRC) grant the C(Apany specific exemptions from the financial assurance rechanism requir i.ents in 10 CFR Parts 50 and 70, by allowirg GE to act as a self-guarantor to satisfy the requirements. OE also requested a time extension to the July 27, 1990, filing deadline, if the Corra:ission was unable to respond to its exemption request by July 1,1990.

The Cocsission is presently reviewing the financial assurance exemption request and will not corplete its review by July 1,1990.

Thus, we are granting your request for a time extension to the July 27, 1990, filing deadline.

We will notify you of the Comission's decision regarding the financial assurance exe:nption recuest.

If the decision is not to grant the exemption, the extension will expire 30 days from the time you are notified.

Sincerely, Robert M. Bernero, Director Office of Nuclear Material Safety and Safeguards

._. _ _ ~

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UNITED STATES 8

g NUCLEAR REGULATORY COMMISSION f

p WASHING TON, D. C. 20605 4 2 3 9 1990 Mr. Theedcre Stern Executive Vice President Energy and Utility Systems Group

-Westinghouse Electric Corporation Gateway Center Pittsburgh, PA 15222 Cear Mr. Stern:

SUBJECT:

RESPONSE TO REQUEST FOR EXEitPTIONS FROM REGULATIONS On May 25, 1990, Westinghouse Electric Corporation requested that the Nuclear Regulatory Cormission (NRC) grant the cornpany an exemption from the financial assurance instrutaent requirectnts of 10 CFR Parts 30, 40, 50 and 70 by allowing Westinghouse to act as a self-guarantor to satisfy the requirements.

Westinghouse also requested a tin.e extensicn to the July 27, 1990, filing deadline, if the Comission was unable to rule on the exemption request by July 1, 1990.

The Comission is presently reviewing the financial assurance exemption request and will not complete its review by July 1,1990.

Thus, we are grantina your request for a time extension to the July 27, 1990, filing deadline. We will notify you of the Comission's decision regarding the financial assurance exemption request.

If the decision is not to grant the exemption, the extension will expire 30 days from the time you are notified.

Sincerely,

/

. _ =,

Rcbert H. Bernero, Director Office of Nuclear Material Safety and Safeguards

[pa nog #'o, UNITED STATES l'

')

NUCLE AR REGULATORY COMMISSION

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a W A$HING f ON. D C,205%

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s JU! 31 'g90 Mr. Bertram Wolfe Vice President and General Manager General Electric Company 175 Curtner Avenue San Jose, CA 95125

SUBJECT:

RESPONSE TO REQUEST FOR SPECIFIC EXEMPTIONS This concerns the subject request for specific exemptions from the financial assurance instrument requirements of Parts 50 and 70 of the amended decomissioning rule. Your request asked that the General Electric Company (GE) satisfy the financial assurance requirements through the use of a self-guarantee.

Af ter careful-consideration of your submittal, the Comission denies the request for exemption (see enclosed Safety Evaluation Report). When the Nuclear Regulatory Comission promulgated the decomissioning financial assurance regulations on June 27, 1988, careful consideration was given to which financial assurance mechanisms would best provide protection of public health and safety. The acceptable methods do not include acting as a self-guarantor, which is equivalent to establishing an internal reserve. The use of an internal reserve was carefully considered by the Comission and it concluded that the mechanism does not provide reasonable assurance that funds till be available when needed to pay the cost of decomissioning.

Therefore, to ensure that'there is a reasonable assurance that sufficient funds will be available for the decontamination and decomissioning of GE's licensed facilities, GE needs to provide a financial mechanism that is segregated-from licensee corporation assets.

--In a letter dated June 29, 1990, NRC granted your request for a time extension to the July 27, 1990, filing deadline. We said the NRC would notify you of the Comission's decision regarding your exemption request and that if the l'

decision is not to grant the exemption, the extension would expire 30 days from the time you are notified.

Therefore, you should comply with the financial assurance. requirements of the decomissioning rule by August 31, 1990.

Sincerely, n

L Robert M. Bernero, Director Office of Nuclear Material Safety L

and Safeguards

Enclosure:

As stated

SAFETY EVALVATION REPORT RELATED TO GENERAL ELECTRIC's REQUEST FOR EXEMPTION FROM FINANCIAL ASSURANCE INSTRUMENT REQUIREMENTS

-On March 16, 1990, GENERAL ELECTRIC (GE) requested that the Nuclear Regulatory Comission (NRC) grant the company specific exemptions from the financial assurance mechanism requirements in 10 CFR Parts 50 and 70, by allowing GE to act as a self-guarantor to satisfy the requirements.

