ML20236R764

Forwards Copy of Recently Approved Regulation in Fr Which Permits Colleges & Univs to self-guarantee Decommissioning Costs,If Certain Criteria Are Met.Informs That Present Ltr of Credit Must Be Used If Licensee Cannot self-guarantee

ML20236R764
Person / Time
Site:	05000134
Issue date:	07/16/1998
From:	Michaels T NRC (Affiliation Not Assigned)
To:	Cucinotta S WORCESTER POLYTECHNIC INSTITUTE, WORCESTER, MA
References
NUDOCS 9807220260
Download: ML20236R764 (15)

Text

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,4 UNITED STATES s

j NUCLEAR REGULATORY COMMISSION 4'

WASHINGTON, D.C. 20666 4 001

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July 16, 1998 Ms. Sylvia Cucinotta, Associate Treasurer Worcester Polytechnic Institute 100 Institute Road Worcester, MA. 01609-2280

SUBJECT:

FINANCIAL ASSURANCE FOR DECOMMISSIONING

Dear Ms. Cucinotta:

Enclosed, please find a copy of a recently approved regulation in the Federal Reaister, (63 FR 29535, June 1,1998), which permits colleges and universities to self-guarantee decommissioning costs, if certain criteria are met. The criteria are on page 29542 under Appendix E to Part 30, items I, llA, and llc. Also, the requirements in item lli, "Self-Guarantee" needs to be complied with as needed.

It has come to our attention that your Letter of Credit with the Fleet National Bank will not be renewed based on a letter from the Nuclear Regulatory Commission (NRC), George Pangburn to Jon C. Strauss, March 12,1998, which noted that you no longer needed financial assurance for a material license with the NRC because the materials license was being transferred to a Massachusetts State license. However, the letter of credit covered

.both the research reactor and the material licenses, and, therefore, should not be cancelled in its entirety but reduced by the materials license decommissioning costs, if you cannot self-guarantee under the new rule, you must continue the present letter of credit, establish a new one, or use one of the other assurance mechanisms allowed in 10 CFR 50.75(e). Please inform us of your decision and provide assurance that the letter of credit is still in effect, or that another mechanism has been implemented. A letter from the bank which includes the letter of credit would be needed.

If you decide to self-guarantee, please provide which criterion you are using and the background to support this criterion. Also, a corporate officer has to provide the information required in Appendix E to Part 30, item lilD, of the new regulation.

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l Please respond to the course of action you will take along with the supporting documents l-within 30 days of the date of this letter. If you have any questions, please call me at (301) 415-1102.

Sincerely, Original Signed By:

Theodore S. Michaels, Sr. Project Manager Non Power Reactors and Decommissioning Project Directorate Division of Reactor Program Management j

Office of Nuclear Reactor Regulation Docket No. 50-134 l

Enclosure:

As stated cc: See next page f

l DISTRIBUTION:

HARD COPY ENIAll COPY wDocket File _50-134.3, AAdams WEresian PUBLIC CBassett, Rll SHolmes L

PDND r/f TBurdick, Rill Pisaac l

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2 Please respond to the course of action you will take along with the supporting documents within 30 days of the date of this letter. If you have any questions, please call me at (301) 415-1102.

Sincerely, Original Signed By:

Theodore S. Michaels, Sr. Project Manager l

Non-Power Reactors and Decommissioning Project Directorate Division of Reactor Program Management Office of Nuclear Reactor Regulation

' Docket No. 50-134

Enclosure:

As stated cc: See next page i

DISTRIBUTION:

HARD COPY EMAIL COPY Docket File 50-134 AAdams WEresian PUBLIC CBassett, Rll SHolmes PDND r/f TBurdick, Rill Pisaac SWeiss -

PDoyle TMichaels TDragroun EHylton MMendonca RWood, PGEB

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'RWood SWeiss 7//p98 7// /98 7//f/98 7//[p/98 OFFICIAL RECORD COPY DOCUMENT NAME: G:\\SECY\\MICHAELS\\FINANASS.WPD

M' Please respond to the course of action you will take along with the supporting documents

- within 30 days of the date of this letter. If you have any questions, please call me at (301)-

415-1102.

Sincerely, 1 M' Theodore S. Michaels, Sr. Project Manager l-Non-Power Reactors and Decommissioning Project Directorate Division of Reactor Program Management Office of Nuclear Reactor Regulation Docket No. 50-134

Enclosure:

As stated cc: See next page l

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Worcester Polytechnic Institute Docket No. 50-134 l

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- Francis J. McGrath City Manager Worcester, Massachusetts 01608 Office of the Attorney General Environmental Protection Division 19th Floor.

One Ashburton Place Boston, Massachusetts 02180 Department of Environmental Quality Engineering

.100 Cambridge Street Boston, Massachusetts 02180 Dr. E. Thomas Boulette Mechanical Engineering Department Worcester Polytechnic institute 100 institute Road Worcester, MA '01609-2280

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Fed:ral Regist;r/Vcl 63; No.104/ Monday, Juns 1,1998/ Rules and Regulations 29535

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Committee's recommendation, and '

Materials Safety and Safeguards, U.S..

Background

• 1 otherinformation,it is found that-Nuclear Regulatory Commission. -

L Bnalir.ing the interim final rule, without Washington, DC 20555-0001, telephone

. On December 29,1993 (58 FR 68726)"-

change, as published in the Federal (301)415-6203, e-mail cwpenrc. gov.

as corrected on Janu 12,1994 (59 FR 1618),the NRC ubl ed a notice of Register (63 FR 11585; March 10,1998) - SUPPLEnsENTARY INFOM4AT10N:...

final rulemaki that allows financially g

will tend to effectuate the declared Licensees subject to 10 CFR parts 30 stron corporations with A or better 3

policy of the Act.

40,70, and 72, whose operations

' bond tings the option of usin guarantee as a mechanism for.g self-2D List of Subjects in 7'CFR Part 989 involve the use of substantial amounts.

3 Crepes, Marketing' agreements, of nuclear materials, and those subject comp! g with the regulations on '

Raisins, Reporting and recordkeeping to 10 CFR Part 50 who are a plicants ;- finan assurance for requirements.

for, or holders of, operating imnaes for ! decommissioning. Self-guarantee was

~ production or utilization facilities must added to the list of financial assurance-PART 989--RAISINS PRODUCED

- Provide financial assurance for -..

mechar. isms as a cost-saving option for '

)

FROM GRAPES GROWN IN decommissioning funding by selecting licensees that are able to meet the from a variety of mechanisms: surety,, strin ent financial test...

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CALIFORNIA

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bond or letter of credit, p payment,.

NRC's decision to add self-..

Accordingly, the interim final rule ~

insurance, e external si g fund guarantee to the list of approved amending 7 CFR part 989 which was coupled with a surety or insurance.t rinancial assurafice mechanisms for y

published at 63 FR 11585 on March 10, parent company arantee for licensees qualified licensees came in response to 1998,is adopted as a final rule without that have a quali g corporatepamnt, a petition for rulemaking Sled by -

change.

and, for certain financially strong General Electric and Westinghouse-Dated: May 26.1998.

corporations, self-guarantee. A (PRM-30-59. Notice of receipt Robert C. Kammy, statement ofintent regarding obr =Ining published September 25,1991 (56 FR DeputyAdministator. Fruff and Vegetohle funds to satisfy decommissioning. s,.

48445)). The petition presented a case j

Pmsmms.

obligations may be used by some for allowing self-guarantee as a cost-l (FR Doc. 98-14422 Filed 5-29-98; 8:45 ami licensees that are governmental ent'ities saving option for corporate licenroes (for exampf ub c universities whose that ar, able tti pass a stringent financial

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charter pro for a direct link to the test..

Su uent to the December 29,1993, p

State Government).

n.

.. final rul, tfie Commission initiated a l

NUCLEAR REGULATORY To date self guarantee has not bEen available to nonprofit Ilcensees such as stud to determine whether criteria hospitals and universities, or to for, coul be developed and a plied by NRC D-10 CFR Ports 30,40,50,70, and 72 refit licensees who do not issue bonds, fw nonprofit licensees an non-bond-use the financial test for self.

lasuing commercial licensees to use self-RIN 3150-M64 guarantee uses the rating of the bonds.

guarantee while maintaining the Self-Guarentee of Decommiseloning O.', U", "'"g*'

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mmissi r Funding by Nonprofit and Non M I'*"I"8 ability to fund decommissioning.

funds wh.en needed, h study.

'Ibe NRCis extending the use of self - " Anal sis of Potential Selff.,uarantee AGENCV: Nuclear Regulatory ~ **

Tests Demonstrating Financial guarantee, reviouslylimited to bond.

Commission.

issuing in ustrial corporations, to.

Assurance by Nonprofit Co and v

d as y

AcnoN: Final rulee additional cat'egories of quali5ed.

