ML20236S445
| ML20236S445 | |
| Person / Time | |
|---|---|
| Site: | Rensselaer Polytechnic Institute |
| Issue date: | 07/20/1998 |
| From: | Michaels T NRC (Affiliation Not Assigned) |
| To: | Harris D RENSSELAER POLYTECHNIC INSTITUTE, TROY, NY |
| References | |
| NUDOCS 9807240345 | |
| Download: ML20236S445 (13) | |
Text
{{#Wiki_filter:_ , _ _ July 20, 1998 i i I Dr. Donald R. Harris, Director i Critical Facility Department of Nuclear Engineering and Science Rensselaer Polytechnic Institute ' Troy, New York 12181
SUBJECT:
FINANCIAL ASSURANCE FOR DECOMMISSIONING
Dear Dr. Harris:
1 Enclosed please find a copy of a recently approved regulation in the Federal Reaister, l (63 FR 29535, June 1,.1998), which permits colleges and universities to self-guarantee
. decommissioning costs if certain criteria are met. The criteria are on page 29542 under Appendix E to Part 30, Items I, llA, and llc. Also, the requirements in item lli, "Self- i Guarantee" needs to be complied with as needed.
l If you decide to self-guararitee, 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) 415-1102. I Sincerely, ORIGINAL SIGNED BY: Theodore S. Michaels, Sr. Project Manager Non-Power Reactors and Decommissioning , Project Directorate ' l Division of Reactor Program Management ! Office of Nuclear Reactor Regulation l Docket No. 50-225 l
Enclosure:
As stated ! l cc: w\ enclosure See next page
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#A UNITED STATES j
j t NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20666 4001
,,, g # July 20, 1998 Dr. Donald R. Harris, Director Critical Facility Department of Nuclear Engineering and Science.
Rensselaer Polytechnic Institute Troy, New York 12181
SUBJECT:
FINANCIAL ASSURANCE FOR DECOMMISSIONING
Dear Dr. Harris:
Enclosed please find a copy of a recently approved regulation in the Federal Begigigt, (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 I 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 l background to suppart 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) 415-1102. Sincerely, h5h Theodore S. Michaels, Sr. Project Manager Non-Power Reactors and Decommissioning Project Directorate Division of Reactor Program Management Office of Nuclear Reactor Regulation Docket No. 50-225
Enclosure:
As stated cc: w\ enclosure See next page t L.___________.__..____._ . _ _ - _ . - - - - -- -
l 1 Rensselaer Polytechnic Institute - Docket No. 50-225 i. L cc: Mayor of the City of Schsnectady Schenectady, New York 12305 l Director, Bureau of Radiation, DHSR NYS Department of Environmental Conservation 50 Wolf Road
' Albany, Now York 12223-7255 i Mr. Brian S. Craig Department of Nuclear Engineering and Science Rensselaer Polytechnic Institute Troy, New York 12181 i
Mr. John P. Spath I ! . NYS Energy Research and Development
' Authority )
Corporate Plaza West 286 Washington Avenue Extension
' Albany, New York 12203-6399 New York City Department of Health
. Public Health Library
- - 125 Worth Street l-
- New York, New York 10013 j l
4 i l l l L L l l 1 l l l L _--- _____=__-__=_2_-__-_-__-_____---- . _ _ _ _ _ _ _ _ _ _ - _ - - _ _ _ _ _ _ _ _ _ _ - _ - _ - _ _ _ - - _ _ - _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ - _ _ _ - _ _ - - _ _ _ _ _
Fed:rd Regist:r/Vol. 63; No.104/ Monday, Jun21,1998/RulIs tnd Regulations 29535 Committee's recommendation, and Materials Safety and Safeguards, U.S. other information,it is found that Background' ~ Nuclear ReEulatory Commission, On December 29,1993 (58 FR 687'26)'-
' finalizing the interim final rule, without Washington, DC 20555-0001, telephone change, as published in the Federal (301)415-6203, e-mail cwp@nic. gov. as corrected on Janu 12 1994 (59FR Register (63 FR 11585: March 10,1998) suPPLEnaENTARY INFOMh4ATION: , ,
1618), the NRC publ ed a notice of gg will tend to effectuate the declamd final rulemaking that allows financially Licensees subject to 10 CFR parts 30 strong corporations with A or better g,5 Policy of the Act. 40,70, and 72, whose operations 20 0
' bond radngs the option of using self-List ofSubjects in 7 CFR Part'98' 9 invclve the use of substantial amounts . guarantee as a mechanism for M5
=> Crspas, Marketing a ments, of nuclear materials, and those subject , comp! g with the regulations on Raisins, Reporting an recordkeeping plicants mquirements. to 10holders for, or CFRof, Part operating 50 who aredecommissioning. aficenses for - financwas Self-guarantee assurance product!on or utilization facilities must added to the list of financial assurance - PART 989-RAISINS PRODUCED Provide financial assurance for . . mechanisms as a cost-saving option for ' ] FROM GRAPES GROWN IN decommissioning funding by selecting licensees that are able to meet th's CALIFORNIA ~ from a variety of mechanisms: surety . , stringent financial test. . bond or letter of credit, prepayment, .' The NRC's decialon to add self-Accordir'igly, the interim final rule amending 7 CFR part 989 which was .coupled - insurance, an external sinking fund . guarantee to the, list of approved . with a surety or insurance. ' financial assurance mechanisms for g published at 63 FR 11585 on March 10, 1998, is adopted as a final rule without parent company guarantee for limnsees qualiSed licensees came in response to that have a qualifying corporate pamnt, a petition for rulemaking filed by - change. and, for certain financially stmng ', General Electric and Westinghouse-Deted: May 26,1998. , corporations, self-guarantee. A (PRM-30-59, Notice of receipt Rainert C. Keeeey, statement ofintent regarding obtaining Published September 25,1991 (56 FR Deputy Administrator, fruit and Vegetable funds to satisfy decommissioning 3, 48445)). The petition presented a case Programs. 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 are able tb pass a stringent financial charter provides for a direct link to the test. . . .
p State Government). ,
.... Subsequent to the December 29,1993 To date, self-guarantee has not been . final rule, tfie Commission initiated a COMMIS880N available to nonprofit licensees such as study to determine whether criteria hospitals and universities, or to for. could be developed and applied by NRC g 10 CFR Porte 30,40,50,70, and 72 Profit licensees who do not issue bonds, for DonProfit IIconsees and non-bond-RIN 3tBO ,if64 because the finandal test for self- Issuing commercial licensees to use self-guarantee uses the rating of the bonds guarantee while maintaining the Muerenho d Dommmiseloning issued by the licennee as one measum of mquired level of confidence regarding Funding by Nonprofit and Non W the licensee's financial resources and the availability of decommissioning ,
I'*"'"8I3**"**** ' ability to fund decommisaloning ,, funds when needed. h study, he NRCis extending the use of self - " Analysis of Potential Self-Cuarantee AGENCY:NuclearReguistory - ** Tests for Demonstrating Financial arantee, previously limited to bond-Commission. ,
suing industrialcorporations, to . Assurance by Nonprofit Coll and AcnoN: Final rule.- additional cat'egories of qualified j,6es an y 3 y sune4ARY:The Nuclear Regulatory . nan e self B nds " NUREG/CR-6514 2 (June 1997),
t this Commission is amending its regulations extension can be made without idendBed a vadety d Anancial cdtada t3 allow additional materials licensees kopardizing the present high level of , that muld be applied to additional D and non-electric utility reactor licensees financial assurance thatthe .. cat ories.oflicensees regarding the use who meet certain financial criteria to decommissioning obligation requires. d se 0 guarantee.b Enancial cdtede self-guarantee funding for in &ls rule wem selected by se NRC Allowing qualified nonpmfit and non-decommisaloning. Certain commerdal on lafomiadon in &is mpo:L , corporate licensees who lasue bonds am bond-issuing licea- to self ptarantee 1 resently allowed to self-guarantee will reduos the costs of complying with . Public Cesaments on the Proposed Rule {unding if they meet stringent financial NRC financial assurance requirements
' no NRC ublished a notice of 3 .