GE also requested an exemption to the July 27, 1990, filing deadline, if the Comission was unable to respond to its exemption request by July 1, 1990.

Insuppwtofitsrequest}(GEcitesasapplicablethespecialcircumstances listed in 10 CFR $50.12(a 2)(ii),"[a]pplicationoftheregulationinthe particular circumstances would not serve the underlying purpose of the rule."

GE asserts that to require it to provide financial assurance by a third party mechanism is not necessary to achieve the underlying purpose of the rule, in the supplemental information published with its final rule, the Comission

determined that public health and safety can best be protected if its regulations require licensees to use methods which produce reasonable assurance that, at the time of termination of operations, adequate funds are available so that decomissioning can be carried out in a safe and timely manner (53 FR 24033). The Comission did not include an internal reserve as an allowa5Te method. Acting as a self-guarantor is equivalent to setting up an internal The Comissior, carefully considered this issue in the rulemaking reserve.

deliberations when it addressed the use of an internal reserve for utility reactor Itcensees (see 53 FR 24031 - 24033).

In spite of the traditional stability of utility compaiiTes, the Comission noted that some utilities are having severe financial difficulties and that many utilities are engaging in diversified financial activities which involve more financial risk.

In addition,-the Comission noted that because of the nature of an internal reserve, the funds collected are not isolated for use for decomissioning but the utility may use funds for other related purposes. The Comission recognized that, although the law is not fully developed in this area, in the event of bankruptcy there is no reasonable assurance that either unsegregated or segregated internal reserves can be effectively protected from claims of creditors and therefore internal reserves cannot be made legally secure to be available for decontamination and decomissioning.

For these reasons, the-

-Comission concluded that-the internal reserve does not provide reasonable assurance that funds will be available when needed to pay the cost of decomissioning, and hence does not provide reasonable assurance that

-decomissioning will be carried cut in a manner that protects public health and safety (53 FR 24033).-

Enclosure s.

t 2

Although the GE submittal demonstrates that the company is one of the most financially stable companies in the United States, has an excellent history of profit-making, and easily meets the financial test applicable to a parent

-guarantee, it is involved in many diversified financial activities that involve financial risks that are similar to or greater than utility companies.

Accordingly, GE's arguments that its current financial resources make it

" uniquely qualified to assure the Comission of the ready availability of funds for in excess of any requirement for decomissioning" are not determinative.

To ensure that there is a reasonable assurance that sufficient funds will be available for the decontamination and decomissioning of GE's licensed facilities, the staff believes that GE needs to provide a financial assurance mechanism that is segr c ted from licensee corporation assets.

Such segregation 6s proposed oy GE is not possible with a self-guarantee. GE proposes an annually recertifieJ self-guaranRe which it argues should be distinguished from the internal reserve mechaesm which the Comission found unacceptable.

One objection to this approach is the expenditure of staff time and resources necessary to annually monitor the financial status of a number of licensees. GE's speculation that the expenditure of staff resources could be addressed by establishing stringent financial tests to limit the number of licensees qualified to provide a self-guarantee is not persuasive and fails to address the principal objection to GE's proposal, i.e., that the public interest would not be enhanced by eliminating the requirement that e licensee must establish an external reserve for funding decomissioning.

With respect to material licensees, the Comission did not include the financial test as an acceptable funding method in the proposed rule. After

' receiving comments which pointed out the use of financial tests when accompanied by corporate guarantees was allowed by the Environmental Protection Agency, the regulation was modified in the final rule to permit licensees to use parent company guarantees with accompanying financial test.

GE argues that-no-benefit would occur if it reorganized by establishing a subsidiary to carry out its NRC licensed activities with regard to its material licenses but that this would amount only to placing " form over substance".

This argument is not valid.

As discussed in the supplemental information published with the final rule, use of the parent company guarantee and financial test provides assurance of the licensee to expend fundsin that the parent company will p(53 FR 24036).rovide The staff has considered the provisions for specific exemptions in 10 CFR

'50.12, as well as 10 CFR 70.14, and,. based on the information provided,

. identified no special circumstances or any other material' circumstances that were not considered when-the regulation was adopted. _ Application of the regulation to GE serves the underlying purpose of assuring that decomissioning

~ funds are available for the decontamination and decomissioning of GE's licensed facilities. Thus, the staff has determined that GE has failed to

-demonstrate, under provisions of 10 CFR 50.12 and 10 CFR 70.14, an adequate basis to support its exemption request and, accordingly, denies the request.

