ML20236S422
| ML20236S422 | |
| Person / Time | |
|---|---|
| Site: | MIT Nuclear Research Reactor |
| Issue date: | 07/20/1998 |
| From: | Alexander Adams NRC (Affiliation Not Assigned) |
| To: | Bernard J MASSACHUSETTS INSTITUTE OF TECHNOLOGY, CAMBRIDGE |
| References | |
| NUDOCS 9807240326 | |
| Download: ML20236S422 (13) | |
Text
{{#Wiki_filter:_ _ _ - _ _ - _ _ - _ _ _ _ _ _ _ - _ _ - _ _ _ _ July 20, 1998
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Dr. John Bernard, Director of Reactor Operations Nuclear Reactor Laboratory Massachusetts institute of Technology 138 Albany Street I Cambridge, Massachusetts 02139
SUBJECT:
FINANCIAL ASSURANCE FOR DECOMMISSIONING
Dear Dr. Bernard:
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, ilA, and llc. Also, the requirements in item lli, "Self-Guarantee" needs to be complied with as 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. l If you have any questions, please call me at (301) 415-1127. j l Sincerely, ! ORIGINAL SIGNED BY: Alexander Adams Jr., Sr. Project Manager i Non-Power Reactors and Decommissioning j Project Directorate i Division of Reactor Program Management / l Office of Nuclear Reactor Regulation : Docket No. 50-20
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Enclosure:
As stated [ cc: w\ enclosure See next page , 9807240326 980720 PDR ADOCK 05000020 P PDR s Ulb I HIBU lIUN: HARD COPY EMAIL COPY 1 Docket File.50 20 ; Region l MMendonca WEresian PUBLIC CBassett, Ril SHolmes PDND r/f TBurdick, Rlli Pisaac i SWeiss PDoyle TMichaels TDragroun EHylton RWood, PGEB ,7 AAdams PDND:PM PD - PDN W[,A P :D TMichael A d 's @ ton SWeiss 7//7/98 7/ 7/')D/98 7//J/98 OFFICIAL RECORD COPY DOCUMENT NAME: G:\SECY\MICHAELS\MITFINAS.WPD L-__-__--_-___ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ . _ _ . _ _ _ _ . - _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ ___________n
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- UNITED STATES L
NUCLEAR REGULATORY COMMISSION f WASHINGTON, D.C. 20555 4001 ' \ . . . . . ,o8 July 20, 1998 Dr. John Bernard, Director of Reactor Operations Nuclear Reactor Laboratory Massachusetts institute of Technology 138 Albany Street Cambridge, Massachusetts 02139
SUBJECT:
FINANCIAL ASSURANCE FOR DECOMMISSIONING l
Dear Dr. Bernard:
Enclosed please find a copy of a recently approved regulation in the Federal Reaister, l (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 itern ill, "Self-Guarantee" needs to be complied with as needed. l 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.
- If you have any questions, please call me at (301) 415-1127. i L
Sincerely, ! W $4 Alexander Adams Jr., Sr. P je anager Non-Power Reactors and mmissioning Project Directorate Division of Reactor Program Management Office of Nuclear Reactor Regulation Docket No. 50-20
Enclosure:
As stated cc: w/ enclosure i See next page i l
! Massachusetts Institute of Docket No. 50-20 Technology
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- City Hall Cambridge,' Massachusetts 02139 Assistant Secretary for Policy Executive Office of Energy Resources
+ 100 Cambridge Street, Room 1500 Boston, Massachusetts 02202 ' ! Department of Environmental
- l. Quality Engineering l 100 Cambridge Street Boston, Massachusetts 02108 l ..
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l ~ l Fed:rcl Regist:r/Vol. 63; No.104 / Monday, Juni 1,1998/Rul:s cnd Regulations 29535 Committee's recommendation, and Materials Safety and Safeguards, U.S. N otherinformation,it is found that Background ' Nuclear Regulatory Commission. finalir.ing the interim final rule, without- Washington, DC 20555-0001, telephone On December 29,1993 (58 FR 687'26)'- i 1 ras' ' change, as published in the Federal as corrected on Janu 12,1994 (59 FR (301)415-6203, e-mail cwp@nrc. gov. Register (63 FR 11585 March 10,1998) SUPPLEMENTARY INFORMATION: ., 1818), the NRC publ ed a notice of 1,679 will tend to effectuate the declared final rulemaking that allows financially Limasees subject to 10 CFR parts 30, strong corporations with A or better 4,95$ Policy of the Act. 40,70, and 72, whose operations 2,200 List of Subjects in 7 CFR Part 9'89 involve the use of substantial amounts guarantee . ~ bond ratings the option of using self-545 as a mechanism for Grapes, Marketing agreements, of nuclear materials, and those subject ~ complying with the regulations on Raisins, Reporting and recordkeeping plicants financial assurance for
. mquimments. to for, or10 CFR holders Part of, operating 50 who are aficenses for production or utilization facilities must. decommissioning. Self guarantee was ms added to the list of financial assurance-PART 989.-RA! SINS PRODUCED Provide financial assurance for - . . mechanisms as a cost-saving option for '
oses FROM GRAPES GROWN IN decommissioning funding by selecting licensees that are able to meet the for CALIFORNIA from a variety of mechanisms: surety stringent financial test. bond or letter of credit, prepayment, ^ The NRC's decision to add self-
,. Accordingly, the interim final rule insurance an external sinking fund
- amending 7 CFR part 989 which was guarantee to the. list of approved .
on coupled with a surety or insurance,i . Published at 63 FR 11585 on March 10, unancial assurance mechanisms for drting parent company guarantee for licensees qualilled licensees came in response to
, 1998,is adopted as a final rule without that have a qualifying corporate parent, change. a petition for rulemaking filed by -
and, for certain financially strong . General Electric and Westinghouse-ly - Dated: May 26,1998. corporations, self-guarantee. A (PRM-30-59, Notice of receipt 1 Robert C Keeney, statement ofintent regarding obtaining Published September 25,1991 (56 FR ta Deputy A dministmtor, fruit and VegeraMe funds to satisfy decommissioning 48445)). The petition presented a case Pmgmms. obligations may be used by some . . for allowing self-guarantee as a cost-IFR Doc. 98-14422 Filed 5-29-98; 8:45 ami licensees that are governmental entities saving option for corporate licensees .
"""****" " ~
(for example, public universities whose that an able tb pass a stringent financial charter provides for a direct link to the test.. l , neat- State Government). . . . . Subsequent to the December 29,1993, 0-NUCLEAR REGULATORY To date, self-guarantee has not been final rule, tfie Commission initiated a IN avellable to nonpmfit licensees such as . study to determine whether criteria and hospitals and universities, or to for. could be developed and applied by NRC sduce 10 CFR Parts 30,40,50.,70, and 72 profit licensees who do not issue bonds, for DonPmfit licensees and non-bond-because the financial test for self. Issuing commercial limnsees to use self-g RW 3m-AF64 guarantee uses the reting of the bonds guara'atee while maintaining the
,the issued by the liansee as one measure 3 self. Guarantee of Decommissioning
~
Funding by Nonprofit and Non-Bond- " *' ' th a la ility f deco as)ni ' I'*
, t fund d ui funds wh,en needed. The study, "U#*"****'.
" Anal sis of Potential Selff,uarantee AGENCY: Nuclear Regulatory - ** The NRCis guarantee, extending previously limitedthe use of self - Tests [or Demonstrating Financial to bond-Commission. .