criteria. his rule allows nonprofit .. for those who meet the specified . reposed ru emaking on April 30,1997,
' critoria. '. -- - --' "' -
f62 FR 23394). In response to this licensees, such as colleges, universities, ..r g, and hospitals, as well as some - notics,18 comments were received: 2' s p ,euent to so crR sa.rstexas, an sectric commercial hcensees who do not issue utmtycan wriety the d --d-i-a- rundins . from States,8 fmrn colleges and i 1 bonds, to self-guarantee funding .. mguirements with an esaarnal einMas fund. ._ . universiti.e.s/3 from associations.,3 from
.~
provided they meet similarly stringent " d*"3"8 A 3 L % d"g,""'"[F'". financialcriteria. Allowing additional w 8 Slasle mpias are pvalkbb M Nac
- p. Nauce or proposed Rotemakins that addresses contact. copies are evallebne at current rates from qualified licensees to use self-guarantee damnunimioning fundins - :s is the U.s. covernment Prtating ostos. P.O. som reduces llCennee Costs while proViding mochted wis ehctric aulity mtructurias (em smet wwhington. DC 20402-433s (telephone -
ade9uste assurance that funds for . 8'3"*"*3^"""""**'3"""""'"' . (sa2)sta-: en or ham m.Neunalwhnical decommissioning will be available Decommissioning Nuc3.er Power Reactoro-e2 PR Inbrmation Service by writins NTIS at 52ss Port 'i g 4nas septanbar so.seert As part of this when needed. Royalened springfield vArates.copiesare proposed rui the NitC is comidoring amending its evaltabia br i non orcopyins lar a fee from EFFECTIVE DATE' July 1' 1998* d*tination of " electric utility" and clarifying the s she NRC Pub!!c nt Room at 21to L Str.st distinction between financial mesuranor NW wuhington, DC; the PDR's malling address is FOR FURTHER INFOMenaTION CONTACu Dr. machenisms applicable to Clark Prichard, Office of Nuclear hasti stop tua. washinston. DC ross 5-ooo n: and non-power sanctara-- l'~ power suectar licaneses telephone (202) as4-stra; sax tros) s24-ss43. f e
{ - 29538 Federal Rhgister/Vol' 63, No.104 / Monday,' June 1,1998/ Rules and Regulations a private corporations.1 from a hospital, reasonably assume that such a college or extrapolate these extraordinary returns and 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. - c mmenters all supported the extension 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 an 1 non-bond-issuing commercial the necessary funds when they are institutions, the average annual real licensees. Although some commenters needed. I return after spending for the 10-year urged NRC to adopt tige proposed rule Even assuming the preniise of the period ended June 30,1994 Is 4.1 i as written, most favored some type of commenter, NRC does not believe that ! change to the financial criteria. percent, but for the 20 years ended June I reducing the multiple to 15, as the 30,1994, it is 0.9 percent." (1994
- 2. FinancJol Criterio for Colleges and commenter suggests, is desirable-NACUBO Endowment Study, National Umversities Although a real rate of return of 3 Council of College and University
. percent may appear low under the Business Off'cers,1995, p. 4) ne financial test criteria 'proposed for market conditions prevailing during
- colleges and universities were an A or Therefore,the NACUBO study
' certain periods, there is a substantial recommends strongly that institutions better bond rating or, for those not - body nf empirical evidence indicating having a bond rating, unrestricted keep their spending from endowment that it is a reasonable assumption. If a below the rate proposed by the i endowment 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 whichever was greater. There were no trust funf for decommiss oning in the Historical precedent indicates that a fund comments regarding the A or better year befere the beginning of invested approximately so percent in bond rating, but severalcommenters decommissioning, and the licensee domestic and foreign stocks,30 percent in objected to the non-bond criteria as too fixed locame, and to percent in various other relies on earnings from endowment to asset classes inevitably experiences recurring conservative. create the trust, it is the annual earnings periods of absolute decline in market values Comment: A commenter stated that of the endowment for the year the selected multiple of 30 times over 3 years. Such a decline would trigger a immediately prior to the reducuan in spending for an institution decommissioning costs is excessively decommissioning that must equal the sticking to a licy of spending a nxed. conservative. NRC's basis for the 30 fred amount. NRC has reviewed the Pecentage o a 31 ear moving average of multiple is that an amount of money 30 in rmation providedinIbbotson ,%,",'h times decommissioning costs invested e nb,wm, e, pe ' Associates, Stocks, Bonds, Bills, and ft 3 percent would yield an annual Inflation 1995 Yearbook,1995, which rate reported by responding institutions is a.o am:unt suf!Icient to fund those costs. percent. On average, the smaUest published a summary of market results
'fh] commenter said that it should not endowments ($25 million and les:1 spent for the 69-year period from 1926 to 1995 more (7.2 percent) than the largest (4.5 be difficult to obtain secure investments for five categories of investments: small percent), and public institutions spent more yi:Iding 6 percent; thus an appropriate company stocks,large company stocks.
multiple would be 15 based on (6.6 percent) than private instituuons (5.7 investment yield. long-term govemment bonds,long-term percent) * *
- With the sole exception of the I
.' corporate bonds, and intermediate-term 4.5 pacent spent by the largest universides, Response: NRC's ob}ective in selecting government bonds. . , these spending rates are not compatible with financial criteria was to provide a level tu tated in On a yearby-year basis,less risky. '
cf financial assurance risk similar to the investments, such es treasury bills' *fst ,( hei e 1 financial assurance nsk in the existing showed the most frequent positive Ovw dme it is possible (difficult, but self-guarantee. However, for colleges returns, but their annual retums also possible) for the exceptionally well managed institution to spend 6.0 percent of a 3-year andofuniversities lack thatondo a propriate data not issue default risk bonds, were relatively low. Riskier investments moving everage of endowment . showed a broad distribution of returns, and still preserve purchasing power. made a mancial assurance risk analysis imm very good tc>very poor. Overall, However,it is courting disaster to spend at " impossible. For these licensees, NRC however, with the exception of small an annua! rate of e.o percent toward the tail , deliberately chose financial criteria - which are conservative. and large company stocks, the average , end of a long bull market. (t994 NACUBO .q Inflation-adjusted earnags (geometric Endowment Study,1995, p. 5) NRC did state in the preamble to the mean) for these categ rios of proposed rule, at 62 FR 32296, that Based on these considerations, the investments were less Bhnn 3 percent. In NRC continues to believe that a p
"[the multiple of 30 has been chosen 0 a number of years, oc.rnings for stocks relatively conservative criterion, such as because this would mean that any level ofdecommissioning costs could be also were less than 3 percent. Thus, real the 30 times requirement. Is a h covered by the annual return on an ' investment returns over a one year reasonable criterion for the '1l endowment invested at 3 percent." period may not even match conservative decommissioning self-guarantee test for ti earnings assumptions. colleges and universities. The NRC does However,it is important to note that The study of endowment sponsored '
NRC was not aseuming (1) that , not acx:ept the commenter's [1 institutions willin fact financa ~ ~ "" b the National Council of College andIfniversity Business Officers (NAC substantially less stringent criterion.