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sunesAny:N Nuclear Regulatory S$$

1f t this Bonds." NUREG/CR-6514 8 Qune 1997),

Commission is amending its regulations extension can be made without identified a vari of financial critaria to allow additional materials licensees and non-electric utility reactor licensees jeopardizing the present high level of,

that could be opp ed to additional financial assurance thatthe ca wies of Hansees regarding de use D

who meet artain financial criteria to a-ca==issio obligation ulrea.

of f-guarantee.b fia=act 1 criteria self-guarantee funding for Allowing qualift nonprofit d non,

in els mle wem selecteny se NRC decommissioning. Certain commercial bond-fasuing licensees to self-guarantee - based on inimmation in &is mportq corporate licensees who issue bonds am r

will redum the costs of complying with. Public th====ts on the F. _, _ M Rule

{resenti allowed to self-guarantee NRC Enancial assurance requirements.

' b NRC ublished a notice of ~

ding they meet stringent Bnancial for thoes who most the speci6ed '

a f6$ posed ru emaling on April 30',1997, criteria.

• Ibis rule allows nonproSt.

. criteria. -

licensees, sucfi as colleges, universities.

FR 23394). In response to this p,

and hospitals, as well as some -

notice 16 comments were received: 2'

-. re

. pore sat,o so cra so.rsteXs). en elearse commercial licensees who do not lasue etnity a,e esisfy the ' -

from States,6 from colleges and bonds. to self-guarantee funding -.

esquirements with an external sinung'lund, s.-- fundtas

. universities 3 g,,m associations, {ggm 1

gancialcriteria. Allowing additionalvided they meet similarly stringent', @, g h Q,d*"g"'gl"-

e sinsupies ne svenebb fmm b NRC F

y.

Nouco d rmpmed matemauns that addreses contea. copia.m evanebie et current reta imm qualified licensees to use self-guarantee d.v.--i-ioning funding amurence insam the u.s. co,wnmani printins oeice. P.O. som reduces licensee costs while providing eseacleted with electric suilty notructurlag (see 37042, wmhington, DC 2o4o2-e32s (wiephone.

adequate assurance that funds for

""""" ^""'*"" "*4"I""**'8 8'r (2o2) s12-224Q or han the Neuonal hchnical g

decommittioning will be available Decommissioning Nuclear Power Reactors-.62 FR Information Service writing NTIS at stas Port when needed.

ersea. September 10.toer). As of tble Roya: Road. Spring VA 221s1. copise are proposed rule, the Nac is cones amending its avallebte er ia.ielon or copyins kr a fee imm EFFECTIVE LATE: July 1,1998*

denniaan d elaaric utiuty" and claruying the

% sha NRC Pubhc Document Ramn at 2120 f. Stmet FOR FURTHER INFOMsATION CONTACT Dr.

distinction between financial assurance NW washington. DC: the PDR's mailing addreas is

- rhanisme opptimble to andnon-powerreactariv powerreactorlicene e.Mail stop LL-e. washinston. Dc tosss-ooot:

Clark Prichard, Office of Nuclant

--es.

telephone (2o2) s24-3273: fax (to2) as4-as43.

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29536 Fedeal Rep. ster /Vol. 63, No.104/ Monday, Juns 1,1998/ Rules and Regulations private corporations,1 from a hospital, reasonably assume that such a college or extrapolate these extraordinary returns and 1 from 6 United States university can be allowed to self-into the future and to oudget Enrichmertt Corporation. De

, guarantee for the costs of,

endowment spending accordingly.

c mmenters all supported the extensformdecommissioning because it possesses However, in this context it is instructive of self-guarantee to qualified nonprofit sufficient financial strength to obtain to note that for a representative group of and non-bond. issuing commercial the necessary funds when they are institutions, the average annual real licensees. Although some commenters needed.

retum after spending for the 10-year urged NRC to adopt the proposed rule Even assuming the prenilse of the period ended June 30,1994, is 4.1 as written, most favored some type of commenter, NRC does not believe that percent, but for the 20 years ended Juna reducing the multiple to 15, as the 30,1994, it is 0.9 percent." (1994 change to the fMancial criteria.

commenter suggests,is desirable.

NACUBO Endowment Study, National f, Financial Criten. for Colleges and Although a real rate of return of 3 Council of College and University o

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Univenities percent may appear low under the Business Officers 1995, p. 4) ne financialiest criteria proposed for market conditions prevailing during Therefore,the NACUBO study colleges and universities were an A or certain periods, there is a substantial recommends strongly that institutions better bond rating or, for those not '

body of empirical evidence indicating kup their spending from endowment hsving a bond rating, unrestricted that it is a reasonable assumption. If a below the rate proposed by the end:wment of at least $50'million or 30 licensee who has been relying on a self-commenter. The report states that:

times projected decommissioning costs. guarantee is required to fully fund a Historical pacedent indicates that a fund whicheur was greater.Here were no trust fund for decommissioning in the invested approximately so percent in

. comments regarding the A or better year before the beginning of domestic and fonign stocks. 30 percent in bond rating.but several commenters decommissioning, and the licenses fLxed income, and to percent in various other objected to the non-bond criteria as too relies on earnings from endowment to asset classes inevitably experiences recurring conservative. '

create the trust, it is the annual earnings periods of absolute decline in market values Comrnent: A commenter stated that of the endowment for the year over 3 years. Such a decline would trigger a the selected multiple of 30 times immediately prior to the mducen in spediry8pemling a Axd for an insutu@n decommissioning costs is excessively decommissioning that must equal tim '

8 tick!"8t*fcyo H

ennsarvative. NRC's basis for the 30 required amount. NRC has reviewed the

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ma ket nt n * * ' F ns al multiple is that an amount of money 30 information pmvided in Ibbotson times decommissioning costs invested Associates. Stocks, Bonds, Bills, and year 1994, the averase endowment spending rate sported by responding institutions is 6.0 at 3 percent would yield an annual.

Inflation 1995 Yearbook,1995, which percent. On average, the smallest am unt sufHcient to fund those costs.

published a summary of market results endowments (525 million and less) spent b commenter said that it should not for the 69-year period from 1926 to 1995 more (7.2 percent) than the largest (4.5 be difHcult to obtain secure investments for fin categories of investments: small percenti, and public institutions spent more yi:Iding 6 percent; thus an appropdate company stocks, large company stocks, (s.s percent) than private institutions (5.7 multiple would be 15 based od long-term government bonas, long-term percent) * *

• With the sole exception of the 1: vestment yield.

Y corporste bonds, and intermediate-term 4.5 percent spent by the largest universities, Response: NRC's objective in selecting ent bonds.

the8e 8pending rates are not compatible with financial criteria was to provide a level On year-by-year basis, lass dsky.

m 88 in8tituhns' stated intention to presaw of financial assurance risk similar to the investments, such as treasury bills, her th Ffble( ifBcht,bu financial assurance risk in the existing showed the most frequent positive possible) for the exceptionally well-managed' poss self-guarantee. Howewr, for colleges returns but their annual returns also institution to spend 6.o percent of a 3-year and universities that do not issue bonds,' were re,latively low. Riskier Investments roovin6 everage of endowment market values, lack cf appropriate data on default risk showed a broad distribution of retums, and still preserve purchasing power.

made a financial assurance risk analysis fmm very good tosvery poor. Overall, However, it is courting disaster to spend at ~

impossible.For these licensees NRC however, with tlm exception of small en annual rate of s.o percent toward the tail deliberately chose financial criteda -

and large corapany stocks, the average, end of a long bull market. (1994 NACUBO which are conservative.

Inflation-adjusted earnings (geometric Endowment Study 1995, p. 5)

NRC did state in the preamble to the mean) for these categories of Based on these considerations, the pmposed rule, at 62 FR 32206, that investments were less than 3 percent. In NRC continues to believe that a

"[the multiple of 30 has been chosen a number of years, earnings for stocks relatively conservative criterion, such as because this would mean that any level also were less than 3 percent. Thus, real the 30 times requirement.is a of decommissioning costs could be investment returns over a one-year reasonable critadon for the covered by the annual retum on an

' period may not even match conservative decommissioning self guarantee test for 3

endowment invested at 3 percent."

eamings assumptions.

colleges and universities. The NRC does j'

However,it is important to note that The study of endowment sponsored '

not accept the commenter's NRC was not assuming (1) that by the National Council of College and recommendation to adopt a I

Institutions willin fact finance "* University Business Officers (NACUBO) substantially less stringent criterion.

decommissioning out of endowments, - published in 1995 also emphasir.ed a Comment: A commenter objected to I

(2) that endowments can be expected in - concern for this earnings variability in. the requirement that unrestricted 5

cll circumstances to grow at a rate of at its analysis of college and university endowment be at least $50 million or at f

lea 13 percent annually; or (3) that endowment investment. First, least 30 times the decommissioning cost

,J.';

institutions can be expected to NACUBO's study noted that current estimate, whl hever is greater. The.

reallocate up to 3 percent of their high rates of return cannot be eicpected requirement should be compliance with g

spending from endowments in a one-to continue indefinitely. "At a time either the $50 million figure or the 30 year period. Rather, the criterion was when many public and private q

times decommissioning cost estimate, selected to serve as a measure of the institutions are searching for ways to but not whichever is greater.

