ML20236S422

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Forwards Copy of Recently Approved Regulation in Fr Which Permits Colleges & Universities to self-guarantee Decommissioning Costs If Certain Criteria Met.Requests Copy of Criteria to Be Used If School self-guarantees
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)
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{{#Wiki_filter:_ _ _ - _ _ - _ _ - _ _ _ _ _ _ _ - _ _ July 20, 1998 ) 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. If you have any questions, please call me at (301) 415-1127. j 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 Office of Nuclear Reactor Regulation ~b / Docket No. 50-20

Enclosure:

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cun q[% l g UNITED STATES NUCLEAR REGULATORY COMMISSION L 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

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, 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 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 l. Ecc: l . City Manager - 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.. l t I ,1 i i + l i, 1 I 1 l ) [ 't

l. 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. Background ' N otherinformation,it is found that Nuclear Regulatory Commission. finalir.ing the interim final rule, without-Washington, DC 20555-0001, telephone On December 29,1993 (58 FR 687' 6)'- 2 i 1 ras' ' change, as published in the Federal (301)415-6203, e-mail cwp@nrc. gov. as corrected on Janu 12,1994 (59 FR 1818), the NRC publ ed a notice of Register (63 FR 11585 March 10,1998) SUPPLEMENTARY INFORMATION: 1,679 Limasees subject to 10 CFR parts 30, final rulemaking that allows financially will tend to effectuate the declared 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. ~ bond ratings the option of using self-guarantee as a mechanism for 545 Grapes, Marketing agreements, of nuclear materials, and those subject ~ complying with the regulations on to 10 CFR Part 50 who are aficenses for plicants financial assurance for Raisins, Reporting and recordkeeping for, or holders of, operating production or utilization facilities must. decommissioning. Self guarantee was mquimments. added to the list of financial assurance-ms 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 guarantee to the. list of approved. ^ amending 7 CFR part 989 which was coupled with a surety or insurance,i. unancial assurance mechanisms for on drting Published at 63 FR 11585 on March 10, 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, a petition for rulemaking filed by - change. 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.. saving option for corporate licensees. for allowing self-guarantee as a cost-IFR Doc. 98-14422 Filed 5-29-98; 8:45 ami licensees that are governmental entities (for example, public universities whose that an able tb pass a stringent financial l ~ charter provides for a direct link to the test.. 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 self. Guarantee of Decommissioning issued by the liansee as one measure 3 ~ Funding by Nonprofit and Non-Bond-th a la ility f deco as)ni t fund d ui funds wh,en needed. The study, I'* "U#*"****'. " Anal sis of Potential Selff,uarantee The NRCis extending the use of self - Tests [or Demonstrating Financial AGENCY: Nuclear Regulatory - ** guarantee, previously limited 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

SUMMARY

'Its Nuclear Regulatory

$e for t if t tids Bonds," NUREG/CR-6514 a Gune 1997), D-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 who meet certain financial criteria to dseharantde Ma%na self-guarantee funding for decommissioninbobligation requires. ms in this rule wem elected aNRC Allowing qualifi nonpmfit and non-. decommissioning. Certain commercial ,g corporate licensees who issue bonds am bond-issuing licensees to self-guarantee - based on infonnation in mpon will redum the costs of complying with Puhticrsm,-ts on the Proposed Rule {resently allowed to self-guarantee NRC financial assurance requirements Ihe NRC ublished a notim of [g,f. ding if they meet stringent financial for those who meet the specified ' por,ed emaling on April 30',1997, g criteria. This rule allows nonprofit. criteria. d licensees, sut:h as colleges, universities, f6 FR 23394). In response to this a"- 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 commercial licensees who do not issue utstr can atisfy the dec==.ni iantas funding - from States,6 from colleges and l on' bonds, to self-guarantee funding _ aquirwa.ats with an externat sinking fund.. . universities. 3 from association, s 3 fro'm l provided they meet similarly stringent "*"d!"8,$$ d s 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 cent.ct. cept are evaliabi.t current rat from t"Y. qualified licensees to use self-guarantee A-s-W fundins.=uranc 1. the U.s. coveranwn: Prinuns Ofrus. P.O. Box l reduces licensee costs while providing "at d wis l.ctric aulity a_ (= arosz.wohinston. Dc ro4ca-esze it.i. phon. 80 ade9uate assurance that funds for D""" ^""'*"'" **9."r'" Power R.'*.'ctore-62 FR Decommlaaloning Nucl. tros) :12448 m hun 6. Neuonal Technical e g, gg decommissioning will be available inform.flon S rvice writing NT15.t s285 Port when noeded. 4rsas.Sirptember to.19erl As 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 'T "8 ** i ' ** N8C P*** D"**"""'

        • 81** I"ddress 6.

