ML20209D129
| ML20209D129 | |
| Person / Time | |
|---|---|
| Issue date: | 06/30/1999 |
| From: | NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES) |
| To: | |
| References | |
| TASK-*****, TASK-RE REGGD-03.066, REGGD-3.066, NUDOCS 9907130047 | |
| Download: ML20209D129 (165) | |
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U.S. NUCLEAR REGULATORY COMMISSION June 1999 f.
S OFFICE OF NUCLEAR REGULATORY RESEARCH Division 1 O
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Draft DG-3014 DRAFT REGULATORY GUIDE D
Contact:
L. M. Bykoski (301)415-6754 DRAFT REGULATORY GUIDE DG-3014
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(Proposed Revision 1 to Regulatory Gu
)
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k STANDARD FORMA (#ANgCONTENT OF FINANCIAL ASSURANCE;MECyNISMS REQUIRED FOR DECOMMISSIONING UNDER>10iCFR PARTS 30,40, 70, AND 72
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i 03.066 R PDR This regulatory guide le being issued in draft form to involve the public in the early stages of the development of a regulatory position in thee area.
It has not received complete staff approval and does not represent an official NRC staff position.
Public comments are being solicited on the draft guide (including any implementation schedule) and its associated regulatory analysis or value/ impact statement. Commente should be accompanied by appropriate supporting data. Written comments may be submitted to the Rules and Directivee Branch, Office of Administration, DAS, U.S. Nuclear Regulatory Commission, Washington, DC 20555. Copies of comments p\\ received may be examined at the NRC Public Document Room,2120 L Street NW., Washington, DC. Comments will be most helpful if recei
[() by September 30,1999.
Requests for eingle copies of draft or active regulatory guideo (which may be reproduced) or for placement on an automatic distribution list for eingle copies of future draft guides in specific divisions should be made in writing to the U.S. Nuclear Regulatory Commission, Washington, DC 20555, Attention: Reproduction and Distribution Services Section or by f ax to (3011415-2289, or by email to < DISTRIBUTION @NRC. GOV >.
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C TABLE OF CONTENTS l*A l
1.
INTRODUCTION
................................................... 1 1.1 How to Use this Regulatory Guide.................................. 2 l
1.2 -
When Financial Assurance is Required............................... 2 j
1.3 Certification or Decommissioning Funding Plan........................
4 1.4 Seiection of Financial Instrument '................................... 6 l
1.5 '
Recordkeeping 10 1.6' Canceling, Replacing, or Transferring Financial Instruments................ 11 2.
CERTIFICATIONS OF FINANCIAL ASSURANCE............................. 12 2.1 Determining the Appropriate Certification Amount...................... 12 2.2 -
Preparing the Certification Statement............................... 16 2.3 Submitting the Required Documentation........................... 16 2.4 Model Certification Statement.................................... 17 3.-
DECOMMISSIONING FUNDING PLANS................................... 18 3.1-Preparing the Site-Specific Cost Estimate............................ 18 3.2 Determining the Means for Adjusting the Cost Estimate.................. 22
'3.3 Submitting the Required Documentation............................. 23 3.4 Model Facility Description Summary 24 l
3.5
~ Number and Dimensions of Facility Components.,..................... 25 3.6 Planning and Preparation (Work Days) 26 3.7 Decontamination or Dismantling of Radioactive Facility Components 27 3.8_-
Restoration of Contaminated Areas on Facility Grounds.................. 28
. 3.9 Final Radiation Survey.......................................
28 3.10 Site Stabilization and Long-Term Surveillance......................... 29 3.11 Total Work Days by Labor Category................................ 29 3.12 Worker Unit Cost Schedule...................................... 30 3.13. Total Labor Costs by Major Decommissioning Task..................... 30 3.14 Packaging, Shipping, and Disposal of Radioactive Wastes................. 31 3.15 Equipment / Supply Costs (Excluding Containers) 32 3.16 Miscellaneous Costs.......................................... 32 3.17 Total Decommissioning Costs.................................... 33 4.
TR U ST FUN D S..................................................
34 L
4.1 Qualifications of the issuer: The Trustee............................. 34 4.2 Level of Co ve rage............................................ 36 4.3 Recommended Documentation 36 4.4
. Model Trust Fund Agreement.................................... 39 4.5 Model Trust Agreement Schedules 44 4.6 Model Certificate of Events '...................................... 45 Ic 4.7 Model Certificate of Resolution.....,............................. 46 I
4.8 Model Letter of Acknowledgment................................
46 5.
ESCROW ACCOUNTS 47 5.1 Qualifications of the issuer: The Escrow Agent........................ 47 5.2 Le vel of Co ve ra g e............................................. 49 5.3 Recommended Documentation.................................... 49 5.4 Model for an Escrow Agreement.................................. 51 5.5 -
Model Certificate of Events...................................... 56 5.6 Model Certificate of Resolution To Commence Decommissioning............ 57 5.7 Certified Resolution Authorizing the Making and Performance of the Escrow Agreement.............................
57 5.8 Certificate of Names and Specimen Signatures........................ 58 iii
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l 6.
G OV ERN M ENT FUN D S.............................................. 59 j
6.1 Qualifications of the issuer: The State or State Agency.................
59
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6.2 Le v el o f Co ve ra g e............................................ 59 i
6.3 Recommended Documentation.............
60 7.
CERTIFICATF.S OF DEPOSIT...............
62 7.1 Qualifications of the issuer...
63 j
7.2 Le v el o f L a v e ra g e............................................ 63
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7.3 Recommended Documentation................................... 64 J
7.4 Model Certificate of Deposit..................................... 67 8.
DEPOSITS OF GOVERNMENT SECURITIES................................ 68 8.1 Qualifications of the issuer...................................... 68 8.2 Level of Cove ra ge...................................
70 8.3 Recommended Documentation................................... 70 9.
S U R ETY B O N D S.................................................. 72 9.1 Qualifications of the issuer...............
73 9.2 Level of Coverage........
74 9.3 Recommended Documentation 74 9.4 M od el S u re ty Bo n d........................................... 76 l
10.
LETTERS O F CREDIT.......................
79 10.1 Qualifications of the issuer...................................... 79 10.2 Le v el o f C o v e ra g e............................................ 81 10.3 Recommended Documentation 81 l
10.4 Modelletter of Credit 83 11.
LINES OF CREDIT 85 11.1 Qualifications of the issuer...................................... 86 11.2 Level of Coverage..........
87 11.3 Recommended Documentation 87 l
12.
IN S UR AN C E PO LICI ES.............................................. 89
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12.1 Oualifications of the issuer...................................... 89 12.2 Le vel of Covera g e............................................ 90 12.3 Recommended Documentation................................... 91 i
13.
PARENT COMPANY GUARANTEES..........
92 13.1 Qualifications of the issuer.....................
93 13.2 Le vel o f Co vera ge............................................ 94 13.3 Recommended Documentation
...................95 1
13.4 Model Chief Executive Officer (CEO) Letter
........ 98 13.5 Model Chief Financial Officer (CFO) Letter
...........................99 13.6 Parent Company Guarantee Financial Test I
.........................100 13.7 Parent Company Guarantee Financial Test 11........................ 1 01 13.8 Model Confirmation of Chief Financial Officer's Letter
..................102 13.f-Model of Schedule Reconciling Amounts Contained in CFO's Letter with Amounts in Financial Statements................................. 103 l
13.10 Model Parent Company Guarantee................................ 104 14.
SELF-6UARANTEES
..................................107 14.1 Qualifications of the issuer..................,.................. 108 14.2 Level of Coverage...........
....... 108 14.3 Recommended Documentation
.................109 iv
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14.4 Recommended Wording for a Self-Guarantee and Financial Test............ 113 14.5 Model Self Guarantee Financial Test for Commercial Companies that l.-
las ue Bonds............................................... 1 14 1
14.6, Model Self-Guarantee Financial Test for Commercial Companies that Do Not issue Bonds.......................................... 1 15 14.7 Model Self-Guarantee Financial Test for Nonprofit Colleges and Universities that issue Bond s............................................ 1 16 14.8 Model Self-Guarantee Financial Test for Nonprofit Colleges and Universities that Do Not issue Bonds
.............116 14.9 Model Self-Guarantee Financial Test for Nonprofit Hospitals that lasue Bonds.. 117 14.10 Model Self-Guarantee Financial Test for Nonprofit Hospitals that Do Not issue Bond s............................................... 1 18 14.11 Model Confirmation of Letter from CEO or CFO....................... 119 14.12 Model Schedule for Reconciling Amounts Contained in CEO's or CFO's Letter with Amounts in Financial Statements............................. 120 14.13 Model Self-Guarantee
........................................121 l
15.
EXTERN AL SINKING FUN DS.......................................... - 126 l
15.1 Qualifications of the issuer...................................... 12 6 l
15.2 Level of Coverage........................................... 12 6 l
15.3 Recommended Documentation.................................. 127 l
16.
STATEMENTS OF INTENT
.........................................128 l'
16.1 QuaEncations of the issuer...................................... 12 8 i
16.2 Level of Coverage........................................... 12 9 16.3 Recommended Documentation
..................................129 O
16.4 Model Statement of intnnt.....................................131 N
l 17.
STAN DBY TR U ST FUN D S........................................... 13 2 17.1 Qualifications of the issuer: The Trustee............................ 132 l
17.2 Le vel of Coverage........................................... 134 17.3 Recommended Documentation.................................. 134 17.4 Model Standby Trust Agreement................................. 137 17.5 Model Standby Trust Agreement Schedules......................... 142 l
17.6 Model Certificate of Events.................................... 14 3 17.7 Model Certificate of Resolution.................................. 144 17.8 Model Letter of Acknowledgment................................144 t
l BI BLI OG R A PH Y,...................................................... 1 4 5 l
APPENDIX A Table for Determining Financial Assurance Requirements Under 10 CFR Parts 30,40, and 70 by Type of isotope and Activity Level
...............A-1 APPENDIX B Appendix B to 10 CFR Part 30................................... B-1 1
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1.
INTRODUCTION The NRC's requirements for financial assurance for materials licensees are in i 30.35 of 10 CFR Part 30, " Rules of General Applicability to Domestic Licensing of Byproduct Material"; I 40.36 of 10 CFR Part 40, " Domestic Licensing of Source Material"; I 70.25 of 10 CFR Part 70, " Domestic Licensing of Special Nuclear Material"; and i 72.30 of 10 CFR Part 72, " Licensing Requirements for the Independent Storage of Spent Nuclear Fuel and High-Level Radioactive Waste."
This regulatory guide is being developed to provide guidance to NRC licensees and applicants on how to demonstrate financial assurance for decommissioning. The guide also establishes a standard format for presenting the information to the NRC that will (1) aid the licensee or applicant in ensuring that the information is complete, (2) help ensure that applicable requirements in 10 CFR Parts 30,40,70, and 72 have been met, and (3) help achieve the intent of the regulations, which is to ensure that the decommissioning of all licensed facilities will be accomplished in a safe and timely manner and that licensees will provide adequate funds to cover all costs associated with decommissioning.
Other documents also address the decommissioning financial assurance requirement.
Guidance on uranium recovery facilities under Part 40 is provided in _" Technical Position on Financial Assurances for Reclamation, Decommissioning, and Long-Term Surveillance and Control of Uranium Recovery Facilities" dated October 1998. Information on low-level O
w" Standard Format and Content of a License Application for a Low-Level Radiative Waste aste disposal facilities under 10 CFR Part 61 is provided in Revision 1 of NUREG-1199, Disposal Facility"' (January 1988), and Revision 3 of NUREG 1200, " Standard Review Plan for the Review of a License Application for a Low Level Radioactive Waste Disposal Facility"' (March 1994).
Note that throughout this regulatory guide, the term " licensee" refers to both licensees and license applicants. This guide uses the terms "financialinstrument,"
" financial mechanism," and " financial assurance mechanism" interchangeably.
Regulatory guides are issued to describe to the public methods acceptable to the NRC staff for implementing specific parts of the NRC's regulations, to explain techniques used by the staff in evaluating specific problems or postulated accidents, and to provide guidance to applicants. -Regulatory guides are not substitutes for regulations, and compliance with regulatory guides is not required. Regulatory guides are issued in draft form for public comment to involve the public in developing the regulatory positions. Draft regulatory guides have not received complete staff review; they therefore do not represent official NRC staff positions.
' Copies are available at current rates from the U.S. Govemment Printing Office, P.O. Box 37082, Washington, DC 20402 9328 (telephone (202)5121800); or from the National Technical information Service by writing NTIS at 5285 Port Royal Road, Springfield, VA 22161. Copies are available for inspection or copying for a fee from the NRC Public Document Room at 2120 L Street NW., Washington, DC; the PDR's mailing Eddress is Mail Stop LL-6, Washington, DC 20555; telephone (202)634-3273; f ax (202)634 3343.
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The information collections contained in this draft regulatory guide are covered by the requirements of 10 CFR Parts 30,40,70, and 72, which were approved by the Office of Management and Budget, approval numbers 3150-0017,3150-0020,3150-0009, and 3150-0132, respectively. The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
1.1 HOW TO USE THIS REGULATORY GUIDE This guidance pertains to the various components of a financial assurance demonstration, e.g., the cost estimate, the financial instrument. Each component is addressed briefly in this introduction and then is addressed again in greater detail in its own section. Each subsequent section provides narrative guidance on a particular component.
and contains one or more checklists to help guide the reader. By completing the tasks on the checklists, a licensee or applicant can be sure that its financial assurance demonstration is complete and likely to be acceptable to the NRC.
Licensees and applicants should read this Section 1 in its entirety. It includes a
" master" checklist that directs the reader to other relevant sections and checklists in thia regulatory guide. To prepare a financial assurance demonstration that is likely to be acceptable to the NRC, a licensee or applicant should simply complete the following steps.
1.
Complete Check!ist 1 (the master chacklist):
2.
Complete applicable checklists called for by Checklist 1:
3.
Prepare any documentation called for in the completed checklists; and 4.
Submit the completed checklists and accompanying docurnentation to the NRC for review and approval.
To help licensees and applicants make the initial decisions called for in Checklist 1, this Section 1 discusses each of the three major decision points:
Confirmation that financial assurance is required (see Section 1.2)
Use of a Certification or a Decommissioning Funding Plan (see Section 1.3)
Selection of a financialinstrument (see Section 1.4)
Finally, the section also explains applicable recordkeeping requirements (see Section 1.5) and provides guidance for licensees who wish to cancel, replace, or transfer their financial assurance mechanisms (see Section 1.6).
1.2 WHEN FINANCIAL ASSURANCE IS REQUIRED The NRC's financial assurance requirements apply only to lionsees authorized to possess or use certain quantities and types of licensed materials. The minimum possession or use thresholds that trigger the requirements vary, depending on the type of license and the types and quantities of materials authorized under the particular license. Licensees authorized to possess only a single isotope may up the table in Appendix A to this guide to 2
CHECKLIST 1 MASTER CHECKLIST FOR DECOMMISSIONING FINANCIAL ASSURANCE Name of Licensee / Applicant Mailing Address Facility Address l
License Nanber(s)
Date of Submission Applicable Part of 10 CFR (check all that apply):
a Part 30 a Part 40 0 Part 70 a Part 72 Type of Submission:
a Certification of Financial Assurance - attach Checklist 2 a Decommissioning Funding Plan
- attach Checklist 3 Type of Mechanism:
a Prepayment a Trust - attach Checklist 4-A a Escrow Account - attach Checklist 5-A a Government Fund - attach Checklist 6-A o Certificate of Deposit - attach Checklist 7-A a Deposit of Government Securities
- attach Checklist 8-A a Surety, Insurance, or Other Guarantee Method a Surety Bond
- attach Checklist 9-A a Letter of Credit
- attach Checklist 10-A a Line of Credit
- attach Checklist Il-A a Insurance -+ attach Checklist 12-A a Parent Company Guarantee - attach Checklist 13-A a Self-Guarantec
- attach Checklist 14-A a External Sinking Fund
- attach Checklist 15-A a Statement ofIntent
- attach Checklist 16-A
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determine whether financial assurance is required for a given activity level. Any license that authorizes the possession or use of types or quantities of materials exceeding these thresholds is subject to NRC's decommissioning financial assurance requirements. Note that the relevant quantities and types of materials are those authorized under a particular license, even if a licensee does not currently or usually possess or use these same quantities and types of materials.
Tvoe of License Minimum License Threshold Reauirina Financial Assurance PART 30 Unsealed byproduct material with a half-life greater than 120 days in amounts greater than 10 times the applicable quantities of Appendix B to Part 30 (reproduced as Appendix B to this guide) or, for a cc8ination of isotopes, if R divided by 10'is greater than 1 when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30 DL Sealed sources or plated fails with a half-life greater than 120 days in amounts greater than 10' times the applicable quantities of Appendix B to Part 30 (reproduced as Appendix B to this guide) or, for a combination of isotopes, if R divided by 10' is greater than 1 when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30 PART 40 Source materialin a readily dispersible form exceeding 10 millicuries (mci) l s
PART 70 Unsealed special nuclear materialin amounts greater than lo times the applicable quantities of Appendix B to Part 30 (reproduced as Appendix B to this guide) or, for a combination of isotopes, if R divided by 10' is greater than 1 whe.e R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30 PART 72 Any amount of spent fuel or high-levelradioactive waste Licensees who exceed the minimum thresholds outined above are required to demonstrate financial assurance that is acceptable to the NRC until decommissioning has been completed and the license has been terminated. License applicants must have financial assurance in place prior to the receipt of licensed materials.
1.3 CERTIFICATION OR DECOMMISSIONING FUNDING PLAN I
If financial assurance is required for a particular license (as discussed in Section 1.2),
a licensee must decide whether to use a certification of financial assurance or a decommissioning funding plan (DFP), the only two options for demonstrating financial assurance.
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t CERTIFICATION A certification of financial assurance is a financial assurance demonstration that is based on one or more of the three amounts prescribed by regulation -- $75,000, $150,000, and $750,000. Only licensees that are not required to use a DFP may use a certification, as discussed below. The certification amount specified in the regulation h the required level of financial assurance coverage for a license who uses a certification.
DFP A decommissioning funding plan (DFP) is a financial assurance demonstration that is based on a site-specific cost estimate for decommissioning the licensed facility. Any licensee may use a DFP, but certain licensees must use a DFP, as discussed below. The amount of the facility-specific cost estimate is the required level of financial assurance coverage for the licensee who uses a DFP.
Licensees may be required to prepare a DFP rather than a certification depending on the type of license and the types and quantities of materials authorized under the particular license. Any license authorizing the possession or use of types or quantities of materials exceeding the following thresholds must use a DFP.2 Note that the relevant quantities and types of materials are those authorized under a particular license, even if a licensee does not currently or usually possess or use these same quantities and types of materials. Licensees whose possession limits are stated in general terms (e.g., up to 1 Ci of any nuclide having C
an atomic number from 1 to 83) should submit a decommissioning funding plan or commit
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to limiting meterial quantities below the applicable financial assurance thresholds.
l Tvoe of License Minimum License Threshold Reauirina Use of a DFP PART 30 Unsealed byproduct material with a half-life greater than 120 5
days in amounts greater than 10 times the applicable quantities of Appendix B to Part 30 (reproduced as Appendix B to this 5
guide) or, for a combination of isotopes, if R divided by 10 is greater than 1 when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30 PART 40 Source materialin a readily dispersible form exceeding 100 mci PART 70 Unsealed specialnuclear materialin amounts greater than 10' times the applicable quantities of Appendix B to Part 30 (reproduced as Appendix B to this guide) or, for a combination of isotopes, if R divided by 10'is greater than 1 where R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30 PART 72 Any amount of spent fuel or high-level radioactive waste fx i
k 8 Licensees who are authorized to possess only a single isotope may use the table in Appendix A to this guide to determine whether a DFP is required for a given activity level.
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Licensees who do not exceed the thresholds outlined above may use either a certification or a DFP. Such licensees may wish to elect use of a DFP if, for example, they J
wish to obtain the optimal amount of financial assurance, or because use of a site-specific cost estimate may result in a lower financial assurance coverage requirement than would use of a certification (as could happen if a single facility holds multiple licenses, each of which triggers % own certification amount).
Licensees who elect to use certifications of financial assurance should refer to Section 2 of this guide for applicable guidance. Complete Checklist 2 (in l
Section 2) if using a certification.
Licensees who use DFPs should refer to Section 3 for applicable guidance.
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Complete Checklist 3 (in Section 3)if using a DFP.
1.4 SELECTION OF FINANCIAL INSTRUMENT The second major decision that a licensee must make is to identify the type of financialinstrument it will use to demonstrate financial assurance. The choice of financial instrument typically depends on a number of factors, including the availability of the instrument to the licensee (i.e., whether or not the licensee is capable of obtaining it), the time and difficulty associated with establishing the instrumont, the cost of the instrument, and the expected amount of time remaining before decommissioning. Because these factors j
can differ for different licensees, each licensee will have to identify the financialinstrument that best meets its particular needs.
NRC regulations specify 13 allowable Summary of NRC Exper/ence types of f,nanc,alinstruments that fallinto one i
i of four " methods:"
NRC's experience to date is that the vast majority of licensees (on the order of 70 1.4.1 Method 1: Prepayment percent) have used a parent company guarantee, self-guarantee, letter of credit, Under prepayment, the licensee or surety bond. Trust funds also have provides advance decommissioning funding in been used to a lesser extent, as have full (i.e., in the amount of the applicable escrow accounts. In contrast, very few certification or in the amount of the facility-licensees have used govemment funds, specific cost estimate) using an account deposits of govemment securities, lines segregated from licensee assets and outside of credit, insurance, or extemal sinking the licensee's administrative control.
funds.
Licensees who use prepayment mechanisms generally will not need to provide additional funds at the time of decommissioning unless decommissioning costs exceed the amount of financial assurance provided. Prior to decommissioning, the funds placed in prepayment instruments can be expected to generate earnings. These earnings are payable to the licensee as long as adequate funds remain in the financial mechanism. Upon completion of decommissioning, any funds remaining in the prepayment mechan?sm are returned to the l
licensee. Prepayment instruments include the following:
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TRUST A trust is analogous to a special benk account that is administered by a
" trustee." Trusts can be readily established using an appropriately 6
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s qualified financialinstitution as the trustee. Trustee fees are typically I
taken from the earnings on the trust.
Licensees who elect to use a trust fund should refer to Section 4 for applicable guidance.
Licensees who use a trust should complete Checklist 4-A (in Section 4).
ESCROW An escrow is similar to a trust for practical purposes. Escrows must be established with a financialinstitution serving as the " escrow agent."
Escrow fees are similar to those associated with trusts, and are also frequently taken from the earnings on the account. Despite the similarities between escrows and trusts, NRC's past experience is that escrows have t'een less likely than trusts to be approved quickly by NRC (primarily because of unacceptable provisions that are sometimes added by the drafters of escrow agreements).
Licensees who elect to use an escrow account should refer to Section 5 for applicable guidance.
Licensees who use an escrow account should complete Checklist 5 A (in Section 5).
GOVERNMENT A government fund is simply a trust fund or escrow account for which FUND a State is scting as trustee or escrow agent.
Licensees who elect to use a government fund should refer to Section 6 for applicable guidance.
Licensees who use a government fund should complete Checklist 6-A~(in Section 6).
CERTIFICATE A certificate of deposit (CD)is a deposit of cash by a licensee into a OF DEPOSIT bank for a pre-specified period of time. CDs must be accompanied by a trust, escrow, or government fund.
Licensees who elect to use a CD should refer to Section 7 for applicable guidance.
Licensees who use a CD should complete Checklist 7-A (in i
Section 7).
DEPOSIT OF A' deposit of government securities is the deposit by a licensee (into GOVERNMENT an accompanying trust fund, escrow account, or government fund) of SECURITIES securities backed by the Federal government or a State or local p
government.
t Licensees who elect to use a deposit of government securities should refer to Section 8 for applicable guidance.
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Licensees who use a deposit of government securities should complete Checklist 8-A (in Section 8).
1.4.2 Method 2: Surety, insurance, or Guaraatee Under this method, an entity with adequate financial strength (e.g., a surety, bank, or insurer) guarantees that the required amount of funds will be available whenever needed.
Unlike prepayment, this method does not require the full amount of decommissioning funds to be set aside by the licensee in advance. Instead, the licensee typically pays an annual fee to the provider of the guarantee. Specific surety, insurance, or guarantee instruments include the following:
SURETY BOND A surety bond is a guarantee by a surety company that it will fund decommissioning if the licensee fails to do so. Licensees must pay an annual fee to the surety company to provide the bond and may have to provide substantial collateral, depending on the licensee's financial condition. Surety bonds must be accompanied by a standby trust.
Licensees who electing to use a surety bond should refer to Section 9 for applicable guidance.
Licensees who use a surety bond should complete Checklist 9-A.
LETTER OF CREDIT A letter of credit is a formalized line of credit extended by a bank on behalf of a licensee. The credit may be used only to fund decommissioning. As with a surc.y bond, licensees who use a letter of credit must pay an annual fee to the bank and may have to provide substantial collateral depending on the licensee's financial condition.
Letters of credit must be accompanied by a standby trust.
Licensees who elect to use a letter of credit should refer to Section 10 for applicable guidance, j
Licensees who use a letter of credit should complete Checklist 10-A.
LINE OF CREDIT A line of credit is similar in many respects to a letter of credit. NRC's experience is that knes of credit have been used by licensees very rarely. This is probably because, in order to be acceptable to NRC, a line of credit must be more formalized than is common practice for the banks that provide them.
Licensees who elect to use a line of credit should refer to i
Section 11 for applicable guidance.
Licensees who use a line of credit should complete Checklist 11-A.
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O INSURANCE An insurance policy is a guarantee by an insurance company that it will fund decommissioning activities, whenever needed. if a licensee does not do so. Insurance must be accompanied by a standby trust. NRC's experience is that insurance has almost never been used by licensees and, when insurance has been used, the submittals usually have not met NRC's acceptance criteria.
Licensees who elect to use insurance should refer to Section 12 for applicable guidance.
Licensees who use insurance should complete Checklist 12-A.
PARENT COMPANY A parent company guarantee is a guarantee from a licensee's corporate GUARANTEE parent that it will fund or carry out decommissioning activities if the licensee fails to do so. The corporate parent must pass a financial test to demonstrate that it has adequate financial strength to provide the guarantee. The parent company guarantee (because of its very low cost) is usually the financial instrument of choice for licensees with corporate parents willing and able to provide such a guarantee for decommissioning.
Licensees who elect to use a parent company guarantee should refer to Section 13 for applicable guidance.
Licensees who use a parent company guarantee should b
complete Checklist 13-A.
SELF-GUARANTEE A self-guarantee is a guarantee by the licensee itself that it will fund and carry out decommissioning activities. The licensee must pass a financial test to demonstrate that it has adequate financial strength to provide the guarantee. Self-guarantees may not be used by licensees that have a corporate parent. Because of its very low cost, a self-guarantee is usually the financial instrument of choice to assure decommissioning for licensees who are able to provide such a guarantee.
Licensees who elect to use a self-guarantee should refer to Section 14 for applicable guidance.
Licensees who use a self-guarantee should complete Checklist 14-A.
143 Method 3: External Sinking Fund An external sinking fund allows a licensee to gradua//y prepay for decommissioning by combining the use of a partially funded prepayment instrument (e.g., a trust or escrow) n with a surety bond, letter of credit, or insurance covering the unfunded balance. As the licensee gradually funds the prepayment instrument over time, the licensee is allowed to A
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reduce by a corresponding amount the coverage provided by the surety bond, letter of credit, or insurance.
O
Y Licensees who elect to use an external sinking fund should refer to Section 15 for applicable guidance.
Licensees who use an external sinking fund should complete Checklist 15-A.
i 1.4.4 Method 4: Statement of latent j
A statement of intent is a commitment by a Federal, State, or local government i
licensee to request and obtain decommissioning funds from its funding body when necessary. Because of its very low cost, the statement of intent is usually the financial instrument of choice to assure decommissioning for governrnent licensees. This method (and instrument) is available only to licensees that are government entities.
Licensees who elect to use a statement of intent should refer to Section 16 for applicable guidance.
Licensees who use a statement of intent should complete Checklist 16-A.
1.5 RECORDKEEPING The recordkeeping requirements for licensees are in 10 CFR 30.35(g),40.36(f),
70.25(g), and 72.30(d). At a minimum, licensees must keep records of:
Spills or other unusual occurrences if contamination remains after any cleanup procedure or if contaminants may have spread to inaccessible areas. These records must include information on nuclides, quantities, forms, and concentrations.
As-built drawings and modifications of structures and equipment in restricted areas where radioactive materials are used or stored.
Records of the cost estimate performed for the decommissioning funding plan l
or of the amount certified for decommissioning, as well as records of the funding methods used for assuring funds.
A copy of the financial assurance mechanism and other supporting documentation.
Timely notification should be given to the NRC in the following situations.
Any proposed changes, revisions, and adjustments to the underlying cost estimates and to the financial mechanisms, including a change from one mechanism to another.
1 Commencement of bankruptcy action involving the licensee. Written notification of commencement of bankruptcy proceedings is to be submitted, j
as required by 10 CFR 30.34(h),40.41(f),70.32(a)(9), and 72.44(b)(6).
1 10 1.
Reports that certifying completion of the activities for which financial assurance is provided must be submitted before the financial assurance mechanism may be canceled.
1.6 CANCELING, REPLACING, OR TRANSFERRING FINANCIAL INSTRUMENTS The financial assurance mechanisms outlined in this regulatory guide are designed so that licensees may not cancel them without NRC approval, even if a replacement instrument is being established. Licensees who wish to cancel their existing financial mechanisms must first submit a replacement to NRC for review and approval or notify NRC that decommissioning has been completed. If a replacement mechanism is provided to NRC for review, the current mechanism will not be canceled or released before NRC's review and approval of the replacement mechanism. Licensees should provide NRC with adequate time to review proposed replacement mechanisms. Upon NRC's approval of the replacement mechanism (or termination of the license if decommissioning has been completed), the applicable NRC Branch Chief will stamp the current mechanism " canceled," sign it, and release it to the licensee.
If the license holder is expected to change as a result of a corporate acquisition or divestiture, the licensee must obtain NRC's approval before an existing financial instrument may be transferred or teleased. If the new licenn holder intends to establish a new financialinstrument to replace the existing one, NRC must approve the replacement before NRC will release the existing mechanism. NRC recommends that the licensee communicate with NRC staff concerning any replacement instrument well in advance (at least 60 days) of fm the scheduled change in licensee or in corporate ownership.
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2.
CERTIFICATIONS OF FINANCIAL ASSURANCE A certification of financial assurance is a financial assurance demonstration that is based on one or more of the three amounts prescribed in the regulations -- $75,000,
$150,000, and $750,000. For licensees who use certifications, the certification amount specified in the regulations becomes the required level of financial assurance coverage. Only certain licensees may use a certification, however, as discussed below. Licensees who use certifications must undertake the following actions, as summarized in Checklist 2.
Determine the appropriate certification amount (see Section 2.1)
Prepare a certification statement (see Section 2.2)
Submit the required documentation (see Section 2.3)
Licensees using certifications eventually may have to adjust their financial assurance coverage levels (and update their financialinstruments) for one of three reasons:
(1)
The NRC may periodically adjust the certification amounts specified in the regulations, (2)
The licensee may elect to replace the certification with a decommissioning funding plan (DFP), or (3)
The licensee intends to initiate decommissioning and prepares a 3
decommissioning plan.
Also, regardless of a particular licensee's eligibility to use a certification amount, any licensee may elect instead to use a DFP based on a site-specific cost estimate to determine the required level of financial assurance coverage. Licensees may wish to use a DFP if, for example, they wish to obtain the optimal amount of financial assurance, or because use of certification amounts may overstate a facility's decommissioning costs (as could happen if a single facility holds multiple licenses, each of which triggers its own certification amount).
Guidance on preparing DFPs is presented in Section 3 of this regulatory guide.
2.1 DETERMINING THE APPROPRIATE CERTIFICATION AMOUNT Licensees may be eligible to use a particular certification amount depending on the type of license and the types and quantities of materials authorized under the particular license, as summarized below.' Notethat the relevant quantities and types of materials are
- Certain licensees who notify the NRC that they will terminate activities under their licenses and decommission their facilities must submit decommissioning plans (not the same as decommissioning funding plans). The decommissioning plan must contain "an updated detailed cost estimate for decommissioning, a comparison of that estimate with present funds set aside for decommissioning, and a plan for assuring the availability of adequate funds for completion of decommissioning" (10 CFR 30.36(g)(4)(v),40.42(g)(4)(v), and i
70.38(g)(4)(v)).
- Licensees authorized to possess only a single isotope may use the table in Appendix A to this guide to determine the appropriate certification amount for a given activity level.