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everall financial strength of the bridge the gap between revenues and,

Response: As previously stated, NRC fastitution, indicating that NRC can, expenditures,it is tempting to chose conservative financial criteria for d

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,f Federal Register /Vol 63, No.104/ Monday, Jun31,1998/Rults and Regulations 29537 Q

S..

non-bond-issuing colleges and up front even though da===l== toning ' decommissioning cos sl was excmdvoly

(.

universities,' aimed at assuring the activities are not completed within a. ' conservative. It appears to aflect an

.i Anancial viability of a licensee quali8ed single year. For this reason NRC's..J expectation that the decommissioning to self-guarantes. His is the only critada for determining whether & " '

will take a short time wheroes a realistic n

requirernent that would apply to non-licensa should be allowed to self.'

- time frame should be 2 years or more.

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bond lesuing colleges and universities., - guarantee the costs of dara==I= toning NRC should consider whereas non-bond issuing hospitals or must consider the possibility that the ' less to be appropdate.

commercial licensees would be subled ; licensee will be required to fully fund,Re po> nw:ne mquirement that to multiple Anancial ratios as Baancial deco==laaloning in b s

tests. It is designed to capture two immediately prior to the of.

hospital operating revenues be at least -

measures of Anancial viability:(1)..

deco==Ia=IonIng activitim. &

100 times decommissioning costs is a overall Snancial strength and (2) licensee would fund a standby trust i.f criterion that NRC is proposing to use to St,ancial strength mistive to sias of either (1) the licenses nolonger determine whether a licensee has f decomrnissioning obligation.N ' J' qualines to use the self guarantee to,

sufBcient Annarial strength to self-overall flamarial strength of an.

.1 provide Ananetal assurance for guarantee. However, a potential * * *,

Institution is heavily dependent on the. decommissioning even ifit was not yet consequence of self-guaranteeing could size ofits unrestricted endowment.

required to conduct decommissioning...be b need to fully fund a trust fund la Specinc ability to fund or (2) a limnase using's self-guarmata ' a short period of time if the licensee decommissioning expenses is measured by the retto of unrestricted endowment is required to cany out meses to be capable of passing the self-decommissioning. NRC currently'does guarantee test orif deca==l==ioning to decommissioning costs. A namarial not allow licensees to consider the.

must be carried out. As discussed above, test based only on ratio to decommissioning cost might allow an impact of earnings during the " payout" the opersting mvenues multiple institution without adequate Anancial period (the period during which funds criterion does not reDect any am being expended from the Ananaal expedation can-ning thelength of strength to ifits dara==lasianing assursace standby trusticpay for time durin

. A test based only on the decommissioning) in calculating the.

will occur.g which decommissioning costs were brefore, NRC does not slas of the unrestricted endowment -

amount of funds that must be set aside accept this ma=ad=Han might be inadequate for those for decommissioning, hmfom, the t'n O A===anter found the lastitutions with the highest decommissiming costs. Both threshold NRC disagrees with the co===asar's.

rationale that requires hospitals to meet requirements are needed_to provide suggestion that the expected duration of all four Snancial ratios tests unclear..

assurance that an lastitution can meet aara==t=laning activities should-his en=manter believed that using '

apply to the determination of the decommissioning obligations when -

only b operoung revenues /

p ry.

appropdate multiple.

Comment: A ra===near :=ra===ad' decormuiMoning costs rado would vide hie N

le a

p 3

ty to provide missi t e o and imfd frominvestmentlies that dacaamissioning cats m investment yields over 2 to 3 year period. However, yields over a 1-pa rather than 1 1 the multip Hon Response:b Ramarlai retics test for e

it is mm.

factorIbel uced from 30 to 10 with.

hospitals.in the rule was arefully realistic to assume that any selected to provide a level of Baancial g

vetism?

dara==issioning activities wherd -

"'"[ esp,o,n,s,e,:,For the reasons statN inassurance risk similar to the Roancial -

Ramacial assurance arrangements are involved will utre considerable responses to the preceding ca=-ts,.

assurance risk in.the existing self,

coordination wi regulators and NRC does am acmpt thh

.n

. guarantee.b four ratios in.

Snancial services involving 2 or 3 years. ' recommendation.m,.

l.,,

combination represent the Anancial test to cornplete. His consideration also

2. Financial Criterid for Nospitals, that best echieves this goal. A Snancial test using just one of these ratios would implies that the appropriate multiple b Anancial test criteria proposed for not represent the same level of risk and -

should be 15 rather than 30..

hospitals was an A or better bond reting would not provide an adequate level of.

Response:NRC recognises that decommissioning may occur over a or, for hospitals not having a band Anancial assurance. Using only the ratio period I than one year, n' g oung, a Anancial ratios test consisting ofopereung revenues to.

r of the following:(current assets aEddecommissioning costs would -

. multiple o 30 was chosen without (a)1.lquidity-regard to how many years it would take depreciation fund, divided by current -

completely ignom such determinants of to decommission a facility. De liatulities) greater than or equal to 2.55.

Enancial strength as liquidity commenter is attempting to make this (b) Not Revenue-(Total revenues less indebtedness andprofitability.N linkage the key factor in arrivin t

fi ancialtest med for bond-issui appropriate multiple. However,g at an' otal expenditures divided by total following this line of. - -- tat..... revenues) greater than or equal to 0.04.

commerciallicensees inc des severs (c)1. _,,. lLong term debt divided raum, nm jmt oneme non4ond

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stretching out the time length of.

by not Exod assets) less than,or equal to f anancial test for colleges and decommission would imply ever o.67.

universities does use a single ratio, but decreasing multi los..

(d) Operaung Revenues n't least 100

'it is the retto of unrestricted endowment NRC's objectiv is to ensure that decommissioning will take place on a. times decommissioning costs.

to decommissioning costs. Unrestricted There were no comments regarding' endowment is a fund readily available timely basis. N financial assurance the bond rating criterion but there were to meet decommissioning expensesc mgulations are intended to assure that several comments on the non. bond.

Hospital operating revenues are l

inadequate funding does not prevent criteria.,

different because these funds may not timely decommissioning. Timely Comment: A commenter believed that.be readily svallable to meet decommissioning may require that all the. selected multiple of 100 thospital decommissioning expenses due to other decommissioning funding be available operating revenues at least 100 times

, hospital costs.

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__ l 2'9538 Federal Register /Vol. 63, No.104/ Monday, June 1,1998/ Rules and Regulations

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3. Prohibition on Using o Guarantee in rating, despite declines in the financial accounting principles to assess Combination With AnotherFinancial a condition of the issuore compliance with a financial test D* Problem with an insured bond designed using U.S. GAAP. Finally, the Assurance Mechanism from the standpoint of financial present finandal assurance regulations Comment:Some commenters noted assurance is that there is no criterion by allow the use of a broad range of that provisions in 10 CFR 30.35(f)(2),

which NRC can identify when a financial assurance mechanisms in part 40.36(e)(2), 50.75(e)(2)(ill), 70.25(f)(2),

licensee / issuer no longer qualifies to to ensure that licensees that are unable and 72.30(c)(2) Provide that neither a self. guarantee. no bond can retain its to use a particular mechanism have

, Parent company guarantee nor a high rating des ite a decline in the '

ohr alternatives available. NRC does not expect firms to change their toe a

m finandal stren of the issuer.

accounting practices in order to make d

Furthennore, e insurance coverage methods to satisfy financiay assurance provided by the bond insurer, which is use of the financial test because a P nd d.

number of other options are available.

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th

. want o kn w t asons ese

6. Financial Criteria for Non. Bond.

Response:%is rule makes no change sa,g g,,a,,, R,gg,ey, gag,,,$g; ang issuing CommercialLicensen restrictions. '

5g,,,,,

nd souru of in the s1 endy existing prohibition h,,, ding for decommtmaloning. NRC doesThe financialtest proposed for ncn-against combining a parent or self-not agree with the commenter's bond issuing commercial licensees was:

guarantee with anotherptoffinancial suggestion that it accept ratings on (a) Cash How divided by total assurance marhaniam-os issue of insund bonds as an acceptable criterion liabilitlos greater than 0.15.

(b) Totafilabilities divided by not whether w not to a!!ow such a for self-guarantee.

combination is broader than the focus of worth less than 1.5.

this rule.%e NRC has limited

5. Requinsments for Financial (c) Not worth greater than 310 million

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or atleast to times decommissioning experience with parent and self-guarantee to dete. It is expected that the Comment:Some commenters objected costs, whichever is greater.

