ML20236S435

Forwards Copy of Recently Approved Regulation in Fr Which Permits Colleges & Univs to self-guarantee Decommissioning Costs If Certain Criteria Are Met.Requests Provision of Criterion to Be Used If School Decides to self-guarantee

ML20236S435
Person / Time
Site:	Reed College
Issue date:	07/20/1998
From:	Mendonca M NRC (Affiliation Not Assigned)
To:	Frantz S REED COLLEGE, PORTLAND, OR
References
NUDOCS 9807240339
Download: ML20236S435 (13)

Text

l, : -

July 20, 1998 i

Mr. Stephen G. Frantz, Director Reed Reactor Facility Reed College 3203 SE Woodstock Blvd.

Portland, Oregon 97202

SUBJECT:

FINANCIAL ASSURANCE FOR DECOMMISSIONING

Dear Mr. Frantz:

Enclosed please find a copy of a recently approved regulation in the Federal Regists, (63 FR 29535, June 1,1998), which permits colleges and universities to self-guarantee i

decommissioning costs if certain criteria are met. The criteria are on page 29542 under Appendix E to Part 30, items I, llA, and llc. Also, the requirements in item Ill, "Self-Guarantee" needs to be complied with as needed.

If you decide to self-guarantee, please provide which criterion you are using and the j

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) 415-1128.

Sincerely, ORIGINAL SIGNED BY: Theodore Michaels for Marvin M. Mendonca, Sr. Project Manager Non-Power Reactors and Decommissioning Project Directorate j

Divisica of Reactor Program Management Office of Nuclear Reactor Regulation

)

Docket No. 50 288

Enclosure:

As stated

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cc: w\\ enclosure See next page T /

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July 20, 1998 Mr. Stephen G. Frantz, Director 3

Reed Reactor Facility Reed College

.3203 SE Woodstock Blvd.

Portland, Oregon 97202 1

SUBJECT:

FINANCIAL ASSURANCE FOR DECOMMISSIONING

Dear Mr. Frantz:

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

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) 415-1128.

i Sincerely, lk

{+-

Marvin M. Mendonca, Sr. Project Manager Non-Power Reactors and Decommissioning Project Directorate Division of Reactor Program Management Office of Nuclear Reactor Regulation Docket No. 50-288

Enclosure:

As stated cc: w/ enclosure See next page l

Reed College Docket No. 50-288 cc:

Mayor of City of Portland 1220 Southwest 5th Avenue Portland, Oregon 97204 1

David Stewart-Smith, Administrator Oregon Office of Energy Energy Resources Division 625 Marion Street,'NE Salem, Oregon 97310 -

i l

e__-.________________________________

Feder-1 Register /Vol. 63; No.104/Mondry, Juns 1,1998/ Rules and Regulations 29535

~2

~

~

Committee's recommendation, and ~

Materials Safety and Safeguards, U.S.

Background' ^

Otherinformation,it is found that-Nuclear Regulatory Commission. -

. On December 29,1993 (58 FR 687'26).-

finalizing the interim final rule, without Washington, DC 20555-0001, telephone as corrected on Janu 12,1994 (59 FR

=>

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

1618), the NRC publ ed a notice of Register (63 FR 11585: March 10,1998) SUPPLEMENTARY INFORMaTION:,. T final rulemaking that allows financially will tend to effectuate the declared '

Licensees subject to 10 CFR parts 30, strong corporations with A or better g

3 policy of the Act.,,

40,70, and 72, whose operations, bond ratings the option of using self-involve the use of substantial amounts. guarantee as a mechanism for.

ID List of Subjects in 7 CFR Part 989 of nuclear matenals, and those sub}ect complying with the regulations on '

Grapes, Marketing'agmements.

to to CFR Part 50 who are applicants ;- fmancial assurana for

=>

Raisins, Reporting and recordkeeping -

for, or holders ' f, operating licenses for - decommissioning. Self-guarantee w'as o

requirements.

production or utilization facilities must added to the list of financial assurance -

PART 989-RAISBNS PRODUCED Provide Anancial assurance for - ',.

mechanisms as a cost-saving option for '

5 FROM GRAPES GROWN IN decommisaloning funding by selecung. licensees that are able to meet the fran a variety M mechanisins: surety., stringent financial test..

CALIFORNIA bond or letter of credit, pmpayment, u The NRC's decision to add self-Accordir$ gly, the interim final rule insurance, an external sinking fund '

. guarantee to the, list of approved cmending 7 CFR part 989 which was coupled with a surety or insuranced. - financial assurance mechaniams for published at 63 FR 11585 on March 10, parent company guarantee for licensees qualified licensees came in response to l

y 1998,is adopted as a final rule without that have a qualifying corporate parent, a petition for rulemaking Sled by -

change _

and, for certain financially strong -

General Electric and Westinghouse l

Dated: May 26,1998.

CorPwations, self-guarantee. A.

(PRM-30-59, Notice of receipt Reliert C. Kaemey,.

statement ofintent regarding obtaining Published September 25,1991 (56 FR Deputy Administmtor, Fruit and Vegetable funds to satisfy decommissioning. :.,.

48445)). The petition presented a case

progmm, obligations may be used by some for allowing self-guarantee as a cost-

[FR Doc. 98-14422 Filed 5-29-98: 8:45 aml licensees that are governmental ent'ities saving option for corporate licensees.

(for example, public universities whose that any able tti pass a stringent financial

/

charter provides for a direct link to the test.-

Subsequent to the December 29,1993 p

State Government).

i.. -

To date, self guarantee has not baien-final rule, the Commission initiated a EAR REWWM available to nonprofit licensees such as.. study to determine whether criteria '.

CMM

^ hospitals and universities, or to for.

could be developed and applied by NRC D-10 CFR Parte 30,40,50,70, and 72 Profit licensees who do not issue bonds, fw nonprofit licensees and non-bond-because the financial test for self.

issuing cmnmercial licensees to um self-RIN 3180-AFG4 guarantee uses the ruting of the bonds guarantee while snaintaining the Self-Guarantes of r.. - __=...m,_

issued by th,e limnsee as one measure of required level of confidence regarding g,g

, gnancg,g,,,,,,c

, 33,

the availability of decommissioning Funding by Nonprofitand Non pond-ability to fund decomml==ioning.

funds when needed, h study, I'*"N b NRCis extending the use of self - " Analysis of Potential Self-Guarantae Tests for Demonstrating Financial AceNcY:NuclerRegulatory ' ?

• barantee, previously limited to bond-Assurance by Non rofit Co and.

uing industrialcorporations, to.

Commluion..-

additional categories of quell 5ed -

^

vorsities d y

ACDON: Final mie.-

g liconeses. By selecting a[-guarantee, this propdate 3

financial criteria for sel Bonds," NUREGICR-6514 8 Uune 1997),

SUMMARY

& Nuclear Regulatory Commission is amending its regulations extension can be made without identified a variety of financial criteria to allow addidonal materials licensees Jeopardizing the present high level of,

that could be applied to additional ca mies d Hoensees agarding the use and non-electric utility reactor licen=="

financial assurance thatthe b

who meet certain Anancial criteria to decommissioning obligation requires..

da f-guarantee /me ErsanHal crheda self-guarantee funding for.

Allowing qualified nonproSt and non- - in this rule were selected by the NRC decommisaloning. Certain commactal bond-issuing lir=n-to self-guarantee. based on iniminadon in &ls mpato 7

corporate licensees who issue bonds as*

will reduce the costs of complying with Poblic f%===nts en the Proposed Rule Pmsently allowed to self guarantee NRC financial assurance requirements ~

"Ihe NRC ublished a notice of funding if they meet stringent Snancial for those who most the speci6ed '

f6$ posed ru omaking on April 30',1997, 7

criteria. ' mis rule allows nonprofit... criteria. -

'+*u"

-ev -

FR 23394).In response to this licensees, such as colleges, universities.