'j decommissioning out of endowmentst published in 1995 also emphasized a Comment: A commenter objected to l (2) that endowments can be expected in concern for this earnings variability in all circumstances to grow at a rate of at the requirement that unrestricted h its analysis of college and univenity endowment be at least $50 million or at dl least 3 percent annually; or (3) that endowment investment. First, institutions can be expected to NACUBO's study noted that current least 30 times the decommissioning cost estimate, whichever is greater. The -
,{j reallocate up to 3 perant of their l spending from endowments in a one-high rates of return cannot be expected requirement should be compliance with ti i
to continue indefini%ly. "At a time either the $50 million figure or the 30 , l year period. Rather, the criterion was when many public and private g, selected to serve as a measure of the times decommissioning cost estimate, institutions are searching for ways to but not whichever is greater. g3 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 l A 1
1 Federal Register /V:1. 63, N2104/ Monday, Juna 1,1998/Rulis c.nd Regulations 29537
,. non-bond-is' suing colleges and ~
t up frontare even'th'ough universities, aimed at assuring the activities not completed decommlaaloning within a . ' ' decommissioning costs) w L financial viability of a licensee qualified single year. For this reason NRC's . conservative. It appears to reflect an to self-guarantee. nis is the only expectation that the decommissioning
- requimment that would apply to non- criteria for determining whether 4 . '.
will take a short time whereas a realistic bond-issuing colleges and universities,' limnsee should be allowed to self ' whereas non-bond-issuing hospitals or guarantee the costs of decommissioning - time frame should be 2 yeen or must consider the possibility that the NRC should consider a multiple of 30 or commercial licensees would be subject ' less to be appropriate. to multiple financial ratios as fMawlal Licensee will be required to fully fund tests. It is designed to ca ure two decommissioning in the R ~ ' rise:ne utrement that immediately prior to the inning of -l hos t operating revenues be at least - measures of financial vi llit :(1) decommissioning activities. The . 100 times decommissioning costs is s ' overall financial stangth an (2) ' financial strength relative to size of licensee would fund a standby trust i.f crhwlon that Ms posing to m to decommissioning obligation.The ' ' either(1) the licensee nolonger . . determine whether a 'censee has f overall financial stre ofan qualifies to use the self-guarantee to ., provide Snancia'l assurance for sufficient financial strength to aslf; ,, Institution is heavily pendent on the guarantee. Howem, a potendal size ofits unrestrict endowment, doccomissioning, 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 licensee l by the ratio of unrestricted endowm nt is required to carry out == to be capable of passing the self-to decommluloning costs. A financial decommissioning. NRC currentiv'does guarantee test orif decommluloning I
' test based only on ratio to not allow licensees to consider the must be carried out. As discussed above, decommissioning cost might allow an impact of earnings during the payout" the operating revenues multiple , lastitution without adequate financial period (the period during which funds criterion does not aflect any strength to pass ifits decommissioning are being expended from the finandal expectation concerning the length of assurana standby trustio pay foe time durin size of the unrestricted endowmentcosts were Iow. A test based only will occur.g on the which decommissioning decommissioning) nerefore NRCdoesnot in calc might be inadeguate for those amount of funds that must be set aside accept this recornmendation. institutions witn the highest for decommissioning. newfore, the . . decommissioning costs. Both threshold NRC disagrees with the commenter's - Comment: A commenter found the requirements are needed to provide suggestion that the expected duration of rationale that requires hospitals to meet
- dommmissioning activities should. all four financialratios tests unclear.
assurance that an institution can most His commenter believed that using decomtnissioning obligations when - apply to the determination of the < .- I necessary. appmpriate multiple- only the operating revenues / ' decommissioning costs ratio would ' Comment: A commenter stated that that (based on the combinadan of .Commer:t: A commenter recomm NRC's rationale for a multiple of 30 Implies that d===fsaloning costs are investment yield of 6 perant and . ogagg g ,w s;q paid from investment investment yields over 2 to 3 < fundhg. . year period. However, yields it is more over a 1*rather than 1 yearl the multip on Response:The Snancial ratios tat for realistic to assume that anY factor [ bel reduced from 30 to to with hospitals in the rule was carefully le conse . selected to provide a level of financial decommission!n8 activities wh' erd - ""[esponse:rvadsm."For the reasons stated in 1 financial assurana arrangements are assurance risk similar to the financial - involved will require considerable responses to tbp paceding comments, . assurance risk in the existing self- . coordination with regulators and NRC does not accept this . - guarantee. The four ratios in financial services involving 2 or 3 years recommendation...a , , . , combination represent the financial test to complete. This consideration also 2. Financial Criterfd for fiospitals' that best achieves this goal. A financial implies that the appropriate multiple should be 15 rather than 30. . The financial test criteria proposed for test using just one of these ratios would Response:NRC recognizes that hospitals was an A or better bond rating not represent the same level of risk and or, for hospitals not having a bond would not provide an adequate level of-decommissioning may occur over a financial assurana. Using only the ratio period lon r than one year. The rating, a financial ratios test consisting of operating revenues to multiple ob30 was chosen without regard to how many years it would take of(a) the followlng:{ current assets arid 1.iquidity- decommissioning costs would - depreciation fund, divided by cunent completely ignore such detenninants of
,' to decommission a facility. The financial stren r
liabilities) greater than or equal to 2.55. Indebtedness, andgth as liquidity, commenter is attempting to make this linkage the key factor in arriving at an (b) Net Revenue-{ Total revenues lesa profitability.The l appropriate multiple. However, total expenditures didded by total f nancial test used for non-bond-issuing following this line of reasoning. a revenues) greater than or equal to 0.04. commercial licensees includes several-stretching out the time length of (c)1.everage-{Long term debt divided ratios
- not just one* The non-bond '
decommissioning would imply ever by not fixed assets) less than or equal to Snancia est 0.67. , d s sin I ratio.but decreasin multiples. . i NRC's o jective is to ensure that (d) Operating Revenues at least 100 -it is the ratio of unrestricted endowment I times decommissioning costs. to decommissioning costs. Unrestricted decommissioning will take place on a timely basis. The financial assurance There were no comments regarding,- endowment is a fund re'adily available the bond rating criterion but there were to meet decommissioning expensesc regulations are intended to assure that t inadequate funding does not prevent several comments on the non-bond Hospital operating revenues are criteria. timely decommissioning. Timely different because these funds may not decommissioning may require that all Comment: A commenter believed that s be readily available to meet the selected multiple of 100 thospital decommission.ing expenses due to other decommissioning funding be available operating revenues at least 100 times hospital costs. a
.M
~
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- 2
- 1
$1 29538 Federal Register /Vol. 63, No.104/ Monday, June' 1,1998/ Rules and Regulations rating. despite declines in the financial accounting prindples to assess
- 3. Prohibition on Using a Guamnteein '
compliance with a financial test , Combination With AnotherFinancial . condition of the issuer.- designed using U.S. GAAP Finally, the Assurance Mechanism The problem with an insured bond from the standpoint of financial present financial assurance regulations Comment:Some commenters noted assurance is that there is no criterion by allow the use of a broad range of " which NRC can identify when a financial assurance mechanisms in that p(rovisions in 10 CFR 30.35(0(2),40.36 e)(2),50.75(e)(2)(lii),70.25(0(2), licensee / issuer no longer qualifies to to ensure that licensees lethat are unaI and 72.30(c)(2) provide that neither a self-guarantee. The bond can retain its to use a particular mechanism have parent company guarantee nor a high rating des its a decline in the other alternatives available. NRC does d guarantee by an applicant may be used financial stren of the issuer. not expect firms to change their ' in combination with other financial Furthermore, e insurance coverage' accounting pra':tices in order to make i methods to satisfy financial assurance provided by the bond insurer, which is use of the financial test because a requirements.These commenten ent of principal and number of other options are available. _l
. wanted to know the masons for these a guarantee interest of pabce with the insured '
in accor mstrictions.
- 6. Financial Criteria for Non-Bond-I"I"I
~
C#""### ###### Response:This rule makes no change bond issue's pabent rovide an ad onal source of schedule, will no, 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 commerciallicensees was: bond issuinfow divided by total (a) Cash i j I guarantee with another type of financial suggestion that it accept ratings on ' assurance mechanism. The issue of . insured bonds as an acceptable criterion liabilities greater than 0.15. whether or not to allow such a (b)Totalliabilities divided by not fa, ,,gf. guarantee. combination is broader than the focus of worth less than 1.5.
- 5. Esquirements for Finaarl=I (c) Net worth greater than 310 million this rule.The NRC has limited or at least to times decommissioning experience with parent and self. Statemente l guarantee to date. It is expected that the Comment:Some commenters objected costs, whichever is greater. .
