ML20045F356
| ML20045F356 | |
| Person / Time | |
|---|---|
| Site: | Dow Chemical Company |
| Issue date: | 04/17/2020 |
| From: | Geoffrey Wertz NRC/NRR/DANU/UNPL |
| To: | O'Connor P Dow Chemical Co |
| Wertz G, NRR/DANU/UNPL, 301-415-0893 | |
| Shared Package | |
| ML20049A026 | List: |
| References | |
| Download: ML20045F356 (8) | |
Text
Enclosure 2 SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION FOR INDIRECT TRANSFER OF CONTROL OF RENEWED FACILITY OPERATING LICENSE NO. R-108 DOW TRIGA RESEARCH REACTOR DOCKET NO. 50-264
1.0 INTRODUCTION
By application dated November 22, 2019 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML19330E244), the Dow Chemical Company (TDCC, the licensee) requested U.S. Nuclear Regulatory Commission (NRC, the Commission) consent, pursuant to Section 184, Inalienability of Licenses, of the Atomic Energy Act of 1954, as amended (AEA), and Title 10 of the Code of Federal Regulations (10 CFR) 50.80, Transfer of licenses, to the indirect transfer of control of Renewed Facility Operating License No. R-108 for the Dow TRIGA Research Reactor (DTRR) after a transaction resulted in TDCC becoming a wholly-owned subsidiary of Dow, Inc.
2.0 BACKGROUND
In August of 2017, TDCC merged with E.l. du Pont De Nemours and Company and each entity became a wholly-owned subsidiary of DowDuPont, Inc. as part of a planned corporate reorganization. The next step of the reorganization occurred on April 1, 2019, when TDCC separated from DowDuPont, Inc. as a wholly-owned subsidiary of Dow, Inc. During the time between August of 2017, and the reorganization on April 1, 2019, TDCC maintained, by agreement, operational control of the DTRR pursuant to the terms of Renewed Facility Operating License No. R-108. The reorganization ultimately resulted in an indirect transfer of control of the DTRR license to Dow, Inc. with TDCC remaining as the licensee.
3.0 REGULATORY EVALUATION
The transaction described in the application constitutes an indirect transfer of control of the DTRR license. Generally, for indirect transfers of control of a license, the NRC must find that the transaction will not affect the technical and financial qualifications of the holder of the license.
The licensees request for approval of the indirect transfer of control as discussed in this safety evaluation (SE) is made under 10 CFR 50.80, which states, in part:
No license for a production or utilization facility or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the Commission gives its consent in writing.
In addition, the regulations at 10 CFR 50.80(b) and (c) apply.
Pursuant to 10 CFR 50.80(b), an application for a license transfer shall include as much of the information described in 10 CFR 50.33, Contents of applications; general information, and 10 CFR 50.34, Contents of applications; technical information, with respect to the identity and technical and financial qualifications of the proposed transferee as would be required by those sections if the application were for an initial license.
The regulation in 10 CFR 50.80(c) states, in part, that:
[T]he Commission will approve an application for the transfer of a license, if the Commission determines: (1) That the proposed transferee is qualified to be the holder of the license; and (2) That transfer of the license is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission pursuant thereto.
Additionally, consistent with the regulations in 10 CFR 50.40, Common standards, paragraph (b), the proposed indirect transfer of control must not affect the technical and financial qualifications of the licensee to hold the license.
With respect to financial qualifications, 10 CFR 50.33(f) requires, in part, that each application state:
Except for an electric utility applicant for a license to operate a utilization facility of the type described in [10 CFR] 50.21(b) or [10 CFR] 50.22, information sufficient to demonstrate to the Commission the financial qualification of the applicant to carry out, in accordance with the regulations in this chapter, the activities for which the permit or license is sought.
The required information includes information that demonstrates that the proposed licensee possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license through the submission of estimates for total annual operating costs for each of the first 5 years of operation and the sources of funds to cover these costs. The Commission may also request additional information regarding the proposed licensees ability to continue the conduct of the activities authorized by the license and to decommission the facility. Finally, pursuant to 10 CFR 50.33(k)(1) and 10 CFR 50.75, Reporting and recordkeeping for decommissioning planning, the proposed transferee must indicate how reasonable assurance will be provided that funds will be available to decommission the facility.