8 NW, weshington. DC; the PDR's mailing. '"" FOR FURTHER INFORMATION CONTACH Dr. distinction betw a financial assumace mech.ni ms oppiscable to power r ccor tican Matt Stop LL-e. Washinston, DC toss 5-ooo1: Clark Prichard, Office of Nuclear and non-po-c r ctor lican toi phon. (202) as4-stra; tax (2o2) ass-3 43. 3 r = l

'~ 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 extrabe future and to budget and 1 from e United States university can be allowed to self-into f Enrichment Corporation. The. . guarantee for the costs of. endowment s ending accordingly. p commenters all supported the extension decommissioning because it possesses However, in is context it is instructive 'y 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 J. Finones. l Criten. for Colleges and commenter suggests, is desirable. NACUBO Endowment Study, National o o 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 recommends strongly that institutions bett:r bond ratin8 or, for those not ' 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 $50 million or 30 licensee who has been relying on a self-commenter. The report sistes that: times projected decommissioning costs, guarantee is required to fully fund a whichever was greater. nere were no trust fund for decommissioning in the Historical precedent indicates that a fund invested approximately 60 percent in 1 comments regarding the A or better year before the beginning of domestic and foreign stocks. 30 percent in { bond rating, but several commenters decommissioning, and the licenses faed incnme, and 1o percent in various other i objected to the non-bond criteria as too relies on earnings from endowment to asset classes inevitably experiences recurring conservative ' create the trust, it is the annual earnings periods of absolute decline in market valuee Comment: A commenter stated that of the endowment for the year over 3 years. Such a decline would trigger a the selected multiple of 30 times immediately prior to the reduction in spending for an institution decommissioning costs is excessively decommissioning that must equal the stickins m a licy of spending a fixed. reguired amount. NRC has reviewed the 7,",,,',,0p8[,,3],$,7Yncal conservative. NRC's basis for the 30 multiple is that an amount of money 30 F in.ormation provided in Ibbotson 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 pe,c nt. on average. the smallest amrunt sufHcient to fund those costs. 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 sta d e m cf financial assurance risk similar to the investments, such as treasury bills *y.7t h ot.i iowm financial assurance nsk in the existing showed the most frequent positive Over time. It is possible (difficult. but self-guurantee. However, for colleges returns, but their annual returns also possible) for the exceptionally well-managed l institution to spend 6.0 percent of a 3. year 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 .t deliberately chose financial criteria - and large company stocks, the average, and of a long bull market. (1994 NACtJBO i which are conservative, inflation-adjusted earnings (geometric Endowment Study,1995, p. 5)