Comment: A commenter objected to NRC will pwfodically reevaluate its to the proposed requirement in financial assurana program in the Appendices D and E to 10 CFR Part 30 the not worth criterion of not worth futum and could reassess the need for that licensees must conduct accounting greater than sto million or at least to times estimated decommissioning costs. j the prohibition. by U.S. generally accepted accounting This discriminates against well funded Principles (GAAF).His does not smaIler firms that could easily self-
- 4. Insured Bond Ra "8' ' recognise the increasingly multi.
Comment:Some commenters objected national nature of materials licenseen. guarantee smaller decommissioning 13 the proposed financial criteria which Foreign ownership of ma}or material projects,but could not meet the sto deal withbond ratmgs. As pwpsd, for licensees is currently a reality (e.g., anillion not worth requirement. Institutions that issue bonds, only a Siemens, ABB, Framatome) and can be Response:The NRC's objective in bond issuance that is " uninsured" may a ed to increase in the future. ne 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 elig!ble. 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 rate assurance risk of the financial criteria financial condition of the prospective - practices of major multi-natio firms for licensees that issue bonds (estimated issuers and avoid issuing policies to be changed for a licensee to be allowed to be approximately 0.13 percent per univenities that are not creditworthy. to provide self-guarantee of year). According to the analysis of Consequently, the presence of bond , tam ==Issioning funding.De 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 financial condition. adequate assurance that funds will be criteria in the proposed rule meet this Response: Bond insurers evaluate the avsilable by using other recognized and objective.s 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: Financial statements firms.Rus, the 310 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.De NRC has assign such bonds a triple A rating GAAP pose two problems from the retained this requirement in the final - because of the insured status of the standpoint of a anancial test for self- rule. bond. - guarantee. First, the financial test was 7. ormnissioning Cost Mamtes
. NRC's concens with accepting developed based on an analysis of insured bonds as a criterion of financial financial data for U.S. firms.
Comment: Sevwal commenters raised assurance arise from the possibility that. Consequently, the financial test criteria ~ the issce of how decommluloning costs , cver time, the insured bond rating could may not be applicable or effective when were estitnated. De NRC should mask adverse changes in the financial used in conjunction with financial data encourage best available information that were prepared in accordance with estimates of decommissioning costs, _ condition of the bond issuer aftw the ' 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 statements prepared according to than commercial estimates by must ascertain whether it continues to contractors that tend to be too high. pass the financial test for self-guarantee accounting principles in use in their . svery year. Furthermore, if the licensee own country could place a heavy
- 8" Analysis of Potential Self4uarantee Tests for no longer meets the test criteria,it must administrative burden on NRC. The Demonstrating Financial Assurance by NonproSt .
n:tify NRC and establish altemative examples cited by the commenter, for fin ncial assurance. However, insured instance, might require NRC to know I D fi,,$"" N oo*pod M 'd,*[.d. Et u cf , bonds would continue to hold their and apply German, Swiss, and French CR-4514 p. 4.7, June 1997, j l
j Fed:rd Regist;r/Vol. 63, No.104 / Monday, Juna L 1998/Rults.cnd Regulations'
- ?
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 sections in order to mgintain an .. benefit from the opportunity to reduce estimates of waste disposal costs, ad unte program. The remaining _
4 the costs of complying with NRC . should not be used. A commenter also ons of the rule, including those noted that assuming a period for short- financial assurance requirements, which which allow self-guarantee of certain . USEC estimated would presently cost in lived isotopes to decay before commercial corporate licensees who . decommissioning begins would be a excess of $100,000 per year for letters of issue bonds if they meet stringent , 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 mquired to amount of material allowed by the l 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 rulemaldng makes no The final rule change, which will ' a available for the ultimate disposal of - changes in the requirements for how. J extend the self-guarantee financial ~ waste and depleted uranium, and . i . licensees estimate decommissioning assurance option to other material and < costs. Decommissioning cost estimates, decontamination and decommissioning 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 Part 30, are already required by designated as compatibility Category D. funding mechanisms currently listed in existing regulations on financial Under compatibility category D,- assurance. This rule simply adds an the' regulation as potentially acceptable Agreement States may choose to for use by the Corporation include . additional financial assurance maintain a more stringent rule by no,t.. prepayment, surety, insurance, and an mechanism to those already permitted adopting the self-guarantee option. external sinking fund, but do not' in NRC regulations. '
- 9. RequirementforAnnualPassqge of I include self-guarantee or statement of
- 8. Agreement State CompatibilityStatus Financial Test . ,
offinoneml Assumace Regulations - , . Comment: A commenter , , stated that jI"N* "h ,, ,*,*,' *f,*, availab lity of funds for any activities Comment:Some commenters belle'ved Section II.C.(2) of Appendix E to Part 30 that are required to be com that the proposed regulations abould be should be modified so a qualifying 'the Corporation ' assigned a compatibility status of Level licensee would not have to repeat ' 1 with Agreement States. His will USEC was created pursuant to the passage of the financial test for self-ensure consistent requirements for . Eneruv Policy Ad cf 1992. It is a wholly guarantee every year. University ownid government corporation, whose financial surety arrangements and will endowments are very stable. In . preclude the unintended creation of powers are vested in a five-member ' addition, Section II.C(3) provides Board of Directors appointed by the competitive disadvantages between sufficient assurana that NRC will be. facilities in Agreement States and Non- President of the United States and - notified when a licensee no longer confirmed by the Senate. However, on - Agreement States. .. meets the criteria for self-guarantee.- Response: When the proposed rule July 25,1997 a plan was approved by Response: Although it is true that . was published in the Federal Register , university endowments are relatively the President under which USEC will be sold either to another corporation or to (see 62 FR 23394. April 30,1997),it was stable and Section II.C.(3) provides for the public thmugh a stock offering, designated as a Division 2 compatibility notification, the provision for qualifying ~ Under the USEC Privatization Act, item in accordance with the , licensees to annually pass the test la - Congress set certain restrictions'on compatibility policy in effect at that . retained in the final rule. For a self- foreign involvement in USEC's time. A Division 2 level of compatibility guarantee program to provide adequate privatization and required that a allowed an Agreement State to ' assurance of decommissioning funding. " reliable and economical domestic promulgate equivalent, or more the annual,"requalification" provision . source of enrichment services" exist m stringent, financial assurance is necessary. NRC must have assurance , regulations than those of NRC. following privatization.- .
- of financial strength on a timely basia. Although the NRC is not currently Under the new " Policy Statement on A self-guarantee rolles solely on the Adequacy and Compatibility of aware of any resson why it would be licensee's ability to fund . < inappropriate to consider expanding the Agreement State Programs,"(see 82 FR .
decommissioning. There is no backup category of funding mechanisms. ' 46517, September 3,1997) Agreement such as that provided by a third-party available to the Corporation to - States must adopt NRC regulations financial assurana mechanism. The demonstrate the availability of funds for having particular health and safety requirement for repeating the financial the actions required under to CFR significance and those ne saary to test yearly is not unduly burdensome on 76.35(n), NRC does not believe that it . maintain compatibility with the a licensee and gives NRC information on would be feasible to do so in the current Commission's regulatory program. the financial condition of the licensee rule. First.USEC was not included in The NRC financial assuranm on a timely basis. This requirernent is any of the analyses performed to regulations,in effect when the neW not unique to colleges and universities evaluate potential self-guarantee tests policy was implemented, were 7 for demonstrating financial assurance. designated as having health and safet or to this rule. It is found in the self. significance. Specifically, sections (a)y guarantee financial tests applicableto e NRC believes that delalled analyses -
~
(b), and (d) of Parts 30.35,40.36 and . ~ ~ other types of licensees, both profit and . should be' undertaken to ensure that all nonprofit. s :s . critical factors have been considered. i ' 70.25, which require that licerisees must ~ consider the cost of decommissioning 20. Use of Self-Cuoruntee by the United . Second, USEC's current and future . situation with respect to the costs that their facilities and that those costs must.' StatesEnnchment Corporation ; it might incur is substantially different , be provided for through a financial Comment:The United St'ates ' < , .from those of the licensees incl 6ded in assurance mechanism, have particular the current rulemaking. In particular, health and safety significance and were Enrichment proposed that the Corporation NRC modify the (USEC)(, . l . 'the scope and type of a I designated as category H&S. Under the . -langua8e of the rule to include . USEC must carry out under 10 CFR H&S category, Agreement States should certificates (regulated by NRC undk to 76 35tn) are very different from those
. ~
9 [ 1
o 29540 Fed'e ral Regist:r/Vol. 63' No.10NMonday, Juna 1,'1998/Rults end liegulations j conducted by hospitals and universities, . which can be used by qualified ' basis. Therefore, Category D has been' . and the non-bond issuing firms covered non rofit licensees and non-bond- assigned to these rule provisions. ; g licensen.