12
A f
CHECKLIST 2 CERTIFICATIONS OF FINANCIAL ASSURANCE License Number (s):
Applicable Part of 10 CFR (check all that apply):
o Part 30 o Part 40 0 Part 70 a Part 72 a
Determine the appropriate certification amount (s) (see Section 2.1)
- Amount required under Part 30 for scaled sources:
- Amount required under Part 30 for unsealed sources:
- Amount required under Part 40:
- Amount required under Part ',0:
- Total ofall certification amountsfor all licenses:
O Prepare certification statement (see Section 2.2)
O Include the necessary documentation (see Section 2.3):
O Certification statement a
Financial instrument and supporting documentation those authorized under a particular license, even if a licensee does not currently or usually possess or use these same quantities and types of materials. The following discussion of applicable certification amounts is organized into four parts corresponding to the four general license types:
Part 30 - Byproduct Material Part 40 - Source Material Part 70 - Special Nuclear Material e
Part 72 -Independent Spent Fuel Storage Installations 2.1.1 Part 30 Certification Amounts The following apply to the use of certification amounts by Part 30 licensees.
A certi// cation amount of $75,000 applies to Part 30 licensees who are authorized to possess or use sealed sources or plated foils with a half-life greater than 120 days in amounts greater than 10' times the applicable quantities of Appendix B to 10 CFR Part 30 (reproduced as Appendix B to this guide) or
?
for a combination of isotopes,if R divided by 10 is greater than 1 but if R
\\
divided by 10' is Greater than 1 (when R is defined as the sum of the ratios of 13
f O
the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30).
A certification amount of $150,000 applies to Part 30 licensees who are authorized to posse,ss or use unser, led byproduct material in amounts greater than 10 but less than or equal to 10' times the applicable 8
quantities of Appendix B to 10 CFR Part 30 or for a combination of isotopes,if R divided by 10 is greater than 1 but if R divided by 10 is less than or equal to 1 (when R is defined as the sum of the 4
ratios of the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30).
A certi// cation amount of $750,000 app //es to Part 30 licensees who are authorized to possess or use unsealed byproduct material in amounts exceeding the limit applicable to the $150,000 certification amount, as stated above, but in amounts greater than 10' but less than or equal to 10' times the applicable I
quantities of Appendix B to 10 CFR Part 30 or 4
for a combination of isotopes, if R divided by 10 is greater than 1 but if R divided by 10'is less than or equal to 1 (when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30).
A certi// cation amount may not be used for a Part 30 license authorizing the possession or use of byproduct materialin amounts exceeding the limit applicable to the $750,000 certification amount, as stated above. These licensees must prepare DFPs, as discussed in Section 3.
No //nanciaisssurance is required (as discussed in Section 1.2) for a Part 30 licensee who is authorized to possess or use (1) unsealed byproduct material in amounts less j
than or equal to 10 times the applicable quantities of Appendix B to 10 CFR Part 30 (reproduced as Appendix B to this guide) or, for a combination of isotopes,if R divided by 10 is less than or equal to 1 when R is defined as the sum of the ratios of 8
the quantity of each isotope to the applicable value in Appendix B to Part 30, or (2) sealed sources or plated foils in amounts less than or equal to 10' times the applicable quantities of Appendix B to 10 CFR Part 30 or, for a combination of isotopes, if R divided by 10'"is less than or equal to 1 when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to Part 30.
2.1.2 Part 40 Certification Amounts The following applies to the use of certification amounts by Part 40 licensees.
A certification amount of $150,000 applies to a Part 40 licensee who is authorized to possess or use source materialin a readily dispersible form in amounts greater than i
10 millicuries (mci) but less than or equal to 100 mci.
l 14
A certi# cation amount may not be used for Part 40 licensees authorized to possess or a
\\
use source materialin a readily dispersible form in amounts greater than 100 mci.
'These licensees must prepare DFPs, as discussed in Section 3.
t No #nencielassurance is required (as discussed in Section 1.2) for Part 40 licensees who are authorized to possess or use source material in a readily dispersible form in amounts less than or equal to 10 mci.
2.1.3. Part 70 Certification Amounts The following apply to the use of certification amounts by Part 70 licensees.
~ A certification amount of #150,000 applies to a Part 70 licensee who is authorized to possess or use unsealed special nuclear material 8
in amounts greater than 10 but less than or equal to 10' times the applicable quantities of Appendix B to Part 30 (reproduced above) or 8
for a combination of isotopes, if R divided by 10 is greater than 1 but if R divided by 10* is less than or equal to 1 (when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30).
A certi# cation amount of #750,000 applies to a Part 70 licensee who is authorized to possess or use unsealed special nuclear material in amounts exceeding the limit applicable to the $150,000 certification amount, as stated above, but in arnounts greater than 10' but less than or equal to 10' times the applicable quantities of Appendix B to 10 CFR Part 30 or
.for a combination of isotopes, if R divided by 10* is greater than 1 but if R divided by 10' is less than or equal to 1 (when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30).
A certification amount may not be used for a Part 70 license authorizing the possession or use of unsealed special nuclear materialin amounts exceeding the limit applicable to the $750,000 certification amount, as stated above. These licensees must prepare DFPs, as discussed in Section 3.
No financialassurance is required (as discussed in Section 1.2) for a Part 70 license authorizing the possession or use of unsealed special nuclear material in amounts less 8
than or equal to 10 times the applicable quantities of Appendix B to 10 CFR Part 30 8
or, for a combination of isotopes,if R divided by 10 is less than or equal to 1 when R is defined as the sum of the ratios of the quantity of each isotope to the applicable value in Appendix B to 10 CFR Part 30. No financial assurance is requried for A
licensees possessing only special nuclear material in sealed form.
U 15
2.1.4 Part 72 Certification Amounts Licensees under Part 72 are not permitted to use certifications of financial assurance.
These licensees must prepare DFPs, as discussed in Section 3.
2.2 PREPARING THE CERTIFICATION STATEMENT Licensees who use cortifications of financial assurance prepare a certi// cation statement. In the certification statement, the licensee certifies that it has obtained financial assurance in the appropriate certification amount and provides the details needed to verify that the certification amount is accurate under NRC regulations. As discussed above, these details include the license type and the types and amounts of materials authorized L the license.
The model wording for certification statements that is presented in this section is acceptable to the NRC staff. Although other wording may also be satisfactory, all certification statements should clearly identify the licensee, the license number, the type of license (e.g., Part 30), the types and amounts of materials authorized by the license (including specific isotopes where applicable), the appropriate certification amount, and a certification that the information presented in the statement is accurate.
2.3 SUBMITTING THE REQUIRED DOCUMENTATION Under NRC's financial assurance regulations,10 CFR 30.35(b)(2),40.36(b)(2), and i
70.25(b)(2), licensees who use certifications of financial assurance must submit the following to the NRC.
i The certification statement (as discussed above in Section 2.2) and a
An origina//y signed dup //cate of the financial instruments obtained to provide financial assurance for decommissioning. This regulatory guide describes the allowable financial instruments first in general terms, in Section 1, and then in detail beginning in Section 4. Licensees should refer to these other sections to i
ensure that their financial assurance instruments and supporting documentation will be acceptable to the NRC.
j in addition to submitting these materials, licensees must maintain records of the j
amount certified for decommissioning and the funding methods used for assuring funds (e.g.,
a copy of the instruments and all supporting documentation).
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16
/
2.4 Model Certification Statement
\\\\
1 CERTIFICATION OF FINANCIAL ASSURANCE Principal: [ Legal names and business address oflicensee]
NRC license number, name and address of the facility Issued to: U.S. Nuclear ReguLtory Commission I certify that [ insert name oflicensee) is licensed to possess the following types of
[ insert all that apply: " sealed sources or plated foils with a half-life greater than 120 days licensed under 10 CFR Part 30," " unsealed byproduct material with a half-life greater than 120 days licensed under 10 CFR Part 30," " source material in a readily dispersible form licensed under 10 CFR Part 40," and " unsealed special nuclear material licensed under 10 CFR Part 70"] in the following amounts:
Tvoc of Material Amount of Material
( ])-
[ List materials and quantities of materials noted above. For byproduct materials and special nuclear materials, list separately the type and amount of each isotope authorized by the license.]
I also certify that fmancial assurance in the amount of[ insert "$75,000,"
"$150,000," "$750,000," or the applicable sum of these amounts] has been obtained for the purpose of decommissioning as prescribed by 10 CFR Part
[ insert 30,40, or 70].
[ Signatures and titles of officials ofinstitution]
[ Corporate seal]
[Date]
OO 17
3.
DECOMMISSIONING FUNDING PLANS A decommissioning funding plan (DFP) is a financial assurance demonstration that is based on a site-spec ///c cost estimate for decommissioning the licensed facility. The amount of the facility-specific cost estimate becomes the minimum required level of financial assurance coverage. Any licensee may use a DFP, but certain licensees must use a DFP, as discussed in Section 1.
Licensees who use DFPs must undertake the following actions, as summarized in Checklist 3.
Prepare a site-specific decommissioning cost estimate (see Section 3.1)
Determine the means that will be used to adjust the cost estimate and associated funding levels periodically over the life of the facility (Sce Section 3.2)
Submit the required documentation (see Section 3.3) 3.1 F REPARING THE SITE-SPECIFIC COST ESTIMATE j
In evaluating decommissioning cost estimates, the NRC considers the following factors:
The completeness of the estimate (i.e., scope),
=
The level of detail presented, and The reasonableness of the estimate (i.e., the accuracy and magnitude
+
of estimated costs).
These factors are discussed briefly below. Sections 3.1.1-3.1.3 outline or describe the three basic parts of a cost estimate: the facility description, the estimated decommissioning costs, and key assumptions. Section 3 concludes with j
a series of cost estimating tables that can assist licensees in preparing decommissioning cost estimates that are likely to be acceptable to the NRC.
The site-specific cost estimate required for a DFP should represent the licensee's best approximation of all direct and indirect costs of decommissioning its facilities under routine facility conditions. The assumption that routine facility conditions will prevail at the time of decommissioning implies that the cost estimate need not consider a worst-case decommissioning scenario. Similarly, however, the estimate should not be based on a scenario that is more optimistic than would be consistent with routine facility conditions.
By way of example, NRC believes it reasonable for decommissioning cost estimates to assume the following:
18 f
t
r fx CIIECKLIST 3 DECOMMISSIONING FUNDING PLANS License Number (s):
Applicable Part of 10 CFR (check all that apply):
o Part 30 0 Part 40 0 Part 70 0 Part 72 O
Prepare a detailed, site-specific cost estimate (see Section 3.1) o Determine the means that will be used to adjust the site-specific cost estimate and associated funding levels periodically over the life of the facility (see Section 3.2) o Include the necessary documentation (see Section 3.3):
O Detailed, site-specific cost estimate o
Description of the means that will be used to adjust the site-specific cost estimate o
A certification that financial assurance for decommissioning has been provided in the amount of the decommissioning cost estimate o
Financial instrument and supporting documentation
/ h
(
)
G' inventories of materials and wastes at the time of decommissioning will I
+
be the maximum amounts associated with routine facility conditions.'
Costs will be incurred to decontaminate some areas where contamination is possible but uncertain (e.g., areas that were contaminated in the past and that are cleaned up only periodically); and Costs will be incurred for some cleanup of minor or cumulative spills that might have gone undetected under routine facility conditions before decommissioning.
Decommissioning activities take place immediately on cessation of operations without multi-year storage-for-decay periods.
Decommissioning activities do not need to include removal or disposal of non-radioactive structures and materials beyond that necessary to terminate the NRC
- license,
[m}
- For example, if radioactive waste is continually generated but is not disposed of until a specific volume of
\\,/
waste has been accumulated, for the cost estimate it is reasonable to assume that, at the time of decommissioning, the f acility will have an inventory of waste equal to the maximum amount routinely accumulated prior to disposal.
19
A decommissioning cost estimate should contain a substantial level of detail, consistent with the guidance presented in this section, to allow NRC to fully evaluate the adequacy of the estimate. A series of cost estimating tables are provided at the end of this section to assist licensees in preparing decommissioning cost estimates that contain sufficient detail and are likely to be acceptable to NRC.
The NRC staff recommends that licensees pattern their cost estimates after tha cost estimating tables presented at the end of this section.
The labor estimates, material costs, and other factors of the cost estimate j
should have a clear and reasonable basis. Licensees may wish to consider the use l
of NRC-provided cost information such as that found in NUREG/CR-1754,
" Technology, Safety and Costs of Decommissioning Reference Non-Fuel-Cycle I
Nuclear Facilities," Addendum 1' (October 1989), and other NRC cost estimating references. (Other documents that may help in calculating estimates for decommissioning costs are in the Bibliography of this guide.)
Complete decommissioning cost estimates contain three basic parts:
(1)
A facility description, (2)
The estimated decommissioning costs (including labor costs, nonlabor costs, and a contingency factor), and (3)
Key assumptions.
These parts of cost estimates are discussed separately below and have been incorporated into the cost estimating tables at the end of Section 3.
3.1.1 Facility Description The facility description provides the basic context of the estimate it should include both general and specific information, including:
License number and type, Specific quantities and types of materials authorized by the license (e.g., by specific isotope),
General discussion of how licensed materials are used in the licensee's operations, Description of facility buildings, rooms, and grounds, including the number and dimensions of areas (e.g., laboratories) that require decontamination, Number and dimensions of facility components (e.g., fume hoods, glove boxes, laboratory benches, ductwork) that require decontamination, Levels of contamination, and Quantities of materials or waste accumulated prior to shipping or disposal (if applicable).
20 l
1
i i
O The facility description should also address any other characteristics of the Q
facility.that need to be understood to evaluate the estimated decommissioning costs.
3.1.2 Estimated Decommissioning Costs l
The cost estimate must account for the costs of all phases of the decommissioning process. The estimate should itemize each of the major decommissioning tasks or activities and should distinguish between labor costs and nonlabor costs, as described in Sections 3.1.2.1 and 3.1.2.2. The estimate should also explicitly incorporate a contingency factor as discussed in Section 3.1.2.3.
3.1.2.1 Labor Costs Labor costs associated with all decommissioning tasks and activities should include basic wages and benefits for licensee and contractor staff performing decommissioning-related tasks, overhead costs,8 and contractor profit (if applicable).
Labor costs should be broken out by major task or activity, such as:
Planning and preparation of the facility and site for decommissioning, including activities such as preparing a detailed decommissioning plan, preparing other State or local documentation, developing work plans, performing staff training, and procuring special equipment,-
Decontamination or dismantling of radioactive facility components, Restoration of contaminated areas on facility grounds,'if necessary, a
A final radiation survey, Site stabilization and long-term surveillance, if necessary.
1 The cost estimate should also describe the techniques and methods that will be used to decontaminate facility components because these decontamination methods willimpact the amount of labor required. if any of the decommissioning tasks or activities listed above do not apply to a particular facility, the estimate should explain why this is the case.
3.1.2.2 Nonlabor Costs Non-labor costs also are likely to arise during decommissioning, such as:
- The term " overhead" typically includes costs that are not airectly traceable to any particular product produced or project conducted by the firm. Thus, overhead typically includes " period" costs such as insurance, utilities, rent, supplies, property taxes, depreciation, and the costs of any wages, salaries, and benefits incurred as a result of the corporation's of ficers and " support staff" (e.g., accounting staff, legal staff, janitorial staff, security staff). To spread such costs across multiple products or projects fairly, firms usually calculate an " indirect
- overhead rate that is applied to all direct labor hours (i.e., on those labor hours that are directly associated with g
particular products or projects). Appendix D of Addendum 1 to NUREG/CR 1754 applies an overhead rate of 50 percent on direct labor for most licensee staff (70 percent for the supervisor), and an overhead rate of 110 percent on direct labor for contractor personnel, for decommissioning activities at six reference facilities. If other rates are used, licensees should provide justification for those rates in the cost estimate.
21
Packing materials e
Shipping costs (these could be classified as labor costs for some
=
facilities) f Disposal costs a
Other equipment and supplies (e.g., personal protective equipment, brushes)
Miscellaneous expenses (e.g., license fees, insurance, taxes).
3.1.2.3 Contingency Factor Because of the uncertainty in waste disposal costs and other costs associated with decommissioning, the cost estimate should apply a contingency factor of 25 percent to the sum of all estimated decommissioning costs. The 25 percent contingency factor helps protect against unforeseen decommissioning costs and should not be reduced or eliminated simply because foreseeable costs are low.
I 3.1.3 Key Assumptions (including Salvage Value)
Key assumptions used in the decommissioning cost estimate should be identified and adequately justified. For example, claims of low levels of contamination should be supported by test results or by adequate discussion of how I
the licensed materials are used throughout the facility Unusual items, such as disposal of radioactive materials at zero costs, should be supported by relevant l
information (e.g., disposal agreements, contracts, or other information). In general, justifications based on "past experience" are likely to be adequate only if the past experience is relevant; therefore, the cost estimate should compare comparable decommissionings with respect to facilities, materials, processes, management, regulatory requirements, and price levels. If cost models are used, the models should be described in enough detail to determine whether they are adequate and appropriate given the characteristics of the facility.
The cost estimate should clearly state that it does not take credit for any sa/vage value that might be realized from the sale of potential assets (e.g.,
recovered materials or decontaminated equipment) during or after decommissioning.
If estimated credits are taken for salvage value but are not fully realized at the time of decommissioning, the cost estimate tas well as the financial assurance) may be significantly low.
l 3.2 DETERMINING THE MEANS FOR ADJUSTING THE COST ESTIMATE Licensees who use DFPs must specify the means (i.e., the method and frequency) by which they will periodically adjust their cost estimates and associated funding levels over the life of their facilities. In general, cost estimates should be l
updated with the current prices of goods and services at least every five years or l
when the amounts or types of material at the facility change. Adjustments should be made to account for inflation, for other changes in the prices of goods and 22 j
t services, for changes in facility conditions, and for changes in expected decommissioning procedures.
3.3 SUBMITTING THE REQUIRED DOCUMENTATION Under NRC's financial assurance regulations (10 CFR 30.35(e),40.36(d),
70.25(e), and 72.30(b)), licensees who use DFPs must submit the following to NRC:
A site-specific. cost estimate for decommissioning (as discussed in Section 3.1),
A description of the means that will be used to adjust the site-specific cost estimate and associated funding levels periodically over the life of the facility (as discussed in Section 3.2),
A certification by the licensee that financial assurance for decommissioning has been provided in the amount of the decommissioning cost estimate, and An original /y signed dup //cate of the financial instruments that provide financial assurance for decommissioning. This guide describes the allowable financial instruments in general terms in Section 1, and then C) in detail beginning in Section 4. Licensees should refer to these
. sections to ensure that their financial assurance instruments and supporting documentation will be acceptable to NRC.
In addition to submitting these materials to NRC, licensees must maintain records of these materials in their files.
1 1
-23
3.4 Facility Description Summary NRC license numbers and types (i.e., Part 30, 40, 70, or 72)
Types and quantities of materials authorized under the licenses listed above.
Description of how licensed materials are used.
(Use additional sheets as necessary)
Description of facility, including buildings, rooms, grounds, and description of where particular types of materials are used.
i (Use additional sheets as necessary) l Quantities of materials or waste accumulated before shipping or disposal.
l I
(Use additional sheets as necessary) 24
3.5 Number and Dimensions of Facility Components i
Use this table to summarize relevant features of the facility. Copy and complete the table as necessary for each room, laboratory, or area. Rooms, laboratories, or areas with similar levels of contamination may be consolidated in one table.
Name of room, laboratory, or area:
Level of Contamination:
Dimensions of Number of Total Dimensions Component' Component Components g,,
(specify units)
Glove Boxes Fume Hoods Lab Benches Sinks Drains Floors I
Walls Ceilings Ventilation /Ductwork j
Hot Cells j
Equipment / Materials Soil Plots Storage Tanks Storage Areas Radwaste Areas Scrap Recovery Areas Maintenance Shop Equipment Decontamination Areas Other (specify) 25
f 3.6 Planning and Preparation (Work Days)
Estimate the number of work days, by specific labor category, that will be required to complete planning and preparation activities. Include all appropriate labor categories, including Supervisor, Foreman. Craftsman, Technician, Health Physicist, Laborer, Clerical, and others as needed.
Labor Labor Labor Labor Labor Labor Activity Category Category Category Category Category Category Preparation of Documentation for Regulatory Agencies Submittal of Decommissioning Plan to NRC when required by 10 CFR 30.36(g)(1),
40.42(g)(1), or 70.38(g)(1)
Development of Work Plans Procurement of Special Equipment Staff Training Characterization of Radiological Condition of the Facility (including soil and tailings analysis or groundwater analysis, if applicable)
Other (specify)
TOTALS O
26 I
r:
3.7 Decontamination or Dismantling of Radioactive Facility Components (Work Days) l Estimate the number of workdays, by specific labor category, that will be required j
to complete decontamination and/or dismantling activities for each facility j.
component. Copy and complete this table as necessary for each room, laboratory, or area.. Rooms, laboratories, or areas with similar levels of contamination may be consolidated in one table.
Name of room, laboratory, or area:
Level of Contamination:
Labor Labor Labor Labor Labor Labor Comeponent Categ ry Category Category Category Category Category M
Glove Boxes Fume Hoods Lab Benches Sinks Drains Floors Walls Ceilings Ventilation /Ductwork IIot Cells Equipment / Materials -
Soil Plots Storage Tanks Storage Areas Radwaste Areas Scrap Recovery Areas Maintenance Shop Equipment Decontamination Areas Other(specify)
TOTALS 27
3.8 Restoration of Contaminated Areas on Facility Grounds (Work Days)
Estimate the number of work days, by specific labor category, that will be required to restore contaminated areas on facility grounds.
Labor Labor Labor Labor Labor Labor l
Activity Category Category Category Category Category Category BackEll and Restore Site B
TOTALS 3.9 Final Radiation Survey (Work Days)
Estimate the number of work days, by specific labor category, that will be required to conduct a final radiation survey.
Labor Labor Labor Labor Labor Labor Activity Category Category Category Category Category Category TOTALS j
91 28
G 3.10 Site Stabilization and Long-Term Surveillance (Work Days)
Estimate the number of work days, by specific labor category, that will be required to complete site stabilization and long-term surveillance activities.
Labor Labor Labor Labor Labor Labor Activity Category Category Category Category Category Category TOTALS 3.11 Total Work Days by Labor Category Enter the total work days estimated for each specific labor category from the applicable table above (i.e., from the bottom rows of Tables 3.6 through 3.10).
Labor Labor Labor Labor Labor Labor Task Category Category Category Category Category Category Planning and Preparation (TOTALS from Table 3.6)
Decontamination and/or Dismantling of Radioactive Facility Components (Sum of TOTALS from all copies of Table 3.7)
Restoration of Contaminated Areas on Facility Grounds (TOTALS from Table 3.8)
Final Radiation Suney (TOTALS from Table 3.9)
Site Stabilization and Long.
Term Suneillance (TOTALS from Table 3.10) 29
T 3.12 Worker Unit Cost Schedule Estimate labor costs (including salary, fringe benefits, and corporate overhead).
Include all appropriate labor categories, including Supervisor, Foreman, Craftsman, Technician, Health Physicist, Laborer, Clerical, and others as needed.
Labor Labor Labor Labor Labor Labor Labor Cost Component Category Category Category Category Category Category Salary & Fringe ($/ year)
Overhead Rate (%)
Total Cost Per Year Total Cost Per Work Day *
- Based on work days per year (e.g., 260).
l 3.13 Total Labor Costs by Major Decommissioning Task Multiply the estimated work days for each specific 4ter <;ategory (from Table 3.11) by the total cost per work day for the corresponding &m category (from Table
(
3.12), and enter the results in the table below. Then, iM across all labor categories to determino the total labor costs for each major decommissioning task.
Labor Labor Labor Labor Labor Labor Total Task Categm y Category Category Category Category Category Labor Cost Planning and Preparation Decontamination or Dismantling of l
Radioactive Facility Components Restoration of Contaminated Areas on Facility Grounds Final Radiation Survey Site Stabilization and Long Term Surveillance 30
3.14 Packaging, Shipping, and Disposal of Radioactive Wastes b
(Excluding Labor Costs)
U i
(a) Packing Material Costs Estimate the types and volumes of waste expected to be generated, along with the number and types of containers required for packaging the waste. Multiply the number of containers required by the unit cost per container.
um rf Type of Unit Cut of Total PacWag Weste Type Volume (m')
Containers Costiiner Container Costs TOTAL (b) Shipping Costs Estimate the number of truckloads of waste to be shipped. Multiply shipping costs per mile (including truckload costs, surcharges, and overweight charges) by the total distance shipped.
\\
Unit Cost Overweight Distance Total I
Waste Type IS/"i'*/
Charges Shipped Shipment T
o l
truckload)
($/ mile)
(miles)
Costs TOTAL (c) Waste Disposal Costs Estimate the volume of waste to be disposed. Multiply the volume of waste disposed by the unit disposal cost (including any volume-based surcharges). Add any surcharges that are based on the number of containers of waste.
SPuel Volume Unh Cost Surchaqn Waste Type Total Disposal Costs (m')
($/m')
($/m or $/ container) 2 dI TOTAL 31
)
3.15 Equipment /Gupply Costs (Excluding Containers)
Estimate the quantity of equipment and supplies required for decommissioning and multiply that quantity by the appropriate unit costs.
Total Equipment / Supplies Quantity Unit Cost Equipment / Supply Cost TOTAL 3.16 Miscellaneous Costs Estimate any other applicable costs.
l Cost Item Total Cost License Fees Insurance Taxes Other (specify)
TOTAL l
O 32 1
l l-L 3.17 Total Decommissioning Costs
]
Enter the total costs reported in Tables 3.13, 3.14(a)-(c), 3.15, and 3.16 into the appropriate cells below, and add them to obtain a subtotal. Add to the subtotal a contingency allowance in the amount of 25 percent of the subtotal to obtain the total l
decommissioning cost estimate.
- * ****8' #
Task / Component Cost Total Cost Planning and Preparation (From Table 3.13)
Decontamination and/or Dismantling of Radioactive Facility i
Components
]
(From Table 3.13)
Restoration of Contaminated Areas on Facility Grounds (From Table 3.13)
Final Radiation Survey (From Table 3,13) -
Site Stabilization and Long-Term Surveillance (From Table 3.13)
Packing Material Costs (TOTAL from Table 3.14(a))
(
Shipping Costs (TOTAL from Table 3.14(b))
Waste Disposal Costs (TOTAL from Table 3.14(c))
Equipment / Supply Costs (TOTAL from Table 3.15)
Miscellaneous Costs (TOTAL from Table 3.16) j SUBTOTAL 100 %
25% Contingency TOTAL DECOMMISSIONING COST ESTIMATE l
i v(%
33
4.
TRUST FUNDS A trust fund functions much like a savings account except that (1) monies are legally segregated for a specific purpose and (2) the funds are administered by someone with a fiduciary responsibility to keep or use the property in the fund for the benefit of the beneficiary. A decommissioning trust is governed by an irrevocable, three-party written agreement in which the licensee (called the grantor or, less frequently, the trustor or settlor) transfers an amount of cash, securities, or other liquid assets at least equal to the cost of decommissioning to a trustee, such as a bank.' The trustee manages the fund according to the terms of the written agreement for the benefit of the beneficiary (NRC).
The remainder of this section discusses the primary criteria that determine whether particular trust fund submissions will be acceptable to NRC.
Section 4.1 describes qualifications required of the issuer (the trustee).
Section 4.2 addresses funding and the adequacy of coverage.
Section 4.3 discusses the documentation that supports a trust fund.
Section 4.4 presents a model trust fund submission that NRC has found to be acceptable.
This section also contains two checklists designed to assist licensees in preparing acceptable decommissioning trusts. Checklist 4-A summarizes the primary criteria used by NRC to evaluate trust funds. Checklist 4-B (which should be used only by licensees who revise or do not use the model wording for trust agreements) presents terms and conditions tha' are recommended for trust agreements.
1 4.1 QUALIFICATIONS OF THE ISSUER: THE TRUSTEE The regulations on financial assurance for decommissioning (10 CFR 30.35(f)(2)(ii),
40.36(e)(2)(ii),70.25(f)(2)(ii), and 72.30(c)(2)(ii)) require that the trustee be acceptable to the NRC. Acceptable trustees include appropriate State or Federal government agencies and financialinstitutions that have the authority to act as trustees and whose trust operations are regulated and examined by a Federal or State agency. Trust operations are regulated separately from other banking operations, and it is very common for a regulated bank not to have the authority to act as a trustee. In addition, NRC's requirement for trustees is not usually met by individuals who are not acting as a representative of a financial institution.
The word " National" in the title of a financial institution signals that the institution is Federa//y regulated, as do the words " National Association" or the initials "N.A."
following its title. To determine whether such a financial institution qualifies as an acceptable trustee, licensees should contact the appropriate district office of the Office of the Comptroller of the Currency (OCC) and confirm that the institution (1) is Federally regulated and (2) has Federally regulated trust operations. The six district offices of the OCC, along with the States and territories under their jurisdiction, are:
34
(
CHECKLIST 4-A N
TRUST FUNDS O
Documentation is complete:
O 1.
- Trust agreement (originally signed duplicate) 0 2.
Schedule A O
3.
Schedule B o
4.
Schedule C a
5.
Certificate of events a
6.
Certificate of resciution O
7.
Letter of acknowledgment a
8.
Receipt or statement from the trustee showing the trust's current market value a
9.
Checklist 4-B (it'model trust wording is modified or not used) o The trustee is qualified:
D The financial institution is regulated by a Federal or State agency.
p D
The financial institution has authority to act as a trustee and has trust operations that are regulated and examined by a Federal or State agency.
a The trust's current market value equals or exceeds the required coverage level.
Northeastern District Office (212-819-9860) -- CT, DE, ME, MD, MA, NH, NJ, NY, PA, Rl, VT, District of Columbia, Puerto Rico,. and Virgin Islands.
Southeastern Distri'ct Office (404-659-8855) -- AL, FL, GA, MS, NC, SC, TN, VA, and WV.
Central District Office (312-360-8800) -- IL, IN, KY, MI, OH, and Wl.
fAidwestern District Office (816-556-1800) -- IA, KS, MN, MO, NE, ND, and SD.
Southwestern District Office (214 720-0656) -- AR, LA, NM, OK, and TX.
I Western District Office (415-545-5900) -- AK, AZ, CA, CO, HI, ID, MT, NV, OR, UT, WA, WY, and Guam.
35
i I
The word " State" in the title of a financial institution signals that the institution is State regu/ated. U.S. branches of foreign banks are usually regulated by the State in which they are located. To determine whether a State-regulated financial institution qualifies as an acceptable trustee, licensees should contact the applicable State banking authority and confirm that the institution (1) is State regulated and (2) has State-regulated trust operations.
The titles of some financialinstitutions do not suggest that they are either Federally regulated or State regulated. In many such cases (but not all), these institutions are State regulated, as are many domestic branches of foreign banks.
The licensee may need or choose to replace the current trustee with a new trustee.
To be acceptable to the NRC, any successor trustee must meet the same standard as the original trustee (i.e., must be an appropriate State or Federal government agt.ncy or an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency). To ensure that the change in trustee does not negatively impact the trust, the licensee should replace the trustee only after sufficient notification (i.e.,90 days or more) has been provided to both the NRC and the current trustee.
4.2 LEVEL OF COVERAGE A trust must at all times contain sufficient assets, valued at their current market va/ue, to complete decommissioning activities.7 Therefore, at the time the trust is established, the trust must be fully funded, with a market value at least as great as the licensee's current decommissioning cost estimate or certification amount. When submitting a trust to NRC, a licensee should also submit documentation verifying the amount in the trust (e.g., a receipt from the trustee or a fund balance statement). If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the trust fund, the licensee must either (1) revise the trust to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the trust.
In addition to being adequately funded, a trust agreement should allow the trustee access to the fulllevel of coverage as appropriate to complete decommissioning activities.
For example,in the model wording for a trust agreement, the trustee is authorized to make decommissioning payments only up to the amount listed in Schedule A to the trust agreement. If the amount listed in S::hedule A is not at least as great as the NRC-approved cost estimate or certification amount, the trustee may not be able to make sufficient payments to complete decommissioning. even if there are sufficient monies in the trust.
4.3 RECOMMENDED DOCUMENTATION
{
The terms and conditions of a trust are governed by a written trust agreement. The wording of a trust agreement may vary, but Section 4.4 of this regulatory guide is a "model" trust agreement that would meet NRC's requirements and is recommended by the NRC.
7 The exception to this rule is a trust fund that is being combined with another financial mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
36
Ti f
i t
V)
' Other documentation must also be submitted _with a trust agreement. As summarized in Checklist 4-A,' the following documentation is to be submitted with the trust agreement.
I i
l The trust agreement (along with any amendments) is the written document l
that specifies the terms and conditions of the trust. The wording contained in 1
(
the model trust presented in Section 4.4 is acceptable to the NRC. Licensees l
who use other wording should refer to Checklist 4-B to ensure that the
' alternative wording contains all the necessary terms and conditions.
l
' Schedule A identifies the name and address of the licensee, the NRC license numbers' covered by the trust, the addresses of the licensed activity, the -
amount of regulatory assurances demonstrated by the trust agreement, and the date on which these amounts were last adju.sted and approved by NRC.
Schedu/e B lists the property (i.e., cash, securities, or other liquid assets) used to establish the initial trust fund.