Comment: A commenter objected to NRC will periodically reevaluate its -

to the proposed requirement in the not worth criterion of not worth Anandalassurance program in the Appendices D and E to to CFR Part 30 future and could r====aan the need for that licensees must conduct accounting greater than 310 million or at least to times estimated decommissioning costs.

the prohibition.

by U.S. generally acceptid accounting his discriminates against well-funded Principles (GAAP). %1s does not recognize the increasingly multi.

smaller firms that could easily self-

& Insured Bond RaU"8' Comment:Some commenters objected national nature cf materials licensees.

guarantee smaller decornmissioning t3 the proposed financial criteria which Foreign ownership of major material projects,but could not meet the $10 ded with bond ratings. As proposed, for licensees is cunently a reality (e.g.,

million not worth requirement.

Institutions that issue bonds, only a Siemens, ABB, Framatome) and can be Response:ne NRC's objective in bond issuance that is " uninsured" may ed to increase in the future.The setting financial criteria for non-bond-be used: an " insured" bond rating se on of accoundng practices to be issuing commerciallicensees was to would not be eligible. %e justification. used is a significant corporate decision make the finandal assurance risk of for this limitation is not warranted anected by many factors. It is these criteria equal to the financial because bond insurers evaluate the unrossonable to requim that to assurance risk of the financial criteria practices of ms}or multi.natio finns for licensees that issue bonds (estimated financial condition of the prospective '

issuers and avoid issuing policies to be changed for a licensee to be allowed to be approximately 0.13 percent per universities that are not creditworthy.

to provide self-guarantee of ysar). According to the analysis of Consequently, the presence of bond dam==1ssioning funding.%e rule potential Snancial criteria carried out as insurance indicates that the issuer is in should allow licensees to certify part of the proposed rule, the financial sound financial condition.

adequate assurance that funds will be criteria in the proposed rule meet this Response: Bond insurers evaluate the available by using other recognized and objective.8 Firms with smaller net worth financial condition of the issuers of the - acmpted accounting principles.

heve a larger default risk than larger bonds at the time the debt is insured.

• Response:Financialstatements firms.nus,the $10 million not worth Bond rating agencies, such as Moodys.

prepared in accordance with foreign requirement is an essential part of the and Standard and Poors, typically acccunting principles rather than U.S.

overall financial test. The NRC has

- assign such bonds a triple-A rating GAAP pose two problems from the retained this requirement in the final standpoint of a financial test for self-rule..

because of the insured status of the band.

guarantee. First, the financial test was

7. &comnJssionm.g Cost Esumdes NRC's concoms with accepting developed based on an analysis of

- Comment: Several commenters raised insured bonds as a criterion of Anancial financial data for U.S. firms.

assurance arise from the possibility that, Consequently, the Anancial test criteria ' the issue of how decommissioning costs over time, the insured bond rating could. may not be applicable or effective when were estimated. ne NRC should a

mask adverse changes in the financial used in conjunction with financial data encourage best available information condition of the bond issuer aner the that were prepared in acx:ordance with estimates of decommissioning costs, debt has been insured.The rule foreign accounting practices. Second,

. based on historic plant experience in includes a requirement that the licensee allowing firms to rely on financial decommissioning and renovation, rather must ascertain whether it continues to statements prepared according to than commercial estimates by pass the Anancial test for self. guarantee accounting principles in use in thei; contractors that tend to be too high.

every year. Furthermore, if the licensee own country could place a heavy as longer meets the test criteria, it must administrative burden on NRC. Tha

" Analysis of rotential seltcuarante. Tu ts for N

i notify NRC and establish alternative examples cited by the commenter, for co W N8$s fbProSt fin:ncial assurance. However, insured instance, might require NRC to know Business Finns That Do Not Issus Bonds." NUREG i:

bonds would continue to hold their and apply German, Swiss, and French' cx-este, p. 4.7, June test.

g t

Q

[

Feder:.1 Regist:r/Vol. 63, No.104/Mondry. Juns L 1998/Rul:s end Regulatfor.s' 29539 s

Conservative assumptions, such as use adopt the essential objectives of these '

CFR Part 76). USEC stated that kt wou of rates charged by contractors and high sections in to mgintain an; benefit imm the o rtunity to reduce estimates of waste disposal costs, adequate p

. The remaining the costs of comp g with NRC should not be used. A commenter also sections of the rule, including those.

Snancial assurance requirements, which noted that assuming a period for short-which allow self-guarantee of certain USEC estimated would presently cost in lived isotopes to decay before commercial corporate licensees who excess of $100,000 per year for letters of decommissioning begins would be a issue bonds if they meet stringent.

credit and surety bonds.

realistic assumption. Also, a typical financial criteria, were designated as.

Response:Under to CFR 76.35(n).

licensee will not have the maximum compatibility Category D. Category D ' USEC (or the Corporation) is required to amount of material allowed by the means the Agreement States do not need establish financial surety arrangsnents '

license at the time of decommissioning. to adopt a compatible rule..

to ensure that sufficient funds will be Response:This rulemaking makes no The final rule change, which will '

available for the ultimate disposal of -

changes in the requirements for how. J extend the self-guarantee financial

~ waste and depleted uranium, and. - _.

licensees estimate decommissioning assurance option to other material and decontamination and decommissioning costs. Decommissioning cost estimates, non-electric utility reactor licensees that activities that are the financial or use of the certificatloa amounts in to meet certain financial criteria, is also responsibility of the Corporation.The '

CFR Part 30, are already requimd by designated as compatibility Category D.

funding mechanisms currently listed in existing regulations on financial Under compatibility categoryD,-

the regulation as potentially acceptable assurance. This rule simply adds an Agreement States may choose to. _,

for use by the Corporation include additional financial assurana maintain a more stringent rule by not

' prepayment. surety, insurance, and an mechanism to those already permitted adopting the self-guarantee option.

external sinkin8 und, but do not' f

in NRC regulations.

include self-guarantee or statement of

9. Requirementfor Annual Passage of[

• jf',I0*)ha ae

8. Agreement State Com tibilityStatus Financial Test offinancro1 Assumnce egulations -

Comment: A commenter stated that availability of funds for any activities Comment:Some commenters believed Section EC.(2) of Appendix E to Part 30 that are required to be completed that the proposed regulations should be should be modified so a qualifying

'the Corporation.

assigned a compatibility status of Level licensee would not have to repeat USEC was created pursuant _to the 1 with Agreement States. This will passage of the financial test for self-Energy Policy Act of 1992. It is a wholly ensure consistent requirements for guarantee every year. University own2 government corporation, whose financial surety arrangements and will endowments are very stable. In powers are vested in a five-member '

preclude the unintended creation of addition. Section EC.(3) provides Board of Directors appointed by the ~

competitive disadvantages between sufficient assurance that NRC will be.

President of the United States and -

facilities in Agreement States and Non-notified when a licensee no longer confirmed by the Senate. However, on Agreement States.

meets the criteria for self-guarantee.

July 25,1997 a plan was approved by "

Response:When the proposed rule Response: Although it is true that.

the President under which USEC will be was published in the Federal Register, university endowments are relatively sold either to another co ration or to (see 62 FR 23394. April 30,1997),it was stable and Section II.C.(3) provides for the public through a st "fering.

designated as a Division 2 compatibility notification, the provision for qualifying ' Under the USEC Privatizaflu Act; item in accordance with the licensees to annually pass the test is '

. Congress set certain restrictions'on compatibility policy in effect at that retained in the final rule. For a self-foreign involvement in USEC's time. A Division 2 level of compatibility guarantee program to provide adequate privatization andrequired that m' allowed an Agreement State to assurance of decommissioning funding. "mliable and economical domestic promulgate equivalent, or more the annual "requalification" provision source of enrichment services" exist * -

stringent, financial assurance is necessary. NRC must have assurance following privatization.-

regulations than those of NRC of financial strer gth on a timely basis.

Although the NP4 is not currently Under the new " Policy Statement on A self-guarantee relies solely on the aware of any reason why it would be Adequacy and Compati ility of licensee's ability to fund

. Inappropriate to consider expanding the Agreement State Programs," (see 62 FR decommissioning. There is no backup, category of funding mechanisms 46517 September 3,1997) Agreernent such as that provided by a third party available to the Corporation to States must adopt NRC regulations financial assurana mechanism. The demonstrate the availability of funds for having particular health and safety

. requirement for repeating the financial the actions required under 10 CFR significance and those necessary to ~

test yearly is not unduly burdensome on 76.35(n). NRC does not believe that it.

maintain compatibility with the a licensee and gives NRC information on would be feasible to do so in the current Commission's regulatory program.

the financial condition of the licensee rule. First. USEC was not included in The NRC financial assurance on a timely basis. This requirement is any of the analyses performed to regulations,in effect when the new not unique to colleges and universities evaluate potential self-guarantee tests policy was implemented, were 7 or to this rule. It is found in the self.

for demonstrating financial assurance.

designated as having health and safety guarantee financial tests applicable to,. NRC believes that delalled analyses.

significance. Specifically, sections (a). - nonprofit.

s. m.

critical factors have been considered.

other types oflicensees, both profit 'and. should be undertaken to ensure that all (b), and (d) of Parts 30.35,40.36 and.

