ML20213E014

Consents to Transfer of All Ga Technologies Inc Licenses to General Atomic Technologies Corp,Per 860507 Application & 860617,0725 & 0910 Ltrs.Approval Contingent Upon Receipt of Amended Svcs Agreement Re Costs of Decommissioning

ML20213E014
Person / Time
Site:	07000734
Issue date:	09/28/1986
From:	Jennifer Davis NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS)
To:	Pritchard J WINTHROP, STIMSON, PUTNAM & ROBERTS
Shared Package
ML20213D997	List: ML20213D994 ML20213E014
References
NUDOCS 8611120371
Download: ML20213E014 (15)

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E' Yeg' NUCLEAR REGULATORY COMMISSION j

. e ivASHINGTOed. D. C,20$55 SEP ? 8 986 John F. Pritchard, Esq.

Winthrop, Stimson, Putnam *

& Roberts

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40 Wall Street New York, NY 10005

Dear Mr. Pritchard:

By application dated May 7,1986, as supplemented by letters dated June 17, July 25, and September 10, 1986, General Atomic Technologies Corporation

("GATC") requested the NRC's written consent to the transfer of control nf GA Technologies Inc. ("GA"), a wholly-owned subsidiary of Chevron U.S.A.,

Inc. ("CUSA"), to GATC. The consent sought would approve transfer of control of a Commission licensee, GA, and, indirectly, the control of numerous Comission licenses. However, in the case of all licenses currently held or applied for by GA (reactors, special nuclear materials, byproduct devices,

1. certificates of compliance, export and import), the licensee would remain unchanged. The request was made in order to formally close an agreement between CUSA and GATC for the acquisition by GATC of all of the outstanding stock of GA.

Because this office has responsibility for a major portion of GA facilities and there is more than one office at NRC which has responsibility for the requested consent, the Office of Nuclear Material Safety and Safeguards (NMSS) has taken

the lead in responding to the GATC request in the areas under the jurisdiction

' of NMSS, the Office of Nuclear Reactor Regulation (NRR), the Office of State Programs (OSP), and the Office of International Programs (IP).

NRR, having reviewed the reactor operating licenses for the TRIGA Mark I and Mark F reactors, and based on the representations in the GATC application, as

i supplemented, that there are ro anticipated changes in the operating and manage-- '

ment personnel, in the minimum qualifications or other requirements of personnel responsible for safety, or in the organization of GA, and that all reactor activities will be conducted in accordance with the reactor licenses and tech-t nical specifications, gives consent to the transfer of control of GA to GATC insofar as it relates to the two reactor licenses under the jurisdiction of NRR.

IP has reviewed the pertinent import and export licenses and applications and gives its consent to the transfer of control of GA to GATC insofar as it J

relates to the licenses and license applications under its jurisdiction.

NMSS has reviewed the special nuclear material and byproduct licenses, and ,

the certificates of compliance and associated q'uality assurance program (all under NMSS) and gives consent to the transfer of control of GA to GATC 8611120371 861002 PDR ADOCK 07000734

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John F. Pritchard, Esq. 2 l

insofar as it relates to the licenses and license applications in.the three l categories under the jurisdiction of NMSS.

3 These consents are granted-in accordance with Section 184 of the Atomic 1 Energy Act and appropriate portiens.of the Comission's implementing regula-tions, and the following conditions specified by OSP:

' (1) GA will submit to the Office of Nuclear Materials Safety and Safeguards (NMSS) copies of the GA/ Valley Pines Association (VPA) Services Agreement after it is amended to reaffirm VPA's obligation to pay the full cost of the Nuclear Fuel Fabrication (NFF) facility decomissioning; (2) GA will imediately inform USNRC Region V, if, at any time, GA becomes aware of changed circumstances which may have the effect of relieving VPA of its obligation to fund any portion of the decomissioning costs of the facilities described in the

.' current Decomissioning Plan.

It should be noted that, notwithstanding any contractual or other arrangements, the licensee is ultimately responsible for the decomissioning of all licensed facilities in accordance with the applicable regulations. It should also be noted that these approvals apply to the transfer of assets only and not to any subdivision of land currently subject to NRC licenses. Such land and facilities cannot be released for unrestricted use without NRC approval.

