ML20149M618
| ML20149M618 | |
| Person / Time | |
|---|---|
| Issue date: | 01/13/1997 |
| From: | Martin T NRC (Affiliation Not Assigned) |
| To: | Morrison D NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES) |
| Shared Package | |
| ML20007H219 | List: |
| References | |
| FRN-62FR23395, RULE-PR-30, RULE-PR-40, RULE-PR-50, RULE-PR-70, RULE-PR-72 AF64-1-007, AF64-1-6, AF64-1-7, NUDOCS 9701170443 | |
| Download: ML20149M618 (4) | |
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. l hPM-l l i 10F cc: Morris ,
- "% , Prichard Martin
-p k +, UNITED STATES . ~;
j File g NUCLEAR REGULATORY COMMISSION
- C W ASHINGToN, D.C. 2055W1 NG, Jr, g p# .
l- ***** Jamary 13,. 1997 l- i MEMORANDUM T0: David L. Morrison, Director ,
Office,of Nuclear Regulatory Resea, h ;
i FROM: 'A Thomas T. Martin, Director p Division of Reactor Program M g ment :
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SUBJECT:
PROPOSED RULEMAKING FOR SELF-GUARANTEE OF DECOMMISSIONING
! FUNDING ASSURANCE FOR NON-PROFIT AND NON-BOND ISSUING l LICENSEES
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As requested in your memorandum of December 19, 1996, we have reviewed the '
proposed rulemaking package for self-guarantee of deconuissioning funding !
i assurance for non-profit and non-bond issuing licensees. Our comments on the rulemaking package are attached to this memorandum. We would like an 1 l
opportunity to review the final package prior to providing NRR concurrence.
l This rulemaking, when complete, will allow several of the non-power reactors :
regulated by NRR to take advantage of the self-guarantee method, which will !
l reduce their burden for complying with NRC regulations while maintaining l
confidence that decommissioning funds will be available when needed.
6 If you have any questions on our comments, please contact Robert Wood at 415-1255 or Alexander Adams at 415-1127.
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Attachment:
As stated l l
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NRR Comments on Proposed Rulemaking for Self-Guarantee for Won-r 'ofit and Non-Bond Issuing Licensees Federal Reaister Notice
- 1. Pg. 1, line 2 of summary. "Non-power reactor licensees" should be changed to "non-electric utility reactor licensees." At some point, some l power reactor licensees may use these guarantee mechanisms when they no I longer meet the Commission's definition of " electric utility." Because "~
l 550.75 is structured to distinguish only hatwaea. electric utilities and ._ l non-electric utilities, the nomenclature should be kept consistent. I Also, it would be helpful to the general reader to add a footnote to !
explain that this proposed rule would not affect the Commission's other I rulemaking that addresses decommissioning funding assurance issues associated with electric utility restructuring.
- 2. Pg. 4, line 11. The supplementary information states that "Ligensees i subject to 10 CFR parts 30, 40, 50, 70, and 72, whose operations involve l the use of substotial amounts cf nuclear materials, must provide i financial assur ace for decommissioning funding..." The need to provide ;
financial assue.nce for non-power reactors is not dependent on the amount l of nuclear material possessed but on whether the organization is an applicant for or holder of an operating license for a production or utilization facility. We suggest changing this sentence to " Licensees subject to 10 CFR Parts 30, 40, 70, and 72, whose operations involve the l use of substantial amounts of nuclear materials, and those subject to j 10 CFR Part 50 who are an applicant for or holder of an operating license ;
for a production or utilization facility must provide financial assurance )
for decommissioning funding..."
- 3. Pg. 9, section A, second paragraph, second line (and body of rule at
- p. 23). A level of unrestricted endowment of $50 million, or at least 30 times decommissioning costs, whichever is larger, seems excessive when compared to the 10-times-net-worth test for self-guarantees under :
Part 30, Appendix C. Typically, an unrestricted endowment will be more l liquid, and thus more accessible in case of financial difficulty, than l net worth, which would tend to be fixed assets of uncertain marketable i value. The ICF report may provide valid reasons for making this I distinction, but they are not provided in the rule. At the very least, I the preamble to the rule should document the reasons for this distinction.
- 4. Pg.10, line 3, financial ratios for hospital licensees. As with comment 3, a better rationale needs to be provided as to why these particular ratios were chosen. Also, in theory, a hospital could meet the proposed ratios with a very small asset base, i.e., without adequate i resources to meet its decommissioning obligations. In practical terms, I hospitals are unlikely to have high decommissioning costs; but it is not clear why an additional ratio of 10-times-net-worth, or equivalent l measure appropriate to hospitals such as net revenues, should not also be required. Finally, for clarity the discussions (and the rule itself) l should explicitly state that a licensee must meet all of the specified ratios. Some readers may assume, based on the actual wording, that only l one of the ratios must be met. j l
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i 5. Pg.-11, cost. savings estimate. The total cost savings for college and university. licensees may-need to be adjusted in two ways. These numbers I
- appear.to include (from looking at the regulatory analysis) savings from j public institutions. The analysis assumes that these' institutions are j presently incurring costs related to decommissioning funding assurance.
The analysis does not appear. to consider the possibility th:t th::o -
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public institutions are currently.using statements of intent as allowed r bi ~10'CFR 30.35(f)(4) which would incur no cost to the college or !
University. If most of the public institutions with material licenses i are taking advantage of a statement of intent, the estimate of total cost i 1 ssvings could be overstated by 50 percent. On the other hand, this table i
{ does not include potential cost savings from non-power reactors. The i e report prepared by ICF to assist in the development of the rulemaking did i
[ not consider non-power reactors. !