' issuing industrial corporations, to Assurance by Non refit Coll and
^
Tin ACTION: Final rulec additional categories of qualified "Itles d tais an by
$e for t
SUMMARY
- 'Its Nuclear Regulatory Bonds," NUREG/CR-6514 a Gune 1997),
D- if t tids Commission is amending its regulatforts extension can be made without identified a variety of financial critaria y to allow additional materials limnsees jeopardizing the present high level of , that could be applied to additional g and non-electric utility reactor licensees financial assuranos thatthe .. categories #censees agarding the use ms who meet certain financial criteria to decommissioninbobligation dseharantde Ma%na self-guarantee funding for decommissioning. Certain commercial Allowing qualifi nonpmfit and requires. non-. in this rule wem elected aNRC corporate licensees who issue bonds am bond-issuing licensees to self-guarantee - based on infonnation in mpon
,g will redum the costs of complying with Puhticrsm,-ts on the Proposed Rule
[g,f . {resently allowed to self-guarantee NRC financial assurance requirements ding if they meet stringent financial for those who meet the specified ' Ihe NRC ublished a notim of g criteria. This rule allows nonprofit . criteria. -> a"- por,ed emaling on April 30',1997, d licensees, sut:h as colleges, universities, f6 FR 23394). In response to this I ttm's and hospitals, as well as some . notice,16 comments were received: 2 irar uant to so crR se.nt.)(31.an doctrie l on' commercial licensees who do not issue utstr can atisfy the dec==.ni iantas funding - from States,6 from colleges and
' bonds, to self-guarantee funding _ aquirwa.ats with an externat sinking fund. . . universities. s 3 from association, s 3. , _fro'm l provided they meet similarly stringent "*"d!"8,$$ d 3, the N s Single copies ar pail.bl. hom the NRC l bday. financial criteria. Allowing additional Notic,etPropo d Rui making that eddria l
qualified licensees to use self-guarantee cent.ct. cept are evaliabi .t current rat from t"Y . A-s- W fundins.=uranc 1 . the U.s. coveranwn: Prinuns Ofrus. P.O. Box 80 reduces licensee costs while providing "at d wis l.ctric aulity a_ (= arosz.wohinston. Dc ro4ca-esze it.i. phon . e ade9uate assurance that funds for "*"'* . tros) :12448 m hun 6. Neuonal Technical g, gg decommissioning will be available D""" ^""'*"'" **9."r'" Power R.'*.'ctore-62 Decommlaaloning Nucl. 4rsas.Sirptember to.19erl As inform.flon FR S rvice writing NT15.t s285 Port when noeded. ofthia Royal Ro.d, Springhe d. VA tits 1.Copi.s are propo a rui ch. NRc i.can.i .m ding si. .vailable sor inspection or copyinc, for . I from EFFECTIVE DATE: July 1,1998* d*B"Ad*" "' ~*3*C8 "'*'Y~ ""d 'Ti "8 ** ' ** N8C P*** D"**"""' 8 distinction betw a financial assumace FOR FURTHER INFORMATION CONTACH Dr. mech.ni ms oppiscable to power r ccor tican NW, weshington. DC; the ****PDR's
81** I"ddress mailing . '"" 6.
Clark Prichard, Office of Nuclear Matt Stop LL-e. Washinston, DC toss 5-ooo1: and non-po-c r ctor lican toi phon. (202) as4-stra; tax (2o2) ass-3 43. 3 r
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o 29536 Fed:ral Register /Vol 63, N 104/ Monday, lune 1,1998/Rul:s and Regulations ., , private c rations,1 from a hospital, reasonably assume that such a college or late these extraordinary returns and 1 from e United States university can be allowed to self- extrabe into future and to budget ; p f Enrichment Corporation. The. . guarantee for the costs of . endowment s ending accordingly. commenters all supported the extension decommissioning because it possesses y However, in is context it is instructive ' ! ciself-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. . return after spending for the 10-year urged NRC to adopt t!ge proposed rule Even assuming the prernise 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 e,nded June change to the financial criteria. reducing the mult!ple to 15, as the 30,1994,it is 0.9 percent."(1994 o l Criten.o for Colleges and commenter suggests, is desirable. NACUBO Endowment Study, National J. Finones. Universities Although a real rate of return of 3 Council of College and University
~
. percent may appear low under the -
Business Officers.1995, p. 4) ~? The financial test criteria proposed for market conditions prevailing during Therefore,the NACUBO study colleges and universities were an A or certain periods, there is a substantial bett:r bond ratin8 or, for those not ' recommends strongly that institutions body of empirical evidence indicating keep their spending from endowment having 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 sistes that: times projected decommissioning costs, guarantee is required to fully fund a whichever was greater. nere were no trust fund for decommissioning in the Historical precedent indicates that a fund comments regarding the A or better year before the beginning of invested approximately 60 percent in 1 bond rating, but several commenters domestic and foreign stocks. 30 percent in decommissioning, and the licenses faed incnme, and 1o percent in various other { objected to the non-bond criteria as too relies on earnings from endowment to i conservative ' asset classes inevitably experiences recurring create the trust, it is the annual earnings periods of absolute decline in market valuee Comment: 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 reduction in spending for an institution decommissioning costs is excessively decommissioning that must equal the stickins m a licy of spending a fixed. conservative. NRC's basis for the 30 reguiredprovided multiple is that an amount of money 30 in.ormation amount. NRC has reviewed in Ibbotson ,, the 7,",,,',,0p8[,,3],$,7Yncal F times decommissioning costs lavested Associates, Stocks, Bonds, Bills, and year 1994. the evange endowment spending ct 3 percent would yield an annual Inflation 1995 Yearbook,1995, which rate sported by responding institutions is a.0 amrunt sufHcient to fund those costs. pe,c nt. on average. the smallest published a summary of market results endowments ($25 million and less) spent he commenter said that it should not for the 69-year period from 1926 to 1995 more (7.2 percent) than the larBest (4.5 be dif!! cult to obtain secure investments for five categories ofinvestments: small percent), and public institutions spent more ylilding 6 percent; thus an appropriate company stocks,large com y stocks, (6 8 Percent) than private institutions (5.7 multiple would be 15 based on ' long-term govemment bon long-term percent) * *
- With the sole exception of the investment yield. corporate bonds, and intermediate-term (5 percent spent by the largest universities, Response:NRC's objective in selecting government bonds. - , these spendbg ruta am m compatible with .;
financial criteria was to provide a level
- On a year by-yearbasis,less risk cf financial assurance risk similar to the investments, such as treasury bills *y . 7t sta d e ot .i m
iowm Over time. It is possible (difficult. but h financial assurance nsk in the existing showed the most frequent positive self-guurantee. However, for colleges returns, but their annual returns also possible) for the exceptionally well-managed institution to spend 6.0 percent of a 3. year l and universities that do not issue bonds, wers relatively low. Riskier investments moving everage of endowment market values, lack of a propriate data on default risk showed a broad distribution of returns, and still preserve purchasing power. made a mancial assurance risk analysis from very good tovery poor. Overall, However,it is courting disaster to spend at " I impossible. For these licensees, NRC however, with the exception of small an annual rate of e.0 percent toward the tail deliberately chose financial criteria - .t which are conservative, and large company stocks, the average , and of a long bull market. (1994 NACtJBO i inflation-adjusted earnings (geometric Endowment Study,1995, p. 5) NRC did state in the preamble to the ;s mean) for these categories of Based on these considerations, the ' proposed rule, at 62 FR 32296, that investments were less than 3 percent. In NRC continues to believe that a C'
"[the multiple of 30 has been chosen a number of years, earnings for stocks because this would mean that any level relatively conservative criterion, such as I ef decommissioning costs could be also were less than 3 percent. Thus, real the 30 times requirement,is a r
' Investment returns over a one year reasonable criterion for the I covered by the annual return on an
end;wment invested at 3 percent." period may not even match conservative decommissioning self-guarantee test for earnings assumptions. colleges and universities. The NRC does However,it is important to note that NRC was not assuming (1) that The study of endowment sponsored ' not acx:ept the commenter's [ by the National Council of College and recommendation to adopt a
- Institutions willin fact finance " '"
University Business Officers (NACUBO) substantially less stringent criterion. E decommissiordng out of endowments, published in 1995 also emphasized a Comment: A commenter objected to (2) that endowments can be spected in concern for this earnings verisbility in the requirement that unrestricted cll circumstances to grow at a rate of at its analysis of college and university d least 3 percent annually; or (3) that endowment investment. First, endowment be at least $50 million or at - institutions can be expected to least 30 times the decommissioning cost i U. NACUBO's study noted that current estimate, whichever is greater. The . d-reallocate up to 3 percent of their high rates of return rannnt be expected gg spending from endowments in a one- requirement should be compliance with 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 h-selected to serve as a measure of the times decommissioning cost estimate, g institutions are searching for ways to but not whichever is greater. cverall financial strength of the bridge the gap between revenues and , d' institution, indicating that NRC can. Response: As previously stated. NRC expenditures,it is tempting to chose conservative financial criteria for d I 3 i i*