Sincerely,

&Y, N"'hw' hohnG. Davis, Director Office of Nuclear Materials Safety and Safeguards 4

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FIRST AMENDMENT E SERVICES AGREEMENT THIS FIRST AMENDMENT, dated as of h8' ,

1986, by and between GA TECHNOLOGIES INC.,.a California' corporation (hereinafter called "GA") , and VALLEY PINES

' ASSOCIATES, a-partnership organized under the laws of the State of California (hereinafter called the " Partnership"),

W I T N E S S E T H:

Whereas GA-and the Partnership entered into a Services Agreement dated aslof January 1, 1982 (the "Ser-vices Agreement") , under which GA furnishes certain services and facilities to the Partnership; and Whereas GA and the Partnership desire to amend the Services Agreement:

Now, Therefore, the parties agree to

[ amend the Services Agreement as follows:

1. Name changes. In view of the change in the name of Gulf Oil Corporation to Chevron U.S.A. Inc., all references in the Services Agreement to Gulf Oil Corporation and the defined term " Gulf" are hereby changed to Chevron U.S.A. Inc. and " Chevron," respectively. In view of the

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change in the name of Scallop' Nuclear Inc. to Scallop - ,

Corporation, all referenc2s in the Services. Agreement to

_ Scallop Nuclear Inc. are hereb'y changed to Scallop Corpo-ration. ,

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2. Clarification of Fort St. Vrain Obligations.

Section 2.02(b) of the Services Agreement is hereby amended so as to add the following to the end of such Section:

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"Under paragraph 26 of the Fabrication Agreement, PSC is obligated to reimburse the Partnership for part'of the costs of decontAmi-nating and decommissioning the nuclear fuel fabrication facility consisting of_that portion of ,

the-building on GA's premises commonly kgown as Building 37 and those items of machinery and equipment located therein that are or were used in s performing the Partnership's fuel fabrication duties to PSC (hereinafter called the "NFF Facility") unless the Partnership chooses to keep all or any portion of the NFF Facility open for ,

its own business reasons after PSC has notified the Partnership that it no longer desires fuel . ,,

fabrication services under the Fabrication Agreement. Accordingly, on notice by the Partner- ,

ship to GA, GA shall take one of the foliowing

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" (i) .GA-may decontaminate and decommission all of the NFF Facility. GA shall submit a plan for the decontamination and decommissioning for the, Partnership's review and approval prior to commencing work; provided, however, that such review shall be accomplished in a timely and expeditious manner, and such approval shall not be unreasonably withheld. The Partnership shall reimburse GA for the full costs (pursuant to Section 4.01) lof such decontamination and decom-missioning. It is understood that GA is entitled to make'an orderly shutdown of the NFF Facility, and provided that-the orderly shutdown is com-pleted within a reasonable-time (or such time as may be consented to by PSC without prejudicing the i- Partnership's reimbursement right), the Part-

nership will not claim that the orderly shutdown process constitutes GA's keeping all or part of the NFF Facility.open for its own business reasons. GA shall perform its duties in an orderly and cost-effective manner as required to decontaminate and decommission all areas of the NFF Facility to a level of decontamination com-mensurate with future conventional office building 4

use in accordance with all then applicable laws, regulations, policies and orders governing releases of nuclear facilities from existing

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,1 ' licenses. .Any costs of decontaminatibh and

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-decommissioning in excess of the.foreg6ing stan-dards shall'be paid by GA. The Partnership shall'

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-have the right but not the duty to participate in ,

', 'bA's decision-making processes concerning the T-decontamination and decommissioning. Upon the

completion)of the decontamination and decom-missioning, and without prejudice to GA's right to i  ; .,)

reimbursement under this clause (i) , GA shall have +

5 the right to'use Building 37tand the land thereunder.p s

" (ii) If GA' proposes to keep all or any 3,

portion of the NFF Facility open for its own/

business reasons after receipt of such notice, GA ,

shall notify the Partnership of GA's proposal.