~
k Schedu/e C specifies the compensation to be paid by the licensee to the trustee for its services.
l l
The model certificate of events and the model certificate of reso/ution provide the format for instructing the trustee to release monies from the trust in order
. to fund decommissioning activities at the licensee's facility. When submitted
![N as part of a financial assurance package, the certificates should be unexecuted drafts.~ (Actual authorization to release funds from the trust is accomplished when completed and notarized versions of these certificates are signed by the secretary of the licensee and presented to the trustee.)
The notarized /etter of acknowledgment verifies the execution of the trust agreement and certifies the trustee's signature and authority to enter into the
- agreement.
l I\\
l f Supporting documentation may differ for licensees who submit trusts that differ from the recommended model.
37
CHECKLIST 4-B Terms and Conditions Needed in Decommissioning Trust Agreements Use this checklist only ifdeviatingfrom the wording recommended in Section 4.4.
O Execution date of trust.
O Purpose of trust ("whereas" clauses).
O Statement oflicensee's regulatory otligations as reason for the trust fund.
O Grantor or grantors (introductory paragraph).
O Trustee or trustees (introductory paragraph):
a 1.
Names and addresses; and o 2.
Bank or corporate trustee.
O Identification of facilities (name, address, and license number) and cost estimates or certification amounts (Section 2 and Schedule A).
O Words of transfer, conveyance, and delivery in trust (Section 3).
O Description of trust propeny (Section 4 and Schedule B):
o 1.
- Cash, a 2.
Securities, and a 3.
Other liquid assets.
O Additions to trust (Section 4).
o Distribution of trust principal (Section 5):
01.
Disbursement to licensee upon proper certification; o 2.
Payment for activitics at NRC's direction in writing; o 3.
Refund to grantor at NRC's written specification upon completion of decommissioning; and a 4.
Maximum withdrawal of funds at one time for a particular license is limited to 10 percent of the i
remaining funds available for that license unless NRC written approval is attached.
I o
Trust management (Sections 6 - 8):
o 1.
Discretionary powers; O 2.
Fiduciary duty; o 3.
Commingling and investment; o 4.
Sale or exchange of trust property; o 5.
Scope ofinvestments; a6 Express powers of trustee; o 7.
Borrowing money and encumbering trust assets; o 8.
Insurance (optional);
o 9.
Operation of business (optional); and a 10.
Compromise of claims (optional).
O Taxes and expenses (Section 9).
O Annual valuation (Section 10).
O Advice of counsel (Section 11).
O Authority, compensation, and tenure of trustees (Sections 12 14):
01.
Trustee compensation (Schedule C);
o 2.
Successor trustee; and a 3.
Instructions to trustee.
O Amendment of agreement (Section 15).
O Irrevocability and termination (Section 16).
O Immunity and indemnification (Section 17).
O Law to govern construction and operation of trust (Section 18).
O Interpretation and severability (Section 19).
O Signatures and titles.
O Acknowledgments, seals, or attestations, if necessary or desired (witness by notary public).
O 1
l 38 I
c rl
'(
4.4 ModelTrust Fund Agreement TRUST AGREEMENT, the Agreement entered into as of[ insert date] by and between [ insert name of ficensee], a [ insert name of State] [ insert " corporation," " partnership," " association," or
" proprietorship"), herein referred to'as the " Grantor," and [ insert name and address of a trustee acceptable to NRC], 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 I of the Code of Federal Regulations, Part
[ insert 30,40,- 70, or 72]. These regulations, applicable to the Grantor, require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part [ insert 30,40, 70, or 72]
provide assurance that funds will be available when needed for required decommissioning activities.
j WHEREAS, the Grantor has elected to use a trust fund to provide [ insert "all" or "part"] of such financial assurance for the facilities identified herein; WHEREAS, the Grantor, acting through its duly authorized officers, has selected 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:
O Section 1. Defmitions; As used in this Agreement:
(a)
The term " Grantor" means the NRC licensee who enters into this Agreement and any successors or assigns of the Grantor.
(b)
The term "Tmstee" means the trustee who enters into this Agreement and any successor trustee.
Section 2. Costs of Decommissioning. This Agreement pertains to the costs of decommissioning the materials and activities identified in License Number (insert license number] issued pursuant to 10 CFR Part [ insert 30,40,70, or 72], as shown in Schedule A.
Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund (the Fund) for the benefit of the NRC. The Grantor and the Tmstee intend that no third party shall 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, securities, or other liquid assets acceptable to the Trustee. The Fund is established initially as consisting of the property, which is acceptable to the Trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the Tmstee 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 Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Tmstee shall not be responsible nor shall it undertake any responsibility for the amount of, or adequacy of the Fund, nor any duty to collect 39
from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by the NRC.
Section 5. Payment for Reauired Activities Soecified 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 of Events, and (b)
A certificate attesting to the following conditions:
{
(1) that decommissioning is proceeding pursuant to an NRC-approved plan; (2) that the funds withdrawn will be expended for activities undertaken pursuant to that plan; and (3) that the NRC has been given 30 days prior notice of[ insert name of licensee]'s intent to withdraw funds from the trust fund.
No withdrawal from the Fund for a particular license can exceed 10 percent of the remaining funds available for that license unless NRC written 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 addition, the Trustee shall refund 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.
Section 6. Trust Manaaement. 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 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 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 matters, would use in the conduct of an enterprise of a like character and with like aims; except that:
(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 authorized to invest the Fund in time or demand deposits of the Trustee, to the extent in;ured by an agency of the Federal government, and in obligations of the Federal 40
h government such as GNMA, FNMA, and FHLM bonds and cenificates or State and
(
Municipal bonds rated BBB or higher by Standard & Poor's or Baa or higher by Moody's Investmem Services; and (c)
For a reasonable time, not to exceed 60 days, the Tmstee is authorized to hold uninvested cash, awaiting investment or distribution, without liability for the payment ofinterest thereon.
Section 7. Commingling 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 tmst 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 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 Trustee. The Trustee may vote such shares in its discretion.
Section 8. Express 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 Tmstee is expressly authorized and empowered:
C (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 hold any security in bearer form or in book entry, or to combine cenificates 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 instmments, to file proper forms concerning 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 deposit of any securities issued by the U.S. Government, 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 deposit any cash in the Fund in interest-bearing accounts maintained or savings I
certificates issued by the Tmstee, in its separate corporate capacity, or in any other banking 41
institution affiliated 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. Taxes and Expenses. 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 Tmstee shall be paid from the Fund.
Section 10. Annual Valuation. After payment has been made into this tmst fund, the Trustee shall annually, at least 30 days before the anniversary date of receipt of payment into the trust fund, furnish to the Grantor and to the NRC a statement confirming the value of the Tmst. 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 failure of the Grantor to object in writing to the Trustee i
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 from asserting any claim or liability against the Trustee with respect to the matters 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 fully protected, to the extent permitted by law, in acting on the advice of counsel.
Section 12. Trustee Compensation. The 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 and the Grantor, the Trustee may resign; upon 90 days notice to NRC and the Trustee, the Grantor may replace the Trustec; but such resignation or replacement shall not be effective until the Grantor has appointed a successor Trustee, the successor accepts the appointment, the successor is ready to assume its duties as trustee, and NRC has agreed, in writing, that the successor is an appropriate State or Federal government agency or an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency. The successor Trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. When the resignation or l
replacement is effective, the Tmstee 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, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. The successor Trustee shall specify the date on which it assumes administration of the trust, in a writing sent to the l
Grantor, the NRC, and the present Tmstee, 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.
42
p Section 14. 'Instmetions 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 Agreement or such other designees as the Grantor may designate in writing. The Trustee 'shall be fully protected in actmg without inquiry in accordance with the Grantor's orders, requests, and instructions. If the NRC issues orders, requests, or instructions to the Trustee these shall be in writing, signed by the NRC or its 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 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 or the NRC hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or the NRC, except as provided for herein.
Section 15. Amendment of Anreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the NRC, or by the Trustee and the NRC if the Grantor ceases to exist. All amendments shall meet the relevant regulatory requirements of the NRC.
Section 16. Irrevocability and Termination. Subject to the right of the parties to amend this A.w..;,r.t as provided in Section 15, this trust shall be irrevocable and shall continue until termmated at the written 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 remaining trust property, less final trust administration expenses, shall be delivered to the Grantor or its successor.
Section 17. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this trust, or in carrymg out any directions by the Grantor or the NRC issued in accordance with this Agreement. The Trustee shall be O
indemnified and saved harmless by the Grantor or from the trust fund, or both, from and agamst any personal d
liability 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.
Section 18. This Agreement shall be administered, construed, and enforced according to the laws of the State i
of[ insert name of State].
Section 19. Interpretation and Severability. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headmgs 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 remain valid and enforceable.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by the respective officers duly authorized and the incorporate seals to be hereunto affixed and attested as of the date first written above.
[ Insert name oflicensee (Grantor)]
[ Signature of representative of Grantor)
[ Title]
ATTEST:
[ Title] [ Seal]
[ Insert name of Trustee)
[ Signature of representative of Trustee)
[ Title]
O ATTEST:
C
[ Title] [ Scal]
43
4.5 TRUST AGREEMENT SCHEDULES Schedule A This Agreement demonstrates financial assurance for the following cost estimates or certification amounts for the following licensed activities:
U.S. NUCLEAR COST ESTIMATES FOR REGULATORY REGULATORY COMMISSION NAME AND ADDRESS OF ASSURANCES LICENSE ADDRESS OF LICENSED DEMONSTRATED BY NUMBER (S)
LICENSEE ACTIVITY THIS AGREEMENT The cost estimates listed here were last adjusted and approved by the NRC on [ insert date].
Schedule B,
AMOUNT AS EVIDENCED BY Schedule C Trustee's fees shall be $
per year.
O l
44
D 4.6 MODEL CERTIFICATE OF EVENTS '
- [ Insert name and address of trustee]
Attention: Trust Division Gentlemen:
In accordance with the terms of the Agreement with you dated
. I, Secretary of[ insert name of ficensee], hereby certify that the following events have occurred:
1.
[ Insert name oflicensee) is required to commence the decommissioning ofits facility located at [ insert location of facility] (hereinafter called the decommissioning).
2.
' He plans and procedures for the commencement and conduct of the decommissioning have been approved by the United States Nuclear Regulatory Commission, or its successor, on __
(copy of approval attached).
3.
The Board of Directors of[ insert name oflicensec] has adopted the attached resolution authorizing the commencement of the decommissioning.
5' Secretary of[ insert name oflicensce]
Date 1
V 45
)
4.7 MODEL CERTIFICATE OF RESOLUTION I,
. do hereby certify that I am Secretary of [ insert name oflicensee], a [ insert State of incorporation] corporation, and that the resolution listed below was duly adopted at a meeting of this Corporation's Board of Directors on
. 19_.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this Corporation this day of
. 19_.
1 Secretary RESOLVED, that this Board of Directors hereby authorizes the President, or such other employee of the Company as he may designate, to commence decommissioning activities at [ insert name of facility] in accordance with the terms and conditions described to this Board of Directors at this meeting and with such other terms and conditions as the President shall approve with and upon the advice of Counsel.
O!
4.8 MODEL LETTER OF ACKNOWLEDGMENT STATE OF To Wit:
CITY OF On this __ day of
. before me, a notary public in and for the city and State aforesaid, personally appeared
. and she/he did depose and say that she/he is the [ insert title], of
_, national banking association, Trustee, which executed the above instrument, that she/he knows the seal of said association; that the seal affixed to such instrument is such corporate scal; that it was so affixed by order of the association; and that she/he signed her/his name thereto by like order.
[ Signature of notary public]
My Commission Expires:
[Date]
46
f'
(
5.
ESCROW ACCOUNTS i
A decommissioning escrow (or escrow account) is an irrevocable, three-party written agreement whereby the licensee transfers assets (i.e., cash, securities, or other liquid assets) at least equal to the cost of decommissioning to an escrow agent, such as a bank.
The escrow agant manages the account according to the terms of the written agreement for the benefit of the beneficiary (NRC). An escrow account functions much like a savings account except that (1) monies are legally segregated for a specific purpose and (2) the account is administered by someone with a fiduciary responsibility to keep or use the property in the account. The purpose of an escrow acccunt is to help execute an underlying contract. For purposes of financial assurance for decommissioning, the underlying contract is the NRC licensing agreement.
The remainder of this section discusses the primary criteria that determine whether particular escrow account submissions will be acceptable to NRC.
Section 5.1 describes qualifications required of the issuer (the escrow agent).
Section 5.2 addresses funding and the adequacy of coverage.
Section 5.3 discusses the documentation that supports an escrow account.
Section 5.4 presents a model escrow account submission that NRC has found O.
to be acceptable.
This section also contains two checklists designed to assist licensees in preparing acceptable decommissioning escrows. Checklist 5-A summarizes the primary criteria used by NRC to evaluate escrows. Checklist 5-B (which should be used only by licensees that revise or do not use the model wording for escrow agreements) presents terms and conditions that are recommended for escrow agreements.
5.1 QUALIFICATIONS OF THE ISSUER: THE ESCROW AGENT i
The escrow agent should be a financialinstitution whose operations are regulated and examined by a Federal or State agency. This criterion is not usually met by individuals who are not acting as a representative of a financialinstitution.
i l
The word " National" in the title of a financial institution signals that the institution is Federa//y regulated, as do the words " National Association" or the initials "N.A."
following its title. To determine whether such a financialinstitution qualifies as an acceptable escrow agent, licensees should contact the appropriate district office of the Office of the Comptroller of the Currency (OCC)and confirm that the institution is Federally regulated. The six district offices of the OCC, along with the States and territories under their jurisdiction, are as follows:
Northeastern District Office (212-819-9860) -- CT, DE, ME, MD, MA, NH, NJ, NY, PA, Rl, VT, District of Columbia, Puerto Rico, and Virgin islands.
47
I CIIECKLIST 5-A ESCROW ACCOUNTS l
0 Documentation is complete:
O 1.
Escrow agreement (originally signed duplicate)
O 2.
Model certificate of events a
3.
Model certificate of resolution to commence decommissioning a
4.
Certified resolution authorizing the making and performance of the escrow agreement O
5.
Certificate of names and specimen signatures a
6.
Receipt or statement from the escrow agent showing the escrow's current market value a
7.
Checklist 5-B (if model escrow wording is modified or not used)
O The financial institution is regulated by a Federal or State agency.
O The escrow's current market value equals or exceeds the required coverage level.
O Southeastern District Office (404-659-8855) -- AL, FL, GA, MS, NC, SC, TN, VA, and WV.
Central District Office (312-360-8800) -- lL, IN, KY, MI, OH, and WI.
Midwestern District Office (816-556-1800) -- IA, KS, MN, MO, NE, ND, and SD.
Southwestern District Office (214-720-0656) -- AR, LA, NM, OK, and TX.
Western District Office (415-545-5900) -- AK, AZ, CA, CO, HI, ID, MT, NV, OR, UT, WA, WY, and Guam.
The word " State" in the title of a financial institution sig,als that the institution is State regu/ated. U.S. branches of foreign banks are usually regulated by the State in which they are located. To determine whether a State-regulated financial institution qualifies as an acceptable escrow agent, licensees should contact the applicable State banking authority and confirm that the institution is State regulated.
The titles of some financialinstitutions do not suggest that they are either Federally regulated or State regulated. In many such cases (but not all), these institutions are State regulated, as are many domestic branches of foreign banks.
48 E
The licensee may need or choose to replace the current escrow agent with a new1 f
escrow agent. Any successor escrow agent must meet the same standard as the original i
escrow agent (i.e., must be a financial institution whose operations are regulated and examined by a Federal or State agency). To ensure that the change in escrow agent does not negatively impact the escrow, the licensee should replace the escrow agent only after sufficient notification (90 days or more) has been provided to both the NRC and the current escrow agent.
5.2 LEVEL OF COVERAGE An escrow must at all times contain sufficient' assets, valued at their current market value, to complete decommissioning activities.' Therefore, at the time the escrow is established, the escrow must be fully funded, with a market value at least as great as the.
licensee's current decommissioning cost estimate or certification amount. When submitting
.an escrow to NRC, a licensee should submit documentation verifying the' amount in the escrow (e.g., a receipt from the escrow agent or a fund balance statement). If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the escrow account, the licensee must either (1) revise the escrow to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the escrow.
5.3 RECOMMENDED DOCUMENTATION The terms and conditions of an escrow are governed by a written escrow agreement.
The wording of an escrow agreement may vary, but Section 5.4 of this regulatory guide is a "model" escrow agreement that would meet NRC's requirements and is recommended by the NRC. Other documentation must be submitted with an escrow. As summarized in i
Checklist 5-A,'" the following ' documentation is to be submitted for use with the model escrow.
The escrow agreement (along with any amendments) is the written document that specifies the terms and _ conditions of the escrow. The wording contained in the model escrow presented in Section 5.4 is acceptable to NRC. ~ Licensees who use other wording should refer to Checklist 5-B to be sure that the alternative wording contains all the necessary terms and conditions.
The model Certificate of Events (Section 5.5) and the model Certificate of Resolution To Commence Decommissioning (Section 5.6) provide the required format for instructing the escrow agent to release monies from the escrow in order to fund decommissioning activities at the licensee's facility. When submitted as part of a financial assurance package, the specimen certificates should be unexecuted drafts.
(Actual authorization to release funds from the escrow is accomplished when
~
completed and notarized versions of these certificates are signed by the secretary of the licensee and presented to the escrow agent.)
- The exception to this rule is an escrow account that is being combined with another financial mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to p
the required coverage level.
- Supporting documentation may differ for licensees who submit trusts that differ from the recommended model.
49
The Certified Resolution Authorizing the Making and Performance of the Escrow e
Agreement (Section 5.7) officially certifies that the licensee's Board of Directors has authorized the licensee to enter into the escrow agreement.
The Certificate of Names and Specimen Signatures (Section 5.8) presents the names and signatures of the licensee's officers or representatives who are authorized to sign the escrow agreement and notices, instructions, and other communications under the agreement.
CHECKLIST 5-B Terms and Conditions Needed in Decommissioning Eserow Agreements Use this checklist only ifdeviatingfrom the wording recommended in Section S.4.
Introduction explaining the nature of the agreement between the parties and referring to the NRC license O
agreement concerning the regulatory obligations of the licensee (Paragraph 1).
O Identification of the escrow agent (Paragraph 1):
0 1.
Name and address of escrow agent; o 2.
Position of escrow agent; and a 3.
Duties and liabilities of escrow agent.
O Identification of the name, address, and license number of the facility, corresponding estimated costs of required activities, and the amount of financial assurance provided by the escrow account (Paragraph 1).
O Recital of delivery ofitems placed in escrow (Paragraph 2):
0 1.
- Cash, a 2.
Securities, and a 3.
Other liquid assets.
O Recital of conditions and terms of the escrow account (Paragraph 3).
O Terms and conditions upon which items in escrow will be disbursed (Paragraph 4):
0 1.
Disbursements to licensee upon proper certification; o 2.
Conditions that constitute default; o 3.
Rights of parties upon default; a 4.
Rights and duties of escrow agent upon default; o 5.
Persons or names or positions to which funds may be released; and a 6.
Maximum withdrawal of funds at one time for a particular license is limited to 10 percent of the remaining funds available for that license unless NRC written approval is attached.
O Recital ofirrevocability of escrow arrangement (Paragraph 5).
O Escrow agent's rights and duties (Paragraph 6).
O Annual valuation requirement (Paragraph 7).
O Successor escrow agent (Paragraph 8).
O Recital ofinstructions to the escrow agent (Paragraph 9).
O Compensation and expenses of escrow agent (Paragraph 10).
O Amendment of the escrow agreement (Paragraph 11)
O Termination of escrow (Paragraph 12).
O Requirement for the financial institution issuing the mechanism to notify the licensee and the NRC at least 90 days prior to cancellation or nonrenewal.
O Interpretation of escrow agreement (Paragraph 13).
O Acceptance of appointment by escrow agent (Paragraph 14).
O Severability provision (Paragraph 15).
O Signatures of licensee and escrow agent.
O 50
I f\\
5.4 MODEL FOR AN ESCROW AGREEMENT V
Escrow Account Number Paranraoh 1. Establishment of Escrow Account.
It is agreed between the parties that [ insert name oflicensee] has elected to establish an escrow account with [ insert name, address, and position (if applicable) of escrow agent] to provide financial assurance for deconunissioning of the facility (ies) in the amounts shown below:
[For each facility for which financial assurance is provided by the escrow agreement, list facility name, address, and license number, corresponding estimated or certified decommissioning costs, and indicate amount of financial assurance provided by the escrow account.]
Paranraoh 2. Descriotion of Procerty in Escrow Account.
It is hereby acknowledged by the parties that [ list the assets that have been delivered to the escrow agent and indicate the market value of each item] has (have) been delivered to escrow.
[ Insert name oflicensee] warrants to and agrees with [ insert name of escrow agent] that, un is t otherwise expressly set forth in this Agreement: there is no security interest in the property. he V
escrow account or any part thereof; no financing statement under the Uniform Commercial Code :s
)
on file in anyjurisdiction claiming a security interest in or describing (whether specifically or generally) the escrow account or any part thereof; and the escrow agent shall have no responsiblity at any time to ascertain whether or not any security interest exists or to file any financing statement j
under the Uniform Commercial Code with respect to the escrow account or any part thereof.
Paranraoh 3. Conditions of Escrow Agreement.
The property described in Paragraph 2 above will remain in the escrow account created by this Agreement until one of the following two conditions has been satisfied:
(1)
The conditions specified in Paragraph 4 of this Agreement have been met; or (2)
The decommissioning activities required by 10 CFR Part [ insert 30,40, 70, or 72] have been completed, the license has been terminated, the facility site is available for unrestricted use for any public or private purpose, and the escrow account has been terminated byjoint notice, in writing, from [ insert name oflicensee] and the U.S. Nuclear Regulatory Commission (NRC), or by NRC alone if the licensee ceases to exist.
Paragraoh 4. Disbursement of property in Escrow Account.
[ Insert name of escrow agent] shall make payments from the escrow account upon presentation to the escrow agent of the following:
51
(a)
A certificate duly executed by the Secretary of the [ insert name of ficensee] attesting to the occurrence of the events, and in the form set forth in the attached Specimen Certificate of Events, and (b)
A certificate attesting to the following conditions:
(1) that decommissioning is proceeding pursuant to an NRC-approved plan; (2) that the funds withdrawn will be expended for activities undertaken pursuant to that plan; and (3) that the NRC has been given 30 days prior notice of[ insert name of licensee]'s intent to withdraw funds from the escrow account.
No withdrawal from the account for a particular license can exceed 10 percent of the remaining funds available for that license unless NRC written approval is attached.
Or upon [ insert name of escrow agent] receiving written notification of ficensee's default from the NRC, [ insert name of escrow agent] shall make payments from the escrow account as the NRC shall direct, in writing, to provide for the payrnent of the costs of the required decommissioning activities covered by this Agreement. The escrow agent shall reimburse the licensee or other persons as specified by the NRC from the escrow account for expenses for required activities in such amounts as the NRC shall direct in writing. In addition, the escrow agent shall refund to
[ insert name oflicensee] such amounts as the NRC specifies, in writing. Upon refund, such funds shall no longer constitute part of the escrow account as described in Pa agraph 2 above.
Paragraoh 5. Irrevocability.
It is also agreed between the parties that this escrow became irrevocable upon delivery to [ insert name of escrow agent], the escrow agent, and will remain irrevocable and in full force and effect until the occurrence of one of the conditions described in Paragraph 3 above.
Paragraph 6. Powers of the Escrow Agent.
The only power and duties of the escrow agent shall be to hold the escrow property and to invest and dispose ofit in accordance with the terms of this Agreement.
Escrow Account Management The escrow agent shallinvest and reinvest the principal and income of the escrow account and keep the escrow account invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the [ insert name oflicensee] may communicate in writing to the escrow agent from time to time, subject, however, to the provisions of the escrow account; the escrow agent shall discharge its duties with respect to the escrow account solely in the interest ofNRC and with the care, skill, prudence, and diligence, under the circumstances then prevailing, that persons of prudence, acting in like capacity and familiar with such matters, would use in the conduct of an enterprise oflike character and with like aims; except that:
52 L
(a)
Securities or other obligations of the licensee, or any other owner or operator of the licennd
]V facility (ies), 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 government; (b)
The escrow agent is authorized to invest the escrow account in time or demand deposits to the extent insured by an agency of the Federal government, and in obligations of the Federal government such as GNMA, FNMA, and FHLM bonds and certificates or State and Municipal bonds rated BBB or higher by Standard & Poor's or Baa or higher by Moody's Investment Services; and (c)
The escrow agent is authorized to hold uninvested cash, awaiting investment or distribution, for a reasonable time and without liability for the payment ofinterest thereon.
Express Power of the Escrow Agent j
)
Without in any way limiting the powers and discretion conferred upon the escrow agent by other provisions of this Agreement or by law, the escrow agent is expressly authorized and empowered:
(a)
To register any securities held in the escrow account in its own name and to hold any security in bearer form or in book entry or to deposit or arrange for the deposit of any securities issued by the U.S. Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the escrow agent shall at all times show j
i that all such securities are part of the escrow account; L)
(b)
To deposit any cash in the escrow account in interest-bearing accounts or savings certificates to the extent insured by an agency of the Federal government; and.
(c)
To pay taxes, from the account, of any kind that may be assessed or levied against the escrow account and all brokerage commissions incurred by the escrow account.
Paracraoh 7. Annual Valuation.
After delivery has been made into this escrow account, the escrow agent shall annually, at least 30 days before the anniversary date of receipt of the property into the escrow account, furnish to the licensee and to the NRC a statement confirming the value of the escrow account. Any securities in the account shall be valued at market value as of no more than 60 days before the anniversary date of the establishment of the escrow account. The failure of the licensee to object in writing to the escrow agent within 90 days afler the statement has been furnished to the licensee shall constitute a conclusively binding assent by the licensee, barring the licensee from assening any claim or liability against the escrow agent with respect to the matters disclosed in the statement.
Paranraoh 8. Spccessor Escrow Agent.
l tn Upon 90 days prior notice to the NRC and (insert name oflicensee], the escrow agent may resign;
(
i upon 90 days notice to the NRC and the escrow agent, [ insert name oflicensee) may replace the l'
escrow agent; provided that such resignation or replacement is not efTective until the escrow agent has appointed a successcr escrow agent, the successor accepts the appointment, and the successor 53
is ready to assume its duties as escrow agent. The successor escrow agent shall have the same powers and duties as those conferred upon the escrow agent under this Agreement. When the resignation or replacement is effective, the escrow agent shall assign, transfer, and pay over to the successor the funds and properties then constituting the escrow account. If for any reason the licensee cannot or does not act in the event of the resignation of the escrow agent, the escrow agent may apply to a court of competent jurisdiction for the appointment of a successor, or for instructions. The successor escrow agent shall specify the date on which it assumes administration of the escrow account in a writing sent to the licensee, the NRC, and the current escrow agent by certified mail 10 days before the change becomes effective. Any expenses incurred by the escrow agent as a result of any of the acts contemplated by this paragraph shall be paid as provided in Paragraph 10 of this Agreement.
Paracraph 9. Instructions to the Escrow Anent.
All orders, requests, and instructions form the licensee to the escrow agent snall be in writing, signed by such persons as are signatories to this Agreement, or such other designees as the licensee or NRC may designate in writing. All orders, requests, and instructions from the NRC shall be in writing, signed by the designees of the NRC. The escrow agent shall be fully protected in acting in accordance with such orders, requests, and instructions. The escrow agent 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 bekJrof the licensee or NRC under this Agreement has occurred. The escrow agent shall have no duty to act in the absence of such orders, requests, and instructions from the licensee or the NRC, except as provided in this Agreement.
Paracraph 10. Compensation and Excenses of the Escrow Acent.
The fee of the escrow agent for its services in establishing the escrow account shall be $
payable at the time of the execution of this Agreement, to be borne by [ insert name oflicensee].
Expenses of the escrow agent for the administration of the escrow account, the compensation of the escrow agent for services subsequent to the establishing of the escrow account to the extent not paid directly by the licensee, and all other proper charges and disbursements shall be paid from the escrow account.
j f
Paragraoh 11. Amendment of Aareement.
This Agreement may be amended by an instrument in writing executed by the licensee, the escrow I
agent, and the NRC, or by the escrow agent and the NRC if the licensee ceases to exist. All amendments shall meet the relevant regulatory requirements of the NRC.
Paragranh 12. Termination.
l This Agreement can be terminated by written notice of termination to the escrow agent signed by
[ insert name oflicensee] and the NRC, or by the NRC alone if the licensee ceases to exist.
Paranraoh 13. Interpretation.
This escrow agreement constitutes the entire agreement between (insert name oflicensee] and
[ insert name of escrow agent]. The escrow agent shall not be bound by any other agreement or 54
I O
case of ambiguity in this escrow agreement is the licensing agreement between [ insert name of contract entered into by [ insert name of ficensee), and the only document that may be referenced in licensee) and the United States Nuclear Regulatory Commission, or its successor.
Paranraoh 14. Acceotance of Accointment by Escrow Agent.
[ Insert name, address, and position (if applicable) of escrow agent] does hereby acknowledge its appointment by [ insert name of ficensee] to serve as escrow agent for the escrow account created under this Agreement and agrees to carry out its obligations and duties as stated in this escrow agreement.
Paragraoh 15. Severability.
If any part of this Agreement is invalid, it shall not affect the remaining provisions that will remain valid and enforceable.
Paragraoh 16.
This Agreement shall not become effective (and the escrow agent shall have no responsibility hereunder except to return the escrow property to the [insen name oflicensee]) until the escrow I
agent shall have received the following and shall have advised [ insert name oflicensee) in writing
.g that the same are in form and substance satisfactory to the escrow agent:
(1)
A certified resolution ofits Board of Directors authorizing the making and performance of this Agreement; and (2)
A certificate as to the names and specimen signatures ofits officers or representatives authorized to sign this Agreement and notices, instructions, and other communications hereunder.
[ Signatures and positions of the designees of the licensee and the escrow agent]
[ Insert name of escrow agent]
[ Insert name oflicensee]
By By Name Name Title Title
[Date]
[ Witness by Notary Public]
O
(
55
L l
5.5 MODEL CERTIFICATE OF EVENTS
)
[ Insert name and address of escrow agent]
Attention: Escrow Division Gentlemen:
In accordance with the terms of the Agreement with you dated
. I, Secretary of[ insert name oflicensee], hereby certify that the follow'mg events have occurred:
1.
[ Insert name oflicensee) is required to commence the decommissioning ofits facility located at [ insert location of facility) (hereinafter called the decommissioning).
2; The plans and procedures for the commencement and conduct of the decommissioning have been approved by the United States Nuclear Regulatory Commission, or its successor, on (copy of approval attached).
3.
The Board of Directors of[ insert name oflicensee] has adopted the attached
)
resolution authorizing the commencement of the decommissioning.
O Secretary of[ insert name of ficensee]
Date O
56
('N 5.6 MODEL CERTIFICATE OF RESOLUTION
'C)
TO COMMENCE DECOMMISSIONING l
i I,
, do hereby certify that I am Secretary of[ insert name oflicensee], a
[ insert State 'ofincorporation] corporation, and that the resolution listed below was duly adopted at a meeting of this Corporation's Board of Directors on
, 19 I
1 IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this Corporation this day of
,19 l
Secretary RESOLVED, that this Board of Directors hereby authorizes the President, or such other i
employee of the Company as he may designate, to commence decommissioning activities at [ insert name of facility] in accordance with the terms and conditions described to this Board of Directors at this meeting and with such other terms and conditions as the President shall approve with and upon the advice of Counsel.
m (U)
I 5.7 CERTIFIED RESOLUTION AUTHORIZING TIIE MAKING AND PERFORMANCE OF TIIE ESCROW AGREEMENT I,
. do hereby certify that I am Secretary of[ insert name oflicensee], a
[ insert State ofincorporation] corporation, and that the resolution listed below was duly adopted at a meeting of this Corporation's Board of Directors on
.19 IN WITNESS WHEREOF, I have hereunto signed my name and aflixed the seal of this Corporation this day of 19 l
Secretary RESOLVED, that this Board of Directors hereby authorizes the President, or such other employee of the Company as he may designate, to enter into an escrow agreement with the [ insert j
name of escrow agent] in accordance with the terms and conditions described to this Board of Directors at this meeting and with such other terms and conditions as the President shall approve (g) with and upon the advice of Counsel.
G 57
i t
5.8 CERTIFICATE OF NAMES AND SPECIMEN SIGNATURES i
i The individuals listed below are authorized to sign this Escrow Agreement on behalf of
[ insert name oflicensee], and are authorized to sign any notices, instructions, and other communications made pursuant to the Agreement.
Name Title Signature Name Title Signature Name Title Signature Name i
Title f
Signature l
1 1
1 0
58
O V
6.