70.25, which require that licerisees must consider the cost of decommissioning

10. Use of Self-Cuamntee by the. United. Second, USEC's current and future-situation with respect to the costs that be provided for through a fi.nancial

' States Enrichment Corporation It might incur is substantially different..

their facilities and that those costs must.

Comment:The United St'ates '

from those of the licensees included in assurance mechanism, have particular Enrichment Corporation (USEC)

a. c,'the' current rulemaking. In particular, health and safety significance and were ~ proposed that the NRC modify the the scope and type of activities that designated as category H&S. Under the language of the rule to include.

USEC must carry out under 10 CFR H&S category, Agreement States should. certificates (regulated by NRC under 10 76.35(n) are very different from those l

/

N, s

~

29540 Federal Register /Vol. 63', No.104/ Monday, Jun31,1998/Rul:s end Regulations I

coriducted by hospitals and universities, which can be used by quallfled '

basis'. Therefore, Category D has been'

~

and the non-bond issuing firms covered nonprofit licensees and non-bond.

assigned to these rule provisions.

j by the proposed rule.

Issuing licensees.

Finding ofNo Significant

' nird, the exact size of the obligations. - Appendix D is added to 10 CFR Part EnvirorenentalImpact: Availability 30 to establish miements for self.

that USEC mightbe butred to coveris guaranta by no ad-issuing The amendments will allow qualified uncertain and willn determined

' until a later date, although it is known commerciallicensees. Appendix E is nonprofit and non-bond-issuing

~ responsibility of the U.S. Department of, added to 10 CFR Part 30 to establish licensees the option of using self.

that many of the costs will remain the requirements for self-guarantee for guarantee as a mechanism for financial

[.

Energy (DOE). Under 10 CFR 76.35(n), ' nonproSt college, university, and assurance for decommissioning. For-DOE is responsible for those aspects of hospitallicensees.

cgoyte11 ms t

e

?

' decontamination and decommissioning

~

8"arantee if theY meet the regulatory 0-cf the gaseous diffusion lants(GDPs) 20 CFR Part M.

assigned to DOE under t e Atomic Section 40.36 is amended to permit criteria. Other lic,ensees currently may Energy Act. DOE also is msponsible for - self-guarantee for financist assurance elect to use a vanety of financial cl! environmental liabilities associated wMch can be usad by qualified assurance mechanisms, such as surety with the operation of the GDPs befer, nonprofit licensees and non bond.

bonds, letters of credit,. and escrow Jul 1' 1993. According to USEC's.

~ issuing licensus.

accounts to comply with Y

decommissioning regulations. This

{

Annual Report for 1996. (eixcept for 10 CFR Ptzrt 50 action is intended to offer nonprofit and certain accrued liabilities that will be.

a specified in a memorandum of h Section 50.75 is amended to permit non-bond-issuing nuclear materials y,

licensees and non-electric utilit reactor agreement entered into prior to eelf uarantee for financ.ial assurance

. licensees greater flexibility by aflowing

.g alified.

rivatization, all envimnm non refit licensees an[non-bond..

that meet the financial criteria for use of an additional mechanism for licensees of tb gh the

, lasufng licensees.

_ hb1 g

mdn

,, 3

,,g'.

(Notes to Financial Statements: 7.

"s ' **hNs$n to the NP.C's obligations of the U.S. Covernment."

10 CFR Part 70.,.' d '

9 lations Section 70.25 is amended to permit simply adds one more financi Environmental Matters). Furthermo.re, self-guarantee for finarttial assurance '

assurance mechanism to the as of June 30.1996. USEC had accrued-which can be used by ualified

~

mechanisms currently available. It does Itbliity of$303 million for not affect the cost of decommissioning transportation, conversion. and nyon rofitlicensees'an non-bond.

materials and non-power reactor g

,, gc,,,,

disposition of depleted uranium facilities. Allowing self-guarantee for

+

cunently stored at the GDPs. De 1996 20 CFR Port 72 additional types of licensees does not Annual Report states that "USECis. 4 i Section 72.30 is amended to permit

' lead to any increase in the effect on the evaluating various proposals for the self-guarantee for financial assurance environment of the decommissioning j

disposition of depleted ursalum, and '

which can be used by quellAed non-activities consided in the final rule

. depending on the outcome of such bond having Heensen.-

- published on June 27,1988,(53 FR evaluations, the Company may be able 24018), as analyzed in the Final Generic 13 reduce future cost accruals * * *,

Compatibility of Agrs==nant State.'

EnvironmentalImpact Statement on y

Pursuant to the USEC Privatization Act.

Regulations J

2 Decommissioning of Nuclear Facilities all costs and liabilities related to the

'The current NRC regulation which (NUREG-0586, August 1988).*

j disposition of depleted uranium allows self-guarantee of certain

.a Promulgation of this rule does not generated prior to the privatization date. comrnercial corporate licensees who introduce any impacts on the

.are the responsibility.of DOE." Fourth.

Issue bonds if they, meet stringent

. environment not previously considered u

untilprivatizath has occurred.

finandal criteria is designated as..

by the NRC. Derefore, the Commission important infr,rmat!on about USEC's -

compatibility Category D. This final rule has determined, under the National future corpotete structure and change, which will extend the self-~

, Environmental Policy Act of 1969, as ownership will remain uncertain. As

. guarantee financial assurance option to' amended, and the Commission's noted above, Congress has allowed

. other material and non-electric utill'.y regulations in subpart A of 10 CFR part USEC to be sold either to another reactor licensees that meet certain 51, that this rule would not be a major corporation or to the public through a financial criteria, is also designated as a Federal action significantly affecting the stock offering. Thus, the form in which compatibility Category D. Category D auslity of the human environment, and '

privatization occurs could affect the -

. muns the agreement States do not need therefore an environmentalimpact

. NRC's analysis of financial assurance.

to adopt e compatible rule. no Category statement is not required. No other titernatives. Because of the need to '

D designation was determined in

agencim or persons were contacted in ev11uste all of these factors, NRC has accordance with the new "Pdcy

' making this determination.The NRC

. determined not to include 10 CFR part Statement on Adequacy and

. ' Y staffis not aware of any other

~

731n the current rulemaking..

. Compatibility of Agreement State -

r documents related to the environmental Changes From the L' M Rule Programs," opproved by the Commission on June 30,1997. The final

• coptes are available si current rates from the There are no changes from the '

rule change does not involve a basic u.s.covernmen Prtatins rrice.P.o.som aross.

o proposed rule.

radiation Protaction standard. activities

• • 'hl"8'"". K 20402-9328 it*I*P one (202) 512-h

~.

t 22M or from the Nadonal TechnicalInformadon Section-by-Section Description of that have direct and significant effects service by writins NTIS at $285 Port Royal Road.

Changes in multiple jurisdictions, or essential Springfleid. VA 22161. Coples are evallable for objectives which an Agreement State la*Paction or Copying for a fee from the NRC Pubuc M CFR Part 3[

should adopt to avoid conillets, s or - Document Room at 21201. Street NW, Washington.

Section 30.35 is amended to permit'

-duplications in the regulation of ws'N[s76-aa43."o DcsNo'eYo2 n

self-guarentee for financisl1 assurance agreement material on a nationwide-fan

~

r

l Fed' erd Register /Vol.' 63,'No.104/ Monday, Jun31,1998/Rults and Regul:tions 29541 1

[mpact ofthis action. The foregoing 3

constitutes the environmental ~

Regulatory Flexibuity CadiScation Radiation protection Reporting and la accordance with the R latory acordkuping requhements. Scientific assessment and finding of no significant 1

C imPad fw this rule.

Flexibility Act of 1980 (5 U C 605(b)), ' equipment Security measures Special the Commission certifies that this rule nuclear material g

Paperwork Reduction Act Statement '

will not have a significant economic 10 CFR Part 72" ' " -

This final rule amendsinformation impact on a substandal number of smau ' Manpower training

s. Nuclear entities.This rule would expand the collection requirements that are subject rwork Reduction Act of 1995 number of options available to 11cen"" materials, Occupation 1 and to b Pa[3501 et seq.). hee-M comp y with the Commission's health, Reporting and recordkeeping a

l (44U.S.

/

requirements wom'approvedb the financial assurance requirements, thus requirements. Security measures. Spent fud.

Office of Management and Bu enhancing the flexibihty of these

'(OMB), approval number 3150-0017, regulations. It is estimated that this rule.

y,,tne reasons set out in the r

would result in significant cost savings pdk ud de &% &

-0020 -0011.-0009, and-0132.

The public reporting burden for this 6 qualifying Hesees.

Atomic Energy Act of1954, as amended.

Information collection is estimated to

. BackAt Analysis 6 Energy Reorganization Act of 1974,

~

as amended, and 5 U.S.C 553, the NRC ave 9 to 14 hours1.62037e-4 days <br />0.00389 hours <br />2.314815e-5 weeks <br />5.327e-6 months <br /> r response, h NRC hu delud that is ado ting the following amendments -

g tim b n ewing backfit rovisions (10 CFR 50.109 to 10 Parts 30,40,50,70, and 72.