.The Partnership shall have the right to approve p GA's proposal; provided, however, that the Part-nership shall nop unreasonably withhold its approval. For the Partnership's approval of GA's

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proposal, GA shall provide the Partnership with adequate assurance (concerning any necessary financial and technical capabilities) that the Partnership will not have to decontaminate and dec bmission the open portion of the NFF Facility at a later time. Without limitation, an agreement by PSC to assume the Partnership's obligation to la . s

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l decontaminate and decommission the open portion of the NFF Facility would be adequate financial assurance. Such assurance shall be provided from time to time'at the Partnership's request until such decontamination and decommissioning are completed. Upon the Partnership's approval of GA's proposal, the Partnership shall be relieved of its responsibility to pay for any of the decontamination and decommissioning costs associ-ated with that portion of the NFF Facility kept open. The decontamination and decommissioning of the open portion of the NFF Facility shall be-conducted in accordance with the standards set forth in. clause (i) by GA without cost to or reimbursement by the Partnership. 'The decontami-nation and decommissioning of the portion of the NFF Facility to be shut down shall be conducted in accordance with the standards set forth in clause (i) and the Partnership shall undertake its obligations with-respect to such portion as set forth in clause (1) .

"It is agreed that the Partnership's notice to GA as provided in this Section 2.02(b) shall be given on or before December 31, 1992, and if no such notice has been given, such a notice shall be deemed to be given on December 31, 1992."

3. Clarification of." full. costs." Section 4.01 of the' Services. Agreement is hereby. amended to read in its entirety as.follows:

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" (a) The Partnership shall reimburse GA for all full costs properly recorded on the books of GA and reasonably incurred by GA in rendering any services'and furnishing facilities requested-by the Partnership hereunder. Full costs will include all direct costs, indirect costs, overhead costs, incidental expenses and full allocated general and administrative expenses as heretofore calculated by GA for its commercial business in accordance with its project cost accounting

. manuals and procedures in effect with respect to GA's customers generally at the time such costs are incurred. In addition, full costs shall

include recognition of the interest cost to GA in furnishing working capital for the performance of the services to the Partnership hereunder, such j

costs to be calculated by applying the prime rate from time to time in effect as publicly announced by Morgan Guaranty Trust Company of New York from the date such costs are incurred on a cash basis to the date of invoice or, in lieu thereof, the Partnership shall have the right to make working i

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Ecapital directly available to GA for.the perfor-mance of the Partnership's obligations hereunder.

" (b) LExcept as otherwise permitted by subsection 4.01(c), if any portion of full costs payable for any period after the date of this Amendment consists of depreciation, occupancy or i similar costs with respect to assets that were owned or used by GA prior to the date of this ~

Amendment, such depreciation, occupancy or similar costs shall be-calculated on the same basis as in the past,-regardless of any changes in the owner-ship or use arrangements involving such assets.

By way of illustration, where such costs have previously been calculated using a depreciation formula based on the historical cost of GA or GA's predecessor, they shall continue to be so calcu-lated, even if the assets in question are sold to another party and leased by GA.

"(c) Notwithstanding subsection 4.01(b) , the depreciation, occupancy or similar cost component of full costs may be calculated on a different basis from that required by subsection 4.01(b) if 4

and to the extent that 4

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"(i) GA obtains PSC's advance agreement that_such different. basis is an appropriate method of calculating the amount ithat is.

reimbursabl,e'by it under Section 25 of the

-Fabrication Agreement; and

" (ii) the amount by.which the full costs

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that are payable to-GA by the Partnership hereunder exceed the reimbursement that PSC is required to make under Section 25 of the Fabrication Agreement shall not be greater than the amount of such excess that would exist if calculations were made strictly in accordance with subsection 4.01(b).

"The Partnership shall have no obligation to request PSC to agree to any modification of the kind contemplated by this subsection- (c) ."

4. Termination. Article VIII of the Services l

l Agreement is amended in its entirety to read as follows:

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"Section 8.01. Termination without default.