NUREG-1537, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors, Part 2, Standard Review Plan and Acceptance Criteria, Chapter 15, Financial Qualifications (ADAMS Accession No. ML042430048), provides guidelines for the NRC staff determination of whether the licensee is qualified to own, operate, and decommission a non-power reactor. The NRC staffs review process includes confirming that the licensee provided an estimate of the first 5 years of operating costs and has given a reliable basis for the estimate, such as past operating costs or costs of operating similar facilities. The 5-year estimate should be sufficiently detailed to show categories of spending, such as salaries, benefits, and overhead, equipment, and supplies. The licensee should also discuss the sources of funding for operating costs, the amount of funding that is committed, and the amount that is potentially available. The licensee should confirm committed sources and discuss conditions under which potential sources of funding would become committed and how the facility can be safely operated if some potential sources of funding are not realized. If the source of funding is not committed, the licensee should discuss the probability of acquiring the funds and the potential source of the funds. The licensee should also discuss the possibility of operating the facility without this funding.
As for the level of assurance that the Commission requires for a licensees ability to meet its financial obligations, the Commission determined in CLI-99-06 (ADAMS Accession No. ML16195A533) that it is not within the NRCs purview to manage the finances of its licensees. Thus, the Commission does not require absolute certainty in the financial area and recognizes that some speculation is unavoidable when the issue at stake concerns predictive judgments about a licensees future financial capabilities. However, the licensee still bears the burden to show, by a preponderance of the evidence, that it meets the Commissions financial qualifications rules. This means that the licensees cost-and-revenue projections must not rely on assumptions seriously at odds with governing realities and must not involve uncertainties significantly greater than those that usually cloud business outlooks.
In 10 CFR 50.34(b)(6), the NRC requires that applicants provide certain information on facility operation. It requires, in part, that the information provided by the applicant includes the following:
(i)
The applicants organizational structure, allocations or responsibilities and authorities, and personnel qualification requirements.
(ii)
Managerial and administrative controls to be used to assure safe operation.
In 10 CFR 50.34(b)(7), the NRC requires that applicants provide the following information in the final safety analysis report:
The technical qualifications of the applicant to engage in the proposed activities in accordance with the regulations in this chapter.
With respect to the issue of foreign ownership, control, or domination, Section 104d of the AEA provides, in relevant part, that no license may be issued to:
[A]ny corporation or other entity if the Commission knows or has reason to believe it is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government.
The NRCs regulation in 10 CFR 50.38, Ineligibility of certain applicants, is the regulatory provision that implements this statute. The NRC staff evaluates license transfer applications in a manner that is consistent with the guidance provided in the NRC Standard Review Plan on Foreign Ownership, Control, or Domination, published in the Federal Register on September 28, 1999, to determine whether the proposed transferee is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government (64 FR 52355).
The NRC staff reviews information that relates to the Price-Anderson insurance and indemnity requirements under Section 170 of the AEA and 10 CFR Part 140, Financial Protection Requirements and Indemnity Agreements, and reviews the onsite property insurance requirements under 10 CFR 50.54(w).
In its application, TDCC indicates that the indirect transfer of control of the DTRR license to Dow, Inc. necessitates no changes to the license, and that TDCC will remain the licensee named in the license. For indirect transfers of control of a license, the NRC must find that the transaction will not affect the qualifications of the holder of the license, in this case TDCC. The purpose of the evaluation is to ensure that the indirect license transfer, in this case to Dow, Inc.,
does not adversely impact corporate managements involvement with and dedication to the safe maintenance and operation of the facility and that adequate technical and financial resources will be provided to support these activities.
4.0 FINANCIAL QUALIFICATIONS Consistent with 10 CFR 50.33(f) and the Commissions interpretation of this regulation, the NRC staff reviewed the licensees financial projections for the reasonableness of the estimated operating costs and sources of funds to cover these costs, as well as the sensitivity of plant revenue projections, to determine whether TDCC, as wholly-owned by Dow, Inc., possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license.
In its application dated November 22, 2019, TDCC stated that Dow, Inc. is a sustainable materials science company that has a portfolio of performance materials, industrial intermediates, and plastic businesses that deliver a broad range of differentiated science-based products. Dow, Inc. operates 113 manufacturing sites in 31 countries and employs approximately 37,000 people and delivered pro forma sales of approximately $50 billion in 2018.
Dow, Inc. is the market facing entity of TDCC and holds TDCC and all its wholly-owned subsidiaries. TDCC is the operating company that holds and operates assets in the United States including the DTRR. The officers of Dow, Inc. are essentially the same officers of TDCC.
Further, TDCC stated that the reorganization did not change any of the organizational structure that controls the DTRR license.
The NRC staff performed a review of the financial considerations necessary to support the issuance of Renewed Facility Operating License No. R-108, dated June 18, 2014, for the DTRR and documented its review in the NRC license renewal (LR) safety evaluation report (SER),
Section 1.9, Financial Considerations (ADAMS Accession No. ML12137A181). Given the size of the parent company, Dow Inc. (sales of $50 billion in calendar year 2018), and the lack of any change in the organizational structure of TDCC, the NRC staff finds that there is reasonable assurance that TDCC has sufficient funding to cover the estimated operating costs for the period of the license.