Instructions, searching existing data and 72.6 6e pans of 6e i

sources, thering and maintaining the PART 30--RULES OF GENERAL dets nee [ed, and completing and -. Cmnmission's reguladons est am beng APPUCABluTY TO DOMESTIC

"**"d O '"

"8, ',[,,

"UCENSING OF BYPRODUCT r

reviewing the information collection.

y g

py Send comments on any aspect of this A

I' information collection,inclu not impose a beckfit as defined in to CFR 50.1 emends.09(a)(1) or 72.62(a). The rule' 1.%e authority citation for Part 30

.er,,=,s,e 6

-8 e

. mgua, ant ah.,nauve fo, c u. esto, sed - fono.s:

r Management Branch (T-6 F33), U.S.

demonstraung decommissioning Authority: Secs. 81, s2. to1,1s2. t 83.1se.

I Nuclear Regulatory Commission, Anancial assurance to quellfled non-es Stat. s35,94s. 953. 954,955. as amended.

Washi

n. DC 20555-0001' or by grofit and non-bond-issuing licensees.

sec. 234, as seat. 444. as amended (42 U.sn Internet electronic mail at rixtending the availabluty of this option 2111.2112.2201.2232.2233,2236.22s21:

8)S4BNRC.COV; and to the Desk Officer, does not impose a new burden on secs. 201, as amendal. 202,20s. 88 Stat.

IJoensees of commercial reactors 1242, es amended.1244.124s (42 U.sn Office ofInformation and Regulatory m t, m 2, steel.

Affairs, NEOB-10202, (3150-0017),

orindef,ndent s{.nt fue g,,g,j g,

,, gg37 s). Acx:ord ly,the-Section 30.7 also issued under Pub. L Office of Management and Budget, rulemaki does not constitute a beckfit 95-601, sec.10,92 Stat. 2951 (42 U.S.C ng n, DC 20503.

and a be t analysis.was not propered 5801). Section 30.34(b) also issued Puhuc Protec6en Nou8cadon forthis Analrule.

under sec.184,68 Stat. 954, as amended (42 U.S.C 2234). Section 30.61 also If a document used to impose an

. List ofSubjects issued under sec.187,68 Stat. 955 (42 information collection does not dip y a cunently valid OMB control num 10 CFR Part 30 U.S.C. 2237).

2. In 5 30.8, paragraph th) is revised ' o t

the NRC may not conduct or sponsor, Byproductinpterial Criminal md a foHows.-

and a person is not required to respond penalties, Govemment contracts,~.

to, the information collection.

Intergovernmental relations, Isotopes ~ gso.s snoormosensomeesen Regulatory Analysis.

Nuclear materials, Radiation protection,. seguireenente: cess appmet.

e Reporting and recordkeeping The NRC has prepared a latory

. requirements.

(b)%e approved information analysis on this regulation.

analysis examines the costs and benefits of the la CFR Part 40 collection requirements contained in 2

this part appear in $$ 30.9,30.11,30.15, alternatives considered by the NRC The Criminal penalties, Government.

30.19,30.20,30.32,30.34,30.35,30.36, analysis is avallable for inspection in contracts Hazardousmaterials the NRC Public Document Room 2120 transportation, Nuclear materials,-

30.37,30.38,30.50,30.51,30.55,30.56 an 1 Appendices A C,D,and E of this L Street NW (lower Level), Washington, Reporting and recordkaoping part.

DC. Single copies of the analysis may be requirements. Source material, e.

u obtained from Clark Prichard Office of Uranium.

3. In 5 30.35, the introductory text of Nuclear Materials Safety and Paragraph (f)(2) is revised to road as 20 CFR Part 50 Safeguards, U.S. Nuclear Regulatory follows:

Commission. Washington, DC 20555. -

Antitrust, Class!!!ad information, -

telephone (301) 415-6203.

Criminal penalties, Fire protection, 630.3s Mnenoisiemeuronoeand Small Business Regulatory Enforcement Intergovernmental relations, Nuclear roooreseping ser decommissioning.

Fairness Act power plants and reactors, Radiation b

protection, Reactor siting criteria.

(fl * *

• In accordance with the Small Reporting and recordkeeping ~.

(2) A surety method, insurance, or Business Regulatory Enforceme nt requirements.

~

other guarantee method.These methods Fairness Act of 1996, the NRC has guarantee that decommissioning costs determined that this action is not a 20 CFR Part 70 will be paid. A surety method may be "ma}or ruk," and has verified this Criminal penalties, Haza'dous s in the form of a surety bond, letter of r

determination with the Office of materials transportation, Material' credit, or line of credit. A parent Information and Regulatory Affairs,'

control and acrounting, Nuclear company guarantee of funds for -

Office of Management and Budget.

materials, Packaging and containers, decommissioning costs based on a a*

I

~

~

' Federal Registir/Vol. 63, N2.104/ Monday, funa 1. d998 Rulis and Regulations

~

29542 financial test may be used if the v. company is msponsible as self-guaranteeing ' Commission. the licensee will set up and fund a trust in the amount of the current cost

{

' guarantoe and test are as' contained in limn==e and as parent guarantor.

. (2) Assets located in the United States estimates for decommissioning.

(

appendix A to this part. A parent y guarantee ma not be used in' amounting to at least 90 percent of total apets or at least to times the total current.

A ndix E to Part 30-Criteria com co ination with othe financial decommissioning cost estimate (or b.

Re ating to Use of Financial Tests and t

I methods to satisfy the :3quirements 'of cunent amount required if certification is Self Guarantee For Providing this section. For commercial

.. used) for all decommissioning activities for Reasonable Assurance of Funds For,

I corporations that issue bonds. a

. ' which the company is responsible as self-Dernmmlaaioaing by Nonprofit I

arantee of funds by the applicant or

• guaranteeing licensee and as perent--

,, - Colleges, Universities, and Hospitals I

masee Mcmnddg M based on a financial test may be used if tio ofcash Dow divided by total L Introduction

. liabilities ster than o.15 and a ratio of total

'Ana licant or licenses may de

(

th) guarantee and test are as contained. liabilities ivided by net worth less than 1.5.

reasonbe assurance of the aval bihty of

[

In appendix C to this part. For

p. In addition, to pass the financial test, a funds for decommissioning based on j

commercial companies that do not issue company must meet all of the following furnishi its own guarantee that funds will bonds, a guarantee of funds by the trements:

be avalla e for decommissioning costs and I

rpplicant orlicensee for

) N company's independent certified " - on a demonstration that the applicant or decommlastonin costs may be used if Public accountant must have compared the licensee passes the financial test of Section the guarantee an test are as contained data used by the com y in the Snancial. 11 of this appendix. The tenus of the self.

E in APP 8ndix D to this Part. For nonprofit test, which is requ to be derived from b guarante are in Section nl of this appendix.

independently sudited year end financial - nis appendix establishes criteria for passing C

entities, such as coH

, universities.

statement based on United States generally '

.h financial test for the self-arantee and

(

. and non rofit hospi s, a gu'arantee of accepted accounting practices for the latest establishes the terms for a se -guarantee.

(

funds the applicant or licensee may..

fiscalyear with the amounts in such '

H. FinanciaiTest -

be used if the guarantee and test are as Anancial statement. In connection with that

{

contained in a pendix E to this part. A procedure, the licenme shall inform NRC A. For colleges and um.versities, to pass the f

hh aI*

l d'

in Ph 2

d st satisfy the requirements of this section 0*

Pe For applicants'or licensees that issue 3 Anor h d Snah h

or in any situation where the applicant ' ampany must topoet of h test bonds, a current rating for its most recent '

a orlicenses has a parent com F-within 90 days aAer close of each unbsund, uncollateralized, and a

unencumbered bond issuance of AAA.*AA.

holding majority control of a voting sucmeding Sacal year.

g c'ock of the company.

surety (3)If the licensee no longer meets the or A as issued by Standard and Poors (S&P) method or insurance to provide.

requirements of paragraph RA of this or Aaa. Aa. or A as issued by Moodys. -

"~~" the licensa must send notice to (2) For a icants or licensees that do not a

fina cial"""#*" for tTJ NRc"of intent io.stablish alternative issue bon. unrestricted endowment 0

decommissioning must contain the,'

anancial amurance u speci8ed in NRC consisting of assets located in b United following conditions:

regulations.The notico must be s6at States of at least $5e million, or at Idast 30 9

e a

cardSed mail, return receipt times the totalcurrant decommissioning cost a

year. h,c*,,f,"a p u whN1er) ater l

4. New Appendices D and E to Part 30 w thin 90 days afterje y

of the 8

,,tif g

for au decommissioning activities Ewhich are added to reed as follows: ~

. he h lan=== no longer meets the g

^---- % D to Part as-Criteria

.'?