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UNITEO STATES iLi

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NUCLEAR REGULATORY COMMISSION l.

WASHING TON, D. C. 20$55 t

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+ tr wt Mr. Theodore Stern Executive Vice President Westinghouse Electric Corporation f

-Westinghouse Building.

Gateway Lenter Pittsburgh, Pennsylvania 15227

SUBJECT:

RESPONSE T0 RLJ' JEST FOR SPECIFIC EXEMPTIONS This concerns the subject request.for specific exemption from the financial assurance instrument requirements of 10 CFR Parts 30, 40, 50 and 70 of the amended decomissioning rule.

Your request asked that Westinghouse Electric Corporation (Westinghouse) satisfy the financial assurance requirements through_the_use of a self-guarantee.

' Af ter careful. consideration of your submittal, the Comission denies the request for exemption (see attached Safety Evaluation Report). When the Nuclear Regulatory Comission promulgated the decomissioning financial assurance regulations on June 27, 1988, careful consideration was given to which-financial assurance mechanisms would best provide protection of public health and safety.- The' acceptable methods do not include acting as a self-guarantor, which is equivalent to establishing an internal reserve.

The use of an internal reserve was carefully considered by the Comission and it concluded that the~ mechanism does not provide reasonable assurance that funds will be available when needed to pay the cost of decomissioning.

To ensure-that there is a reasonable assurance.that sufficient funds will be available for the decontamination and decomissiening of Westinghouse's licensed facilities, Westinghouse needs-to provide a financial mechanism that is segregated from licensee corporation assets.

_In a letter dated June 29 :1990, NRC granted your request for a time extension-to the July 27, 1990, filIngdeadline.

We said the NRC would notify you of the Comission's decision regarding your exemption request and that if the decision is not to grant the exemption, the extension would expire 30 days from the time you. are -notified.

Therefore,.you should comply with the-financial assurance requirements of the-decomissioning rule by August 31, 1990.

Sincerely, f

w Robert M. Bernero, Director Office of Nuclear Material Safety and Safeguards

Enclosure:

As stated l

9 SAFETY EVALUATION REPORT RELATED TO WESTINGHOUSE'S REQUEST FOR EXEMPTION FROM FINANCIAL ASSURANCE INSTRUMENT REQUIREMENTS On May 25, 1990, Westinghouse Electric Corporation (Westinghouse) requested that the Nuclear Regulatory Comission (NRC) grant the company specific exem;;tions from the financial assurance mechanism requirements in 10 CFR Parts 30, 40, 50, and 70, by allowing Westinghouse to act as a self-guarantor to satisfy the requirements. Westinghouse also requested an exemption to the July 27,1990, filing deadline, if the Commission was unable to respond to its exemption request by July 1,1990. -

.in support of its request, Westinghouse cites as applicable the special circumstances listed in 10 CFR 550.12(a)(ii), "[a]pplication of the regulation in the particular circumstances would not serve the underlying purpose of the rule." Westinghouse asserts that to require it to provide financial assurance by a third party mechanism is not necessary to achieve the underlying purpose of the rule.

In the supplemental information published with its final rule, the Comission determined that public health and safety can best be protected if its regulations require licensees to use methods which produce reasonable assurance that, at the time of termination of operations, adequate funds are available so that decommissioning can be carried out in a safe and timely manner (53 FR 24033). The Comission did not include an internal reserve as an allowable ~ method. Acting as a self-guarantor is equivalent to setting up an internal reserve.

The Comission carefully considered this issue in the rulemaking deliberations when it addressed the use of an internal reserve for utility reactor licensees (see-53 FR 24031 - 2t93).

In spite of the traditional stability of utility col 5panies, the. omission noted that some utilities are having severe financial difficG ues and that many utilities are engaging in diversified financial activities which involve more financial risk.

In addition, the Comission noted that because of the nature of an internal reserve, the funds collected are not isolated for use for decomissioning 4

but the utility may use funds for other related purposes.

The Comission recognhed that, although the law is not fully developed in this area, in the event of bankruptcy there is no reasonable assurance that either unsegregated or segregated internal reserves can be effectively protected from claims of creditors and therefore internal reserves cannot be made legally secure to be available for decontamination and decomissioning.