~
by the proposed rule. . Finding of No Significant - nird, the exact size of the obligations,, Appendix D is added to 10 CFR Part EnvironmentalImpact: Availability - th:t USEC might be uired to cover is 30 to establish uirements for self- ; determined guarantee by no nd-issuing The amendments will allow qualified ; uncertain and will n until a later date, although it is known commerciallicensees. Appendix E is nonprofit and non-bond-issuing .
- that many of the costs willremain the added to 10 CFR Part 30 to establish licensees the option of using self- 3
. rrponsibility of the U.S. Department of.. requimments for self-guarantee for guarantee as a mechanism for financial assurance for decommissioning. For-Energy (DOE). Under 10 CFR 76.35(n) ' nonprofit college, university, and DOE is responsible for those aspects of hospitallicensees. .
{ fit ds corporate licensees allowed tothat use issue decontamination and decommissioning I . 5 am already self- _.
# 1. ,
of the gaseous diffusion lants(GDPs) -- . . - - - - . , guarantee if they meet the regulatory - _, Section 40.36 is amended to permit criteria. Other licensees currently may assigned to DOE under t e Atomic elect to use a variety of financial Energy Act. DOE also is responsible for - self-guamntee for financial assurance ., which can be used by qualified assurance mechanisms, such as surety. all environmental liabilities associated
- bonds, letters of credit, and escrow with the operation of the CDPs before ' nonprofit licensees and non-bond- ;
July 1,1993. According to USECs issuing licensees. ,p' ~ accounts to comply with
** ^
- Annual Report for 1996, "[e]xcept for 20 CFR Pbri50
,- action is intend to offer nonprofit and r certain accrued liabilities that will be non-bond-issuing nuclear materials specified in a memorandum of - . Section 50.75 is amended to permit 4 ment entered into rior to ':' t> self-guarantee for financial assurance licensees and non-electric utility reactor .
tization, all environmental
' which can be used by qualified . licensees greater flexibility by allowing ,
an additional mechanism for h,censees } babilities of the Company through the nonpmfit licensees and non-bond-
. Issuing licensees. that meet the financial criteria for use of J date of privatization will remain ,
_.. , g, ,, , obligations of the U.S. Government." 20 CFRPbrt 70 s . b. % .
- i . ' **h, ,$n to the NRCs lations t '
{'y g"Iu8jrs)em Section 70'.25 is amended to permit simply adds one more financ assurance mechanism to the - as cf June 30,1996. USEC had accrued which -canself-guarantee for financial assurance - ' mechanisms currently available. be und by MHbd t 303 H not affect the cost of decommissioning on d nonProfitlicensees'en non-bond . P materials and non-power reactor disposition of depleted uranium' . ' issuing licensees. ~ i. facilities. Allowing self-guarantee for currently stored at the GDPs.Re 1996 20 CFR Part 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 und by quahfied non- activities considered in the final rule - d:pending on the outcome of such bond issuing licensees.- published on June 27,1988. (53 FR , evaluations, the Company may baiable '~ 24018) as analyzed in the Final Generic to reduce future cost accruals * * *, , Cosapatibility of Agreement State EnvironmentalImpact Statament on Pursuant to the USEC Privatization Act, Regulations .' Decommissioning of Nuclear Facilities I cll costs and liabilities related to the 'The curmat NRC regulation $hich (NUREG-0586, August 1988).* , disposition of depleted uranium - allows self-guarantee of certain ! Promulgation of this rule does not
, gen:rsted prior to the privatization date. commercial corporate licenseer. who introduce any impacts on the are the responsibility of DOE." Fourth, . Issue bonds if they' meet stringent u environment not previously considered until privatization has occurred.- ' Anancial criteria is designated as by the NRC. Therefore, the Commission I important information aboutUSECs. compatibility Category D. This final rule has determined, under the National future corporate structure and . - change, which willextend the self ' . EnvironmentalPolicy Act of1969,as' ownership will remain uncertain. As . guarantee financial assurance option to ' amended, and the Commission's l coted 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 meet certain 51, that this rule would not be a major ' I corporation or to the public through a financial criteria, is also designated as a Federal action significantly affecting the cock 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
. NRCs analysis of financial assurance-to adopt a compatible rule. De Category statement is not required. No other clt:rnatives. Because of the need to ' D designation was determined in : agencies or persons were contacted in
- ev:luste all of these factors, NRC haa . accordance with the new "PoHey * ' making this determination.The NRC
. determined not to include 10 CFR part - Statement on Adequacy and ~ 7 staffis not aware of any other i 7Jin the current rulemaking. - -Compatibility of Agreement State - 1 documents related to the environmental
- Changes From the Proposed Rule Programs," approved by the .--
. , ?
Commission on June 30,1997. The final
- copies ar. .vailabt. . curr.nt rat.: frorn the There are no changes from the *
- rule change does not involve a basic U.s covernro.nt Prtatinsomc P.o.som arosa, proposed rule. , ~. .
radiation protection atandard, activities W.shinston. oc 20e2-esta (ta. phon. (202) sis- , Section-by-Section Description of that have direct and significant effects Changes in multiple jurisdictions, or essential d* ,h".v"thn*s sprinsteld r 52 o A : isi. copi ar..vailabt for Ro 1 objectives which an Agreement State insp.cuan or copying for . f frorn the NRC Public l
.20 CFR Part 30 ,- : should adopt to avoid conflicts, gaps
- or Docuan nt R mn . 2:201.Str. I NW., W.shington. I Section 30.35 is amended to permit . ' duplications in the regulation of N'Yo'c"'zNN.Ip5's.Yo ism $
self-guarantee for financial assurance - agreement material on a nationwide- sas (zNsu-asu. - _ e- -
, ~
' i J
/
Fedhral Registir/Vol.' 63,'No.104 onday,' June 1,1998/ Rules and Regulations 2 29541 J impact of this action.b foregoin Regalatory Flerihiliey Ces*ine=*ia= constitutes the environmental ; g . Radiation pmtection. Reporting and 1 3- In mzorrians with b Re'gulatory - moordkeeping requirements. Scientific assessment and Ending of no signincant ISPact for &is mle. Flexibility Act of 1980 (5 U.S.C 605(b)) ' "luipment, Security measures, Special I_~ ' nuclear material.
, the Commission artifies that this rule 1 Paperwork Reduction Act Statement ,will not have a signl8 cant economic This Anal rule amends information impact e a substandal ausnbm d anaH '20 CFR Ftut 721 ' i - l collection requirements that am subject entities.This rule would expand the Man wert' raining , Nuclear
.. " bw d op a
,,,,,g,{. Occupational and' to the Pa rwork Reduction Act of 1995 le to H,mn== health, Reporun J (44U.S. 3501 et seq.). 'Ibese to m Y g __ ghme, g and recordkeeping I
g, assurance requimments, thus pomm, @t gai==ts wem appromlb ce of Management and Bu the .. enhancing the flexibility of these I"*I' < * (OMB), approval number 3150-0017, ' regulations. It is estimated that this rule Fw b ressee set out in the ' .. -
-4020. -4011 -0000, and -0132. . Md Mn @W mg Preamble and uc. der the authority of the
^
The public ro og burden for this - 2 qushfying Bconsees. . Atomic Energy Act of 1954, as amended, information co on is estimated to " the Ene:Ey Reorganization Act of 1974, BackSt Analysis ' as amended, and 5 U.S.C 553, the NRC a 9 to 14 hours per response, inclu ng tisne for myiewing .Ibe NRC ha dembd'that is ado the following amendments - l Instruedas, searching wisdag data backBtting .to 10 30,40,50,70, and 72. and 72'62)thebrevisions ofthe (10 GR 50.109 I sources thering and maintaining the date , and completing and - , Comimion's '*8 1.ES MERAL ons that are bein.g APPUCASIUTY TO DoldESTic r mviewing the infamade mHecdon. mundW by els r&naking det d" " apply to this rule because the rule does g, meum C m " ant imPoes a back8t es de8aed in to ; MAJMBAL." , x ;
;g,, :p'-a,o,n's* _,,,
- GR 50.100(a)(1) or 72.62(a). The rule tuds &. . guar.nt.e ait.rn ive fa, anunu.s t. rea .s ,tation 1, & authority ci om for Part 30
~
- tb(T-4 F33),U.S. demonstmung naam==l=foning Amherky: ascs. s1, sa, is s.1st, isa,1as.
