ML20059M694
| ML20059M694 | |
| Person / Time | |
|---|---|
| Site: | 07000064 |
| Issue date: | 07/28/1993 |
| From: | Yuhas G NRC OFFICE OF INSPECTION & ENFORCEMENT (IE REGION V) |
| To: | Holmes J STANFORD UNIV., STANFORD, CA |
| References | |
| 571252, NUDOCS 9311190250 | |
| Download: ML20059M694 (110) | |
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M Control No.:
571252 Stanford University Health Physics Environmental Safety Facility Oak Road Stanford, California 94305 Attention:
John A. Holmes, Associate Director Environmental Health and Safety Radiation Safety Officer We have reviewed your decommissioning financial assurance submittal dated August 20, 1992, and the revision dated July 12, 1993.
Within the scope of our review, no further deficiencies were identified.
If any additional information is required, we will contact you.
Sincerely, f fgguzy f, /$4%h7MA'
[g7'GrehoryP.Yuhas, Chief, v'
Radioactive Materials Safety Branch bec:
Docket File Inspection File G. Cook B. Faulkenberry LFDCB M. Smi,th W
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pf UNITED STATES l
p' NUCLEAR REGULATORY COMMISSION
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E REGION V '
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1450 MARIA LANE 8
WALNUT CREEK, CAUFORNIA 94596-5368 JUN 111993
~ Docket No. :
070-00064 License No.:
SNM-56 Control No.:
571252 Stanford University l
Health Physics Environmental Safety Facility Oak Road j
Stanford, California 94305
)
-t Attention:
John A. Holmes, Associate Director Environmental Health and Safety Radiation Safety Officer l
This is in reference to-the letter dated August 20, 1992, from David H. Russ 1
regarding financial assurance mechanisms required to support your special j
nuclear material license. We have received comments on the above letter from NRC Headquarters personnel and have one remaining item which needs.to be addressed.
The letter of credit requires the bank to notify NRC in advance if the bank l
decides not to renew the letter of credit. Under. the terms of the letter of -
credit, this notification must be made by registered mail at least 90 days prior to the operative expiration date for the letter of credit.. This non-renewal notification provision, however, does not satisfy the terms specified in NRC Regulatory Guide 3.66, page 4-33, in two respects. First, the notification is not provided to both NRC and the licensee.
Second, it is not l
clear that the notification (i.e. the registered letter) must be received at least 90 days before the expiration date.
In the event that the bank elects' not to renew the letter of credit, it is essential for NRC and the licensee to receive timely notification.
Therefore, to correct the above discrepancy, the letter of credit needs to be revised to (1) require the bank to notify both NRC and the licensee if the l
bank elects not to renew the letter of credit, and (2) clarify that such notice must be received, as evidenced by the signed return receipts, at.least 90 days prior to the expiration date of the letter of credit.
Following completion of the above change, it appears we will be able to complete our review.
In order to continue prompt review of your application, we request that you submit your response to this letter within 30 days from -
l the date of this letter. Please reply in duplicate, and refer to Mail Control No. 571252.
Sincerely, V [
I James L. Montgomery Senior Materials Specialist Radioactive Materials Safety Brangh 1
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NUCLEAR REGULATORY COMMISSION NSC o
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WASHINGTON, D. C. 20555 REG!O:: V E3 l'.3 26 !.:: 0 I!3 HEMORANDUM FOR: James Montgomery Radioactive Materials Safety Branch, RV FROM:
Louis M. Bykoski Decommissioning and Regulatory Issues Branch Division of Low-level Waste Management and Decommissioning, NMSS
SUBJECT:
THE OFFICE OF GENERAL COUNSEL AND CONTRACTOR COMMENTS ON NONSTANDARD FINANCIAL ASSURANCE SUBMITTALS Our contractor, ICF Incorporated, and OGC have reviewed and provided comments on the Stanford University nonstandard financial assurance submittal sent to us for review.
The ICF comments are presented in two parts. The first part deals with specific recommendations to current deficiencies. The second part (Other Issues) provides a discussion of changes to the standard wording that are acceptable and are not considered to be deficiencies. The OGC comments include additional deficiencies that need to be corrected by the licensee and comments for our internal use.
You should carefully review the comments before preparing the deficiency letter. We have enclosed more specific information to help you sort and consolidate the ICF and OGC comments.
Should you have any further questions with regard to the comments, please call me on (301) 504-2572 or David Futoma of OGC on (301) 504-1621.
m; M. hMf-Louis M. Bykoski Decommissioning and Regulatory Issues Branch Division of Low-Level Waste Management and Decommissioning, HMSS
Enclosures:
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e 220311207 703.934 3000 ICl> IN CO R PO R ATED April 16, 1993 To:
Dr. Lou Bykoski, NMSS/NRC From:
Martin Marchaterre and John Collier, ICF Incorporated
Subject:
Review of Revised 'atter of Credit Submitted by Stanford University Stanford University in Stanford, California, submitted a revised certification of financial assurance, using a revised letter of credit and revised standby trust, in the amount of $750,000.1 The submission assures decommissioning costs for license SNM-56 issued under 10 CFR Part 70.
Upon review of the submission,2 ICF recommends that NRC Region V require the licensee to modify the submission in the following way:
Revise the letter of credit's non-renewal notification provisions to require notification of both NRC and the licensee at least 90 days prior to the expiration date as shown on the signed receipts (Regulatory Guide 3.66, Page 4-33).
The letter of credit requires the bank to notify NRC in advance if the bank decides not to renew the letter of credit. Under the terms of the letter of credit, this notification must be made by registered mai13 at least 90 days prior to the operative expiration date for the letter of credit.
This non-renewal netification provision, hcwever, does not satisfy the terms specified in Regulatory Guide 3.66, page 4-33, in two respects.
First, the notification is not provided to both NRC and the licensee. Second, it is not clear that the notification (i.e., the registered letter) must be received at least 90 days before the expiration date.
In the event that the bank elects not to renew the letter of credit, it is essential for NRC and the licensee to receive timely notification so that 1
ICF assumes that NRC has verified that the certification amount is acceptable under 10 CFR 70.25.
2 ICF reviewed Stanford University's previous submissions and reported several recommendations to NRC in memoranda dated October 31, 1990, and November 18, 1991.
3 Both certified mail and registered mail require the person accepting the mail to sign a receipt.
Registered mail is more secure, however, and is delivered only to the addressee.
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- the licensee can obtain alternative financial assurance.
In the event the licensee fails to obtain alternative financial assurance, NRC can, if necessary, draw on the letter of credit prior to the letter of credit's expiration.
ICF recommends that NRC require the licensee to revise the letter of credit's non-renewal provision to (1) require the bank to notify both NRC i
and the licensee if the bank elects not to renew the letter of credit, and (2) i clarify that such notice must be received, as evidenced by the sinned return i
receipts, st least 90 days prior to the expiration date of the letter of credit.
Other Issues Apart from editorial and non-substantive changes to the standard wording i
provided in Regulatory Guide 3.66, the following modifications are noteworthy:
(a)
The letter of credit lists as the beneficiary the U.S.
97711C
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Nuclear Regulatory Commission, Washington, D.C. 20555.
J However, the telephone number of the listed NRC contact,
,<w Louis Bykoski, is cited as 301-492-0572.
Dr. Bykoski's l
telephone number has recently been changed to 301-504-2572.
This error should not be significant because the bank is t
unlikely to telephone Dr. Bykoski. Also, the bank should be able to contact Dr. Bykoski by mail at the listed address.
(b)
The bank added a requirement to the letter of credit that i
NRC present a certification to the bank to draw on the letter of credit if, after notification of non-renewal of the licensee's letter of credit, the licensee cannot find alternative assurance within 30 days. This additional i
requirement does not reduce the effectiveness or enforceability of the mechanism, although it does require l
NRC to submit an additional certification, worded as I
specified in the letter of credit, to draw on the mechanism.
(c)
The standby trust agreement contains an extra WHEREAS clause and a Section 20, which is not included in the recommended wording in Regulatory Culde 3.66.
The WHEREAS clause states WHEREAS, the Crantor and Trustee entered f
into a Standby Trust Agreement dated July l
27, 1990, but the NRC has requested that j
said agreement by replaced by this agreement.
Section 20 of the submitted standby trust agreement reads Section 20.
Termination of July 27. 1990 Standby Trust Acreement. Grantor, Trustee e
and the NRC (by its signature hereon) agree to, and hereby do, terminate the
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July 27, 1990 Standby Trust Agreement f
between Grantor and Trustee.
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1 These added sections are acceptable and' ensure that this standby trust fund supersedes the July 27, 1990 standby trust fund.
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'(d)
The standby trust agreement includes a signature line for NRC, although no representative of NRC has yet signed.
In i
general, the beneficiary of a trust is not expected to sign l
the trust agreement.
In this case, however, NRC's signature
[
is necessary to execute an amendment to the agreement.
As.
l described above, the added "WHEREAS" clause and the added
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Section 20 act, in effect, to amend the July 27, 1990, standby trust agreement and replace it with the current agreement.
In accordance with the amendment provisions in Section 15 of both agreements, any amendment must be executed in writing by the grantor, the trustee, and by NRC.
j Therefore, ICF recommends that an ap;propriate representative
-y> of NRC sign 'the agreement as requested.
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(e)
The evidence submitted by the licensee to demonstrate the authority of its chief financial officer (CFO) to sign the standby trust agreement limits the CFO's authority in cases
" involving the expenditure of more than $100,000... until it shall have been first approved by the Office of the Controller as to availability of funds."
Because the availability of funds is not at issue in this case (given that funds would be provided, if necessary, by the letter of credit), ICF does not believe that any further approvals or evidence of authority is necessary.
____j/y Finally, the Region should ensure that documents submitted by the fr licensee are oritinally siened dug cates, as recommended in Regulatory Culde f,,, \\
t 3.66.
Unless the documents have been properly signed, NRC cannot be certain i
that the financial assurance mechanism is enforceable.
Because ICF does not possess the original submissions, we cannot verify compliance with these
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requirements.
attachments i
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1
. APPENDIX A 4
CHECKLIST FOR DECOM4ISSIONING FINANCIAL ASSURANCE l
NAMEOFLICENSEEJRAPPLICANT A6td udJWk i
MAILING ADDRESS L R % ta
' L%& mdb G fe % % Q Q h
a s
t (bh Vood MM C A
@4.705~- T006 I
A.
Licensee Part (check one of the followi,M):
Part 30 Licensee or Applicant K
Part 70 Licensee or Applicant
.f Part 40 Licensee or Applicant Part 72 Licensee or Applicant f
B.
Check appropriate item in each category (if applicable)
I li 1.
A f $93 Date of Financial Assurance Submission 2.
Public Entity
)
X Private Entity PAvM MMb J,
3.
Y Certification of Financial Assurance $ 79*
l Decommissioning Funding Plan 4.
(a)
Prepayment Option (See Appendix B) i Trust Fund Escrow Account Certificate of Deposit Government Fund i
Deposit of Government Securities (b)
X Surety / Insurance /0ther Guarantee (See Appendix C)
Surety bond Y Letter of Credit Line of Credit i
Parent Company Guarantas/ Financial Test (c)
External Sinking Fund, Sinking Account and Surety /
I Insurance (See. Appendix 0)
Trust Fund 4
Escrow Account Certificate of Deposit i
Government Fund Deposit of Government Securities Surety Bond l
Letter of Credit.
l Line of Credit j
(d)
Statoesnt of Intant (pubile entities o g
- May not be used in combination with any other instrument,
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APPENDIX C CHECKLIST FOR SUBMISSION OF SURETY / INSURANCE / PARE A.
Check Appropriate Form of Surety / Insurance / Guarantee Surety Bond
[ Letter of Credit Line of Credit Parent Company Guarantee / Financial Test
- Insurance t
B.
Check Documents Submitted for Surety / Insurance / Guarantee 1.
Surety Bond' Surety Bond Standby Trust Agreement Acknowledgement 2.
Letter of Credit K Letter of Credit x Standby Trust Agreement Acknowledgement x
3.
Line of Credit Verification Standby Trust Agreement Acknowledgement 4.
Parent Company Guarantee Letter from Chief Executive Officer of Applicant or Licensee Letter from Chief Financial Officer of Parent Company Financial Test: Alternative [IorII)
Auditor's Special Report and Attached Schedule Corporate Guarantee Standby Trust Agreement Acknowledgement 5.
Insurance Certificate of Insurance Standby Trust Agreement Acknowledgement May not be used in combination with any other instrument.
C-1
i EXHIBIT 3-7 i
CHECKLIST OF CRITERIA FOR REVIEW OF LETTERS OF CREDIT i
I 1
Copy of corporate by-laws or other evidence indicating that parties f
g signing the financial instrument (for the applicant) are authorized
-Wp to represent the organization in the transaction.
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1 4 he Evidence that the financial instrument is an originally signed i
M 9%q duplicate (e.g., an executed copy of the instrument).
Evidence that the financial institution is regulated by Federal or State agency (e.g., member of FDIC, Federal Reserve System, etc.).
The instrument must be entitled a letter of credit.
The letter should be limited in amount.
i gy The letter of credit must contain a specified expiration date or be gh written for a definite term.
We 9g The issuer's obligation to pay the beneficiary should arise only l
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Oy upon presentation of a draft or other documents specified in the f
...u W *f letter of credit.
C_r ch w-.
The bank sust not be called upon to determine a question of fact or i
law at issue between the licensee and the Coamission or State regulatory agency.
a The licensee should have an unqualified obligation to reimburse the issuer for payments made under the letter of credit.
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i 3-27
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EXHIBIT 3-5 CHECKLIST OF CRITERIA FOR REVIEW OF TRUST AGREEMENTSa
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Copy of corporate by-laws or other evidence indicating that parties signing the financial instrument (for the applicant) are authorized to represent the organization in the transaction.
Mc.poa8 I
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- w. 4 Evidence that the financial instrument is an originally signed 3
duplicate (e.g., an executed copy of the instrument).
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Evidence that the financial institution has authority to act as a trustee.
I Purpose of trust ("whereas" clauses).
/ 1.
Description
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j Grantor or grantors (introductory paragraph).
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4.
Names i
l
/2.
Addresses l
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Trustee or trustees.
I d.
Names and addresses M.
Bank or corporate trustee (introductory paragraph) l Identification of facilities and cost estimates (Section 2).D l
' Adapted from 17A Am Jur Legal Forms 2d (Rev) $251.94.
References are to recomended wording for trust agreements provided in Section 4.
3-19
4-EXHIBIT 3-5 (continued)
Words of transfer, conveyance, and delivery in trust (Section 3).
Payments constituting the trust fund (Section 4).
/*
Duration of trust.
Description of trust property.
Property described in attached schedule (Schedule B) 1 2.
Cash 3.
Stock and other securities
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Additions to trust.
Distribution of trust principal (Section 5).
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Disbursement to licensee upon proper certification
<.y, S eM #
2.
Payment for activities at NRC's direction in writing i EM Refund to grantor at NRC's specification in writing after 3.
completion of decossissioning activities t
Trust management (Sections 6-8).
- k. Discretionary powers
/2. Fiduciary duty
./ 3.
Cosmingling and investrent
/ 4.
Sale or exchange of trust property i
Scope of investments 5
/. Express pcvers of trustee 6
s 7.
Borrowing money and encumbering trust assets (Optional provisions) l 3-20 r
EXHIBIT 3-5 (continued)
/ 8.
Insurance
/ 9.
Operation of business
/10.
Compromise of claims v'
- Taxes and expenses (Section 9).
/*
Annual valuation-(Section 10).
Advice of counsel (Section 11).
/*
Authority, compensation, and tenure of trustees (Sections 12-14).
/ 1.
Trustee compensation Successor trustee 2
J.
Instructions to trustee Amendment of agreement (Section 15).
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Irrevocability and termination (Section 16).
Immunity and indemnification (Section 17).
Law to govern construction and operation of trust (Section 18).
Interpretation and severability (Section 19).
ma h
Date (signature block). 7 h l
- ^
PJ0 Signatures (signature block).
/*
Acknowledgements, seals or attestations, if necessary or desired (witness by notary public).
Acceptance of trust by trustee or trustees (acknowledgment).
3-21
o 4
LIST OF INSTRUCTIONS N M 2 4 1993 STANFORD UNIVERSITY In reviewing the corrnents the reviewer will note that there will be some overitp between ICF and OGC connents.
included in the basis for the deficiency letter:The following coments should be 1.
ICF comments 1 turd)gW 2.
All OGC corrnents.
All other coments and discussions are for reviewer information.
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a MEMO TO:
Louis M. Bykoski, f*SS FROM:
OGC RE:
REVIEll 0F NONSTAliDARD SUEMITTALS MAY 2 41993 Stanford University:
No legal objection to the ICF Recommendations, including those under the heading "Other Issues."
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Docket No. : 070-00064 License No.: SNM-56 Control No.: 571252 Stanford University Health Physics Environmental Safety Facility Oak Road Stanford, California 94305 Attention: John A. Holmes, Associate Director Environmental Health and Safety Radiation Safety Officer Gentlemen:
This is in reference to your letter dated August 22, 1991, regarding financial assurance mechanisms required to support your special nuclear material license.
In order to complete our review, we need the following additional information:
1.
As was noted previously, the Certification of Financial Assurance should be revised to refer to 170 microcuries of U-235 oxide.
2.
Also noted previously was the fact that you should submit original, notarized copies of your Letter of Credit, Certification of Financial Assurance, and of your Standby Trust Agreement. You should submit originally signed duplicates of all other supporting documentation.
3.
You should amend the cancellation notification provisions in your Letter of Credit.
You should require the bank to give both you and the NRC 90 days advance notice of intent not to renew.
4.
You should revise the immunity and indemnification provisions of the St ndby Trust Agreement to refer to " personal liability of any nature" rather than to " liability (either individually or as a Trustee)." The language on page 4-23 of Regulatory Guide 3.66 is meant to limit the trustee's individual liability only.
5.
You should submit evidence indicating that the party signing the Standby Trust Agreement is authorized to represent the University.
As recommended in Regulatory Guide 3.66, page 3-14, evidence of authority to represent the licensee is necessary to ensure the validity of the mechanism.
You should submit a copy of the corporate by-laws or other evidence indicating that the party who signs the Standby Trust Agreement is authorized to do so.
i i
2 6.
You should submit a Letter of Acknowledgement with the Standby Trust Agreement, as recommended by Regulatory Guide 3.66, page 4-27.
The acknowledgement is needed to verify the execution of the Standby Trust Agreement and to certify the trustee's signature and authority to enter into the agreement.
7.
You should submit a Specimen Certificate of Events and Specimen Certificate of Resolution with the Standby Trust Agreement.
Section 5 of the Standby Trust Agreement refers to a Specimen Certificate of Events that is to be attached to the trust agreement. The Specimen Certificate of Events should refer to a l
Certificate of Resolution. Refer to pages 4-24 and page 4-25 of Regulatory Guide 3.66.
Include blank spaces for dates and signatures until decommissioning activities have commenced.
We will continue the review of your submittal upon receipt of this information.
In order to continue prompt review of your application, we request that you submit your response to this letter within 30 days from the date of this letter.
Please reply in duplicate, and refer to Mail Control No.
571252.
Sincerely, Bath A. Prange Sr. Health Physicist (Licensing)
Nuclear Materials and Fuel Fabrication Branch
Enclosures:
Pages 4-23, 3-14, 4-27, 4-24, and 4-25 of Regulatory Guide 3.66 Distribution bec w/ copy of license, original concurrence, original correspondence:
License Docket Folder bec w/ copy of license, copy of correspondence:
Inspection Folder bec w/ copy of license:
Reading File 1
bec w/2 copies of license, copy of correspondence:
Marnella Rodriguez, LFMB, MNBB 4503 Copy of License only:
State of California RV/gmd KPrendergast DSkov JMontgomery BP[knge 4/./92 4/ /92 4/ /92 4/l/92 I
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,(,p* <cgjo UNITED STATES QGl@ y g
NUCLEAR REGULATORY COMMISSION e
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WASHINGTON, D. C. 20555
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'92 FEB -3 R2 '49 ts, Qgg
- e MEMORANDUM FOR: Beth Prange Nuclear Material and Fuel Fabrication Branch, Region V FROM:
Louis M. Bykoski Decomissioning and Regulatory Regulatory Issues Branch Division of Low-Level Waste Management and Decomissioning Office of Nuclear Material Safety and Safeguards SUu ECT:
THE OFFICE OF GENERAL COUNSEL (0GC) AND CONTRACTOR COMMENTS 1
ON NONSTANDARD FINANCIAL ASSURANCE SUBMITTALS Our contractor, ICF Incorporated, and OGC have reviewed and provided coments on the Stanford University and Interstate Nuclear Services submittals you sent to us for review.