s NRC did state in the preamble to the 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 relatively conservative criterion, such as I because this would mean that any level also were less than 3 percent. Thus, real the 30 times requirement,is a r ef decommissioning costs could be Investment returns over a one year reasonable criterion for the I covered by the annual return on an period may not even match conservative decommissioning self-guarantee test for end;wment invested at 3 percent." earnings assumptions. colleges and universities. The NRC does [ However,it is important to note that The study of endowment sponsored ' not acx:ept the commenter's NRC was not assuming (1) that 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 endowment be at least $50 million or at U. d least 3 percent annually; or (3) that endowment investment. First, least 30 times the decommissioning cost institutions can be expected to NACUBO's study noted that current estimate, whichever is greater. The. i d-reallocate up to 3 percent of their high rates of return rannnt be expected requirement should be compliance with gg 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 times decommissioning cost estimate, g h-selected to serve as a measure of the institutions are searching for ways to but not whichever is greater. cverall financial strength of the institution, indicating that NRC can. bridge the gap between revenues and, Response: As previously stated. NRC d' 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 up front even though decommissioning decommissioning costs] was exce ~ ~ i universities, aimed at assuring the activities are not completed within a. conservative. It appears to reflect an financial viability of a licensee quallSed single year. For this reason NRC's. I to self-guarantee. His is the only criteria for detennining whether & expectation that the decommissioning will take a short time whereas a realistic requirement that would apply to non-limnsee should be allowed to selfi bond-issuing colleges and universities.,- guarantee the costs of decommissioning time frame should be 2 years whereas non-bond-issuing hospitals or commercial licensees would be sub}ect. must consider the possibility that the NRC should consider a multiple of 30 or to multiple financial ratios as financial Licensee will be required to fully fund less to be appropriate. 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) limnsee would fund a standby trust if [te th C financial strength alative to size of either (1) the licensee no lon8er. no h ther ce see. decommissioning obligation.ne ' ' qualifies to use the self-guarantee t'o. sufficient financia3 strength to segf-overall financial stren th of an provide financial assurance for guarantee. However, a potential institution is heavily pendent on the 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 not allow licensees to consider test based only on ratio to must be canied out. As discussed above, decommissioning cost might allow an impact of earnings during the " syout" the operating res enus multiple institution without adequate financial period (the period during whi funds criterion does not reflect any strength to pass ifits decommissioning are being expended from the finandal expectation concerning the length of 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 Cornment: A commenter found the decommissioning costs. Both threshold NRC disagmes with a commenter's - requirements are needed to provida suggestion that the expected duration of rationale that requires hospitals to meet assurance that an institution can meet decommissioning activities should all four financial ratios tests unclear.. decommissioning obligations when apply to the determination of the - - This commenter believed that using ~ neosssary. ap riate multiple. only the operating revenues / ~ decommissioning costs ratio would ' entt A commenter renmmends' sphity'to p Comment: A commenter stated that to provide reasonable assurance that (based on the combination of. NRC's rationale for a multiple of 30 of rovide decommissioning investment yield of 6 percent and implies that decommissioning costs are paid from investment yields over a 1-investment yields over 2 to 3 hmding' 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 le conse selected to provide a level of financial decommissioning activities wherd -

    • [esponse:rvatism."For the reasons stated in assurance risk similar to the financial -

financial assurance arrangements are 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 that best achieves this goal. A financial to complete. This consideration also

2. Financial Criterio for Hospitals,,

test using just one of these ratios would im lies that the appropriate multiple The financial test criteria proposed for not re resent the same level of risk and sh uld be 15 rather than 30. hospitals was an A or better bond rating Response:NRC recognizes that decommissioning may occur over a or, for hospitsis not having a bond woul not provide an adequate level of. 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 to decommission a facility. We reciation fund, divided by current - completely ignore such determinants of financial stren 11 tiltles) greater than or equal to 2.55. Indebtedness, gth as liquidity. commenter is attempting to make this (b) Net and profitability. The linkage the key factor in arriving at an total exp Revenue-(Total revenues less financial test used for non-bond repriate multiple. However, enditures divided by total a f owing this line of reasoning..e.... revenues) greater than or equal to 0.04. commercial licensees includes several-stretching out the time length of (c) Leverage-{long term debt divided yratios' not Just one. The non. bond decommissioning would imply ever by net fixed assets) less than.or equal to nan 1' $ I d 0.67. 6 d a sin le ratio, but decreasin multi les. (d) Operating Revenues at least 100 -it is'the ratio of unrestricted endowment NRC's }ectiv is to ensure that i 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. The financial assurance the bond rating criterion but there were to meet decommissioning expensesc regulations are intended to assure that several comments on the non-bond. Hospital operating revenues are { ined unte funding does not prevent

criteria, different because these funds may not timel decommissioning. Timely Comment: A commenter believed that s be readily available to meet decommissioning may require that all the. selected multiple of 100 [ hospital decommission.ing expenses due to other decommissioning funding be available operating revenues at least 100 times hospital costs.

,m. e-l l L_______________

Federal Register /Vol. 63, No.104 / Monday, June' 1,1998/Ru'les and Regulations 29538 . 3. Prohibition ud Using a Guarantee in rating, despite declines in the finandal accounting prindples to assess Combination With Another Finandal.. condition of the issuerc compliance with a financial test Assunmce Mechanism he Problem with an insured bond daigned using U.S. GAAP. Finally, the %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 - hi mhg despite a decHne in tb ' other alternatives available. NRC does self-tee. The bond can retain its to use a particular mechanism have parent company guarantee nor a ' 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

8. Em.ancia/CritenaforNon Bond.

restrictions. ' bond issue's p ent schedule, will not Issuing Commercialkensees 'Res nse:This rule makes no change tional source of hrovide an adding fo decommissioning. NRC does The financial test p sed for non-In th already existing prohibition against combining parent or self-not agree with th commenter's band issuing comme licensees was: (a) Cash frow divided by total guarantee with ano er of financial suggestion that it accept ratin on assurance inachanism. Issue of insured bonds as an acceptab e criterion liabilities greater than 0.15. (b) Totalliabilities divided by not whether or not to allow such a for self-guarantee. combination is broader than the focus of worth fees than 1.5. this rule.The NRC has limited

5. Requirements for Financial (c) Net worth greater than 310 million 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.