Nucleer Regulatory Commission, Saancial assurance to quellBed non- ' es seat. sas, ses, ess, eso, ess, as amended, Washington DC 20555-0001, or by mB nm uing - sec.334,as seat.m,asamendeC4 uc i Intmpet elec'tronic maH at adi the availability of this option att1,a112 anos,assa,rass,azas,22sah BJ8SNRCCOV; and to the Desk OfBcar, does not a new burden on secs. 301, as amended,302,20s, as seat OfBoo ofInformation and Regulatory y ,,,, , , ,,, , ,,g,g ,g,, 3:43, ue,1 44,1ses (42 U.S.C l Affairs, NEOB-10202,(3150-4017), orindependent s t fuel storage asst,seen,seest. OfBco of Man snent and Budget, lastallations(ISFSI ). Accordingly,the- Section 30.7 slao issued under Pub. L. Washington, 20503. rule does not constitute a back8t 95-401, sec.10,92 Stat. 2951 (42 U.S.C and a t anal Puhuc Protecdon Mannemata= for this Anal rule.ysis was not prepared under5851). Section sec.184,68 30.34(b) Stat. 954, as also
==aarlantissued if a document used toimpose an " (42 U.S.C 2234). Section 30.61 also List ofSabless' issued under sec.187, as Stat. 955 (42 information collection does not d y .
a currently valid OMB control n , - . U.S.C 2237). the NRC may not conduct or sponsor, Byproduct inpterial, Criminal
. 2. In 5 30.s. pmagraph (b) is revismi io and a person is not utrod to respond penalties, Governamat contracts.
,,g ,, g,g ,,, , * ~*
to, the information col an. Intergovernmental relations, lootopes, ' sas.s sneennseensessenen Regalatory Analysis c. Nuclear materials Radiation protection,. segubemenes: cess approost. - . De NRC has prepared a latory Reporungandd 7 -
" * * ' " ' . -* * - i" requirements. (b) De approved information '
analysis on this regulation. analysis
"..?-,"
20 CFR M 40 i collection requirements contained in examines the costs and benefits of the . alternatives cocaldered by the NRC N this part appear in $$ 30.9,30.11,30.15 I Criminal penalties, Government 30.19,30.20,30.32,30.34,30.35,30.38, analysis is available for ins onin' metracts.Hasardous materials . 30.37,30.38,30.50,30.51,30.55,30.56 - the NRC Public Document ,2120 transportation Nuclear ==tadals, i and Appendices A,C D,and E of this L Stmet NW (lower Invol), Washington, Reporting and recordkeeping * ' > part. ' DC. le copies of the analysis rasy be . , _ obtal from Clark Prichard, OfBos of
- ts Sourcn meterial. .3 . .... .. . .. , .a Uranium. - - % ~-
Nuclear Materials Safety and '
' ~ "
' ' 3. In 5 30.35, the introductory text of Safeguards, U.S. Nuclear Regulatory MCF N g~ *' - Ph(f)(2)is revised to read as Commission, Washington, DC 20555. - Antitrust, Classified information, '
tions.
~.-w If- '- ' - - - ~ ~
telephone (301) 41&4203. . Criminal penalties. Fire protection, 430.as pinenoieleseuronseand -l Small Business Regulatory Enferesesent Fairness Ad g ,, ,,f ,,, ,7 s in accordance with the Small protection, Reactor siting criteria, s (f) * * * ' 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 - 20 CFR M 70 guarantee that decommissioning costs determined that this action is not a , - ' will be paid. A surety method may be
" major rule" and has verified this- Criminal penalties, Haza'rdous On the form of a surety bond, letter of determination with the Office of ' materials transportation, Material. cmdit, or line of credit. A parent Information and Regulatory Affairs,, control and acx:ounting, Nuclear company guarantee of funds for .
OfBoo of Management and Budget. materials, Packaging and matainers, decommissioning costs based on a 4 4 #
29542 ' Federal Regist:r/Vol. 63, No.'104/ Monday, Jun31,1998/Rults and Regulations . financial test may be'used if the v . omnpany is responsible as self-guaranteeing ' ' Commission, the licensee will set up and
' guarantee and test are as contained in licensee and as parentparantor. fund a trust in the amount of the current cost {
appendix A to this part. A parent
=
(2) Asuts located in the United States estimates for decommissioning. company guarantee may not be used,,ins **j,dr7:$ast 0t esNtot c nt ^PPendix E to Part 30 -Criteria j combination with other financial d --=wtoning cost estimate (or b . Relating to Use of Financial Tests and 3 methods to satisfy the requirements o' f cunent amount required if certification is Self-Guarantee For Pmviding < this section. For commercial _ used) for all decommir.sioning activities for Reasonable Assurance of Funds For , i corporations that issue bonds, a which the company is responsible as self- Decommissioning by Nonprofit t guarantee of funds by the applicant cr
- guarantying licensee and as parente
~
,, Colleges, Universities and Hospitals l
licensee for decommissioning costs guarantw. . (3) A ratio ofcash flow divided by total L Introduction l based on a financial test may be used if Hamties smater than a15 and a utio of total An applicant or licensee may
)
the guarantee and test are as contained . liabilities divided by not worth less than 1.5. reasonable assurance of the avai vide ility of ! - in appendix C to this part. For - ." B. In addition, to pass the financial test. a { funds for decommissioning based on commercial companies that do not issue company must meet all of the following , furnishing its own guarantee that funds will ) bonds, a guarantee of funds by the ' requirements: ~ be available for decommissioning costs and applicant or licensee for ' (1) The company's independent certified" - on a der.aonstration that the applicant or I
, decommissioning costs may be used if public accountant must have compared the licenses passes the financial test of Section '
the guarantee and test are as contained data used by the company in the financial II of this appendix. The terms of the self. 3 in appendix D to this part. For nonprofit tut, which is required to be dwived from the guarantee are in Section m o,f % appendix.