The ICF coments are presented in two parts. The first part deals with specific recomendations to correct deficiencies. The second part (Other Issues) provides a discussion of changes to the standard wording that are acceptable and are not considered to be deficiencies. The OGC comments include additional deficiencies.
that need to be corrected by the licensee and coments for our internal use.
r iou should carefully review the coments before preparing the deficiency letter.
We have enclosed more specific information to help you sort and consolidate the ICF and OGC coments.
Should you he.ve any further questions with regard to the comments, please call me on FTS 964-2572 or David Futoma of OGC on FTS 964-1621.
Louis M. Bykoski Decomissioning and Regulatory Regulatory Issues Branch Division of Low-Level Waste Management and Decomissioning Office of Nuclear Material Safety and Safeguards
Enclosures:
As stated t
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LIST OF INSTRUCTIONS STANFORD UNIVERSITY In reviewi g the comments the reviewer will note that there will be some overlap between ICF and OGC coments. The following comments should be included in the basis for the deficiency letter:
1.
ICF comments 1 through 5 plus last paragraph.
2.
0GC concurs with ICF and makes some observations.
P All other coments and discussions are for reviewer infomation.
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MEMO T0: Louis Bykoski, NMSS FROM:
Ronald Smith, OGC Stanford University concur with ICF Recommendations (1) - (5), although,,as to Recommendation (1), current NRC guidance does not indicate that the 90-day clock will start running with "the date of the signed return receipts."
ICF apparently is noting that a delay in the mail could cut into the NRC's 30-day time period to draw upon the letter of credit.
If this is a concern, you can do as recommended by ICF.
If you do so, it is recommended that you do so consistently with other licensees in the future.
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t 9i300 Lee Hichway Fairfat. \\ Irgmia 22031 1207 T'03/934 3000 ICF INCOR PORATED November 18, 1991 To:
Dr. Lou Bykoski, NMSS/NRC From:
David Mitamura, John Collier, and Paul Bailey, ICF Incorporated Subj ec t :
Review of Revised Draf t Letter of Credit Submitted by Stanford University Stanford University in Stanford, California, resubmitted a draft certification of financial assurance, a draft letter of credit and amendment, and a draf t standby trust agreement amending their original submission dated September 12, 1990.1 The submission assures decommissioning costs of
$750,000 for license SNM-56 issued under 10 CFR Part 70.2 As directed by NEC, ICF has reviewed the draf t documents as if they had been fully executed.
Upon review of the submission, ICF recommends that NRC Region V require the licensee to modify the submission in the following ways:
(1)
Amend the cancellation notification provisions in the letter of credit; (2)
Modify the immunity and indemnification provisions of the standby trust agreement to more closely match the recom:nended wording in Regulatory Guide 3.66; (3)
Submit evidence indicating that the party signing the standby trust agreement for the licensee is authorized to represent the university; i
(4)
Submit a letter of acknowledgement with the standby trust agreement: and (S)
Submit a specimen certificate of events and specimen certificate of resolution with the standby trust agreement.
These recommendations and other issues are discussed below.
1 ICF reviewed the original submission and reported several l
recommendations to NRC in a memorandum dated October 31, 1990.
2 ICF assumes that NRC has verified that the certification amount is accurate under 10 CFR 70.25.
We note, however, that the submission indicates that the certification statement has yet to be revised to address previous NRC coements.
m a
i 2
(1)
Amend the Cancellation Notification Provisions in the Letter of Credit Under 10 CFR 70.25(f)(2)(1), a letter of credit used as a surety method of assurance, if written for a fixed term, "must be renewed automatically unless 90 days or more prior to the renewal date, the issuer notifies the Commission, the beneficiary, and the licensee of its intention not to renew."
NRC's Regulatory Guide 3.66 " Standard Format and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR Parts 30, 40, 70, and 72" (June 1990), page 4-33, further specifies under the provision for notification of cancellation that the issuer must notify NRC and the licensee of its intent not to renew the letter of credit "at least 90 days before the current expiration date... by certified mail, as shown on the siened return receiots" (emphasis added). These provisions are essential to ensuring that the mechanism is not cancelled without being drawn upon by NRC or replaced by another mechanism.
The amended letter of credit submitted by the licensee is written for a fixed term and is renewable automatically. The mechanism, however, requires only 60 days advance notice to h3C.
Moreover, in place of the phrase "by certified mail, as shown on the signed return receipts," it substitutes the phrase "by registered mail."3 In the event that the bank elects to cancel the letter of credit, NRC must receive adequate notification so that, if necessary, it can draw on the letter of credit prior to the letter of credit's expiration. ICF recommends that NRC require the licensee to revise the letter of credit to require at least 90 days advance notice of intent not to renew, and to require that such advance notice be given to both the licensee and the NRC.
In addition, to further ensure that the licensee and NRC will have the full 90 days required by NRC regulations, ICF recommends that NRC require the licensee to amend the letter of credit so that the 90 days notice begins on the date of the signed return receipts.
(2)
Modify the Immunity and Indemnification Provisions of the Standby Trust Agreement to More Closely Match the Recommended Wording in Regulatory Guide 3.66 Section 17 of the submitted standby trust agreement states that:
"The Trustee shall not incur liability (either individually or as Trustee) in connection with any act or omission, made in good faith, in the administration of this trust, or in carrying out any direction by the Grantor, the hTC, or State agency, issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Crantor or from the trust fund, or both, i
from and against any liability (either individually or as Trustee) 3 Both certified mail and registered mail require the person accepting the mail to sign a receipt. Registered mail is more secure, however, and is delivered only to the addressee.
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to which the Trustee may be subjected by reason of any act or conduct in its official capacity." [ emphasis added}
c i
Page 4-23 of Regulatory Culde 3.66 recommends similar wording, but substitutes I
" personal liability of any nature" for the phrases underlined above. NRC's recommended wording of " personal liability" is meant to limit the trustee's irdividual liability, and to prohibit the grantor from suing the trustee personally. The modification, however, also limits the trustee's representative liability (i.e., as a representative of the trust), and therefore limits the trustee's liability even for funds in the trust.
ICF recommends that NRC require the licensee to modify the immunity and indemnification provisions of the standby trust agreement to more closely i
match the recommended wording of Regulatory Culde 3.66.
(3)
Submit Evidence Indicating that the Party Signing the Standby Trust Agreement for the Licensee is Authorized to Represent the University The submission contains draf t documents, which are not fully executed or signed. To ensure adequate financial assurance, the licensee must present i
sufficient evidence indicating that the party who signs the mechanism is authorized to enter into a standby trust agreement for the licensee, as l
recommended in Regulatory Culde 3.66, page 3-14 Evidence of authority to represent the licensee is necessary to ensure the validity and enforceability j
i of the mechanism.
Therefore, ICF recommends that NRC require the licensee to l
submit a copy of the corporate by laws or other evidence indicating that the i
party who signs the standby trust agreement is authorized to do so.
(4)
Submit a Letter of Acknowledgement with the Standby Trust Agreement The submission does not include a letter of acknowledgement with the standby trust agreement, as recommended by Regulatory Culde 3.66, page 4-27.
The acknowledgement is needed to verify the execution of the standby trust agreement and to certify the trustee's signature and authority to enter into the agreement.
ICF recommends that NRC require the licensee to submit a letter of acknowledgement with the standby trust agreement.
(5)
Submit a Specimen Certificate of Events and Specimen Certificate of i
Resolution with the Standby Trust Agreement i
The submission does not include a specimen certificate of events or a i
j-specimen certificate of resolution with the standby trust agreement. Section 5 of the standby trust agreement refers to a specimen certificate of events 3
that is to be attached to the trust agreement. The specimen certificate of i
events, in turn, should refer to an attached certificate of resolution.
Without the specimen certificates, NRC cannot be sure that the trustee will I
release decommissioning funds only upon receiving appropriate instructions.
In addition, the trustee may not be able to determine the validity of future resolutions authorizing commencement of decommissioning activities and payments from the trust.
NRC should require submission of the specimen l
certificates (which should contain blank spaces for dates and signatures until j
decommissioning activities have commenced) worded similarly to the specimen certificates on page 4 24 and page 4-25 of Regulatory Culde 3.66.
o B
1 4
Other Issues Apart from non-substantive changes to the standard wording provided in Regulatory Guide 3.66, the following modifications are noteworthy:
(a)
The letter of credit requires that NRC present a signed statement to draw on the letter of credit if, after cancellation of licensee's coverage, the licensee cannot find alternative assurance. This additional requirement does not affect the effectiveness or enforceability of the mechanism, although it imposes additional administrative burden on NRC.
(b)
The s tiginal letter of credit is dated September 5, 1990, but the date that the letter was signed is September 11, 1990.
The effective date is stated in the letter as "immediately"; the letter of credit does not specify if the effective date is September 5,1990 or September 11, 1990. This should have no effect on the effectiveness or enforceability of the mechanism.
(c)
The submitted revised draft trust agreement includes an additional section, entitled "Section 20.
Termination of July 27. 1990 Standby Trust Agreement. "
This section is not included in the recommended wording of Regulatory Guide 3.66.
In addition, the submitted trust agreement includes an additional "WHEREAS" clause on the first page stating that the agrehment replaces the previous agreement dated July 27, 1990. These additions simply clarify that the previously executed standby trust agrerment is cancelled, and do not alter the enforceability or validity of the replacement trust agreement.
(d)
Section 5 of the submitted trust agreement omitted the underlined words from the following recommended wording of Regulatory Guide 3.66:
No withdrawal from the fund can exceed 10 percent or dollars of the outstanding balance of the Fund, whichever is creater.
unless written NRC approval is attached.
The omission places stricter limits on fund withdrawals, and strengthens NRC's oversight of the funds (although it may increase NRC's administrative burden by a very small degree).
Finally, the Region should ensure that the executed documents that are eventually submitted by the licensee are originally signed duplicates, as
i I
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i l
recommended in Regulatory Guide J.66.
Unless the documents have been properly signed, NRC cannot be certain that the financial assurance mechanisms are enforceable.
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attachments l
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APPENDIX A CHECKLIST FOR DEcom ISSIONING FINANCIAL ASSURANCE NAME OF LICENSEE OR APPLICANT Qnk(b
$IhY(?/(
lY_bdV 0(n A.
Licensee Part (check one of the followino):
Part 30 Licensee or Applicant k
Part 70 Licensee or Applicant i
Part 40 Licensee or Applicant Part 72 Licensee or Applicant 8.
Check appropriate ites in each category (if applicable) 9fl0f9 /
Date of Financial Assurance Subsission 1.
2.
Public Entity Y
Private Entityht\\raf_ UnMr$<
3.
Y Certification of Financial Assurance Decosmissioning Funding' Plan 4.
(a)
Prepayment Option (See Appendix B)
Trust Fund Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities (b)
Surety / Insurance /0ther Guarantee (See Appendix C) h 1 Lefte redit Line of Credit E ; 60@
l Parent Company Guarantee / Financial Test i
(c)
External Sinki Fund, Sinking Account and Surety /
Insurance (See ndix D)
Trust Fund i
Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities 1
Surety Bond Letter of Credit Line of Credit (d)
Statament of Intent (public entities o.nly) 9.ay not be used in combination with any other instrument.
A-1
APPENDIX C i
CHECKLIST FOR SusMISSION OF SURETY / INSURANCE /PARD A.
Check Appropriate Form of Surety / Insurance / Guarantee
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Surety Bond N Letter of Credit Line of Credit Parent Company Guarantee / Financial Test
- I Insurance B.
Check Documents submitted for Surety / Insurance / Guarantee 1.
Surety Bond Surety Sond s
5teney Trust Agreement
_ Acknowledgement 2.
Letter of Credit X Letter of Credit X Steney Trust Agreement Acknowledgement-p gg, pyptidd WHh NY_
CWij no.L d.or,uw1&tl'S.
3.
Line of Credit Verification Staney Trust Agreement Acknowledgement.
4.
Parent Caspery Guarantee l
Letter free. Chief Executive Officer ef. Applicant er Licensee Letter free Chief Financial Officer of Parent Company.
l Financial Teet: Alternative (I er !!].
i Auditor's Special Report and Attached Schedule Z Corporate Guarantee
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5 Trust Agreement Acknow edgement 5.
Insurance Certificata of Insurance
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Z Staner Trust Agreement Acknowledgement i
.I w not no d in conninetien with any etner instrument.
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I EXHIBIT 3-7 i
CHECKLIST OF CRITERIA FOR AEVIEW 0F LETTERS O N
Copy of corporate by-laws or other evidence indicating that parties signing the financial instrument (for the applicant) are authorized to represent the organization in the transaction.
Evidence that the financial instrument is an origina11 i ned duplicate (e.g., an executed copy of the instrument).
Vgh[, 'i V
Evidence that the financial institution is regulated by Federal or N(C I State agency.(e.g., member of FDIC, Fede Res g g tes The instrument must be entitled c' <latter of credit.
< a verkz
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- The letter should be Itatted in amount.
The letter of credit must contain a specified empiration sate or be wr1tten for a definite ters. $cChon Cf th%9 MCMmCL+<
c_mi.cctL i6 m h ght a w t.
./ e The issuer's obligation to pep the beneficiary should arise only upon presentation of a draft er other documents specified in the letter of credit.
/
i The bank aust r.st be called won to determine a question of fact or law at issue between the licensee and the Commission er State regulatory agency.
The licensee should have an unqualified atligetien to reimburse the issuer for pepsents ande under the letter of credit.
Ynt. I&Y OP CY$ f % SY W fo CL k ncibv f7us h fClSQND I
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B 3-20 i
EXHIBIT 3-5 CHECKLIST OF CRITERIA FOR REVIEW OF TRUST AG he hg Copy of corporate by-laws or other evidence indicating that parties signing the financial instrument (for the applicant to represent the organization in the transaction. g) are author gp Evidence that the financial instrument is an originally signed duplicate (e.g., an executed copy of the instrument), y g(Mighg
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g Evidence that the financial institution has authority to act as a trustee.
d% L(%(A Q AA I
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- Purpose of trust ("whereas" clauses).
l 1.
Description i
Ve Grantor or grantors (introductory paragraph).
i 1.
Kanes 2.
Addresses Trustee or trustees.
1.
Meses and addresses 2.
Bank or corporate trustee (introductory paragraph)
Identification of facilities and cost estimates (Section 2).b Words of transfer, conveyance, and delivery in trust (Section 3).
e i
Ve Payments constituting the trust fund (Section 4).
Duration of trust.
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Description of trust property.
i 1.
Property described ta attached schedule (Schedule B) 2.
Cash 3.
Stack and other. securities Additions to trust.
l je Distribution of trust principal (Section 5).
1.
Disbursement ta Itcensee WMm proper certification 2.
Pa m nt for activities at NBC's direction in writing bAdapted free 17A As Jur Legal Forms 2d (Rev) 1251.94.
References are to recommended wording for trust agreements provided in Section 4.3 of this guide.
3-14 i
1 i
EXHit!T 3-5 (continued)
F 3.
Refund to grantor at NRC's specification in writing after 2
l coupletion of decommissioning, activities 0
\\N \\ W8 Trust manageme.y0.VJ0 I Q%1hCf%
I'(h t.5L (YE (VC Q (r :;;
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i nt (Sections 6-8).
- '~-
t 1.
Discretionary powers
- 2. -F1duciary duty 3.
Commingling and investment 4.
Sale or exchange of trust property 5.
Scope of investments i
6.
Express powers of trustee a
7.
Sorrowing money and ancimbering trust assets (Optional provisions) g y g g 8.
Insurance 9.
Operation of business
- 10. Ceapromise of claims Taxes and expenses (Section 9).
Me Annual valuatten (Section 10).
Advice of counsel (Section 11).
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- Authority, cesponsation, and tenure of trustees (Sections 12-14).
1.
Trustee cogensation l
2.
Successer trustee 3.
Instructions to trustee Amendment.of agreement (Section 15).
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- Irrevocability and terminetten (Section 18).
1
'I de Immunity and indemnification (Section 17).
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- Law te govern construction and operation of trust (Section 18).
Interpretetfen and severability (Section 19).
i' oste (signature 61eck).') b(ofte fov thc d_roft Signatsres (signetsre bl.eck).
/
' Acknowledgements, seals or attestations, if necessary or desired (witness by notary pelic).
1 Acceptance of trust by trustee er trustees (ackne'wledgment). doog-t-hYOm NIS b.
$ b O.LriLf 3-15 i
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f LIST OF INSTRUCTIONS t
INTERSTATE NilCLEAR SERVICES In reviewing the comments the reviewer will note that there will be some overlap between ICF and OGC comments. The following comments should be included in the basis for the deficiency letter:
1.
ICF comments 1 through 9 plus last paragraph.
2.
OGC concurs with ICF comments and makes some observations.
All other comments and discussions are for reviewer information.
h e
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MEMO TO: Louis Bykoski, NMSS FROM:
Ronald Smith, DGC Interstate Nuclear Services.
recommendations 1-9.
Inc._--No legal objection to Under "Other Issues," ICF notes in paragraph (d) that the line-of-credit bank requires the NRC to submit a specified statement with a sight draft if the bank intends to withdraw the letter and the licensee has not made alternative arrangement within 30 days.
The bank honor the draft.cannot require the NRC to provide the statement in order to However, it is presumed that the NRC, under this circumstance, w7uld communicate more information to the bank as to why it is drawing the funds than contained in the simple presentation of the draft.
if it chooses to do so.is no legal objection to the NRC accepting this requir i
h
93C3 Lee Hir.h;ay Fairf tx. Virents 22031 1207 703/934-3000 ICF INCOR PORATED December 4, 1991 To:
Dr. Lou Bykoski, NMSS/NRC from:
David Mitamura, John Collier, and Craig Dean, ICF Incorporated Subj e c t :
Review of Decommissioning Funding Plan and Letter of Credit Submitted by Interstate Nuclear Services, Inc.
Interstate Nuclear Services in Columbia, South Carolina, submitted a decommissioning funding plan (DFP), using an unexecuted letter of credit and unexecuted standby trust agreement, in the amount of $1.944,65'i.1 The submission assures decommissioning costs of $1,944,653 for licentes 20-03529-01, 37-23341-01, 39-19727-01, and 53-13668-01 issued under 10 CFR Part 30.
Upon review of the submission, ICF recommends that NRC require the licensee to modify the submission in the following ways:
(1)
Submit additional detail to support the cost estimate consistent with Appendix F of Regulatory Culde 3.66; (2)
Incorporate a contingency factor into the total decommissioning cost estimate; (3)
Describe the means to be used for adjusting cost estimates and associated funding levels over the life of the facility; (4)
Revise the letter of credit to require the issuer to deposit funds drawn from the letter of credit into the standby trust fund within 30 days of presentation of a draft to the bank; (5)
Revise the letter of credit to specify that it is subject to the Uniform Commercial Code or the Uniform Customs and Practices for Documentary Credits; (6)
Revise the amendment provisions in Section 15 of the standby trust agreement; (7)
Correct the error in the severability provision in Section 19 of the standby trust agreement; 1
NRC Headquarters reviewed the original submission and sent a deficiency letter to the licensee on July 15, 1991. As directed by NRC, however, ICF treated the revised submission as if it were a first review.