NRC will periodically reevaluate its to the proposed requirement in Comment: A commenter objected to _ 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 the prohibition. by U.S. generally acce tid accounting times estimated decommissioning costs. Prindples (GAAP). s does not This discriminates against well-funded (Insured Bad Rah ' recognize the increasingly multi. smaller firms that could easily self- ~ 8 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 condition of the prospective ~ be changed for a licensee to be allowed to be approximately 0.13 percent per issuers and avoid lasuing policies to 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 . standpoint of a financial test for self-rule. because of the insured status of the 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 auns nan tal Assmm papron: D" n notify NRC and establish alternative examples cited by the commenter, for D"".',fN"p'"d[g,*[,d'y ""d k,Rr.c/ financial assurance. However, insured instance, might require NRC to know bonds would continue to hold their and apply German, Swiss, and French cx-asse p...r. jun. iser, j-1 l

~ ~ Federal Register /Vol. 63, No.104/ Monday, June 1.,1998/ Rules *nd Regulations' a 29539 Conservative assumptions, such as use adopt the essential objectives of these CFR Part 76). USEC stated that it would. _ _ of rates charged by contractors and high 4ections in order to m#ntain an.. benefit from the opportunity to reduce 1 - estimates of waste disposal costs, adequate program. The remaining the costs of complying with NRC J' should not be used. A commenter also _ sections of the rule, including those financial assurance requirements, which l noted that assuming a period for short-which allow self-guarantee of certain. USEC estimated would presently cost in lived isotoped 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 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 USEC (or the Corporation) is required to amount of material allowed by the means the Agreement States do not need establish financial surety arrangements - 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 chan8e, which will - available for the ultimate disposal of changes in the requirements for how.. 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 ase the financial or use of the certification amounts in to meet certain financial criteria, is also responsibilityof theCorporation.The ' CFR Part 30, are already required by designated as compatibility Category D. funding mechanisms currently listed in existing regulations on financial Under compatibility cattBory D,- the regulation as potentially acceptable assurance. This rule simply adds an Agreement States may choose to for use by the Corporation include. additional financial assurance maintain a more stringent rule by not prepayment, surety, insurance, and an mechanism to those already permitted adopting the self-guarantee option. external sinking fund, but do not' in NRC regulations. include self-guarantee or statement of

9. RequimmentforAnnualPassage of[
  • f,* f f '

,fg*,

8. Agreement State CompatibihtyStatus Financial Test ofFinancial Assurance Regulations ;

Commenb'A commenter stated that availab lity of funds for any activities 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 'b 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-ensure consistent requirements for Energy Policy Ad of 1992. It is a wholly financial surety arrangements and will guarantee every year, University. owned government corporation, whose endowments are very stable. In preclude the unintended creation of addition, Section II.C(3) providea. Board of Directors appointed by the ' powers are vested in a five-member ' competitive disadvantages between sufficient assurana 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 ILC(3) provides forthe public through a st offering. designated as a Division 2 compatibility notification, the provision for qualifying Under the USEC Privatization Ac 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 l time. A Division 2 level of compatibility guarantee program to provide adequateprivatization and required that s' allowed an Agreement State to I assurance of decommissioning funding, " reliable and economical domestic promulgate equivalent, or more the annual ~requalification" provision. source of enrichment servims" exist + stringent, financial assurance is necessary. NRC must have assurance following prfvatirationc /, regulations than those of NRC - of financial strength on a timely basis. Although the NRC is not currently Under the new " Policy Statement on 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 46517 September 3,1997) Agreement decommissioning. There is no backup category of funding mechanisms States must adopt NRC regulations such as that provided by a third-party available to the Corporation to financial assurance mechanism. The demonstrate the availability of funds for having particular health and safety significance and those necessary to requirement for repeating the financial the actions required under 10 CFR maintain compatibility with the test yearly is not unduly burdensome on 76.35(n), NRC does not believe that it. a licensee and gives NRC information on. would be feasible to do so in the current i Commission's regulatory program. the financial condition of the licensee rule. First, USEC was not included in ' The NRC financial assurance i regulations,in effect when the neW on a timely basis. This requirement is any of the analyses performed to 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 profit ' nd. should be' undertaken to ensure that al1' a 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 it might incur is substantially different,