' independently audited year end financial This appendix establishes cnteria for pening t entities
- such as col!88es statement based on United States generally ' -
. and nonprofit hospitals,' a gu'arantee universities'f o (
funds by the applicant or licensee may acce accounting practices for the latest .the financial establishes the terms test for for a se the self baarantee an guarantee. I year, with h amounts in such - be used if the guarantee and test are as financial statement. la cormction with that E FinanciaiTat -
- j cantained in appendix E to this part. A procedure, & licensee m11 inform NRC A. For colleges and universitin to pass the guarantee by the applicant or licenme . within 90 days of any matters that may cause Enandal tut a college or univwsi must
' may not be used in combination with . the euditor to believe that the data specified meet either the criteria in Paragra EA.(1) any other financial methods used to in the financial test should be adjusted and w the cr teria in Faragraph EA.(2 of %
ut. g satisfy the requirements of this section % '" g" Pen n - g For applicants or licensees that issue. _
- orin any situation where the applicant ' company must repost pasage of h test -
bonds, a current rating for its most recent c orlicensee has a parent company - within 90 days aftw h close of each uniasured,uncollateralized and a h:lding me}ority control of tae voting succeeding fiscal year. , unencumbered bond issuance of AAA ,AA. 3 rock of the company. Any surety (3)If the licensee no longer meets the or A as issued by Standard and Poors (S&P]
. method orinsurance used to provide 4 requirements of paragraph RA of % or Aaa. Aa. or A as issued by Moodys.
financial assurana for appendix, h licensee must send notice to (2) For applicants or licensees that do not a the NRC of Intent to establish alternative lasue bonds, unrestricted endowment 0 decommissioning must contain the ,' financial assurance as specified in NRC consisting of assets located in the United foHowing conditions: Stuen of at least $50 rnmion, w at least 30 e a ' * - * *- regulations. The notice must be sent by i certified mail. return aceipt requested. a w fi Iyear . estimateja times the total current decommissioning trequin if cost LN" Appendices D and E to Part 30 y9 ays ,ansrje end n,g ot , ,, are added to read as follows: I r all decommissioning activities
. he the Heenses no longer mats & which 3 Appendix D to Part 30--Criteria' '? Anancial test requirements. 'Ite licensee the coHege w unimsity is responsible as a Relating To Use of naaacial Tests and must provide alternative financial asmrance "If1P2arante license.
sieK. Guarantee for Providing within 120 days after the end of such fiscal F t to e tb ancia st i Reasemable Assurance of Funds for F"' " HL Canpany SelMuarante Paragraph EB.(1) or the criteria in Paragroph rh===alantaming by f'a===-cial .
. H.E(2)of this appendix:
Conapanies'nat Have no Outstanding The term's of a self arantee wliich an (1) For applicants or licansees that issue Rated Beeds ,;.4 J., 4 - applicant or licensee has must provide bonde, a current rating for its most recent c that: L Introduction -",..- s
' . ' " v uninsured.uncollaterallzud, and
'
- A. The guarantee shall remain in form. , *r-3-4 bond issuance of AAA. AA. '
'
- An applicant or licensee msy ..'de unless the licensee sends notice of or A as issued by Standard and Poors (S&P) reasonable assurancs of the ability of cancellation by certified mail return receipt or Ana. Aa or A as issued by Moodys.
funds for decommissioning based on requested, to the NRC CanmHation may not (2) For applicants or hicensees that do not furnishing its own guarantee that funds will occur until an alternative finandal assurancs issue bonds, all the foHowing tests must be . be available for darammissioning costs and """" '"" W P l*C*- . met:
- on a demonstration that the company passes E T16sicenseo Aall provide alternative la) (Total Revenues less total expenditures) b Rnancial test of Section H of this . . Anandal assurance as spe:ified in the , divided by total revenues must be equal to appendix. The terms of the self-guarantee are regulations within 90 days following rocsipt or greater than 0.04.
- ~
~ in Section HI of this appendix. This appendix by the NRC of a notice of cancellation of the (b) long term debt divided by net fixed , --
establishes criteria for passing the financial .. guamntes. . . . assets must be less than or equal to 0.67. test for the self-guarantee and establishes the C Th6 guarantee and financial test. - (c)(Current assets and depreciation fund) terms for a self-guarantee. . Provisions must remain in effect until the divided by current liabilities must be greater . II. Financial Test ~ ,3: ,e..,, Comminalon has terminated h license or than or equal to 2.55. until another financial assurance method (d) Operating revenues must be at least 100 A. To pass the Anandal test e company - acceptable to the Commission has been put times the total current decommissioning cost must meet the following criteria: la effect by the licensee. estimate (or the current amount required if (11 Tangible net worth greater than $10 D. The applicant or licensee n ust provide ' certification is used) ior all decommissioning million, or at least to times the total current - to the Commission a written guarantee (a activities for which the hospitalis decommissioning cost estimate (or the . written commitment by a corporate officer) responsible as a self guaranteeing license. ? cunent amount required if certification is which states that the licensee wiH fund and C in addition, to pass the financial test, a used), whichever is greater, for all carry out the required decommission - Ilcensee must meet all the following decommissioning activities for which the activities or, upon issuance of an order the requirements: . 9'
. s -
I
r f T': Fed:rd Regist:r/Vol. 63, NO.104 / Monday, Juns 1,1998/ Rules and Regulations 29543 W (1) The licensee's independent certified
- ost public accountant must have compared the.. - PART 40-OOMESTIC LICENSING OF or la any situation where the applicant data used by the licensee in the financial test, SOURCE MATERIAL .' . ~ or licensee has a parent company
-$. which is required to be derived from the 5. The authority citation for Part 40 bolding majority control of the voting independently audited year end financial stock of the company. Any samty d conttnues to read as follows:
statements, based on United States generally 4 method or insurance used to provide accepted accounting practices, for the latest Authority: Secs.62,63,64,65,81,161, 182,183,186,68 Stat. 932,933,935,948 financial assurance for p fiscal year, with the amounts in such decommissioning must contain the 953,954. 955, as amended, secs.11e(2) 83' financial statement. In contaction with that 84, Pub. L 95 604,92 Stat. 3033, as followinE conditions #' I. 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, I, attention of the auditor that cause the auditor 2094,2005,2111,2113,2114,2201,2232, to t elieve that the data speciSed in the 2233,2236,2282); sec. 274, Pub. L 86-373, PART 50-DOMESTIC LICENSING OF r, . financial test should be adjusted and that the 73 Stat. 688 (42 U.S.C 2021); secs. 201, as PRODUCTION AND UTILIZATION ! FACILITIES - y licensee no longer passes the test. amended. 202. 206, 88 Stat.1242, as . , 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 amended by . continues to read as followsr i within 90 days after the close of each Pub. L 97- 415,96 Stat. 2067 (42 U.S.C :>
succeeding fiscal year. 2022).. W AM Secs. 102,103, W , 2 5 M 1,
- x. Section 40.7 also issued under Pub. L 95- 2,183,186,189. 68 h 936,937,938, (3)If the licensee no longer meets the 948,953,954,955,956, as amended, sec.
ng ~ 601, sec.10,92 Stat. 2951 (42 U.S.C 5851). requirements of Section I of this appendix, Section 40.31(g) also issued under sec.122,
- d' ( 22j the licensee must send notice to the NRC of 68 Stat. 939 (42 U.S.C 2152). Section 40.46 2 h2133.'21 2 201 2 its intent to establish alternative financial a nde 2236,2239,2282); secs. 201 as amended' 1-assurance as specified in NRC regulations. d u 2 ).' o 7'1 so 202,206,88 Stat.1242, as amended.1244, h, The notice must be sent by certified mall, Issued under sec.187,68 Stat. 955 (42 U.S.C' 1248 (42 U.S.C 5841. 5842,5846).
return receipt requested, within 90 days after 2237)~ Section 50.7 also issued under Pub. L 95-I 601, sec.10,92 Stat. 2951 (42 U.S.C 5851). the end of the fiscal year for which the year end financial data show that the licensee no 6. In paragra 5 40.36, the introductory text of . Section 50.10 also issued under secs.101, longer meets the financial test requirements. follows:ph (e)(2)is revised to read as 185,68 Stat. 936, 955, as amended (42 U.S.C The licensee must provide alternate financial 2131,2235); sec.102, Pub. L 91-190,83 Stat. assurance within 120 days after the end of 853 (42 U.S.C 4332). Sections 50.13,
$ 40.38 Financialassurance and 50.54(dd), and 50.103 also issued under sec. ,
$ such fiscal year. mcweseping fw decommiselonir5
* *
- 108,68 Stat. 939, as amended (42 U.S.C III. Self. Guarantee .*. *
- 2138). Sections 50.23,50.35,50.55, and 50.56 The terms of a self-guarantee which an (e) * * *
(2) A surety method, insurance, or also issued under sec.165. 68 Stat. 955 (42 applicant or licenses furnishes must provide U.S.C 2235). Sections 50.33a,50.55a and i that - other guarantee method. These methods Appendix Q also issued under sec.102. Pub. A. The guarantee shall remain in form guarantee that decommissioning costs L 91-190,83 Stat. 853 (42 U.S.C 4332). unless the limnsee sends notice of will be paid. A surety method may be Sections 50.34 and 50.54 also issued under cance!!ation by certified mail, and/or return in the form of a surety bond
- letter of sec. 204,88 SM 1245 (42 m 5846 receipt requested, to the Commission. d line nl Sections 50.58,50.91, and 50.92 also issued Cancellation may not occur unless an .. CorDPany guarantee of funds for . . ,. under Pub. L 97-415,96 Stat. 2073 (42 i
alternative financial ass' urance mechanism is decommissioning costs based on a U.S.C 2239). Section 50.78 also issued under sec.122,68 Stal 939 (42 U.S.C 21521 g financial test may be used if the . .