GOVERNMENT FUNDS A government fundis a trust fund or escrow account for which a State is acting as trustee or escrow agent. To use this mechanism, a licensee and a State or State agency must agree that funds in an amount at least equal to the cost of decommissioning will be held in a special State fund or account and will be used solely to carry out decommissioning activities. The licensee must deposit the required amount of cash, securities, or other liquid assets in the special fund or account prior to beginning facility operations. If the licensee defaults, the State or State agency must arrange for the necessary decommissioning work to be completed by (1) ordering the licensee to decommission the site, (2) ordering the licensee to select a decommissioning contractor, or (3) choosing a contractor itself. (In the event that the State or State agency is unable to exercise its options, NRC must select the contractor.) The special fund or account terminates when decommissioning is complete, the license is terminated, and the facility site is available for unrestricted use for any public or private purpose.
The remainder of this section discusses the primary criteria that determine whether particular government fund submissions will be acceptable to NRC.
Section 6.1 describes qualifications required of the issuer (the State or State agency).
p Section 6.2 addresses funding and the adequacy of coverage.
+
Section 6.3 discusses the documentation that supports a government fund.
This section also contains a checklist designed to assist licensees who use government funds for decommissioning. Checklist 6-A summarizes the primary criteria used by NRC to evaluate government funds.
6.1 QUALIFICATIONS OF THE ISSUER: THE STATE OR STATE AGENCY As a State government entity, the State or State agency holding the assets in the government fund would automatically qualify as an acceptable trustee or escrow agent.
However, a State or State agency must have the authority to establish special segregated funds or accounts to receive and hold funds for specified purposes.
6.2 LEVEL OF COVERAGE A government fund must at all times contain sufficient assets, valued at their current market value, to complete decommissioning activities." Therefore, at the time the fund or account is established, it must be fully funded, with a market value at least as great as the licensee's current decommissioning cost estimate or certification amount. When submitting a government fund to NRC, a licensee should also submit documentation verifying the D
" The exception to this rule is a government fund that is being combined with another financial mechanism.
For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
59
amount in the fund or account (e.g., a receipt from the State or State agency, or a fund / account balance statement). If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the government fund, the licensee must either (1) revise the government fund to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the government fund.
6.3 RECOMMENDED DOCUMENTATION The terms and conditions of a government fund are governed by a written trust agreement or escrow agreement. The wording of a government fund may vary, but Sections 4.4 and 5.4 of this regulatory guide include a model trust agreement and a model escrow i
agreement that would meet NRC's requirements and are recommended by the NRC. As f
summarized in Checklist 6-A, the following documentation is to be submitted with a government fund.
The trust agreement or escrow agreement (along with all supporting documentation and any amendments)is the written document that specifies the terms and conditions of the government fund. The wording of the model trust and escrow agreements presented in Sections 4.4 and 5.4, respectively, is acceptable to the NRC. Licensees who use other wording should refer to Checklists 4-B or 5-B to be sure that the alternative wording contains all the necessary terms and conditions.
A list of assets deposited with the State or State agency. The list should state the assets' current market value and the date on which the assets were transferred to the government fund.
Documentation specifying the licensee's certification amount or estimated cost of decommissioning.
A letter from the State or State agency stating that use of the funds will be restricted to covering the costs of decommissioning upon the licensee's default.
O 60
~
A CHECKLIST 6-A GOVERNMENT FUNDS a
Documentation is complete:
a 1.
Either:
Trust agreement (originally signed duplicate) and all supporting documentation (see Section 4 and attach Checklist 4-A) 0.1 Escrow agreement (originally signed duplicate) and all supporting documentation (see Section 5 and attach Checklist 5-A) a 2.
List of assets deposited with the State or State agency a
3.
Specification of the current market value of the assets deposited a
4.
Specification of the date on which assets were transferred to the fund or account a
5.
Specification of the licensee's certification amount or estimated cost of decommissioning a
6.
Letter from State or State agency stating that use of funds will be Q
restricted to covering the costs of decommissioning upon the licensee's s
default a
7.
Checklist 4-8 or 5-8 (if model trust or escrow wording is modified or not used) o The State or State agency has the authority to establish special segregated funds or accounts to receive and hold funds for specified purposes, a
- The government fund's current market value equals or exceeds the required coverage level.
4 O
I 61 1
1 7.
CERTIFICATES OF DEPOSIT A certificate of deposit /CD)is a deposit of cash by a licensee into a bank for a specified period of time. The licensee deposits in a bank funds sufficient to cover the cost of decommissioning and receives a CD. If the licensee defaults on its decommissioning obligations, the NRC will draw on CDs used as financial assurance instruments. In addition, the licensee must establish a trust fund, escrow account, or government fund into which funds may be received if drawn from the CD in the event of default.
Both nonnegotiable and negotiable CDs may be used to fulfill decommissioning financial assurance requirements.
If a CD is nonnegotiab/e, only the payee designated on the certificate may receive the funds from the bank when the CD reaches maturity.
Consequently, the trustee of the trust, escrow agent of the escrow account, or State or State agency administering the government fund (if the State or State agency can hold funds without depositing them into general State revenues) must be named as payee and must be in possession of the CD.
if a CD is negotiable, however, anyone holding the CD may receive the funds.
Consequently, the trustee, the escrow agent, or the State or State agency must be in possession of the CD.
A certificate of deposit used to provide financial assurance for decommissioning should be for a limited time period so that the face value can be adjusted for inflation and for changes in decommissioning costs. Licensees may use either time or demand CDs to provide financial assurance. Time deposits are payable at a certain time, while demand deposits are payable on demand after a specified period of time (usually 30 to 90 days) has elapsed. Demand CDs allow the holder to withdraw funds at will at any time after the specified period has elapsed and, therefore, may be better suited to the contingency j
requirements of a decommissioning financial assurance mechanism. If time CDs are used, i
their value must be sufficient to cover decommissioning costs even if a penalty is incurred for withdrawal prior to the date specified on the certificates.
All CDs obtained by licensees to provide financial assurance for decommissioning must be fully insured by the Federal Deposit Insurance Corporation (FDIC). Deposits by a given entity in Federally insured banks and savings and loan institutions are insured only up to the basic total amount of $100,000. These limitations also apply to the interest earned on deposits. If the principal provided by the licensee is equal to or greater than the limit established through Federal bank insurance, the interest may remain uninsured. Thus, if a licensee is securing financial assurance of more than $100,000 using CDs, deposits should be split among severalinstitutions so that all funds are fully insured by the FDIC. For example, if $750,000 in financial assurance coverage is required, the licensee would need to purchase at least eight CDs issued by eight different financial institutions whose total value at the time of financial assurance certification equated $750,000.
In general, a bank issuing a CD may have a " set-off right" to the deposited funds.
This refers to the ability of the bank to look to deposits it holds for the repayment of any indebtedness to the bank on the part of the depositor and to apply the debtor's deposit to 62
~
these debts as they become due. To reduce the likelihood that the bank's set-off right might apply to CDs assuring decommissioning, licensees using CDs should inform the issuing bank that the certificate is being used to demonstrate financial assurance in compliance with NRC's regulatory requirements. Also, licensees using non-negotiable CDs should name the trustee, escrow agent, or State or State agency as payee.
The remainder of this section discusses the primary criteria that determine whether particular submissions in regard to CDs will be acceptable to NRC.
Section 7.1 describes qualifications required of the issuer.
Section 7.2 addresses funding and the adequacy of coverage.
Section 7.3 discusses the documentation that supports a certificate of deposit.
Section 7.4 presents a model CD that NRC has found to be acceptable.
~
This section also contains two checklists designed to assist licensees who will use CDs. Checklist 7-A summarizes the primary criteria used by NRC to evaluate CDs.
Checklist 7-B (which should be used only by licensees who revise or do not use the model
. wording for CDs) presents terms and conditions that are recornmended for CDs.
7.1 - QUALIFICATIONS OF THE ISSUER Banks issuing CDs for financial assurance should be insured by the Federal Deposit Insurance Corporation (FDIC).
Also, as noted above, a licensee must deposit CDs into a trust fund, escrow account, or government fund. Information on the qualifications of the issuers of these types of mechanisms is provided in Sections 4, 5, and 6.
7.2 LEVEL OF COVERAGE A CD must at all times have a current market value (less any potential penalty for early withdrawal) that is sufficient to complete decommissioning activities.'8 If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the CD, the licensee must either (1) revise the CD to assi!re the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the CD.
1 6
~
" The exception to this rule is a CD that is being combined with another financial mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the i
required coverage level.
j 63 l
f 7.3 RECOMMENDED DOCUMENTATION The terms and conditions of a CD are governed by a written certificate. The wording of a CD may vary, but Section 7.4 of this regulatory guide is a model CD that would meet CIIECKLIST 7-A CERTIFICATES OF DEPOSIT D
Documentation is complete:
a 1.
Certificate of deposit (originally signed duplicate) a 2.
Either:
Trust agreement (originally signed duplicate) and all supporting documentation (see Section 4 and attach Checklist 4-A) 9.E Escrow agreement (originally signed duplicate) and all supporting documentation (see Section 5 and attach Checklist 5-A) pr Government fund (originally signed duplicate) and all supporting documentation (see Section 6 and attach Checklist 6-A) a 3.
Specification of the current market value of the CD a
4.
Specification of the date on which the CD was transferred to the fund or account O
5.
Specification of the licensee's certification amount or estimated cost of decommissioning a
6.
Verification that the CD has been placed into the trust fund, escrow account, or government fund a
7.
Letter from State or State agency stating that use of funds will be restricted to covering the costs of decommissioning upon the licensee's default (needed only if a government fund is established to hold the CD) a 8.
Checklist 7-B (if model CD wording is modified or not used) a 9.
Checklist 4-B or 5-B (if model trust or escrow wording is modified or not used)
O The financial institution is insured by the Federal Deposit Insurance Corporation.
O The CD's current market value (less any potential penalty for early withdrawal) equals or exceeds the required coverage level.
f i
64
_ ___j
.,~
/^\\
.the NRC's requirements and is recommendec 69 the NRC. As summarized in Checklist
(,)
7-A,'8 the following documentation is to be t,obmitted with a CD.
The certificate of deposit constitutes the bank's written acknowledgment of the receipt and deposit of a sum of money,its promise of repayment, and other applicable terms and conditions. The wording of a CD may vary, but Section 7.4 of this guide is a model CD that is acceptable to the NRC.
Licensees who use other wording should refer to Checklist 7-B to be sure that the alternative wording contains all the necessary terms and conditions.
A trust fund, escrow account, or government fund must be established to hold the CD. The trust, escrow, or government fund should satisfy the criteria described in Sections 4,5, or 6, respectively, and in Checklists 4 A,5-A, or 6-A, respectively, of this regulatory guide.
Documentation specifying (1) the current market value of the CD, (2) the date on which the CD was transferred to the trust fund, escrow account, or government fund, and (3) the licensee's certification amount or estimated cost of decommissioning.
Verification (e.g., a letter or receipt) from the trustee, escrow agent, or State or State agency that the CD has been placed into the trust fund, escrow account, or government fund.
0
(
A letter from the State or State agency stating that use of funds will be restricted to covering the costs of decommissioning upon the licensee's default (needed only if the CD is held in a government fund).
O
\\
" Supporting documentation may differ for licensees who submit CDs that differ from the recommerided model.
65
e O
CIIECKLIST 7-B Terms and Conditions Needed in Decommissioning Certificates of Deposit Use this checklist only ifdeviatingfrom the wording recommendedin Section 7.4.
O Time or demand deposit.
O Non-negotiable or negotiable instrument:
Ifnon-negotiable, the certificate e deposit names the trustee. escrow anent. or State or r
a State agency as cavec and is in the oossession of the trustee. escrow anent. or State or State anency.
a If negotiable, the certificate of deposit is in the nossession of the trustee. escrow agent. or State or State agency.
O Name and address ofissuing bank.
a Number of certificate.
o Name of depositor.
O Amount of funds deposited.
a Name or position of payee or holder.
O Date of maturity.
O Rate ofinterest.
O Statement oflicensee's regulatory obligations as reason for the CD.
o Names, addresses, and license numbers of assured facilities.
O Provision for automatic renewal.
a.
Limitation on withdrawal.
a Notice requirements.
O Provision governing penalty for early withdrawal in the event of default.
a Power of bank not to renew.
O The financial institution issuing the mechanism must notify the licensee and the NRC at least 90 days prior to cancellation or non-renewal.
l Deposit insurance covering all CDs obtained by tne licensee.
0 O
Signature and date.
i l
l O
66
'Ol]
7.4 MODEL CERTIFICATE OF DEPOSIT
[Name and address ofissuing bank]
CERTIFICATE OF DEPOSIT NO. [ INSERT NUMBER]
[ Insert name oflicensee] has deposited not subject to check Dollars
($
) payable to the order of the [if the CD is nonnegotiable, insert the name of the trustee of the trust, the escrow agent of the escrow account, or the State or State agency administering the government fund; if the CD is negotiable, insert " holder"] in ctaent funds linsert number not less than 30] days after the date written above, upon surrender of this certificate properly endorsed, with interest at the rate of percent per annum from date to maturity only.
The rate ofinterest payable hereunder is subject to change by the bank to such extent as may be necessay to comply with requirements of the Federal Reserve Board made from time to time pursuant to the Federal Reserve Act.
]
These funds are deposited for the purpose of providing financial assurance for the cost of
- decommissioning activities at [ insert facility name(s), address (es), and license number (s)], as required under Title 10 of the Code of Federal Regulations, Part [ insert 30,40,70, or 72].
.f}
Accordingly, this certificate will be renewed automatically unless written notice of one of the
)
V following events is received from the U.S. Nuclear Regulatog Commission (NRC): (1) the default of the [ insert name oflicensee] on these obligations; (2) the termination of the facility license; or (3) the substitution of another financial assurance mechanism. In the event the NRC notifies the bank of the licensee's default, the bank shall pay the [if the CD is nonnegotiable, insert " payee"; if the CD is negotiable, insert " holder"] the full amount of this certificate plus any interest accmed thereon, for deposit into the [ insert " trust fund," " escrow account," or " government fund"] established for decommissioning.
The bank will notify [ insert name oflicensee] and the NRC at least 90 days prior to cancellation or nonrenewal of this certificate.
The deposit documented in this certificate is insured by the Federal Deposit Insurance Corporation.
pignature of authorized representative of the issuer]
[Date]
Ov 67
8.
DEPOSITS OF GOVERNMENT SECURITIES A deposit of government securities is the deposit by a licensee (into a trust fund, an escrow account, or a government fund) of securities backed by the Federal government or a State or local government.
Procedures for receipt and possible reinvestment of interest from the securities should be established in the trust agreement (see Section 4) or escrow agreement (see Section 5) governing the deposit of the securities. The proper registrant for U.S. Treasury securities is the trustee of the trust, the escrow agent of the escrow account, or the State or State agency administering the government fund.
The deposit of government securities into a trust fund, escrow account, or government fund requires the careful attention of the trustee, escrow agent, or State or State agency with respect to the following matters:
Proper registration and endorsements; Reinvesting interest payments; Handling instruments with varying maturity dates; Reinvesting funds from matured and redeemsd instruments; and Filing proper forms in a timely fashion with the appropriate government agencies.
]
The remainder of this section discusses the primary criteria that determine whether particular deposit of government securities submissions will be acceptable to NRC.
{
i Section 8.1 describes qualifications required of the issuer.
e Section 8.2 addresses funding and the adequacy of coverage.
Section 8.3 discusses the documentation that supports a deposit of government securities.
This section also contains a checklist designed to assist hcensees who uso deposits of government securities. Checklist 8-A summarizes the primary criteria used by NRC to evaluate deposits of government securities.
8.1 QUALIFICATIONS OF THE ISSUER Securities used in a deposit of government securities must be backed by the Federal government or a State or local government. Acceptable government securities include:
U.S. Treasury bills, notes, and bonds, 68 J
CIIECKIsIST 8-A
,. J DEPOSITS OF GOVERNMENT SECURITIES O
Documentation is complete:
O 1.
Trust agreement (originally signed duplicate) and all supporting documentation (see Section 4 and attach Checklist 4-A) 91 Escrow agreement (originally signed duplicate) and all supporting documentation (see Section 5 and attach Checklist 5-A)
DI Government fund (originally signed duplicate) and all supporting documentation (see Section 6 and attach Checklist 6-A).
O 2.
List of securities deposited with the trustee, escrow agent, or State or State agency:
O U.S. Treasury bills a
U.S. Treasury notes a
U.S. Treasury bonds O
Government National Mortgage Association pass-through certificates (GNMAs)
.p)
O Federal National Mortgage Association bonds (FNMAs) y O
Federal Home Loan Mortgage Corporation (FHLM) bonds O
State or municipal bonds rated BBB or higher by Standard &
Poor's, or Baa or higher by Moody's Investment Services O
3.
Specification of the current market value of the securities deposited O
4.
Specification of the date on which securities were transferred to the fund or account O
5.
Specification of the licen.;ee's certification amount or estimated cost of decommissioning o
6.
Letter from State or State agency stating that use of funds will be restricted to covering the costs of decommissioning upon the licensee's default (needed only if a government fund is established to hold securities)
O 7.
Checklist 4-B or 5-B (if model trust or escrow wording is modified or not used) o The current market value of deposited securities equals or exceeds the required coverage level.
n(d l
)
69
Government National Mortgage Association (GNMA) pass-through certificates, a
Mortgage-backed bonds issued by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLM); and State or municipal bonds rated BBB or higher by Standard & Poor's, or Baa or higher by Moody's Investment Services.
j Also, a licensee must deposit government securities into a trust fund, escrow l
account, or government fund. Information on these mechanisms is provided in Sections 4, 1
5, and 6.
I l
8.2 LEVEL OF COVERAGE j
A deposit of government securities must at all times contain sufficient securities, valued at their current market value, to complete decommissioning activities." Therefore, at
)
the time the trust fund, escrow account, or government fund is established, it must contain
)
government securities with a market value at least as great as ti.e licensee's current I
decommissioning cost estimate or certification amount. When submitting a deposit of government securities to NRC, a licensee should also submit documentation that verifies the amount in the trust fund, escrow account, or government fund (e.g., a receipt from the trustee, escrow agent, or State or State agency or an account balance statement). If the I
j licensee's certification amount or estimated decommissioning cost increases to a level above
{
l the amount assured by the deposit of government securities, the licensee must either (1)
(
deposit additional government securities to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the deposit of government securities.
8.3 RECOMMENDED DOCUMENTATION The terms and conditions of a deposit of government securities are governed by a written trust agreement or escrow agreement. The wording of a deposit of government securities may vary, but Sections 4.4 and 5.4 of this regulatory guide are a model trust agreement and a model escrow agreement that meet NRC's requirements and are recommended by the NRC. As summarized in Checklist 8-A, the following documentation is to be submitted when government securities are used.
A list of securities deposited with the trustee, escrow agent, or State or State agency (which should state their current market value and the date on which the securities were transferred to the fund or account).
The trust agreement or escrow agreement (along with all supporting j
documentation and any amendments) is the written document that specifies the terms and conditions of the deposit of government securities. The wording in the model trust and escrow agreements in Sections 4.4 and 5.4, respectively,is acceptable to the NRC staff. Licensees who wish to use other I
i
" The exception to this rule is a deposit of government securities that is being combined with another financial l
mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
70 1
l l
O wording should use Checklists 4-B or 5-B to be sure that the alternative wording contains all the necessary terms and conditions.
Documentation specifying the licensee's certification amount or estimated cost of decommissioning.
A letter from the State or State agency stating that the fund's use will be restricted to covering the costs of decommissioning upon the licensee's def ault (needed only if the securities are held in a government fund).
t
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71
9.
SURETY BONDS A payment surety bond (or surety bond) is a guarantee by a surety company (or surety) that it will fund decommissioning activities if the principal (i.e., the licensee) fails to do so. In issuing a surety bond, the surety company becomes " jointly and severally" liable for the guaranteed payment, meaning that the surety assumes the licensee's obligation to fund j
decommissioning as its own and can be sued jointly with the licensee for the obligation.
1 Consequently, most surety bonds include an indemnification provision that requires the principal to reimburse the surety for costs incurred in satisfaction of the principal's obligations.
A surety bond used for decommissioning financial assurance must be open-ended or,if written for a specified term (such as five years), must be renewed automatically unless,90 days or more prior to the renewal date, the surety notifies both NRC and the licensee of its intention not to renew. A surety bond must also provide that the full face amount of the bond be paid to the beneficiary automatically prior to expiration, without proof of forfeiture,if the licensee fails to provide a replacement mechanism acceptable to the NRC within 30 days after receipt of notification of cancellation.
Funds drawn from a surety bond must be placed directly into a " standby trust fund" if the licensee fails to conduct decommissioning as required. A standby trust fund is simply a trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as a surety bond). Funds in the standby trust would then be available to pay the costs of decommissioning, just as they would with an ordinary trust fund. (See Section 17 for more information on standby trust funds.)
J The remainder of this section discusses the primary criteria that determine whether particular surety bond submissions will be acceptable to NRC.
Section 9.1 describes qualifications required of the issuer (the surety company).
Section 9.2 addresses the adequacy of coverage.
Section 9.3 discusses the documentation that supports a surety bond.
Section 9.4 presents a model surety bond that NRC has found to be acceptable.
This section also contains two checklists that are designed to assist licensees who wish to use surety bonds. Checklist 9-A summarizes the primary criteria used by NRC to evaluate surety bonds. Checklist 9-B (which should be used only by licensees who revise or do not use the model wording for surety bonds) presents terms and conditions that are recommended for surety bonds.
O\\
4 72
1 CHECKLIST 9-A
~
SURETY BONDS y
O Documentation is complete:
O 1.
' Surety bond (originally signed duplicate) 0 2.
Standby tmst agreement and all supporting documentation (see Section 17
. and attach Checklist 17-A)
- O 3.
Copy of broker / agent's power of attorney authorizing the broker / agent to issue bonds a
4.
Checklist 9-B (if model surety bond wording is modified or not used)
O The surety company is listed in the most recent edition of Circular 570 for th: Lia:e in which the bond was signed and has an underwriting limitation greater than or equal to the amount of the bond being used for decommissioning.
O The' amount of the surety bond equals or exceeds the required coverage level.
D 9.1
. QUAUFICATIONS OF THE ISSUER To determine whether a surety company is qualified, licensees should consult the most recent edition of the U.S. Department of the Treasury's Circular 570, which is published annually on approximately July 1 and is updated periodically in the FederalRegister. (Circu/ar 570 can also be found on the World Wide Web at http://www.fms.treas. gov /c570/index.html.) The surety must be listed in Circular 570 as qualified in the State where the surety bond was signed, and the surety's underwriting
' limitation (also specified in Circular 570) must be at least as great as the level of coverage required for the license.
Also, as noted above, a surety bond must be payable to a standby trust fund.
Information on the qualifications of trustees of standby trusts is provided in Section 17.
V F A surety can only exceed its underwriting limitation if it brings another surety company into the agreement to share the risk. Nevertheless, several sureties ac+ing together may not exceed the sum of their individual underwriting limitations, 73
9.2 LEVEL OF COVERAGE A surety bond must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning. If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the surety bond, the licensee must either (1) revise the surety bond to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the surety bond.
{
9.3 RECOMMENDED DOCUMENTATION As summarized in Checklist 9-A," licensees who wish to use surety bonds to provide financial assurance for decommissioning submit a copy of the surety bond and other documentation as discussed below.
The surety bond (along with any riders or amendments) signed by an authorized representative from the surety company. The wording of a surety bond may vary, but Section 9.4 of this regulatory guide is a model surety bond that would meet NRC's requirements and is recommended by NRC. Licensees who wish to use other wording should refer to Checklist 9-B to be sure that the alternative wording contains all the necessary terms and conditions.
A copy of the broker / agent's power of attorney authorizing the brokerlagent to issue bonds on behalf of the surety company. The power of attorney ensures that the surety bond is enforceable.
A standby trust fund must be established to receive funds from the surety bond. The standby trust fund should satisfy the criteria described in Section 17 and in Checklist 17-A of this regulatory guide.
f l
" The exception to this rule is a surety bond that is being combined with another financial mechanism. For a i
I combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
" Supporting documentation may differ for licensees who submit surety bonds that differ from the recommended model.
74
- o.
[
}
CilECKLIST 9-B
\\_/
Terms and Conditions Needed in Decommissioning Surety Bonds Use this checklist only ofdeviatingfrom the wording recommended in Section 9.4.
O Date of execution of bond and effective date.
O
.Name and address oflicensee.
0 Type of business organization and State ofincorporation (if appropriate).
O NRC license number, identification oflicensed facility (ies) (name and address), costs or required decommissioning activities.
O Identification of corporate or individual surety (ies):
O 1.
Name; O 2.
State ofincorporation; and 03.
Qualification in jurisdiction where facility covered by the surety bond is located.
a Designation of obligee (NRC).
O Recitation of consideration (fee paid for surety bond).
O Liability of surety:
O 1.
Penal sum; 02.
Limitation ofliability; o 3.
Condition (s) ofliability; and p
D 4.
Statement ofjoint and several liability.
- Q O
Statement oflicensee's regulatory obligations as reason for bond.
O Scope and duration ofbond:
O 1.
Restricted to single obligation; O 2.
Continuing; O 3.
Provisions for renewal; and O 4.
Payable to a standby trust fund.
O Termination:
O 1.
By surety; O 2.
By principal; and O 3.
Effective datp of termination or revocation.
O The financial institution issuing the mechanism must notify the licensee and the NRC by certified mail at least 90 days prior to cancellation or nonrenewal.
O An automatic payment provision must be included that, if the licensee is unable to secure alternative financial assurance to replace the bond within 30 days of notification of cancellation, the NRC may draw upon the bond prior to cancellation.
O Adjustment of penal sum.
O
. Liability limit of the bond.
O Date.
O Signatures.
O Premium.
75
r 9.4 MODEL SURETY BOND Date bond executed:
Effective date:
Principal: [ Insert legal name and business address oflicensee]
Type of organization: [ Insert " proprietorship," " joint venture," " partnership," or " corporation"]
State ofincorporation:
(ifapplicable)
NRC license number, name and address of facility, and amount for decommissioning activities guaranteed by this bond:
Surety: [ Insert name and business address)
Type of organization: [ Insert " proprietorship," " joint venture," " partnership," or " corporation"]
State ofincorporation:
(ifapplicable)
Surety's qualification in jurisdiction where licensed facility is located.
Surety's bond number:
Total penal sum of bond: $
Know all persons by these presents, that we, the Principal and Surety hereto, are firmly bound to the U.S. Nuclear Regulatory Commission (hereinafter called NRC) in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum " jointly and severally" only for the purpose of allowing ajoint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety; but if no limit ofliability is indicated, the limit ofliability shall be the full amount of the penal sum.
WHEREAS, the U.S. Nuclear Regulatory Commission, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of1974, has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part [ insert 30, 40,70, or 72], applicable to the Principal, which require that a license holder or an applicant for a f
facility license provide financial assurance that funds will be available when needed for facility decommissioning; 1
O 76 A
NOW, THEREFORE, the conditions of the obligation are such that if the Principal shall faithfully, i
before the beginning of decommissioning of each facility identified above, fund the standby trust fund in the amounts identified above for the facility; Or, if the Principal shall fund the standby trust fund in such amount after an order to begin facility decommissioning is issued by NRC of such assurance, within 30 days after the date a notice of cancellation from the Surety is received by both the Principal and the NRC, then this obligation shall be null and void; otherwise it is to remain in full force and effect.
The Surety shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by the NRC that the Principal has failed to perform as guaranteed by this bond, the Surety shall place funds in the amount guaranteed for the facility into the standby tmst fund.
The liability of the Surety shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety hereunde'r exceed the amount of said penal sum.
The Surety may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the NRC provided, however, that cancellation shall not occur during the 90 days beginning on the date of receipt of the notice of cancellation by both the Principal and the NRC, as evidenced by the return receipts.
The Principal may terminate this bond by sending written notice to the NRC and to the Surety 90 days prior to the proposed date of termination, provided, however, that no such notice shall become effective until the Surety receives written authorization for termination of the bond from the NRC.
The Principal and Surety hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new amount, provided that the penal sum does not increase by more than 20 percent in any one year and no decrease in the penal sum takes place without the written permission of the NRC.
If any part of this agreement is invalid, it shall not affect the remaining provisions that will remain valid and enforceable.
In Witness Whereof, the Principal and Surety have executed this financial guarantee bond and have affixed their seals on the date set forth above.
The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety.
Principal
[(
[ Signatures]
77
i
[ Names]
[ Titles]
[ Corporate seal]
Corporate Surety j
[Name and address]
State ofincorporation:
Liability limit: $
[ Signatures]
[ Names and titles]
[ Corporate seal]
[For every co-surety, provide signatures, names and titles, corporate seal, and other information in the same manner as for the Sureties above.]
Bond Premium: $
9
)
78 4
i t
i I
[b 10.
LETTERS OF CREDIT A /etter of credit is a formalized, written line of credit extended by a bank on behalf of a licensee. The credit may be used only by NRC and only to fund decommissioning in the event the licensee does not conduct decommissioning on its own. A letter of credit used to provide financial assurance for decommissioning must be irrevocable, meaning that it may not be canceled prior to its expiration date. Also, the arrangement requires that the licensee repay (with interest) any funds drawn from the letter of credit.
A letter of credit used for decommissioning financial assurance must be open-ended or,if written for a specified term (such as five years), must be renewed automatically unless 90 days or more prior to the renewal date, the issuing bank notifies both NRC and the licensee of its intention not to renew. A letter of credit must also provide that the full face amount of the credit be paid to the beneficiary automatically prior to expiration, without proof l
of forfeiture,if the licensee fails to provide a replacement mechanism acceptable to NRC l
within 30 days after receipt of notification of cancellation.
j Funds drawn from a letter of credit must be placed directly into a " standby trust fund" if the licensee fails to conduct decommissioning as required. A standby trust fund is simply a f
trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as a letter of credit). Funds in the standby trust would then be available to pay the costs of decommissioning, just as they would with an ordinary trust fund. -(See Section 17 for more information on standby trust funds.)
I O
The remainder of this section discusses the primary criteria that determine whether
{
particular letter of credit submissions will be acceptable to NRC.
Section 10.1 describes qualifications required of the issuer.
Section 10.2 addresses the adequacy of coverage.
Section 10.3 discusses the documentation that supports a letter of credit.
Section 10.4 presents a modelletter of credit that NRC has found to be acceptable.
This section also core m two checklists that are designed to assist licensees who wish to use letters of credit. Checklist 10-A summarizes the primary criteria used by NRC to l
evaluate letters of credit. Checklist 10-B (which should be used only by licensees who revise or do not use the model wording for letters of credit) presents terms and conditions that are recommended for letters of credit.
1 10.1 QUALIFICATIONS OF THE ISSUER A bank issuing a letter of credit to a licensee should be a financial institution whose operations are regulated and examined by a Federal or State agency.
/3
'uY 79
l CIIECKLIST 10-A LETTERS OF CREDIT 0
Documentation is complete:
O 1.
Letter of credit (originally signed duplicate) 0 2.
Standby trust agreement and all supporting documentation (see Section 17 and attach Checklist 17-A) a 3.
Checklist 10-B (if model letter of credit wording is modified or not used)
O The financial institution is regulated by a Federal or State agency.
O The amount of the letter of credit equals or exceeds the required coverage level.
The word " National" in the title of a financial institution signals that the institution is Federa//y regulated, as do the words " National Association" or the initials "N.A."
following its title. To determine whether such a financialinstitution qualifies as an acceptable issuer of a letter of credit, licensees should contact the appropriate district office of the Office of the Comptroller of the Currency (OCC) and confirm that the institution is Federally regulated. The six district offices of the OCC, along with the States and territories under their jurisdiction, are as follows:
Northeastern District Office (212-819-9860) -- CT, DE, ME, MD, MA, NH, NJ, NY, PA, Rl, VT, District of Columbia, Puerto Rico, and Virgin Islands.
Southeastern District Officq (404-659-8855) -- AL, FL, GA, MS, NC, SC, TN, VA, and WV.
Central District Office (312-360-8800) -- lL, IN, KY, MI, OH, and Wl.
Midwestern District Office (816-556-1800) -- IA, KS, MN, MO, NE, ND, and SD.
Southwestern District Office (214-720-0656) -- AR, LA, NM, OK, and TX.
Western District Office (415-545-5900) -- AK, AZ, CA, CO, HI, ID, MT, NV, OR, UT, WA, WY, and Guam.
The word " State" in the title of a financialinstitution signals that the institution is State regulated. U.S. branches of foreign banks are usually regulated by the State in which they are located. To determine whether a State-regulated financialinstitution 80
qualifies as an acceptable issuer of a letter of credit, licensees should contact the
(-
applicable State banting authority and confirm that the institution is State regulated.
The titles of some financialinstitutions do not suggest that they are either Federally regulated or State regulated. In many such cases (but not all), these institutions are State regulated, as are many domestic branches of foreign banks.
Also, as noted above, a letter of credit must be payable to a standby trust fund.
Information on the qualifications of trustees of standby trusts is provided in Section 17.
J l
'10.2 LEVEL OF COVERAGE A letter of credit must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning. If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by j
the letter of credit, the licensee must either (1) revise the letter of credit to assure the higher amcunt or (2) obtain another financial assurance' mechanism to make up the difference between the new coverage level and the amount of the letter of credit.