Ananet=1 test requirements. The liceum the collega or uniwrsity is responsible as a g

RMating To Use of Nascial Teets and must provide alternative Snancial assuranca 8'If-guarantesi licensee.

3,gg,g,,,,,,,, g,, y,,,ggg,g within 120 days after the end of such Escal F

t th n an a test Reaseeable Assurance of Funds for I'

a Paragraph E5.(1) or the criteria in Paragraph

...f.

Decee==Immioning by rammmaarcial HL Company Self4uarante

. EB.(2)of this appendix:

e-, -t== nat Have no One=tandlag h terms of a se arantee which an (1) For applicants or licensees that issus licaat or licensee 1shee asust provide bonde, a current rating for its moet recent Rated Bends w

uninsured.uncollateralized.and s

,,o L introduction

• A.& guarantee shall remain in inece unencumbered bond issuance of AAA. AA.

l

• An app!! cant orlicmasse miey de unless the licensee sends notice of,

reasonable assurance of the ability of cancellation certified maII.reture receipt

_or A as issued by Standard and Poors (S&P) -

or Ana. Aa. or A as lasued by Moodys.

funds for _4- ---- :- :=ia= based on requested, to NRC raamilation may not (2)For innts or licensees that do not furnishing its own guarant'oe that funds will ocx ur until an alternative Anancial assurance issue bon all the following tests must be -

le evallable for d=en==1seloning costs and mechanism is in place.

+

met:

on a demonstration that the company passes B. N licensee shall provide altwnstive

, - (a) (Total Revenues less total expenditures) the Ananciat test of Sec6an U of this

.. nnanci t assurance as specifiedin the divided by total revenues must be equal to appendix.& terms of the self uarantes are tions within 90 days following recolpt or greater than 0.04.

C

- -la Section UI of this appendix. This appendix NRC of a notico m cancellation of the,

(b)lang term debt divided by not fixed.

established criteria for passing h nnancint,. guarantee.

aseets must be less than or equal to 0.67.

test for the se se and estab!!shes the C & guarantee and Anancial test..

x

'- (c)(Current assets and depreciation fund) lons must rummin in effect until the '

="on has terminated the license or

. divided by current liabilities must be greater

. terms for a erantes.

E FinancialTest.., ;.p.

..w

,' 2 than or equal to 2.55.

. untB anohr Ananelal assurance method (d) Operating revenues must be at least 100 4

A. To pass the financial test a company 4 table to the Commission has been put " times the total current decommissioning cost must meet the follow criteria:

in e by the licensee.

estimate (or the current amount required if (11 Tangible not greater than $10

, D. & spplicant or licensee must provide certification is used) for all decommluloning -

J million. or at least 10 times the total current - to the Commission a written guarantee (e.

activities for which the hospitalis decommissioning cost estimate (or the written rammitment by a corporate officer) responsible as a self-guaranteeing license.

current amount requimd if certification is

%hich states that the licensee will fund and C In addition. to pass the financial test, a l

used), whichever is gruter, for all carry out the required decommissioning -

licensee must meet all the fo!!owing decammianloning activittee for which the activitiae or. upon issuance of an order by the requirements:

f c

6

,e s

I

(

0

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?

FedrJ Regist:r/Vol. 63, No.104 /Mondty, Juns 1,1998/Rults cnd Reguhtions 29543 6.

W (1) The licensee's independent certified PART 40--DOMESTIC LICENSING OF or in any situation where the applicant.

ost Public accountant must have compared th.e.

SOURCE MATERIAL.

.., n or licenseehas a parent company p~

data used by the licensee in the financial test, 3,

which is required to be derived from the 5.The authority citation for Part 40 holding majority control of the voting independently audited year end financial

,, continues to read as follows:

stock of the company, An surety method orinsurance use to provide statements, based on United States generauy Authority: Secs. 62,63.64,65.81,161' financial assurance for accepted accounting practices, for the latest,

182,183.186,68 Stat. 932,933,935,948, p

fiscal year, with the amounts in such 953,954,955, as amended, secs.11e(2). 83, decommissioning must contain the I.

financial statement. In connection with that 84, Pub. L 95-604,92 Stat. 3033, as followlng conditions,i procedure, the licensee shall inform NRC amended,3039, sec. 234,83 Stat. 444, as

• y *.

s*

within 90 days of any matters coming to the-amended (42 U.SC 2014(e)(2),2092. 2093 -

attention of the auditor that cause the auditor 2094,2095,2111,2113,2114,2201,2232.

PART 50--DOMESTIC LICENSING OF to believe that the data specified in the 2233, 2236, 2282); sec. 274. Pub. L.86-373, PRODUCTION AND UTILIZATION t r,.

financial test should be adlusted and that the 73 Stat. 688 (42 U.Sc 2021); secs. 201, as FACILITIES r

y licensee no longer passes the test.

amended. 202,206,88 Stat.1242 u amended, 1244,1246 (42 U.SC 5841,5842..

7. The authority citation for Part 50 (2) After the faltlal financial test, the 3--

licensee must repeat passage of the test Pub. L 97-415,96 Stat. 2067 (42 U.S.C 5846); sec. 275,92 Stat. 3021, as amended by. Continues to read as follows:

Aut'ho' rity: Secs. 102,103,104,105,161,

,.r within 90 days after the close of each 2022).

succeeding fiscal year.

Section 4O.7 also issued under Pub. L.95-182,183,186,189. 68 Stat. 936,937,938, (3)If the licen'se nolonger meets tbs,

601, sec.10,92 Stat. 2951 (42 U.0.C 5851).

948,953,954,955,956, as amended, sec.

c-ng -

requirements of Section I of this appendix, Section 40.31(g) also issued under sec.122, 234,83 Stat.1244. as amended (42 U.SE the licensee must send notice to the NRC of 68 Stat. 939 (42 U.S.C 2152). Section 40.46 2,2133,2134,2135,2201,2232,2233, its latent to establish alternative financial a

s n

.C. i23 ).

0 71 Iso 20 t Stat.1

. as n

124,

e assurance as specified in NRC regulations.

e he The notice must be sent by certified mail, Issued under sec.187,68 Stat. 955 (42 U.SC~ 1246 (42 U.SC 5841,5842,5846).

' return receipt requested, within 90 days after 2237)'

Section 50.7 also issued under Pub. L 95-601, sec.10,92 Stat. 2951 (42 U.SC 5851).

the end of the fiscal year for which the year

6. In $ 40.36, the introductory text of. Section 50.10 also issued under secs.101, end financial data show that the licensee no paragraph (e)(2) is revised to read as 185,68 Stat. 936,955, as amended (42 U.SC longer meets the financial test requirements.

follows:

2131,2235); sec.102, Pub. L 91-190,83 Stat.

~

The licensee must provide alternate financial 853 (42 U.SE 4332). Sections 50.13, assurance within 120 days after the end of 9 40.36 Rnancial aneurence ans, 4 50.54(dd), and 50.103 also issued under sec.

i f*Cor18ke*P ng for =

such fiscal year.

108,68 Stat. 939, as amended (42 U.SE M

III. SelfCuarantee 2138). Sections 50.23,50.35,50.55, and 50.56 e

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also issued under sec.185,68 Stat. 955 (42 he terms of a self. guarantee which an (2) A surety method, insurance, or U.Sn 2235). Sections 50.33a,50.55a and applicant or licensee furnishes must provide other guarantee melbod. These methods A pendix Q also issued under sec.102, Pub.

P 5

that- -

guarantee that decommissioning costs L 91-190. 83 Stat. 853 (42 U.SE 4332).

A.%e guarantee shall remain in imco -

unless the liansee sends notice of wHI be paid. A sursty method may b Sections 50.34 and 50.54 also issued under -

cancellation by certified mail, and/or return in the form of a surety bond, letter of ac. 204,88 Stat.1245 82 esc 5844L S ctions 50.58,50.91, and 50.02 also issued g.redi

• li

• f di * ^ E" receipt requested, to the Commission.

C mPany guarantee of funds for.

-. under Pub. L 97-415,96 Stat. 2073 (42 Cancell6 tion may not ocrut unless an Lt.Sc 2239). Section 50.78 also issued under a torna ve financial assurance mechanism is decommissioning costs based ona me.122,68 Stat. 939 (42 U.Sc 21521 i

financial test may,be unsed if the..

Sections 50.80-50.81 also issued under sec.

B ne licensee shall provide alternative guarantee and test are as contained in 184,68 Stat. 954, as amended (42 U.St financial assurance as specified in the sPPendix A to part 30iA parent 4{Agn F1 is u der sec.

Commissic,n's regulations within 90 days com y guarantee may not be used in

8. In $ 50.75, the introductory text of following receipt by the Commission of a com instion with other Rnandal c

2M hM M md a notice of cancellation of the guarantee.

methods to satisfy the requirements of Qows..

C ne guarantee and financial test this section. For commercial..

provisions must remain in effect until the corporations that issue bonds", a '

$50J5 Reporting end in,i, - 7 s for.