4 7 Federal Register /Vol. 63. No.104 / Monday, Jun31,1998/Rul;s and Regulations29537
,- non-bond-issuing colleges and ~
~
i universities, aimed at assuring the up front are activities evennot though completed decommissioning within a . decommissioning costs] was exce financial viability of a licensee quallSed single year. For this reason NRC's . conservative. It appears to reflect an I to self-guarantee. His is the only criteria for detennining whether & expectation that the decommissioning requirement that would apply to non- ' will take a short time whereas a realistic limnsee should be allowed to selfi bond-issuing colleges and universities.,- whereas non-bond-issuing hospitals or guarantee the costs of decommissioning time frame should be 2 years NRC should consider a multiple of 30 or commercial licensees would be sub}ect . must consider the possibility that the Licensee will be required to fully fund less to be appropriate. to multiple financial ratios as financial g,- 'nse:ne requirement that tests.It is designed to ca ture two decommissioningin,the
- immediately prior to the inning of . hosp operating revenues be at least -
measures of financial vi 111 :(1) decommissioning activities. ne . 100 times decommissioning costs is a ' overall financial strength an (2) . th C financial strength alative to size of limnsee would fund a standby trust if decommissioning obligation.ne ' ' either (1) the licensee no lon8er . [te no h ther ce see. qualifies to use the self-guarantee t'o . sufficient financia3 strength to segf-overall financial stren th of an provide financial assurance for institution is heavily pendent on the guarantee. However, a potential size ofits unrestricted endowment- decommissioning, even ifit was not yet consequence of self-guaranteeing could Specific ability to fund required to conduct decommissioning. - .be the need to fully fund a trust fund in decommissioning expenses is measured or (2) a licensee using a self-guarantee > a short period of time if the bcensee by the ratio of unrestricted endowment is required to carry out . ceases to be capable of passing the self-to decommissioning costs. A financial decommissioning.NRCcurrenti does guarantee test or if decommissioning test based only on ratio to not allow licensees to consider . must be canied out. As discussed above, impact of earnings during the " syout" the operating res enus multiple decommissioning cost might allow an institution without adequate financial period (the period during whi funds criterion does not reflect any are being expended from the finandal expectation concerning the length of strength to pass ifits decommissioning costs were Iow. A test based only on the assurance standby trustio pay for time during whien decommissioning size of the unrestricted endowment decommissioning)in calculating the - will ocx:ur.Derefore. NRC does not might be inadequate for thos* amount of funds that must be set aside accept this recommendation. institutions with the highest for decommission . nerefore, the . . NRC disagmes with a commenter's - Cornment: A commenter found the decommissioning costs. Both threshold requirements are needed to provida suggestion that the expected duration of rationale that requires hospitals to meet decommissioning activities should all four financial ratios tests unclear. . assurance that an institution can meet apply to the determination of the - - This commenter believed that using ~ decommissioning obligations when only the operating revenues / ~ neosssary. ap riate multiple. decommissioning costs ratio would ' Comment: A commenter stated that to provide reasonable assurance NRC's rationale for a multiple of 30 investment entt A commenter renmmends' sphity'to p that (based on the combination of . yield of 6 percent and of rovide decommissioning implies that decommissioning costs are . hmding' paid from investment yields over a 1- investment yields over 2 to 3 - - ' year riod. However, it is more rather than 1 ) the multip cation Response:The finandal rados test for reali ic to assume that any - factor (bel from 30 to 10 with hospitals in the rule was carefully decommissioning activities wherd - le conse selected to provide a level of financial
**[esponse:rvatism."For the reasons stated in financial assurance arrangements are assurance risk similar to the financial -
involved will tre considerable responses to tbp preceding comments,. assurance risk in the existing self . coordination wi regulators and NRC does not accept this . guarantee. The four ratios in . financial services involving 2 or 3 years recommendation. ..a . , . . combination represent the financial test to complete. This consideration also that best achieves this goal. A financial
- 2. Financial Criterio for Hospitals, ,
im lies that the appropriate multiple test using just one of these ratios would sh uld be 15 rather than 30. . The financial test criteria proposed for not re resent the same level of risk and Response:NRC recognizes that hospitals was an A or better bond rating woul not provide an adequate level of. decommissioning may occur over a or, for hospitsis not having a bond financial assurance. Using only the ratio
, period longer than one year. Re rating, a financial ratios test consisting ~ of operating revenues to 1
multi le of 30 was chosen without of the following: (a) Liquidity-(current assets and decommissioning costs would - reg to how many years it would take d reciation fund, divided by current - completely ignore such determinants of
, to decommission a facility. We financial stren 11 tiltles) greater than or equal to 2.55. Indebtedness, commenter is attempting to make this (b) Net andgth as liquidity.
profitability. The linkage the key factor in arriving at an total exp Revenue-(Total revenues less financial test used for non-bond a repriate multiple. However, enditures divided by total revenues) greater than or equal to 0.04. commercial licensees includes several-f owing this line of reasoning. .e .. .. stretching out the time length of (c) Leverage-{long term debt divided yratios' not Just one. The non. bond by net fixed assets) less than .or equal to nan 1' $ I d decommissioning would imply ever 0.67. , 6 d a sin le ratio, but decreasin multi les. . (d) Operating Revenues at least 100 NRC's }ectiv is to ensure that -it is'the ratio of unrestricted endowment i decommissioning will take place on a . times decommissioning costs. to decommissioning costs. Unrestricted timely basis. The financial assurance There were no comments regarding,' endowment is a fund readily available ! the bond rating criterion but there were , to meet decommissioning expensesc regulations are intended to assure that ined unte funding does not prevent several comments on the non-bond. criteria, Hospital operating revenues are { timel decommissioning. Timely different because these funds may not Comment: A commenter believed that s be readily available to meet decommissioning may require that all the. selected multiple of 100 [ hospital decommissioning funding be available decommission.ing expenses due to other operating revenues at least 100 times hospital costs.
,m.
e-l . l L_______________ _ _ _ _ . _ .
29538 Federal Register /Vol. 63, No.104 / Monday, June' 1,1998/Ru'les and Regulations .
. 3. Prohibition ud Using a Guarantee in rating, despite declines in the finandal accounting prindples to assess '
- compliance with a financial test Combination With Another Finandal . . condition of the issuerc daigned using U.S. GAAP. Finally, the Assunmce Mechanism he Problem with an insured bond
%from the standpoint of financial present financial 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 art 40.36(e)(2),50.75(e)(2)(lii). 70.25(f)(2)' licensee / issuer no longer qualifies to to ensure that licensees that are una le rad 72.30(c)(2) provide that neither a - self- tee. The bond can retain its to use a particular mechanism have parent company guarantee nor a hi mhg despite a decHne in tb ' other alternatives available. NRC does
' guarantee by an ap licant may be used financial stren of the issuer. .
not expect firms to change their in combination wi other Snancial Furthennore, e insurance coverage accounting practices in order to make methods to satisfy financial assurance provided by the bond insurer, which is use of the financial test be.ause a requirements.These commenters a guarantee of p ent of rincipal and number of other options are avellable.
. wanted to know the reasons for these interest in acc ce wi the insured .
restrictions. ' bond issue's p ent schedule, will not 8. Em.ancia/CritenaforNon Bond.
'Res nse:This rule makes no change Issuing Commercialkensees tional source of In th already existing prohibition hrovide an adding fo decommissioning. NRC does The financial test p sed for non-against combining parent or self- not agree with th commenter's band issuing comme licensees was:
guarantee with ano er of financial suggestion that it accept ratin on (a) Cash frow divided by total assurance inachanism. Issue of insured bonds as an acceptab e criterion liabilities greater than 0.15. whether or not to allow such a for self-guarantee. (b) Totalliabilities divided by not combination is broader than the focus of worth fees than 1.5.
- 5. Requirements for Financial (c) Net worth greater than 310 million this rule.The NRC has limited *"*"""" -
or at least to times decommissioning experienca with parent and self-guarantee to date. It is expected that the Comment:Some commenters objected costs, whichever is greater. to the proposed requirement in Comment: A commenter objected to NRC will periodically reevaluate its _ Anancial assurance program in the Appendices D and E to 10 CFR Part 30 the not worth criterion of not worth future and could reassess the need for that licensees must conduct accounting greater than $10 million or at least to by U.S. generally acce tid accounting times estimated decommissioning costs. the prohibition. Prindples (GAAP). s does not This discriminates against well-funded (Insured Bad Rah8 ' .* recognize the increasingly multi.