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(8)
Modify Section 5 of the standby trust agreement and submit a specimen certificate of events; and l
6 (9)
Submit an executed standby trust agreement and letter of acknowledgment, and submit evidence indicating that the party signing the standby trust agreement for the licensee j
is authorized to represent the company.
l 6
These recommendations and other issues are discussed below.
j t
I (1)
Submit Additional Detail to Support the Cost Estimate Consistent with I
Appendix F of Regulatory Guide 3.66 The licensee provided no description of the work required to decommission its facilities and no description of the facilities themselves.
Fur the rmore, the total cost estimate was not broken down by decommissioning ac tivity. Therefore, ICF could not evaluate whether the licensee included rer.sonable cost estimates for all major decommissioning activities in its overall decommissioning cost estimate.
The licensee estimated the costs of decommissioning by using a model based on cost data from two prior decommissioning efforts at other facilities owned by the licensee. Although the cost model.could not be fully evaluated due to inadequate documentation, ICF identified at least one questionable assumption. Specifically, the DFP states that the model " averages the cost projections using [actaal costs of a high-cost decommissioning] and a [ low-cost decommissioning]." The licensee states that it expects-this to result in "a reasonable estimate" of decommissioning costs.
Because the submission does not adequately address the question of whether the licensee's facilities are likely to require relatively high-cost, low-cost, or average-cost decommissionings,2 however, we believe that this " averaging" assumption could, potentially, cause the model to underestimate costs if the assured deccanissionings prove to be high cost decommissionings. Consequently, if financial assurance is provided in the amount of the model's cost estimate.,
there may be in.ufficient funds available to pay for all required decommissioning activities.
ICF recommends that NRC require the licensee to develop a new cost estLaate by using or adapting the " Cost Estimating Tables" in Appendix F of Regulatory Guide 3.66 " Standard Format and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR Parts 30, 40, 70, and 72," June 1990, to demonstrate that it has provided reasonable cost estimates 2
The submission states only that, because the facilities being estinated are on average larger than those decommissioned in the past, economies of scale should make the cost per square foot less than estimated.
However, the submission does not identify the activities that will cost less per square foot, quantify the savings, or address the possibility that some costs may be constant or even increase with facility size.
P i
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3 P
for all major decommissioning activities. Alternatively, NRC could require the licensee to submit comprehensive documentation of its cost model, including detailed descriptions of the licensee's two previous decommissionings (i.e., detailed descriptions of the facilities, the l
activities undertaken, and the costs incurred for each activity), derivations of all model inputs and coefficients, a discussion of al2 assumptions built irto the model, and an explanation of why these assumptions are reasonable for i
the four facilities in question.
Complete descriptions of the facilities to be assured would also be necessary to assess the applicabi.lity of the model to the assured facilities.
(2)
Incorporate a Contingency Factor into the Total Decommissioning Cost I
Estimate Regulatory Guide 3.66, page 1-10, recommends that a contingency factor l
be included in each decommissioning cost estimate. NUREG/CR-1754 uses a l
contingency factor of 25 percent in its cost estimates for eacn of six t
reference laboratories,3 although licensees may choose to use lever contingency factors if they can show why a lower factor is appropriate.
In its cover letter to the DFP, Interstate Nuclear Services states that l
it has not incorporated an " explicit 25% contingency fund (sic)" inte its cost estimate.
In fact, the licensee has not explicitly included any contingency l
factor in its cost estimate, although it has attempted to explain why this is acceptable. ICF recommecas that the licensee incorporate a 25 percent f
contingency factor in its decommissioning cost estimate, or provide further
{
justification for why this is not appropriate in its case.
I I
In the submission, the licensee claims. that a contingency factor would
[
be inappropriate in its case for four reasons, as discussed below. To the extent these arguments are valid and the submitted cost estimate is, as the licensee argues, " generous," then the need for a contingency factor would i
f-deed be reduced. However, we urlieve the licensee has not sufficiently supported its claims. Specificat.(, the licensee has not quantified the impact of each argument on the sice of the estimated costs. Unless these effects are quantified, it is impossible to say whether these factors result.
~'
in a cost estimate that is sufficiently " generous" to justify the elimination i
of a contingency factor.
Argument 1.
The estimate is already based on the costs of past decommissionings. includine actual contincencies.
'*hile the licensee recognizes that "there are always u.3 foreseen costs involved in decommissioning," it argues that unforeseen costs of past decommissionings can adequately approximate unforeseen costs of future decommissionings. Because the nature and amount of these past costs L
have not been explained, however, it is unclear why they should be i
representative of future contingencies.
If the licensee expects the i
3 NUREG/CR-1754, Addendum 1, Technolony. Safety and Costs of Decommissioning Reference Non-Fuel-Cvele Nuclear Facilities: Compendium of l
Current Information, Pacific Northwest Laboratory, October 1989.
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1 4
f same contingencies that occurred in the past to occur again in the future, then they should not be considered contingencies at the present time.
On the other hand, if the licensee does not expect these past contingencies to occur again in the future, then the past costs may i
poorly approximate the costs of future contingencies. To further support this argument, the licensee could detail the contingencies that occurred in its past decommissionings, why each contingency should not i
be expected to arise in the future, the cost of each contingency, and the relative magnitude of each contingency's cost to those costs that i
had been anticipated.
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ArRument 2.
The estimate takes no credit for increased efficiencies to i
be rained from past experience and new tools and technolocies. While
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new tools and techniques do tend to improve efficiency, they may also cost more than the previous generation of tools and techniques. To I
further support this argument, the licensee could explain how its added -
.i experience, new tools, and techniques will help reduce decommissioning costs, and by how much costs will be reduced.
Arrument 3.
The facilities beine estimated are on averare larcer than those decommissioned in the past. so economies of scale should make the cost per souare foot less than estimated. To further support this
[
argument, the licensee could quantify the potential economies of scale.
Economies of scale could be estimated by describing in detail the size of the facilities being estimated relative to those previously decommissioned, detailing the change in the cost per square foot for 7
each decommissioning activity to be undertaken, quantifying the total savings, and addressing the possibility that some costs may be constant or may increase with facility size.
Argument 4.
The estimate is based on documented historical facts.
I rather than on a more speculative racer study. so the likelihood of underestimation is " greatly reduced." While underestimation of I
decommissi ning costs i.
ierious concern, contingency factors o
are prudent ' applied in oidar to help protect against unforeseen decommissioning costs -- not so'ely low cost estimates.
Therefore, even if we assume that the licensee has accurately t
estimated all anticipated decommissioning costs, it is not clear why the need to account for contingencies is eliminated.
(3)
Describe the Means to be Used for Adjusting Cost Estimates and Associated Funding Levels Over the Life of the Facility Under 10 CFR 30.35(e), the licensee is required to describe the means it
[
will use to adjust decommissioning cost estimates and associated funding levels over the life of the facility. Although the licensee's model allows for adjustments due to inflation, the licensee does not specify the intervals at which adjustments will be made over the life of the facility.
ICF t
recommends that NRC require the liceasee to describe the means and intervals at which it will adjust its cost estimates and associated funding levels over the life of the facility.
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5 (4)
Revise the Letter of Credit to Require the Issuer to Deposit Funds Drawn from the Letter of Credit into the Standby Trust Fund within 30 Days of Presentation of a Draft to the Bank i
The recommended wording of the letter of credit in Regulatory Guide 3.66, page 4-34, includes the following statement: "Whenever this letter of credit is drawn on under and in compliance with the terms of this letter of credit, we shall duly honor such draft upon its presentation to us within.30 I
days, and we shall deposit the amount of the draft directly into the standby trust fund of [ licensee's name) in accordance with your instructions." The letter of credit submitted by the licensee does not require drafts to be honored within 30 days. The 30 day requirement ensures timely receipt of funds necessary to pay for decommissioning costs. Therefore, ICF recommends that NRC require the letter of credit to be revised to more closely match the recommended wording of Regulatory Guide 3.66.
i (5)
Revise the 'itter of Credit to Specify that it is Subject to the Uniform Commercial Code or the Uniform Customs and Practices for Documentary credits The submitted letter of credit omits the following paragraph recommended on page 4-34 of Regulatory Guide 3.66:
This credit is subject to [ insert "the most recent edition of the Uniform Customs and Practices for Documentary credits, published by the International Chamber of Commerce," or "the Uniform Commercial Code").
i Because letters of credit can be interpreted differently under the Uniform Commercial Code (UCC) than under the Uniform Customs and Practices for Documentary Credits (UCP), the letter of credit should specify one or the other so that its interpretation is clear.
ICF recommends that NRC require I
the licensee to revise the letter of credit by inserting the omitted paragraph and specifying whether the credit is subject to the UCC or the UCP.
(6)
Revise the Amendment Provisions in Section 15 of the Standby Trust Agreement Under Section 15 of the recommended wording of a standby trust agreement, Regulatory Guide 3.66, page 4-22, states that "This Agreement may be amended by an instrument in writing l
executed by the Grantor. the Trustee and the NRC. or State atency.
or by the Trustee and the NRC or State Acency. if the Grantor ceases to exist [ emphasis added]."
l The licensee substituted the following phrase for the phrase underlined above:
"the Grantor and/or the NRC, except as provided herein." Consequently, the submitted agreement allows the terms of the standby trust to be modified unilaterally by either NRC or the licensee, and without regard to the j
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objections of the trustee. ICF recommends that NRC require the licensee to revise Section 15 to follow the wording recommended in Regulatory Culde 3.66.
(7)
Correct the Error In the Severability Provision in Section 19 of the Standby Trust Agreement The recommended wording for a standby trust agreement on page 4-23 of Regulatory Guide 3.66 includes the following severability clause:
"If any part of this agreement is invalid, it shal.' not affect the remaining i
provisions which will remain valid and enforceable [ emphasis added)." The submitted standby trust agreement substituted the word " invalid" for the word underlined above. This change adversely affects the meaning of the paragraph, and could jeopardize the effectiveness of the entire agreement.
ICF recommends that NRC require the licensee to correct this error to match' the wording of Regulatory Guide 3.66.
(8)
Modify Section 5 of the Standby Trust Agreement and Submit a Specimen Certificate of Events The submission does not include a specimen certificate of events with the. standby trust agreement, as recommended in the Regulatory Guide 3.66.
In addition, Section 5 of the standby trust agreement does not refer to a specimen certificate of events. Without the specimen, NRC cannot be sure that the trustee will release decommissioning funds only upon receiving appropriate instructions. NRC should require the licensee to submit a specimen certificate (which should contain blank spaces for dates and signatures until decommissioning activities have commenced) worded similarly to the specimen certificate on page 4-24 of Regulacory Guide 3.66.
In addition, ICF recommends that paragraph (a) of Section 5 of the agreement be modified to refer to the specimen certificate of events.
(9)
Submit an Executed Standby Trust Agreement and Letter of Acknowledgement, and Submit Evidence Indicating that the Party Signing the Standby Trust Agreement for the Licensee is Authorized to Represent the Company The submitted standby trust agreement is not signed. NRC must have an originally signed copy of the agreement and a completed letter of acknowledgment to ensure an enforceable and effective mechanism.
In addition, the submission must displaf sufficient evidence indicating that the party signing the mechanism is authorized to enter into a standby trust agreement for the licensee, as recommended in Regulatory Guide 3.66, page 3-14.
Evidence of authority to represent the licensee is also necessary to ensure the validity and enforceability of the mechanism. Therefore, ICF recommends that NRC require the licensee to submit an originally signed copy of the standby trust agreement and letter of acknowledgment, and submit a copy of the corporate by-laws or other evidence indicating that the party signing the standby trust agreement for the licensee is authorized to do so.
7
)
e Other Issues i
Apart from editorial and non-substantive changes to the standard wording provided in Regulatory Cufde 3.66, the following nodifications are noteworthy:
j (a)
The letter of credit is entitled " Clean Standby l
Undertaking - Irrevocable" rather than " Irrevocable Standby Letter of Credit." The first sentence of the
[
letter, however, clearly identifies the letter as an i
" irrevocable letter of credit."
(b)
The licensee's address as indicated on the letter of credit differs both from the addresses of the assured facilities and from the address indicated on the cover letter to the submission. NRC may wish to ask the licensee for clarification as to which address NRC should use in dealing with the licensee on matters related to the letter of credit.
(c)
The recommended wording for a standby trust agreement r
on page 4-19 of Regulatory Guide 3.66 includes the i
following sentence in Section 4:
"The Fund is established initially as consistine of the property, which is acceptable to the Trustee, described in Schedule B attached hereto" [ emphasis added).
l The submitted agreement substituted
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"The Fund is established initially as Irrevocable Standby letter of Credit No.
I which is acceptable to the Trustee, and is referenced in Schedule B attached hereto" [ emphasis added).
This modification simply lists the contents of Schedule B within the text of the standby trust agreement. Although funds from the letter of credit may be paid to the standby trust, these proceeds are not assets of the trust until the appropriate triggers (i.e., decommissioning activities and default by the licensee) have occurred.
Therefore, whether or not the letter of credit is identified in Schedule B or in the main body of the agreement (with or without an _
l identification number) does not affect the workings of either the standby trust or the letter of credit.
i (d)
Under the terms of the submitted letter of credit, NRC must present a signed statement (worded as specified t
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t 8
in the letter of credit) along with a sight draft to withdraw the full value of the letter of credit if, after having received notice of cancellation of the credit from the bank, the licensee is unable to secure alternate financial assurance within 30 days.
Presentation of a signed statement is not included in Regulatory Culde 3.66's ' recommended wording, page 4-33, but it does not detract from the effectiveness or enforceability of the mechanism.
It may, however, slightly increase the administrative burden on NRC to l
draw on the letter of credit.
(e)
The submitted letter of credit includes a final paragraph beyond those recommended in Regulatory Guide 3.66.
The additional paragraph identifies a contact at the bank to whom correspondence should be I
addressed, and it does not detract from the protection provided by the mechanism.
(f)
The letter of credit does not identify the title of the officer who signed the letter of credit for the issuer. Although the title may help identify the party who signed the mechanism, its omission does not affect the enforceability of the letter of credit.
(g)
The letter of credit is not dated on the signature page. This does not affect the validity of the mechanism because the letter of credit contains an effective date and an expiration date.
(h)
Section 4 of the standby trust agreement omitted the following underlined words from the wording recommended in Regulatory Culde 3.66, page 4-19:
The Trustee shall not be responsible nor shall it undertake any responsibility for the amount of. or adecuacy of the Fund.
nor any duty to collect from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by the NRC.
The omitted phrase serves to protect the Trustee from actions that could be taken by NRC.
Its omission does not diminish the protections provided to NRC.
(i)
Section 5 of the submitted standby trust agreement omitted the underlined words from the following l
recommended wording of Regulatory Culde 3.66:
"No withdrawal from the fund can exceed 10 percent or dollars of the outstanding balance of the Fund, whichever is creater." unless NRC's written approval
l 9
t is presented to the Trustee. As the size of the trust diminishes, this omission will require the licensee to obtain NRC approval for withdrawals of increasingly small dollar amounts (though still 10 percent of the balance of the fund). Thus, the change increases NRC's ability to monitor spending from the trust, but may also increase the associated burden on NRC.
(j)
Regulatory Guide 3.66, page 4-20, recommends that Section 8 (Express Powers of Trustee), paragraph (a)
{
of a standby trust agreement be worded as follows:
"the Trustee is expressly authorized and empowered.
to sell, exchange, convey, l
transfer, or otherwise dispose of any property held by it, by public or private sale, as necessary to allow duly authorized withdrawals at the ioint recuest of the grantor and the NRC or to reinvest in securities at the direction of the grantor" [ emphasis added]
The wording submitted by the licensee substitutes the phrase "as provided for by this Agreement" for the words, underlined above, recommended by Regulatory Guide 3.66.
This substitution implies that the trustee, in liquidating property in the trust, is bound only by the other terms of the agreement, and need not receive a joint request from the grantor and NRC in order to liquidate property for purposes of
~
making duly authorized withdrawals.
The terms of both Section 5 of the standby trust agreement (which requires NRC's written approval for withdrawals exceeding 10 percent of the outstanding balance) and Section 6 (which directs the trustee to invest and reinvest the fund in accordance with general l
guidelines communicated by the grantor) now would cover liquidations. Consequently, the change does not.
i diminish the protections of the trust.
(k)
Section 13 of the standby trust agreement states that "Upon ninety (90) days notice to the NRC and the' Crantor, the Trustee may resign-[ emphasis added]."
The licensee added the underlined phrase to the recommended wording of the Regulatory Guide 3.66, page 4-22.
The added phrase requires that the trustee notify both NRC and the licensee if it intends to resign as trustee.
This notification will allow the 4
licensee time to find a replacement trustee, and should not diminish the effectiveness of the mechanism.
t i
5 10 (1)
Section 17 of the submitted standby trust agreement added the following underlined phrases to the recommended wording of Regulatory Culde 3.66:
The Trustee shall not incur pctsonal liability of any nature in connection with any act or omission, made in good faith and in the exercise of due dilicence, in l
the administration of this trust, or in carrying out any directions by the Grantor, or the NRC, issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the t
Grantor or form the Fund, or both, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity and in the exercise of due dilir.ence and prudent care, including 7
all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense.
The paragraph, which protects the trustee from personal liability under the agreement except in certain circumstances, is more protective of the trust and NRC's interests as a result of the additions.
Finally, the Region should ensure that documents submitted by dbe licensee are origina11-y signed duplicates, as recommended in Regulatory Culde 3.66.
Unless the documents have been properly signed, NRC cannot be certain that the financial assurance mechanism is enforceable. Because ICF does not possess the original submissions, we cannot verify compliance with these requirements.
attachments i
f i
i
t REVIEN OF DECObstISSIOtfING FUNDIEG FIAN (DFF) i N ut f o r ' Iff vict$ - CorporoRoA Name of company or institutions-lnfers dak t Number of licenses and applicable regulations:
b 10 CFR Part 30 l
I 10 CFR Part 40 i
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~
l Isotopes handled and l
possession limite I
(specify units):
Gw.A W pe,548 1.
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C4)liten W by r.44 c-b 1
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t Total cost estimate for licenses listed above:
$ \\_94165 3 i
General comments on DTP:
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i EXHIBIT 3-7
-l i
CHECKLIST OF. CRITERIA FOR REVIEW 0F LETTERS OF CREDIT Copy of corporate by-laws or other evidence indicating-that parties' signing the financial instrument (for the applicant) are authorized to represent the organization in the transaction. y i
huplicate (e.g., an axecuted copy of the instrument). Evidence that N
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,4 Evidence that the financial institution is regulated by Federal or State agency (e.g., member of FDIC, Federal Reserve System, etc.).
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e The instrument must be entitled a letter of credit.dihfC(e.r# wCKif n
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The letter should be limited in amount.
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N letter of credit must contain a specified expiration date or be
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written for a definite. tare.
N issuer's obligation to pay the beneficiary should arise only upon presentation of a draft or other documents specified in the letter of credit.
i
[
The bank must not be called upon to determine a question of fact or-l law at issue between the licensee and the Commission or State
-i regulatory agency.
i The licensee should have an unqualified obligation to reimburse the e
issuer for payments made under the letter of credit.