10.3 RECONIMENDED DOCUMENTATION Licensees who use letters of credit to provide financial assurance for decommissioning must submit a copy of the letter of credit and other documentation as discussed below and summarized in Checklist 10-A:
- The letter of credit (along with any amendments) signed by an authorized representative from the issuing bank. The wording of a letter of credit may vary, but Section 10.4 of this regulatory guide is a modelletter of credit that would meet NRC's requirements and is recommended by NRC. Licensees who use other wording should refer to Checklist 10-B to be sure that their wording contains all the necessary terms and conditions.
A standby trust fund must be established to receive funds from the letter of
~
credit. The standby trust fund should satisfy the criteria described in Section 17 and in Checklist 17-A of this regulatory guide.
The exception to this rule is a letter of credit that is being combined with another financial mechanism. For a
/~%
combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
Supporting documentation may differ for licensees who submit letters of credit that differ from the recommended model 81
}
CHECKLIST 10-B Terms and Conditions Needed in Decommissioning Letters of Credit Use this checklist only Ydeviatingfrom the wording recommended in Section 10.4.
O The instrumeri must be entitled an " irrevocable letter of credit."
o The name of the issuing financial institution must be identified on the letter of credit.
a The letter should be limited in amount.
O The letter of credit must contain a specified expiration date or be written for a definite term.
a The issuer'.= obligation to pay the beneficiary should arise only upon presentation of a draft or other ecuments specified in the letter of credit.
O The letter of credit must be automatically renewed at each expiration date unless notification by certified mail is received by NRC and the licensee at least 90 days prior to nonrenewal.
O An automatic payment provision must be included that if the licensee is unable to secure alternative financial assurance to replace the letter of credit within 30 days of notification of cancellation, the NRC may draw upon the letter of credit prior to cancellation.
a Statement of ficensee's regulatory obligations as reason for the letter of credit.
O The letter of credit must be payable to a standby trust.
O Notice ofinsolvency or violation of banking requirements.
O The bank must not be called upon to determine a question of fact or law at issue between the licensee and NRC.
The licensee should have an unqualified obligation to reimburse the issuu for payments O
made under the letter of credit.
O Signature and title of officials ofissuing institution (signature block).
a Date (signature block).
O Standards under which the letter of credit may be interpreted (i.e., Uniform Customs and j
Practice for Documentary Credits or Uniform Commercial Code).
Ol 82
1b 10.4 MODEL LETTER OF CREDIT l
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [ insert number]
l This Credit Expires [ insert date]
Issued To:
U.S. Nuclear Regulatory Commission Washington, DC 20555 l
Dear Sir or Madam:
We hereby establish our Irrevocable Standby Letter of Credit No.
in your favor, at the request and for the account of[ insert name and address oflicensee] up to the aggregate amount of(insert dollar amount in words], U.S. dollars S
. available upon presentation of:
(1) your sight draft, bearing reference to this Letter of Credit No.
,and (2) your signed statement reading as follows: "I certify that the amount of the draft is payable pursuant to regulations issued under authority of the U.S. Nuclear Regulatory Commission."
This letter of credit is issued in accordance with regulations issued under the authority of the U.S.
]
Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic v
Energy Act of1954, as amended, and the Energy Reorganization Act of 1974. The NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, F.a t [ insert 30, 40, 70, or 72), which require that a holder of, or an applicant fw, a materials license issued under 10 i
CFR Part [ insert 30,40, 70, or 72] provide assurance that funds will be available when needed for decommissioning.
This letter of credit is effective as of[insen date] and shall expire on [ insert date at least 1 year later], but such expiration date shall be automatically extended for a period of[ insert time period of at least 1 year] on (insert date] and on each successive expiration date, unless, at least 90 days before the current expiration date, we notify both you and [ insert name oflicensee], by certified mail, as shown on the signed return receipts. If[ insert name of ficensee) is unable to secure alternative financial assurance to replace this letter of credit within 30 days of notification of cancellation, the NRC may draw upon the full value of this letter of credit prior to cancellation. The bank shall give immediate notice to the applicant and the NRC of any notice received or action filed alleging (1) the i
insolvency or bankruptcy of the financial institution or (2) any violation of regulatory requirements that could result in suspension or revocation of the bank's charter or license to do business. The financial institution also shall #ve immediate notice if the bank, for any reason, becomes unable to fulfill its obligation under the letter of credit.
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 days; and we shall deposit m I the amount of the draft directly into the standby trust fund of[ insert name oflicensee] in accordance with your instructions.
83
i Each dran must bear on its face the clause: " Drawn under Letter of Credit No.
, dated and the total of this dran and all other drafts previously drawn under this letter of credit does not exceed [ insert amount ofletter oferedit]."
[ Signature (s) and title (s) of oHicial(s) ofissuing institution]
[Date]
This credit is subject to [ insert "the most recent edition of the Uniform Customs and Practice for Documentary Credita, published by the International Chamber of Commerce," or "the Uniform Commercial Code").
O l
l 84
,n 5
\\
/
v 11.
LINES OF CREDIT A //ne of credit is an extension of credit from a bank to a licensee. In common practice, a line of credit is less formal than a letter of credit.2 To be acceptable to NRC for purposes of decommissioning financial assurance, however, a line of credit must be very similar to a letter of credit. The line of credit represents a binding arrangement by which the issuing party (i.e., a bank) agrees to place funds into a standby trust fund in the event of default by the licensee in the performance of decommissioning. A line of credit providing financial assurance for decommissioning must be documented in writing, irrevocable (meaning that it may not be canceled prior to its expiration date), and payable only at the request of NRC. The arrangement requires that the licensee repay (with interest) any funds drawn from the line of credit.
A line of credit used for decommissioning financial assurance must be open-ended or, if written for a specified term (such as five years), must be renewed automatically unless 90 days or more prior to the renewal date, the issuing bank notifies both NRC and the licensee of its intention not to renew. A line of credit must also provide that the full face amount of the credit be paid to the beneficiary automatically prior to expiration, without proof of forfeiture,if the licensee fails to provide a replacement mechanism acceptable to NRC within 30 days after receipt of notification of cancellation.
O, Funds drawn from a line of credit must be placed directly into a " standby trust fund"
('j if the licensee fails to conduct decommissioning as required. A standby trust fund is simply a trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as a line of credit). Funds in the standby trust would then be available to pay the costs of decommissioning, just as they would with an ordinary trust fund. (See Section 17 for more information on standby trust funds.)
The remainder of this section discusses the primary criteria that determine whether a particular line of credit submissions will be acceptable to NRC.
Section~11.1 describes qualifications required of the issuer.
Section 11.2 addresses the adequacy of coverage.
Section 11.3 discusses the documentation that supports a line of credit.
This section also contains two checklists designed to assist licensees in preparing acceptable lines of credit. Checklist 11-A summarizes the primary criteria used by NRC to evaluate lines of credit. Checklist 11-B presents terms and conditions that are recommended for lines of credit. NRC has not yet developed model wording for a line of credit. Nevertheless, such wording would probably be similar to the wording for a model letter of credit.
IV) 8 Letters of credit are discussed in Section 10 of this regulatory guide.
85
CIIECKLIST I1-A LINES OF CREDIT a
Documentation is complete:
0 1.
Line of credit documentation or verification (origina"y signed duplicate) a 2.
Standby tmst agreement and all supporting documentation (see Section 17 and attach Checklist 17-A) a 3.
Checklist 11-B o
The financial institution is regulated by a Federal or State agency.
O The amount of the line of credit equals or exceeds the required coverage level.
11.1 QUALIFICATIONS OF THE ISSUER A bank issuing a line of credit to a licensee should be a financialinstitution whose operations are regulated and examined by a Federal or State agency.
The word " National" in the title of a financial institution signals that the institution is federa//y regulated, as do the words " National Association" or the initials "N.A."
following its title. To determine whether such a financialinstitution qualifies as an acceptable issuer of a line of credit, licensees should contact the appropriate district office of the Office of the Comptroller of the Currency (OCC) and confirm that the institution is Federally regulated. The six district offices of the OCC, along with the States and territories under their jurisdiction, are as follows:
. Northeastern District Office (212-819-9860) -- CT, DE, ME, MD, MA, NH, NJ, NY, PA, Rl, VT, District of Columbia, Puerto Rico, and Virgin Islands.
i Southeastern District Office (404-659-8855) -- AL, FL, G A, MS, NC, 1
SC, TN, VA, and WV.
1 Central District Office (312-360-8800) -- lL, IN, KY, MI, OH, and WI.
Midwestern District Office (816-556-1800) -- IA, KS, MN, MO, NE, ND, and SD.
Southwestern District Office (214-720-0656) -- AR, LA, NM, OK, and TX.
86 l
Wes_ tern District Office (415-545-5900) -- AK,AZ,CA,CO,HI,ID, j-MT, NV, OR, UT, WA, WY, and Guam.
The word " State" in the title of a financial institution signals that the institution is State regulated. U.S. branches of foreign banks are usually regulated by the State in which they are located. To determine whether a State-regulated financial institution j
qualifies as an acceptable issuer of a line of credit, licensees should contact the I
applicable State banking authority and confirm that the institution is State regulated.
The titles of some financialinstitutions do not suggest that they are_either Federally l
regulated or State regulated. In many such cases (but not all), these institutions are l
State regulated, as are many dornestic branches of foreign banks.
Also, as noted above, a line of credit must be payable to a standby trust fund.
Information on the qualifications of trustees of standby trusts is provided in Section 17.
11.2 LEVEL OF COVERAGE -
A line of credit must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning.2' If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the line of credit, the licensee must either (1) revise the line of credit to assure the higher amount, or (2) obtain another financial assurance mechanism to make up the differenco
!/
between the new coverage level and the amount of the line of credit.
'U 11.3 RECOMMENDED DOCUMENTATION Licensees who use lines of credit to provide financial assurance for decommissioning must submit documentation or verification of the line of credit and other documentation as discussed below and summarized in Checklist 11-A.
Documentation or verification of the line of credit (along with any amendments: signed by an authorized representative from the issuing bank.
Licensees should refer to Checklist 11-B to ensure that the line of credit contains all the necessary terms and conditions.
A standby trust fund must be established to receive funds from the line of credit. The standby trust fund should satisfy the criteria described in Section 17 and in Checklist 17 A of this regulatory guide.
l O.
8' The exception to this rule is a line of credit that is being combined with another financial mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the required coverage level.
87
O CIIECKLIST 11-B Terms and Conditions Needed in Decommissioning Lines of Credit a
Statement oflicensee's regulatory obligation as reason for the line of credit.
O The line of credit should be limited in amount.
O The line of credit must be either open-ended or renewed automatically.
O NRC may draw on the line of credit upon commencement of required activities.
O The financial institution must be obligated to provide funds without reservation as necessary for required activities.
O The issuer's obligation to pay the beneficiary should arise only upon presentation of a draft or other documents specified in the line of credit.
a The financial institution issuing the mechanism must notify the licensee and NRC by certified mail at least 90 days prior to cancellation or non-renewal.
O An automatic payment provision must be included that if the licensee is unable to secure alternative financial assurance to replace the line of credit within 30 days of r,otifict. tion of cancellation, then NRC may draw upon the line of credit prior to cancellation.
O The line of credit must be payable to a standby taist.
O The financial institution must not be called upon to determine a question of fact or law at issue between the licensee and NRC.
O The licensee should have an unqualified obligation to reimburse the issuer for payments made under the line of credit.
O Signatures and titles (signature block).
D' Date (signature block).
O 88 i
i d
,f*
12.
INSURANCE POLICIES l
A decommissioning insurance po//cy is a guarantee by an insurance company to fund decommissioning. NRC's experience is that licensees seeking t, use insurance policies to
. assure their decommissioning costs have met with little if any success.
An insurance policy used for decommissioning financial assurance must be j
open-ended or, if written for a specified term (such as five years), must be renewed l
automatically unless 90 days or more prior to the renewal date, the issuer notifies both NRC and the licensee of its intention not to renew. ' An insurance policy must also provide that the full face amount of the policy be paid to the beneficiary automatically prior to expiration, without proof of forfeiture,if the license 6 fails to provide a replacement mechanism acceptable to NRC within 30 days after receipt of notification of cancellation.
Funds drawn from an insurance policy must be placed directly into a'" standby trust fund" if the licensee fails to conduct decommissioning as required. A standby trust fund is simply a trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as an insurance policy). Funds in the j
standby trust would then be available to pay the costs of decommissioning, just as they would with an opinary trust fund. (See Section 17 for more information on standby trust funds.)
r The remainder of this section discusses the primary criteria that determine whether A
particular insurance policy submissions will be acceptable to NRC.
Section 12.1 describes qualifications required of the issuer (the insurance company).
l Section 12.2 addresses the adequacy cf coverage.
Section 12.3 discusses the documentation that supports an insurance policy.
l L
This section also contains two checklists designed to assist licensees in preparing acceptable insurance policies. Checklist 12-A summarizes the primary criteria used by NRC to evaluate insurance policies. Checklist 12-B presents terms and conditions that are recommended for insurance policies. NRC has not yet developed modelinsurance policy wording that is acceptable to insurers and to NRC.
12.1 QUALIFICATIONS OF THE ISSUER l
An insurance company that issues a policy to provide financial assurance for decommissioning must be licensed by State regulatory authorities to transact business as an insurer in one or more U.S. States. This standard prevents licensees from using policies issued by insurers that are not subject to oversight by at least one U.S. State regulatory authority. Insurance policies issued by " captive" insurers (insurers owned by at least one of
)~
%)
89
CIIECKLIST 12-A INSURANCE POLICIES O
Documentation is complete:
a 1.
Insurance policy (originally signed duplicate)
{
Standby trust agreement and all supporting documentation (see Section 17 o
2.
and attach Checklist 17-A) l 0
3.
Checklist 12-B The insurance company is licensed by State regulatory authorities to transact business as a
an insurer in one or more U.S. States.
The amount of the insurance policy equals or exceeds the required coverage level.
a the parties for which they provide coverage) may not be used by licensees to provide financial assurance for decommissioning.22 Also, as noted above, an insurance policy must be payable to a standby trust fund.
Information on the qualifications of trustees of standby trusts is provided in Section 17.
12.2 Level of Coverage An insurance policy used as a decommissioning financial assurance mechanism must provide coverage that is at least equal to the licensee's certification amount or estimated cost of decommissioning.2 Note that an annuity policy that would gradually increase coverage over time to equal decommissioning costs would not be acceptable (unless accompanied by some other financial assurance mechanism to make up any shortfall). If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the insurance policy, the licensee must either (1) revise the insurance pnlicy to assure the higher amount or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the insurance policy.
)
88 Captive insurers (1) are less strictly regulated than commercial insurers, (2) may not be monitored closely af ter their operations have been approved, and (3) usually do not have access to guarantee funds that pay claims in the event the insurer is not able to do so.
83 An exception is an insurance policy that is being combined with another financial mechanism. For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal to the l
required coverage level.
1 90 1
]
12.3 RECOMMENDED DOCUMENTATION
, Licensees who use insurance policies to provide financial assurance for decommissioning must submit a copy of the insurance policy and other documentation as discussed below and summarized in Checklist 12-A.
A copy of the insurance policy (along with any endorsements or amendments) signed by an authorized representative from the insurance company. Licensees should refer to Checklist 12-8 to be sure that the insurance policy contains all the necessary terms and conditions.24 A standby trust fund must be established to receive funds from the insurance
+
policy. The standby truct fund should satisfy the criteria described in Section i
17 and in Checklist 17-A of this regulatory guide.
CIIECKLIST 12-B Terms and Conditions Needed in Decommissioning Insurance Policies a
Name and address oflicensee.
O NRC license number; name and address of facility.
O Name and address ofinsurer.
O Amount ofinsurance policy (limit ofliability).
O Premium.
O ErTective date of policy.
O Expiration date of policy.
O Statement oflicensee's regulatory obligations as reason for policy.
O The insurance policy must be either open-ended or renewed automatically.
The insurer issuing the mechanism must notify the licensee and NRC by certified mail at O
least 90 days prior to cancellation or nonrenewal.
O An automatic payment provision must be included that, if the licensee is unable to secure alternative financial assurance to replace the policy within 30 days of notification of cancellation, the NRC may draw upon the policy prior to cancellation.
O The insurance policy must be payable to a standby trust.
O Signatures.
O Date.
()
" Licensees should also maintain in their records any certi// cates o/ insurance signed by individuals authorized to act for the licensee and the insurer. Certificates of insurance can be helpfulin clarifying any ambiguities that may exist in the insurance policy.
91
13.
PARENT COMPANY GUARANTEES
'A parent company guarantee is a guarantee from a licensee's corporate parent that it will fund or carry out decommissioning activities if the licensee fails to do so. The corporate parent must annually pass (within 90 days after the close of each succeeding fiscal year) one of two financial tests specified in Appendix A to 10 CFR Part 30 to demonstrate that it has adequate financial strength to provide the guarantee. The financial test alternatives (see below) consider accounting ratios, net worth, assets, and bond rating data relative to fixed criteria. Also, the parent company's financial statements must have been premred in accordance with generally accepted accounting principles applicable to the UnCad States, and an independent certified public accountant must have verified the accuracy of the financial test data relative to the audited financial statements. A parent Nmpany guarantee may not be used in combination with other financial assurance mechanisms.
A parent company guarantee must remain in force unless the parent company sends notice of cancellation by certified mail to both NRC and the licensee at least 120 days in advance (as evidenced by the return receipts). However, a parent company guarantee may be used only as long as the parent company meets the financial test criteria. If the parent company no longer passes the financial test, it must provide alternative financial assurance if the licensee does not do so.
If the guarantee is drawn upon because the licensee fails to carry out decommis-sioning, the parent company must either fund or carry out decommissioning activities. Under the funding option, funds drawn from a parent company guarantee should be placed directly into a " standby trust fund." A standby trust fund is simply a trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as a parent company guarantee). Funds in the standby trust would then be available to pay the costs of decommissioning, just as they would with an ordinary trust fund. (See Section 17 for more information on standby trust funds.)
The remainder of this section discusses the primary criteria that determine whether particular parent company guarantee submissions will be acceptable to NRC.
Section 13.1 describes qualifications required of the issuer.
Section 13.2 addresses the adequacy of coverage.
a Section 13.3 discusses the documentation that supports a parent company i
guarantee.
Section 13.4 presents a model parent company guarantee that NRC has found to be acceptable.
This section also contains two checklists designed to assist licensees in preparing acceptable parent company guarantees. Checklist 13-A summarizes the primary criteria used by NRC to evaluate parent company guarantees. Checklist 13-B (which should be used only by licensees that revise or do not use the model wording for parent company 92
r r'
CIIECKLIST 13-A i
PARENT COMPANY GUARANTEES l
l O
Documentation is complete:
l 0
1.
Parent company (corporate) guarantee agreement (originally signed duplicate) a 2.
Letter from chief executive oflicer oflicensee a
3.
Letter from chief financial officer of parent comoany, including parent company guarantee financial test (Financial Test I or II)
O 4.
Auditor's special report confirming CFO letter and reconciling amounts in the CFO letter with parent company's financial statements D
5.
Parent company's audited financial statements for the most recent fiscal year, l
including the auditor's opinion on the fmancial statements a
6.
Standby trust agreement and all supporting documentation (see Section 17 and attach Checklist 17-A)
O 7.
Checklist 13-B (if model parent company guarantee wording is modified or q
not used) b a
The corporate parent has majority control of the licensee's voting stock (if not, details on the parent-subsidiary relationship have been submitted to NRC for review).
O The amount of the parent company guarantee equals or exceeds the required coverage level.
guarantees) presents terms and conditions that are recommended for parent company guarantees.
13.1 QUALIFICATIONS OF THE ISSUER A parent company guarantee must be provided by the corporate parent of the licensee. Normally, the parent company must have majority control of the licensee's voting l
stock (although NRC may consider exceptions to this rule on a case-by-case basis). To qualify to provide the guarantee, the parent company must meet one of the two financial tests specified in Appendix A to 10 CFR Part 30. These two financial tests, shown below, differ in that one includes a bond rating criterion while the other does not. Parent companies without an actual bond rating may still use the bond rating alternative of the financial test by securing a so-called " indicative" bond rating from either Standard & Poor's or Moody's.
Indicative bond ratings, which are available for a fee, are for information only and are provided as an indication of what a rating would be if the firm were to issue debt. A parent m
company seeking to use an indicative bond rating should submit the rating and name of the
')
rating service as part of the financial test demonstration. The company, however, would not be able to provide NRC with information on the dates of issuance and maturity of the bond, nor would it be able to certify that the rating pertained to its "most recent bond issuance."
93
Rather, the parent company would explain that the rating was an indicative rating. The parent company would also update the indicative rating every year as it repeats the passage of the financial test.
As noted above, a parent company guarantee should be payable to a standby trust fund. Information on the qualifications of trustees of standby trusts is provided in Section 17.
13.2 LEVEL OF COVERAGE A parent company guarantee must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning. If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the parent company guarantee, the licensee must revise the guarantee to assure the higher amount (or must replace the guarantee with a different financial assurance mechanism that is in the amount of the new coverage level).2s O
i 85 Because a parent company guarantee may not be used in combination with any other financial assurance mechanism, licensees do not have the option of obtaining another mechanism to make up differences between increased coverage levels and guaranteed amounts.
94
rz W)
Financial Test I M
The parent company must have:
(i)
Two of the following three ratios: A ratio of total liabilities to net worth less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities greater than 0.1; and a ratio of current assets to current liabilities greater than 1.5; (ii)
Net working capital and tangible net worth each at least six times the current decommissioning cost estimates (or prescribed amount if a certification is used);
(iii) Tangible net worth of at least $10 million; (iv) Assets located in the United States amounting to at least 90 percent of total assets or at least six times the current decommissioning cost estimates (or prescribed amount if a certification is used).
Financial Test II The parent company must have:
f"N (i)
A current rating for its most recent bond issuance of AAA, AA, A, or BBB as issued by Q
Standard & Poor's, or Aaa, Aa, A, or Baa as issued by Moody's; (ii)
Tangible net worth a ieast six times the current decommissioning cost estimates (or prescribed amount if a certification is used);
(iii) Tangible net worth of at least $10 million; (iv) Assets located in the United States amounting to at least 90 percent of total assets or at least six times the current decommissioning cost estimates (or prescribed amount if a certification is used).
13.3 RECOMMENDED DOCUMENTATION The terms and conditions of a parent company guarantee are governed by a written guarantee agreement. The wording of a parent company guarantee agreement may vary, but this Regulatory Guide (in Section 13.4) includes a "model" parent company guarantee agreement that would meet NRC's requirements and is recommended by NRC. In addition to the guarantee agreement, other documentation must be submitted with a parent company guarantee. Documentation for the model parent company guarantee is to include the following, as summarized in Checklist 13-A.2e The guarantee agreement is the written document that specifies the terms and conditions of the parent company guarantee. The wording in the model guarantee presented in Section 13.4 is acceptable to NRC. Licensees who use A
Supporting documentation may differ for licensees who submit parent company guarantees that differ from the recommended model.
95 t
other wording should refer to Checklist 13-B to be sure that the alternative wording contains all the necessary terms and conditions, j
The chief executive officer (CEO) /etter is a letter from the CEO of the licensee
=
that (1) certifies that the licensee is a going concern, (2) identifies toe amount of the licensee's tangible net worth, (3) specifies whether the licensee is required to file a Form 10-K with the U.S. Securities and Exchange j
Commission, and (4) states the date on which the licensee's fiscal year ends.
The chief financia/ officer (CFO) /etter is a letter from the CFO of the carent comoany that (1) identifies the names, addresses, license numbers, and estimated decommissioning costs of the facilities covered by the guarantee and (2) demonstrates the parent company's ability to pass either of the two financial tests specified in Appendix A to 10 CFR Part 30. The parent company must pass the financial test for all costs covered by a financial test.
These include costs covered by (1) the parent company guarantee, (2) other NRC or Agreement State parent company guarantees or self-guarantees, and (3) parent company guarantees, self-guarantees, or financial tests of other Federal or State agencies (e.g., EPA).
The auditor's specialreport is a report from the parent company's independent certified public accountant that compares the data used by the parent company in the financial test demonstration with the amounts in its annual financial statements. If needed, this report may also include a schedu/e attachment reconciling the financial test numbers with amounts in the parent company's financial statements.
A copy of the parent company's audited financia/ statements for the most recent completed fiscal year. These financial statements should include the independent certified public accountant's opinion on the statements.
Evidence that the parent company has majority control of the licensee's voting stock. Such evidence can include incorporation agreements (i.e., copies of submissions to the appropriate State Corporation Commission), Schedule 22 from the parent company's SEC Form 10-K, or a certified corporate resolution that the licensee and the parent company guarantor are separate and distinct corporate entities and that the parent company controls a majority of the voting stock of the subsidiary. If the parent company does not have majority control of the licensee's voting stock, the licensee should provide details on j
the parent-subsidiary relationship to NRC for review.
j O
96
r i
LG CIIECKLIST 13-B Terms and Conditions Needed in Parent Company Guarantees 1
Use this checklist only if deviatingfrom the wording recommended in Section 13.4.
o Name and address of guarantor.
o Name and address oflicensee.
O Name and address of regulatory agency.
O The following five recitals:
)
(1)
The authority of the guarantor to enter into the guarantee; (2)
The licensee's regulatory obligations as reason for the parent guarantee; (3)
The names, addresses, and license numbers of the facilities for which the guarantee provides financial assurance and the amounts guaranteed for decommissioning actisities; (4)
Financial test I or 11 used by guarantor to demonstrate financial strength; and (5)
The guarantor's authority to provide the guarantee, such as ownership of the licensee as evidenced by majority control of the voting stock of the licensee.
O Description of the primary obligation (required activities).
o Unequivocal statement of guarantee:
0 1.
Recitation of the consideration for the guarantee; and a 2.
Liability of the guarantor:
x 0 a.
Limitation ofliability
\\
o b.
Conditions ofliabilitv o c.
Effect on liability of a change in the status of the licensee.
O Statement that guarantor remains bound despite amendment or modification oflicense, reduction or extension of time of performance of required activities, or any other modification or alteration of an obligation of the licensee.
l 0
Notice requirements.
j o
Discharge of the guarantor (release of obligations).
o Termination and revocation:
o 1.
Termination on occurrence of contingency; j
o 2.
Voluntary revocation by guarantor; and 03.
Effective date of termination or revocation.
]
o Date.
0 Signatures.
j D
Signature of witness or notary (signature block).
A standby trust fund, although not required under NRC regulations, is recommended for use with parent company guarantees. The standby trust fund should be ready to receive funds from the guarantee. The standby trust fund should satisfy the criteria described in Section 17 and in Checklist 17-A of this regulatory guide.
i s
J 97
13.4 MODEL CIIIEF EXECUTIVE OFFICER (CEO) LETTER
[ Address to U.S. Nuclear Regulator / Commission]
I am the chief executive officer of[ insert name and address of ficensee), a [ insert i
" proprietorship," " joint venture," "pannership," or " corporation"). This letter is in support of this firm's use of the financial test to demonstrate fmancial assurance, as specified in 10 CFR Part [ insert 30,40, 70, or 72].
)
I hereby certify that [ insert name oflicensee) is currently a going concern, and that it possesses positive tangible net worth in the amount of[ insert amount].
1 i
This firm [ insert "is required" or"is not required"] to file a Form 10-K with the U.S.
Securities and Exchange Commission for the latest fiscal year. This fiscal year of this firm ends on
[ insert month and day].
I hereby certify that the content of this letter is true and correct to the best of my knowledge.
[ Signature]
[Name]
[ Title]
[Date]
l O
98
l 13.5 MODEL CHIEF FINANCIAL OFFICER (CFO) LETTER
[ Address to U.S. Nuclear Regulatory Commission)
I am the chief financial officer of[ insert name and address of parent guarantor], a [ insert i
l
" proprietorship," " joint venture," " partnership," or " corporation"). This letter is in support of this firm's use of the financial test to dernonstrate financial assurance, as specified in 10 CFR Part [ insert 30,40,70, or 72].
[ Complete the following paragraph regarding facility (ies) and associated cost estimates or certified amounts. For each facility, include its license number, name, address, and current cost estimates or certified amounts for the specified activities.]
This firm guarantees, through the parent company guarantee submitted to demonstrate compliance under 10 CFR Part [ insert 30,40,70, or 72], the decommissioning of the following facilities owned or operated by subsidiaries of this firm. The current cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility:
Certified Amounts Name of License Location of or Current Facility Number Facility Cost Estimates s
Thic frm [ insert "is required" or " is not required"] to file a Form 10-K with the U.S.
Securities and Exchange Commission for the latest fiscal year.
This fiscal year of this firm ends on [ insert month and day]. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended [ insert date]. A copy of this firm's most recent financial statements is enclosed.
[ Insert completed Financial Test I or II of the parent company.]
I hereby certify that the content of this letter is true and correct to the best of my knowledge.
[ Signature]
[Name]
[ Title]
l
[Date]
m 99~
i 13.6 PARENT COMPANY GUARANTEE FINANCIAL TEST I 1.
Current decommissioning cost estimates or certified amounts i
Decommis:.ioning amounts covered by this parent a.
company guarantee
)
b.
All decommissioning amounts covered by other NRC or Agreement State parent company I
guarantees or self-guarantees All amounts covered by parent company guarantees, c.
self-guarantees, or fmancial tests of other Federal or State agencies (e.g., EPA)
TOTAL
- 2.
Total liabilities (if any portion of the cost estimates for decommissioning is included in total liabilities on your firm's financial statemente, you may deduct the amount of that portion from this line and add that amount to lines 3 and 4)
- 3.
Tangible net worth **
- 4.
Net wonh
- 5.
Current assets
- 6.
Current liabilities S
- 7.
Net working capital (line 5 minus line 6)
- 8.
The sum of net income plus depreciation, depletion, and amortization
' 9.
Total assets in United States (required only ifless than 90 percent of firm's assets are located in the United States)
Yes No 10.
Is line 3 at least $10 million?
11.
Is line 3 at least 6 times line !?
12.
Is line 7 at least 6 times line !?
13.
Are at least 90 percent of firms's assets located in the United States? If not, complete line 14.
14.
Is line 9 at least 6 times line l?
Guarantor must meet two of the following three ratios:
15.
Is line 2 divided by line 4 less than 2.0?
16.
Is line 8 divided by line 2 greater than 0.l?
17.
Is line 5 divided by line 6 greater than 1.5?
i Gl
- Denotes figures derived from financial statements.
]
" Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.
1 i
100
lO) 13.7 PARENT COMPANY GUARANTEE FINANCIAL TEST II v
1.
Current decommissioning cost estimates or certified amounts a.
Decommissioning amounts covered by this parent company guarantee b.
All decommissioning amounts covered by other NRC or Agreement State parent company guarantees or self-guarantees c.
All amounts covered by parent company guarantees, self-guarantees, or financial tests of other Federal or State agencies (e.g., EPA)
TOTAL 2.
Current bond rating of most recent unsecured issuance of this firm Rating Name of rating service 3.
Date ofissuance of bond 4.
Date of maturity of bond
(]j f
- S.
Tangible net worth * * (if any portion of estimates for decommissioning is included in total liabilities on your firm's financial statements, you may add the amount of that portion to this line)
- 6.
Total assets in United States (required only ifless than 90 percent of firm's assets are located in the United States)
Yes
]io 7.
Is line 5 at least $10 million?
8.
Is line 5 at least 6 times line !?
9.
Are at least 90 percent of firm's assets located in the United States? If not, complete line 10.
10.
Is line 6 at least 6 times line l?
11.
Is the rating specified on line 2 BBB or better (ifissued by Standard & Poor's) or Baa or better (ifissued by Moody's)?
O
- Denotes figures derived from financial statements.
" Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyri 1ts.
2 101
13.8 MODEL CONFIRMATION OF CIIIEF FINANCIAL OFFICER'S LETTER We have examined the fmancial statements of[ insert name of parent guarantor] for the year ended [ insert date], and have issued our report thereon dated [ insert date]. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary.
[ Insert name of parent guarantor] has prepared documents to demonstrate its financial responsibility under the NRC's financial assurance regulations,10 CFR Part [ insert 30,40,70, or 72]. This letter is furnished to assist the licensee [ insert name and NRC license number] in complying with these regulations and should not be used for other purposes.
The attached schedule reconciles the specified information fumished in the chief financial officer's (CFO's) letter in response to the regulations with the company's financial statements. In connection therewith, we have 1.
Confirmed that the amounts in the column "Per Financial Statements" agree with amounts contained in the company's financial statements for the year ended [ insert date];
2.
Confirmed that the amounts in the column "Per CFO's Letter" agree with the letter prepared in response to the NRC's request; 3.
Confirmed that the amounts, if any, in the column " Reconciling Items" are adequately explained in the attached schedule, that each reconciling item represents an appropriate adjustment to the financial data, and that the Enount of each reconciling item is accurate; and 4.
Recomputed the totals and percentages.