~
smaller firms that could easily self-Comment:Some commenters objected national nature of materials licensees. guarantee smaller decommissioning 13the pro financialcriteria which Foreign ownership of major material projects,but could not meet the 510 deal with d ratings. Asproposed. for licensees is currently a reality (e.g., million not worth requirement. Institutions that issue bonas, only a Siemens, ABB, Framatome) and can be Response:%e 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 accounting practices to be issuing commerciallicensees was to would not be eligible. no justf Bcation used is a significant corporate decision make the financial assurance risk of for this limitation is not warranted ' affected by many factors. It is these criteria equal to the financial because bond insurars evaluate the unreasonable to require that c rate assurance risk of the financial criteria practices of major multi-natio firms for licensees that issue bonds (estimated financial issuers andcondition ofpolicies avoid lasuing the prospective to ~ be changed for a licensee to tobebeallowed approximately 0.13 percent per universities that are not creditworthy. to provide self-guarantee of year). According to the analysis of
' Consequently, the presence of bond d===tssioning funding. %e rule potential financial criteria carried out as insurance indicates that the issuer is in should allow licensees to certify part of the proposed rule, the financial sound fmancial 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.3 Firms with smaller net worth financial condition of the issuers of the accepted accounting principles. have a larger default risk than larger bonds at the time the debt is insured.
- Response:Financialstatements firms. Thus, the $10 million net worth Bond rating agencies, such as Moodys . prepared in accordance with foreign requirement is an essential part of the -
and Standard and Poors, typically accounting 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 because of the insured status of the . . standpoint of a financial test for self- rule. - bond. - guarantee. First, the financial test was 7 mailssm.ning Cost Estimotes
. NRC's concerns with accepting developed based on an analys!s of insured bonds as a criterion of financial financial data for U.S. firms. Comment:Several commenters raised '
assurance arise from the possibility that. Consequently, the financial test criterin ' the issue of how decommissioning costs -
- over time, the lasured bond rating could . may not be applicable or effective when were estimated. %e NRC should mask adverse changes in the financial used in conjunction with financial data encourage best available information -
condition of the bondissuer afier the that were prepared in accordance v'.8 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 Er:: s to rely on financial decommissioning and renovation, rather must ascertain whether it continues to stat. nents prepared according to than commercial estimates by pass the financial test for self-guarantee accounting principles in use in their . ~ 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 W.distrative burden on NRC. The '" Analysis of rotatial s.trowanta Tats kw examples cited by the commenter, for D" aunsnnan tal Assmm papron: . notify NRC and establish alternative financial assurance. However, insured instance, might require NRC to know D"".',fN"p'"d[g,*[,d'y ""d k,Rr.c/ bonds would continue to hold their and apply German, Swiss, and French cx-asse p. ..r. jun. iser, j-
- 1 l
~
a Federal Register /Vol. 63, No.104/ Monday, June 1.,1998/ Rules *nd Regulations'
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29539 Conservative assumptions, such as use adopt the essential objectives of these of rates charged by contractors and high 4ections in order to m#ntain an .. CFR Part 76). USEC stated that it would. _ _ 1 - estimates of waste disposal costs, benefit from the opportunity to reduce ! J' adequate program. The remaining the costs of complying with NRC should not be used. A commenter also _ sections of the rule, including those l noted that assuming a period for short- financial assurance requirements, which which allow self-guarantee of certain . USEC estimated would presently cost in lived isotoped to decay before commercial corporate licensees who decommissioning begins would be a excess of $100,000 per year for letters of issue bonds if they meet strin8ent . credit and surety bonds. realistic assumption. Also, a typical financial criteria, were designated as . . Response:Under 10 CFR 76.35(n), licensee will not have the maximum compatibility Category D. Category D amount of material allowed by the USEC (or the Corporation) is required to license at the time of decommissioning. to adopt means the Agreement States a compatible rule. . . .do not need establish financial surety arrangements - Response:This rulemaking makes no to ensure that sufficient funds will be The final rule chan8e, which will - available for the ultimate disposal of changes in the requirements for how. . extend the self-guarantee financial licensees estimate decommissioning - waste and depleted uranium, and .- - assurance option to other material and costs. Decommissioning cost estimates, decontamination and decommissioning non electric utility reactor licensees that activities that ase the financial or use of the certification amounts in to meet certain financial criteria, is also CFR Part 30, are already required by responsibilityof theCorporation.The ' existing regulations on financial designated as compatibility Category D. funding mechanisms currently listed in Under compatibility cattBory D,- the regulation as potentially acceptable assurance. This rule simply adds an Agreement States may choose to additional financial assurance _, for use by the Corporation include . maintain a more stringent rule by not prepayment, surety, insurance, and an mechanism to those already permitted adopting the self-guarantee option. in NRC regulations. ' external sinking fund, but do not' include self-guarantee or statement of
- 8. Agreement State CompatibihtyStatus Financial ofFinancial Assurance Regulations ; ..
- 9. RequimmentforAnnualPassage Test
,.
- f ,* f f '
of[ Commenb'A commenter stated that availab lity of funds for any activities
,fg*,
Comment:Some commenters believed Section ILC(2) of Appendix E to Part 30 that are required to be c that the proposed regulations should be should be modified so a qualifying assigned a compatibility status of Level 'b Corporation. ~ 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-ensure consistent requirements for Energy Policy Ad of 1992. It is a wholly guarantee every year, University. owned government corporation, whose financial surety arrangements and will endowments are very stable. In preclude the unintended creation of powers are vested in a five-member ' competitive disadvantages between addition, Section II.C(3) providea . Board of Directors appointed by the ' facilities in Agreement States and Non- sufficient assurana that NRC will be President of the United States and Agreement States. notified when a licensee no longer confirmed by the Senate. However, on 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. . was published in the Federal Register , university endowments are relatively the President under which USEC will be (see 62 FR 23394, April 30,1997),it was stable and Section ILC(3) provides forthe sold either to another co ration or to public through a st offering. designated item as awith in accordance Division the 2.,compatibility notification, the provision for qualifying Under the USEC Privatization Ac 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 l time. A Division allowed an Agreement State to 2 level of compatibility guarantee program to provide adequate privatization and required that s' I promulgate equivalent, or more assurance of decommissioning funding, " reliable and economical domestic stringent, financial assurance the annual ~requalification" provision . source of enrichment servims" exist + is necessary. NRC must have assurance following prfvatirationc /, regulations than those of NRC Under the new " Policy Statement on - of financial strength on a timely basis. Although the NRC is not currently Adequacy and Compatibility A self-guarantee rolles solely on the aware of any reason why it would be ' Agreement State Programs,"y of licensee's ability to fund . Inappropriate to consider expandin8 the (see 62 FR decommissioning. There is no backup 46517 September 3,1997) Agreement category of funding mechanisms ' States must adopt NRC regulations such as that provided by a third-party available to the Corporation to having particular health and safety financial assurance mechanism. The demonstrate the availability of funds for requirement for repeating the financial the actions required under 10 CFR significance and those necessary to maintain compatibility with the test yearly is not unduly burdensome on 76.35(n), NRC does not believe that it . Commission's regulatory program. a licensee and gives NRC information on . would be feasible to do so in the current i The NRC financial assurance the financial condition of the licensee rule. First, USEC was not included in ' i on a timely basis. This requirement is any of the analyses performed to regulations,in effect when the neW I policy'was implemented, were . T ' not unique to colleges snd universities evalcate potential self-guarantee tests ,' designated as having health and safety or to this rule. It is found in the self. for demonstrating financial assurance. significance. Specifically, sections (a), guarantee financial tests applicable to e NRC believes that delalled analyses (b). and (d) of Parts 30.35,40.3,6 and . ' ~ other types of licensees, both a profit ' nd . should be' undertaken to ensure that al1'
~
70.25, which require that licensees must nonprofit. .
- 6. critical factors have been considered.
consider the cost of decommissioning 20. Use of Self-Guarontee by the United . Second, USEC's current and future-their facilities and that those costs must. States Enrichment Corporation a tuation with respect to the costs that be provided for through a financial Comment:The United States , it might incur is substantially different , j assurance mechanism, have particular Enrichment Corporation (USEC) from those of the licensees included in health and safety significance and were the current rulemaking. In particular, 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 hegulated by NRC unde.r10 76.35(n) are very different from those
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29540 Federal Register / Vel. 63,' No.104/ Monday, Jun21,1998/Rul:s s.nd Regulations conducted by hospitals and universities. . which can be used by qualified ' basi'i. Therefore, Category D has been' and the non-bond issuing firms covered fit licensees and non bond- assigned to these rule provisions. F g 8
, et sbe of the obil 8 ations.Appendix added to 10 CFR Part td einHi .
