ML20118C221
| ML20118C221 | |
| Person / Time | |
|---|---|
| Site: | 07000113 |
| Issue date: | 12/19/2019 |
| From: | Ty Naquin NRC/NMSS/DFM/FFLB |
| To: | Doncsecz J Pennsylvania State Univ |
| TDNaquin NMSS/DFM/FFL 415.7352 | |
| Shared Package | |
| ML20118C219 | List: |
| References | |
| CAC 000222, EPID L-2019-DFA-0016 | |
| Download: ML20118C221 (5) | |
Text
TECHNICAL EVALUATION REPORT DOCKET: 070-0113 LICENSE: SNM-95 LICENSEE: PENNSYLVANIA STATE UNIVERSITY
SUBJECT:
ANNUAL SELF-GUARANTEE, SPECIAL NUCLEAR MATERIALS LICENSE SNM-95, PENNSYLVANIA STATE UNIVERSITY (ENTERPRISE PROJECT IDENTIFICATION CODE: CAC/EPID 000222/07000113/L-2019-DFA-0016)
BACKGROUND By letter dated December 19, 2019 (Agencywide Document Access and Management System (ADAMS) Accession No. ML19357A042), Pennsylvania State University (PSU) submitted its annual certification of its self-guarantee (SG) for decommissioning financial assurance for Special Nuclear Material License (SNM-95). PSU has two licenses issued by the U.S. Nuclear Regulatory Commission (NRC), Special Nuclear Material (SNM) License SNM-95 (Docket 70-113), and license R-2 Breazeale Nuclear Reactor (Docket 050-0005). The subject review pertains to License SNM-95.
DISCUSSION Regulatory Requirements Pursuant to Title 10 of the Code of Federal Regulations (10 CFR) Section 70.25, "Financial assurance and recordkeeping for decommissioning," nuclear facilities licensed under 10 CFR Part 70 are required to establish adequate financial assurance for decommissioning, decontamination, and reclamation. Section 70.25 of 10 CFR requires nonprofit college and university licensees to provide reasonable assurance of available funds for decommissioning costs through an SG, to annually provide an SG agreement, and pass a financial test pursuant to Appendix E of 10 CFR Part 30, Criteria Relating to Use of Financial Tests and Self-Guarantees For Providing Reasonable Assurance of Funds For Decommissioning by Nonprofit Colleges, Universities, and Hospitals."
Staff Review Upon review of PSUs December 19, 2019 submittal, as detailed below, the NRC staff finds that PSUs SG is acceptable.
Staff Review of Self-Guarantee and Supporting Documentation In its review, the NRC staff relied on the regulations set forth in Appendix E of 10 CFR Part 30 and 10 CFR 70.25, as well as the supporting NRC guidance contained in NUREG-1757, Volume 3, Rev. 1, Appendix A.9, Self-Guarantee, (ADAMS Accession No. ML12048A683).
This review was limited to the requirements set forth in Condition S-3 of License SNM-95.
Enclosure
The regulations in 10 CFR 70.25(f) require, in part, that the financial instrument include the licensee's name, license number, and docket number; and the name, address, and other contact information of the issuer, and, if a trust is used, the trustee. Financial assurance for decommissioning must be provided by stated methods, including for nonprofit entities such as colleges, universities, and nonprofit hospitals. A guarantee of funds by the licensee may be used if the guarantee and test are as contained in Appendix E to 10 CFR Part 30.
In its December 19, 2019, submittal, PSU submitted documentation to demonstrate their continued eligibility to use the self-guarantee. The submittal consisted of the following:
- An updated SG and associated Financial Test signed by the Associate Vice President for Finance and Corporate Controller;
- An Independent Accountants Report and Schedule of Reconciling Amounts contained in NRC annual certification letter with amounts in the licensees consolidated financial statements; and
- PSUs audited financial statements for the most recent fiscal year, including auditors opinion on the financial statements.
The SG agreement in Attachment B of the submittal (ADAMS Accession No. ML20112F213) states that the guarantee was made by the Pennsylvania State University, a nonprofit university, organized under the laws of the Commonwealth of Pennsylvania, to the NRC, on behalf of the university as licensee. Pennsylvania State University has full authority and capacity to enter into this self-guarantee by the bylaws of the Trustees of the PSU. The self-guarantee agreement is signed by Joseph J. Doncsecz, Associate Vice President for Finance and Corporate Controller of PSU.