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i 3-20
EXHIBIT 3-5 CHECKLIST OF CRITERIA FOR REVIEW OF TRUST AGREEMENTS' AQ Copy of corporate by-laws or other evidence indicating that parties D-signing the financial instrument (for the applicant) are authorized to represent the organization in the transertion. gy @
Evidence that the financial instrument is an originally signed duplicate (e.g., an executed copy of the instrument).d yg{y- (
L Evidence that the financial inst,itution has authority to act as a
\\M)l M f & of Q 3 % trustee. Purpose of trust ("whereas" clauses). 1. Description Grantor or grantors (introductory paragraph). 1. Names 2. Addresses [* Trustee or trustees. 1. Names and addresses 2. Bank or corporate trustee (introductory paragraph) Identification of facilities and cost estimates (Section 2).b Words of transfer, conveyance, and delivery in trust (Section 3). Payments constituting the trust fund (Section 4). WOVEAO, dl [C l.$ Duration of trust. /* Description of trust property. 1. Property described in attached schedule (Schedule B) [eEYL-r-CrebY$ w 2. Cash hunW W 3. Stock and other securities Additions to trust. Distribution of trust principal (Section 5).gh n gj;sfc6 pS 1. Disbursement to licensee upon proper certification V 2. Payment for activities at NRC's direction in writing / bAdapted from 17A As Jur Legal Forms 2d (Rev) $251.94. References are to recommended wording for trust agreements provided in Section 4.3 of this guide. 3-14
4 al e i EXHIBIT 3-5 (continued) 3. Refund to grantor at NRC's specification in writing after ! cpletion of decommissioning activities 4 NI+hdA i Trust management (d hialorir muof rytEYcezi IO ;aere';' /* Sections,6-8), 1. Discretionary powers 2. Fiduciary duty 3. Commingling and investment 4. Sale or exchange of trust property 5. Scope of investments 6. Express powers of trustee 7. Borrowing noney and encumbering trust assets (Optionalprovisions) gd 8. Insurance 9. Operation of business 10. Compromise of claims /* Taxes and expenses (Section 9). Annual valuation (Section 10). /* Advice of counsel (Section 11). /* Authority, compensation, and tenure of trustees (Sections 12-14). 1. Trustee compensation 2. Successor trustee 3. Instructions to trustee Amendment of agreement (Section 15). LA.)0Yd1/1} k@ /* Irrevocability and temir.ation (Section 16). /* Immunity and indemnification (Section 17). / Law to govern construction and operation of trust (Section 18). V Inta'rpretation and severability (Section 19). try'\\ph{- k V Date (signature block). tl Signatures (signature block), Acknowledgements, seals or attastations, if necessary or desired (witness by notary public).g)g g g Acceptance of trust by trustee or trustees (acknowledgment). 3-15
I 4 f APPENDIX C CHECKLIST FOR SUBMISSION OF SURETY / INSURANCE / PARENT COMPANY A. Check Appropriate Form of Surety / Insurance / Guarantee ) Surety Bond Y Letter of Credit Line of Credit i Parent Company Guarantee /Firutncial Test" ( Insurance I B. Check Documents Submitted for Surety / Insurance / Guarantee 1. Surety Bond Surety Bond Standby Trust Agreement I Acknowledgement 2. Letter of Credit bO SWt W A CFrbr. i k letter of-Credit @4 : 1 Staney Trust Agreement Y Acknowledgement g ir W IC a 3. Line of Credit Verification Staney Trust Agreement Acknowledgement [ 4. Parent Company Guarantee Letter from Chief Executive officer of Applicant or Licensee Letter from Chief Financial Officer of Parent Company l Financial Test: Alternative (IorII) Auditor's Special Report and Attached Schedule Corporate Guarantee Staney Trust Agreement Acknowledgement 1 S. Insurance Certificate of Insurance Staney Trust Agreement Acknowledgement i %y not be used in combination with any other ins,trument. a l i 'i C-1
- \\
l APPENDIX A CHECKLIST FOR DECDPMISSIONING FINANCIAL ASSURANCE NAME OF LICENSEE OR APPLICANT InFensktk. A>adwrS rvias MILING ADDRESS 9@3 MillWOOd the. 00lw SD/W i ColuulNN,SP 2925~a / A. Licensee Part (check one of the following): Y Part 30 Licensee or Applicant Part 70 Licensee or Applicant Part 40 Licensee or Applicant Part 72 Licensee or Applicant 8. Check appropriate ites in each category (if applicable)
- 1. hk
[DateofFinancialAssuranceSubmission 2. Public Entity X Private Entity 3. Certification of Financial Assurance X Decommissioning Funding Plan T 4. (a) Prepayment Option (See Appendix B) Trust Fund Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities (b)[ Sursty/ Insurance /Other Guarantee (See Appendix C) i [f k N,b Xe e redit Line of Credit Parent Cospany Guarantee / Financial Test i (c) External Sinking Fund, Sinking Account and Surety / Insurance (See Appendix D) Trust Fund Escrow Account Certificate of Deposit Government Fund ~ Deposit of Government Securities Surety Bond Letter of Credit i Line of Credit (d) Statement of Intent (public entities o g
- May not be used in combination with any other instrument.
l A-1 i
I CIE M IST FOR REVIEWING DFF's (contimmed) l QUESTIONS ColelENTS (6) Do the computations seem Q p,h wg {Qd) Jgt 33, C ## # # 5 Preod $ beef. / Yes No (7) Does the licensee take credit [ for the potential salvage value of recovered materials or decontaminated equipment? Yes / No r (8) Does the licensee include a Coo k tn8 y b'hf Al tho e t ht. 9 w erntingency factor in the h Ad t idH ShM, M cost estimate? r I:ctes te. cid*5 tnt becao3e.* W V Yes No Con R5 H ma4c. 73 hsed on ad% ( Cht5 the formala a d o r o 4 ically .i includes a con F^g f et.) (9) Does the licensee provide a g g,4 h,3 a gGW fg gp3+ description of the methode S L"+ 1hl5 dfs no F that will be used to adjust the decoassissioning cost dt S crSt a pide h updatt Pt tJ5h estimate periodically over over time.. the life of the facilityr /o z.e e
- =r= ' L- - n ?^i--~'~A A & 6 = .1 CIBCKI.IST FOR REVIEWING DFP's (continued)' QUESTIONS COMMENTS 3 (4) Is the total cost estimate reasonable for the type (s) g 3g 'f g ;) jy gytn-ng, and size (s) of facility tkt (ac;\\3t(s -lo ' dttterk If tht licensed? Nd b M g. Yes No / Not Sure 4 F -i e -. i (5) Are the cost estimates for ~ g g ) } individual facility activities and/or components CIWh - reasonable? Yes No d Not Sure i i s .6 4 i -t i r t i t v-1 = w
.u.
- a.. =.; ; = w : a ; a u' :. =. M M i d = -
% ~L n:O\\ u t t
- 1.
GSCELIST FOR REVIEWING DSCotetISSIONING FUNDING FIJuts (DFP's). QUESTIosts. COMMENTS (1) Does the licensee provide $on supporttq fv de t.t Du b P ort j supporting documentation for Q3 - n gg3,3, j its cost estimates? / Yes No (2) Does the licensee use the Tkt. I;cen.5 Et-does /uf u se. - St. Appendix F ' Cost Estimating g gg g g4g g g g,) g Tables?" ],' t. en 5 et derived bafed o^ S Q 5 l Yes / No kEWii1I O"NS 'I5 (3) Does the cost estimate include the following major I cost elements? (1) Planning and Preparation? Yes No ,,a-(ii) Decontamination and/or Dismantling of Radioactive Facility Compon'ents? Yes No =. (iii) Packaging, shipping, and 7 Disposal of Radioactive wastes? I i Yes No (iv) Restoration of Contaminated Areas on Facility Grounds? l Yes No NA (v) Final Radiation turvey? Yes No (vi) site stabilization, Long-Term surveillance? q Yes No NA 1 I .]
// a neg'o UNITED STATES 8 NUCLEAR RESULATCRY COMM.'2SION o j E MEGION V '4 1480 MARIA LANE. SUITE 210 4,..... f WALNUT CREEK, CAUFORNIA 94BBH30W i Memorandum For: Louis Bykoski Decommissioning and Regulatory Issues Branch, NHSS l 1 from: Beth Prange Nuclear Materials and Fuel Fabrication Branch, Region V
Subject:
Stanford University License SNM i i This refers to an ongoing nonstandard financial assurance submittal. In response to your letter dated January 3 1991, I drafted the enclosed deficiency letter, dated March 15, 1991. UnAugust 22, 1991, the licensee replied. They asked me to assure the adequacy of their changes before they were finalized. Therefore, I am forwarding their submittal to you for review. i Please contact me regarding the outcome of your review.' j '6t$ kg Beth Prange Sr. Health Physicist (Licensing) Nuclear Materials and Fuel Fabrication Branch
Enclosures:
Letter dated Sept. 12, 1990 ~ Letter dated January 3, 1991 Letter dated March 15, 1991 Letter dated August 22, 1991 i I i i i I 1 I m- =-
r N C.e .g. REGION V/ dot BPran 8 9/10 /ge 91 .htyUt51 JA1FY. Ytb (NO). v SEND 10 fDR, f YES /NO)
- 1
STANFORD UNIVERSITY Stanford, California 94305-8006 L. E i HEALTH PHYSICS John A. now Environmental Safety Facihty Associate Director Oak Road Envir1 Health & Safety Phone: (415) 723-32o1 (415) 725 1413 August 22, 1991 hi $ kl U.S. NUCLEAR REGULATORY COMMISSION U [5 REGION V Z E < o 1450 MARIA LANE, SUITE 210 WALNUT CREEK, CA 94596 o N ATTENTION: MS. BETH PRANGE SENIOR HEALTH PHYSICIST (LICENSING) RE: MAIL CONTROL 571252 DEAR MS. PRANGE: In response to your letter of March 15, 1991, I am enclosing a draft of the final (I hope) of the Standby Trust Agreement and Irrevocable Letter of Credit. I thought it would be useful for your counsel to review them to make sure that they encorporate the verbiage that was requested before we have all of the documents executed and notorized and sent to the NRC. Perhaps you would like to send them to David finklestein. Regarding the specific items in your letter: (usingthesamenumbersystem as in your letter)
- 1. Notarized originals will be furnished, if the drafts incorporate all necessary changes.
- 2. 3. and 4(a) & (b) See amendments to letter of Credit..
- 5. (a) See Section 5, of revised Standby Trust Agreement (b) See Section 8 regarding rights of Trustees.
c) See Section 8 (a) d) See Section 10 e) Such attestation following the specimen in Regulatory Guide Standard format will be furnished when the original documents are signed and sent to the NRC. (f)Aletterfollowingthespecimenletterwillbedraftedandfurnished when the original documents are sent to the NRC. (g) A " Specimen Certificate of Events" will be furnished at the time that the original documents are sent to the NRC.
- 6. The certification of financial Assurance will be revised to show the correction in the activity from 1 millicurie to 170 microcuries when the original documents are submitted to the NRC.
S7a52
Please let me know as soon as you have information regarding the acceptability of' the documents; my phone number is (415) 725-1413 or FAX (415) 725-3468. I'll notify the Stanford Management Company, which is the former Treasurer's Office, so that everything can be completed and dispatched to you. i !'t Very ruly y ur, i John A. Ho mes Radiation Safety Officer i f i j i r k .i i i k i i t I I
9(Leff CERTIFICAT10N OF FINANCIAL ASSURANCE Principal: The Board of Trustees of de 14!and Stanford Junior University Stanford, California 94305 NRC License Number SNM56 -C. Facility:,- IIealth Physics-Env rnmental Safety Facility Oak Road i Stanford, Califomia 94305-8006 This is to certify that ne Board of Trustees of the Leland Stanford Junior University is licensed to possess U-235 oxide in the fo!!owing aymou. IssM ) millicurie, and that financial assurance in the amount prescribed by 10 CFR 70, seven hundt ftfry thousand U.S. dollars,5750,000, has been obtained for the purpose of decommissioning, udCA**kblh W N / ys The Board of Trustees of de / Leland Stanford Junior University kk Signature %c h tu tu 't Title w 'I 1 ]l1f. / fit, Date f7m CFD L.- Mpm & )C50 J l 4' l
H on su twutsterwis e, y, n,3 - sc 33 p, V STANDDY TRUST AGREE.NENT TRUST AGREESENT,the Agreement entered into as of ( Date ] by and between the Board of Trusiccs of Leland Stanford Junior University, a body having corporate powers under the laws of the state of California, bercin referred to as the *0rantor." and The Chase Manhattan Bank - N.A.,1211 Avenue of the Americas - 39th Fivur, New Yoak,NY 10036, the ' Trustee." WilEREAS, the U.S. Nxlear Resc!atory Comminion (NRC), an agency of the U.S. Govemment, pursaant to the Atornic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has promulgated regulations in Title 10, Chapict 1 of the Code of FederrJ Reguistions, Part 70. These regulations, applicable to the Grantor, require that a holder of, or an applicant for, a Part 70 license provide assurante that funds will be available when needed for required decommissioning activities. s WHEREAS, the Grantor has c1cetod to use a letter of credit to provide all of such financial assuranco for the facilitics identitled heretn; and WIEREAS, when payrnent is made under a letter of credit, thh standby trust sha!! be use,d for the receipt of such payment;and j WHEREAS, the Grantor, acting through its duty authorized officers, has selected the Trustoo to be the trcstee under this Ageement, and the Trunec is willing to act as trustee, WHEREAS, Grantor and Trusicc entered into a Standby Trust Agreement dated July 27,1990, but the NRC hn requested that said agreement be rep 1md by this sgreement. NOW, T1EREPORE, the Orantor t.nd the Trustee apec at follows: S;;ctiott D fiMtiors. As used in this Agreement: (a) "Ihe term *0 ardor
- means the NRC licensee who enters into this Apecment and any successors or ass!gns of the Gramor.
(b) The term *Trusice" means the truuee who enters into this Agreercent and any ruecessor Trustae. section 1 cntts of Demmmt<sioMy This Agreement pertains to the costs of decommissioning the rnaterials and a:tivities identified in License Number SNM56 issoco persuant to 10 CFR Part 70 as shownin Schedule A. hetion 3. Ec'sMieert of Funi The Orantor and the Truster hereby establish a standby trust fund (the Fund) for the benent of the NBC. The Orantor and the Trustec intend that no third party have access to the Pund except as providad h: rein. Seetin'i 4. Pavr er ts copiitotine the Funi Payments made to the Trustee for the Fund shall consist of cash, securities, or other liquid tesets acceptable to the Trustee The Fund is established initia!!y as ccesisting or the property,which is a:ceptable to the Trunec, descrih;d in Schedule B atta:hed hereto. Such pro;>crty and any other property subsecluently tran.sferred to the Trustee are referred to os the ' Fund.* together with all camings and profits thereon,less any payments or distributions rnade by the Trust:c persursnt to this Apccment.The Fund shall be held by the Trustee,IN TRUST, as hereinafter provided. The Trustet shall not be responsibic nor shallit untkrtric any responsibility for the amount of, or adequacy of the Fund, nor any duty to vollect from the Orantor, any payments necessary to discharge any liabilities of the Grantor established by the h*RC. Fage 1 of 5
? - .FECM SU INUESTMENTS
- 8. P.1991-14: 30 P.
3 p V Saetbn 5. Payment for Rectned Activides Soecified in the PIm. The Trustee shall make payments from the Fund to the Grantor upon presentation to the Trustee of the following: (a) A certificate duly executed by the Secretary of the Depositor attesting to the occurrence of the events, and in the form set fonh in the attached Specimen Cenificate,and (b) A cenificate attesting to the following conditions; (1) that decommissioning is proceeding pursuant to an b7C approved plan. (2) that the funds withdrawn will be expended for activities undertaken pursuant to that Flan, and (3) that the NRC has been given 30 days' prior notice of Grantors intent to withdraw funds from the escrow fund. No withdrawal from the fund can exceed 10 percent of the outstanding balance of the Fund unless written NRC approvalis attsched. In the event of the Grantors default or inability to direct decommissioning activities, the Trustee shall make payments from the Fund as the NRC shall direct, in writing, to provide for the payment of the costs of required activities coscred by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the NRC, or State agency, from the Fund for expenditures for required activities in such amounts as the NRC, or State agency, shall direct in writing. In addition, the Trustee shall refund to the Grantor such amoums as the NRC specifies in writing. Upon refund, such funds shall no longer constitu:e pan of the Fund as defined herein. Section 6. Trust Mmgement. The Trustee shallinvest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income,in accordance wi:h generalinvestment policies and guid: lines which the Grantor m6y communicate in writing to the Trustee from time to time, subject, however, to the provisions of this section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge its duties with respect to the Fund solely in the interest of the beneficiary and with the care, skill, Nnce, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; fJap12.3 (a) Securities or other obligations of thd Grantor, or any other owner or operator of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended (15 U.S.C. 80a-2(a)), shall not be acquired or held, unless they are securities or other obligations of the Federalor a State govemment; (b) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal Governtnent, and in obligations of the Federal Government such as GNMA, FNMA, and FHLM bonds and cenificates or State and Municipal bonds rated BBB cr higher by Standard and Foors or Baa or higher by Moody's Investment Services; and (c) For a reasonable time, not to exceed 60 days, the Trustee is authorized to hold uninvested cash, awaiting investment or distribution, without liability for the payment of interest thereon. Snin2 Commincline and Inveement. The Trustee is expressly authorized in its discretion: (a) To transfer from time to time any or all of the assets of the fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts panicipating Fage 2 of 5
FRoQ -59 IHUEsTMENTS 8. 7,1991 14: 39 P, 4 11erein; and t (b) To purchase shares in any investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a 1 et seq.), including one that may te cremed, managed, underwrinen,or to which investment advice is tendered, or the shares of which are sold by the Trustee. ne Trustee may vote such shares in its discretion. Section 8. Ewress Powers of Trustee. Without in any way limiting the powers and discretion conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale, as necessary to allow duly authorized withdrawals at the joint request of the Grantor and the NRC or to reinvest in securities at the direction of the Grantor; (b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (c) To register any securities held in the Fund in its own name, or in the name of a nominee, and to bold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, to reinvest interest payments and funds from matured and redeemed instruments, to file proper forms conceming securities held in the Fund in a timely fashion with appropriate government agencies, or to deposit or arrange for the deposit of such securities in a qualified central depository ev en though, when so deposited, such securities may be merged and held in bulk in the name of the nominee or such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the U.S. Govemment, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund: (d) To depoJ t any cash in the Fund in interest-bearing accounts rnalntained or savings i certifiestes issued by the Trustee, in its separate corporate capacity, or in any other banking Institution affdiated with the Trustee,to the extent insured by an agency of the Federal government; and (e) To compromise or otherwise adjust all claims in favor of or against the Fund. Section 9. Tues end Eryntes. All taxes of any kind that rnay te assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in con'nection with the administration of this Trust. including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund. Section 10. Anrms1 Wimim. After payment has been made into this standby trust fund, the Trustee shall annually, at least 30 days before the anniversary date of receipt of payment inin the standby trust fund, furnish to the Grantor and to the NRC a statement confirming the value of the Trust. Any securities in the Fund shall te valued at market value as of no more than 60 days before the anniversary date of the establishment of the Fund. The failure of the Grantor to object in writing to the Trustee within 90 days after the staternent has been furnished to the Grantor and the NRC, or State agency, shall consti:ute a conclusive'y binding assent by the Grantor, barring the grantor from asserting any clairn or liabi!!ty against the Trustee with respect to the matters disclosed in the statement. Seetion 11. Advice of Countel. The Trustee may from time to time consult with counsel with respect to any question arising as to the construction of this Agreement or any action to te taken hereunder. De Trustee shall te fully protected, to the extent permitted by law, in acting on the advice of counsel. Section 12. Trunee comrensation. The Trustee shall te entitled to reasonable compensation for its Page 3 of 5
.FROH Su INVESTnENTS 8. 7.1991 14836 P. servias as agreed upon in writing with the Grantor. (See Schedule C.) Section 13. Succenor Trustee. Upon 90 days notice to the NRC, the Trustee may resign; upon 90 days notice to NRC and the Trustee, the Grantor may replace the Trustee; but such resignation or replaxment shall not be effective until the Grantor has appointed a successor Trustee and this successor accepts the appointment. The successor Trustee shall have the same powers and duties as those 3 conferred upon the Trustee hereunder, Upon the successor Trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor Trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, tht, Trustec may apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. De successor Trustee shall specify the date on which it assumes administration of the trust in a writing sent to the Grantor, the NRC or State agency, and the present Trustee by cenified mail 10 days before such change becomes effective. Any capenses incurred by the Trustee as a result of any of the acts contemplated by this section shall be paid as provided in Section 9. S-ction 14. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are signatories to this agreernent or such other designees as the Orantor may designate in writing. The Trustee shall be fully protected in acting without inquiry in accordance with the grantor's orders, requests, and instructions. If the NP>C or State agency issues orders, requests, or instructions to the Trustee these shall be in writing, signed by the NRC, or State agency, or their designees, and the Truster shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. De Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor, the NRC, or State agency, hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instruction from the Grantor and/or the NRC, or State agency, except as provided for herein. 5:ction 15. Amendment of Aereement. This Agreement may be amended by an instrumentin writing caecuted by the Grantor, the Trustee and the NRC, or State agency, or by the Trustee and the NRC or State Agency,if the Grantor ceases to exist. Section 16. Irrevocabif!ty end Terminnfion. Subject to the right of the parties to amend this Agrectnent as provided in Section 15, this trust sha!! be irrevocable and shall continue until terminated at the written egreement of the Grantor, the Trustec, and the NRC or State agency, or by the Trustee and the NRC or State agency,if the Grantor ceases to exist. Upon termination of the trust, all rernalning trust property,less final trust administration expenses, shall be delivered to the Grantor or its suxessor. S-edon 17. Imrnun!ty and Indemnificatim ne Trustte shall not incur liability (either individually or as Trustee)in connection with any act or omission, made in good faith,in the administration of this entst or in carrying out any directions by the Grantor, the NRC, or State agency, issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor or frem the trust fund, or both, from and against any liability (either individua!!y or as Trustee) to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense. Sxtjon 18. This Agreement shall be administered, construed, and enforced according to the laws of the Sute of New York. Section 19. higtetion and Seversbility. As used in this Agreement, words in the singular include the plurnt and words in the pluralinclude the singular. De descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efDcacy of this Agreement. If any part of this agreement is invalid, it shall not affect the remaining provisions which will remain valid and enforceable. Sect!on 20.Termivion of July 27.19o0 Standby Trust Acreement. Grantor, Trustee and the NRC (by its signature hereon) agree to, and hereby do, terminate the July 27,1990 Standby Trust Agreement Page 4 of 5
TROM SU I N U E S t riE NT S e, 7,3993 gangg' P. 6 I between Orantor and Trustee. i IN %TINESS WHEREOF the parties have caused this Agrecraent to be executed by the respective offcers duly authorized and the incorporate seals to be hereunto affaed and attested as of the date firrt
- Titten above.