P that USEC might be requimd to cover is 30 to establish requirements for self. uncertain and will not be determined guarantee by non-bond issuing The amendments will allow qualified
. until a later date, although it is known commerciallicensees. Appendix E is nonprofit and non-bond-issuing ,
that many of the costs will remain the added to 10 CFR Part 30 to establish licensees the opdon of using self- 1
. responsibility of the U.S. Department of,.. requirements for self-guarantee for guarantee as a mechanism for financial !
EnerFy (DOE). Under 10 CFR 76.35(n), nonprofit college, university, and assurance for decommissioning. For- a
' DOE is responsible for those aspects of hospitallicensees. . profit corporato licensees that issue )
decontamination and decommissioning bonds are already allowed to use self- s E of the gaseous diffusion plants (CDPs) N N## ',O -
,; guarantee if they meet the regulatory _l
' criteria. Other licensees currently may assigned to DOE under the Atomic , Section 40.36 is amended to permit Energy Act. DOE also is responsible for self-guarantee for financial assurance elect to use a variety of financial
. all environmental liabilities associated which can be used by qualified . assurance mechanisms, such as surety with the operation of the GDPs before nonprofit licenses and non-bond-bonds, letters of credit, and escrow July 1,1993. According to USEC's issuing licensees. . accounts to comply with
- Annual Report for 1996. "[e]xcept for 10 CFR Por150 .
* ** """ " "8 "8"'" "*' '
P certain accrued Liabilities that will be ~ action is intended to offer nonprofit and specified in a memorandum of ' 'm . Section 50.75 is amended to permit
": self-guarantee for financial assurance non-bond-issuing nuclear materials licensees and non-electric utility reactor agreement entered into prior to .
' which can be used by liSed . . licensees greater flexibility by allowing brivatization, all bilities of the Company through the environment! non non-bond + an additional mechanism for licensses date of privatization will remain issu. Profit inglicensus. ' licensees an)ua . , , ,,,,. that meet the financial criteria for use of ,
obligations of the U.S. Government." ' 20 CFR Port 70 ., [ h l, t .
' **hNs$n to the NRC's lations vin Section 70.25 is amended to permit simply adds one more financi talM tiers) ore.
self-guarantee for financial assurance - as of June 30,1996. USEC had accrued assurance mechanism.to the - liability of $303 million for which can be used by qualified mechani ms currenti available. It does , transportation, conversion. and nonprofit licensees and non-bond not affect the cost of commissioning , disposition of depleted uranium issuing Heensus. ,, materials and non-power reactor currently stored at the CDPs. The 1996 facMea. AHowing se5 guarantee for 20 CFR Port 72 Annus1 Report states that **USECIs additional types of licensees does not
! Section 72.30 is amended to permit ' lead to any increase in the effect on the -
_ evaluating various pro osals for the self-guarantee for financial assurance dis uranium, and ~ envuonment of the decommissioning which can be used by qualified non- activities considered in the final rule f, position "k of deple n r!y" le bond issuing licensees.- published on June 27.1988. (53 FR .
' Compatibility of Agreement State 2M18), as analyzed in the Final Ger.eric ta reduce future cost accruals * * *.
Pursuant to the USEC Privatization Act, Regulations .
- En ' , P "
all costs and liabilities related to the Doco s n af u ad Un
'The current NRC regulation which (NUREG-0586, August 1988).'
, disposition of depleted uranium , ~ allows self-guarantee of certain . ' Promulgation of this rule does not generated prior to the privatization date. commercial corporate licensees who introduce any impacts on the
~
are the responsibility of DOE. Fourth, . Issue bonds if they' meet stringent 2 environment not previously considered until privatization has occurred,- ' financial critaris is designated as . by the NRC. Therefore, the Commission important information about.USEC's - compatibility Category D. This final rule has determined, under the National futum corporate structum and change, which wfIlextend the self-
- s
- Environmental Policy Act of 1969, as ownership will remain uncertain. As guarantee financial assurance option to ' amended, and the Ccmmission's noted above, Congress has allowed . other material and non-electric utility regulations in subpart A of to CFR part USEC to be sold either to another '
reactor IIcensees that meet certain 51, that this rule would not be a ma}or 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 privatization occurs could affect the - . means the agreement States do not need buality ofan the human environment, and erefore environmentalimpact
. NRC's analysis of financial assurance .
to adopt a compatible rule. The Category statement is not required. No other alt:rnatives. Because of the need to ~ D designation was determined in eviluate all of these factors, NRC has agencies or persons were contacted in > accordance with the new " Policy ,
' making this determination. The NRC
_ . detennined not to include 10 CFR part Statement on Adequacy and ' ' other i 7Jin the current rulemaking. . - . Compatibility of Agreement State - 7 staffis documents notrelated aware to t of anfe environmen Changes From the Proposed Rule Programs," approved by the . - . _ _ Commission on June 30,1997. The final *coptes are available et current rates frorn the Them am im &anges fmm the , . rule change does not involve a basic U.s. covernrnent Printins ornce. P.o. som stoat. Proposed rule. radiation protection standard, activities Washinst n. oc to4ca-este Nephone troz) sia. Section-by-Section Description of that have direct and significant effects *Ntbb, "Yn*s
- s. rt S ls2sN aURoe[
Changes in multiple jurisdictions, or essential sprinsn.fd.vA stet. copies are available for objectives which an Agreement State inspecdon or copying for a fee frorn the NRC Public M UR Nrt 30- ,- should adopt to avoid conflicts, gaps, or D curnent Roorn at 212o L street NW. Washington. Section 30.35 is amended to permit - ' duplications in the agulation of Ni ,g1",E*Ns ' o ieYo$'sN' s. I self-guarantee for financial assurance agreement material on a nationwide- fax (zoz)su-23 3. - 7 i I
" 6
Fedhr..I Registir/Vol.'63 'No.104/Mondsy, June 1,1998/ Rules an 1 Regul:tions 29541 l J impact of~this action.b fomgoing
)
Regulatory Flexibiuty Certiacation Radiatian protection, Reporting and I constitutes the environmental ' '" ' ?. -* In M - with tim ' latory - mcordkeepingmiuirements Scientific assessment and $nding of no sign 1Bcant Flexibility Act of 1980 (5 U. .C 605(b)), al Pment, Security measures, Special
}C impact for eis mio. '
, the Commission catines that this rule nu material. l g Paperwork Reduction Act Statement .will not have a signincant economic 10 CFR Pht 72 ' "* - ' I This finalrule amendsinformation impact on e substantial number of anall Manpower t'rsining s. Nuclear collection requirements that are subject entitles.This rule would expand the materials, Occupational and^
+
rk Reduction Act of 1995 bwM msa === i health, Reporting and recordkeeping to the Peb1 et seq.).Neo to mm , (44U.S. Ananci assurance requirements, thus Qul8*ments, Security m**sures,PS ent ment and u
. (OMB), approval number 3150-0017' '
[* Y a els rub For'the reason's ask out in the'f
-4020 -0011. 0009,and-0132. would result in signl5 cant cost savings - Preamble and under the authority of the Atomic Energy Act of 1954, as amended, b public ng bustlen for this . to q,,gfy g,, gg,neces. .
the Ene isation Act of 1974, ~ information co on is estimated to Bacidit Analysis ' as amen , an 5 U.S.C. 553, the NRC 4 a 9 to 14 hours respones, ' N NRC ha demmingg ~ is inclu ng time for m b following amendments-haraA revisions (10 CFR 50.100 to 10 30,40,50,70, and 72. I lastructions, eserch existing date sources, theringan maintainingthe ad 72.6 es park PART 30--81ULES OF GENERAL data , and completing and - , Canmieslan's regulaums em am iming APPLICABIUTY TO DOASESTIC reviewing the information collection. OI8 '" ruk b b rub ims LICENS500 OF BYPRODUCT d comunents u 8 "AMAIAL-
. _ " * * " not imPoes a backSt as de8ned in to - . .
. a.
for ti""'g ucin b ,to GR 50.100(a)(1) or 72.62(a), b rule. 1.N authority citation for Part 30 extends the self. guarantee altamative for continues to read as follows:. nt Branch (T-6 F33), U.S. d8m888t'8tI88 "I**'""'"8 Aemberity: sees. st,82, to1,1st, t es,1as. NucisInr Regulatory Commission. Anandal amurance h quaBSed non- as Stat. ess, ses es3, est ess, as amended. Washington DC20555-0001,orby St and non-bend.lasuing lima ==== sec. 234, as samt. 444, as ==.-a.,e (42 U.S.C. Inkram ela'tronic man a the availabili of this option 2111,at12,2 01,22 2,22:3,223s,22 sal:
. BJSGNRCGOV;and to the Desk OfBeer, does not poesanew on secs. 301, as assmoded,3o2,20s. as Stat, Hansees of commercial reactors 1242, as easeded,1244,1348 (42 U.S.C.