Commission has terminated the license or guarantee of funds by the applicant or M

_ r.:rg peonning.

until another financial assurance method.

licensee for decommissioning costs.

ecceptable to the Commission has been put based on a financial test may be used if.

(e) = *.

• La effect by the 11mnses.

the guarantee and test are as contained (2) *

• C

• O D. De applicant or licensee must provide in appendix C to part 30.For.

(iii) A surety method, insurance, or to the Commission a written guarantee (a commercial companies that do not issue other guarantee method. These methods written commitment by a corporate officer or bonds, a guarantee of funds by the guarantee that decommissioning costs officer of the institution) which states that the llansee will fund and carry out the applicant orlicensee for will be paid. A surety method may.be. '

decommissioning costs may be used if' in the form of a surety bond, letter of required decommissioning activities or, upon the guarantee and test are as contained credit, or line of credit A parent issuance of an order by the Commission, the licensee will at up and fund a trust in the ln appendix D to part 30. For nonprofit company guarantee of funds for.

s. sd as M

, unMA de'hlonbg cuts band on a d

Iss and nonprofit hospit a guarantee of-financial test may be used if the funds by the applicant orlicensee may guarantee and test are as contain$d in bond issuance ceases to be rated in anyE. If, at any time, the licensee's moet recent be used if the guarante appendix A to part 30. A parent, category of "A" or above by either Standard contained in appendix E to part 30. A company guarantee may not be used in and Poors or Moodys, the licensee shall guarantee by the applicant orlicensee coinbination with other financial j

provide notice in writing of such fact to the snay not be used in combination with '

Insthods to satisfy th requirements of I

Commission within 20 days after publication any c;her financial methods used to this section. For commercial.

I of the change by the reting service.

satisfy the requirements of this section corporations that issue bonds, s.

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t______.______________

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29544 Federal Register /Vol. 63, Ns.104/Mdnday, Juna 1,1998/Rult8 and Regulations guarantee of funds by the applicant or appendix A to part 30. A parent Subpart J also issued under secs. 2(2),2(15).

L licensee for decommissioning costs company guarantee may not be used in 2(19),117(a).141(h). Pub. L 97-425. 96 Stat.

based on a financial test may be used if combination with other financial 2202. 2203,2204,2222,2244 (42 U.Sn I

the guarantee and test are as containI# methods to satisfy the requirements of 10101,10137(a),10161(h)). Subparts K and L 1

In cppendix C to part 30. For this section. For commercia]

are also issued under sec.133,98 Stat. 2230 commercial companies that do not issue corporations that issue bonds, a (42_U.SC 10153) and sec. 218(a),96 Stat.

[

bonds, a guarantee of funds by the guarantee of funds by the applicant or 2252 (42 U.Sn 101981 Epplicant or licensee for licensee for decommissioning costs

12. In $ 72.30. the introductory text of I

decommissioning based on a financial test may be used if the guarantee ank costs may be used if test are as contained the guarantee and test are as contained Paragraph (c)(2) is revised to read as i 11 ws:

_ in appendix D to part 30. For nonprofit in appendix C to part 30. For g

entities. such as colleges, universities, commercial companies that do not inue $ 72.30 Financial esaurence and J

and nonprofit hospitals, a guarantee of bonds, a guarantee of funds by the reo.,dkeeping for decommiseloning.

funds by the applicant or licensee may applicant,or licensee for be used if the guarantee and test an as decommissioning costs may be used if contained in appendix E to part 30. A the guarantee and test are as contained (c) * *

• guarantee by the applicant or licensee in appendix D to part 30. For nonprofit (2) A surety method, insurance, or may not be used in combination with entities, such as colleges, universities, other guarantee method. nese methods any other financial methods used to and nonproSt hospitals, a guarantee of guarantee that decommissioning costs -

satisfy the requirements of this section funds by the applicant or licznsee may will be paid. A surety method may be or in any situation where the applicant be used if the guarantee and test are as in the form of a surety bond, letter of or licensee has a parent company contained in appendix E to part 30. A credit, or line of credit. A parent h:lding majority control of the voting guarantee by the applicant or licensee company guarantee of funds for may not be used in combination with decommissioning costs based on a cock of the company.

any other financial methods used to financial test may be used if the a

=

satisfy the requirements of this section guarantee and test are as contained in PART 70-DOMESTIC LICENSING OF or in any situation where the applicant

• Ppendix A to part 30. A parent SPECIAL NUCLEAR MATERIAL orlicensee has a parent com y

din of oting

{,Y

9. 'Its authority ' citation for Part 70 a)o tycon ti n t ot er fin al continues to road as follows:

method or insurance use to provide methods to satisfy the requirements of '

Authority: Secs. 51, 53,161,182,183. 68 financial assurance for this section. For commercial Stat. 929,930,948,953,954, as amended.

domunissioning must contain the corporations that issue bonds, a

. g3,4 s S t;44422h' '

fodowing conditions:'

licensee for decommissioning costs f7 guarantee of funds by the applicant or f

i 201, as amended. 2c2,204, 20s, as Stat.

l 1242, as amended.1244.1245,1246 (42,

based on a financial test may be used if i

U.sn 5841,5842,5845. 5s46).

PART 72-LICENSING the guarantee and test are as contained Sections 7a1(c) and 7a20a(b) also issued REQUIREMENTS FOR THE in appendix C to part 30. For t

under secs.135,141. Pub. L 97-425,96 Stat. INDEPENDENT STORAGE OF SPENT commercial corporations that do not 2232,2241 (42 U.Sc 20155,10181). Section

• NUCLEAR FUEL AND HIGH-LEVEL issue bonds, a guarantee of funds by the 70.7 also issued under Pub. L 95-601 sec-RADIOACTIVE WASTE APP cant or licensee for

)

li 10,92 Stat. 2951 (42 U.SC 5851). Section i

ra21(g) also lasued under sec.122. 68 Stat.

11.The authority citation for Part 72 decommissioning costs may be used if l

939 (42 U.SE 2152). Section 70.31 also continues to read as follows:

the guarantee and test are as contained in appendix D to part 30. A guarantee lesund under sec. 57d. Pub. L 93-377. as Authority: Secs.51,53,57,62,63,65,69, Stat. 475 (42 U.SC 2077). Sections 70.36 and by the applicant or licensee may not be 70.44 also issued under sec.184. 68 Stat. 954, 81,161,182,183.184,186.187.189. 68 Stat.

used in combination with anY other as amended (42 U.SC 2234). Section 7a61 929,93G,832,933.934,935,948,953,954 also issued ur secs.186,187. 6a Stat 955 ' 955, as arnended. sec. 234. 83 Stat. 444 as financial methods used to satisfy the (42 U.SC 22

37). Section 70.62 also amended (42 U.SE 2071. 2073. 2077,2092, requirements of this section or in any issued unda

.108,68 Stat. 939, as 2003.2005,2099.2111,2201,2232,2233, situation where the applicant or amended (42 SC 2138). '

2234,2236,2237,2238,2282h sec. 274, Puh licensee has a parent company holding

10. In $ 70.25, the introductory text of $32051 201 a

2.20s, me}ority control of the voting stock of Paragraph (f)(2)is redeed to read as as Stat.1242. as amended.1244.1246 (42 the company. Any surety method or

.y. _

U.SC 5641. 5442, $848); Puh. L 95-401, sec. insurance t. sed to provide Snancial

_ follows:

10,92 Stat. 2951(42 U.S4 5451); sec.102, assurance for decommissioning must M 26 M ses urane anh ( >

Pub. L 91-190,83 Stat. 853 (42 U.SC 4332); contain the following conditions:

i

'" 'e -

Socs,131,132.133.135.137,141. Pub. L

. Dated at Rockville, Maryland, this 22nd hL 203.'101 tat.133 235 2

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(f) * * *

(2) A sumty method, insurance, or U.SE 10151.10152.10153.10155.10157, day of May,1998,.

other guarantee method. These methods ' 10161.10168).

For the Nuclear Regulatory Commission.

guarantee that decommissioning costs Section 72.44(g) also issued under secs. ^

John C, Hoyle, will be paid. A surety method may be 142(b) and 148(c). (d), Pub. L 100-203,101 -

Stat.1330-232,1330-236 (42 U.Sc

'7 0/g g"".."*"-

I in the form of a surety bond, letter of 10182(b).1016a(c). (d)). Section 72.46 also (FR Doc. 96-14385 Filed 5-29-98; 8:45 aml credit, or line of credit. A arent P

issued under sec.189. 68 Stat. 955 (42 U.SE ama.ses coos rses-ew 2

ccmpany guarantee of funds for 2239h sec.134. Pub L 97-425,96 Stat. 2230 decommissioning costs based on a ',

(42 U.Sn 10154). Section 72.96(d) also

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financial test may be used if the -

ts,ued under sec.145(g). Pub. L 100-203, guarantee and test are as contained in ~

tot Stat.1330-235 (42 U.Sc 10165(g)).

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