ATTEST: The Board of Trustees of the Lehnd Stanford JuniorUniversity Associate Vice President of Finance Assistant Secretary 8 AT7TSTt The Chase Manhattan Bank, N.A. [ Title] [ Title) ATTEST: United States Nuclear Reguhtory Cornmission Nitle) - 2 hide) f Page 5 of 5
f R Oil SU INVESTMENTS 9. 7.3993 14s30 P. 7 hAfl TRUST AGREEMENT SCHEDULE i SCREDULE A ^ m This Agreement demonstrates financial assuran:e for the following cost estima:es for the following licenced aethivi'Jes: U.S. NUCLEAR NAhEAND COST ESTIMATES FOR i REGULATORY ADDRESS ADDRESS OF REGULATORY ASSUR-COMMISION OF LICENSED ANCE DEMONSTRATED LICENSE NUMBER LICENSEE ACITVTTY BYTH!S AGREEMENT SNM56 The Board of Trustees of the Health Physics $750,000 under i Leland Stanford Junior University Environmental Safety Facility 10 CFR 70.25 ~ Sanford Management Company OakRoad 2770 Sand Hill Road Stanford,CA 94305 8005 Menlo Park,CA 94025 The cost estimates listed here were last adjusted and approved by the NRC on July 27,1990. l i SCHEDULE B I The AMOUNT of $750.030 has been placed in the Trust account AS EVIDENCED BY the Standby Letter of Credit dtd July 10,1990 and ammended [ date ],issuedby i The Chase Manhattan Bank N.A pursuant to this Agreement f i i senEntu e i The Cht" Manhattan Be.nk, N.A., Trustee's fee shall be 55000 for life of Trust. i a
9 FWGE 1 PC094689 t#All CCFY - AC'PNEGC11AiLE LETTEP OF AFLh0FENT JLhi C7 1991 DRF ggvlSC SEEE82CIARY: M l [ L.S. hvCLEAF RE(LcA1 CRY C O F.F : 55!CN KASh3hGTCA, D.C. 205f5 ATTh: LCLIS cYFCSCI pHCAE 201-492-C572 GEATLEFfA: CUR L E.1 T E tt CF CRED21/AD\\ ICE N0. PCCG46ES { V M, p Cp. EY C ADER Aht FCR ACCCUh1 CFt Elll*l8RIITw M % - Co SS s.98 W [cA4h 2C+rAdtinc4S!!J: - 9 2 /70 bb Nt t' N '-" ' " " 31 ncm3 pggc4 Fw 2.5-if IN YOUR FAVOR IS A r.E A C E D AS FCLLCL5: 1A THE T!*T CF OLR LETTEk UF C A E :; 1 T P A R 14 4 A P H 3 E G I t.N ; h G m' I T H: "(2) YCOR 514hiD $1A1!F!hi AND ENC!hG WITH UhDEFt AUTHORITY CF................" 3G ;!LFlip Asp A!h A C ED FY TFE FCLLCk!NG: LCTE
- 2) TCtsR SIGNED STATEFIN1 k ! A t I N C-A$ FOLLCLF: ": CER12FY THAT 1HE AFCUh1 0F 1HE DRAFT I! P AY A%i # t,8. 5 U; N T T O P. E c c L AT I ch s j
gg,g c C$ IS$UED UhtER ALTFCA111 CF THi U.S. SL LIA> 'EGULATOPY f C CP 3 E SIC A." thC0 Cit b intTL)TOF CLP L11TER Or c gg;It p;gt;;; APH 5EGIhh;NG: "TH2S LE1TED OF C *iCIT I S..." A AD S h?I A G m!Td: WMfh AEEDID FOR C ECCP P IS $10NJ k E.* P C A12 0h RFA01N*: "1C Cf5 ' ART 7 !$ CHLhGED TO READ GLC1E 7C Q1}r(H A fMC D 1C Cf9 .h.sV G1 E ( l INE FCLLChihG PARAG8.AFns ARC ADB!C TC 1ME TEXT OF CUR LET T ER CF
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Ft W FUTLkE E)FIRA1Ich Ca1E MIF EOFr UP. L E 5 ; AT LEAST $IkTY (60) DAYSe s I FRICR TC fUCh LA1E WI No1IFY YCV 1A wF;TIsd k Y #CCISTERED MAIL 1 HAT kr f L EC1 A D1 TC CONSIDEb THI! Li1 TIE CF CREDIT AINEw AAY 3LCF 8001110bAL FIRICC5. w 43 LFON RECEIPT EY 100 C F $LCh hCTICE, YCL FAY tRAW FEP40NDER NC 50Ch 1FAh !C gsY$ ictLCh!ht SLCN ACT!CS eli k'IT nIN THE THEh APPLI C AULE EXFIRATICS DAli E Y YCLA 0FAFl! A1 $!shT if ATING R!FIRINCs TO THIS LETTip 01 CRCtIT h0. PCCc46EC ACCCFFah1ED DY YOUP PURPOA TEDLY SIG A 51ATIFENT THAT: $ T A h r 0 R D ONIkEtS27Y FAS 9EEA.UNAEL i ALTERNATJ\\E FINAACIAL ASELRAACi TC REFLACE LETTER OF FCC94tB9.* FLEASE IAF00 LS 3Mw.!CIATELY kHITFto CK ACT YOU AGREE OR DISAGREE LITk TMIS AFEN0).!hT So TF AT KE P AY ACTIFY CLR A C CCRDINCL Y. m4ETHEF 02 hc7 1WE E A CLC $1D (CP). YCU ALRi!, FL2A$! SICN AhD RETUkN ALL CTh' TEAFS AND CCNDITIOh! Ri4 AI.\\ LNCFANGED. v E R Y T R L'L Y YOUR$ ALTPCAIIED $!GNATURE AC.Rti....................... ALTHCRIIst $ 2 G N A T L'R E 1 t DISALSET..................... AUTHCCI!fC SI G,N A T L R E i STANCEY LETTER of CRitIT tEP1 (112) (70-Cc07 l i f 1 i i .........n. _e,
FROM SU IHUESTMENTS
- e. 7.1991 14:41 P.18
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~ h ' j.; DEA'R: SIR OR MADAN: .k..., ~ i'. : .:' - J;. : l' ~- /s;;" ~ IT '6, P.3..[j LET WE HEREBT ESTABLIS R$ '/. ' .y REQUEST AND FORL PC)94689.IN ' TOUR FA i i ST ANF ORD UNIVERSITY /. ( t THE TREASOERr '20 ?' P A L O A L T 0,.C f." 0 TO THE AGGREGATE ' W 'O.0LLA R S 575 0r 000.01r('t t SEVEN ,0,1. V.P AVENUEr L P0M.. '1 . ;\\ ' HU4DREDFIFTYTHOU$p I '9 ... fg [.g;g.pljj;g;a.. a m=. / q-q'- lhe PRESENTATION OF ' bs cs ".' 7[c I: " M P (1)..YOUR SIGHT.DRAFI ' R Er h! AU{d@'P,. CREDIT NO. PC094689JN j 'd q - <.y?.:j ~ 't.'<*' N Oy _ [kEC lATIONSi'*' yt I (2) TOUR SIGNED SI ATEM VT. ftE ADING': IFT THAT $ ANT N. THE AMOUNT OF THE DR AFT I'tTPAY.AM,/ ISSUED UNDER AUTHORITT.0F M!.;f;"Xf' 1 g3-ff F >' ' ~ '?'ikkk' ., f.,; g;g,._.3 '? +'. THIS LETTER OF CREDIT IS ISSUED IN ACCORDANCE'WITH REGULATIONS' ISSUED UNDER THE AUTHORITY OF THE U.S. NUCLEAR REGULATORY C04 MISSION (NRC), AN AGENCY OF THE.U.S. GOVERNMENTr PURSUANT TO THE ATOMIC ENERGT 'ACT OF 1954r AS AMENDED, AND THE ENERGT REDRGANII ATION ACT OF 1974. THE NRC HAS PROMULG ATED REGUL ATIONS IN TITLE 10e CHAPTER 10F THE CODE OF FEDERAL REGULATIONSr PART 70r WHICH REQUIRE TH AT HotMCMilPO AN APPLICANT FORr 1. LICENSE ISSUED UNDi, O CFR PART 7 PR VIDE ASSURANCE.THAT FUNDS WILL BE ' AVAILABLE REN NEEDED Fl!LAEC MMIS SIONING. ,{
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THIS LETTER OF CREDIT IS. EFFECTIVE ~IMMEDI ATELT ' AND SHALL EXP' IRE'.ON] Y. P^ < '.'., ; f OCTOBER 31,19 94 y ~ 'N' THE B ANK SHALL GIVE IMMEDIATE NOTICE TO THE APPLICANT AND THE. NRC 0F ANY NOTICE RECEIVED OR ACT!DN FILE ALLEGING (1) THE, ;. f.- Q-l?.',.-l. gc ' ~ J.${5,4 .q ',$ f.., { COMT INUE D ON F OLLOWING P'AC'E'.3, i .. E ' s..c.m.. ~ ~ 3..-W ; M m. c. ;..... ' n .a n=
FRDM SU INVESTMENTS 8. 7.1991 14:42 P.11 t etW of Crodit - 3,c,.,,,c,,3,3,n caxoa - ca. wm r,w.r e. i Tre. erw et. u.:,e, n,,u, ce. :mnw.= 2.: ? 1 Np Yvh P.au. 6th Moor < J ;t.,$. ?f.., Now York. NY 10001 a. .. s <,:. :. 'W'? PC09468NU WID PA$E 2 t INSOLVENCY OR BANKRUPTCY 0F THE FINANCI AL INSTITUTION' OR I2) ANT I VIOL ATIONS OF -REGULATORY REQUIREMENTS THAT COULD RESULT IN SUSPENSION OR REV0t ATION of THE BANK'S CHARTER OR LICENSE TO DO BUSINESS. THE FINANCI AL INSTITUTION ALSO SHALL GIVE IMMEDI ATE Noi!CE IF THE B ANKr FOR ANY REASONS BECOMES UNABLE TO FULFILL ITS OBLIGATION UNDER THE LETTER OF CREDIT. ..>i $ ih k WHENEVER THIS LETTER OF C R E55 T IS D R A NN ON UN'D E R ' AND IN ' ' fU#'- 'P 2 7" c COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT, WE SHAL'0ULY J 't *, HONOR SUCH DRAFT UPON ITS PRESENTATI0,N T,0 US,y{ THIN 30 D AYS ~AND WE'. t SHALL DEPOSli THE AMOUNT OF idE. 0 RAFT.h)R.ECTL,Y.1NTO THE ST ANDBY TRUST FUND OF THE BO ARD OF TRUSTEES,0f THE 1 OND STAN{*0RD JUNIOR UNIVERSITY-IN ACCORDANCE WITH YOUR INSTR CTIONS.! M'QM..4 ~ ' i P.M N.. 4, - bhQM6 I ACH. DRAf T MUST BEAR ON ITS's
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I'%R 1 : 1931 Docket No. : 070-00064 License No.: SNM-56 Control No.: 571252 Stanford University Health Physics Environmental Safety Facility Oak Road Stanford, California 94305 Attention: John A. Holmes, Associate Director Environmental Health and Safety Radiation Safety Officer ] Gentlemen: This is in reference to your Certification of Financial Assurance and to your i Standby Trust Agreement dated July _16, 1990 for your byproduct material license. In order to complete our review, we need the following additional information: l 1. You should submit original, notarized copies of your Letter of Credit, Certification of Financial Assurance, and of your Standby Trust Agreement. 2. A statement should be added to your Letter of Credit permitting the NRC l to draw on funds in the event that you are unable to secure alternative financial assurance to replace the Letter of Credit within 30 days of notification of cancellation. 3 3. A statement should be added to the Letter to permit automatic renewal without further action on your part to ensure continuous financial assurance. 4. The Letter of Credit needs two additional changes: a.) The blank in Item (2) should refer to "the U.S. Nuclear Regulatory Commission" j i b.) License SNM-56 was. issued pursuant to 10 CFR 70.31, not 10 CFR Part 7. You should correct the reference in the Letter. i 5. The Standby Trust Agreement needs the.following changes: ' i a.) Section 5 should be revised to state: "No withdrawal' from the fund can exceed 10% of the outstanding balance of the fund unless NRC written approval is attached." b.) Section 7 should be revised to give the trustee the right to vote i shares'at its discretion. P h
t-V r . MAR 151991 c.) Section 8(a) should state "to allow duly authorized withdrawals at joint request of Grantor and NRC" rather than "as necessary for prudent management of the fund." The NRC's right to allow the Grantor access to the fund should be clear, d.) Section 10 should be amended to remove the phrase "and the NRC" from the last sentence. The NRC must net be barred from asserting any claim against the trustee when the grantor fails to object within 90 days. j r e.) Submit evidence indicating that the Associate Vice President, Finance, is authorized to enter into a standby trust agreement for the institution. Refer to pages 3-19 and 3-20 of the Regulatory Guide, Standard Format and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR Parts 30, 40,'70, and 72" (June 1990).
- f. ) Submit a letter of acknowledgement with the standby trust agreement, as recommended by the guide described in Item e., page 4-27.
g.) Submit a Specimen Certificate of Events and Specimen Certificate of Resolution with the standby trust agreement, as recommended in the Regulatory Guide, pages 4-24 and 4-25. 6. The Certification of Financial Assurance should be revised, as License SNM-56 authorizes possession of 170 microcuries of U-235 oxide, rather than one millicurie. We will continue the review of your submittal upon receipt of this - information. In order to continue prompt review of your application, we request that you submit your response to this letter within 30 calendar days from the date of this letter. Please reply in duplicate, and refer to Mail Control No. 571252. Sincerely, j Beth A. Riedlinger i Senior Health Physicist (Licensing) Nuclear Materials and Fuel Fabrication Branch
Enclosures:
Letter dated July 16, 1990 Letter dated September 12, 1990 Regulatory Guide 3.66, " Standard Format and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR Parts 30, 40, 70, and 72" (January 1990) S w
tm Y I Distribution MAR 151931 I bcc: License docket folder (original concurrence)(Peggy) Inspection folder (Peggy) Reading file (Frances) Maurice Messier, LFMB, MNBB 4503 F.Browne J.Montg/omery D.Skov B.R d nger / / / / 3/6/9[ 1 REQUEST COPY ] REQUEST COPY ] REQUEST COPY ] REQUEST RPY ] REQUEST COPY ] YES / NO ] YES / N0 ] YES / NO ] YES / /NO) ] YES / NO ] i V t J 4 t i t I t I l l i b
[(je asc,g e Jg UNITED STATES %.,}k(g( C ) g NUCLEAR REGULATORY COMMISSION WASHINGTON. D. C. 20ss5 [' '%,,'[,[/ 8 o, January 3,1991 MEMORANDUM: Beth Riedlinger Nuclear Material and Fuel Fabrication Branch, Region V FROM: Louis Bykoski Decommissioning and Regulatory Issues Branch, NMSS
SUBJECT:
THE OFFICE OF GENERAL COUNSEL (0GC) AND CONTRACTOR COMMENTS ON NONSTANDARD FINANCIAL ASSURANCE SUBMITTALS Our contractor, ICF Incorporated, and OGC have reviewed and provided comments on the Stanford University nonstandard financial assurance submittal you sent to us for review. The ICF comments are presented in two parts. The first part deals with specific recommendations to correct deficiencies. The Lccar.d part (Other Issues) provides a discussion of changes to the standard wording that are acceptable and are not considered to be deficiencies. The OGC comments include additional deficiencies that need to be corrected by the licensee and comments for our internal use. You should carefully review the comments before preparia.g the deficiency letter. We have enclosed more specific information to help you sort and consolidate the ICF and OGC comments. We trust that the enclosed comment format will suit your-needs. If not, please contact us with recommendations by January 15, 1991. Should you have any further questions with regard to the comments, please call me on (301) 492-0572 or Michael Finkelstein of OGC on (301) 492-1623. d y ouis Bykoski Decommissioning and Regulatory Issues Branch, NMSS
Enclosures:
As stated
l f s i 1 LIST OF INSTRUCTIONS -Stanford University In reviewing the comments the reviewer will note that there will be some overlap between ICF and 0GC comments. The following comments should be included in the basis for the deficiency letter: 1. ICF comments 1 through 7. 2. All OGC comments with the exception of number 5. All other comments and discussion is for reviewer information. f i i f 4 5 f i I i i -l
4 From: Michael Finkelstein, OGC/Rulemaking & Fuel Cycle Re: Comments on ICF review submitted November 5, 1990 Deficiency Review for the Recions In each of the examples listed below the Regional reviewers must. verify that the document is a signed-copy of the originalv and duly notarized; t 1. Stanford University Stanford's Letter of Credit is missing the provision that permits the NRC to draw on the funds in the event that the licensee is unable to secure alternative financial assurance to replace the Letter of Credit within 30 days of notification of cancellation. The Letter is also misning tne automatic renewal provisions that permit turnover.of the Letter without further licensee action. Both of these provisions are legally significant. The Letter of Credit states that the license was issued under 10 CFR Part 7. It should state that the license was issued under 10 CFR Part 70. The blank in Paragraph 1, subparagraph 2 of the Letter of Credit should state that "U.S. Nuclear Regulatory Commission." Moderately significant changes must be made to the Standby Trust Agreement. These changes include the following: 1. SMN56 was not issued pursuant to 10 CFR Part 70.25. Part 70.25 implements the decommissioning rule. The license was issued pursuant to 10 CFR Part 70.31. i f 2. The withdrawal numbers must be changed to state that "no l withdrawal from the fund can exceed 10% of the outstanding balance of the fund nW42,.oOO,-uhichevards--greatery unless the NRC approval is attached." 3. The provision giving the trustee the right to vote shares at its discretion is missing from section 7. 4. The language in section 8(a) should state "to allow duly authorized withdrawals at joint request of Grantor & NRC" rather than "as necessary for prudent management of the fund." The NRC's right to allow the Grantor access to the fund should not be ambiguous. l 5. Section 8 (e), (f) (g) additions strengthen the trust agreement and perhaps should be considered for the model standby trust agreement contained in R.G. 3.66.
r ,s 6. The NRC must not be barred from asserting any claim against the trustee when the grantor fails to object within 90 days. The phrese "and the NRC" must be removed from the last sentence of section 10 in the trust agreement. ~ 7. Section 20 is valid. The initial assets in' Schedule B, S750k of. Gov't bonds, can be legitimately substituted by the $750k Letter of Credit. 4 g gQ,,, The ICF analysis on Specimen of Events and Certificate of Resolution should be amendedl Both models are required because they serve two different functions. The Specimen of Events allows the trustee to release money in the trust fund. The Certificate of Resolution is proof that the licensee's Board of Directors have authorized the decommissioning. Submissions of both model documents is mandatory. Missing from Stamford's-submittal: a) Specimen of Events, b) Certificate of Resolution and c) Letter of Acknowledgement, i.e. statement by Notary Public that the signatures on the. trust were witnessed and acknowledged by.the signatories. Minor points The September lith v. September 5th dichotomy should have no effect on the enforceability of the Letter of Credit. Tne variation in wording in section 17 and the model trust, as discussed by ICF, does not detract from agency rights and duties as beneficiary of the trust fund.