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- 6. Pg. 18, section 2(b). The reference to Appendix B should be deleted, and j
a reference to new Appendix E should be added. ;
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! Reaulatory Analysis j
- 7. . General comment. The discussion in the regulatory analysis focuses on i materials licensees. There is no discussion of non-power reactor i
- licensees. !
i- 8. Pg. 6, line 13. To be consistent with the numbers used in the proposed !
rule, .instead of using the percentages-(i.e., 67 percent and 3.97 :
percent), use the numbers as 'given in the rule (i.e., .67 and 0.04). l 4 .
j 9. Pg. 7, line 11. The document. states "... licensees whose financial :
! indicated.that they..." There appears to be a word missing. Suggest l changing to "... licensees whose financial condition. indicated.that j i they..." ,
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- 10. Pg. 10, line 6. There is a' typographical error, "thirdpparty" that needs l'
, correction.
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- 11. Pg. 11, table of costs. See comment 5 above. :
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- 12. . Pg. 12, line 33. The word "significant" should be "significantly."
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' .cc: Morris
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- [j.9""*% t. UNITED STATES file i
- ! E NUCLEAR REGULATORY COMMISSION NG, Jr.
E WASHINGTON. D.C. N1
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. January 15, 1997 l
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MEMORANDUM T0: David L. Morrison, Director _
Office of Nuclear Regulatory Research {
!. FROM: Carl J. Paperiello, Direct [ ,
i- Office of Nuclear Materia afety
- and Safeguards
SUBJECT:
OFFICE REVIEW AND CONCURRENCE ON A PROPOSED RULEMAKING !
2 FOR AMENDMENTS TO 10 CFR PARTS 30, 40, 50, 70, AND 72 --
SELF-GUARANTEE FOR NON-PROFIT AND NON-BOND ISSUING- i LICENSEES j i;
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The Division of Waste Management staff has reviewed the Comission Paper 4
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entitled, " Proposed Amendments to 10 CFR Parts 30, 40, ' 50, 70, and 72 -- Self-
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! Guarantee of Decomissioning Funding by Non-Profit and Non-Bond Issuing l Licensees." Our coments are attached. With the incorporation of our j l comments, we concur with the Comission Paper.
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Attachment:
As stated i
CONTACT: Louis M. Bykoski, NMSS/DWM c 415-6754 W
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. f Comments on Proposed Self-Guarantee Rule for Non-Profit and Non-Bonded Oraanizations -
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i 1. The objective of the ICF study was to develop information from which to '3
- . propose financial tests of equivalency for non-profit entities that are i
, _ equivalent to other instruments. The ratio test proposed in the ICF l l study is a risk based proposal of failure equivalence that likely is not '
- as reliable as the risk based evaluation that a bond rating agency would '
! perform. We believe that additionel p*alic comments should be sought on !
- this issue. NMSS will consider future options based on the comments !
[ received. Note that the bond rating is based on a very thorough j t financial review that cannot be matched with the use of the simple ,
4- financial tests. Note also that the medical community is currently J
' -under severe pressure to reduce costs, and having a thorough financial !
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review will result in greater credibility for our granting self- i i guarantees without having to rely on a bankruptcy database. -!
The financial tests proposed for non-bond rated companies appear to be '
based on risk levels equivalent to the other allowable financial assurance mechanisms. We do not object to presenting these criteria in
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the proposed rule. However, through the bond rating process, a company 1 undergoes a much more thorough financial review than is possible through ,
the simple financial tests proposed. Because of the added credibility I of the bond rating and the fact that there will be no other source of ,i decommissioning funding, we, therefore, recommend that bond ratings be l used as the principle basis for corporate self-guarantees. . Note that a i company can request a rating from the rating companies even if they do not issue bonds. Since only 2 of 36 non-bond rated licensees are !
- expected to qualify under the financial test, we do not consider there j will be substantial impacts for rejecting the proposed financial tests. 'i
- 2. If the financial test for non-bonded companies is accepted, we should state _over what period bonds have not been issued. For example, does j this apply to companies who have never issued bonds or do not have any outstanding short-term or long-term bonds at the present time? Suggest a period of five years.
- 3. In the proposed rule language, we should specify that the certified public accountant's review should be based on United Si.ahs generally accepted accounting practices. We should also amend the parent company and self-guarantee provisions in Appendices A and C to also reflect this standard. Note that we have had numerous discussions with Siemens, which proposed a guarantee by its German parent. The auditor's reports initially were not performed in accordance with US GAAP. Not using US GAAP may not ensure that foreign companies meet the'same high financial standards we require.
- 4. In the proposed Appendix D, is there a reason why the language in i Appendix A, II, C.2 was not included? If a company cannot pass ]
succeeding financial tests, we should require submittal of notice and a new instrument as required in Appendix A, II, C.2.
Attachment
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- 5. In proposed Appendix E, the bond ratings should be specified as i j uninsured uncollateralized, unencumbered ratings as stated in the !
Statement of Considerations.
- 6. In proposed Appendix E, is there a reason why language similar to i' Appendix C, II.B and II.C is not used? We recommend including requirements for aud'tcr'-s-;tatements, annual financial retests, and, if ;
the licensee fails to meet the financial test requirements, submittal of ;
notices and alternative instruments. ?
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- 7. In Appendix E, III.E, the second sentence in Appendix C, III.E should be added if a bond rating is to be required for all licensees using this i sel f-guarantee.
- 8. There are pagination errors in Table 3.1 in the Regulatory Analysis.
- 9. In the Regulatory Analysis, Footnote 7, p. 9, states that due to the l charges for obtaining an indicative rating, companies are unlikely to '
get ratings. However, if a licensee must put up substantial collateral ,
to obtain an alternative instrument, like a letter of credit, it may be cost-effective to get the bond rating to use a self-guarantee.
- 10. For college and university licensees, it should be stated that the bond !
rating is for uninsured bonds.
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