Except for the services described in Section 8.03, i this Agreement shall automatically terminate upon I

termination of the Partnership Agreement at the i

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s initiative (other'than in the case of a default of Chevron) or with the. consent of Scallop.

"Section 8.02. Termination of fuel fabrica-tion services for nonperformance.

"If GA defaults on its obligation to perform the fuel fabrication services required under Section 2.02(b), the Partnership, without prejudice to any other remedies the Partnership may have, may terminate such services by giving notice to GA. Upon any such termination, PSC and the Partnership shall each have the right, but not the obligation, to use the NFF Facility to arrange for the continued manufacture of nuclear fuel elements for the Fort St. Vrain plant through December 31, 1992. On request by PSC or the +

Partnership, GA shall provide them or their substitute contractors with access to and use of the NFF Facility, and shall supply any of GA's equipment, materials (excluding special nuclear material) and know-how that is needed for such continued manufacture. This commitment by GA shall cover only facilities, equipment, materials and know-how maintained or used by GA for Fort St. Vrain fuel fabrication. In the event that PSC or the Partnership assumes responsibility for the v-l manufacture of nuclear fuel elements pursuant to j this Article VIII, GA shall~ grant a royalty-free license to PSC, the Partnership or their substitute contractors to make nuclear fuel for Fort St. Vrain until December 31, 1992. In the event that PSC assumes responsibility for such manufacture, GA shall bill PSC for GA's costs incurred in providing such access, use and supply; in the event that the Partnership assumes responsibility for such manufacture, GA shall bill the Partnership for such costs. In either case, and without prejudice to any right of setoff the Partnership may have, the sole responsibility of the Partnership shall be to transfer promptly to GA any funds received by the Partnership from PSC in consideration of GA's costs pursuant to the Fort St. Vrain Nuclear Fuel and Fabrication Agreement dated as of January.1, 1979 between the Partnership and PSC.

"Section 8.03. Decontamination and decommis-sioning.

"Notwithstanding the termination of this Agreement or of the services described in Section 2.02(b) (including pursuant to a default as contemp ated by Section 8.02) GA shall undertake

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'the decontamination and decommissioning of the NFF Facility in-accordance with Section'2.02, and the Partnership shall reimburse.GA for the' Partner- -

ship's, share of the full costs thereof?as set ,

-forth in Section 2.02(b). GA and the Partnership acknowledge that the'NFF Facility.and the remainder of the premises on which GA conducts its business were constructed and used during periods prior to the time they were owned by the Partnership. The Partnership's obligation to reimburse GA under this Agreement shall not impair or prejudice the rights of the Partnership to seek indemnity or contribution, and to implead other I ~

parties, in the event that government authorities

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seek to require the Partnership to undertake duties with respect to decontamination and decommissioning of the NFF Facility.

Notwithstanding the Partnership's reimbursement of GA hereunder, the Partnership shall have a right of contribution from GA for any significant additional decontamination and decommissioning costs resulting from any use of the NFF Facility

{ after the date of this First Amendment other than pursuant to the terms of contracts in effect on the date of this First Amendment, except to the extent that the Partnership has been reimbursed for such additional costs by PSC."

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5. Use of NFF Facility. Any use of the NFF Facility between the date of this'First Amendment and the date of completion of the Partnership's obligations under the Fabrication Agr,eement for purposes other-than performance of the Fabrication Agreement or performance of

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other contracts in effect on the date of this First Amendment shall require the review and consent of the Partnership. Such review shall be accomplished in a timely and expeditious manner. Such consent shall not be withheld if no significant additional decontamination or decommissioning costs'are likely to result from such use, and such use is not likely to interfere with GA's performance of its fuel fabrication obligations in favor of the Partnership.

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6. Continuation. Except as expressly' modified in this First Amendment, the terms of the Services Agreement shall continue in full force and~effect.

IN WITNESS WHEREOF, GA and the Partnership have entered into this First Amendment in-duplicate as of the date first above written.

GA TECHNOLOGIES INC. VALLEY PINES ASSOCIATES By CHEVRON U.S.A. INC.,

By General Partner

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By SCALLOP CORPORATION, General Partner By A Date

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