Because the procedures in 1-4 above do not constitute a full examination made in accordance with generally accepted auditing standards, we do not express an opinion on the manner in which the amounts were derived in the items referred to above. In connection with the procedures referred to above, no matters came to our attention that cause us to believe that the chief financial officer's letter and supporting information should be adjusted.
Signature Date O
102
I l
13.9 MODEL OF SCHEDULE RECONCILING AMOUNTS 4
CONTAINED IN CHIEF FINANCIAL OFFICER'S LETTER WITil AMOUNTS IN FINANCIAL STATEMENTS i
XYZ COMPANY j
YEAR ENDED DECEMBER 31.19XX Line Number in -
Per Recon-Per Section 13.6 Financial ciling CFO's Financial Test I Statements items Letter 6
Total current liabilities X
Long-term debt X
Deferred income taxes X
XXX Accmed decommissioning costs included in current liabilities X
CC)
Totalliabilities (less accrued decommissioning costs)
X 4
Net worth XX Less: Cost in excess of value of tangible assets acquired X
X Accrued decommissioning
)
costs included in current liabilities X
Tangible net worth (plus decommissioning costs)
XX
]
l l
i (Balance of schedule is not illustrated.)
This illustrates the form of schedule that is contemplated. Details and reconciling iterns will difTer in specific situations.
O l
103
13.10 MODEL PARENT COMPANY GUARANTEE Guarantee made this [insen date] by [ insert name of guaranteeing entity), a [ insert " proprietorship,"
" joint venture,"" partnership," or " corporation") organized under the laws of the State of[ insert name of State], herein referred to as " guarantor," to the U.S. Nuclear Regulatory Commission (NRC), obligee, on behalf of our subsidiary [ insert name oflicensee], of[ insert business address].
Recitals 1.
The guarantor has full authority and capacity to enter into this guarantee [if the guarantor is a corporation, insert the following: "under its bylaws, articles ofincorporation, and the laws of the State of[ insert guarantor's State ofincorporation), its State ofincorporation."] [If the guarantor has a Board of Directors, insert the following: " Guarantor has approval from its Board of Directors to enter into this guarantee."]
2.
This guarantee is being issued to comply with regulations issued by the 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. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part [ insert 30,40,70, or 72] which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part [ insert 30, 40,70, or 72] provide assurance that funds will be available when needed for required decommissioning activities.
3.
The guarantee is issued to provide financial assurance for decommissioning activities for
[ identify name and address oflicensed facility (ies) and corresponding NRC license number (s)] as required by 10 CFR Part [ insert 30,40,70, or 72]. The decommissioning costs for these activities are as follows: [ insert amount of decommissioning costs guaranteed for each identified facility].
4.
The guarantor meets or exceeds the following financial test criteria [ insert statement indicating which fmancial test is being used] and agrees to comply with all notification requirements as specified in 10 CFR Part [ insert 30,40,70, or 72] and Appendix A to 10
)
CFR Part 30.
The guarantor meets one of the following two financial tests:
(a)(i) Two of the following three ratios: a ratio of total liabilities to net worth less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities greater than 0.1; and a ratio of current assets to current liabilities greater than 1.5; and (a)(ii) Net working capital and tangible net worth each at least six times the costs covered by financial tests; and (a)(iii) Tangible net worth of at least $10 million; and 104 L-
(a)(iv) Assets located in the United States amounting to at least 90 percent of total assets or at least six times the costs covered by financial tests.
OR (b)(i) A current rating for its most recent bond issuance of AAA, AA, A, or BBB as issued
. by Standard & Poor's, or Aaa, Aa, A or Baa as issued by Moody's; and (b)(ii) Tangible net worth at least six times the costs covered by financial tests; and
. (b)(iii) Tangible net worth of at least $10 million; and (b)(iv) Assets located in the United States amounting to at least 90 percent of total assets or at least six times the costs covered by financial tests.
5.
The guarantor has majority control of the voting stock for the following licensees covered by this guarantee: [ List for each licensee: name, address, the facilities owned or operated by each licensee, and the' corresponding license numbeis.] -
6.
Decommissioning activities as used below refer to the activities required by 10 CFR Part
)
(insert 30,40,70, or 72] for decommissioning of the facilities identified above.
g 7.
For value received from [ insert name of ficensee], and pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to the NRC that if the licensee fails to perform the required decommissioning activities, as required by License No. [ insert license number], the guarantor shall (a) carry out the required activities, or (b) set up a trust fund in favor of the above identified beneficiary in the amount of the current cost estimates for these activities.
8.
The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule annually within 90 days of the close of the parent guarantor's fiscal year.
9.
The guarantor agrees that if, at the end of any fiscal year before termination of this
)
guarantee, it fails to meet the financial test criteria, the licensee shall send within 90 days of the end of the fiscal year, by certified mail, notice to the NRC that the licensee intends to provide alternative financial assurance as specified in 10 CFR Part [ insert 30,40,70, or 72].
Within 120 days after the end of the fiscal year, the guarantor shall establish such financial i
assurance if the [ insert name oflicensee] has not done so.
p 10.
The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensee d
or the parent firm is transferred and to maintain this guarantee until the new parent firm or the licensee provides alternative financial assurance acceptable to the beneficiary.
105
11.
The guarantor agrees that ifit determines, at any time other than as described in Recital 9, that it no longer meets the financial test criteria or it is disallowed from continuing as a guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 30,40, 70, or 72, as applicable, within 30 days, in the name of[ insert name oflicensee] unless
[ insert name oflicensee] has done so.
12.
The guarantor as well as its successors and assigns agree to remain bound jointly and severally under this guarantee notwithstanding any or all of the following: amendment or modification oflicense or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of perforrrance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part [ insert 30, 40,70, or 72].
13.
The guarantor agrees that all bound parties shall be jointly and severally liable for all j
litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the I
agreement against the guarantor.
14.
The guarantor agrees to remain bound under this guarantee for as long as [ insert name of licensee] must comply with the applicable financial assurance requirements of 10 CFR Part
[ insert 30,40, 70, or 72), for the previously listed facilities, except that the guarantor may cancel this guarantee by sending notice by certified mail to the NRC and to [ insert name of 1
licensee], such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and [ insert name oflicensee] as evidenced by the return receipts.
15.
The guarantor agrees that if[ insert name of ficensee] fails to provide alternahve financial assurance as specified in 10 CFR Part [ insert 30,40,70, or 72], as applicable, and obtain written approval of such assurance from the NRC within 90 days after a notice of cancellation by the guarantor is received by both the NRC and [ insert name oflicensee] from the guarantor, the guarantor shall provide such alternative financial assurance in the name of
[ insert name oflicensee] or make full payment under the guarantee.
16.
The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by
[ insert name oflicensee]. The guarantor also expressly waives notice of amendments or modification of the decommissioning requirements and of amendments or modification of the license.
i j
17.
If the guarantor files financial reports with the U.S. Securities and Exchange Commission, j
then it shall promptly submit them to the NRC during each year in which this guarantee is in I
effect.
I hereby certify that this guarantee is true and correct to the best of my knowledge.
Effective date:
[Name of person signing]
[Name of guarantor]
[ Title of person signing]
[ Authorized signature for guarantor]
Signature of witness or notary l
l l
106
e-L i
)
14.
SELF-GUARANTEES A self-guarantee is a guarantee by a licensee itself that it will fund and carry out decommissioning activities. The licensee must annually pass (within 90 days after the close of each succeeding fiscal year) the applicable financial test specified in Appendix C, D, or E to 10 CFR Part 30 to demonstrate that it has adequate financial strength to provide the guarantee. The financial test alternatives consider accounting ratios, net worth, assets, operating revenues, and bond rating data relative to fixed criteria. Also, the licensee's financial statements must have been prepared in accordance with generally accepted accounting principles applicable to the United States, and an independent certified public accountant must have verified the accuracy of the financial test data relative to the audited financial statements. A self-guarantee may not be used in combination with other financial assurance mechanisms, and may not be used in cases where a licensee has a parent company holding majority control of its voting stock.
NRC's regulations for self-guarantees apply to three general categories of licensees:
Commercial companies that issue bonds. Self-guarantees by these licensees are regulated under Appendix C to 10 CFR Part 30.
Commercial companies that do not issue bonds. Self-guarantees by these licensees are regulated under Appendix D to 10 CFR Part 30.
/
N Non-profit colleges, universities, and hospitals. Self-guarantees by these licensees are regulated under Appendix E to 10 CFR Part 30.
A self-guarantee must remain in force unless the licensee sends notice of cancellation by certified mail to NRC. For a commerciallicensee that issues bonds, this notice must be sent at least 120 days in advance (as evidenced by the return receipts). For a commercial licensee that does not issue bonds or a non-profit college, university, or hospital, the guarantee may not be canceled until an alternative financial assurance mechanism is in place. However, in all cases, a self-guarantee may be used only as long as the licensee meets the financial test criteria. If the licensee no longer passes the financial test, it must provide alternative financial assurance.
Finally, the licensee must provide a written guarantee stating that it will fund and carry out the required decommissioning activities or, upon issuance of an order by NRC, will set up and fund a trust in the amount of the current decommissioning cost estimates or certified amounts.
The remainder of this section discusses the primary criteria that determine whether particular self-guarantee submissions will be acceptable to NRC.
Section 14.1 describes qualifications required of the issuer.
Section 14.2 addresses the adequacy of coverage.
Section 14.3 discusses the documentation that supports a self guarantee.
107
l l
Section 14.4 presents a model self-guarantee that NRC has found to be acceptable.
l This section also contains two checklists designed to assist licensees in preparing j
J acceptable self-guarantees. Checklist 14-A summarizes the primary criteria used by NRC to evaluate self-guarantees. Checklist 14-B (which should be used only by licensees that revise or do not use the model wording for self-guarantees) presents terms and conditions that are recommended for self-guarantees.
14.1 QUALIFICATIONS OF THE ISSUER As noted above, a licensee using a self-guarantee to provide financial assurance for decommissioning must not have a parent company holding majority control of its voting stock." To qualify to provide the guarantee, the licensee also must meet the applicable financial test specified in Appendix C, D or E to 10 CFR Part 30 (shown in the boxes below).
The financial test specified in Appendix C pertains to commercial companies that issue bonds.
The financial test specified in Appendix D pertains to commercial companies that do not issue bonds.
The financial tests specified in Appendix E pertain to non-profit colleges, universities, and hospitals.
Licensees without an actual bond rating may still use the financial tests involving bond ratings by securing a so-called " indicative" bond rating from either Standard & Poor's or Moody's. Indicative bond ratings, which are available for a fee, are for information only and are provided as an indication of what a rating would be if the firm were to issue debt. A licensee seeking to use an indicative bond rating should submit the rating and name of the rating service as part of the financial test demonstration. The licensee, however, would not be able to provide NRC with information on the dates of issuance and maturity of the bond, nor would it be able to certify that the rating pertained to its "most recent bond issuance."
Rather, the licensee would need to explain that the rating was an indicative rating. The
]
licensee would also need to update the indicative rating every year as it repeats the passage of the financial test.
)
14.2 LEVEL OF COVERAGE A self-guarantee must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning. If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the self-guarantee, the licensee must revise the guarantee to assure the higher amount
" See 10 CFR 30.35(f)(2),40.36(e)(2). 70.25(f)(2), and 72.30(c)(2).
108
1 I
CHECKLIST 14-A
- SELF-GUARANTEES O
Documentation is complete:
0 1.
Self-guarantee agreement (originally signed duplicate) 0 2.
Letter from chief executive officer or chief financial officer oflicensee, including applicable self-guarantee fmancial test O
3.
Auditor's special report confirming CEO or CFO letter and reconciling amounts in the CEO or CFO letter with licensee's financial statements O
4.
Licensee's audited financial statements for the most recent fiscal year, including the auditor's opinion on the financial statements a
5.
Checklist 14-B (if model self-guarantee wording is modified or not used)
O The licensee does not have a parent company holding majority control ofits voting stock.
O The amount of the self-guarantee equals or exceeds the required coverage level.
G a(or must replace the guarantee with a different financial assurance mechanism that is in the mount of the new coverage level).
14.3 RECOMMENDED DOCUMENTATION The terms and conditions of a self-guarantee are governed by a written guarantee agreement. The wording of a self-guarantee agreement may very, but Section 14.4 of this regulatory guide is a model self-guarantee agreement that would meet NRC's requirements and is recommended by NRC, Other documentation that is to be submitted with a self-guarantee includes the following and is summarized in Checklist 14-A s The guarantee agreement is the written document that specifies the terms and conditicm. of the self-guarantee. The wording contained in the model guarantee presented in Section 14.4 is acceptable to NRC. Licensees who use other wording should refer to Checklist 14-B to be sure that the alternative wording contains all the necessary terms and conditions.
Because a self-guarantee may not be used in combination with any other financial assurance mechanism,
'rx licensees do not have the option of obtaining another mechanism to make up differences between increased
\\
coverage levels and guaranteed amounts.
f 8' Supporting documentation may differ for licensees who submit self-guarantees that differ from the recommended model.
109
Financial Test for Commercial Companies that Issue Bonds Thelicensee must have:
(i)
Tangible net worth at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; (ii)
Assets located in the United States amounting to at least 90 percent of total assets or at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; and (iii)
A current rating for its most recent bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Ana, Aa, or A as issued by Moody's.
(Note: In order to pass the financial test, a commercial licensee that issues bonds also must have at least one class of equity securities registered under the Securities Exchange Act of 1934.)
Financial Test for Commercial Companies that Do Not Issue Bonds The licensee must have:
(i)
Tangible net worth greater than $10 million, or at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used), whichever is greater, for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor, (ii)
Assets located in the United States amounting to at least 90 percent of total assets or at least 10 times the j
current decommissioning cost estimates (or prescribed amount if a certification is used) for all l
decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; and (iii)
A ratio of cash flow divided by total liabilities greater than 0.15 and a ratio of total liabilities divided by net v orth less than 1.5.
Financial Test for Non-Profit IIospitals that Issue Bonds The licensee must have a current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
(Note: An " uninsured, uncollateralized, and unencumbered" bond issuance is one that is backed only by the issuer's full faith and credit. Such issuances are not guaranteed by a bond insurance company or backed by collateral, a letter of credit, claims on a specific revenue source, or any other propeny or credit.)
Financial Test for Non-Profit Ilospitals that Do Not Issue Bonds The licensee must have:
(i)
(Total revenues less total expenditures) divided by total revenues must be equal to or greater than 0.04; and (ii)
Long-term debt divided by net fixed assets must be less than or equal to 0.67; and (iii)
(Current assets and depreciation fund) divided by current liabilities must be greater than or equal to 2.55; and (iv)
Operating revenues must be at least 100 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the hospital is responsible as a self-guaranteeing licensee.
1 110 1
r I
Financial Test for Non-Pmfit Hospitals that Issue Bonds The licensee must have a current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A'as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
(Note: An " uninsured, uncollateralized, and unencumbered" bond issuance is one that is backed only by the issuer's full faith and credit. Such issuances are not guaranteed by a bond insurance company or backed by collateral, a letter of credit, claims on a specific revenue source, or any other property or credit.)
Financial Test for Non-Profit Hospitals that Do Not Issue Bonds The licensee must have:
(i)
(Total revenues less total expenditures) divided by total revenues must be equal to or greater than 0.04; and,
(ii)
Long-term debt divided by net fixed assets must be less than or equal to 0.67; and (iii)
(Current assets and depreciation fund) divided by current liabilities must be greater than or equal to 2.55; and
'(iv)
Operating revenues must be at least 100 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the hospital is responsible as a self-guaranteeing licensee.
.The chief executive officer (CEO) or chief financial officer (CFO) letter is a letter from either the CEO or CFO of the licensee that (1) identifies the names, addresses, license numbers, and estimated decommissioning costs of the facilities covered by the guarantee, (2) certifies that the licensee is a going concern, (3) identifies the amount of the licensee's tangible net worth, (4) specifies whether the licensee is required to file a Form 10-K with the U.S. Securities and Exchange Commission, (5) lists the date on which the licensee's fiscal year ends, and (6) demonstrates the licensee's ability to pass the applicable financial test specified in Appendix C, D, or E to 10 CFR Part 30. The licensee must pass the financial test for d costs covered by a financial test. These include costs covered by (1) the self-guarantee, (2) other NRC or Agreement State parent company guarantees or self-guarantees, and (3) parent company guarantees, self-guarantees, or financial tests of other Federal or State agencies (e.g., EPA).
The auditor's specialreport is a report from the licensee's independent certified public accountant that compares the data used by the licensee in the financial test demonstration with the amounts in its annual financial statements. if needed, this report may also include a schedu/e attachment reconciling the financial test numbers with amounts in the licensee's financial statements.
A copy of the licensee's audited financialstatements for the most recently completed fiscal year. These financial statements should include the independent certified public accountant's opinion on the statements.
111
CIIECKLIST 14-B Terms and Conditions Needed in Self-Guarantees Use this checklist only ifdeviatingfrom the wording recommended in Section 14.4.
a Name and address of self-guarantor (licensee).
O Name and address of regulatory agency.
a The following four recitals:
(1)
The authority of the self-guarantor to enter into the guarantee; (2)
A statement of the licensee's regulatory obligations as reason for the celf-guarantee; (3)
Identification of the facility (ies) (name, address, and license number) for which the
)
guarantee provides financial assurance and the amounts guaranteed for j
decommissioning activitics; and i
(4)
Identification of financial test used by self-guarantor to demonstrate financial strength.
j o
Description of the primary obligation (required activities).
i O
Unequivocal statement of guarantee:
O 1.
Condition (s) ofliability; and a 2.
Effect on liability of a change in the status of the licensee.
a Statement that self-guarantor remains bound despite amendment or modification of license, reduction or extension of time of performance of required activities, or any other modification or alteration of an obligation of the licensee.
O Notice requirements.
O Discharge of the self-guarantor (release of obligations).
O Termination and revocation:
O 1.
Termination on occurrence of contingency; O 2.
Voluntary revocation by self-guarantor; and D 3.
Effective date of termination or revocation.
O Date.
O Signatures.
O Signature of witness or notary (signature block).
l g
112 u
t I
O 14.4 MODEL SELF-GUARANTEE AND FINANCIA'L TEST V
CHIEF EXECUTIVE OFFICER OR CHIEF FINANCIAL OFFICER LETTER (MODEL)
[ Address to U.S. Nuclear Regulatory Commission]
I am the [ insert " chief executive officer" or " chief financial officer"] of [ insert name and address of licensee], a [ insert " proprietorship," " joint venture," " partnership," " corporation," "non-profit college," "non-profit university," or "non-profit hospital"). This letter is in support of this firm's use of the self-guarantee financial test to demonstrate financial assurance, as specified in 10 CFR Part [ insert 30,40,70, or 72]. This firm has no parent company holding majority control ofits voting stock.
[ Complete the following paragraph regarding facilities and associated cost estimates or certified amounts. For each facility, include its license number, name, address, and current cost estimates or certified amounts for the specified activities.]
This firm guarantees, through the scif-guarantee submitted to demonstrate compliance under 10 CFR Part [ insert 30,40, 70, or 72), the decommissioning of the following facilities owned or operated by this firm.
He current cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility:
Certified Amounts Name of License Location of or Current (9
Facility Number Facility Cost Estimates U
I hereby certify that [ insert name oflicensee] is currently a going concern, and that it possesses positive tangible net worth in the amount of[ insert amount].
This fiscal year of this firm ends on [insen month and day]. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended [ insert date]. A copy of this firm's most recent financial statements is enclosed.
s This firm [ insert "is required" or " is not required"] to file a Form 10-K with the U.S. Securities and Exchange Commission for the latest fiscal year. [lf the licensee is a commercial company that issues bonds, insen the following: "This firm has at least one class of equity securities registered under the Securities Exchange Act of 1934."]
This firm satisfies the following self-guarantee test:
[ Insert completed demonstration of the applicable self-guarantee financial test.]
I hereby certify that the content of this letter is true and correct to the best of my knowledge.
[ Signature]
,m
[Name][ Title]
(
)
[Date]
v 113 I
1 14.5 MODEL SELF-GUARANTEE FINANCIAL TEST FOR COMMERCIAL COMPANIES THAT ISSUE BONDS (10 CFR Part 30, Appendix C) 1.
Current decommissioning cost estimates or certified amounts Decommissioning amounts covered by this self-a.
guarantec b.
All decommissioning amounts covered by other NRC or Agreement State parent company guarantees or self-guarantees S
All amounts covered by parent company guarantees, c.
self-guarantees, or financial tests of other Federal or State agencies (e.g., EPA)
TOTAL S
2.
Current bond rating of most recent unsecured issuance of this firm Rating Name of rating service 3.
Date ofissuance of bond 4.
Date of maturity of bond
- S.
Tangible net worth" (if any portion of estimates for decommissioning is included in total liabilities on your firm's financial statements, you may add the amount of that portion to this line)
S
'6.
Total assets in United States (required only ifless than 90 percent of firm's assets are located in the United States) l Xe1 M9 7.
Is line 5 at least 10 times line l?
8.
Are at least 90 percent of firm's assets located in the United States? If not, complete line 9.
9.
Is line 6 at least 10 times line !?
10.
Is the rating specified on line 2 A or better?
11.
Does the licensee have at least one class of equity securities registered under the Securities Exchange Act of 19347
- Denotes figures derived from financial statements.
" Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.
114
l 14.6 MODEL SELF-GUARANTEE FINANCIAL TEST (j
FOR COMMERCIAL COMPANIES THAT DO NOT ISSUE BONDS (10 CFR Part 30, Appendix D) 1.
Current decommissioning cost estimates or certified amounts a.
Decommissioning amounts covered by this self-guarantee b.
All decommissioning amounts covered by other NRC or Agreement State parent company guarantees or self-guarantees c.
All amounts covered by parent company guarantees, self-guarantees, or financial tests of other Federal or State agencies (e.g., EPA)
TOTAL j
- 2.
Total liabilities (if any portion of the co',t estimates for decommissioning is included in total liabilities on your f.rm's financial statements, you may deduct the amount of that portion nom this line and add that amount to lines 3 and 4)
- 3.
Tangible net worth" j
'4.
Net worth (3
'5.
The sum of net income plus depreciation, depletion, and amortization S
- 6.
Total assets in United States (required only ifless than 90 percent of firm's assets are located in the United States)
Xu N9 7.
Is line 3 greater than $10 million, or at least 10 times line 1, whichever is greater?
8.
Are at least 90 percent of the firms's assets located in the United States? If not, complete line 9.
9.
Is line 6 atleast 10 timca line !?
10.
Is line 5 divided by line 2 greater than 0.15?
11.
Is line 2 divided by line 4 less than 1.5?
- Denotes figures derived from financial statements.
" Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.
115
F 14.7 MODEL, SELF-GUARANTEE FINANCIAL TEST FOR NONPROFIT COLLEGES AND UNIVERSITIES TIIAT ISSUE BONDS (10 CFR Part 30, Appendix E) 1.
Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution Rating Name of rating service 2.
Date ofissuance of bond 3.
Date of maturity of bond Yes No 4.
Is the rating specified on line 1 A or better?
14.8 MODEL SELF-GUARANTEE FINANCIAL TEST FOR NONPROFIT COLLEGES AND UNIVERSITIES TIIAT DO NOT ISSUE BONDS (10 CFR Part 30, Appendix E) 1.
Current decommissioning cost estimates or certified amounts a.
Decommissioning amounts covered by this self-guarantee S
b.
All decommissioning amounts covered by other NRC or Agreement State self-guarantees S
c.
All amounts covered by self-guarantees or financial tests of other Federal or State agencies (e.g., EPA)
S TOTAL
- 2.
Total assets in United States in unrestricted endowment S
Yes No 3.
Is line 2 at least $50 million, or at least 30 times line 1, whichever is greater?
- Denotes figures derived from financial statements.
O 116
14.9 MODEL SELF-GUARANTEE FINANCI4? MST FOR NONPROFIT HOSPITALS THAT ISS-C 80NDS s
(10 CFR Part 30, Appendix E) 1.
Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution Rating Name of rating service 2.
Date ofissuance of bond j
3.
Date of maturity of bond Yel NQ 4.
Is the rating specified on line 1 A or better?
t 1
\\
l 117
I l
l 14.10 MODEL SELF-GUARANTEE FINANCIAL TEST
)
FOR NONPROFIT IiOSPITALS TIIAT DO NOT ISSUE BONDS l
(10 CFR Part 30, Appendix E) 1.
Current decommissioning cost estimates or certified amounts Decommissioning amounts covered by this self-a.
guarantee b.
All decommissioning amounts covered by other NRC or Agreement State self-guarantees All amounts covered by self-guarantees or financial c.
tests of other Federal or State agencies (e.g., EPA)
TOTAL
- 2.
Total revenues
- 3.
Operating revenues
- 4.
Total expenditures
'5.
Long-term debt
- 6.
Net fixed assets
- 7.
Current assets S
- 8.
Depreciation fund
- 9.
Current liabilities S
Yes No 10.
Is line 3 at least 100 times line !?
Guarantor must meet each of the followine ratios:
11.
Is (line 2 minus line 4) divided by line 2 at least 0.04?
12.
Is line 5 divided by line 6 less than or equal to 0.67?
13.
Is (line 7 plus line 8) divided by line 9 at least 2.557
- Denotes figures derived from financial statements.
O 118
i 1
l l
)
.p) j 14.11 MODEL CONFIRMATION OF LETTER FROM V
[ Insert " CHIEF EXECUTIVE OFFICER" or " CHIEF FINANCIAL OFFICER"]
We have examined the financial statements of [ insert name of self-guarantor] for the year ended
[ insert date], and have issued our report thereon dated [ insert date). Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary.
[ Insert name of self-guarantor] has prepared documents to demonstrate its financial responsibility under the NRC's financial assurance regulations,10 CFR Part [ insert 30,40,70, or 72]. This letter is fumished to assist the licensee [ insert name and NRC license number] in complying with these regulations and should not be used for other purposes.
The attached schedule reconciles the specified information furnished in the [ insert " chief executive officer's (CEO's)" or " chief financial officer's (CFO's)"] letter in response to the regulations with the [ insert
" company's" or " institution's"] financial statements. In connection therewith, we have I.
Confirmed that the amounts in the column "Per Financial Statements" agree with amounts contained in the [ insert " company's" or " institution's"] financial statements for the year ended [ insert date];
l 2.
Confirmed that the amounts in the column "Per [ insert "CEO's" or "CFO's"] Letter" agree with the letter prepared in response to the NRC's request; 3.
Confirmed that the amounts, if any, in the column "Reconc!!ing Items" are adequately explained in the attached schedule, that each reconciling item represents an appropriate adjustment to the financial data, and that the amount of each reconciling item is accurate; and 4.
Recomputed the totals and percentages.
Because the procedures in 14 above do not constitute a full examination made in accordance with generally accepted auditing standards, we do not express an opinion on the manner in which the amounts were derived in the items referred to above. In connection with the procedures referred to above, no matters came to our attention that cause us to believe that the [ insert " chief executive officer's" or " chief financial officer's") letter and supporting information should be adjusted.
Signature Date O
I 119 1
14.12 MODEL SCIIEDULE FOR RECONCILING AMOUNTS l
CONTAINED IN CHIEF EXECUTIVE OFFICER'S OR CHIEF FINANCIAL OFFICER'S LETTER WITII AMOUNTS IN FINANCIAL STATEMENTS XYZ COMPANY
]
YEAR ENDED DECEMBER 3 L 19XX l
Line Number Per Recon-Per CEO's or j
in CEO's or Financial ciling CFO's
{
CFO's Letter Statements Items Letter Net worth XX Less: Cost in excess of value of tangible assets acquired X
X Accrued decommissioning costs included in current liabilities X
5 Tangible net worth (plus decommissioning costs)
X (Balance of schedule is not illustrated.)
This illustrates the form of schedule that is contemplated. Details and reconciling items will difTer in specific situations.
I O
120
14.13 MODEL SELF-GUARANTEE-Guarantee made this [ insert date] by [ insert name of self-guaranteeing entity), a [ insert
" proprietorship,"" joint venture,"" partnership,"" corporation,""non-profit college,""non-profit university," or "non-profit hospital"] organized under the laws of the State of[ insert name of State],
herein referred to as " guarantor," to the U.S. Nuclear Regulatory Commission (NRC), obligee, on behalf of ourselves as licensee.
Recitals 1
1
'l.
The guarantor has full authority and capacity to enter into this self-guarantee [if the guarantor is a corporation, insert the following: "under its bylaws, articles ofincorporation, and the laws of the State of[ insert guarantor's State ofincorporation], its State of incorporation."] [If the guarantor has a Board of Directors, insert the following: " Guarantor has approval from its Board of Directors to enter into this self-guarantee."]
2.
This self-guarantee is being issued to comply with regulations issued by the 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. NRC has promulgated regulations in Title 10, Chapter
'I of the Code of Federal Regulations, Part [ insert 30,40, 70, or 72], which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part [ insert 30, b
40, 70, or 72] provide assurance that funds will be available when needed for required b
decommissioning activities.
3.
The self-guarantee is issued to provide financial assurance for decommissioning activities for
[ identify name and address oflicensed facilities and corresponding NRC license numbers] as required by 10 CFR Part { insert 30,40,70, or 72]. The decommissioning costs for these activities are as follows: [ insert amount of decommissioning costs guaranteed for each identified facility).
4.
The guarantor meets or exceeds the following financial test criteria [ insert statement indicating which financial test is being used] and agrees to comply with all notification j
requirements as specified in 10 CFR Part [ insert 30,40,70, or 72] and Appendix [ insert C, D, or E] to 10 CFR Part 30.
The guarantor meets the following self-guarantee test:
[If the guarantor is a commercial company that issues bonds, insert the following test)
(a)
Tangible net worth at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-n guarantor; and (b)
Assets located in the United States amounting to at least 90 percent of total assets or at least 10 times the current decommissioning cost estimates (or prescribed amount if 121
a certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; and (c)
At least one class of equity securities registered under the Securities Exchange Act of 1934; and (d)
A current rating for its most recent bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
[If the guarantor is a commercial company that does not issue bonds, insert the following test]
(a)
Tangible net wonh greater than $10 million, or at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used),
whichever is greater, for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; and (b)
Assets :ocated in the United States amounting to at least 90 percent of total assets or at least 10 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor; and (c)
A ratio of cash flow divided by total liabilities greater than 0.15 and a ratio of total liabilities divided by net worth less than 1.5.
[If the guarantor is a non-profit college or university that issues bonds, insert the following test]
(a)
A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
[If the guarantor is a non-profit college or university that does not issue bonds, insert the following
]
test]
(a)
Unrestricted endowment consisting of assets located in the United States of at least I
$50 million, or at least 30 times the current decommissioning cost estimates (or prescribed amount if a cenification is used), whichever is greater, for all decommissioning activities for which the college or university is responsible as a self-guaranteeing licensee.
1 i
If the guarantor is a nonprofit hospital that issues bonds, insert the following test]
(a)
A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's.
O!
122
(O
[If the guarantor is a nonprofit hospital that does not issue bonds, insert the following test]
1 (a)
(Total revenues less total expenditures) divided by total revenues must be equal to or greater than 0.04; and (b)
Long-term debt divided by net fixed assets must be less than or equal to 0.67; and (c)
(Current assets and depreciation fund) divided by current liabilities must be greater than or equal to 2.55; and l
l (d)
Operating revenues must be at least 100 times the current decommissioning cost estimates (or prescribed amount if a certification is used) for all decommissioning activities for which the hospital is responsible as a self-guaranteeing licensee.
5.
The guarantor does not have a parent company holding majority control ofits voting stock.
6.
Decommissioning activities as used below refer to the activities required by 10 CFR Part
[ insert 30,40,70, or 72] for decommissioning of the facilities identified above.
7.
Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to the NRC that the guarantor shall m i (a) carry out the required decommissioning activities, as required by License No. [insen license number] pr (b) set up a trust fund in favor of the above identified beneficiary in the amount of the current cost estimates for these activities.
8.
The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule annually within 90 days of the close ofits fiscal year.
9.
[If the guarantor is a commercial company that issues bonds, insert the following language]
The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall send, by certified mail, immediate notice to the NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part [ insert 30,40,70, or 72]. Within 120 days of such notice, the guarantor shall establish such financial assurance.
[If the guarantor is a commercial company that does not issue bonds or is a non-profit college, university, or hospital, insert the following language]
p The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self guarantee financial test criteria, it shall send within 90 days t
of the end of the fiscal year, by certified mail, notice to the NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part [ insert 30,40, 70, or 72]. Within 123
120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.
10.
The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed actisity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.
I 1.
The guarantor agrees that ifit determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 30,40,70, or 72, as applicable, within 30 days.
12.
The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following: amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part [ insert 30, 40, 70, or 72].
13.
The guarantor agrees that it shall be liable for all litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.
14.
The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part [ insert 30, 40,70, or 72], for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to the NRC, such cancellation to become effective [if the guarantor is a commercial company that issues bonds, insert "no earlier than 120 days after receipt of such notice by the NRC, as evidenced by the return receipt"] [if the guarantor is a commercial company that does not issue bonds or is a nonprofit college, university, or hospital, insert "not before an alternative financial assurance mechanism has been put in place by the guarantor"].