>gr-7 notice,is comments were received: 2' "

y, and hospitals, as well as some -

.rar ant to se cra so.rs(exit a d cate from States,6 from coll'8 and commerciallimnases who do not issue unity== usty the '

fundias

. uniorshion,3,fran associadons,3 from 1

a' Pair =.no with a aannal enkins'f=nd.. _

bonds, to self-guarantee funding.-

@m'nNba's"n'i b"ib't'ac- #"*

)

D k

provided they most similarly stringent' ssinskmphsmp.ww e

~

financial criteria. Allowing additional n oo,,(emposed adamsku e m addrun n enact. copwe m evehbne a cument rum imm s

y.

qualified licensees to use self-guarantee

- -- fundias momence insnes abe u.s. cmen at Prtauas omen. P.O. som reduces licensee costs while providing - " tad =lth auctric sitairy sonructurias (me sross,wohinsiaa.ocso on-esas(idepbme -

(2o2) s12-224ek or han &e Neumal Tactukal 8'L"'"'' ^"""" ""'3"3""'** 8" ad'9uste assurance that funds for i rs.rn-mia.nanlag Nuclear Power Reactore-as F"R information Service be writins NTIS at s2ss Past g

decommissioning will be available erses.sepismber so.toerk As ofthi.

Royal Road. SprinsBeld. VA 2:181. Copia are when needed.

proposed rule. tbs NRC is cons ammading its available ter or copying lar a ime from EPPECTIVE DATE: July 1,1998* '

deantuan of *dectric utulty" and clartfying the

s. the NRC Public ment Room at :12o t. StmW distincuan between flamar4at assurance NW., washington. DC: the PDR's maillag address is POR PURTHER INFORMATION CONTAci:Dr.

m.chaaume appucable to power re caer ti~~

unti stop 1.t-a. washinston. Dc zosss. coo 1:

Clark Prichard, Office of Nuclear and non-power reacter limas==s.

ist phone (2o2) s24-sars: fax tros) as4-3243.

(. s

.p

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f

)

o 1

a 29536 Federal Regist:r/Vcl. 63. No.104/ Monday, Jun31,1998/Rults end Regulations e4 s

private corporations,1 from a hospital, reasonably assume that such a college or extrapolate these extraordinary returns an ? 1 from the United States university can be allowed to self-into the future and to budget Enrichment Corporation.The guarantee for the costs of.

endowment spending accordingly.

commenters all supported the extensios,, decommissioning because it possesses However, in this 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 avera e annual real licensees. Although some commenters needed.

return aAer spending or the 10-year urged NRC to adopt tige proposed rule Even assuming the prem.ise of the period ended June 30,1994, is 4.1 as written, most favored some type of ~

commenter, NRC does not believe that percent, but for the 20 years ended June change to the financial criteria.

reducing the multiple to 15, as the 30,1994, it is 0.9 percent." (1994 commenter sugg,ts, is desirable.

NACUBO Endowment Study, National

2. Finonciol Criterio for Colleges citd Although a real rate of return of 3 Council of College and University Umversities

. percent may appear low under the The financiallest criteria ' proposed for ' market conditions prevailing during

- Business Officers.1995, p. 4)

Therefore,the NACUBO study colleges and universities were an A or certain periods, there is a substantial recommends strongly that institutions bettir bond rating 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 endrwment of at least $50'million or 30 licensee who has been relying on a self-commenter. The report states that:

times projected decommissioning costs. guarantee is required to fully fund a Historical precedent indicates that a fund whichever was greater.There were no trust fund for decommissioning in the invested ap ximately so percent in comments regarding the A or better year before the beginning of domestic anEforeign stocks. 30 percent in bond rating, but several commenters decommissioning, and the licensee fixed income, and to percent in various other objected to the non-bond criteria as too relies on earnings from endowment to esset classes inevitably experiences recurring conservative. '

create the trust,it is the annual earnings periods of absolute decline in market values 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 reductim in spend for en institution decommissioning costs is excessively decommissioning that must equal the sticking to a licy a spending a fixed.

conservative. NRC's basis for the 30 required amount. NRC has reviewed the 7,"rmTot me val fl I multiple is that an amount of money 30 information provided in Ibbotson yew 1994, the average endowment spending times decommissioning costs invested Associates, Stocks, Bonds, Bills, and rate nported by responding institutions is 6.0 at 3 percent would ytaid an annual inflation 1995 Yearbook,1995, which percent. On avwege, the smallest am unt sufBcient to fund those costs.

published a summary of market results endowments (525 miillon and less) spent

% commenter said that it should not for the 69-year period from 1926 to 1995 more (7.2 percent) than the largest (4.5 be difBcult to,obtain secure investments, for five categories ofinvestments: small percent), and public institutions spent more yielding 6 perconti thus an appropriate company stocks,large company stocks, (6.6 percentl than private institutions (5.7 multiple would be 15 based on long-term government bonds, long-term percent) * *

• With the sole exception of the investment yield.

corporate bonds, and intermediate-term 4.5 pennt spent by the largwt univwsities, them spending ratw are not compatible with Response: NRC's objective in selecting rament bonds.

m et institutions

• stated intenti n to preserve financial criteria was to provide a level On a year by-year basis,less risky.

(f financial assurance risk similar to the investments, such as treasury bills, h

dQblei t.

financial assurance risk in the existing showed the most frequent positive possible) for the exceptionally well-managed self-guarantee. However, for colleges -

returns but their annual returns also institution to spend s.o percent of a 3. year and universities that do not issue bonds,' were re,latively low. Riskier investments moving everage of endowment market values, lack of appropriate data on default risk showed a broad distribution of returns, and still preserve purchasing power.

made a Anancial assurance risk analysis from very good to very poor. Ovnall, However, it is courting disaster to spend at '

impossible.For these licensees NRC howmr, with the exception of small en annual rate of e.0 percent towaru the tail deliberatelychose Anancialcriteria.'

and lary corepany stocks,the average, end of a long bull market. (1994 NACtJBO which are conservative.

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

. NRC did state in the preamble to the mean) for these categories of Based on these considerations, the Proposed rule, at 62 FR 32296, that investments wwe less than 3 percent. in NRC continues to believe that a

"(the multiple of 30 has been chosen a number of years, earnings for stocks relatively conservative criterion, such as because this would mean that any level also were less than 3 percent. Thus, real the 30 times requirement,is a of decommissioning costs could be -

inmtment returns over a one. year reasonable criterion for the covered by the annual return on an period may rot even match conservative decommissioning self-guarantee test for endowment 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 accept the commenter's NRC was not assuming (1) that by the National Council of College and recommendation to adopt a I

institutions willIn fact finance University Business OfBcers (NACUBO) substantially less stringent criterion.

I decommissioning out of endowments. -

published in 1995 also emphasized a Comment: A commenter objected to (2) that endowments can be expected in concern for this earnings variability in -

the requirement that unrestricted 5

all circumstances to grow at a rate of et its analysis of college and university endowment be at least $50 million or at I

least 3 percent annuallyi or (3) that endowment investment. First, least 30 times the decommissioning cost M

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

f reallocate up to 3 percent of their hi h rates of return cannot be sicpected requirement should be compliance with 6

g spending from endowments in a one- -

to continue indefinitely. "At a time either the $50 million figure or the 30 g

year period. Rather, the criterion was when many public and private times decommissioning cost estimate.

(

selected to serve as a measure of the institutions are searching for ways to but not whichever is greater.