Based on the review, the NRC staff has determined that the licensee has an acceptable method of financial assurance to decommission, protect health, and minimize danger to life or property. Therefore, the NRC staff finds that the licensee meets the requirement of 10 CFR 70.25(f), as modified by Condition S-3 of License SNM-95.
For PSU to qualify for use of an SG, it must satisfy the criteria found in 10 CFR Part 30, Appendix E, Section II.A.1 or A.2. Pennsylvania States Universitys SG submission intends to demonstrate compliance with 10 CFR Part 30, Appendix E, Section II.A.1 (the Financial Test).
The Financial Test requires that PSU have a current rating for its most recent bond issuance of AAA, AA, A as issued by Standard & Poors or Aaa, Aa, or A as issued by Moodys Corporation.
As part of the SG submission, PSU included the identification of the Financial Test used and used the guidance in NUREG 1757, Volume 3, Appendix A, Checklist 9-B to demonstrate passage of the Financial Test.
The SG submission states that the current bond rating of the most recent uninsured, uncollateralized, and unencumbered bond issuance is AA, as issued by Standard & Poors. The licensees statement was compared with Standard & Poor's Global Ratings to PSU dated May 16, 2019, by PSUs independent auditor and found no exceptions in Attachment C of the submittal (ADAMS Accession No. ML20112F213). Therefore, PSU meets the requirement of 10 CFR Part 30, Appendix E, Section II.A.1.
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In addition, 10 CFR Part 30, Appendix E, Section II.C.(1) requires an independent certified public accountant of the licensee to compare the data used by the licensee in the financial test, which is derived from the independently audited, year-end financial statements for the latest fiscal year, with the amounts in such financial statement. The accountant must evaluate the licensee's off-balance sheet transactions and provide an opinion on whether those transactions could materially adversely affect the licensee's ability to pay for decommissioning costs. The accountant must verify that a bond rating, if used to demonstrate passage of the financial test, meets the requirements of Section II.
As part of the December 19, 2019, submittal, PSU included an independent auditors' report made to the Board of Trustees of the Pennsylvania State University, University Park, Pennsylvania (ADAMS Accession No. ML20112F213). Consolidated financial statements of the Pennsylvania State University and its subsidiaries were audited. The financial statements comprise the financial position as of June 30, 2019 and 2018, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. The independent auditor stated an opinion that the consolidated financial statements present fairly, in all material respects, the financial position of the University as of June 30, 2019 and 2018.
The auditor obtained a schedule of off-balance sheet exposures from PSUs management totaling $1,290,225,000 and recalculated them for mathematical accuracy. The auditor then compared the total off-balance sheet exposures to the total net assets of $10,536,831,000 reported in the 2019 NRC Annual Certification Letter prepared by PSU and noted the off-balance sheet exposures were less than the total net assets in Attachment C (ADAMS Accession No. ML20112F213).
The NRC staff determined that the licensee had their independent certified public accountant compare the data used by the licensee in the financial test, which is derived from the independently audited, year-end financial statements for the latest fiscal year, with the amounts in such financial statement. The accountant evaluated off-balance sheet transactions and noted that the off-balance sheet exposures were less than PSUs total assets. The accountant verified the bond rating meets the requirements of 10 CFR Part 30, Section II. Therefore, the NRC staff finds that the licensee meets the requirement of 10 CFR Part 30, Appendix E, Section II.(C)(1).
Furthermore, 10 CFR Part 30, Appendix E, Section II.(C)(2) states that after the initial financial test, the licensee must repeat passage of the test and provide documentation of its continued eligibility to use the self-guarantee to the Commission within 90 days after the close of each succeeding fiscal year.
The fiscal year of PSU closes on June 30th. Under the 90-day requirement of Part 30, Appendix A, the annual certification documents are required to be submitted to the NRC by September 28th. At PSU, the Committee on Audit and Risk meets to review and accept financial statements on behalf of the Board of Trustees during October or November. The date on which the PSU Board of Trustees meets to give final approval of the financial statements varies from year to year, but such approval is generally given by November 30th.