For these reasons, the Comission concluded that the internal reserve does not provide reasonable assurance that funds will be available when needed to pay the cost of

' decomissioning, and hence does not provide reasonable assurance that decomissioning will be carried out in a manner that protects public health and safety (53 FR 24033).

Although the Westinghouse submittal demonstrates that the company is financially stable, has an excellent history of profit-making, and easily meets the financial test applicable to a parent guarantee, it is involved in many diversified financial activities that involve financial risks that are similar to or-greater than utility companies. Accordingly, Westinghouse's

_ _ ~

2 arguments that its financial position, "is such that there will be reasonable assurance of funds for decomissioning when the time comes for such decomissioning" are not determinative.

To ensure that there is a reasonable assurance that sufficient funds will be available for the decoitamination and decomissioning of Westinghouse's licensed facilities, the staff believes that Westinghouse needs to provide a financial assurance mechanism that is segregated from licensee corporation assets.

Such segregation as proposed by Westinghouse is not possible with a self-guarantee, compelling Westinghouse to obtain either a third party commitment for financial assurance or establish an external segragated fund to ensure that sufficient funds will be available for decomissioning.

1 With respect to material licensees, the Comission did not include the financial test as an acceptable funding method in the proposed rule.

After receiving coments which pointed out the use of financial tests when accompanied by corporate guarantees was allowed by the Environmental Protection Agency, the regulation was modified in the final rule to permit licensees to use parent company guarantees with accompanying financial test.

Westinghouse argues that "to deny Westinghouse the right to guarantee its own decomissioning costs by the same assets with which it would be permitted to guarantee the decomissioning costs of a subsidiary if it had elected to establish such subsidiary would be both illogical and arbitrary." The argument is not valid.

As discussed in the supplemental information published with the final rule, use of the parent company guarantee and financial test provides assurance in that

- the parent company will provide an independent commitment beyond that of the licensee to expend funds (53 Fj 24036).

The staff has considered the provisions for specific exemption in 10 CFR 550.12, as well as 10 CFR 30.11, 40.14, 70.14, and, based on the information provided, identified no special circumstances or any other material circumstances that were not considered when the regulation was adopted.

Application.of the regulation to Westinghouse serves the underlying purpose of assuring that decomissioning funds are available for the decontamination and decomissioning of Westinghouse's licensed facilities.

Thus, the staff has determined that Westinghouse has failed to demonstrate, under the above provisions, an adequate basis to support its exemption request and, accordingly, denies the request.

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UNITED STATES

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g-NUCLE AR REGULATORY COMMISSION W AsHINGToN, 0. c. 20555

\\...../

AUG 21 1990 Mr. Mcivin B.- Schweiger Manager-Quality and c.nvironmental Programs Aerospace Operations Division General Electric Company Curtis Centt:r, Suite 625 6th and Walnut Streets Philadelphia, PA 19106

SUBJECT:

RESPONSE TO REQUEST FOR SPECIFIC EXEMPTIONS On July 27, 1990, the General Electric Company (GE), Aerospace Operations Division, requested that the Nuclear Regulatory Connission (NRC) grant the Company specific exemptions from the financial assurance instrument requirements in 10 CFR Parts 30 and 40, by allowing GE to act as a self-guarantor to satisfy the requirements.

GE cited an analogcus request submitted to the Comission earlier by GE Nuclear Energy Operations.

GE also requested a time extension if the Comission is unable to rule on the exemption request by August 1, 1990.

Your request indicated that you were in close touch with GE Nuclear Energy Operations on this matter. We assume that you are now aware of the NRC denial of their request (copy attached).

Your separate request was not tinely and you are expected.to comply with the financial assurance requirements by August 31, 1990, the same date required of the other GE component.

Sincerely, (g

Robert M. Bernero, Director Office of Nuclear Material Safety and Safeguards

Enclosure:

As stated

[go no '%

v UNITED STATES f ',.y NUCLEAR REGULATORY COMMISSION 5

l WASHINGTON D C. 20$$5

%a f 4.....

ut 3 i a Mr. Bertram Wolfe Vice President and General Manager General Electric Company 175 Curtner Avenue San Jose, CA 95125

SUBJECT:

RESPONSE TO REQUEST FOR SPECIFIC EXEMPTIONS This concerns the subject request for specific exemptions from the financial assurance instrument requirements of Parts 50 and 70 of the amended decomissioning rule.