9300 Lee llichua) Fairfa. \\ irginia 22031-1207 703/934-3000 ICF INCOR POR ATED t October 31, 1990 To: Dr. Lou Bykoski, NMSS/NRC From: Dave Mitamura, Michael Berg, and John Collier, ICF Incorporated
Subject:
Review of Letter of Credit Submitted by Stanford University Stanford University in Stanford, California submitted a certification of financial assurance, using a letter of credit, in the amount of $750,000. The submission assures decommissioning costs for license SNM-56 issued under 10 CFR Part 70.1.2 Upon review of the entire submission, ICF recommends that NRC Region V require the licensee to modify thc ;ubaission in the following seven ways: (1) Add automatic renewal provisions to the letter of credit; (2) Amend the letter of credit to fill in the blank in Paragraph 1, Subparagraph 2; i (3) Submit evidence indicating that parties signing the standby trust agreement for Stanford are authorized to represent the institution; i (4) Modify Section 5, Paragraph 2 of the standby trust agreement so that Stanford cannot withdraw more than 10 percent of the outstanding balance of the trust without NRC approval; (5) Submit a letter of acknowledgcment with the standby trust agreement; 1 Ve assume that URC Region V has verified the certification amount and that it is acceptable under 10 CFR 70.25. 2 Stanford's submission includes a standby trust agreement which indicates (in Section 20) that Treasury notes were deposited into the standby trust initially, and the Treasury notes were to be returned to the Grantor (i.e., Stanford) upon execution of the letter of credit. According to the dates of the standby trust (July 27, 1990) and the letter of credit (September 5, 1990), Stanford apparently used the standby trust fund to satisfy the financial assurance rules for a short period of time. f
2 (6) Submit a specimen certificate of events or specimen certificate of resolution with the standby trust agreement; andi-(7) Modify the last sentence of Section 10 of the standby trust agreement so as not to bar NRC from asserting any claim or liability against the trustee. Each of these recommendations, along with other issues, is discussed below. (1) Add Automatic Renewal Provisions to the Letter of Credit Under 10 CFR 70.25(f)(2)(i), if a letter of credit is written for a' definite term, it "must be renewed automatically unless 90 days or more prior to the renewal date, the issuer notifies the Commission, the beneficiary, and the licensee of its intention not to-renew.". The submitted letter of credit is written for a definite term of four years, but it does not include the automatic renewal provision. ICF recommends that NRC require Stanford to add this provision to the letter of credit in order to ensure continuous financial assurance. (2) Amend the Letter of Credit to Fill in the Blank in Paragraph 1, Subparagraph 2 The issuing institution did not fill in the blank in Paragraph 1, subparagraph 2, which should read "U.S. Nuclear Regulatory Commission." This language is necessary because NRC must use the correct wording in order to draw upon the letter of credit. Therefore, ICF recommends that NRC require Stanford to include this omission in the letter of credit. Also, The regulatory reference in Paragraph 2 is incorrectly ' stated as 10 CFR Part 7,- rather than 10 CFR Part 70, and must be corrected. l (3) Submit Evidence Indicating that Parties Signing the Standby Trust Agreement for Stanford are Authorized to Represent the Institution The Stanford submission does not display any evidence indicating that j the Associate Vice President, Finance, is authorized to enter into a standby trust agreement for the institution. Evidence of authority to represent Stanford is necessary, as recommended by the draft Regulatory Guide " Standard Format and Content of Financial Assurance Mechanisms Required for i Decommissioning Under 10 CFR Parts 30, 40, 70, and 72" (January 1990), page 3-19, to ensure that the submission is effective and enforceable. ) y (4) Modify Section 5, Paragraph 2 of the Standby Trust Agreement so that Stanford Cannot Withdraw More Than 10 Percent of the Outstanding Balance of the Trust Without NRC Approval As submitted, the standby trust agreement allows withdrawal from the trust fund up to 100 percent of the outstanding balance or $750,000,.whichever l 1s greater, without NRC approval. This withdrawal limit exceeds the 10 l i
i l 3 t-percent level specified in NRC guidance.3 Therefore, ICF recommends that Section 5 of the submitted standby trust agreement be modified to comply with the lower level recommended by NRC. This change will provide NRC greater tty 0,y)porcon/JO &y to monitor the licensee's decommispioning. T/2 /.Jf.Q's th du & uuu opportunit Le% &dd [d ad G n U A N E C & ~fs @ W m 5.> A d d *:M% (5) Submit a Letter of Acknowledgement with the Standby Trust AgreeErit'% al/gd4 = ~ ~. _ The submission does not include a letter of acknowledgement with the standby trust agreement, as recommended by the draft Regulatory Culde, page 4-27. The acknowledgement is needed to verify the execution of the standby trust agreement, and to certify the trustee's signature and authority to enter into the agreement. .%s (6) Submit a Specimen Certificate of Events om Specimen Certificate of Resolution with the Standby Trust Agreement The Stanford submission does not include a specimen certificate of events or specimen certificate of resolution with the standby trust agreement, as recommended in the draft Regulatory Culde, pages 4-24 and 4-25. Section 5 of the standby trust agreement refers to a specimen certificate, which must later be executed in order to initiate payments from the fund. Either of these certificates provides evidence to the trustee that funds can be distributed. (7) Modify the Last Sentence of Section 10 of the Standby Trust Agreement So as Not to Ear NRC from Asserting any Claim or Liability Against the Trustee The Stanford standby trust agreement submission bars "the Grantor and NRC from asserting any claim or liability against the Trustee with respect to the matters disclosed in the [ annual valuation) statement." However, the wording recommended by the draft Regulatory Culde, page 4-15, does not bar NRC } from this right to assert any claim or liability against the trustee with respect to matters disclosed in the valuation statement. In order to preserve NRC's rights, ICF recommends that the last reference to NRC be deleted from Section 10 of the standby trust agreement. Other Issues The licensee made a few other modifications to the standard wording of the letter of credit and the standby trust agreement, which do not decrease the protection provided by the mechanisms. Apart from editorial and non-substantive changes and typographical mistakes, three modifications are noteworthy: 3 " Response to Question Related to the Trust Fund Mechanism," from Timothy Johnson, NMSS/NRC to Karen Davis, St. Louis University, August 7, 1990. Although this guidance applies to a stand-alone trust fund, we assume NRC would give the same response to the same question regarding a standby trust fund.
4 (1). The letter of credit is dated September 5, 1990, but the date that the letter was signed is September. 11~,"1990. The effective date is stated in the letter as "immediately"; the-letter of credit does not specify if the effective date is September 5, 1990 or September 11, 1990. This should have no effect on the' effectiveness or enforceability of the mechanism. (2) The standby trust agreement includes three additional paragraphs which expand the express powers of the trustee. The following paragraphs were not included-in the Regulatory Guide format, but were included in the Stanford standby. trust agreement: (e) To settle, compromise or submit to arbitration any claims, debts, or damages, due or owing to or from the Fund, to commence or defend suits or legal proceedings and to represent the Fund in all suits or legal proceedings in any court of law or before any other k body or tribunal. (f) To exercise, personally or by general or by limited power of attorney, any right, including the right to vote, appurtenant to any securities held by it at any time. (g) To employ suitable agents and counsel and to pay their reasonable and proper expenses and compensation. These additional provisions do not detract from the strength of the standby trust agreement, but explicitly state certain trustee powers that might otherwise be implied in the agreement. i (3) The submitted standby trust agreement is worded differently than the wording suggested in the draft Regulatory Guide with respect to Section 17. The recommended wording.in the draft Regulatory Guide states that "the Trustee shall be indemnified and saved harmless by the Grantor or from the trust fund, or both, from and against any nersonal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity [ emphasis added)." The Stanford submission states that "the Trustee shall be indemnified and saved harmless by the Grantor or from the trust fund, or both, from and against any liabiliev (either individually or as Trustee) to which the Trustee.may be subjected by reason of any act or conduct in its official capacity (emphasis added)." The difference in wording does not substantially change the effectiveness of the mechanism, but it may reduce the Ttustee's potential liability exposure. This difference does not affect NRC's ability to
v. ~. (- i j t 5 I recover from the. trustee, but addresses the licensee's i responsibility to indemnify the trustee. ~ ~ ~ ~ t Finally, the Region should ensure that documents submitted by the licensee are originally signed duplicates. Unless the documbnts have been { signed appropriately, NRC cannot be certain that the financial assurance mechanism will be enforceable. Because ICF does not possess the original i submissions, we cannot verify compliance with these requirements. l r attachments i r i s i ? i t .1 'l l i o
1- %.s APPENDIX A CHECKLIST FOR DECOM4ISSIONING FINANCIAL ASSURANCE NAME OF LICENSEE OR APPLICANT $ T,4fAfLO d.Ali t.'6t1 r W MAILING ADDRESS %jE. CD aA qu (,g 'h g. A. Licensee Part (check one of the following): ( Part 30 Licensee or Applicant Y Part 70 Licensee or-Applicant Part 40 Licensee or Applicant Part 72 Licensee or Applicant ~ B. Check appropriate item in each category (if applicable) , ys ;Lt 'l!' : 4 1. 7/27 / t Date of Financial Assurance Submission ef %. /J. 1' 9 2. Public Entity W'~ K Private Entity f. "r.v -d 6/d TM 3. I Certification of Financial Assurance ++ - S 7. s.ys/.7 A if Decommissioning Funding Plan 4. (a) Prepayment Option (See Appendix B) Trust Fund Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities 1 (b) I Surety / Insurance /Other Guarantee (See Appendix C) 2 ,7 Surety bond SLM M M) Oc d #f,c4 : X Letter of Credit 3 7G,CCCb2 o w'r 7 Line of Credit Parent Company Guarantee / Financial Test (c) External Sinking Fund, Sinking Account and Surety / Insurance (See. Appendix 0) Trust Fund Escrow Account Certificate of Deposit dovernment Fund Deposit of Government Securities Surety Bond Letter of Credit Line of Credit (d) Statement of Intent (public entities only), { "May not be used in combination with any other instrument. A-1 I
r G hb..}, l.In, /. APPENDIX C CHECKLIST FOR SUBMISSION OF SURETY / INSURAN A. Check Appropriate Form of Surety / Insurance /Guarintee Surety Bond Letter of Credit Line of Credit Parent Company Guarantee / Financial Test" Insurance B. Check Documents Submitted for Surety / Insurance / Guarantee 1. Surety Bond Surety Bond Standby Trust Agreement Acknowledgement 2. Letter of Credit Letter of Credit k *< c+' O f %ps Gd 0 * "e' * " Standby Trust Agreement &m, L Acknowledgement NOT ttJC LUD@ h,A). 'Ig ~.u 'i/iut.b ^^ r e"< Da-u 3. Line of Credit Verification Standby Trust Agreement Acknowledgement 4 Parent Company Guarantee Letter from Chief Executive Officer of Applicant or Licensee Letter.from Chief Financial Officer of Parent Company Financial Test: Alternative [I or II] Auditor's Special Report and Attached Schedule Corporate Guarantee Standby Trust Agreement Acknowledgement 5. Insurance Certificate of Insurance Standby Trust Agreement Acknowledgement May not be used in combination with any other instrument. C-1
dvh'.[ni/ i Mv-EXHIBIT 3-7 CHECKLIST OF CRITERIA FOR REVIEW OF LETTERS OF CREDIT Cocy of corporate by-laws or other evidence indicating that parties signing the financial instrument (for the applicant) are authorizea n to represent the organization in the transaction. Evidence that the financial instrument is an originally signed duplicate (e.g., an executed copy of the instrument). Evidence that the financial institution is regulated by Fed =ral or State agency (e.g., member of FDIC, Federal Reserve System, etc.). v '* The i'strument must be entitled a letter of credit. The letter should be limited in amount. s '* The letter of credit must contain a specified expiration date or be written for a definite term. The issuer's obligation to pay the beneficiary should arise only upon presentation of a draft or other documents specified in the letter of credit. The bank must not be called upon to determine a question of fact or e j law at issue between the licensee and the Commission or State regulatory agency. The licensee should have an unqualified obligation to reimburse the y j issuer for payments made under the letter of credit. ~. 0 t " 3-27 e
Lk n J rW'. P [P[' EXHIBIT 3-5 i CHECKLIST OF CRITERIA FOR REVIEW OF TRUST._ AGREEMENT 5 a i j.3, Copy of corporate by-laws or other evidence indicating that parties ,,, y y,, u.t signing the financial instrument (for the applicant) are autnorized l ' '.. e/ to represent the organization in the transaction. \\ a n.. u i Evidence that the financial instrument is an originally signed duplicate (e.g., an executed copy of the instrument). Evidence that the financial institution has authority to act as a trustee. i y Purpose of trust ("whereas" clauses). 1. Description i 1 Grantor or grantors (introductory paragraph). 1. Names 2. Addresses i Trustee or trustees. 1. Names and addresses i 2. Bank or corporate trustee (introductory paragraph) 3 x-[ Identification of facilities and cost estimates (Section 2).b i aAdapted from 17A Am Jur Legal Forms 2d (Rev) 5251.94. References are to recommended wording for trust agreements provided in Section 4. 3-19
.e i EXHIBIT 3-5 (continued) l Words of transfer, conveyance, and delivery in trust ~(Section'3). se Payments constituting the trust fund (Section 4). l x* t u,* Duration of trust. % f7.'" ./ l -i Description of trust property. - 1. Property described in attached schedule (Schedule B) i 2. Cash 3. Stock and other securities 1 Additions to trust.. b 8ba d
- /
v* i Distribution of trust principal (Section 5). t i d. 'isbursement to licensee upon proper certification 4. Payment for activities at NRC's direction in writing -3. Refund to grantor at NRC's specification in writing after completion of decommissioning activities i Trust management (Sections 6-8). e - 1. Discretionary powers 4. Fiduciary duty 4. Commingling and investment .j A. Sale or exchange of trust property - 5. Scope of investments t E Express powers of trustee (7. Borrowing money and encumbering trust assets L (Optional provisions) 1 i i 3-20 i
? EXHIBIT 3-5 (continued) B. Insurance 9. Operation of business 10. Compromise of claims Taxes and expenses (Section 9). Annual valuation (Section 10). Advice of counsel (Section 11). Authority, compensation, and tenure of trustees (Sections 12-14). '1. Trustee compensation ~ 2. Successor trustee s3. Instructions to trustee Amendment of agreement (Section 15). av OF Irrevocability and termination (Section 16). Immunity and indemnification (Section 17). Law to govern construction and operation of trust (Section 18). e i Interpretation and severability (Section 19). Date (signature block). g;vVL l s>/ Signatures (signature block). i t, *' Acknowledgements, seals or attestations, if necessary or desired (witness by notary public). i p([ytS-
- Acceptanc" of trust by trustee or trustees (acknowledgment).
[ i l 3-21
)- )l'l(LUrl'CL l0LS)lW ~ ff/46,P1NBb928 l SEP 101990 MEMORANDUM FOR: Louis Bykoski, Ph.D Division of Low-Level Waste Management, LLRB i FROM: Beth A. Riedlinger, Sr. Health Physicist (Licensing) Nuclear Materials and Fuel Fabrication Branch
SUBJECT:
PROCESSING AND REVIEW OF THE STANDBY TRUST AGREEMENT SUBMIT 1ED BY STANFORD UNIVERSITY, CONTROL No. 71252 We have reviewed the Standby Trust Agreement from Stanford University against the model agreement in NUREG-1336, Rev. 1, pages 4-21 through 4-30. Michael Blume, our regional counsel, found no problem with the minor wording changes. Therefore, we are submitting the following information to you for contractor assistance in accordance with the memorandum from John Austin i dated August 6,1990: Letter dated July 16, 1990 from Stanford University Draft amendment 13 to License SNM-56 Draft cover letter to forward amendment i Checklist for Decommissioning Financial Assurance (for information only) If the contractor concurs that Stanford's Standby Trust Agreement is adequate, we plan to issue Amendment 13 and the cover letter as enclosed. i h[Xl{qk,fOdlSiff ] Beth A. Riedlinger Sr. Health Physicist (Licensing) Nuclear Materials and Fuel Fabrication Branch
Enclosure:
l As stated l l
N, Distribution bec w/ original concurrence, copy of license, and original correspondence: License docket folder (Peggy) bec w/ copy of license and correspondence: Inspection folder (Peggy) bec w/ copy of license: Reading file (Frances) bcc w/ correspondence and 2 copies of lice.ise: Maurice Messier, LFMB, MNBB 4503 license only: State of California M omery D.Skov B.Riedlinger F.Browne J.Montg/ / / / 91@ /90 / / REQUEST COPY ] REQUEST COPY ] REQUEST COPY ] REQUEST 'Y ] REQUEST COPY ] YES / NO ] YES / NO ] YES / NO ] YES / NO ] YES / NO ] 9 5 I
i () o () c o g y' j STANFORD UNIVERSITY Stanford, Califomia 94305-8006 I 4 i I 2 i HEALTH PHYSICS nviron ental Safety Facility A;# Phone: (415) 7234201 'y ygy l July 16, 1990 i l U.S. Nuclear Regulatory Comission Region V 1450 Maria Lane, Suite 210 h :o o-Walnut Creek, California 94596 $S 5:=0 g <: O<0. Attn: Hs. Deth Riedlinger Nuclear Haterials Safety Section W Regarding: Decomissioning Certification R Dear Hs. Riedlinger- + Enclosed you will find documents from the Treasurer's Office of Stanfora University outlining the arrangements which have been made to provide financial assurance that funding will be available for decommissioning of facilities under license SNM56. These steps were taken as required under 10CFR 70.25. We are presently trying to find a way to dispose of the U-235 oxide, for which the financial assurance is required. Hopefully this process will be 1 completed before we renew the license. Very truly yours, F For the Board of Trustees of the Leland Stanfor Un ersity i k 'b y ohn A. Ho mes Associate Director, Environmental Health and Safety, 3' Radiation Safety Officer i i cc: R.H. Beth, Risk Management David Russ, Treasurer's Office
7 CERTIFICATION OF FINANCIAL ASSURANCE Principal: 'the Board of Trustees of de Irland Stanford Junior University Stanford, California 94305 NRC License Number SNAL56 Facility: Heahh Physics-Enviornmental Safety Facility Oak Road Stanford, California 94305-8006 This is to certify that The Board of Trustees of the I cland Stanford Junior University is licensed to possess U-235 oxide in the following amounts one (1) mi!!icurie, and that financial assurance in the amount prescribed by 10 CFR 70, seven hundred fifty thousand U.S. dollars, S750,000, has been obtained for the purpose of decommissioning. The Board of Trustees of the I21and Stanford Junior University CX W 4 Signature h%L i va w % Title r q ]t1f. / fit > Date k r
STANDBY TRUST AGREEhENT TRUST AGREEMENT, the Agreement entered into as of July 27,1990 by and between De Board of Trustees of the Leland Stanford Junior University a body having corporate powers under the laws of the State of Califomia, herein referred to at de
- Grantor,* and The Chase Manhattan Bank N.A.,1211 Avenue of the Americas - 33rd Ficor, New York, NY 10036, the Trustee
- WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has promulgated regulations in Title 10, Chapter 1 of the Code of Federal Regulations Part 70. These regulations, applicable to the Grantor, require that a holder of,'
or an applicant for a Pan 70 license provide assurance that funds will be available when needed for required decommissioning activities. WHEREAS, the Grantor has elected to use the letter of credit to provide all of such fmancial assurance for the facilities identifed herem; and WHEREAS, when payment is made under a letter of credit, this standby trust shall be used for the receipt of such payment; ard WHEREAS, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the Trustee under this Agreement, and the Tn stee is willing to act as Trustee, NOW, THEREFORE, the Grantor and the Trustee agree as follows: Section 1. Ikfinitions. As used in this Agreement: (a) The term
- Grantor
- means the NRC licensee who enters into this Agreernent and any successors or assigns i
of tie Grantor. (b) De term " Trustee
- means the Trustee who enters inta this Agreement and any successor Trustec.