OfBee ofInformation and Regulatory as41 seat, sees). Affairs, NEOS-10202. (3150-0018, or inde t' fue ins (ISIk'I . According
* "8' .
OfBcs of ment and Budget, insul ,h- Secuan 30.7 also issued under Pub. L. ru does not constitute a t 95-401, sec.10,92 Stat. 2951 (42 U.S.C Washington, 20503. eda tm Puhuc Protection Nassarass== . forthis Analrul@a,was og g 8851). Secdon under sec.184, 30.34(b) se Stat. also est iseumi as amended If a docyannt used to impose an '"' (42 U.S.C 2234). Section 30.61 also
. Ust of Sablocas imumt unds on. tsr.as Sim. 955 H2 Information collection does not dip y
- a currently valid OMB control n 20 CFR Flert 30 ' ' . U.S.C. 2237).
,, 2. In 6 30.8, peregrapli (b) is revised t'o the NRC may not conduct or sponsor, B uct taptorial Criminal and a person is not -road as fouown. .
to respond , Gover===nt contracts.- ' .3 - to, the information co tergovernmentalrelations, Isotopes, ' 938.8 inconomeenseasseen a, Nuclear materials, Radiation prosar*ian 8ellul'emenes: cess approves. Esgulatory Analysis , , Repordng and w " ---ing . * *' ' * ' c* * - ' ia *
- I h NRC has pmpared a analysis on this regulation.
das yois requirements. (* (b) h approved information collection requiresnents contained in I avaminna the costs and benefits of the 20 CFR Flert 40 ,\ % , this part appear in $$ 30.9,30.11,30.15,- alternatives considered by the NRC h Criminal penalties Govern ==nt 30.19,30.20,30.32,30.34,30.35,30.36,
' analysis is available for on in contracts. Hasardous maearials .. 30.37, 30.38,30.50,30.51,30.55,30.56 -
the NRC PubHc Document 2120 transportation, Nuclear metadals,' and Appendices A C,D,and E of fais L Stmet NW (Iower Level), Washington, Reportingandi " ;
- part. .
DC. copies of the anal may be ts, Source esatori . .- . ... . . .- , .t
,OfBeeof from Clark U lum. ? *
? '
- 3. In $ 30.35, the introductory text of Nuclear Materials Safety and '
~< ~~~#
Safeguards, U.S. Nuclear Regulatory 20 CFR Phrt 50 *'~ ^ Ph(f)(2)is revised to read as own. " Commission, Washington, DC 20555, ' ' Antitrust, ClassiSed information, - N. ' telephone (301) 415-4203. . Criminal penalties, Fire protection. 430.a5 Penanmaalaoeuronesand ; SmallBusiness"""---- - Enforcement I"I*'8""""*"'"I power plants and reactors,'R'adiation .. L ** s
*J Fairnem Am
, protection, Reactor siting criteria, , . (f) * * *
, in accordance with the Small Reporting and recordkeeping: (2) A surety method, insurance, or Business Regulatory Enforcement requirements. .
..; other guarantee method. These methods Fairness Act of 1996, the NRC has .. guarantee that d2 commissioning costs determined that this action is not a 10 &R Pwt 70 . +. ., ,-
will be paid. A sumty method may be :
" major rule" and has verified this- Criminal penalties, Hazardous A in the form of a surety bond, letter of determination with the Office of ' materials transportation, Material, credit, or line of credit. A parent Information and Regulatory Affairs," control and accounting, Nuclear company guarantee of funds for - i Of5ce of Management and Budget. materials, Packaging and containers, decommissioning costs based on a 1- -
n
i 4 . 29542 ' Federal Register /Vol. 63. No.'104/ Monday funs 1,1998/Rults end Regulations , financial test may be used if the J . company is msponsible as self-guaranteeing ' Commission, the licensee will set up and
' gustantee and test sie as contained in- ucensa and as parent guarantor. fund a trust in the amount of the current cost I
*PPendix A to this part. A parent 2
(2) Assets located in the United States estimates for decommissioning.
' ~
( com y guarantee may not be used In' amounting to at least 90 percent of total A ndix E to Part 30-. Criteria co lastion with other financial assets or at least to times the total current . i a.,m, -hsfoning cost estimate (or b . Re ating to Use of Financial Tests and l methods to satisfy the requirements 'of current amount required if certification is Self-Guarantee For Providing - 4 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- rhea ==t-ioning by Nonprofit (
6 arantee of funds by the applicant'or guaranteeing licensee and as parent-
' Colleges, Universities, and Hospitals consee for decommissioning costs '
based on a financial test may be used if tio of cash flow divided'by total L Introduction the guarantee and test are as contained . liabilities greater than 0.15 and a ratio of total ^An applicant or licensee rnay vide f in appendix C to this art. For .M habilities B divided by net worth less than 1.5. reasonable assurance of the avability of - ( commercial compani that do not issue . com. pany In addition, to pass the financial test. a-funds for decommissioning based on must meet all of the following { furnishing its own guarantee that funds will bonds, a guarantee of funds by the utrements: . be available for decommissioning costs and plicant orlicensee for
!) b company's independent certified ' on a demonstration that the applicant or [
mmisalonin costs may be used if ' Public sa:ountant raust have co the licenses passes the financial test of Section t the guarantee an test are as contained data used by the com in the ancial U of this appendix. The terrns of the self- C in appendix D tothis For nonprofit test, which is requ derived imm the guarantee are in Section nl of this appendix. entitles, such as colJ es, universities, independently audited year end financial This appendix establishes criteria for passing 6 statement based on United States generally ' - .the financial test for the self- arantee and and non rofit hospi s, a gu'arantee of accepted accounting practices for the latest 0 establishes the terms for a se arantee funds b the applicant or licensee may.. fiscal year, with the amounts in such - 9 be used if the guarantee and test are as D. Financial Test
- C financial statement. In connection with that
' contained in pendix E to this part. A procedure, the licensee shall inform NRC A. For co!!eges and universities, to pass the i guarantee by e applicant orlicensee . 8"""a latest a college or univasi must g within 90 days of any matters that may cause teria in P g
~ may not be used in combination with . b suditor to believe that the data specified oyre* ger a cyaragrap . d }
any other financial methods used to . In the enana al test should be adjusted and C q satisfy the requirements of this section Pan For applicants'or licensees that issue
- 2) h niu n test 2 or in any situation where the applicant 5 company must to bonds, a current rating for its most recent ~
orlicensee has a parent com of the tut o y within 90 days after close of ach uninsund unwllateralized,and o h:lding majority control of a voting succeeding ascalyear. > "=m=Med bond issuance of AAA,,AA. stock of the company. g surety (3)lf the Ucensee no longer meets b or A as issued by Standard and Poors (S&P)
. method orinsurance to provide - requirements of paragraph II.A of this or Asa. Aa. or A as issued by Moodys. -
financialassurance for =>% b licensee must send notice to (2) For applicants or licensees that do not 0 decommisafoning must contain the ,' owing cm onst k"'=%* L2" regulations. & notice must be sent pygf' d N 'g7,,t,
,s i Un'ited States of at least 550 million, or et least 30 e a '=- * '
- a carened mail, return med request timw b total current decomrnissionin cost e 4 New' APP 8ndices D and E to Part 30 within 90 days after the en of the fiscal year , estimate (or the current amount requin if g are added to read as follows: in which b year end anancial data show cert 15 cation is used), whichever is greater, g
. be b licansa no longer mwts the he all decommissioning activities for which g
.S M81 D to Part 36.-Criteria' 'I finandal test requirements. m licensee the coHege or university is responsible as a g gifating To Use ofhancial Tests and must provide alternative financial assuranca self.guamatosi licensee.