5.0 DECOMMISSIONING FUNDING
The regulation in 10 CFR 50.33(k)(1) states that, for an applicant for an operating license for a production or utilization facility, the applicant must provide information in the form of a report, as described in 10 CFR 50.75, indicating how reasonable assurance will be provided that funds will be available to decommission the facility. The regulation in 10 CFR 50.75(d) states that, for non-power reactor applicants, the report must contain a cost estimate for decommissioning the facility, indicate which method will be used to provide funds for decommissioning, and provide a description of the means of adjusting the cost estimate and associated funding level periodically over the life of the facility. The acceptable methods for providing decommissioning funding assurance are specified in 10 CFR 50.75(e)(1).
As described in Section 1.9.2, Financial Ability to Decommission the Facility, of the NRC LR SER, TDCC provides financial assurance for decommissioning with a surety bond, as allowed by 10 CFR 50.75(e)(1)(iii)(A), which states, in part, that, [a] surety method may be in the form of a surety bond, or letter of credit. Also, TDCC indicated in its LR application that it will review and update the surety bond rider annually to reflect the DTRR decommissioning cost estimate of the current year. During the LR application review period, TDCC indicated that it had increased the decommissioning surety bond from $5,516,000 (in 2011 dollars) to $5,521,813 (in 2012 dollars) because of the annual inflation factor. In its indirect transfer of control application dated November 22, 2019, TDCC provided a copy of its updated surety bond, naming the NRC as the Obligee and increasing the surety bond from $6,108,881 to $6,224,950.
As described in Section 1.9.2 of the LR SER, the NRC staff concluded that the TDCC decommissioning method and cost estimate were conservative compared to similar research reactor facility decommissioning cost estimates and are acceptable. The NRC staff, based on its independent calculations, finds the current decommissioning cost estimate of $6,224,950 (in 2019 dollars) to be a reasonable value given the annual inflation factor from the cost estimate of
$5,521,813 (in 2012 dollars).
Based on the information summarized above, the NRC staff concludes that the proposed surety bond method is acceptable, the decommissioning cost estimate is reasonable, and the proposed means of adjusting the decommissioning cost estimate and associated funding level periodically over the life of the facility is reasonable. Therefore, the NRC staff finds that there is reasonable assurance that funds will be available to decommission the DTRR, as required by 10 CFR 50.33(k)(1) and 10 CFR 50.75(d).
6.0 TECHNICAL QUALIFICATIONS In its application dated November 22, 2019, TDCC stated that there was no change in the management of the DTRR prior to or following the indirect transfer of control to Dow, Inc. TDCC indicated that Mr. A. N. Sreeram, Senior Vice President of Research and Development and Chief Technology Officer, was in that position when the renewed license was issued on June 18, 2014, and remains in that position currently with no change. TDCC also indicated that Mr.
Sreeram is a U.S. citizen, as required by DTRR Renewed Facility Operating License No. R-108 (ADAMS Accession No. ML12137A151) license condition 2.C.(4), Negation Action Plan, item b (see Section 7.0 below). Additionally, the DTRR technical specification 6.1, Organization (ADAMS Accession No. ML12137A171), provides a description of the Level 1 and Level 2 organizational levels and responsibilities. The Level 1 position has been occupied by Mr.
Wayde Konze and the Level 2 position has been occupied by Mr. Paul O'Connor since the issuance of the renewed license. Neither individual has changed positions as a result of the indirect transfer of control.
Therefore, since the indirect transfer of control did not result in any change to the management responsible for oversight and control of licensed activities involving reactor operation and safety at the DTRR, the NRC staff concludes that TDCC remains technically qualified to hold Renewed Facility Operating License No. R-108.
7.0 FOREIGN OWNERSHIP, CONTROL, OR DOMINATION Section 104d of the AEA, as implemented by 10 CFR 50.38, prohibits the issuance of a license to any entity which the Commission knows or has reason to believe is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government.
As described in Section 1.9.3, Foreign Ownership, Control, or Domination, of the LR SER, TDCC submitted a Negation Action Plan to ensure that TDCC will segregate decisions relating to the safety and security of the DTRR from non-U.S. citizen directors and officers. The Negation Action Plan became license condition 2.C.(4) in Renewed Facility Operating License No. R-108.