j be provided for through a financial Comment:The United States, from those of the licensees included in assurance mechanism, have particular Enrichment Corporation (USEC) 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 hegulated by NRC unde.r10 76.35(n) are very different from those 9 o 1 o Y

} 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. et sbe of the obil ations.Appendix added to 10 CFR Part F g 8 8 td P einHi 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 . responsibility of the U.S. Department of,.. added to 10 CFR Part 30 to establish licensees the opdon of using self-1 that many of the costs will remain the 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 ) bonds are already allowed to use self-s decontamination and decommissioning guarantee if they meet the regulatory _l E of the gaseous diffusion plants (CDPs) N N## ',O assigned to DOE under the Atomic , Section 40.36 is amended to permit criteria. Other licensees currently may Energy Act. DOE also is responsible for self-guarantee for financial assurance elect to use a variety of financial assurance mechanisms, such as surety all environmental liabilities associated which can be used by qualified 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 " "8 "8"'" Annual Report for 1996. "[e]xcept for 10 CFR Por150 action is intended to offer nonprofit and P certain accrued Liabilities that will be ~ . Section 50.75 is amended to permit non-bond-issuing nuclear materials specified in a memorandum of ' 'm agreement entered into prior to self-guarantee for financial assurance licensees and non-electric utility reactor which can be used by liSed. . licensees greater flexibility by allowing issu. Profit licensees an)ua brivatization, all environment! non non-bond + an additional mechanism for licensses bilities of the Company through the inglicensus. ' that meet the financial criteria for use of date of privatization will remain obligations of the U.S. Government." ' 20 CFR Port 70., [ h l, t ' **hNs$n to the NRC's lations vin talM tiers) ore. Section 70.25 is amended to permit simply adds one more financi as of June 30,1996. USEC had accrued self-guarantee for financial assurance - 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 facMea. AHowing se5 guarantee for currently stored at the CDPs. The 1996 20 CFR Port 72 additional types of licensees does not Annus1 Report states that **USECIs 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 envuonment of the decommissioning dis uranium, and ~ f, position of deple which can be used by qualified non-activities considered in the final rule "k r!y" bond issuing licensees.- published on June 27.1988. (53 FR n le ta reduce future cost accruals * * *. ' Compatibility of Agreement State 2M18), as analyzed in the Final Ger.eric Pursuant to the USEC Privatization Act, Regulations - En , P Doco s n af u ad Un all costs and liabilities related to the '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 environment not previously considered 2 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- - Environmental Policy Act of 1969, as s 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 buality of the human environment, and privatization occurs could affect the - . means the agreement States do not need erefore an 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 agencies or persons were contacted in eviluate all of these factors, NRC has accordance with the new " Policy ' making this determination. The NRC _. detennined not to include 10 CFR part Statement on Adequacy and ' ' 7 staffis not aware of anfe environmen other i 7Jin the current rulemaking.. -. Compatibility of Agreement State - documents related to t 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 ls2sN aURoe[

s. rt Changes in multiple jurisdictions, or essential sprins.fd.vA stet. copies are available for n M UR Nrt 30-objectives which an Agreement State inspecdon or copying for a fee frorn the NRC Public 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'. I s 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 ' ' ?. -* assessment and $nding of no sign 1Bcant Flexibility Act of 1980 (5 U..C 605(b)), al Pment, Security measures, Special In M - with tim ' latory - mcordkeepingmiuirements Scientific }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