Response: As previously stated, NRC f

cverall financial strength of the bridge the gap between revenues and' chose conservative financial criteria for i

institution, indicating that NRC can expenditures,it is tempting to 4

1:

Federal Register /V::1. 63, No.104/ Monday, Jun31,1998/Rul:s cnd Regulations is non-bond-issuing colleges and._

295]

activities are not completed within a.up front even though dec universities, aimed at assuring the

~

t financial viability of a licensee qualified single year. For this reason NRC's.,

conservative. It appears to reflect an l.

to self-guarantee. This is the only criteria for determining whether &

expectation that the decommissioning t-requirement that would apply to non-licensee should be allowed to self '

will take a short time whereas a realistic whereas non-bond-issuing hospitals orbond-1ssuing colleges and universities., - guara commercial licensees would be subject must consider the possibi!!ty that the

. NRC should consider a multiple of 30 or to rnultiple financial ratios as financial limnase will be required to fully fund less to be appropriate, tests. !:is designed to capture two decommissioning in the Re8Ponene mquirmnent dat l

measures of financial viability:(t) immediately prior to the inning of,

hospital operating revenues be at least -

l overall financial strength and (2) decommissioning activities. De 100 times decommissioning costs is a -

financial strength relative to size of licensee would fund a standby trust i.f cnterim est NRCis pmposing to use to decommissioning obligation.He ~ M eihr (1) the licensee no longer determine whether a licensee has f qualifies to use b self-guarantee t'o,.

sufHelent financial strength to self,

overall financial stre ofan provide financi' l assurance for guarantee. However, a potential Institution is heavily ependent on the a

size ofits unrestrict 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's self-guarantee ; - a short period of time if the hcensee by the ratio of unrestricted endowment is required to carry out.

C*ases to be capable of passing the self-i to decommissioning costs. A hada!

decommissioning. NRC currently'does guarantee test orif decommluioning test based only on ratio to not allow licensees to consider the.

must be carried out. As discussed above, decorumissioning cost might allo.

impact of earnings during h "psyouga the operating revenues multiple w an I

institution without adequate financial period (h period during which funds criterion does not reflect an strength to pass ifits decommissi ning are being expended from the Anandal expectatlan macerning the ength of assurance standby trustio pay for time durin size of the unrestricted endowmentcosts were Iow. A test based only on the decommissioning)in calc will ocx:ur.g which decommissioning Therefore,NRC does not l

might be inadequate for those amount of funds that must be set aalde acmpt this recommendation.

lastitutions with the highest for decommissioning. Therefore, the decommissioning costs. Both threshold NRC disagrees with the commenter's Comment: A commenter hund'the requirements are needed to provide suggestion that the expected duration of rationale that requires hospitals to meet assurance that an institution can meet decommissioning activities should -

all four financial ration tests unclear.-

I decommissioning obligations when.

apply to the determination of the

. - his commenterbelieved that using I

sp repriatemultiple.

only the operating revenues /

'nt: A commenter stated that

. decommisaloning costs ratio would NRC's rationale for a multiple of 30 that [ based n th m inati of i Provide reasonable assurana im lies that decommissioning costs are investment yield of 6 percent and '.

• glity'to provide decommissioning p d frominvestment investment yields over 2 to 3

"" "I year period. However, yields over a 1*rather than 1 year] the multip u

R*8Ponse:The RaanA =I ratios test for j

it is more on l

realistic to assume that any factor (bel redumd from 30 to 10 with hospitals in the rule was carefully decommissioning activities.whent

• ample conservatism."

selected to provide a level of financial 11nancial assurana arran8ements are Aesponse:For the reasons stated in assurance risk similar to the financial -

involved will ulre considerable responses to thp preceding commeots,.

assurance risk in the existing self,

cmrdination wi mgulators and NRC does not accept this..

guarantee. The four ratios in financial services involving 2 or 3 years. recommendation.m, ;,

combination represent the financial test to ctmplete. This consideration also l

implies that the appropriate multiple

2. Financial Criterid for Hospitafs'

.that best achieves this goal. A financial test using just one of these mtios would hospitals was an A or better bond rating. The financial test should be 15 rather than 30.

Response:NRC recognizes that decommissioning may occur over a or, for hospitals not having a bond would not provide an adequate level of-financial assurance. Using only the ratio pee dIon sLI.an on? year. n o

'reting, a financial ratios test consisting ' of operating revenues to of the following:(cur.....

decommissioning costs would -

'I

. multi le o 30 was chosen without (a) Liquidity--

rent assets and to how many years it would take to decommission a facility. The depreciation fund divided by cunent -

completely ignore such determinants of financial stren liabilities) greater than or equal to 2.55.

Indebtedness' gth as liquidity'. The and profitability g

e ey factori to expendit vid bas ess financial test uned for non-bond-issuing appropriate multiple. However.g a an following this line of reasoning. _4_

revenues) gmater than or equal to 0.04.

c mmerciallicenseesincludes several-stretching out the time length of (c) Leverage-(Long term debt divided ratios, not just one. The non-bond decommissioning would imply ever by net fixed assets) less than or equal to - financial test forcolleges and 0'67.

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

NRC's objectiv is to ensure that (d) Operating Revenues at least too it is the ratio of unrestricted endowment decommissioning will take place on a. times decommissioning costs.

to decommissioning costs. Unrestricted timely basis. The financial assurance There ware no comments regarding' endowment is a fund readily available the bond rating criterion but there wer, to meet decommissioning expenses.-

regulations are intended to assure that several comments on the non-bond.

Hospital operating mvenues are inadequate funding does not prevent criteria.

decommissioning may require that all Comment: A commenter believed that s be readily available to me timely decommissioning. Timely decommissioning funding be available the selected multiple of 100 thospital decommisslor.ing expenses due to other operating revenues at least 100 times. - hospital costs.

.y

'O

t 2'9538 Federal Register /Vol. 63, No.104/M:nday, June 1,1998/Rul:s and Regul tions

3. Prohibition on Using a Guamntee in rating, despite declines in the financial accounting principles to assess Combination With Anothe: Financial. condition of the issuer.-

compliance with a financial test De Problem with an insured bond designed using U.S. GAAP. Finally, the Assumnce Mechanism fr m 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 n'echanisms 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 and 72.30(c)(2) provide that neither a self-guarantee. He bond can retain its to use a particular mechanism have parent company guarantee nor a high rating despite a decline in the other alternatives available. NRC does li tm be d

of the issuer.

not expect firms to change their te b Q

finandal strenpe insurance coverage,accounting practices in order to make Furthermore, methods to satisfy financial assurance provided by the bond insurer, which is use of the financial test because a requirements.These commenters a guarantee of pa' ent of principal and number of other options are available.

. wanted to know the reasons for these interest in accord ce with the insured ainancm. lCdterkforNon-Bond-ent schedule, will not mstdctions. '

bond issue's pabonal source of MngC mnercia censees Response:This rule makes no change provide any ad in the already existing prohibition funding for decommissioning. NRC does The financial test proposed for non-against combining a parent or self-not agree with the commenter's bond issuing commercial licensees was:

(a) Cash fTow divided by total guarantee with another of financial suggestion that it accept ratings on assurance mechanism. e issue of insured bonds as an acceptable criterion liabilities greater than 0.15.

(b)Totalliabilities divided by net whether or not to allow such a go, ty. guarantee.

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

this rule. The NRC has limited

5. Requirements for Financial (c) Net worth greater than $10 million j

Statements or at least to times decommissioning experience with parent and self.

guarantee to date. It is expected that the Comment:Some commenters objected costs, whichever is greater.

Comment: A commenter objected to NRC will periodically reevaluate its to the proposed requirement in the net worth criterion of net worth financial assurance program in the Appendices D and E to 10 CFR Part 30 future and could reassess the need for that licensees must conduct accounting greater than $10 million or at least to times estimated decommissioning costs.

the prohibition.

by U.S. generally accepted accounting This discriminates against well funded Principles (GAAP).His does not

4. Insured Bond Ratings remgnize the increasingly multi.

sma'ller firms that could easily self-Comment: Some commenters objected national nature of materials licenseen.

