ML20055J459
| ML20055J459 | |
| Person / Time | |
|---|---|
| Site: | 07001113 |
| Issue date: | 07/31/1990 |
| From: | Bernero R NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| To: | Wolfe B GENERAL ELECTRIC CO. |
| References | |
| NUDOCS 9008020293 | |
| Download: ML20055J459 (4) | |
Text
_
Mr. Bertra3 Wolfe Vice President and General Manager
. Getsral Electric Company 175 Curtner Avenue
'JUL 31 1990 San Jose, CA 95125
Dear Mr. Wolfe:
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 1
self. guarantee.
After 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, knod) Robert M. Beinse Robert M. Bernero, Director Office of Nuclear Material Safety and Safeguards
Enclosure:
As stated Distribution: : Central' File #>
NMSS r/f LLRB r/f LBykoski TJohnson JAustin JGreeves RBangart PLohaus JSurmeier Directors r/f LLRB t/f JLepre STreby PDR YES X
NO
_ category:
Proprietary or CF Only ACNW YES NO 1
SUBJECT ABSTRXCT:
RESPON5E TO REQUEST FOR SPECIFIC EXEMPTIONS
- SEE PREVIOUS CONCURRENCE
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DATE:07/30/90
- 07/30/90:07/3U/90:07/30/90 :07/30/90 :07/30/90 : / /90 ::7/f /-90 '76-///3 9008020293 900731 0FFICIAL RECORD COPY
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t a nono, UNITED STATES 6
1 NUCLEAR REGULATORY COMMISSION l
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,I W ASHINGTON, D. C. 20555
'JUL 31 1990 J
Mr. Bertram Wolfe Vice President and General Manager General Electric Company 175 Curtner Avenue San Jose, CA 95125 i
Dear Mr. Wolfe:
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 Commission denies the t
request for exemption (see enclosed Safety Evaluation F. ' sort). When the j
Nuclear Regulatory Comission promulgated the decomisswning 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 eva11able for the decontamination and decommissioning of GE's licensed facilities, GE needs to provide a financial n,echanism 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 Commission's decision regarding your exemption request and that if the decision is not to grant the exemption, the extension wocid expire 30 days from the time you are notified. Therefore, you should comply with the financial assurance requirements of the decommissioning rule by August 31, 1990.
Sincerely,
/,
Robert M. Bernero, Director Office of Nuclear Material Safety and Safeguards
Enclosure:
As stated
1
$AFETY EVALUATION REPORT RELATED TO GENERAL ELECTRIC's REQUEST l
FOR EXEMPTION FROM i
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.
i In support of its request GE cites as a licable the special circumstances listedin10CFR550.12(a}(2)(ii),"(a]p ication 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 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 allowa5Te method. Acting as a self-guarantor is equivalent to setting up an internal reserve. The Commission 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 l
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 Commission 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 recognizej that, although the law is not fully developed in this area, in the event of bankruptcy there is no reasonable assurance that either unsegregated i
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 reason,able 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,F,R24033).
R Enclosure
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 Commission of the ready availability of funds far in excess of any requirement for decomissioning" are not determinative.
To ensure that there is a reasonable a surance 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 i
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 licenseos. GE's speculation that the expenditure of staff resources could be addressed by establishing stringent financial tests to limit the rumber of licensees qualified to provide a self-guarantee is not persuacive 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 decommissioning.
With respect to material licensees, the Comission did not include the financial ter as an acceptable funding method in the proposed rule. After receiving con.aents 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 i
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 in that the parent company will provide an independent comitment beyond that of the licensee to expend funds (53 $ 24036).
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 if 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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