(4) Negation Action Plan
- a. The Dow Chemical Company Resolution included with the supplement dated January 13, 2012, and the representations made in the application regarding reporting relationships and authority over safety and security issues, shall be adhered to and may not be modified in any respect concerning the decision making authority of the Dow Chemical Company over the Dow TRIGA Research Reactor without the prior written consent of the Director, Office of Nuclear Reactor Regulation.
- b. The Vice-President over Research and Development, who is a U.S. citizen, shall have exclusive executive authority over the Dow TRIGA Research Reactor. If at any time the Vice-President over Research and Development is not a U.S. citizen, then at such time the exclusive authority over the nuclear reactor and its special nuclear materials will be transferred to an executive of at least the rank of Vice-President who is a U.S. citizen. This individual shall ensure that the business and activities of the Dow Chemical Company with respect to the Dow TRIGA Research Reactor are at all times conducted in a manner consistent with the public health and safety and common defense and security of the United States.
In its application dated November 22, 2019, TDCC stated that both prior to the merger and following the spin-off, TDCCs Senior Vice President over Research and Development, Mr. Sreeram, retained exclusive authority over the DTRR, as required by Renewed Facility Operating License No. R-108, license condition 2.C.(4), item b., above. Further, TDCC reiterated that Mr. Sreeram is a U.S. citizen.
Based on the information summarized above, the NRC staff concludes that there is no reason to believe that TDCC is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government within the meaning of the AEA and that TDCC has satisfied the requirements of 10 CFR 50.38.
8.0 NUCLEAR INSURANCE
AND INDEMNITY As described in Section 1.9.4, Nuclear Indemnity, of the LR SER, TDCC currently has an indemnity agreement with the Commission that does not have a termination date. Therefore, TDCC continues to be a party to this agreement following the indirect transfer of control of the renewed license. TDCC will be indemnified for any claims arising out of a nuclear incident under the Price-Anderson Act, Section 170 of AEA, and in accordance with the provisions of its indemnity agreement of Appendix B, Form of indemnity agreement with licensees furnishing insurance policies as proof of financial protection, to 10 CFR Part 140 up to $500 million.
9.0 CONFORMING AMENDMENT In its application dated November 22, 2019, TDCC indicated that the indirect transfer of control of the DTRR license to Dow, Inc. necessitates no changes to the license, and that TDCC will remain the licensee named in the license. The NRC staff reviewed Renewed Facility Operating License No. R-108 and finds that no changes are needed as a result of the indirect transfer of control. As such, a conforming amendment is not being issued.
10.0 PUBLICATION OF OPPORTUNITY TO COMMENT, REQUEST A HEARING, AND PETITION FOR LEAVE TO INTERVENE In accordance with the Commissions regulations, the NRC published its consideration of the issuance of an order under 10 CFR 50.80 approving the indirect transfer of control of Renewed Facility Operating License No. R-108 for the DTRR in the Federal Register on February 11, 2020 (85 FR 7800) for a 30-day comment period and a 20-day request-for-hearing-and-petition-for-leave-to-intervene period.
One comment was received during the 30-day comment period (ADAMS Accession No. ML20054B742). The comment was submitted anonymously and only stated: Good. No petitions were received during the 20-day request-for-hearing-and-petition-for-leave-to-intervene period.
11.0 STATE CONSULTATION
The NRC staff notified the Radiological Protection Section, Office of Waste Management and Radiological Protection, Michigan Department of Environmental Quality, of the NRCs consideration of the issuance of an order under 10 CFR 50.80 approving the indirect transfer of control of Renewed Facility Operating License No. R-108 for the DTRR. The State officials had no comments.
12.0 ENVIRONMENTAL CONSIDERATION
The subject application is for the approval of an indirect transfer of control of Renewed Facility Operating License No. R-108, without amendment. Accordingly, the actions involved meet the eligibility criteria for categorical exclusion set forth in 10 CFR 51.22, Criterion for categorical exclusion; identification of licensing and regulatory actions eligible for categorical exclusion or otherwise not requiring environmental review, paragraph (c)(21). Pursuant to 10 CFR 51.22(b),
no environmental impact statement or environmental assessment need be prepared in connection with the approval of the application.
13.0
SUMMARY
AND CONCLUSION Based on its review, which is summarized above, of the information provided in the indirect license transfer application, the NRC staff concludes that TDCC continues to be financially and technically qualified to be the holder of Renewed Facility Operating License No. R-108. The NRC staff further concludes that there are no disqualifying decommissioning funding, foreign ownership, control, or domination, or nuclear insurance and indemnity issues associated with the indirect license transfer.
Based on the considerations discussed above, the Commission has concluded that the proposed transferee is qualified to be the holder of the license and that transfer of the license is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission pursuant thereto.
Principal Contributor: Geoffrey Wertz, NRR Date: April 17, 2020