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

million net worth requirement.

Institutions that issue bonds, only a Siemens, ABB, Framatome) and can be Re*Ponse:The NRC's objective in e

ed to increase in the future. The setting financial criteria for non-bond-bond issuance that is " uninsured *' msy be used; an " insured" bond rating se on of accounting practices to be issuing commercialIJcensees was to would not be eligible. The justification 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 insurers evaluate the unreasonable to require that corporate assurance risk of the financial criteria practices of major multi-national firms for licensees that issue bonds (estimated l

financial condition of the prospective '

l 1ssuers and avoid issuing policies to be changed for a licensee to be allowed to be approximately 0.13 percent per universities that are not creditworthy.

to provide self-guarantee of year). According to the analysis of

' Consequently, the presence of bond d nmmissioning funding.The 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 fmanc ail i

sound financial condition.

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

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

• Response: Financial statements firms. hus, the $10 million net worth Bond rating agencies, such as Moodys -

prepared in acrordance 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 CAAP 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.hmmissi ning Cost Estimates NRC's concerns with accepting developed based on an analysis of inmrod bonds as a criterion of finsacial financial data for U.S. firms.

Comment: Several commenters raised assurance arise from the possibility that, Consequently, the financial test criteria the issue of how decommissioning costs over time, the insured bond rating could may not be applicable or affective when were estimated. The NRC should mask adverse changes in the financial used in conjunction with financial data encourage best available information condition of the bond issuer after the that were prepared in accordance with estimates of decommissioning costs, debt has been insured.The rule foreign accounting practices. Second,

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

'l J

every year. Furthermore, if the licensee own country could place a heavy n3 longer meets the test criteria,it must administrative burden on NRC. He

" Analysis of Potential saf4uarante Testa kn Demonstraung Dnancial Assurance by Nonprofit notify NRC and establish alternative examples cited by the commenter, for financial assurance. However, insured instance, might require NRC to know D,"'fij7s**p' *"D,j'oMURW bonds would continue to hold their and apply German, Swiss, and French CR-4514. p. 4.r. June 199r.

f i

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i l

t p,

Feder:1 Regist;r/Voj. 63, No.104/Mond:y, June 1,1998/ Rules-and Regulations' 2

29539 Conservative assumptions, such as use adopt the essential ob}ectives of these of rates charged by contractors and high sections inorder to mgintain an.

CFR Part 76). USEC stated that it would estimates of waste disposal costs, adequate program.The remaining benefit from the opportunity to reduce noted that assuming a period for short-sections of the rule, inciting thum, the costs of complying with NRC should not be used. A commenter also -

which allow self-guarantee of certain.

ficencial assurance requirements, which USEC estimated would pasently cost in lived isotopes to decay before decommissioning begins would be a commemial corporate bcensees who.

excess of $100,000 per year for letters of realistic ammption. Also, a typical issue bonds if they meet stringent.

cmdit and surety bonds.

liceme will not have the maximum financial criteria, were designated as..

Response:Under 10 CFR 76.35(n),

compatibility Category D. Category D ~ USEC (or the Corporation) is required to naount of material allowed by the means the Agreement States do not need establish financial surety arrangem ifcense at the time of decommissioning.

to adopt a compatible rule..

Response:This rulemaking makes no The final rule change, which will..

to ensure that sufficient funds will be -

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

' available for the ultimate disposal of -

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

CFR Pad 30, are already required by existing regulations on financial designated as compatibility Category D.

fundin8 mechanisms currently listed in Under compatibility category 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' j

in NRC mguladons.

y.

9. RequirementforAnnual Pbssage of' include self-guarantee r statement of

8. Agreement State Cort. tibilityStatus Financial Test gj",

(fug$,fg, ofFinancial Assumace egulations '.

Comment: A c,omme,nter stated that g

Comment:Some commenters believed Section ILC(2) of Appendix E to Part 30 that are req evallability of funds for any activities that the proposed regulations should be should be modified so a qualifying

'the Corporation.

assigned a compatibility status of Level limnese would not have to repeat -

USEC was created pursuant to the 1 with Agreement States, This will passage of the financial test for self-Energy Policy Act of 1992. It is a wholly ensure consistent requirements for guarantee every year. University ownsd government corporation, whose financial surety arrangements and will endowments are very stable. In preclude the unintended creation of addition Section ILC.(3) providen.

of Dimetors appointed by the vars are vested in a five-member '

competitive disadvantages between sufficient assurance that NRC will be.

President of the United States and -

facilities in Agreement States and Non-Agreement States.

' notifled when a licensee no longer confirmed by the Senate. However, on Response:When the proposed rule meets the criteria for self-guarantee. '

fuly 25,1997 a plan was appmved by

• i 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 for the public through a st offering.

desigt.ated as a Division 2 compatibility notification, the provision for qualifying Under the USEC Priva item in accordanca with the licensees to annually pass the test is -

Congrees set certain restrictions'on compatibility policy in effect at that <

retained in the final rule. For a self-foreign involvement in USEC's time. A Division 2 level of compatibility guarantee program to provide adequate privatization and required that a allowed an Agreement State to promulgate equivalent, or more assurance of decommissioning funding, " reliable and economical domestic stringent, financial assurance the annual "requalification" provision. sourm of enrichment servims" exist +

regulations than those of NRC.

is necessary. NRC must have assurance following privatization.

of financial strength on a timely basia.

Although the NRCis not currently Under the new " Policy Statement on A self uarantee relies solely on the swam of any reason why it would be 1

Adequacy and Compatibility Agreement State Programs,"y of. Licensee's ability to fund.

. Inappropriate to consider expanding the (see 62 FR 46517, September 3,1997) Agreement decommissioning. There is no backup. category of funding mechanisms a

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. no demonstrate the availability of funds for significance and those necessary to requirement for repeating the financial. the actions required under to CFR maintain compatibility with the test yearly is not unduly burdensome on 76.35(n), NRC does not believe that it.

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

the financial condition of the licensee rule. First, USEC was not included in The NRC financial assurance regulations,in effect when the neW on a timely basis. This requirement is any of the analyses performed to not unique to colleges and universities evaluate potential self-gcarantee tests policy was implemented, were T I

designated as having health and safety. or to this nile. It is found in the self. for demonstrating financD1 assurance.

significance. Specifically, sections (a),

guarantee financial tests applicable to e NRC believes that detailed analyses.

I other t of licensees, both proSt 'and. should be' undertaken to ensure that all (b), and (d) of Parts 30.35,40.36 and. ~ ~

70.25, which require that licerisees must critical factors have been considered.

nonpro

s. m..

~

consider the cost of decommissioning J0. Use ofSelf-Guarantee by the. United. Second, USEC's current and futum-their facilities and that those costs must. StatesEnrichment Corporation situation with respect to the costs that it might incur is substantially different,,

be provided for through a financial Comment:The United States (

from those of the licensees included in assurance mechanism, have particular health and safety significance and were Enrichment Corporation (USECl s,,..t,'the current rulemaking. In panicular, proposed that the NRC modify the t'he scope and type of activities that designeted as category H&S. Under the language of the rule to include..