Section 2. Costs of Decommissioninc. His Agreement penains to tie costs of decommissioning the materials and xtivities identified in License Number SNM56 issued pursuant to 10 CFR Part 70.25 as showan in Schedule A. Section 3. Establishment of Fund. De Grantor and the Trustee hereby establish a standby trust fund (the Fund) for the icnetn oi umiGC. 5 Grantor and the Trustee intend that no third party have access to the Fund except as provided herein. Section 4. Payments Constituting the Fund. Payments made to the Trustee for the Fund shall consist of cash, serurities, or other liquid assets acc(ptable to the Trustee. De Fuid is established initially as consisting of the property, which is xceptable to the lrustee, described in Schedule B attiched hereto. Such propeny and any other property subsequently transferred to the Trustee are referred to as the " Fund,* together with all earnings and profits thereon,less any payments or distributions made by the Trustee pursuant to this Agrrement. De Fund shall be held by the Tnistee. IN TRUST, as hereinafter provided. De Trustee shall not le responsible nor shall it undertake any responsibility for the amount of, or adequacy of the Fund, nor any duty to collect from tne Grantor, any Inyments neury to discharge any liabilities of the Grantor established by the NRC. SecDoni Payment for Required Activitics Stecified in the Plan. The Trustee shall make payments from the Fund to the Grantor upon presentation to the Trustee of the following:
- a. A certificate duly executed by the Secretary of the Grantor attesting to the occurrence of the events, and in the form set forth in the attached Specimen Cenificate, and
- b. A certificate attesting to the following conditions; (I) that decommissioning is proceeding pursuant to an NRC-approved plan.
Page 1 of 6
Sfandbv Trusi AgmcmldContinued1 1 6 (2) that the funds withdrawn will be expended for rdvities undertaken pursuant to that Plan, and i (3) that the NRC has been given 30 days' prior notice of Grantor's intent to withdraw funds from the escrow fund. I No withdrawal frotu the Fund can exceed 100 percent of the outstanding balance of the Fund or 750,000 dollars, w hichever is greater, unless NRC approval is attached. In the event of the Grantor's default or inabii.ty to direct decommissioning activities, the Trustee shall make payments from the Fund as the NRC shall direct,in writing, to provide for the payment of the costs of required activities covered by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the NRC from the Fund for expenditures for required activides in such amounts as the NRC shall direct in wridng. In addidon, the Trustee shall rebr4 to the Grantor such amounts as the NRC specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein. I Section 6. Trust Management. The Trustee shall invest and reinvest the principal and income of the Fund and Lecp the Fund invested as a single fund, without distincuan between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge its duties with respcrt to the Fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterpnse of a like character and with like aims; except Ihg (a) Securities or other obligations of the Grantor, or any other owner or operator of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended (15 U.S.C. 80a-2(a)), shall not be acquired or held, unless they are securities or other obligations of the Federal or a State government; (b) The Trustee is authonzed to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal government; and (c) For a reasonable time.not to exceed 60 days, the Trustee is authorized to hold uninvested cash, awaiting investment or distribudon, without liability for the payment of interest thereon. Section 7. Comminclinc and Investment. The Trustee is expressly authorized in its discredon: (a) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participadng therein; and (b) To perchase shares in any investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), including one that may be created, managed, underwritten, or to which investment advice is rendered,or the shares of which are sold by the Trustee. Section 8. Express Powers of Trustee. Without in any way limidng the powers and discredon conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered-(a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale, as necessary for prudent management of the Fund; (b) To make, execute, acknowledge, and deliver any and all docurnents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; Page 2 of 6
r4 Standby Trust Acreement (Contino-d1 (c) To register any securities held in the Fund in its own name, or in the name of a nominee, and to hold any security in bearer fcrm or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacitb.1 reinvest interest payrnents and funds from matured and redcerned instruments, to fde piger forms concerning securities held in the Furd in a timely fashion with appropriate Eovernment agencies, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee or such depository with other securities deposited therein by another per7on, or to deposit or arrange for the deposit of any securities issued by the U.S. Government, or any agency orinstrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund; (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the Fedem! government; and (c) To settle, compromise or submit to arbitration any claims, debts, or damages, due or owing to or frorn the Fund, to commence or defend suits or legal proceedings and to represent the Fund in all suits or legal proceedings in any court of law or before any other body or tribunal. (f) To exercise, personally or by general or by limited power of attorney, any right, including the right to vote, appurtenant to any securities held by it at any time. (g) To employ suitable agents and counsel and to pay their reasonable and proper expenses and compensation. Section 9. Taies and Extenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid frorn tk Fund. Section 10. Anrmal Valuation. After payment has been made into this standby trust fund, the Trustee shall anrmally, at least 30 days before the anniversary date of receipt of payment into the standby trust fund, furnish to the Grantor and to the NRC a staternent confirrning the value of the Trust. Any securities in the Fund shall be valued at market value as of no more than 60 days before the anniversary date of the establishment of the Fund. The failun: of the Grantor to object in writing to the Trustee within 90 days after the statement has been furnished to the Grantor and the NRC shall constitute a conclusively binding assent by the Grantor, barring the Grantor and the NRC from asserting any claim or liability against the Trustee with respect to the mauers disclosed in the statement. Section 11. Advice of Counsel. The Trustee may from time to time consult with counsel with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee shall be fally protected, to the extent permitted by law.in acting on the advice of counsel. Section 12. Trustee Comnensation. The Trustee shall be entitled to reasonable compensation for its senices as agreed upon in writing with the Grantor (See Schedule C). Section 13. Successor Truste. Upon 90 days notice to the NRC, the Trustee may resign; upon 90 days notice to NRC and the Trustee, the Gramar may replace the Trustee; but such resignation or replacement shall not be effective until the Grantor has appointed a successor Tnstee and this successor accepts the appointment. The successor Trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor Trustee's acceptance of the appointment the Trustee shall assign, transfer, and pay over to the successor Trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee,or a successor Trustee cannot be found, the Trustee may apply to a court of competent jurisdiction for the appointment of a stecessorTrustee or for Page 3 of 6
k Standby Trust Arreement (Con'inuedt 6 instructions. De successor Trustee shall specify the date on which it assumes admirustration of the Trust in a wTiting sent to the Grantor, the NRC and the present Trustee by certified mail 10 days before such change becomes effecdve. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this secta shall be paid as provided in Secdon 9. Section 14. Instructions to the Trustee. A!! orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are signatories to this agreement or such other designees as the Grantor may designate in writing. De Trustee shall be fully protected in acting without inquiry in accadance with the grantor's crders, requests, and instructions. If the NRC issues orders, requests, or instructions to the Trustee these shall be in writing, signed by the NRC, or their designees, and the Trustee shall act and shall be fully protected in actmg in c.ordance with such orders, requests, and instrucdons. The Trustee shall have the right to assume,in the absence of wTinen notice to the contrary, that no evew consdtuting a change or a termination of the authority of any person to act on behalf of the Grantor, or the NRC, hereunder has occurred. De Trustee shall have no duty to act in the absence of such or&rs, requests, and instrucdon from the Grantor and/or the NRC, except as provided for herein. Secnon 15. Amendment of Acreement. His Agreement may be amended by an instrument in wTiting executed by the Grantor, the Trustee and the NRC, or by the Trustee and the NRC, if the Granta ceases to exist. Section 16. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 15 this trust shall be irrevocable and shall centinue until terminated at the wTitten agreement of the Grantor, the Trustee, and the NRC, or by the Trustee and the NRC,if the Grantor ceases to exist. Upon termination of the trust, all rernaining trust property,less final trust administation expenses, shall be delivered to the Grantor or its successor. heten 17. Im_r;nity and Indemnification. De Trustee shall not incur any liability (either individually or as Trustee) in connection with any act or omission, made in good faith,in the admirustrauon of this trust, or in carrying out any directions by the Grantor or the NRC, issued in accordance with this Agreement. De Trustee shad be indemnified and saved harmless by the Grantor or from the trust fund, or both, from and against any liability (either individually or as Trustee) to which the Trustec may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to preside such defense. Section 18. His Agreement shall be administered, construed, and enfcreed according to the laws of the State of New York. Section 19. Internretation and Severability. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. De descripdve headmgs for each secdon of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. If any part of this agreement is invalid, it shall not affect the remaining provisions which will remain valid and enforceable. Section 20. Nothwithstanding the provisions of Section 4 the parties hereby recognize that initiaUy the assets comprising the trust will be the assets in Schedule B attached and, upon completion of the Lener of Credit arranEements with the Chase Manhanan Bari, N.A., the assets currently comprising the account will be returned to the Grantor and substituted with the Lener of Credit. Page 4 of 6
m .. :6. D 98 22:as r, a F Stayhv Trun Apeemnt (Ow!nued). IN WITNESS WlIEREOP $c partka have caused this Agroernera to be executed by abe res;wtive omeen the incorporate seals to be hereunto affixed and attested as of te date fint writico above. ATTEST: Dc Board of Trustees of 6e
- f. eland StanfordJunior Univershy fdk'k I
bop G e sia= msonun gue, TANT s EcagTARY usm? M % % smSr. w
- o. m o,. s.
uDd,. vauda) ~ It/C fM/ $. Y M N*b w e, p,. a w < f"OAq APPROYED A5 O FORM h WI Depriment~ P 6 .i Pep 5 of 6
APPENDIX I TRUST AGREEMENT SCHEDULE SCHEDULE A This Agreernent demonstrates financial assurance for the following cost estimates for the following licensed activities: U.S. NUCLEAR .NAMEAND REGULATORY ADDRESS ADDRESS OF COST ESTIMATES FOR REGULATORY COMMISSION OF LICENSED ASSURANCES DEMONSTRATED BY LICENSE NUMBER LICENSEE ACTIVITY THIS AGRFFMENT i SNM56 The Board of Trustees of the Health Physics S750,000 under Ieland Stanford Junicr University Environmental Safety Facility 10 CFR 70.25 Officeof theTreasurer Oak Road 209 Hamilton Avenue Stanford,CA 94305-8006 Palo Alto,CA 94301 The cost estimates listed here were last adjusted and approved by the NRC on July 27,1990. SCHEDULE B The AMOUNT of S750,000 has been placed in the Trust account AS EVIDENCED BY 750,000 Par Value U.S. Treasury Notes 8.50% Due 7/15/97 (Market Value 5752,343.75) until substituted with a Standby Ixtter of Credit issued by The Chase Manhattan Bank N.A. pursuant to Section 20 of this agreement. SCHEDULE C The Chase Manhattan Bank, N.A.,Trustec's fees shall be S 5,000 for life of Trust. Psge 6 of 6
g. e APPENDIX A CHECKLISTIOR DECOMMISSIONING FINANCIAL ASSLTANCE The Board of Trustees of The Leland Stanford Junior University Office of the Treasurer 209 Hamilton Avenue Palo Alto,CA 94301 A Licensee Pan (Check one of the followingh _.,_. Pan 30 Licensee or Applicant _X_ Pan 70 Licensee or Applicant __,.Part 40 Licensee or Applicant __._ Part 72 Licensee or Applicant B. Check appropriate item in each category (if applicable)
- 1. 7/27B0 Date of Financial Assurance Submission 2.
Public Entity _2L i-rivate Entity 3. X Certificadon of Financial Assurance Decommissioning Funding Plan
- 4. (a)
Prepayment Option (See Appendix B) X Trust Fund Escrow Account Cenificate of Deposit GovernmentFund Deposit of Govemment Securides (b) Surety /InsuranceSther Guarantee (See Appendix C) Surety bond __X _ LetterofCredit Line of Credit Parent Company Guarantee /Finarcial Test' ~~~ (c) External Sinking Fund, Sinking Account and Surety / Insurarce (See Appendix D) Trust Fund Escrow Account Cenificate of Deposit Deposit of Government Securities Surety Band letter of Credit Lire of Credit (d) Statement of Intent (public endties onb:)
- May not be used in combination with any other instrument.
L
a N nC r., 374 1 3 g q w& s n ' U.S. NUCLE AR CECULATOQV COMMISSION l j PAGE OF PACES g Amendment No. 13 l MATERIALS LICENSE i h Pursuant to the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974 (Public Law 93-438), and Title 10, Code of Federal Regulations, Chapter I, Parts 30,31,32,33,34,35,40 and 70, and in reliance on statements and representations i i heretofore made by the licensee. a license is hereby issued authorizing the licensee to receive, acquire, possess, and transfer byproduct. ,g q f source, and special nuc! car material designated below; to use such material for the purpose (s) ar'd at the place (s) designated below;to !l I deliver or transfer such material to persons authorized to receive it in accordance with the regulations of the applicable Part(s). This I ) I 1 I license shall be deemed to contain the conditions specified in Section 183 of the Atomic Energy Act of 1954, as amended, and is I 3 l subject to all applicable rules, regulations and orders of the Nuclear Regulatory Commission now or hereafter in effect and to any conditions specified below. ] f u c m ee In accordance with letter dated 1 July 16, 1990
- I 1.
Stanford University
- 3. License number SNM-56 is amended in
- I
} Environmental Safety Facility itsentiretytoreadasfollows( i I I p a, ExpNikate s i 2. Oak Road l h '(0E ,0ctober 31, 1994 I Stanford, California 9430 8 4. y 20-00064
- 5. Docket or I :
( O g y A Reference No I
- 6. Byproduct, source,and/or
- 7. Chemical and/or physical V. Maximum amount that licensee I
I special nuclear material form ay possess at any one time 1 l gQ ger thislicense j i A. Uranium 235 Qi Ag kk'de A 170 microcuries I l l. B. e#' \\ sal d n @btron so MO B. Plutoniut 239 si B.Q10.3 curies l Y k sources )/g}bd A C.{62.1 millicuries C. Plutonium 239 ), i D. Plutonium 238 Sse1 nk 'rM sour' des %p y ' D A 51.4 millicuries 4 I cM: .k-c. a4 I ; '> h PlatYds)urceM OF 34.3 millicuries I I w I 1 I @M I E. Plutonium 238 I .. gg I i ,~,% % f,ted sources Op 24 microcuries l l s u g rw , k. i F. foils $r ph l F. Uranium 235 y A. I ; l s/. .j..sN I l I 9. Authorized use gf U ?/ h, I A. For storage only. l,. B. through F. Research and development as d7 fined in Section 30.4(q),10 CFR Part 30. vl s < Ig i
- El l
( CONDITIONS 3 'I: 10. Licensed material shall be used only at Stanford University, Stanford, f I California. igl li 1 1 11. A. Licensed material shall be used by, or under the supervision of, .I! >l: I individuals designated by the Administrative Panel on Radiological Safety. I: W l B. The Radiation Safety Officer for activities conducted under this license hf is John A. Holmes. I ,5) I jll l i, i I II l .&( y 4 6 wwwwraremyssrrmac.mswrmunwsnmTpxxx -- w 'er.svensEsswwww = J
p-----------------mm-m----------- - --------m g N3C Form 374A U.S. NUCLEAR nECULATORY COMMISSION 2 3 I PAGE or ,, cts E License number I I SNM-56 .I. i ( M ATERIALS LICENSE l' pocket er Reference number ~! j l 070-00064 SUPPLEMENTARY SHEET I @MT Amendment No. 13 ( 'N W 'll i E CONDITIONS E (' it ( 'I g (continued) lg i 'I q 12. A. (1) The source (s) specified in Item (s) 7.B. and 7.D. shall be tested for E ( leakage and/or contamination at intervals not to exceed 6 months. Any E i source received from another person which is not accompanied by a E l certificate indicating that a test was performed within 6 months [ g before the transfer shall not g put into use until tested. f- ,g g 1 g (2) The source (s) specified in Item (s) 7. A.j7.C., 7.E., and 7.F. shall be ju I tested for leakage and/or contamination at jntervals not to exceed 3 il 8 months. Any source received from another person which is not accompanied l{: I j by a.certific~ ate indicating that a test was per/ormed within 3 months before the transfer shall not be put into use uhtj/l tested. g I 4 l g q (3) Notwithstanding the periodic leak test require'd by lbis condition, any I licensed sealed source is exempt from such leak test I i containi 100 microcuries or less of )'etaTand/or gamm,s when the source afemitting E i l material or 10 microcuries or'less of~ alpha emitting material. [ x 1 ~
- p. -
f l B. Any source in storag'e and not.being used~ne'ed not be. tested. When the ( source is removed from storage for tserer transfer to another person, it E i-R shall be tested before use or -transfer. < H N n ' 12 P!ll!!;- 4 1 WI C. The test shall be capable of detecting the presence of AEJ005 microcurie of ( l radioactive material on the test saniple?1f 4he test. reveals the presence y ~ g of 0.005 microcurie or more ~of removable contamination,'2 the source shall be 1 i removed from service and decontaminated, repaired,,or~ disposed of in E pi accordance with Commission regulations. A report shall be filed within 5 ,#4 days of the date the leak test result is known with the U. S. Nuclear f Regulatory Commission, Region V; Nuclear Materials Safety and Safeguards f~ ' q Branch; 1450 Maria Lane, Suite 210; Walnut Creek, California 94596. The p q report shall specify the source involved, the test results, and corrective p action taken. Records of leak test results shall be kept in units of f 4l microcuries and shall be maintained for inspection by the Commission. P 4 Records may be disposed of following Commission inspection. l [fi D. Tests for leakage and/or contamination shall be performed by the licensee f ql or by other persons specifically licensed by the Commission or an Agreement y 4l State to perform such services. E t-W 13. Sealed sources containing licensed material shall not be opened. [, 4 9 q 14. The licensee shall not use licensed material in or on human beings or in field p applications where activity is released except as provided otherwise by F i specific condition of this license. 4 4 4, E (1 F (l E (! M. dj F baraTarBCrassTsimsmTaTmmmra2rzwraTaramrmrazmssTaararam'ih
._m____--... .mmmm-..x.y NRC rpm paa U.S. NUCLEAR AEGULATO3Y COMMISSION 3 or 3 eacts N PAGE " **8 ucense nurnber E l' SNM MATERIALS LICENSE k-SUPPLEMENTARY SHEET B 070-00064 Amendment No. 13 CONDITIONS (continued) 4, 15. The licensee may transport licensed material in accordance with the provisions of 10 CFR Part 71, " Packaging and Transportation of Radioactive Material".