=

to the Peb1 et seq.).Neo health, Reporting and recordkeeping + i (44U.S. to mm Ananci assurance requirements, thus Qul8*ments, Security m**sures, S ent P ment and u [* Y For'the reason's ask out in the'f a els rub (OMB), approval number 3150-0017' ' -4020 -0011. 0009,and-0132. would result in signl5 cant cost savings - Preamble and under the authority of the g Atomic Energy Act of 1954, as amended, b public ng bustlen for this. to q,,gfy,, 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 b following amendments-inclu ng time for m haraA revisions (10 CFR 50.100 to 10 30,40,50,70, and 72. I lastructions, eserch existing date ad 72.6 es park sources, theringan maintainingthe PART 30--81ULES OF GENERAL data , and completing and - , Canmieslan's regulaums em am iming APPLICABIUTY TO DOASESTIC OI8 '" reviewing the information collection. ruk b b rub ims LICENS500 OF BYPRODUCT d comunents u 8 "AMAIAL-not imPoes a backSt as de8ned in to - ti""'g a. GR 50.100(a)(1) or 72.62(a), b rule. 1.N authority citation for Part 30 for ucin b ,to 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: does not poesanew on secs. 301, as assmoded,3o2,20s. as Stat, BJSGNRCGOV;and to the Desk OfBeer, Hansees of commercial reactors 1242, as easeded,1244,1348 (42 U.S.C. OfBee ofInformation and Regulatory t' fue * "8' as41 seat, sees). or inde ins (ISIk'I. According,h-Secuan 30.7 also issued under Pub. L. Affairs, NEOS-10202. (3150-0018, insul OfBcs of ment and Budget, ru does not constitute a t 95-401, sec.10,92 Stat. 2951 (42 U.S.C Washington, 20503. Puhuc Protection Nassarass==. forthis Analrul@a,was og g 8851). Secdon 30.34(b) also iseumi eda tm under sec.184, se Stat. est as amended (42 U.S.C 2234). Section 30.61 also If a docyannt used to impose an . Ust of Sablocas imumt unds on. tsr.as Sim. 955 H2 Information collection does not dip y a currently valid OMB control n . U.S.C. 2237). 20 CFR Flert 30

2. In 6 30.8, peregrapli (b) is revised 'o t

the NRC may not conduct or sponsor, B uct taptorial Criminal -road as fouown. and a person is not 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. I Esgulatory Analysis Repordng and w " ---ing. c*

  • - ' ia *
  • h NRC has pmpared a das I

requirements. (* (b) h approved information analysis on this regulation. yois avaminna the costs and benefits of the 20 CFR Flert 40 ,\\ % collection requiresnents contained in 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 from Clark ,OfBeeof U lum. ? ?

3. In $ 30.35, the introductory text of Nuclear Materials Safety and Safeguards, U.S. Nuclear Regulatory 20 CFR Phrt 50

~< ~~~# P (f)(2)is revised to read as h

  • '~

^ own. Commission, Washington, DC 20555, ' ' Antitrust, ClassiSed information, - N. telephone (301) 415-4203. Criminal penalties, Fire protection. 430.a5 Penanmaalaoeuronesand I"I*'8""""*"'"I " * " power plants and reactors,'R'adiation.. L

  • SmallBusiness"""---- Enforcement 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 determined that this action is not a 10 &R Pwt 70. +. guarantee that d2 commissioning costs 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) Assets located in the United States estimates for decommissioning.