15.
The guarantor agrees that ifit, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part [ insert 30,40,70, or 72], as applicable, and obtain written approval of such assurance from the NRC within 90 days after a notice of cancellation by the guarantor is received by the NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.
16.
The guarantor expressly waives notice of acceptance of this self-guarantee by the NRC. The guarantor also expressly waives notice of amendments or modification of the 1
decommissioning requirements and of amendments or modification of the license.
j 17.
If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to the NRC during each year in which this self-guarantee is in effect.
(Insert the following recital only if the guarantor issues bonds]
124
(
18.
The guarantor agrees that if, at any time before termination of this self-guarantee, its most
\\
recent bond issuance ceases to be rated in the category of"A" or above by either Standard &
Poor's or Moody's, it shall provide notice in writing of such fact to the NRC within 20 days after publication of the change by the rating service.
I hereby certify that this self-guarantee is true and correct to the best of my knowledge.
Effective date:
I
[Name of self-guarantor]
[ Authorized signature for self-guarantor]
[Name of person signing]
[ Title of person signing]
Signature of witness or notary:
0 125
- 15. EXTERNAL SINKING FUNDS An extema/ sinking /undis a mechanism through which a licensee can gradually prepay for decommissioning by combining the use of a prepayment mechanism (i.e., trust fund, escrow account, government fund, certificate of deposit. or deposit of government securities) with a surety method (i.e., surety bond, letter of credit, or line of credit) or insurance.a As the value of the prepayment mechanism increases over time, the amount of coverage provided by the surety method or insurance can be reduced.
The remainder of this section discusses the primary criteria that determine whether particular external sinking fund submissions will be acceptable to NRC.
Section 15.1 describes qualifications required of the issuer.
Section 15.2 addresses funding and the adequacy of coverage.
Section 15.3 discusses the documentation that supports an external sinking fund.
This section also contains a checklist designed to assist licensees in preparing acceptable external sinking funds. Checklist 15-A summarizes the primary criteria used by NRC to evaluate external sinking funds.
15.1 QUALIFICATIONS OF THE ISSUER As noted above, an external sinking fund combines a prepayment mechanism with a surety method or insurance. These mechanisms may be provided by separate entities or, in some cases, by a single issuer. In all cases, however, issuers of both the prepayment mechanism and the surety method or insurance must meet appropriate qualifications.
Information on the qualifications of issuers of prepayment mechanisms is provided in Sections 4 through 8 of this regulatory guide. Information on the qualifications of issuers of surety methods or insurance is provided in Sections 9 through 12 of this regulatory guide.
15.2 LEVEL OF COVERAGE An external sinking fund must be in an amount that, in total, is at least equal to the licensee's certification amount or estimated cost of decommissioning. The prepayment mechanism may be funded initially in any amount. The surety method or insurance must then assure the difference between the prepaid amount and the certification amount or estimated cost of decommissioning. Subsequently, the licensee must make contributions at least annually to the prepayment mechanism, which increases in value. As the value of the prepayment mechanism increases over time, the amount of coverage provided by the surety l
l
" Parent company guarantees and self-guarantees may not be used as part of an external sinking fund as these l
mechanisms may not be trsed in combination with other forms of financial assurance.
I 126 1
N
-m -
(
CHECK' LIST 15-A EXTERNAL SINKING FUNDS O
Documentation is complete:
0 1.
Prepayment mechanism (originally signed duplicate) and all supporting documentation (see Sections 4 through 8 and attach Checklists 4-A through 8-A, as applicable)
D.
2.
Surety method or insurance (originally signed duplicate) and all supporting documentation (see Sections 9 through 12 and attach Checklists 9-A through 12-A, as applicable) o The amount of the external sinking fund equals or exceeds the required coverage level.
method or insurance can be reduced.8' The total coverage provided by both mechanisms, however, must at all times be at least equal to the licensee's certification amount or estimated cost of decommissioning. If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the external sinking
)
fund, the licensee must revise either the prepayment mechanism or the surety method / insurance so that the combination of the two mechanisms assures the higher amount.
15.3 RECOMMENDED DOCUMENTATION Licensees who use external sinking funds to provide financial assurance for decommissioning must submit a copy of all documentation supporting the prepayment mechanism (see Sections 4 through 8) and the surety method or insurance (see Sections 9 through 12).
I tV 8'
l Assets held in the prepayment portion of an external sinking fund must be valued at their current market value.
127
16.
STATEMENTS OF INTENT A statement o/ intent is a commitment by a Federal, State, or local government licensee to request and obtain decommissioning funds from its funding body when necessary. The purpose of a statement of intent is to ensure that, early in the life of their facilities, government licensees make their funding bodies aware of (1) decommissioning requirements and costs and (2) the eventual need for funding. A statement of intent should demonstrate that a Government licensee can request special funding from its funding body when necessary. This is different from a guarantee or commitment of a licensee's own funds. Therefore, it is not satisfactory for a licensee to demonstrate that it is authorized to enter into contracts and guarantees committing its own funds, or to promise to allocate funds from its operating budget, from other general appropriations (either current or future),
or from other internal resources. Finally, a statement of intent must include a site-specific decommissioning cost estimate or a certification statement.
The remainder of this section discusses the primary criteria that determine whether a particular statement-of-intent submission will be acceptable to the NRC.
Section 16.1 describes qualifications required of the issuer.
Section 16.2 addresses the adequacy of coverage, i
Section 16.3 discusses the documentation that supports a statement of intent.
Section 16.4 presents a model statement of intent that NRC has found to be acceptable.
This section also contains two checklists designed to assist licensees in preparing acceptable statements of intent. Checklist 15-A summarizes the primary criteria used by NRC to evaluate statements of intent. Checklist 16-B (which should be used only by licensees who revise or do not use the wording in the model statements of intent) presents terms and conditions that are recommended for statements of intent.
16.1 QUALIFICATIONS OF THE ISSUER Under NRC's decommissioning financial assurance regulations (10 CFR 30.35(f)(4),
40.36(e)(4),70.25(f)(4), and 72.30(c)(4)), only Federal, State, or local government licensees may issue statements of intent to provide financial assurance for decommissioning.
O 128
l CHECKLIST 16-A
(
STATEMENTS OF INTENT O
Documentation is complete:
0 1.
Statement ofintent (originally signed duplicate) a 2.
Documentation verifying that the signatory is aut'iorized to represent the licensee in providing the statement ofintent a
3.
Checklist 16-B (if model statement ofintent wording is modified or not used) o The amount of the statement ofintent equals or exceeds the required coverage level.
16.2 LEVEL OF COVERAGE A statement of intent must be in an amount that is at least equal to the licensee's certification amount or estimated cost of decommissioning,*8 If the licensee's certification amount or estimated decommissioning cost increases to a level above the amount assured by the statement of intent, the licensee must either (1) revise the statement of intent to assure-(
the higher amount, or (2) obtain another financial assurance mechanism to make up the difference between the new coverage level and the amount of the statement of intent.
16.3 RECOML ID DOCUMENTATION Licensees who use statements of intent to provide financial assurance for decommissioning must submit a copy of the statement of intent and other documentation as discussed below and summarized in Checklist 16-A. a The statement ofintent signed by an authorized representative of the licensee.
The wording of a statement of intent may vary, but Section 16.4 of this regulatory guide is a model statement of intent that is acceptable to and recommended by the NRC. Licensees who use other wording should use Checklist 16-B to be sure that their wording contains all the necessary terms and conditions.
Documentation verifying that the person signing the statement of intent is authorized to represent the licensee in the transaction (i.e., has the authority to The exception to this rule is a statement of intent that is being combined with another financial mechanism.
32 For a combination of mechanisms, the sum of the coverage provided by the mechanisms must be at least equal p
. to the required coverage level.
/
\\,f' Supporting documentatinn may differ for licensees who submit statements of intent that differ from the 88 recommended model.
129
request and obtain decommissioning funds from the appropriate funding body when necessary).
CHECKLIST 16-B Terms and Conditions Needed in Decommissioning Statements ofIntent Use this checklist only ifdeviatingfrom the wording recommendedin Section 16.J.
Description of authority ofgovernment entity to make the statement ofintent.
O O
Identification of Federal, State, or local government licensee.
Description of facility (ies) (name, address, and license number) for which statement of O
intent provides financial assurance and corresponding costs of required activities.
Specification of the amount of funds being assured.
O Statement that funds for required sctivities will be requested and obtained from the O
appropriate funding body when necessary.
O Recitation of authority to sign the statement ofintent.
O Signatures.
O Names and titles of signatories.
O Date.
I 130
i l
O 16.4 MODEL STATEMENT OF INTENT G
TO:
U.S. Nuclear Regulatory Commission Washington, DC 20555
[or appropriate regional address]
STATEMENT OF INTENT As [ insert title of signatcry] of[ insert name oflicensee], I exercise express authority and responsibility to request from [ insert name of appropriate governmental funding body] funds for decommissioning activities associated with operations authorized by U.S. Nuclear Regulatory Commission Material License No. [ insert license number]. This authority is established by [ insert name of documents governing control of funds]. Within this authority, I intend to request that funds be made available when necessary in the amount of[ insert dollar amount] to decommission [ insert facility names, addresses, and estimated costs of required activities or applicable certification amounts]. I intend to request and obtain these funds sufficiently in advance of decommissioning to prevent delay of required activities.
A copy of[ insert name of documents] is attached as evidence that I am authorized to
- O represent [ insert name oflicensee] in this transaction.
O
[ Signature]
[Name]
[ Title]
l
[Date]
Attachment:
As stated i
)
l 1
~
131
l
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- 17. STANDBY TRUST FUNDS A standby trust fundis simply a trust fund that is not yet funded but is otherwise ready to accept monies in the event they are received from a particular source (such as a surety bond, letter of credit, line of credit, or insurance). Once a standby trust is funded, the funds would then be available to pay the costs of decommissioning, just as they would with an ordinary trust fund. As in the case of an ordinary trust fund, monies in a standby trust fund are legally segregated for a specific purpose and are administered by a trustee with a fiduciary responsibility to keep or use the property in the fund for the benefit of the beneficiary.
Under NRC's decommissioning financial assurance regulations (10 CFR 30.35(f)(2)(ii),
40.36(e)(2)(ii),70.25(f)(2)(ii), and 72.30(c)(2)(ii)), a standby trust agreement must be established to receive funds from a surety method (i.e., surety bond, letter of credit, line of credit) or insurance. If the funds from these mechanisms were paid directly to NRC rather than to a standby trust fund, NRC would be required to deposit the funds in the U.S. Treasury as general revenue. Consequently, the funds would not be available to pay for decommissioning costs.
The remainder of this section discusses the primary criteria that determine whether particular standby trust fund submissions will be acceptable to NRC.
Section 17.1 describes qualifications required of the issuer (the trustee).
Section 17.2 addresses funding and the adequacy of coverage, Section 17.3 discusses the documentation that supports a standby trust fund.
a Section 17.4 presents a model standby trust fund submission that NRC has found to be acceptable.
This section also contains two checklists designed to assist licensees in preparing i
acceptable decommissioning standby trusts. Checklist 17-A summarizes the primary criteria used by NRC to evaluate standby trust funds. Checklist 17-B (which should be used only by licensees who revise or do not use the model wording for standby trust agreements) presents terms and conditions that are recommended for standby trust agreements.
1 17.1 QUALIFICATIONS OF THE ISSUER: THE TRUSTEE The decommissioning financial assurance regulations (10 CFR 30.35(f)(2)(ii),
40.36(e)(2)(ii),70.25(f)(2)(ii), and 72.30(c)(2)(ii)) require that the trustee be acceptable to NRC. Acceptable trustees include appropriate State or Federal government agencies and financialinstitutions that have the authority to act as trustees and whose trust operations are l
regulated and examined by a Federal or State agency. Trust operations are regulated separately from other banking operations, and it is very common for a regulated bank not to have the authority'to act as a trustee. In addition, NRC's requirement for trustees is not usually met by individuals who are not acting as a representative of a financialinstitution.
132 N
CHECKLIST 17-A d
STANDBY TRUST FUNDS O
Documentation is complete:
0 1.
Standby trust agreement (originally signed duplicate) 0 2.
Schedule A O
3.
Schedule B a
4.
Schedule C D
5.
Certificate of events a
6.
Certificate of resolution a
7.
Letter of acknowledgement O
8.
Checklist 17-B (if model standby trust wording is modified or not used)
O The trustee is qualified:
O The financial institution is regulated by a Federal or State agency.
O The financial institution has authority to act as a trustee and has trust operations that are regulated and examined by a Federal or State agency.
(
The word " National" in the title of a financialinstitution signals that the institution is 1
Federally regulated, as do the words " National Association" or the initials "N.A."
fol. lowing its title'. To determine whether such a financialinstitution qualifies as an acceptable trustee, licensees should contact the appropriate district office of the Office of the Comptroller of the Currency (OCC) and confirm that the institution (1) is Federally regulated and (2) has Federally regulated trust operations. The six district l
I offices of the OCC, along with the States and territories under their jurisdiction, are as follows:
Northeastern District Office (212-819-9860) -- CT, DE, ME, MD, MA, NH, NJ, NY, PA, Rl, VT, District of Columbia, Puerto Rico, and Virgin Islands.
Southeastern District Office (404 659-8855) -- AL, FL, GA, MS, NC, SC, TN, VA, and WV.
Central District Office (312-360-8800) -- IL, IN, KY, MI, OH, and WI.
Midwestern District Office (816-556-1800) -- l A, KS, MN, MO, NE, ND, and SD.
Southwestern District Office (214-720-0656) -- AR, LA, NM, OK, and
's TX.
133
4 Western District Office (415-545-5900) -- AK, AZ, CA, CO, HI, ID, MT, NV, OR, UT, WA, WY, and Guam.
The word " State" in the title of a financialinstitution signals that the institution is State regulated. U.S. branches of foreign banks are usually regulated by the State in which they are located. To determine whether a State-regulated financialinstitution qualifies as an acceptable trustee, licensees should contact the applicable State banking authority and confirm that the institution (1) is State regulated and (2) has State-regulated trust operations.
The titles of some financialinstitutions do not suggest that they are either Federally regulated or State regulated. In many such cases (but not all), these institutions are State regulated, as are many domestic branches of foreign banks.
i The licensee may need or choose to replace the current trustee with a new trustee.
To be acceptable to NRC, any successor trustee must meet the same standard as the original trustee (i.e., must be an appropriate State or Federal government agency or an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency). To ensure that the change in trustee does not negatively impact the standby trust, the licensee should replace the trustee only after sufficient notification (i.e.,90 days or more) has been provided to both NRC and the current trustee.
17.2 LEVEL OF COVERAGE
{
Standby trusts generally do not need to contain any money or property at the time they are established." The standby trust should, however, anticipate that it will or may be funded in the full certification amount or estimated decommissioning cost. For example, the standby trust agreement should allow the trustee to access the full level of coverage as appropriate to complete decommissioning activitiet. (In the model (Section 17.4) for a standby trust agreement, for example, the trustee is authorized to make decommissioning payments only up to the amount listed in Schedule A to th9 standby trust agreement, if the amount listed in Schedule A is not at least as great as the NRC-approved cost estimate or certification amount, the trustee may not be able to make sufficient payments to complete decommissioning, even if there are sufficient monies in the standby trust.)
If the funds from the licensee's primary financial assurance mechanism are deposited into a standby trust fund, the trust must at all times contain sufficient assets, valued at their current market value, to complete decommissioning activities.
17.3 RECOMMENDED DOCUMENTATION The terms and conditions of a standby trust are governed by a written standby trust agreement. The wording of a standby trust agreement may vary, but Section 17.4 of this regulatory guide is a model standby trust agreement that meets NRC's requirements and is recommended by NRC. In addition to the standby trust agreement, other documentation is 9
State law in some States may require a standby trust fund to contain a de minimis level of funding in order to be effective.
134
I 1
1
[
to be submitted with a standby trust, as summarized in Checklist 17-A, 5 including the C
following.
]
The standby trust agreement (along with any amendments) is the writte 1 document that specifies the terms and conditions of the standby trust. The wording contained l
in the model standby trust in Section 17.4 is acceptable to the NRC staff. Licensees i
who use other wording should refer to Checklist 17-B to be sure that the alternative l
wording contains all the necessary terms and conditions.
i Schedule A identifies the name and address of the licensee, the NRC license numbers covered by the standby trust, the addresses of the licensed activity, the amount of regulatory assurances demonstrated by the standby trust agreement, and the date on which these amounts were last adjusted and approved by the NRC.
Schedule B lists the property (i.e., cash, securities, or other liquid assets) initially used to establish the standby trust fund.se Schedu/e C specifies the compensation to be paid by the licensee to the trustee for its services.
The mode / certificate of events and the mode / certificate of resolution provide the required format for instructing the trustee to release monies from the standby trust in order to fund decommissioning activities at the licensee's facility. When submitted as 1
O part of a financial assurance package, the model certificates should be unexecuted
()
drafts. (Actual authorization to release funds from the standby trust is accomplished when completed and notarized versions of these certificates are signed by the secretary of the licensee and presented to the trustee.)
j The notarized letter of acknowledgement verifies the execution of the standby trust agreement and certifies the trustee's signature and authority to enter into the agreement.
l i
l i
l
" Supporting documentation may differ for licensees who submit standby trusts that differ from the N
recommended model.
g A standby trust may be established with no property in the fund initially. In this case, Schedule B may 88 simply state "none."
135 l
1 l
CIIECKLIST 17-B Terms and Conditions Needed in Decommissioning Standby Trust Agreements Use this checklist only if deviatingfrom the wording recommended in Section 17.4.
O Execution date of standby trust.
O Purpose of standby trust ("whereas" clauses).
O Statement oflicensee's regulatory obligations as reason for the standby trust fund.
O Grantor or grantors (introductory paragraph).
O Trustee or trustees (introductory paragraph):
o 1.
Names and addresses; and a 2.
Bank or corporate trustee.
O Identification of facilities (name, address, and license number) and cost estimates or certification amounts (Section 2 and Schedule A).
O Words of transfer, conveyance, and delivery in trust (Section 3).
O Description of trust property (Section 4 and Schedule B):
01.
Cash; o 2.
Securities; and/or a 3.
Other liquid assets.
0 Additions to trust (Section 4).
i a
Distribution of trust principal (Section 5):
a 1.
Disbursement to licensee upon proper certification; o 2.
Payment for activities at NRC's direction in writing; o 3.
Refund to grantor at NRC's written specification upon completion of decommissioning; and a 4.
Maximum withdrawal of funds at one time for a particular license is limited to 10 percent of the remaining funds available for that license unless NRC written approval is attached.
O Trust management (Sections 6 - 8):
01.
Discretionary powers; o 2.
Fiduciary duty; o 3.
Commingling and investment; o 4.
Sale or exchange of trust property; o 5.
Scope ofinvestments; 06.
Express powers of trustee; o 7.
Borrowing money and encumbering trust assets-o 8.
Insurance (optional);
o 9.
Operation of business (optional); and a 10.
Compromise of claims (optional).
O Taxes and expenses (Section 9).
O Annual valuation (Section 10).
O Advice of counsel (Section 11).
O Authonty, compensation, and tenure of trustees (Sections 12 - 14):
01.
Trustee compensation (Schedule C);
o 2.
Successor trustee; and a 3.
Instructions to trustee.
O Amendment of agreement (Section 15).
O Irrevocability and termination (Section 16).
O Immunity and indemnification (Section 17).
O Law to govern construction and operation of trust (Section 18).
O Interpretation and severability (Section 19).
O Signatures and titles.
O Acknowledgements, seats, or attestations, if necessary or desirt ' witness by notary public).
O Acceptance of standby trust by trustee or trustees (acknowledgems * ).
O 136
I 17.4 MODEL STANDBY TRUST AGREEMENT
\\.
TRUST AGREEMENT, the Agreement entered into as of[ insert date] by and between [ insert name of licensee), a [ insert name of State] [ insert " corporation," " partnership," " association," or " proprietorship"],
herein referred to as the " Grantor," and [ insert name and address of a trustee acceptable to NRC], 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 I, of the Code of Federal Regulations, Part [ insert 30,40,70, or 72]. These regulations, applicable to the Grantor, require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part [ insert 30,40, 70, or 72] provide assorance that funds will be available when needed for required decommissioning activities.
WHEREAS, the Grantor has elected to use a [ insert " letter of credit," "line of credit," " surety bond,"
" insurance policy,"" parent company guarantee," or "self-guarantee"] to provide [ insert "all" or "part"] of such financial assurance for the facilities identified herein; and WHEREAS, when payment is made under a [ insert " letter of credit," "line of credit," " surety bond,"
" insurance policy," " parent company guarantee," or "self-guarantee"), this standby trust shall be used for the receipt of such payment; and WHEREAS, the Grantor, acting through its duly authorized officers, has selected 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:
Section 1. Definitions. As used in this Agreement:
(a)
The tenn " Grantor" means the NRC licensee who enters into this Agreement and any successors or assigns of the Grantor.
(b)
The term " Trustee" means the trustee who enters into this Agreement and any successor trustec.
Section 2. Costs of Decommissionina. This Agreement pertains to the costs of decommissioning the materials and activities identified in License Number [ insert license number) issued pursuant to 10 CFR Part
[ insert 30,40,70, or 72J, as shown in Schedule A.
Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a standby trust fund (the Fund) for the benefit of the NRC. He Grantor and the Trustee intend that no third party shall have access to the Fund except as provided herein.
Section 4. Payments Constituting the Fund. Payments made te the Trustee for the Fund shall consist of cash, securities, or other liquid assets acceptable to the Trustee. The Fund is established initially as cons. sting of the property, which is acceptable to the Trutee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the T-ustee are referred to as the " Fund," together with all earnings ~xl profits thereon, less any payments or distributions made by the Trustee 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 137
any duty to collect from the Giantor, any payments necessary to discharge any liabilities of the Grantor established by the NRC.
Section 5. Payment for Reauired Activities Soccified in the Plan. The Trustee shall make payments from the Fund to the Grantor upon presentation to the Trustee of the following:
l (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 Certificate of Events, and (b)
A certificate attesting to the following conditions:
)
(1) that decommissioning is proceeding pursuant to an NRC-approved plan; l
(2) that the funds withdrawn will be expended for activities undertaken pursuant to that plan; and (3) that the NRC has been given 30 days prior notice of (insert name oflicensee]'s intent to withdraw funds from the trust fund.
(
No withdrawal from the Fund for a particular license can exceed 10 percent of the remaining funds available for that license unless NRC written 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 addition, the Trustee shall refund 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.
Section 6. Trust Manaaement. The Trustee shall invest 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 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 dutie-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 matters, would use in the conduct of an enterprise of a like character and with like aims; except that:
(a)
Securities or otne' obligations of the Grantor, or any other owner or operator of the facilities, or any of their afliliates 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 authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal govemment, and in obligations of the Federal government such as GNMA, FNMA, and FHLM bonds and certificates or State and Municipal bonds rated BBB or higher by Standard & Poor's or Baa or higher by Moody's Investment Senices; 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 ofinterest thereon.
138
O Section 7. Comminnline and Investment. The Tmstee 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 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 Trustee. The Tmstee may vote such shares in its discretion.
Section 8. Exoress 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; p
(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 Trustec in other fiduciary capacities, to reinvest interest payments and funds from matured and redeemed instruments, to file proper forms concerning 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 nommee or such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issed by the U.S. Govenunent, or any agency or instmmentality thereof, with a Federal Reserve Bank, but the books and records of the 7tustee 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 compromise or otherwise adjust all claims in favor of or against the Fund.
Section 9. Taxes and Expenses. 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 from the Fund.
(
Section 10. 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, furnish to the Grantor and to the NRC a statement confirming the value of the Trust. Any securities in the 139
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 failure of the Grantor to object in writing to the Trustee within 90 days after the statement has been fumished to the Grantor and the NRC shall constitute a conclusively binding assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to the matters disclosed in the statement.
Section i 1. Advice of Counsel. The Trustec 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 fully protected, to the extent permitted by law, in acting on the advice of counsel.
Section 12. Trustee Compensation. The 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 and the Grantor, the Trustee may resign; upon 90 days notice to NRC and the Trustee, the Grantor may replace the Trustee; but such resignation or replacement shall not be effective until the Grantor has appointed a successor Trustee, the successor accepts the appointment, the successor is ready to assume its duties as trustee, and NRC has agreed, in writing, that the successor is an appropriate St:te or Federal government agency or an entity that has the authority to act as a trustee and whose trust operaticos are regulated and examined by a Federal or State agency. The successor Trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. When the resignation or replacement is effective, 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, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. The successor Tmstee 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.
Section 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 Agreement or such other 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, and instructions. If the NRC issues orders, requests, or instructions to the Trustee these shall be in writing, signed by the NRC or its 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 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 or the NRC hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or the NRC, except as provided for herein.
Section 15. Amendment of Aereement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the NRC, or by the Tmstee and the NRC if the Grantor ceases to exist. All amendments shall meet the relevant regulatory requirements of the NRC.
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 continue until terminated at the written 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 remaining trust property, less final trust administration expenses, shall be delivered to the Grantor or its successor.
140 I
h Section 17. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administation 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 mdemnified and saved harmless by the Grantor or from the trust fund, or both, from and agamst any personal liability to which the Tmstee 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.
Section 18. This Agreement shall be admmistered, construed, and enforced according to the laws of the State of[ insert name of State].
Section 19. Interoretation and Severability. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. 'Ihe descriptive headings for each section of this l
Agreement shall not affect the interpretation or the legal efficacy of this Agreement. If any part of this l
Agreement is invalid, it shall not affect the remaining provisions which will remain valid and enforceable.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by the respective officers duly authorized and the incorporate seals to be hereunto affixed and attested as of the date first written above.
[ Insert name oflicensee (Grantor)]
[ Signature of representative of Grantor]
[ Title]
ATTEST:
[ Title]
Q
[ Seal]
[ Insert name of Trustee)
[ Signature of representative of Trustee]
[ Title]
ATTEST:
[ Title]
[ Seal]
O V
141
l l
I 17.5 MODEL STANDBY TRUST AGREEMENT SCHEDULES Schedule A This Agreement demonstrates financial assurance for the following cost estimates or certification amounts for the following licensed activities:
l U.S. NUCLEAR COST ESTIMATES FOR REGULATORY REGULATORY COMMISSION NAMEAND ADDRESS OF ASSURANCES LICENSE ADDRESS OF LICENSED DEMONSTRATED BY NUMBER (S)
LICENSEE ACTIVITY THIS AGREEMENT The cost estimates listed here were last adjusted and approved by the NRC on [ insert date).
Schedule B DOLLAR AMOUNT AS EVIDENCED BY Schedule C Trustee's fees shall be $
per year.
O 142
p p
17.6 MODEL CERTIFICATE OF EVENTS
\\
[ Insert name and address of trustee].
g.
Attention: Trust Division Gentlemen:
In accordance with the terms of the Agreement with you dated
. I,
. Secretary of[ insert name oflicensee], hereby certify that the following events have occurred:
1.
[ Insert name oflicensee] is required to commence the &=missionmg ofits facility located at [ insert location of facility] (hereinafter called the decommissioning).
2.
The plans and procedures for the commencement and conduct of the decommissioning have been approved by the United States Nuclear Regulatory Commission, or its successor, on (copy of approval attached).
3.
The Board of Directors of[ insert name oflicensee] has adopted the attached resolution authorizing the commencement of the decommissioning.
m Secretary of[ insert name oflicensee]
Date b(
143 l
17.7 MODEL CERTIFICATE OF RESOLUTION I,
. do hereby certify that I am Secretary of[ insert name oflicensee), a [ insert State of incorporation] corporation, and that the resolution listed below was duly adopted at a meeting of this Corporation's Board of Directors on
.19 IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this Corporation this day of
.19 Secretary RESOLVED, that this Board of Directors hereby authorizes the President, or such other employee of the Company as he may designate, to commence decommissioning activities at [ insert name of facility] in accordance with the terms and conditions described to this Board of Directors at this meeting and with such other terms and conditions as the President shall approve with and upon the advice of Counsel.
17.8 MODEL LETTER OF ACKNOWLEDGMENT STATE OF To Wit:
CITY OF On this day of
. before me, a notary public in and for the -
_id State aforesaid, personally appeared
. and she/he did depose and say that she/he is the [incert title], of national banking association, Trustee, which executed the above instrument, that she/he knows the seal of said association; that the seal aflixed to such instrument is such corporate seal; that it was so affixed by order of the association; and that she/he signed her/his name thereto by like order.
[ Signature of notary public]
My Commission Expires:
[Date]
O 144
L BIBLIOGRAPHY
\\
for Cost Estimating and Financial Assurance Elder, H.K., " Technology, Safety and Costs of Decommissioning a Reference Uranium Hexafluoride Conversion Plant," NUREG/CR-1757, October 1981.
Elder, H.K., " Technology, Safety and Costs of Decommissioning Reference Nuclear Fuel Cycle and Non Fuel Cycle Facilities Following Postulated Accidents," NUREG/CR-3293, Volumes 1 and 2, May 1985.
Haffner, D.R., and A.J. Villegas, " Technology, Safety, and Costs of Decommissioning a
' Reference Large Irradiator and Reference Sealed Sources," NUREG/CR-6280, January 1996.
Jenkins, C.E., E.S. Murphy, and K.J. Schneider, " Technology, Safety ar:d Costs of Decommissioning a Reference Small Mixed Oxide Fuel Fabrication Plant," NUREG/CR-0129, Volumes 1 and 2, February 1979.
Ludwick, J.D., and E.B. Moore, " Technology, Safety and Costs of Decommissioning Reference Independent Spent Fuel Storage Installations," NUREG/CR-2210, January 1984.
NUREG/CR-1266, " Technology, Safety and Costs of Decommissioning a Reference Uranium Fuel Fabrication Plant," Volumes 1 and 2, October 1980.
- UREG-1307, " Report on Waste Burial Charges," Revision 8, December 1998.
N NUREG-1337, " Standard Review Plan for the Review of Financial Assurance Mechanisms for Decommissioning Under 10 CFR Parts 30,40,70, and 72," Revision 1, August 1989.
Policy and Guidance Directive FC 90-2, " Standard Review Plan for Evaluating Compliance with Decommissioning Requirements for Source, Byproduct, and Special Nuclear Material License Applications," April 1991.
Short, S.M., " Technology, Safety and Costs of Decommissioning Reference Non-Fuel-Cycle Nuclear Facilities," NUREG/CR-1754,' Addendum 1, October 1989.
Witheispoon, J., " Technology and Cost of Termination Surveys Associated with Decommissioning of Nuclear Facilities," NUREG/CR-2241, February 1982.
i 145
l 9
l APPENDIX A Table for Determining Financial Assurance Requirements Under 10 CFR Parts 30,40, and 70 by Type of isotope and Activity Level 9
D
I
- l*# ##"'" l Unsealed Sources
- '*# f*##
under 10 CFR Parts 30, 40, and 70 Under 10 CFR Part 30 ISOTOPE Financial Financial
$75,000
$ 150,000
$750,000 Assurance
^**"'8" DFP Certification Certificatio Certificatio equired
^" "'
n Allowed n Allowed Required Rea ired
>0.01 s0.01 0;1 n1 Americium-241 s100 Ci
> 100 Ci
- mci,
> 1 mci C
s0.1 mC, Antimony 122 s 1,00g,00
> 1,000,000 s10p
> 100 n1Ci,
> 1 Ci,
> 10 Ci 0 Cl Ce mci s1 Ci s10 C s100,000
> 100,000 10 mci
> 1 Ci
> 10 n1Ci,
> 100 mci, Antimony-124 C,
Ci s100 mC s1 Ci s100,000
> 100 000
> 10 n10,
> 100 mci, Antimony-125 s10 mci
> 1 Ci Ci Ci s100 mC s1 C:
s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Arsenic-73
> 10 Ci 0 C:
Ci mci s1 Ci s10 Ci s100,000
> 100,000 10 mci
> 10 n1Ci,
> 100 gCi,
> 1 Ci Arsenic-74 C,
Ci s100 mci s1 Ci s100,000
> 100,000 s10 mci
? 10 n1Ci,
> 100 n1Ci' Arsenic-76
> 1 Ci C#
Ci s100 mci s1 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Arsenic-77
> 10 Ci 0C Ci mci s1 Ci s10 Ci s100,000
> 100 000
> 10 mci,
> 100 mci, Barium-13I f
s10 mci
> 1 Ci C#
Ci s100 mci s1 C s100,000
> 100,000 s10 mci
> 1 Ci
> 10 mci,
> 100 mci, Barium-133 C,
Ci s100 mci s1 Ci s100,000
> 100,000 s10 mci
> 1 Ci
> 10 n1Ci,
> 100 rnCi, Barium-140 C,
Ci s100 mC s1 C Bismuth-210 s10,g00
> 10,000 Ci s1 mci
> 1 n1Ci,
> 10 mci,
>100 Ci s10 mci s100 mci mci s100,000
> 100 000
> 10 mci,
> 100 mci, Bromine 82 f
10 mci
> 1 Ci C.