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

( j

.~

.s l

J 29540 Federd Register /Vsl. 63, Ns. IONMonday, Juna 1,'1998/ Rules and Regulations conducted by hospitals and universities, which can be used by qualified basis'. Therefore, Category D has been' and the non-bond issuing firms covered nonprofit licensees and non-bond-assigned to these rule provisions.

t Issuing licenstes, pg, din of No Si ificant by thek,tohsed rule.

nir t exact size of the obli ationa, Appendix D is added to 10 CFR Part Environmentalimpact: Availability e

8 that USEC might be utred to cover is 30 to establish requirements for self-i uncertain and will n determined guarantee by non-bond-issuing The amendments will allow qualified until a later date, although it is known commercialifcensees. Appendix Eis nonprofit and non-bond-issuing

. responsibility of the U.S. Department of.,.

added to 10 CFR Part 30 to establish licensees the option of using self-3 that many of the costs will remain the requirements for self-guarantee for guarantee as a mechanism fo,r financial Energy (DOE. Under 10 CFR 76.35(n),

nonprofit college, university, and assurance for decommissiomng. For-Profit corporate licensees that issus DOE is responsible for those aspects of hospital licensees.

bonds are already allowed to use self-decontamination and decommissioning cf the gaseous diffusion plants (GDPs)

~

guarantee if they meet the regulatory 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 all environmental liabilities assodated which can be used by qualified assurance mechanisms, such as surety with the operniion of the CDPs before nonprofit IIconsees and non-bond.

bonds, letters of credit, and escrow July 1.1993. According to USEC's issuing licensees.

accounts to comply with E

E" Annual Report for 1996,"le]xcept for 20 CFR Pmt 50

,.~

action is intended to offer nonprofit and certain accrued liabilities that will be

. Section 50.M is amended to permit non-bond-issuing nuclear materials specified in a memorandum of -

'm ment entered into prior to self-guarantee for financial assurance licensees and non-electric utility reactor

'm tization, all environmental which can be used by qualified

. licensees greater flexibility by allowing e

liabilities of the Company through the non refit licensees and non-bond -

an additional mechanism for licensees date of privatization will remain iss glicensees, that meet the financial criteria for use of

' **Ih%t e.

obligations of the U.S. Government" '

20 CFR Part 70,..m

t. t Section 70.25 is amended to permit simply adds one more financ to t Matters) Fu ore. -

seU-guarantee nandal assurance assurance mechanism to the as efJune 30,1996. USEC had accrued mechanisms current! avallable. It does which can be used by hualified nonprofit licensees'an non-bond not effect the cost of decommissioning t

5303 mm P

9 and issuing licensees, materials and non-power reactor currently stored at the GDPs. The 1996,'

disposition of depleted uranium

.x facilities. Allowing self-guarantne for 20 CFR Pmt 72 additional types of licensees does not Annual Report states that 'USEC is Section 72.30 is amended to permit lead to any increase in the effect on the i

evaluating various proposals for the self-guarantee for financial assurance environment of the decommissioning disposition of depleted uranium, and '

which can be used by qualified non-activities considered in the final rule d:pending on the outcomeof such bond issuing licensees.-

put,lished on June 27,1988,(53 FR ev:luations, the Company may be~able a ' 24018) as analyzed in the Final Generic tireduce future cost accruals * * *.

' Coen tibility of Agreement State EnvironmentalImpact Statement on Pursuant to the USEC Privatization Act. Regu ations Decommissioning of Nuclear Facilities all costs and liabilities related to the

'The curreat 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 u

until privatization has occurred.

' financial criteria is designated as' by the NRC. Therefore, the Commission important information aboutUSEC's.

compatibility Category D. This final rule has determined, under the National future corporate structure and change, which willextend the self '

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

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

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

privatization occurs could affect the -

. means the agreement States do not need therefore an environmentalimpact

. NRC's analysis of financial assurance..

to adopt a compatible rule. The Category statement is not required. No other citernatives. Because of the need to D designation was determined in ~

- agencies or persons were contacted in ev:luate all of these factors. NRC l'aa accordance with the new " Policy

' making this determination.The NRC E

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

~

J staffis not aware of any other i

7Jin the current rulemaking-

-Compatibility of Agreement State documents related to the environmental Programs," approved by the Changes From the F.;'1-f Rule Commission on June 30,1997. The linal' ~ acoptee ere avaiteble at current retes frorn the There am no changes frorn the,

. rule change does not involve a basic u.s covemrnent printing omce p.o.nox 270sr.

Proposed rule.

radiation protection standard, activities

• • • hinston. oc to4ca-e32s tielephone (202) sia-Section-by-Section Description of that have direct and significant effects N'bby tfr*s s2 Roy Roe.

Changes tr> multiple jurisdictions, or essential springfield. vA asist. copine ere eveiteble for objectives which an Agreement State In8pecuon or copying for a fee trorn the NRC Public

.30 CFR Pmt 30

,7 should adopt to avoid conflicts, gaps, or Docurnent Roarn et 212o 1. Street NW.. Wuhinston.

I Section 30.35 is amended to permit' '

duplications in the regulation of N,7.,g2'D3$,'p"o$,TonI[M, salf-guarantee for financial assurance agreement material on a nationwide.

fax (2022 as4-s343.

~

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Fed'eral Register /Vol.' 83,'No.104 onday,' June 1,1998/ Rules and ' Regulations 29541 2

i imped of this action.no foregoing

-y Fl=rikility Cert Acation.

Radiation protection Reporting and

" - - ' ^

^

3 constitutes the environmental In accordance wkh b Re'gulatory.

recordkeeping requirements. Scientl6c 4

assessment and Bnding of no sigalRcant

(

impact fw this mie' Flexibility Act of 1980 (5 U.S.C 605(b)),

equipment,Securit b Coramission arti8es that this rule nuclearmaterial. y measures.Special

!g Paperwork Reduction Act Statement' will not have a signl8 cant economic

,20 CFR Port 72",,~

• This Analrule amendsinformation I'8 Ped on a submanual number danaH collecdon requirements that are subject entitim. This rule would expand the Manpower t' raining

, Nuclear 1 -

memlais Occupu I

ad '

to the Pa rwork Reduction Act of1995 bor M o

able, to H,conses health, Reporting and recordkeeping (44 U.S.[3501 et seq.). These t',C",["

g g

,3,,,,,, g,,

requirements, Security measures. Spent guimmets were approved,

enhancing the Aexib ty of these I"'I' ce d Managanent and Bu

~

'r

)

(OMB), approval number 3150-0017J regulations. It is estimated that this rule For"the reasons set out in the - -

would result in signi8 cant cost'asvings preamble and under the authority of the

-0020, -0011. -000s, and 0132.

N public reporting burden for this - to qualifying limaa===

Atomic Energy Act of 1954, as amended.

the Energy Reorganization Act of 1974, l

information collection is estimated to BackSt.*- %

as amended, and 5 U.S.C 553, the NRC i.

avereqe 9 to 14 hours1.62037e-4 days <br />0.00389 hours <br />2.314815e-5 weeks <br />5.327e-6 months <br /> per response, incluaang tinne for revlowing b NRC hs dewmind'gg is ado the following amendments-harkR inemctims marchingexisungdata "d 72.82 5 revisions (10 CFR 50.100

_to to 30,40,50,70, and 72.

sources, the Parts of the data neebthering and maintaining the, Canmimim,s mgulades eat am Wag PART 30-4 TULES OF GEN

, and completing and -

d APPLICABluTY TO DotAESTIC

[8I* "g,*",,, g r'u[dme LICENSING OF BYPRODUCT reviewing the information collection.

,,g, Send ca== ants on any aspect of this infamade coHecum,inci not impose a backSt as de8aed in to.

"A A

" 8 GR 50.10e(s)(1) or 72.62(a). N rule.