Self-Guarantee for Providing within 120 days aher b ead of such fiscal F os a m s th fi ancia1 st g Reasonable Assurance of Funds for F- - P C Da===lanioning by Casm=arcial IE. Company Self-Guarantee ph H.B.(1) or the criteria in Paragraph
. H.B. of this appendix: I Cesapanies nat Have no Outstandlag s h term' a selfsuarantee wlilch an of (1) For applicants or licensees that issue r Rated Beeds , j . . ,, -,. applicaat or licensee Turnishes must provide bonds, a curmnt rating for its most recent
- , , . .- ., . that: . uninsured.uncollateralized, and L Introduction -
A. Tne guarantee shall remain in fords 1 unencumbered bond issuance of AA.t AA. (
' An app!! cant or llanses m' ya'p' r' ovide
~, unless the licenses sends notice of or A as issued by Standard and Poors (S&P) t reasonable assuranca of the evauability( f canceDation certified mall, return recolpt or Ana. Aa or A as issued by Moodys.
funds for do-issioning based on requested.to NRC CanceUntion may not (2) For applicants or licensees that do not a furnishing its own guarantee that funds will i occur until an alternative Anandel assurance issue bonds, all the foHowing tests must be be available for dommmisaloning costs and awebanism is in place. .
- met: -
on a demonstration that the company passes B. The licensee shall provide alternative i (a) (Total Revenues less total expenditures) ', the financial test of Section H u this . Anandal assurance as specified in b , divided by total revenues must be equal to appendix.The tenns of the self-guarantee are ations within 90 de following receipt or ter than 0.04.
- - in Section HI of this appendix. This appendis the NRC of a notics cancsilation of the , long term debt divided by net fLxed - ',
establishes criteria for passi the financial .. guarantee. . .
. assets must be less than or equal to 0.67. 8 test for the self-guarantee an establishes the C h guarantee and financial test N (c)(Current assets and depreciation fund) I
. terms fbr a self. guarantee. lons must remain in effect until the - divided by current liabilities must be greater d-8 H.Financ M T ut . . e '"- until minalon a% has terminated the license or another Scancial assurance method <
than or equal to 2.55. (d) Operating revenues must be at least 100 '* A. To pass the financial test a company - acceptable to the Commission has been put must meet the following criteria: times the total current decommissioning cost la eflect by the licensee. (11 Tangible not worth greater than 510 estimate (or the current amount required if 1 D. 'Its applicant or licensee must provide certification is used) for all decommissioning A million or at least to times the total current - to the Commlulon a written guarantee (a . activities for which the hospital is
- decommissioning cost estimate (or the .
yritten commitment by a corporate officer) current amount required if certification is which states that the licensee will fund and responsible as a self-guaranteeing license. C in addition, to ass the financial test, a used), whichever is greater, for au carry out the required decommlutoning - 's decommissioning activities for which the . licensee must meet I the following activities or. upon lasuance of an order by the reqidrements: ( I . j
't; y
""*" Fedirst Regist:r/Vol. 63, No.104 / Monday, June 1,1998/Rults and Regulations 29543 g- (1) The licensee's independent cartified .ad, , public accountant must have compamd the.- PART 40-DOMESTIC UCENSING OF orin any situation where the applicant .
data used by the licensee in the flaancial test, SOURCE MATERIAL .. ' or licensee has a parent company (, 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 d continues to read as follows: stock of the company, Any surety statements, based on United States generally .. method orinsurance used to provide accepted accounting practices, for the latest Authority: Secs. 62,63,64, 65, 81,161, p 182,183,186,68 Stat. 932,933,935,948, financial assurance for fir, cal year, with the amounts in such 953,954,955, as amended, secs.11e(21,83 decommissioning must contain the
', . financial statement. In connection with that 84, Pub. L 95-604,92 Stat. 3033, as followl"8 conditions
- procedure, the licensee shall inform NRC ' amended,3039, sec. 234,83 Stat. 444, as *
- within 90 days of any matters coming to the- amended (42 U.SC 2014(e)(21,2092,2093, I attention of the auditor that cause the auditoi 2094,2095,2111,2113,2114,2201,2232, to believe that the data specified in the 2233,2236,2282); sec. 274, Pub. L t,,,-373, PART 50-DOMESTIC UCENSING OF F, , financial test should be adjusted and that the 3 Stst. 688 [42 U.SE 2021); secs. 201, as PRODUCTION AND UTILIZATION '
jj licensee no longer passes the test, amended,202,206,88 Stat.1242, as FACILITIES , e 3 (2) After the initial financial test, the amended, 1244,1246 (42 U.SC 5841,5842.. 7, The authority citation for Part 50
- licensee must repeat passage of the test $846h sec. 275,92 Stat. 3021, as amended by continues to mad as follows:
within 90 days s!ter the close of each Pub. L 97-415,96 Stat. 2067(42 U.SE :* succeeding fiscal year. AMy Secs. 102,103,1N,105,161, 6 (3)If the licensee no longer meets the 2022) hon 40.7'alsoissued162,183,186,189,68 Sec . 601, sec.10,92 Stat. 2951 (42 U.S C 5851).
' under Pub LStat. 95-948,953,954,955,956, as amended, sec.
936,937,938, 38 ' requirements of Section I of this appendix, Section 40.31(g) also issued under sec.122, 2 sam'd*d4
' the licensee must send notice to the NRC of 68 Stat. 939 (42 U.SC 2152). Section 40.46 5 at.,124j,21,,
,, 2201 2 32 7 its intent to establish alternative financial also issu undet see ta , as 2238, 2239, 2282); secs. 201, as amended '
assurance as specified in NRC regulations. g ,g ,a 9 202,206,88 Stat.1242, as amended,1244,
- 3. The notice must be sent by certified mail, Issued under sec.187,68 Stat. 955 (42 U.SE. 1246 (42 U.SE 5841,5842,5846L return receipt requested, within 90 days after 2237)* Section 50.7 also issued under Pub. L 95-the end of the fiscal year for which the year 6. In 6 40.36, the iritroductory text of . 601, sec.10,92 Stat. 2951 (42 U.SC 5851L end financial data show that the licensee no paragra Section 50.10 also issued under secs.101, longer meets the financial test requirements. follows:ph (e)(2) is revised to read as 185,68 Stat. 936,955, as amended (42 U.S C The licensee must provide alternate financial 2131,2235); sec,102, Pub. L 91-190,83 Stat.
assurance within 120 days after the and of g 40.38 Financial assurance and . 853 (42 U.SC 4332). Sections 50.13, such fiscal year. recordkeeping for decommiseloning. 50.54(dd), and 50.103 also issued under sec, ,
* *
- 108,68 Stat. 939, as amended (42 U.SE
- m. Self4uarantee .C. * '
(,) . . . + 2138). Sections 50.23,50.35,50.55, and 50.56 The terms of a self. guarantee which an also issued under sec,185,68 Stat. 955 (42 applicant or licensee furnishes must provide (2) A surety method, insurance, or U.SE 2235). Sections 50.33s,50.55a and that - other guarantee method These methods Appendix Q also issued under sec.102, Pub. A. The guarantee shall remain in forcs guarantee that decommissioning costs L 91-190,83 Stat. 853 (42 U.SE 4332L unless the licensee sends nouco of will be paid. A surety method may be Secti ns 50.34 and 50.54 also issued under cancellation by certified mail, and/or return fs bond,Ieuer of sec. zw. 88 Stat.124H42 nS C 5846 receipt requested, to the Cornmission. [Imdith** f h* f U E" Sections 50.58,50.91, and 50.92 also issued Cancellation may not occur unless an ** c mpany guarantee of funds for . 2-. under Pub. L 97-415,96 Stat. 2073 (42 alternative financial assurance mechanism is decommissioning costs based on s U.SE 2239). Section 50.78 also issued under inplats. financial test may be used if the . . . sec.112,68 Stat. 939 (42 U.SE 2152L
' t guarantee and test are as contained in Sections 50.80-50.81 also issued under sec.
B 168.,68 Stat. 954, as amended (42 U.SE assu s: fi h appendix A to part 30.' A parent ^p F al Commission's regulations within 90 days ued der sec. com any guarantee may not be used in 3 following receipt by the Commission of a com instion with other Hnaada! ' 8. In 5 50.75, the introductory text of notice of cancellation of the guarantee. methods to satisfy the requirements of 8 rap C.N guarantee and snancial test yc ows. h (e)(2)(iii)is revised to read as provisions must remain in effect until the this section. For commercial. . corporations that issue bonds", a Commission has terminated the license or guarantee of funds by the applicant or
$ S0.75 Repor#ng and w' f ., for .
until another financial assurance method N _ r.;r.g pionning. licensee for decommissioning costs e e . acaptable to the t nmmi.sion has been put . = based on a financiai test may be used'if la effect by the !!censee. (e) * * .