By letter dated October 23, 2014 (Accession No. ML13325A031), the NRC staff approved an exemption to 10 CFR Part 30, Appendix E, Section II.(C)(2), allowing the licensee to submit documentation 180 days after the close of the fiscal year.
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Given that the fiscal year 2019 ended on June 30, 2019, documentation to demonstrate continued eligibility to use the self-guarantee was due by December 27, 2019. PSU submitted documentation by letter dated December 20, 2019. Pennsylvania States Universitys licensed was renewed on April 24, 2018 (ADAMS Accession No. ML16336A201). License condition S-3, states in part, that Notwithstanding the requirements in 10 CFR Part 30, Appendix E, Section II.C.(2), the PSU shall demonstrate its continued eligibility to use the self-guarantee within 180 days of the close of the fiscal year. The NRC staff determined that the licensee submitted the required documentation in 10 CFR Part 30, Appendix E, Section II.C.(2). PSU meets all the requirements of the Financial Test.
Part 30 of 10 CFR, Appendix E,Section III.A through G, describes the terms that are required in an SG:
A. The guarantee will remain in force unless the licensee sends notice of cancellation by certified mail, and/or return receipt requested to the NRC. Cancellation may not occur unless an alternative financial assurance mechanism is in place.
B. The license shall provide alternate financial assurance as specified in the NRCs regulations within 90 days following receipt by the NRC of a notice of cancellation of the guarantee.
C. The guarantee and financial test provisions must remain in effect until the NRC has terminated the license or until another financial assurance method acceptable to the NRC has been put in effect by the licensee.
D. The applicant or licensee must provide to the NRC a written guarantee which states that the licensee will fund and carry out the required decommissioning activities or, upon issuance of an order by the NRC, the licensee will set up and fund a trust in the amount of the current cost estimates for decommissioning; and E. If, at any time, the licensees most recent bond issuance ceases to be rated in any category of A or above by either Standard & Poors or Moodys, the licensee shall provide notice in writing of such fact to the NRC within 20 days after publication of the change by the rating service; F. A standby trust must be established to protect public health and safety and the environment for decommissioning costs prior to an SG being submitted.
G. Guarantor agrees that if guarantor admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of its creditors, or any proceeding is instituted against by or against the guarantor seeking to adjudicate it as bankrupt or insolvent then the Commission may: (a) declare the financial assurance guaranteed by the guarantee agreement is immediately due and payable to the standby trust ; and (b) exercise any and all of its other rights under applicable law.
In its December 19, 2019, submittal, PSU provided adequate language in its terms of the self-guarantee consistent with model language in NUREG - 1757, Volume 3, Rev. 1, Appendix A.9, Checklist B.
In addition, PSU has previously submitted a Standby Trust Agreement (STA) (ADAMS Accession No. ML14015A387) that has been previously approved by the NRC staff (ADAMS 4
Accession No. ML16144A740). The STA Schedule A document was updated on June 19, 2019 (ADAMS Accession No. ML19177A297) to reflect the current certified decommissioning costs for PSUs Part 70 license.
The NRC staff finds the language of the SG complies with the terms and conditions needed in NUREG-1757, Volume 3, Rev.1, Appendix A.12, Standby Trust Funds. Because the SG is consistent with the recommended language contained in NUREG - 1757, Volume 3, Rev. 1, Appendix A.9, Checklist B, which the NRC staff has previously determined would comply with the NRCs regulatory requirements, the staff therefore finds that the proposed SG meets the requirements of 10 CFR Part 30, Appendix E, Section III.A-G.
CONCLUSION On the basis of the NRC staffs review of the submittal as it applies to License SNM-95, and discussed above, PSU has demonstrated that: (1) its financial condition meets the requirements of 10 CFR Part 30, Appendix E, and (2) the language of the SG agreement, auditors opinion on PSUs audited financial statements, and previously submitted and approved STA agreement are consistent with NRC guidance. Therefore, the NRC staff finds that PSUs SG and supporting documentation are acceptable and are, therefore, approved.
Principal Contributor Shawn Harwell, NMSS/REFS 5