Ci s100 mci s1 C:
s100,000
> 100 000
> 10 mci,
> 100 mci, Cadmium 109 f
s10 mci
> 1 Ci Ci Ci s100 mci s1 C:
s100,000
> 100 000
> 10 niCi,
> 100 mci, Cadmium-115m f
10 mci
> 1 Ci C,
Ci s100 mC s1 Ci f\\
Cadmium-115 s 1,00g,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci Q
0 Ci Ci mci s1 Ci s10 Ci A-1
1 Sealed Sources /
Unsealed Sources g,g pg,,
"" "' ' O under 10 CFR Part 30 Financial Financial Assurance Assuranc DFP CedWcation Cedcatio CedWcati Not e Not Required Allowed n Allowed n Allowed Required Required s 00,000
> 100 000
> 10 mO,
> 100 mO, Calcium-45 f
s10 mci
> 1 Ci C,
Ci s100 mC, s1 C i
s100,000
> 100 000
> 0 ma,
> 100 n10, Calcium-47 f
10 mci
> 1 Ci C,
Ci s100 mC, s1 C e
s1,000,00
> 1,00g,000 slog
> 100 n10,
> 1 0, Carbon-14
> 10 Ci 0 Cl Ce mCs s1 Ci s 10 C:.
Cerium-141 s 1,00g,00
> 1,00g,000 s10g
> 100 nic,
> 1 0,
> 10 Ci 0C Ci mCe s1 Ce s10 C Cerium-143 s 1,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0, 0C Ce mci s1 Ci s10 Ci.
> 10 Ci Cerium-144 s10,g00
> 10,000 Ci s1 mci
> 1 ma,
> 10 ma,
>100 Ci s10 mci s100 mCe m C, s10,000,0
> 10,000,00
> 1 Ci,
> 10 Ci,
>100 esium-131
'l 00 Ci 0 Ci s10 Ci s100 Ci Ci Cesium-134m s 1,00g,00
> 1,00g,000 s10g
> 100 nic,
> 1 0,
> 10 Ci 0C Ci mci s1 Ci s10 C Cesium-134 s10,g00
> 10,000 Ci s1 mci
> 1 ma,
> 10 ma,
>100 Ci s10 mci s100 mci mC,i s100,000
> 100,000 s10 mci
> 10 n10,
> 100 rnC, Cesium-135 i
> 1 Ci C,
Ci s100 mci s1 Ce s100,000
> 100 000
> 10 ma,
> 100 mO, Cesium-136 f
10 mci
> 1 Ci C,i Ci s100 mci s1 C s 00,000
> 100 000
> 0 ma,
> 100 n10, Cesium-137 f
10 mci
> 1 Ci C,
Ci s100 mci s1 Ci s100,000
> 100 000
> 0 mO,
> 100 n10, Chlorine-36 f
10 mci
> 1 Ci C,
Ci s100 mCe, 51 Ci i
s100,000
> 100,000
> 10 mO,
> 100 n10, Chlorine-38 10 mci
> 1 Ci C,
Ci s100 mCs, s1 Ci i
s10,000,0
> 10,000,00
> 1 Ci,
> 10 Ci,
>100 Chromium-51
' l O.
00 Ci 0 Ci s10 Ci s100 Ci Ci s100,000
> 100 000
> 10 n10,
> 100 mO, Cobalt-58m f
s10 mci
> 1 Ci C,:
Ci s100 mci s1 Ci s100,000
> 100,000 s10 mci
> 1 Ci
> 10 mci,
> 100 rnCi, Cobalt-58 C,
Ci s100 mC s1 C A-2
l
- I*U
- "'**#l Unsealed Sources
- '*# f*##
under 10 CFR Parts 30, 40, and 70 under 10 CFR Part 30 ISOTOPE Financial FinenCI*I
$75,000
$150,000
$750,000 Assurance Assuranc DFP Certification certificatio Certificatio Not e Not Required Allowed n Allowed n Allowed Required Required Cobalt-60 s10,g00
> 10,000 Ci s1 mci
> 1 mCl,
> 10 mci,
>100 Ci s10 mci s100 mci mci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Copper-04
> 10 Ci 0 Ci Ce mci s1 Ci s10 Ci s100,000
> 100 000
> 10 mci,
> 100 mci, Dysprosium-165 f
10 mci
> 1 Ci C,
Ci s100 mci s1 C s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci' Dysprosium-166
> 10 Ci 0 Cl Ce mci s1 Ci s 10 Ci Erbium-169 s 1,00g,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci 0C C
m Ci s1 Ci s10 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Erbium-171
> 10 Ci 0 Ci Ce mci s 1 Ci s10 Ci Europium-152 s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, I
9.2 h 0 Ci Ci mci s 1 Ci s10 Ci
> 0 Ci Europium-15213 s10,000
> 1 mci,
> 10 mci,
>100
> 10,000 Ci s1 mci Yr Ci s10 mci s100 mci mci Europium-154 s10,g00
> 10,000 Ci s1 mci
> 1 m Ci,
> 10 mci,
>100 Ci s10 mci s100 mci mci s100,000
> 100,000 10 mci
> 1 Ci
> 10 mci,
> 100 rnCi, Europium-155 C,
Ci s100 mci s1 C Fluorine-18 s 10,00g,0
> 10,000,00
> 1 Ci,
> 10 Ci,
>100 s1 Ci 00 Ci 0 Ci s10 Ci s100 Ci Ci s100,000
> 100 000
> 10 nc,
> 100 mci, Gadolinium-153 j
s10 mci
> 1 Ci C,
Ci s100 mci s 1 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Gadolinium-159
> 10 Ci 0 Ci Ce mci s1 Ci s10 Ci s100,000
> 100 000
> 10 mC,
> 100 gi,
> 1 Ci Gallium-72 f
s10 mci Ci Ci s100 mci s 1 Ci Germanium-71 s 1,00g,00
> 1,00g,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci 0C Ca mci s1 Ci s10 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Gold 198
> 10 Ci 0 Ci Ci mci s1 Ci s10 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Gold-199
> 10 Ci 0 Ci Ci mci s1 Ci s10 Ci A-3 l
Sealed Sources /
Unsealed Sources yy 7,.7,
""#*' ' O '
O'#0'""#
0 under 10 CFR Part 30 ISO' OPE Financial Financial
$75,000
$ 150,000
$750,000 Assurance Assuranc opp Certification Certificatio Certificati Not e Not Required Allowed n Allowed n Allowed Required Required s 00,000
> 100 000
> 10 mO,
> 100 n10, Hafnium-181 7
s10 mci
> 1 Ci Ci Ci s100 mC s1 C Holmium-166 s,00g,00
> 1,00g,000 s10g
> 100 mO,
> 1 0,
> 10 Ci 0C Ce mci s1 Ci s10 Ci s10,000,0
> 10,000,00
> 1 Ci,
> 10 Ci,
>100 Hydrogen 3 s1 C.
00 Ci 0 Ci 10 Ci s100 Ci Ci Indium-113m s 1,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0C Ci mci s1 Ci s10 Ci s100,000
> 100 000
> 0 mO,
> 100 n10, Indium-114m 7
s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci indium-115m s 1,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0 Cl Ci m Ci s1 Ci s10 Ci s100,000
> 100 000
> 10 n10,
> 100 n10, indium-115 7
s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci i
lodine-125 s 0,g00
> 10,000 Ci s1 mci
>1m
> 10 n10,
>100 Ci s10 mci s100 mci mci lodine-126 s10,g00
> 10,000 Ci s1 mci
>1 n10,
> 10 n10,
>100 Ci s10 mci s100 mci
- mCe,
> 0.1 lodine-129 s1,000 Ci
> 1,000 Ci s0.1 mci
,j mC s10 m i mC lodine-131 s 0,g00
> 10,000 Ci s1 mci
> 1 mO,
> 10 mO,
>100 Ci s10 mC s100 mC mC,i s100,000
> 100 000
> 10 n10,
> 100 n10, lodine-132 7
s10 mci
> 1 Ci C,:
Ci s100 mci s1 Ce lodine-133 s10,g00
> 10,000 Ci s1 mci
> 1 mO,
> 10 n10,
>100 Ci s10 mCa s100 mci mci s100,000
> 100 000
> 10 mO,
> 100 n10, lodine-134 f
10 mci
> 1 Ci C,
Ci s100 mci s1 Ci s100,000
> 100 000
> 10 ma,
> 100 n10, lodine-135 f
s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci s100,000
> 100 000
> 10 n10,
> 100 n10, Iridium-192 f
10 mci
> 1 Ci C,
Ce s100 mci s1 Ca Iridium-194 s 1,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0,
> 10 Ci 0C Ce mci s1 Ci s10 Ci A-4
l Sealed Sources /
Unsealed Sources Plated Foils
"" "' ' O #
O' 0
under 10 CFR Part 30 ISOTOPE Financial Financial Assurance Assuranc DFP en catio CeScati Not e Not Required Allowed n Allowed n Allowed Required Required s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 0, Iron-55
> 10 Cl O Ci Ci mci s1 Ci s10 Ci s100,000
> 100 000
> 10 niO,
> 100 n10, Iron 59 f
s10 mci
> 1 Ci Ci Ci s100 mci s1 Ci Krypton-85 s,00g,00
> 1,00g,000 s10g
> 100 n1Ci,
> 1 0,
> 10 Ci 0 Ci Ci mCe s1 Ci s10 C s100.000
> 100,000
> 10 n10,
> 100 n10, Krypton-87 C,
Ci, 10 mci
> 1 Ci i
s100 mci s1 Cs s 00,000
> 100 000
> 10 mO,
> 100 ma, Lanthanum-140 f
s10 mci
> 1 Ci Ci Ci s100 mC s1 Ci Lutetium-177 s,00g,00
> 1,00g,000 s10g
> 100 n1Ci,
> 1 0,
> 10 Ci 0 C:
Ce mci s1 Ci s10 Ci G
s100,000 M00 000
> 10 mO,
> 100 mO, Manganese 52 f
s10 mci
> 1 Ci C,
Ci s100 mci s1 C i
s 00,000
> 100 000
> 10 mO,
> 100 n10, Manganese-54 j
10 mci
> 1 Ci C,
Ci s100 mC 51 Ci s 00,000
> 100 000
> 10 n10,
> 100 n10, Manganese-56 f
10 mci
> 1 Ci C,
Ce s100 mci s1 Ci i
Mercury-197m s,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0C Ce mci s1 Ci s10 Ci s,
>, g, O s10g
> 100 n10,
> 1 0, Mercury-197
> 10 Ci 0 Ci Ci mci s1 Ci s10 C s100,000
> 100 000
> 10 ma,
> 100 mO, Mercury-203 f
10 mci
> 1 Ci C:,
Ce s100 mci s1 C Molybdenum-99 s 1,00g,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci 0 Ci Ci m Ci s1 Ci 510 Ci g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0, s,
Neodymium-147
> 10 Ci 0 Ci Ce mci s1 Ci s10 Cs Neodymium-149 s 1,00q,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0C Ci mci s1 Ci s10 Ci Nickel-59 s 1,00q,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0 C:
Ci mC s 1 Ci s10 Ci s 00,000
> 100,000
> 10 mO,
> 100 n10, Nickel-63 s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci l
A-5 i
Sealed Sources /
Plated Foils UnsealeHources under 10 R Pans 30, M, and M under 10 CFR Part 30 ISOTOPE Financial Financial
$75,000
$150,000
$750,000 Assurance Assuranc DFP Certification Certificatio certificati Not e Not Required Allowed n Allowed n Allowed Required Required Nickel-65 s,000,00
> 1,000,000 slog
> 100 n10,
> 1 0, 0 C, Ci mci s1 Ci s10 Ci.
> 10 Ci Niobium-93m s100,000
> 100 000
> 0 n10,
> 100 n10, y
s10 mci
> 1 Ci C,
Ci s100 mC s1 Ci s100,000
> 100,000 s10 mci
> 10 mO,
> 100 mO, Niobium-95
> 1 Ci C,s ci s100 mci, s1 Ci Niobium-97 s100,000 w0,000 s10 mci
> 10 mO,
> 100 rnO,
> 1 Ci C,i Ci s100 mci s 1 Ci Osmium-185 s100,000
> 100,000 s10 mci
> 10 mO,
> 100 n10,
> 1 Ci C,
Ci s100 mci s 1 Ci Osmium-191m s 1,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0,
> 10 Ci 0 Ci Ce mci s 1 Ci s10 Ci Osmium-191 s 1,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0,
> 10 Ci 0 C:
C mci s1 Ci s 10 C.i Osmium-193 s,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0,
> 10 Ci 0C Ce mci s1 Ci s 10 C.i Palladium-103 s 1,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0 Ci Ce mCs s1 Ci s10 Ci s1,000,00
> 1,000,000 s100
> 100 rnCi,
> 1 Ci, Palladium-109
> 10 Ci 0 C:
Ce mci s 1 Ci s 10 C.
s100,000
> 100 000
> 10 mO,
> 100 mO, Phosphorus-32 7
s10 mci
> 1 Ci C,
Ci s100 mC, s1Ci i
P5tinum-191 s 1,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0C Ce mCe s1 Ci s10 Ci Platinum-193m s 1,00q,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0 Ci Ce mci s1 Ci s10 Ci Platinum-193 s,00g,00
> 1,00g,000 s10g
> 100 n10,
> 1 0,
> 10 Ci 0C Ce mci s1 Ci s10 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Platinum-197m
> 10 Ci O Ci Ci mci s1 Ci s10 Ci Platinum-197 s 1,00g,00
> 1,00g,000 slog
> 100 n10,
> 1 0,
> 10 Ci 0C Ci mci s1 Ci s10 C A-6
l Sealed Sources /
Unsealed Sources Plated Foils
- ' ' O O'
under 10 CFR Part 30 ISOTOPE Financial Financial
$75,000
$150,000
$750,000 Assurance Assuranc DFP Certification Certificatio Certificatio Not e Not Required Allowed n Allowed n Allowed Required Required Plutonium-239 Ci
> 1 mci s
C s0.1 mci O1 Polonium-210 s1,000 Ci
> 1,000 Ci s0.1 mci j
C s10 m i mC s 00,000
>100 000
> 0 mQ,
>100gG,
> 1 Ci Potassium-42 f
s10 mci C,
Ci s100 mci s1 Ci Praseodymium-1 s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci 42 O Ci Ci mci s1 Ci s10 Ci Praseodymium-1 s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci 43 0 Ci Ci mci s1 Ci s10 Ci
> 10 mO,
>100go,
> 1 Ci Promethium-147 l
s10 mci C.
Ci s100 mci s1 Ce s100,000
> 100 000
> 10 mQ,
>100gC,
> 1 Ci Promethium-149 f
s10 mci C,
Ci s100 mci s1 Ci Radium-226 s100 Ci
> 100 Ci i mC
> 1 mci Ci s0.1 mC.i 9'
9 9'
> 10 Ci Rhenium-186 0 C.i Ci mci s 1 Ci s10 Ci
>' 9' 9
9'
> 10 Ci Rhenium-188 0 C.
Ce mci s1 Ci s10 Ci s1,000,00
> 1,00g,000 s10g
> 100 mO,
> 1 0,
> 10 Ci Rhodium-103m 0 C, Ci mci s1 Ci s10 C s,000,00
> 1,00g,000 slog M OO mO,
> 1 0,
> 10 Ci Rhodium-105 0 Ci Ci mci s1 Ci s 10 Ci s100,000
> 100 000
> 10 mO,
>100gC,
> 1 Ci Rubidium-86 f
s10 mci C,
Ci s100 mci s1 C
> 10 mQ,
>100gO,
> 1 Ci Rubidium-87 l
s10 mci C.
Ci s100 mci s1 Ci i
s1,000,00
> 1,00g,000 slog
> 100 mQ,
> 1 Q,
> 10 Ci Ruthenium-97 0 C, Ce mC s1 Ci s10 C s100,000
> 100 000
> 0 mO,
> 100 mci, i
> 1 Ci Ruthenium-103 f
s10 mci C,
Ci s100 mci s1 Ci A-7
- '"I'# #*"'"#l Unsealed Sources Plated Foils
'I under 10 CFR Part 30 ISOTOPE Financial nancial
$75,000
$ 150,000
$750,000 Assurance Aswan DFP Certification Certificatio Certificatio Requ, ired Allowed n Allowed n Allowed Required Re ied s100,000
> 100 000
> 10 mci,
> 100 rnCi, Ruthenium-105 7
s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci Ruthenium-106 s10,g00
> 10,000 Ci s1 mci
> 1 mci,
> 10 mci,
>100 i
Ci s10 mci s100 mci mci s100,000
> 100 000
> 10 mci,
> 100 mci, Samarium-151 y
s10 mci
> 1 Ci C,
Ci s100 mci s1 C i
s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
> 10 Ci
]
Samarium-153 O Ci Ce mci s1 Ci s10 Ci s100,000
> 100,000 10 mci
> 1 Ci
> 10 mci,
> 100 mci, Scandium-46 C,i Ci s100 mci s1 C:
s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Scandium-47
> 10 Ci 0 Ci Ci mci s1 Ci s10 Ci
{
l s100,000
> 100,000 10 mci
> 1 Ci
> 10 mci,
> 100 mci, I
Scandium-48 C,
Ci s100 mci s1 Ci i
s100,000
> 100,000 s10 mci
> 1 Ci
> 10 mci,
> 100 mci, Selenium-75 C,
Ci s100 mci s1 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Silicon-31
> 10 Ci 0 Ci Ci m Ci s1 Ci s10 Ci s100,000
> 100,000 10 mci
> 1 Ci
> 10 mci,
> 100 mci, Silver-1023 C,
Ci s100 mci s1 Ci i
Silver-110m s10,g00
> 10,000 Ci s1 mci
> 1 mci,
> 10 mci,
> 100 Ci s10 mci s100 mci mci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Silver-111
> 10 Ci 0 Ci Ci mci s1 Ci s10 Ci s100,000
> 100,000 s10 mci
> 1 Ci
> 10 mci,
> 100 mci' Sodium-24 C,
Ci s100 mci s1 Ci i
s100,000
> 100 000
> 10 mci,
> 100 mci, Strontium-85 y
s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci i
Strontium-89 s 10,g00
> 10,000 Ci s1 mci
> 1 mci,
> 10 mci,
>100 Ci s10 mci s100 mci mci
> 0.1 mci,
> 1 mci,
>10 Strontium-90 s1,000 Ci
> 1,000 Ci so.1 mci s1 mci s10 mci mci s100,000
> 100,000 10 mci
> 1 Ci
> 10 mci,
> 100 mci, Strontium 91 Ci Ci s100 mci s1 Ci A-8
- I*# #*"'#**l Unsented Sources un er 10 R Pans 30, 40, and 70 under FR art 30 ISOTOPE Financ.al Financial i
$75,000
$ 150'000
$750,000 Assurance Assuranc DFP Certification Certificatio Certificatio Not e Not Required Allcwed n Allowed n Allowed Required Required s1
,0 M
> 100,0@
> 10 mO,
> 100 mci, Strontium-92 s10 mci
> 1 Ci Ci Ci s100 mCe s1 Ci g,
> 1,00g,@0 slog
> 1% nia,
> 1 0, s,
Sulphur-35
> 10 Ci 0 Ci Ci mci s1 Ci s10 C:
'l 0
>1M 000
> 10 n10,
> 100 n10, Tantalum-182 y
s10 mci
> 1 Ci C.
Ci s100 mci s1 Ci
'l
'0
> 100 0@
> 10 mO
> 1 @ n10, Technetium 96 f
s10 mci
> 1 Cl C.
Ci s100 mCs s1 Ci s,0@,@
> 1,00g,@0 s10g
> 100 n10,
> 1 0, Technetium-97m
> 10 Ci 0 Ci Ci mci s1 Ci s10 C g,00
> 1,Mg,@0 s10g
> 1M go,
> 1 0, s,
Technetium-97
> 10 Ci 0C Ci mci s 1 Ci s10 Ci G
s1,0 @,00
> 1,Mg,@0 slog
> 100 n10,
> 1 0, Technetium 99m
> 10 Ci 0 Cl Ce mci s 1 Ci s10 Ci s100,000
> 100 0@
> 10 ma,
> 100 n10, Technetium-99 f
10 mci
> 1 Ci C,i Ci s100 mci s1 C:
0
>1 M 000
> 10 n10
>1@ ma, Tellurium 125m f
s10 mci
> 1 Ci C.
Ci s100 mci s1 Ci i
'0%
>1@f@0 s10 mci
> 1 Ci
> 10 ma,
> 1 M n10, Tellurium-127m C.
Ci s100 mC s1 Cs s1, 0,@
> 1,00g,@0 slog
> 1 @ n10,
> 1 Q, Tellurium-127
> 10 Ci 0 Ci Ce mC s1 Ci s10 Ci 0
>100 MO
> 10 n10,
> 1 M n10, Tellurium-129m f
s10 mci
> 1 Ci C.
Ce s100 mC s1 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci,
'U"'IU*'I 2 0
> 0 C.i 0 Ci Ci mci s1 Ci s10 Ci s100,0 @
> 100 @0
> 10 ma,
> 1 M n10, Tellurium-131m f
s10 mci
> 1 Ci C,
Ci s100 mci s1 C:
'I
'0 %
>100,0@
s10 mci
> 1 Ci
> 10 ma,
> 100 n30, Tellurium-132 C.
Ci s100 mci s1 Ci
'0 @
> 100 0@
> 10 mO,
> 1 @ n10,
^
Terbium-160 f
s10 mci
> 1 Ci
\\
C:.
Ci s100 mci s1 Ci l
s, g,
> 1, g, O s10g
> 1@ gC,
> 1 0, Thallium 200
> 10 Ci 0C Ci mci s1 Ci s10 Ci A-9
Sealed Sources /
Unsealed Sources g,y y,,
under 10 CM Pads 30, 40, and 70 under 10 CFR Part 30 ISOTOPE Financla!
Financial
$75.000
$150,000
$750,000 Assurance Assuranc DFP Certification Certificatio Certificatio Not e Not Required Allowed n Allowed n Allowed Required Required Thallium-201 s,00q,00
> 1,00g,000 s10p
> 100 n10,
> 1 Ci,
> 10 Ci 0C Ce mC s1 Ci s10 C Thallium 202 s 1,00g,00
> 1,000,000 s10g
> 100 mO,
> 1 0:
> 10 Ci 0 C:
Ci mCe s 1 Ci s10 Ci s100,000
> 100,000
> 10 mO,
> 100 mO, Thallium 204 s10 mci
> 1 Ci
.)
Ci Ci s100 mci s1 C:
Thorium (natural) s10 mci Ci 00 s100,000
> 100,000
> 10 mO,
> 100 n10, l
Thulium-170 s10 mci
> 1 Ci C#
Ci s100 mCs s1 Ce
)
'l
,000
> 10 n10,
> 100 n10, 3
Thulium-171 s10 mci
> 1 Ci Cl C.i s100 mci s1 Ci s100,000
> 100,000
> 10 n10,
> 100 n10, Tin-113 s10 mci
> 1 Ci C:,
Ci s100 mC s1 C s100,000
> 100,000
> 10 n10,
> 100 n10, Tin 125 s10 mci
> 1 Ci C,i C,
s100 mci s1 C i
s100,000
> 100,000
> 10 n10,
> 100 n10, Tungsten-181 s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci s 00,000
> 100,000
> 0 mO,
> 100 mO, Tungsten-185 s10 mci
> 1 Ci Ci C,
s100 mci s1 C i
s, g,
>.00g,000 slog
> 100 n10
> 1 0, Tungsten 187
> 10 Ci 0C Ci mci s 1 Ci s 10 Ci Uranium (natural) s10 mci
~
mci 100 Uranium-233 s0 g1 mb, O ni j c'
> 1 mci s0.1 mC,i Uranium-234 s o.
> i mC
- I "'
Ci s
s 0.1 m Ce.
> I m" Uranium-235
> 1 mci Ci s
s 0.1 m Ce.
s 00,000
> 100,000
> 10 mci,
> 100 mci, Vanadium-48 s10 mci
> 1 Ci C:,
Ci s100 mci s1 C A-10
7 ~.
l
- "'#**l Unsealed Sources
- ' ' O #
O' #0' ""# #0 under FR rt30 ISOTOPE Financial Financial 0,W M50,M Assurance Assuranc DFP ed ation e
cado CedWcati Not e Not Required Allowed n Allowed n Allowed Required Required s10,000,0
> 10,000,00
- I U
>10 C,
>1g0 Xenon-131 m s1 Ci 00 Ci 0 Ci s10 Cj s100 Ce C
s1,000,00
> 1,00g,000 s100
> 100 n10,
> 1 0, Xenon-133
> 10 Ci 0 Ci Ce mci s1 Cs 510 Ci s1,000,00
> 1,000,000 s10g
> 100 ma,
> 1 0, Xenon 135
> 10 Ci 0C Ci mCe s1 Ci s10 Ci s1,000,00
> 1,00g,000 s10g
> 100 naa,
> 1 0, Ytterbium-175
> 10 Ci 0 Ci
,,e mC s1 Ci s10 Ci s100,000
> 100,000
> 10 mO,
> 100 mO, Yttrium-90 s10 mci
> 1 Ci C,
C,i s100 mci s 1 Ci s100,000
> 100,000
> 10 mO,
> 100 n10' Yttrium-91 s10 mci
> 1 Ci Ce, Ci s100 mci s1 Ci s1,000,00
> 1,000,000 s10g
> 100 n10,
> 1 0, Yttrium-92
> 10 Ci 0 C:,
Cl mCe s 1 Ci s 10 C.
s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Yttrium-93
> 10 Ci 0 Ci Ci mci s1 Ci s10 Ci s 00,000
> 100,000
> 10 n10,
> 100 rnC, Zinc-65 s10 mci
> 1 Ci C,
Ci s100 mci s1 Ci s1,000,00
> 1,000,000 s100
> 100 mci,
> 1 Ci, Zine-69m
> 10 Ci 0 C:
Ce mC s1 Ce s10 Cs s10,000,0
> 10,000,00
> 1 0,
>10 C,
>100 Zinc 69 1 Ci 00 Ci 0 Ci s10 Ci s100 Ci Ci s100,000
> 100,000
> 10 mO,
> 100 n10, Zireonium-93 C,
Ci, s10 mci
> 1 Ci s100 mC s1 C s100,000
> 100,000
> 10 n10,
> 100 n10, Zirconium-95 s10 mci
> 1 Ci Cl Ci s100 mci s1 C s100,000
> 100,000
> 10 n10,
> 100 n10, Zirconium-97 s10 mci
> 1 Ci C:,
Ci s100 mci s1 Ci
' OV A-11
Sealed Sources /
""###I*
Plated Foils
"" ' 'O O' #0' ""
under 10 CFR Part 30 ISOTOPE Financ,al Financial i
$75,000
$150,000
$750,000 Assurance Assuranc DFP Certification certificatio certificati Not e Not Required Allowed n Allowed n Allowed Requ, red Required i
Any alpha emitting radionuclide not listed above or s0.01
> 0.g1
> 0.1 mci, mixtures of alpha emitters of s100 Ce.
> 100 C.
i mci s1 mci unknown s0.1 mCe.
composition (with a half-life greater than 120 days)
Any radionuclide other than alpha emitting radionuclides, not
>01 m x ures of beta s1,000 Ci
> 1,000 Ci s0.1 mci j
C 10 m i mC l
unknown composition (with l
a half-life greater than 120 days) l l
O A-12
APPENDIX B APPENDIX B TO 10 CFR PART 30*
Quantities' of Licensed Material Requiring Labeling Material Microcuries Material Microcuries Material Microcuries Material Microcuries Americium 241 0.01 Gadolinium 159 100 Osmium-191 100 Tantalum-182 10 Antunony-122 100 Oallium-72 10 Osmium-193 100 Technetium-96 10 Antimony 124 10 Germaniun>71 100 Palladium-103 100 Tedinctiun>97m 100 Antimony-125 10 Gold-198 100 Palladium 109 100 Technetiun>97 100 Arsenic-73 100 Gold-199 100 Phosphorus 32 10 Technetium-99m 100 Arsenic 74 10 Itafnium-181 10 Platinum-191 100 Technetium-99 10 Arsenic-76 10 lloimium 166 100 Plstinum 193m 100 Tellurium 125m 10 Arunic.77 100 flydrogen-3 1,000 Platinum-193 100 Tellurium 127m 10 Barium-131 10 Indiunull3m 100 Platinum-197m 100 Tellurium 127 100 Barium-133 10 Indium-Il4m 10 Platinun>l97 100 Tellurium 129m 10 Banum-140 10 Indium-115m 100 Plutonium 239 0.01 Telluriunwl29 100 Bumuth-210 1
Indium-115 10 Polonium-210 0.1 Tellurium-131m 10 Dromine-82 10 lodine 125 i
Potassium-42 10 Tellurium-132 10 Cadmium-109 10 lodine-126 1
Prucodymium-142 100 Terbiunvl60 10 Cadmium-115m 10 lodine-129 0.1 Praseodymium-143 100 nallium-200 100 Cadmium-II5 100 todine-131 1
Promethium-147 10 nallium 201 100 Calcium-45 10 lodine-132 to Promethiunwl49 to Dallium-202 100 Calciun>47 10 lodine-133 i
Radium-226 0.01 Dallium-204 10 Carbon-14 100 lodine 134 10 Rhenium-186 100 noriungnatural)'
100 Ceriunwi4 t 100 lodme-135 10 Rhenium-188 100 nuliurn-170 10 Cerium-143 100 Iridium-192 10 Rhodium-103m 100 nulium-171 10 Cerium-144 1
Indium-194 100 Rhodiun>105 100 Tin 113 10 Cesium 131 1,000 tron-5 5 100 Rubidium-86 10 Tin-125 10 Cesium-134m 100 Ircr>S9 10 Rubidium-87 10 Tungsten-181 10 Cesium-134 I Krypton 85 100 Ruthenium-97 100 Tungsten 185 10 Cesium-135 10 Krypton-87 10 Ruthenium-103 10 Tungsten-187 100 Cesiundl36 10 lanthanum-140 10 Ruthenium-105 10 Uranium (natural)'
100 Cesiunw137 10 Lutetium-177 100 Rutheniunw106 1
Uranium-233 0.01 Chlorine-36 10 Afanganese-52 10 Samarium-151 10 Uranium-234 0.01 Chlorine-38 10 hianganese-54 10 Samariunw153 100 Uranium-235 0.01 ChromiunwSI 1,000 Manganese-56 10 Scandium-46 10 Vanadium-48 10 Cobalt-58m 10 Mercury 197m 100 Scandium-47 100 Xenon-131m 1,000 Cobalt-58 10 Mercury 197 100 Scandium-48 10 Xenon-133 100 Cobalt-60 1 Mercury 203 10 Selenium-75 10 Xenon-135 100 Copper-64 100 Molybdenum-99 100 Silicon-31 100 Ytterbium-175 100 Dysprosiurn-165 10 Neodymium-147 100 Silver 105 10 Yttrium-90 10 Dysprosium-166 100 Neodymiunvl49 100 Silver 110m 1
Yttrium-91 10 Erbium-169 100 Nickel-59 100 Silver 111 100 Yttrium-92 100 Erbium-171 100 Nickel-63 10 Sodium-24 10 Yttriunw93 100 Europiundl52 9.2 h 100 Nickel-65 100 Strontiura-85 10 Zine-65 10 Europium-15213 yr i Niobium-93m 10 Strontium 1 Zinc-69m 100 Europiundl54 I
Niobium-95 10 Strontium-90 0.1 Zine-69 1,000 Europiundl55 10 Niobium-97 10 Strontiunw91 10 Zirconium-93 10 Fluorine 18 1,000 Osmium 185 10 Strontium-92 10 Zirconium-95 10 Gadolmium-153 10 Osmium-191m 100 Sulphur-35 100 Zirconium-97 10 Any alpha emitting radionuclide not listed above or mixtures of alpha emitters of unknown composition 0.01 Any radionuclide other than alpha emitting radionuclides, not listed above or mixtures of beta emitters of unknown composition.
0.1
' Based on alpha disintegration rate of 4 232, n-230 and their daughter products.
8 Based on alpha disintegration rate of U-238, U-234, and U-235.
NOTE: For purposes of $20.303, where there is involved a combination ofisotopes in known amounts, the limit for the combination should be derived as follows: Determine, for each isotope in the combination, the ratio between the quantity present in the combination and the limit otherwise established for the specific isotope when not in combination. He sum ofsuch ratios for all the isotopes in the combination may not exceed "1" (i.e., " unity").
- Current as ofJuly 1,1998.
/~
B-1
VALUE/ IMPACT STATEMENT A draft value/ impact statement was published with the draft of this guide when it was first published for public comment (Task DG 3002, January 1990). No changes were necessary, so a separate value/ impact statement for Regulatory Guide 3.66 or DG-3014 have not been prepared. A copy of the draft value/ impact statement is available for inspection or copying for a fee in the NRC's Public Document Room at 2120 L Street NW.,
Washington, DC, under Task DG-3014 or DG-3002.
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