- 16. The licensee shall maintain records of information related to decommissioning at Stanford University, Environmental Safety _ Facility, Oak Road, Stanford University.
asspecifiedin10CFR70.25(g)untilthis3icenseisterminatedbytheCommission. y. L 17. Except as specifically provided otherwise in this license, the liu asee shall conduct its program in accordance with the statements, representations, and ~ procedures contained io the documents including any enclosures, listed below. The Nuclear Regulatory Commission's regulations shall govern unless the statements, representations and procedures in the licensee's application and correspondence are more restrictive than the regulations. ~ A. Letter dated: August 21,~1984 ~ B. Application. received July 25, 1989 C. Letter dated November 8, 1989 m D. Letter dated July 16, 1990 - i-k ? .i. p. g e s.- [ 1, g-i f h-FOR THE U.S. NUCLEAR REGULATORY COMMISSION d. An l By e d:1 Date Beth A. Riedlinger Fl Senior Health Physicist (Licensing) Nuclear U terials and Fuel Fabrication Branch ,N 1 Region V Li 1 g ~i k-d> M' zw-- .an-_mana.zama-aa.-xw=5 i
=. -.,_ f { ..Watich.. .j ~
- o UNITED STATES i
~,% NUCLEAR REGULATORY COMMISSION d i - .I neooN v i S f 1400 MARIA LANE SUITE 210 t ' %,.... +,# WALNUT CREEK, CAUFORNIA 90506 5300 i l Docket No. : 070-00064 license No.: SNM-56 i Control No.: 71252 l Stanford University l Environmental Safety Facility Oak Road i Stanford, California 94305-8006 i Attention: John A. Holmes t.ssociate Director l Environmental Health & Safety j i Gentlemen Enclossd is the NRC license amendment which you requested. i o, Please review the enclosed document carefully and be sure that you understand-q all conditions. If there are any errors or questions, please notify us so that we can provide appropriate corrections and answers. Please note that License SNM-56 authorizes possession and use of only 170 _i microcuries of U-235 oxide. Any future-correspondence relating to your license should specifically l reference your license and docket numbers to expedite your inquiry. Sincerely, AU Beth A. Riedlinger Senior Health Physicist (Licensing) e Nuclear Materials and i Fuel Fabrication Branch-
Enclosure:
Attachment A Amendment No. 13 to License No.-SNM ' k t I .a-- r
.V "x ~ 5 APPENDIX A h Checklist for Decommissioning Financial Assurance 1. Applicant Information: Name: S h A f // i t Licensing / O Action:
- rnte d er n f 2.
Applicable Reculations: Part 30 Part 40 Part 70 t/ Note: If more than one Part is appitcable to the license, evaluate the requirements in each Part separately. If financial assurance is required, the applicant must comply with the ~ combined requirements of all applicable Parts. 3. Form of material authorized: Sealed byproduct material with half-life >120 days Unsealed byproduct material with half-life >120 days Readily dispersible source material Unsealed special nuclear material None of the above (no financial assurance required) Z Note: If more than one form is authorized, evaluate the possession Itait thresholds for each. If more than one form exceeds a threshold, the amount of financial assurance required for each form should be summed to determine the total financial assuranca required. I 4. Overall possession limit in Itcense? ' Yes ' / No If no and the ifcensee will not agree to a limiting condition, a Decommissioning Funding Plan (DFP) is required. If yes, analyze possession limits in ites 5. 5. Complete worksheet on back. 6. Financial Assurance Required None Certification in the amount of $ 76r.((O (sum of funds required) or DFP / DFP mandatory 7. Time' of submittal No Financial Assurance Required Prior to Approving Application _~ Prior to July 27, 1990 8. itense Reviewer I /A~d N // F[f/fC A Signaturg/Date A-1 s
- C y i ?..
O' 5. Possesten Linf t Worksheet (See Appendix D)
- (1)
(2) (3) (4) Unsealed Sealed Unsealed Ofspersible Tsotope Byprod. Nat. Byprod. Mat. $NM __ Source Mat. 3 10 3 (Act/10 xApp.C) (Act/10 xApp.C). (Act/10 xApp.C) (Act/10 MCI) (1-236 M0nb'l/01/6 17 Total = J7 l Funds Reqd: $150 cco if <1. 0, i f < 1. 0, i f <1. 0, i f <1. 0, enter $0 enter 30 enter $0 enter $0 i f >1. 0, i f >1. 0, i f >1. 0, if >1.0, but <10.0, enter $75,000 bu t~< 10. 0, but <10.0, ~ enter $150,000 enter $150,000 enter $150,000 i f >10. 0, if >10.0 i f >10. 0, but <100.0, but~<100. 0 enIer "DFP only" enter $750,000 enter $750,000 i f >100. 0, if >100.0, enter "DFP only" enter "DFP only" A-2
4f...ffff I f yG y i. en x io}., ,, g,,,,4 1. u 235 58 7 I 2 /7oxc Pu-2MFs41) syx o.osaggy ,,,,,7g. j ? /o. 3 G-r Fu -2B 9 (plabf) Igdx 0 oc.v/ci,ip.= o.og 20yG-i E G 2.1 M6 3 Pu -23Er b~hN ,fh /7 //7C/g= 5/.;36 2N ^ 3 Pu -2ss Qt#*4 1,.'i17 c g = 5 1 2 3 y i ef -5 a-235 12% 1. 912xto 'C/y = %3x/0 G e' 2//,//4-i t P w h 6 i i w -
L..e t-dOCCO STANFORD UNIVERSITY Stanford, California 94305-8 h/bl/A)6b ~ HEALTH PHYSICS Environmental Safety Facihty / i Oak Road Est?Heabh & Safety Phone: (415) 723-3201 fg g g ygyy July 16, 1990 j U.S. Nuclear Regulatory Comission Region V b 1450 Maria Lane, Suite 210 r= m-m Walnut Creek, California 94596 to 25f<D ~ i Attn: Ms. Beth Ried11nger g <:t i Huclear Materials Safety Section t;, W Regarding: Decomissioning Certification R {
Dear Ms. Riedlinger:
i i Enclosed you will find documents from the Treasurer's Office of Stanfora ~ University outlining the arrangements which have been made to provide financial assurance that funding will be available for decommissioning of facilities under license SNM56. These steps were taken as required under 10CFR 70.25. We are presently trying to find a way to dispose of the U-235 oxide for which the financial assurance is required. Hopefully this process will be completed before we renew the license. Very truly yours, ..u/N,2; >G for the Board of Trustees of the r.' Leland Stanfor Uni ersity i )g [ ; ~ ~~ ~ ,}ge...-f ohn A. Ho mes j- -4 Associate Director. ~ ~ ~ ~ m<w/~~~~~j m .~5c e ((,L, _.;1b.fp11 Environmental Health and Safety, Lh ...I-~~N i '~ NI L_. ~',$;J Radiation Safety Officer ,.3.,. ue. cc: R.H. Beth, Risk Management ~ ~ ~ g David Russ, Treasurer's Office O':2d OE Tr 06. l / 03M333W
CERTIFICATION OF FINANCIAL ASSURANCE Prircipal: - De Board of Trustees of the 1 eland Stanford Junior University Stanford, California 94305 NRC License Number SNM56 Facility: Health Physics-Enviornmental Safety Facility Oak Road Stanford, California 94305-8006 This is to certify that The Board of Trustees of the Irland Stanford Junior University is licensed to possess U.235 oxide in the following amounts one (1) millicurie, and that financial assurance in the amount prescribed by 10 CFR 70, seven 7 # hundred fifty thousand U.S. dollars, S750,000, has been obtained for the purpose of decommissioning. I The Board of Trustees of the Leland Stanford Junior University ,E WC Signature yt l' nitu % Tstle I ]Ilf.1 IH> 1 l l
STANDBY TRUST AGREEMENT TRUST AGREEMENT, the Agreement entered into as of July 27,1990 by and terween The Board of Trustees of the Leland Stanford Junior University, a body having corporate powers under the laws of the State of California, herein referred to as the
- Grantor," and The Chase Manhattan Bank, N.A.,1211 Avenue of the Americas - 33rd Floor, New York, NY 10036, the
" Trustee " WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has promulgated regulations in Title 10, Chapter 1 of the Code of Federal Regulations Part 70. These regulations, applicable to the Grantor, require that a holder of, or an applicant for a Part 70 license provide assurance that funds will be available when needed for required decornmissioning activities. WHEREAS, the Grantor has elected to use thQ6r e]d t to provide all of such financial assurance for the facilities identified herein; and WHEREAS, when payment is made under a letter of credit, this standby trust shall be used for the receipt of such payment; ard WHEREAS, the Grantor, acting through its duly authorized officers, has selceted the Trustee to be the Trustee under this Agreement, and the Trustee is willing to act as Trustee, NOW, THEREFORE, the Grantor and the Trustee agree as follows: Sectio 1LL Definitions. As used in this Agreement: (a) The term "Grantar* means the NRC licensee who enters into this Agreement and any successors or assigns of the Grantor. (b) 'Ihe term "Trustec* means the Trustee who enters into this Agreement and any successor Trustee. Sedi:ml Costs of Decommissioninc. This Agreement pertains to the costs of decommissioning the materials and activities idatified in License Number SNM56 issued pursuant to 10 CFR Part 70.25 as shown in Schedule A. Section 3. Establishment oiFmd. The Grantor and the Trustee hereby establish a standby trust fund (the Fund) for the benefit of the NRC. The Grantor and tiic Trustee intend that no third party have access to the Fund except as provided herein. Section 4. Payments Constitutine the Fund. Payments made to tne T..:sw for the Fund shall consist of cash, securities, or odier liquid assets acceptable to the Trustee. The Fund is established initially as consisting of the propeny, which is acceptable to the Trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the Trustee are refemd to as the " Fund,* together with all carnings and profits thereon,less any payments or dntributions made by the Trustec pursuant to this Agreement. The Fund shall be held by the Trustee,IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount of, or adequacy of the Fund, nor any duty to collect from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by the NRC. Sectienj. Payment for Recuired Activities Soccified in the Plan. The Trustee shall make payments from the Fund to the Grantor upon presentation to the Trustee of the following:
- a. A certificate duly executed by the Secretary of the Grantor attesting to the occurrence of the events,and in the form set forth in the attached Specimen Certificate, and
- b. A certificate attesting to the following conditions; (1) that decommissioning is proceeding pursuant to an NRC-approved plan.
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r Standbv Trust Acr8cmgnt (Continugd). [ (2) that the funds withdrawn will be expended for activities utmataken pursuant to that Plan, and (3) that the NRC has been given 30 days' prior notice of Grantor's intent to withdraw funds from the escrow fund. l No withdrawal from the Fund can exceed 100 percent of the outstanding balance of the Fund or 750,000 do!!ars, whichever is greater, unless NRC approval is attached. In the event of the Grantor's default or inability to direct decommissioning activities, the Trustee shall make payments from the Fund as the NRC shall direct,in writing, to provide for the payment of the costs of required activities covered by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the NRC from the Fund for expenditures for required activities in such amounts as the NRC shall direct in writing. In addidon, the Trustee shall refund to the Grantor i such amounts as the NRC specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein. Section 6. Irust Management. The Trustee shall invest and reinvest the prirripal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income,in accordance with general investment policies and guidelines w hich the Grantor may communicate in writing to the Trustee from time to dme, subject, however,10 the provisions of this section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge its duties with respect to the Fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such nutters, would use in the conduct of an enterprise of a like character and with like aims; etcept Ihal: (a) Securities or other obligations of the Grantor, or any other owner or operator of the facilities, or any of their affiliates as defined in the investment Company Act of 1940, as amended (15 U.S.C. 80a-2(a)), shall not be acquired or held, unless they are securities or other obligations of the Federal or a State government: 4 (b) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal government; and (c) For a reasonable time, not to exceed 60 days, the Trustee is authorized to hold uninvested cash, awaiting investment or distribution, without liability for the payment of interest thereon. Section 7. Commincline and Investment. The Trustee is expressly authorized in its discretion: (a) To transfer from time to time any or all of the assets of the Fund to any common, commingled,or collective trust fund created by the Trusice in which the Fund is eligible to participate, subject to all of the provisions thermf, to be commingled with the assets of other trusts participating therein; and (b) To purchase shares in any investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), including one that may be created, managed. underwritten, or to which investment advice is rendered, or the shares of which are sold by the Trustec. Section 8. Emress Po3srs of Trust &. Without in any way limiting the powers and discretion conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale, as necessary for prudent management of the Fund; (b) To make, execute, acknowledge, and deliver any and all documents of transfer arx! conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; Page 2 of 6
Standbv TrustAgtrement (Continued). (c) To register any securities held in the Fund in its own name, or in the name of a nominee, and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, to reinvest interest payments and funds from matured and redeemed instruments, to file proper forms conceming securities held in the Fund in a timely fashion with appropriate government agencies, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee or such depository with other securities deposited therein by another person, or to deposit or arrange for the deposQ of any securities issued by the U.S. Govemment, or any agency or instrumentality thereof, with a Federal Reserve bank, but de books and records of the Trustee shall at all times show that all such securities are part of the Fund; (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the Federal government; and (e) To settle, compromise or submit to arbitration any claims, debts, or damages, due or owing to or from the Fund, to commence or defend suits or legal proceedings and to represent the Fund in all suits or legal proceedings in any court of law or before any other body or tribunal (f) To exercise, personally or by general or by limited power of attorney, any right, including the right to vote, appurtenant to any securities held by it at any time. (g) To employ suitable agents and counsel and to pay their reasonable and proper expenses and compensation. Section 9. Iaxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incuned by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund. StGiRDlQ. Annual Valuation. After payment has been made into this standby trust fund, the Trustee shall annually, at least 30 days before the anniversary date of receipt of payment into the standby trust fund, fumish to the Grantor and to the NRC a statement confirming the value of the Trust. Any securities in d>e Fund shall be valued at market value as of no more than 60 days before the anniversary date of the establishment of the Fund. De failure of the Grantor to object in writing to the Trustec within 90 days after the statement has been furnished to the Grantor and the NRC shall constitute a conclusively binding assent by the Grantor,barring the Grantor and the NRC from asserting any claim or liability against the Trustee with respect to the matters disclosed in the statement. Senmnll. Advice of Counsel. He Trustee may from time to time consuk with counsel with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. De Trustee shall be fully protected,to the extent permitted by law,in acting on the advice of counsel. Section 12. Trustee Compensation. De Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing with the Grantor (See Schedule C). Section 13. Successor Trustee. Upon 90 days notice to the NRC, the Trustec may resign; upon 90 days notice to NRC and the Trustee, the Grantar may replace the Trustee; but such resignation or replacement shall not be effective until the Grantor has appointed a successor Trustee and this successor accepts the appointment. De successor Trustee shall have the same powers and duties as those conferred upon the Trustec hereunder. Upon the successor Trustec's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor Trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the TrusWEuccessor.Tnistec cannog W-lthe Trustec may apply to a court of competent jurisdiction for the appointment of a successor Trustee o - leToun,d Page 3 of 6
Standby Trust Acreement (Centinued). instructions. The successor Trustee shall specify the date on which it assumes administration of the Trust in a writing sent to the Grantor, the NRC and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this section shall be paid as provided in Section 9. Smiq!L11. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in wnting, signed by such persons as are signatories to this agreement or such o6er designees as the Grantor may designate in writing. The Trustee shall be fully protected in acting without inquiry in accordance with the grantor's orders, requests, arx! instructions. If the NRC issues orders, requests, or instructions to the Trustee these shall be in writing, signed by the NRC, or their designees, and the Trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume,in the absence of written nodce to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor, or the NRC, hereunder has occurred. The Trustee shall have no duty to act in the absence of such or&rs, requests, and instruction from the Grantor and/or the NRC, except as provided for herein. Smien.11 Amendment of Acreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustec and the NRC, or by the Trustee and the NRC,if the Grantor ceases to exist. Section 16. Irrcvocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 15, this trust shall be irrevocable and shall continoe until terminated at the wrinen agreement of the Grantor, the Trustec, and de NRC, or by the Trustee and the NRC,if the Grantor ceases to exist. Upon termination of the trust, all remaining trust property,less final trust administration expenses, shall be delivered to the Grantor or its successor. ' Section 17. Immunity and Indemnification. 71e Trustee shall not incur any liability (either individually or as Trustee) in / connection with any act or omission, made in good faith, in the administration of this trust, or in carrying out any directions t by the Grantor or the NRC, issued in xcordance with this Agreement. 'lhe Trustee shall be indemnified and saved harmless by the Grantor or from the trust fund, or both, from and against any liability (either individually or as Trustee) to which the Trustec may be subjected by reamn of any act or conduct in its official caprity, including all expenses reasonably incurred in, its defense in the event the Grantor fails to provide such defense. Section.18. This Agreement shall be administered, construed, and enforced according to the laws of the State of New York. Section 19. Lnteroretation and Severability. As used in this Agreement, words in the singular include the plural and words in the pluralinclude the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement if any part of this agreement is invalid,it shall not affect the remaining provisions which will runain valid and enforceable. 'SrCLien2B Noth withstanding the provisions of Section 4, the parties hereby recognize that initially the assets comprising the trust will be the assets in Schedule B attached and, upon completion of the Letner of Credit arrangements with the Chase Manhanan Bank, N. A., the assets currently comprising the account will be returned to the Grantor and substituted with the Lener of Credit. s d r Page 4 of 6
.m. 7.2803998 12:15 P. 2 5taMbv.. Trust Acreem.ndCaru!nn@. ~= Oc Incorporate seals to te hereunto amxod and attested x ue y t e respective omcen duly arJ*iad and ve. ATiliST: The Board of Trusioes ofibe Leland StanfordJuniorUniversky Qfj'y 1 . braPW v DAVID H. ROSS Signatr.re gepANT SECRETARY THE BCARDOp TNSTEES WE pD STANFC@ JUNOR UNNERSITY Swmy i ATEST: he w Man tua D N. x di ~ Si stare j 'V V i tWN $. SAN 1) Vice Pres m at 'I sW"#%o APMovE0 \\ t.esat ospartmen~ s .i l i Page5of6 P G h
4 r i ~ APPENDIX 1 ? l J TRUST AGREEMENT SCHEDULE f SCHEDULE A t This Agreement demonstrates financial assurance for the following cost estimates for the following licensed activities: i i U.S. NUCLEAR NAhEAND i REGULATORY ADDRESS ADDRESS OF COST ESTIMATES FOR REGULATORY COMMISSION OF LICENSED ASSURANCES DEMONSTRATED BY l L] CENSE NUMBER LICENSEE ACTIVITY THIS AGREEMENT l f SNM56 Re Boani of Trustees of the Health Physics S750,000 under i leland StarJord Junior University Environmental Safety Facility 10 CFR 70.25 l Officeof theTreasurer Oak Road l 2091 il enue Stanford, CA 94305-8006 I ne cost estimates listed here were last adjusted and approved by the NRC on July 27,1990.
- i SCHEDULE B The AMOUNT of $750,000 has been placed in the Trust account AS EVIDENCED BY 750,000 Par Value U.S. Treasury Notes 8.50% Due 7/15/97 (Market Value S752,343.75) until substituted with a Standby letter of Credit issued by The Chase Manhattan Bank N.A. pursuant to Section 20 of this agreement.
l i SCHEDUI.E C The Chase Manhattan Bank, N.A., Trustee's fees shall be $ 5,000 for tife of Trust Page 6 of 6 u
e s. t APPENDIX A CHECKLIST FOR DECOMMISSIONING FINANCIAL ASSURANCE 'Ihe Board of Trustees of The Leland Stanford Junior University Office of theTreasurer t 209 Hamilton Avenue l Palo Alto,CA 94301 A. Licensee Part (Check one of the followinch ___ _ Part 30 Licensee or Applicant l_ Part 70 Licensee or Applicant ._ Part 40 Licensee or Applicant __,Part 72 Licensee or Applicant B. Check appropriate item in each category (if applicable)
- 1. 7/2790 Date of Financial Assurance Submission 2.
Public Entity _X_ Private Entity 3. X Certification of Financial Assurance Decommissioning Funding Plan l 4. (a) Prepayment Option (See Appendix B) X Trust Fund Escrow Account Certificate of Deposit I Government Fund Deposit of Govemment Securities (b) Surety / Insurance /Other Guarantee (See Appendix C) Surety bond X Letter of Credit j Line of Credit Parent Company Guarantec/ Financial Test * (c) External Sinking Fund, Sinking Account and Surety / Insurance (See Appendix D) Trust Fund i Escrow Account Certificate of Deposit Deposit of Government Securities Surety Bond Letter of Credit Line of Credit I (d) Statement of Intent (public entities onlX) i
- May not be used in combiraation with any other instrument.
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