1.N authority citation for Part 30 d

d

==+=ada the self. guarantee alternative for continues to read as follows:.

tYrb (T-4 F33), U.S.

denummung decommissiming b

NucleInr Regulatory r'ammission.

a"ar *I amurence to quaH8ed non-

4. ascs. st, et ist,1st, t et 1es, Washington, DC 20555-0001, or by Rt and non-bend-issuing lar==-

as sem. ess, ses. Ms. see, ses, as amadal, i

sec. 234. sa samt. 444, as

---d d (4 U.s.c Internet electronic anaH at the availability of this option att1,at12,sa01,2:32,2:33,22as,tasak B)SGNRCCOV; and to the Desk OfBear' does not pose a new burden on secs. act, as anseded, soz. aos. se seat.

OfBee ofInformation and Regulatory Hanum dcmamacial maan 1242, as unseded, t244, t24s (42 U.S.c Affairs NEOS-10202.(3150-4017),

windepades spat fu

.seet, ases, seest.

y, g,.

Section 30.7 also is'ouad under Pub. L OfBoe of Man t and Budget, g,,,y,3,,, gggggg,,),

y Washington, 20503.

ru does not constitute a harkAt 95-401, sec.10,92 Stat. 2951 (42 U.S.C and a t anal Public Protection Naean,=es==

for this Anal rule.ysis was not prepared 5851). Section 30.34(b) also issued under sec.184,68 StaL 954, as amended

!!a doepment used to impose an (42 U.S.C 2234). Section 30.81 also Information collection does not di

. Use ofSubjects y

imud unde uc.187, es Std. 955 (42 a currently valid OMB control n to CFR Part30 U.S.C 2237).

4 the NRC may not conduct or sponsor, B

uctinpterial Criminal '

, read as foHows.. graph (b)is revised t'o

2. In 5 30.s, para and a person is not required to respond ties, Government contracts,'

c-

-t to, the information collection.

%., =_3tal relations,Isoto 9as.8 Inenemseensollsseen Nuclear materials, Radiation pron = pes.

,t Regulatory Analysis

• reta=.

""T-cess approuet.

Reporting and recordkeeping

^1

'the NRC has prepared a letary

. requirmeents.

(b) N ap collection._ proved information analysis on this regulation.

ysis examines the costs and beneSts of the 10 &R Part 40

. "~

^ ts contained in 4

alternatives considered by the NitC N Criminal penalties, Government this part appear in $$ 30.9. 30.11,30.15,-

30.19,30.20,30.32,30.34,30.35,30.36, analysis is available for ins on in~

contracts Hasardous materials 30.37,30.38,30.50,30.51,30.55,30.58, the NRCPublic Document

,2120 transportation, Nuclear matadals, and Appendices A.C,D,and E of this L Street NW (Imwor level), Washington, Reporting and recordkeeping J-part.

DC.

copies of the anal is may be requirements, Souice snatorial, obtal from Clark Pri

, OfBee of Uranium.

~

~;

Nuclear Materials Safety and

3. In 5 30.35, the introductory text of Safeguards, U.S. Nuclear Regulatory M CFR P W So Commission, Washington, DC 20555, '

. Antitrust, Classi8ed information,.

now,P. h (fX2)is revised to road as.

• ~

^'

telephone (301) 415-6203.

Criminal penalties Fire pmtection.

-430.as Pinenetsisoeuronesand a

Small Boeiness Regaletery Enfermannent I',

',',f Fairams Ad p

,. s In accordance with the Smau pmtection, Reactor siting criteria,,

(f) * *

• Reporting and recordkaoping..

(2) A surety method, insurance, or -

Business Regulatory Enforcement requirements.

other guarantee method. These methods

-w Falmees Act of1996, the NRC has a.-

guarantee that daWesioning costs determined that this action is not a 20 &R Pat M will be paid. A surety method may be

" major rule" and has verified this Criminal penalties, Hazardous Mn 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 acx:ounting. Nuclear company guarantee of funds for.

Of5ce of Management and Budget.

materials Packaging and containers, decommissioning costs based on a 1

s

~

l 0 c

29542 Fed;ral Regist:r/Vol. 63, No '104 / Monday, June 1,1998/Rults and Regulations

y'

. company is moponsible as selfparanteeing. Commission. b licenm will setup and

> financial test may be used if the fund a trust in the amount of the current cost

}

guarantee and test are as contained in, liceam and as parent-guarantor.

cppendix A to this part. A parent

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

company guarantee may not be used ins *j*d$ $,*,',IN'0 Pe g

, the tot l cment.

Appendix E to Part 30.--Criteria g

Relating to Use of Financial Tests and c

combination with other financial decommissioning cost estimate (or the methods to satisfy the requirements 'of curant amount required if certification is Self-Guarantee For Providing c

used) for all decommissioning activities for Reasonable Assurance of Funds For _

(

this section. For commercial which the company is responsible as self-Decommissioning by Nonprofit C

corporations that issue bonds, a Colleges, Universities, and Hospitals i

guarantee of funds by the applicant or guaranteeing licensee and as parent.

.i t

licensee for decommissioning costs guaranta.

L Introduction c

(3) A ratio of cash flow divided by total based on a financial test may be used if liabilities greater than 0.15 and a ratio of total An applicant or licensee may rovide

(

reasonable assurance of the avalfability of

(

th> guarantee and test are as contained. liabilities divided by not worth less than 1.5.

in cppendix C to this part. For B. In addition, to pass the financial test, a funds for decommissioning based on

[

commerr.ial companies that do not issue. cocspany must meet all of b following furmshing its own guarantee that funds will uirements:

be available for decommissioning costs and f

bonds, a guarantee of funds by the lt) The company's independent certfEed' ' on a demonstration that the applicant or applicant orlicensee for decommissioning costs may be used if public accountant must have compamd the licensee passes the Snancial test of Section 1

thJ guarantee and test are as contained data used by the company in the Anancial D of this appendix. The terms of the self.

tat. which is required to be derived from the guarantee are in Section W of this appendix.

in appendix D tc6 this part. For nonprofit independently audited year end financial - This appendix establishes criteria for passing I

entitles, sug as cogeges, univegties, statement based on United States generally '

.the Snancial test for the self-arantee and I

and nonprofit hospitals, a guarantee of accooted accounting practices for the latest establishes the terms for a se guarantee.

funds by the applicant or licensee may..

nacal yar, with h amounts in such -

g gwh.

l be used if the guarantee and test are as anancial statement. fa connection with that A. For colleges and universities, to pass the contained in appendix E to this part. A procmdure, the licenne shall inform NRC Ananefal test a college or universi must guarantee by the applicant or licensee -

within 90 days of any matters that may cause meet elbr h criteria in Paragra

!!.A.(1) may not be used in combination with

. the auditor to believe that the data speciSed or the criteria in Paragraph II.A.(2 of this in b Anancial test should be adjusted and any other financial methods used to 0'

, g

) For app!! cants'or licensees that issue. _

satisfy the requirements of this section - company must repeat passage of the test uninsured, uncollaterallad, and Ahw the dal na th,

or in any situation where the applicant.

bonds, a current rating for its most recent orlicensee has a parent company -

within 90 days after the close of each unencumbered bond issuance of AAA,,AA, b:lding majoritycontrol of the voting succeeding fiscal year.

or A as issued by Standard and Poors (S&P]

. stock of the company. Any surety (3)If the licensu no longer meets the or Aas. Aa, or A as issued by Moodys.

method or insurance used to provide.

requirements of paragraph H.A of this (2) For applicants or licensees that do not financial assurance for appendix, the licenses must send notice to the NR o to es mati" RC cons of set e11 alted decommissioning must contain the States of at least $50 million. or at least 30 foHowing con ons:

regulations.The notice must be sent times the total current decommissioning t

within 90 days after the end of the fiscal year. "timate (w the current amo certiaed mail, return aceipt request if

4. New Appendices D and E to Part 30 I r which the year end financial data show for au decommissioning activities for which certification is used), whichever is greater, are a ded to read as follows:

. that h licensee no longer meets b the college w untmsity is responsible as a

,a-- Har D to Part 30-Criteria anancial test requirements. ne licensee 8'If uamteein icensw.

f R2ating To Use of Financial Tests and must provide altamauve anancial assurance For os t s to s th Bnancia st Sdf.Guarasta for Providing within 120 days after the end of such Escal Rasseeable Amaurance of Funds for 7-

Paragraph II.B.(1) or the criteria in Paragraph Decennalaaioning by f%==arcial HI. Company SelfCuarantu

. II.B.(2)of this appendix:

Cosspanies nat Have no Outstanding ne terms of a self arantee which an (1) For applicants or licensees that issue applicant or licensee ishes must provide bonds, a current rating for its most recent Rated Reeds that:

uninsured.uncollateralized, and s

,c A. The guarantee shall remain in force' unencumbered bond issuance of AAA, AA, L Introduction or A as issued by Standard and Poors (S&P)

An applicant or licensee may

~.de unless the licensee sends notice of.

reesonable assuranca of b ability of cancellation by certified mail, return receipt or Asa, Aa,or A as issued by Moodys.

funds for dmmissioning based on requested, to the NRC t'anrulletion may not (2) For applicants or licensees that do not furnishing its own guarantee that funds will occur until an alternative Anancial assurance issue bonds, an the following tests must be -

be available for dammminainning costs and mechanism is in place.

met:

on a demonstration that the company passes B. The licensee shall provide alternative

, - (a)(Total Revenusa less total expenditures)

Anancial assurance as specified in the divided by total revenues must be equal to the financial test of Section H of this appendix.He terms of the self-guarantee are regulations within 90 days following receipt or greater than 0.04.

- ~ in Section III of this appendix. This appendix by the NRC of a notics or cancellation of the (b) Long term debt divided by net axed assets must be less than or equal to 0.67.

establishes criteria for passing the Anancial., guarantee.

m test for the self-guarantee and establishes the C ne guarantee and financial resi

- (c)(Current assets and depreciation fund) provisions must remain in effect until the divided by current liabilities must be greater terms for a self-guarantee.

Commission has terminated the license or than or equal to 2.55.

H. Find Tat until another Snancial 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:

in effect by the licensee.

estimate (or the current amount required if (1) Tangible not worth greater than $10 D. no applicant or licensee must provide certification is used) for all decommissioning million, or at least to times the total current to the Commi=1on a written guarantee (a activities for which the hospital is d:commisaloning cost estimate (or the written 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 pass the financial test, a used), whic.hever is greater, foi all carry out thu required decommission licensee must meet all the following dernmminstoning activities for which the activities or, upon issuance of an order the requirements:

• 4

W I

Federd Regist:r/Vol. 63, No.104 / Monday, June 1,1998/ Rules and Regulations g

'T" 29543 (1) The licensee's independent certified PART 40-DOMESTIC LICENSING OF orin any situation where the applicant 1

Wet Public accountant must have compared the..<

data used by the licensee in the financial test,. SOURCE MATERIAL.

or licensee has a parent company l

4

[.

which is required to be derived from the

5. The authority citation for Part 40 holdin jorit trol f th tin l

independently audited year end financial continues to read as follows:

stock of the com a y. An surety method or insura;nce used to provide staternents, based on United States generally accepted accounting practices, for the latest, Authority: Secs. 62,63, 64, 65, 81,161',

p fiscal 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(2),83, decommissioning must contain the I.

financial statement. In connection with that 84, Pub. L 95-604,92 Stat. 3033, as followl"E 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.S.C 2014(e)(2),2092,2093,-

N*

1, attention of the auditor that cause the auditor 2094,2005,2111,2113,2114,2201,2232 PART 50--DOMESTIC 1.lCENSING OF to Lelieve that the data specified in the 2233,2236,2282h sec. 274, Pub. L.86-373, PRODUCTION AND UTILIZATION !

I financial test should be adjusted and that the 73 Stat. 688 (42 U.S.C 2021); secs. 201, as FACILITIES

,s.

. gj licensee no longer passes the test.

amended. 202,206,88 Stat.1242, as

,,c 3

(2) After the initial financial test, the amended. 1244,1246 (42 U.S.C 5841,~ 5842,.

7. The authority citation for Part 50 licensee must repeat passage of the test 5846); sec. 275, 92 Stat. 3021, as arnended by. Continues to read as followsr within 90 days after the close of each Pub. L 97-415,96 Stat. 2067 (42 U.S.C i

2022).

Autho' rity: Secs. 102,103,104,105,161, i

succeeding fiscal year.

Section 4O.7 also issued under Pub. L 95-.

182,183,186,189,68 Stat. 936,937,938, s

(3)If the licensee no longer meets the 601, sec.10,92 Stat. 2951 (42 U.S.C 5851).

948,953, m,9% 956, as amended, sec.

l R3-requirements of Section I of this appendix, Section 40.31(g) also issued under sec.122, 234,83 Stat.1244, as amended (42 U.S.C the licensee mu'st send notice to the NRC of 68 Stat. 939 (42 U.S.C 2152). Section 40.46, 2 02,2133,2 m,2135,2201,2232,2233, its intent to establish alternative financial also issued under sec.184,68 Stat. 954, as 2236,2239, 2282); secs. 201, as amended, t'

assurance as specified in NRC regulations.

ded 22 2

.7 so o,n

( U C 5841 2

b The notice must be sent by certifled mall, g

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 h yeer -

6. In 5 40.36, the introductory text of.

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

~

end Bnancial data show that the licensee no paragra Section 50.10 also lasued under secs.101, Iollows: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.

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

The licensee must provide alternate financial assurance within 120 days aAer the end of 9 40.38 Financial eseurones and 853 (42 U.S.C 4332). Sections 50.13, 50.54(dd), and 50.103 also issued under sec.,

o.

such fiscal year.

f**0n*** Ping 80f ^ ^ Z " 44 108,68 Stat. 939, as amended (42 U.S.C M

E SelMuaranta (e) * * *

- 2138). Sections 50.23,50.35,50.55, and 50.56 3

also issued under sec.185,68 Stat. 955 (42 The terms of a self. guarantee which an (2) A surety method, insurance, or U.S.C 2235). Sections 50.33a,50.55a and applicant or licensee furnishes must provide other guarantee method. These methods Appendix Q also issued un that- -

i A. The guarantee shall remain in force..

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

unless the licensee sendr. notice of will be paid. A surety method may be Sections 50.34 and 50.54 also issued under -

cancellation by certified mail, and/or return in the fo 0f 8 8 Y boUd. I8 I*

f sec. 204,88 Stat 1245 (42 ES.C 5846 Sections 50.58, 50.91, and 50.92 also issued l

receipt requested, to the Commission.

g

• I '"*

N'"

Cancellation may not occur unless an...

C 2Pany guarantee of funds for.

-. under Pub. L 97-415,96 Stat. 2073 (42 U.S.C 2239). Section 50.78 also issued under alternative financial assurancs mechanism is decommisaloning costs based on 3

- sec.122,68 Stat. 939 (42 U.S.C 2152).

i[e lice financial test may,be used if the..

Sections 50.80-50.81 also issued under sec.

)

hall videal ti guarantee and test are a contained in 184. 68 Stat. 954, as amended (42 U.S.C financial ass as s scifiedin appendix A to part 30. A parent Ag F leo dersec.

Commission's regulations within 90 days com any guarantee may not be used in following receipt by the Commission of a com ination with other financial

8. In 5 50.75, the introductory text of

, c notice of cancellation of the guarantee.

methods to satisfy the requirements of Qgraph (e)(2)(lii) is revised to read as C The guarantee and financial test this section. For commercial. -

provisions must remain in effect until the corporations that issue bonds"a 9 80.78 Meporeng and.-

.,for.