- the guarantee and test are as contained D. b applicant or IIconsee must provide in appendix C to part 30.For. (2) * * # ' 2 to the Commission a written guarantee (a .
(iii) A surety method, insurance, or , written commitment by a corporate omcor or commercial companies that do not' issue other guarantee method. These methods omcor of h institution) which states that bonds, a guarantee of funds by the applicant or licenses for guarantee that decommissioning costs b licensee will fund and carry out the will be paid. A surety method may.be ' 8 "I 8 decommissioning costs may be used if' in the form of a surety bond, letter of
, th licensee will set up and fund a trust in the
*[ the guarantee and test are as contained in 8PPendix D to part 30. For nonproSt credit, or line of credit. A parent ,
company guarantee of funds for . amount of the current cost estimates for entitles, such as colleges, universities, decommissioning costs based on a decommissioning. and nonprollt hospitals, a guarantee of- financial test may be used if the E. If, at any time, the licensee's most recent funds by the applicant orlicensee may guarantee and test are as contained in bond issuance ceases to be rated in any be used if the guarantee and test are as category of"A" or above by either Standard appendix A to part 30. A parent contained in appendix E to part 30. A and Poors or Moodys, the licensee shall . guarantee by the applicant or licensee company guarantee may not be used in provide notice in writing of such fact to the may not be used in combination with ' coInbination with other financial-Commission within 20 days after publication any other financial methods used to methods to satisfy the requirements of of the change by b rating service. this section. For cornmercial satisfy the requirements of this section corporations that isst'e bonds, a
- t i
29544 Federal Regist:r/Vol. 63, Ns.104/Mdaday, Jun31,1998/Rul*,s and Regulations , a guarantee of funds by the applicant or . appendix A to part 30. A parent Subpart I also issued under secs. 2(2), 2(15), I licenses 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.S.C 1 the guarantee and test are as contained' methods to satisfy the requirements of 101ct.10137(a),10161(h)). Subparts K and L in appendix C to part 30.For ' this section. For commercial en also issued under sec.133,96 Stat. 2230 commercial companies that do not issue corporations that issue bonds, a (42..UAC 10153) and sec. 218(a),96 Stat. ( bonds, a guarantee of funds by the guarantee of funds by the applicant or 2252 (42 UAC 10198). ; cpplicant or licensee for licensee for decommissioning costs I decommissioning based on a financial test may be used if 12. In $ 72.30, the introductory text of
- the guaranteetest anh costs are as contained may be used if the guarantee mod test are as contained Paragraph (c)(2) is revised to read as in appendix D.to part 30. For nonprofit in appendix C to part 30. For foHows:
, i entities, such as colleges, universities, commercial companies that do not issus $ 72.30 Financial assurance end .'
and non fit hospitals, a guarantee of bonds, a guarantee of funds by the recordkeeping for decommleasoning. funds the applicant or licensee may applicant or licensee for . . . . . be u if the guarantee and test are as decommissioning costs may be used if contained in appendix E to part 30. A the guarantee and test an 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 usedin combination with entities, such as colleges, universities, other guarantee rnethod. These methods any other finandal methods used to and non refit hospitals, a guarantee of 3 guarantee that decommissioning costs . satisfy the requirements of this section funds the applicant or licensee may will be paid. A surety method may be orin any situation where the applicant be if the guarantee and test are as in the form of a sunty bond, letter of . or licensee has a parent company contained in appendix E to part 30. A hrlding melodty control of the voting cmdit, or line of credit. A parent a guarantee by the applicant or licensee stock of the company, company guarantee of funds for , may not be used in combination with e = =. . .- - any other financial methods used to decommissioning costs based on a satisfy the mquirements of this section financial test may be used if the PART 70-DOMESTIC UCENSING OF guarantee and test are as contained in or in any situation where the applicant SPECIAL NUCLEAR MATERIAL orlicensee has a parent co any 8PPendix A to part 30. A parent holding majon.ty control of com y guarantee may not be used in I
- 9. The authority citation for Part 70 voting cogation with other financial continues to read as follows: b
. Authority: Sacs. 51,53,161,182,183,6a orin7[ce se[t vide methods to satisfy the requirements of financial assurance for this section. For commercial Stat. 929,930,948,953,954, as amended, corporations that issue bonds, a sec. 234,83 Stat. 444, as amended (42 U.S.C decommissioning must contain the
~ 2071,2073,2201,2232,2233,2282): secs. followinE conditions. - guarantee of funds by the applicant or 201, as amended. 202,204, 206, 88 Stat. , , , , ,. licensee for decommissioning costs 1242, as amended,1244,1245,1246 (42 ' based on a financial test may be used if UAC 5841,5842,5845,5846). PART 72-LICENSING the guarantee and test are as contained Sections 7at(c) and 7a20e(b) also issued REQUIREMENTS FOR THE in appendix C to part 30. For under secs. 135,141 Pub. L 97-425,96 Stat. INDEPENDENT STORAGE OF a , NT commercial corporations that do not 2232,2241 (42 U.S.C 10155,10161). Section ' NUCLEAR FUEL AND HIGH-LEVEL issue bonds, a guarantee of funds by the 70.7 also issued under Pub. L 95-401, sec.
10,92 Stat. 2951 (42 UAC 5851). Section RADIOACTIVE WASTE applicant or licensee for 70.21(g) also issued under sec.122,68 Stat. 11. The authority citation for Part 72 decommissioning costs may be used if 939 (42 UAC 2152). Section 70.31 also continues to read as follows: , the guarantee and test are as contained lesued under sec. 57d, Pub. L 93-377,88 in appendix D to part 30. A guarantee Stat. 475 (42 U.S.C 2077). Sections 70.36 and Authority: Secs. 51,53,57,62,63,65,69, 70.44 also issued under sec.184,68 Stat. 954, 81,161,182,183,184,186,187,189,68 Stat. by the applicant or licensee may not be 929,930,932,933,934,935,948,953,954, g ggg g as amended (42 USC 2234). Section 7a61 also issued under secs. 186,187,68 Stat. 955
- 955, as amended, sec. 234,83 Stat. 444, as financi methods use to satisfy the (42 U.S.C 2236,2237). Section 70.62 also- amended (42 USC 2071,2073,2077,2092, requirements of this section or in any issued under sec.108,68 Stat. 939, as 2003,2095,2099,2111,2201,2232,2233, situation where the applicant or amended (42 USC 2138). 2234,2236,,t237,2238,2282); sec. 274, Pub-licensee has a parent company holding
' maj rity c ntr 1 ithe voting stock of
- 10. In $ 70.25, the introductory text of U.S 202'11 201 a a end 2 ,206, paragraph (f)(2)is revised to read as 88 Stat.1242, o amended 1244,1246 (42 the company. Any surety method or follows: ., 9, USC 5841,5841,5648); Puhu L. 95-601, sec. insurance used to provide financial l
10,92 Stat. 2951142 USC 5851); sec.102, assurance for decommissioning must !
$M ynencialassurance end. ., Pub. L 91-190,83 Stat. 8.3 (42 U.S.C 4332); contain the following conditions:
--- , . for-- - - w- -- Secs.131,132,133,135,137,141, Pub. L . . . . .. - -
(f) * * *
~ ~ ' '
- b. L 1 203,101 tat.133 235 2 Deted at Rockville, Maryland, this 22nd (2) A surety method, insurance, or UAC 10151,10152,10153,10155,10157, d'y of May,1998.
other guarantee method. These methods 10101,10168). For the Nuclear Regulatory Commission. guarantee that decommissioning costs Section 72.44(g) also issued under secs. ' Jeha C Hoyle, d), wi be paid. A surety method may be in e rm of a surety bon ,lotter o ja )g 48(c 9, 03,101
-Secretaryof the Commission.
10182(b).10168(c),(d)). Section 72.46 also (FR Doc. 98-14385 Filed 5-29-98; 8:45 aml credit, or line of credit. A parent issued under sec.189,68 Stat. 955 (42 U.S.C ' c:mpany guarantee of funds for eusse coos tsee ow ' 2239); sec.134. Pub. L 97-425,96 Stat. 2230 . decommissioning costs based on a , 142 UAC 10154). Section 72.96(d) also 1 4 financial test may be used if the ' lasued under sec.145(g). Pub. L 100-203, ' i guarantee and test are as contained in ~ 101 Stat.1330-235 (42 USC 10165(g)).
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