( 2 y guarantee may not be used In' amounting to at least 90 percent of total ~ com assets or at least to times the total current. A ndix E to Part 30-. Criteria i co lastion with other financial 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 corporations that issue bonds, a ' which the company is responsible as self-rhea==t-ioning by Nonprofit I ( arantee of funds by the applicant'or guaranteeing licensee and as parent-6 consee for decommissioning costs ' Colleges, Universities, and Hospitals based on a financial test may be used if tio of cash flow divided'by total L Introduction f the guarantee and test are as contained. liabilities greater than 0.15 and a ratio of total ^An applicant or licensee rnay vide habilities divided by net worth less than 1.5. reasonable assurance of the avability of ( in appendix C to this art. For .M B commercial compani that do not issue. com. In addition, to pass the financial test. a-funds for decommissioning based on { pany 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 and non rofit hospi s, a gu'arantee of statement based on United States generally ' -.the financial test for the self-arantee and 0 accepted accounting practices for the latest establishes the terms for a se arantee 9 funds b the applicant or licensee may.. fiscal year, with the amounts in such - D. Financial Test be used if the guarantee and test are as financial statement. In connection with that C ' 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. within 90 days of any matters that may cause 8"""a l test a college or univasi must g a teria in P } g may not be used in combination with . b suditor to believe that the data specified oyre ger cyaragrap. d C ~ any other financial methods used to . In the enana l test should be adjusted and a a satisfy the requirements of this section Pan q 2) h niu n test For applicants'or licensees that issue company must to of the tut bonds, a current rating for its most recent ~ 2 or in any situation where the applicant 5 o orlicensee has a parent com 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. surety (3)lf the Ucensee no longer meets b or A as issued by Standard and Poors (S&P) g . 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,' k"'=%* pygf' N 'g7,,t, ,s i Un'ited L2" d owing cm onst regulations. & notice must be sent States of at least 550 million, or et least 30 a e 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 gifating To Use ofhancial Tests and must provide alternative financial assuranca self.guamatosi licensee. g 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 ph H.B.(1) or the criteria in Paragraph C Da===lanioning by Casm=arcial IE. Company Self-Guarantee . H.B. of this appendix: I Cesapanies nat Have no Outstandlag h term' of a selfsuarantee wlilch an (1) For applicants or licensees that issue r s Rated Beeds , j..,, applicaat or licensee Turnishes must provide bonds, a curmnt rating for its most recent that: uninsured.uncollateralized, and 1 L Introduction A. Tne guarantee shall remain in fords unencumbered bond issuance of AA.t AA. ( a' ' An app!! cant or llanses m' y 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 i furnishing its own guarantee that funds will 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: i on a demonstration that the company passes B. The licensee shall provide alternative (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 minalon has terminated the license or than or equal to 2.55. -8 H.Financ M T ut .. e '"- a% until another Scancial assurance method (d) Operating revenues must be at least 100 A. To pass the financial test a company - acceptable to the Commission has been put times the total current decommissioning cost must meet the following criteria: la eflect by the licensee. estimate (or the current amount required if 1 (11 Tangible not worth greater than 510 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) responsible as a self-guaranteeing license. current amount required if certification is which states that the licensee will fund and C in addition, to ass the financial test, a 's used), whichever is greater, for au carry out the required decommlutoning - licensee must meet I the following decommissioning activities for which the. 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.- SOURCE MATERIAL PART 40-DOMESTIC UCENSING OF orin any situation where the applicant. data used by the licensee in the flaancial test, 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 d independently audited year end financial continues to read as follows: stock of the company, Any surety statements, based on United States generally accepted accounting practices, for the latest Authority: Secs. 62,63,64, 65, 81,161, method orinsurance used to provide p fir, cal year, with the amounts in such 182,183,186,68 Stat. 932,933,935,948, financial assurance for 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, PART 50-DOMESTIC UCENSING OF to believe that the data specified in the 2233,2236,2282); sec. 274, Pub. L t,,,-373, PRODUCTION AND UTILIZATION F,, financial test should be adjusted and that the 3 Stst. 688 [42 U.SE 2021); secs. 201, as FACILITIES jj licensee no longer passes the test, amended,202,206,88 Stat.1242, as 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 Sec AMy Secs. 102,103,1N,105,161, 2022) hon 40.7'alsoissued under Pub L 95-succeeding fiscal year. ' 162,183,186,189,68 Stat. 936,937,938, 6 (3)If the licensee no longer meets the 601, sec.10,92 Stat. 2951 (42 U.S C 5851). 948,953,954,955,956, as amended, sec. 38 ' requirements of Section I of this appendix, Section 40.31(g) also issued under sec.122, 2 5 at.,124j,21,, 2201 2 32 sam'd*d4 the licensee must send notice to the NRC of 68 Stat. 939 (42 U.SC 2152). Section 40.46 its intent to establish alternative financial also issu undet see ta , as 2238, 2239, 2282); secs. 201, as amended ' 7 assurance as specified in NRC regulations. g 202,206,88 Stat.1242, as amended,1244, 9 ,g ,a 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 3. 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, follows:ph (e)(2) is revised to read as 185,68 Stat. 936,955, as amended (42 U.S C longer meets the financial test requirements. 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 applicant or licensee furnishes must provide (2) A surety method, insurance, or also issued under sec,185,68 Stat. 955 (42 + 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 [I th* f fs bond,Ieuer of sec. zw. 88 Stat.124H42 nS C 5846 mdi

  • h* f U E"