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

^ - - -

until another financial assurance method licensee for decommissioning costs.

1,;.., planning.

accmptable to the ummiaton has been put based on a financial test may be used if.

(e) = *.

• in effect by the 11oonsee.

D. The applicant or licanase must provide. the guarantee and test are as contained (2) *

• F ^ U to the Commission a written guarantee (a in appendix C to part 30.For.

(iii) A surety method, insurance, or written commitment by a corporate officar or commercial companies that donot' issue other guarantee method. These methods '

a officer of the institution) which states that bonds, a guarantee of funds by the the lic=nsee will fund and carry out the applicant or licenses for guarantee that decommissioning costs.

r d

decommissioning costs may be used if' will be paid. A surety method may.be f.

7

,7

(

Q"{ the guarantee and test are as contained credit, or line of credit. A parent in the form of a surety bond, letter of licensee will set up and fund a trust in the in *PPendix D to part 30. For nonprofit company guarantee of funds for amount of the cunent cost estimates for.

entitles, such as colleges, universities, decommissioning costs based on a I

decommissioning.

and nonprofit hospitals, a guarantee of-financial test may be used if the bond issuanca ceases to be rated in anyE. If. at any time, the licensee's most recent be used if the guarantee and test are as contained in appendix A to part 30. A parent

~

category of "A" or above by either Standard contained in appendix E to part 30. A company guarantee may not be u, sed 1n and Poors or Moodys, the licensee shall.

guarantee by the applicant orlicensee coInbination with other financial-provide notice in writing of such fact to the may not be used in combination with '

methods to satisfy th9 requirements of Commission within 20 days after publication any other financial methods used to this section. For commercial tf the change by the rating service.

satisfy the requirements of this section corporations that issue bonds,' a

a

~

/

e 29544 Federal Register /Vol. 63. Na.104 /Mdaday, Juns 1,1998/Rults and Regulations l

arantee of funds by the applicant or

. appendix A to part 30. A parent subpart J also issued under secs. 2(2),2(15),

bconsee 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.SE th] guarantee and test are as containie methods to sat:sfy the requirements of 10101,10137(a),10161(h)). Subparts K and L in appendix C to part 30.For this section. For commercial are also issued under soc.133,98 Stat. 2230 commercial companies that do not issue corporations that issue bonds, a (42.U.Sc 10153) and sec. 218(a),96 Stat.

2252 (42 U.Sn 10198).

bonds, a guarantee of funds by the guarantee of funds by the applicant or cpplicant or licensee for ucensee for decommissioning costs

12. In 572.30, the introductory text of decommissioning costs may be used if based on a financial test may be used if paragraph (c)(2) is revised to read as the guarantee an test are as contained the guarantee and test are as contained g93

_ in appendix D.to part 30. For nonprofit in appendix C to part 30. For entities, such as colleges, universities, commercial companies that do not issue 9 72.30 Financ'ai eseurence and and nonprofit hospitals, a guarantee of bonds, a guarantee of funds by the reeerokeeping for decommiseloning.

funds by the applicant or licensee may applicant,or licensee for be used 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 are as contained (C) * *

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

satisfy the requirements of this section funds by the applicant or licensee may will be paid. A surety method may be orin any situation where the applicant be used if the guarantee and test are as in the form of a surety bond, letter of or licensee has a parent company contained in appendix E to part 30. A credit, or line of credit. A parent h:lding majority control of the voting guarantee by the applicant or licensee company guarantee of funds for stock of the company.

may not be used in combination with decommissioning costs based on a any other financial methods used t financial test may be used if the satisfy the requirements of this section guarantee and test are as contained in -

PART 70- DOMESTIC UCENSING OF or in any situation where the applicant

• SPECIAL NUCLEAR MATERIAL or licensee has a parent com any 8PPendix A to part 30. A parent Y

of ung gy, tion wi "j m o[y 9.The authority citation for Part 70 other fin a

continues to read as follows:

method orinsurance use to provide methods to satisfy the requirements of

. Authority: Secs. 51,53,181,182,183,68 financial assurance for this section. For commercial Stat. 929,930,948 953,954, as amended'4 decommissioning must contain the corporations that issue bonds, a 3j7,3, Stet; asQen following conditions:

guarantee of funds by the applicant or 8

2 g

5 licensee for decommissioning costs c.

201, as amended,202,204,206, a8 Stat.

1242, as amended.1244,1245.1246 (42 based on a financial test may be used if U.SE 5841,5842,5845,5846).

PART 72-LICENSING the guarsntee and test are as contained sections 70.1(c) and 70.20a(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 SPENT commercial corporations that do not 2232,2241 (42 U.sn 10155.10181). Section

• NUCLEAR FUEL AND HIGH-LEVEL issue bonds, a guarantee of funds by the 70.7 also issued under Pub. L 95-601, sec-RADIOACTIVE WASTE APP cant or licensee for li 10,92 Stat. 2951 (42 U.SE 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 U.SE 2152). Section 70.31 also continues to read as follows:

the guarantee and test are as contained in appendix D to part 30. A guarantee lesund under sec. 57d, Pub. L 93-377,88 Authority: Seca.51,53,57,62,63,65,69, Stat. 475 (42 U.SC 2077). Sections 70.36 and by the applicant or licensee may not be 70.44 also issued under sec.184. 68 Stat. W54, 81,161,182,183,184,186,187,189,68 Stat.

u g comgnation wi any other as amended (42 UAC 2234). Section 70 tot 929,930,932,933,934,935,948,953,954, 955 as amended. sec. 234,83 Stat. 444, as financial methods used to satisfy the also issued under secs.18e,187,68 Stat. 955 ' ame,nded (42 U.SC 2071,2073,2077,2092, requirements of this section or in any (42 U.SE 2236,2237). Section 70.62 also issued under sec.108,68 Stat. 939, as 2093,2005,2099,2111,2201,2232,2233, situation where the applicant or amended (42 U.SE 2138), '

2234,2236,2237,2238,2282); sec. 274, Puh.

licensee has a parent company holding

10. In S 70.25, the' introductory text of k3d2051

• • 3 maj rity c ntrol of the voting stcck of

'201 'sa a

n 2

,206, Paragraph (f)(2) is revised to road as 88 Stat.1242, as amanded.1244,1246 (42 the cornpany. Any surety method or

, r.3. '

UAC 5841,5842,5846h Pub. L 95-601, sec. insurance used to provide financial f:llows:

10,92 Stat. 2951(42 U.SA 5851); sec.102, assurance for decommissioning must I

_ _ _"" an h.,

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

1

- - "" 7 -

Secs.131,132,133,135,137,141, Pub. L Sta 2 Dated at Rockville, Maryland, this 22nd g

20' 101 t 1$3 235 2

[}...

,2....

• ~ (2) A surety method, insurance, or U.SC 10151,10152,10153,10155, t0157, day of May,1998.

Other guarantee method. These methods ' 10161,10168).

For the Nuclear Regulatory Commission.

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

g.h, c, gg,yi,*

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

.Secreryof the Comimssm In the form of a surety bond, letter of Stat.1330-232,1330-236 (42 U.Sc credit,orline of credit. A arent 10182(b).10168(c),(d)). Section 72.46 also (FR Doc. 98-14385 Filed 5-29-98; 8:45 aml issued undar sec.189,68 Stat. 955 (42 U.SE anme coes rise.es.,

f c:mpany 8"arantee of funds for 2239h sec.134, Puh. L 97-425,96 Stat. 2230 decommissioning 8 costs based on a ',

(42 U.Sn 10154). Section 72.9s(d) also

~

~

t financial test may be used if the -

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

101 Stat.1330-235 (42 U.SC 10165(g)).

.i

?

_ _ _ _ _ _