Your request asked that the General Electric Company (GE) satisfy the financial assurance requirements through the use of a self-guarantee.

Af ter careful consideration of your submittal, the Comission denies the request for exemption (see enclosed Safety Evaluation Report). When the Nuclear Regulatory Comission promulgated the decomissioning financial assurance regulations on June 27, 1988, careful consideration was given to which financial assurance mechanisms would best provide protection of public health and safety.

The acceptable methods do not include acting as a self-guarantor, which is equivalent to establishing an internal-reserve.

The

'use of an internal reserve was carefully considered by the Comission and it concluded that the mechanism does not provide reasonable assurance that funds will be available when needed to pay the cost of decomissioning.

Therefore, to ensure that there is a reasonable assurance that sufficient funds will be available for the decontamination and decomissioning of GE's licensed facilities, GE needs to provide a financial mechanism that is segregated from licensee corporation assets.

In a letter dated June 29, 1990, NRC granted your request for a time extension-to the July 27, 1990,- filing deadline.

We said the NRC would notify.you of the Comission's decision regarding your exemption request and that if the decision is not to grant the exemption, the extension would expire 30 days from the time you are notified.

Therefore, you should comply with the financial assurance requirements of the decomissioning rule by August 31, 1990.

Sincerely, i,

- ~

Robert M. Bernero, Director l

Office of Nuclear Material Safety and Safeguards

Enclosure:

As stated L

1 SAFETY EVALVATION REPORT RELATED TO GENERAL ELECTRIC's REQUEP FOR EXEMPTION FROM FINANCIAL ASSURANCE INSTRUMENT REQUIREMENTS On March 16, 1990, GENERAL ELECTRIC (GE) requested that the Nuclear Regulatory Comission (NRC) grant the company specific exemptions from the financial assurance mechanism requirements in 10 CFR Parts 50 and 70, by allowing GE to act as a self-guarantor to satisfy the requirements.

GE also requested an exemption to the July 27, 1990, filing deadline, if the Comission was unable to respond to its exemption request by July 1,1990.

In support of its request, GE cites as applicable the special circumstances listed in 10 CFR 650.12(a)(2)(ii), "[a bolication of the regulation in the particular circumstances would not serve the underlying purpose of the rule."

GE asserts that to require it to provide financial assurance by a third party mechanism is not necessary to achieve the underlying purpose of the rule, in the supplemental information published with its final rule, the Comission determined that public health and safety can best be protected if its regulations require licensees to use metnods which produce reasonable assurance that, at the time of termination of operations, adequate funds are available so that decomissioning can be carried out in a safe and timely manner (53 FR 24033). The Comission did not include an internal reserve as an allowa5Te method. Acting as a self-guarantor is equivalent to setting up an internal reserve.

The Comission carefully considered this issue in the rulemaking deliberations when it addressed the use of an internal reserve for utility reactor _ licensees-(see 53 FR 24031 - 24033).

In spite of the traditional stability of utility compaiiTes, the Comission noted that some utilities are having severe financial difficulties and that many utilities are engaging in diversified financial activities which involve more financial risk.

In addition, the Comission noted that because of the nature of an internal reserve, the funds collected are not isolated for use for decomissioning but the utility may use funds for other related purposes.

The Comission recognized that, although the law is not fully developed in this area, in the event of bankruptcy there is no reasonable assurance that either unsegregated or segregated internal reserves can be effectively protected from claims of creditors and therefore internal r: serves cannot be made legally secure to be available for decontamination ano decomissioning.

For these reasons, the Comission concluded that the internal reserve does not provide reasonable assurance that funds will be available when needed to pay the cost of decomissioning, and hence does not provide reasonable assurance that decomissioning will be carried out in a manner that protects public health and safety (53 FR 24033).

L l

l l

Enclosure

l

't 2

Although the GE submittel demonstrates that the company is one of the most financially stable companies in the United States, has an excellent history of profit-making, and easily meets the financial test applicable to a parent guarantee, it is involved in many diversified financial activities that involve financial risks that are similar to or greater than utility companies.

Accordingly, GE's arguments that its current financial resources make it

" uniquely qualified to assure the Comission of the ready availability of funds far in excess of any requirement for decomissioning" are not determinative.

To ensure that there is a reasonable assurance that sufficient funds will be available for the decontamination and decommissioning of GE's licensed facilities, the staff believes that GE needs to provide a financial assurance mechanism that is segregated from licensee corporation assets.