Sections 50.58,50.91, and 50.92 also issued receipt requested, to the Cornmission. c mpany guarantee of funds for. 2-. under Pub. L 97-415,96 Stat. 2073 (42 Cancellation may not occur unless an U.SE 2239). Section 50.78 also issued under alternative financial assurance mechanism is decommissioning costs based on s . sec.112,68 Stat. 939 (42 U.SE 2152L inplats. financial test may be used if the.. Sections 50.80-50.81 also issued under sec. t guarantee and test are as contained in 168.,68 Stat. 954, as amended (42 U.SE B assu s: fi h appendix A to part 30.' A parent ^p F al ued der sec. Commission's regulations within 90 days 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 yc ows. h (e)(2)(iii)is revised to read as 8 rap C.N guarantee and snancial test this section. For commercial.. provisions must remain in effect until the Commission has terminated the license or corporations that issue bonds", a until another financial assurance method guarantee of funds by the applicant or $ S0.75 Repor#ng and w' f., for. N licensee for decommissioning costs _ r.;r.g pionning. acaptable to the t nmmi.sion has been put based on a financiai test may be used'if = e e la effect by the !!censee. (e) * *.

  • D. b applicant or IIconsee must provide the guarantee and test are as contained (2) * * # ' 2 to the Commission a written guarantee (a in appendix C to part 30.For.

written commitment by a corporate omcor or commercial companies that do not' issue (iii) A surety method, insurance, or omcor of h institution) which states that bonds, a guarantee of funds by the other guarantee method. These methods b licensee will fund and carry out the applicant or licenses for guarantee that decommissioning costs decommissioning costs may be used if' will be paid. A surety method may.be ' 8 "I 8

  • [

the guarantee and test are as contained in the form of a surety bond, letter of , th licensee will set up and fund a trust in the 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 contained in appendix E to part 30. A appendix A to part 30. A parent and Poors or Moodys, the licensee shall. guarantee by the applicant or licensee coInbination with other financial-company guarantee may not be used in provide notice in writing of such fact to the may not be used in combination with ' methods to satisfy the requirements of Commission within 20 days after publication any other financial methods used to this section. For cornmercial of the change by b rating service. satisfy the requirements of this section corporations that isst'e bonds, a

i

  • t 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 - the guarantee anh costs may be used if based on a financial test may be used if

12. In $ 72.30, the introductory text of I

decommissioning test are as contained the guarantee mod test are as contained Paragraph (c)(2) is revised to read as foHows: in appendix D.to part 30. For nonprofit in appendix C to part 30. For 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 guarantee that decommissioning costs.

3 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 cmdit, or line of credit. A parent hrlding melodty control of the voting guarantee by the applicant or licensee a stock of the company, may not be used in combination with company guarantee of funds for 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 or in any situation where the applicant guarantee and test are as contained in 8PPendix A to part 30. A parent SPECIAL NUCLEAR MATERIAL orlicensee has a parent co any com y guarantee may not be used in I cogation with other financial

9. The authority citation for Part 70 holding majon.ty control of voting b

continues to read as follows: orin7[ce se[t vide methods to satisfy the requirements of . Authority: Sacs. 51,53,161,182,183,6a financial assurance for this section. For commercial Stat. 929,930,948,953,954, as amended, sec. 234,83 Stat. 444, as amended (42 U.S.C decommissioning must contain the corporations that issue bonds, a ~ 2071,2073,2201,2232,2233,2282): secs. followinE conditions. guarantee of funds by the applicant or licensee for decommissioning costs 201, as amended. 202,204, 206, 88 Stat. 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. RADIOACTIVE WASTE applicant or licensee for 10,92 Stat. 2951 (42 UAC 5851). Section 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 as amended (42 USC 2234). Section 7a61 929,930,932,933,934,935,948,953,954, g ggg g also issued under secs. 186,187,68 Stat. 955

  • 955, as amended, sec. 234,83 Stat. 444, as financi methods use to satisfy the amended (42 USC 2071,2073,2077,2092, requirements of this section or in any (42 U.S.C 2236,2237). Section 70.62 also-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 Deted at Rockville, Maryland, this 22nd ~ (f) * * *

b. L 1 203,101 tat.133 235 2

~ (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, wi be paid. A surety method may be ja )g 48(c d), 03,101 -Secretaryof the Commission. 9, in e rm of a surety bon,lotter o credit, or line of credit. A parent 10182(b).10168(c),(d)). Section 72.46 also (FR Doc. 98-14385 Filed 5-29-98; 8:45 aml issued under sec.189,68 Stat. 955 (42 U.S.C eusse coos tsee ow c:mpany guarantee of funds for 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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