Such segregation as proposed by GE is not possible with a self-guarantee. GE proposes an annually recertified self-guarantee which it argues should be distinguished from the internal reserve mechanism which the Comission found unacceptable.

One objection to this approach is the expenditure of staff time and resources necessary to annually monitor the financial status of a number of licensees. GE's speculation that the expenditure of staff resources could be addressed by establishing stringent financial tests to limit the number of licensees qualified to provide a self-guarantee is not persuasive and fails to address the principal objection to GE's proposal, i.e., that the public interest would not be enhanced by eliminating the requirement that a licensee must establish an external reserve for funding decomissioning.

With respect to material licensees, the Comission did not include the financial test as an acceptable funding method in the proposed rule. After receiving coments which poisteti out the use of financial tests when accompanied by corporate gn%ttees was allowed by the Environmental Protection Agency, the regulation was modif h4 in the final rule to permit licensees to use parent company guarantees with eccompanying financial test.

GE argues that no benefit would occur if it rearganized by establishing a subsidiary to carry out its NRC licensed activities with re.qard to its material licenses but that this would amount only to placing " form over substance". This argument is not valid.

As discussed in the suppleMntal infonnation published with the final rule, use of the parent company guanetet and financial test pr'ovides assurance in that the parent coRosny vtll provide 40 independent comitmnt beycfd that of the licensee to e wand funds (53 Og 24035 h The staff het considered the provisions for specific exemptions in 10 CFR 50.12, as well as 10 CFR 70.14, and, based :n the information provided, identified no special circumstances or any other material circumstances that were not considered when the regulation was adopted.

Application of the ragulation to GE serves the underlying purpose of assuring that decomissioning funds are available for the decontamination and decomisr,ioning of GE's licensed facilities. Thus, the staff has determined that GE has failed to demonstrate, under provisions of 10 CFR 50.12 and 10 CFR 70.14, an adequate basis to support its er,emption request and, accordingly, denies the request.

I

e terug'o m

E('

UNITED STATES e

g NUCLEAR REGULATORY COMMISSION o

r,

-l W ASHINGTON, D. C. 20555 k...../

AUG 2 71990 Dr. Bertram Wolfe Vice President and General Manager General Electric Company 175 Curtner Avenue San Jose, CA 95125

SUBJECT:

RESPONSE TO REQUEST-FOR PETITION FOR RECONSIDERATION On August 20, 1990, the General Electric Company (GE) requested the Nuclear Regulatory Comission (NRC) to reconsider and reverse the denial of specific exemption from the financial assurance instrument requirements of 10 CFR Parts 50 and 70 by allowing GE to submit a company guarantee to satisfy the requirements. GE also requested a time extension to the August 31, 1990, filing deadline until 15 days after GE receives notification of the Commission ruling on the Petition.

Your request for petition for reconsideration is currently under review. We are granting your request for a temporary extension to the August 31, 1990, filing deadline until 15 days after the decision on the request for petition for reconsideration is made.

Sincerely.

-/

Robert M. Bernero, Director Division of Low-Level Waste Management and Decomissioning t

L

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_ #p 6* *8 coq'o, UNITED STATES NUCLE AR REGUL ATORY COMMISSION

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W ASHINGT ON, D. C. 20556 a

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4 AUG 2 719K)

Mr. R. J. Slember Vice President and General Manager Energy Systems Business Unit Westinghouse Electric Corporation Box 355 Pittsburgh, PA 15230

Dear Mr. Slember:

-RESPONSE TO REQUEST FOR PETITION FOR RECONSIDERATION

SUBJECT:

Westinghouse Electric Corporation (Westinghouse) in a 20, 1990, On August Petition for Reconsideration, requested the Nuclear Regulatory Comission (NRC) to reconsider its denial of the Westinghouse request for exemptions from-40, 50 the financial assurance instrument requirements of 10 CFR Parts 30,fy the and 70 by allowing Westinghouse to act as a self-guarantor to sat requirements.

1990, filing deadline until 15 days af ter the Comission rules on the Petition.

We Your request for petition for reconsideration is currently under review.31,1990, are granting your request for a temporary extension to the August filing deadline until 15 dsys after the decision on the request for petition for reconsideration is made.

Sincerely.

= = -s obert M. Bernero, Director Office of Nuclear Material Safety and Safeguards

.