. e licensee shall provide alternative Sections 50.80-50.81 also issued under sec.
guarantee and test are as contained in 184,68 Stat. 954, as amended (42 U.S C financial assurance as specified in the appendix A to part 30. A parent Commission's regulations within 90 days com any guarantee may not be used in ] 34 Agn F also issued under sec. following receipt by the Commission of a com inntion with other financial ' 8. In 5 50.75, the introductory text of notice of cancellation of the guarantee. methods to satisfy the requirements of C The guarantee and financial test [* graph
* * , (e)(2)(iii) is revised to read as this section. For commercial. '
provisions must remain in effset until the corporations that issue bonds'a Commission has termina*ed the license or 5 50.75 Reporting and %,. c 'J ,iifor. guarantee of funds by the applicant or decommiseloning planning. until another financial assurance method licensee for decommissioning costs . .. . . ., e acceptable to the Commission has been put in efisct by the licenses, based on a financial test may be used if . (e)*** the guarantee and test are as contained D 'Its applicant or licensee must provide (2) * * * - to the Commission a written guarantee (a in appendix C to part 30. For. (iii) A surety method, insurance, or . written commitment by a mrporate officer or commercial companies that do not issue other guarantee method. 'Ihese methods offiar of the institution) which states that bonds, a guarantee of funds by the guarantee that decommissioning costs ' the limnsee will fund and carry out the applicant or licensee for will be paid. A surety method may be '
' 8 decommissioning costs may be used if' in the form of a surety bond, letter of oCrderby eC "y the guarantee and test are as contained credit, or line of credit. A parent .
licensee will set up and fund a trust in the in 8PPendix D to part 30. For nonprofit company guarantee of funds for amount of the current cx>st estimates for entitles, such as colleges, universities, decommissioning costs based on a commissioning and nonproSt hospitals, a guarantee of financial test may be used if the E. If, e eny time, the licensee's most recent funds by the applicant orlicensee may guarantee and test are as contained in bond issut nce ceases to be rated in any be used if the guarantee and test are as category of "A" or above by either Standard appendix A to part 30. A parent contained in appendix E to part 30. A company guarantee may not be used in and Poois or Moodys, the licenses shall guarantee by the applicant or licensee provide z.otice in writing of such fact to the co,mbination with other financial . may not be used in combination with Commission within 20 days after publication any other financial methods used to methods to satisfy ths requirements of of the change by the mating service. satisfy the requirements of this section this section. For commercial corporations that issue bonds, a
m' j\
.j. j
' l 29544 Federal Regist:r/Vol. 63, No.104/Mdnday, June 1,1998/Ruhs and Regulations .' l 2
guarantee of funds by the applicant or . appendix A to part 30. A parent Subpart J also issued under secs. 2(2),2(15), i licensee for decommissioning costs company guarantee may not be used in 2(19),117(a),141[h), Pub. L 91-425,96 Stat. based on a financial test may be used if combination with other financial 2202,2203,2204,2222,2244 (42 USC I the guarantee and test are as contained' methods to satisfy the requirements of 10101,10137(a),10181[h)). Subparts K and L are also issued under sec.133,98 Stat. 2230 ' in appendix C to part 30. For this section. For commercial commercial companies that do not issue corporations that issue bonds, a (42_USC 10153) and sec. 218(a),96 Stat bonds, a guarantee of funds by the guarantee of funds by the applicant or 2252 (42 U.S.C 10198). :[jl applicant or licensee for licensee for decommissioning costs I decommissioning 12. In S 72.30, the introductory text of based on a financial test may be used if the guaranteetest angarecosts as containedmay be the used if paragraph (c)(2) is revised to read as guarantee and test are as contained g*g *', , 13 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 Financlei assurance and _8 and non refit hospitals, a guarantee of bonds, a guarantee of funds by the recordkeeping for decommiseloning. funds b the applicant or licensee may applicant,or licensee for . . . . . be used f 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 colleges, universities, other guarantee method. %ese methods any other financial methods used to and nonproSt hospitals, a guarantee of guarantee that decommissioning costs - satisfy the requirements of this section funds by the applicant or licensee may will be peld. 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 sumty 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:Iding majority control of the voting ~ guaranta by the applicant or licensee company guarantee of funds for rock of the company. may not be used in combination with decommissioning costs based on a e = =- = *- - any other financial methods uaed t financial test may be used if the satisfy the requirements of this section PART 70-DOMESTIC UCENSING OF guarantee and test are as contained in - or in any situation where the applicant
- SPECIAL NUCLEAR MATERIAL orlicensee has a parent com any appendix A to part 30. A parent C 2Pany guarantee may not be used in 9.The authority citation for Part 70 holdinbmajority control of tbe votin8 stock o be company An surety cogibination with other financial continues to read as follows: method or insurance use[to provide methods to satisfy the mquirements of Autherley: Secs. 51,53,1st,182,183,68 financial assurance for this section. For commercial Stat. 929. 930,948,953,954, as amended, corpontions that issue bonds, a uc. 234,83 Stat. 444, as amended (42 U.S.C decommissioning must contain the followin8 conditions.,1 guarantee of funds by the applicant or
- 2071,2073,2201,2232,2233,2282): seca.
201, as amended 202,2o4,206,88 Stat. , ., , , licensee for decommissioning costs 1242, as amended,1244,1245,1246 (42 based on a financial test may be used if UAC 5841,5842,5845,5848). PART 72-UCENSING the guarantee and test are as contained sections 70.1(c) and 70.20e(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.S.C 10155,101st). 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 1 1 cant or licensee for 10,92 Stat. 2951 (42 USC 5851). Section - 70.21(g) also issued under sec.122,68 Stat. 11. The aut51ority citation for Part 72 decommissioning costs may be used if 939 (42 U.S.C 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 Authority: Seca. 51,53,57,62,63,65,69, Stat. 475 (42 U.S.C 2077). Sections 70.36 and by the applicant or licensee may not be 70.44 also issued under sec.184,68 Stat. 954, 81,161,182,183,184,186,187,189,64 Stat. g 929,930,932,933,934,935,948,953,954, as amended (42 USC 2234). Section 70.61 financial methods used to satisfy the also issued under secs.186,187,68 Stat. 955
- 955, as amended, sec. 234,83 Stat. 444, as (42 U.S.C 2226,2237). Section 70.62 also amended (42 U.S.C 2071,2073,2077,2092, requirements of this section or in any issued under sec.108,68 Stat. 939, as 2003,2005,2099,2111,2201,2232,2233, situation where the applicant or amended (42 USC 2138). 2234,2236,2237,2238,2282); sec. 274, Puh licensee has a parent company holding
- 10. In $ 70.25, the introductory taxt of U.S 2021 201 m ame i d. 2 ,208, maj rity control of the voting stock of Pamgraph (f)(2)is revised to read as 88 Stat.1242, as amended.1244,1246 (42 the company. Any surety method or follows: y.,. .
USC 5841,5842,5846); Pub. L 9!,-601, sec. insurance used to provide financial
- 10. 92 Stat. 2951 (42 USC 5851); sec.102, assurance for decommissioning must
$ 70.28,, mencial assurance and, _ _ ,, , Pub. L 91-190,83 Stat. 853 (42 USC 4332h ccstain the following conditions:
- _. . ,. .for __ _ . - . , . - - . Secs.131,132,133,135,137,141, Pub. L . . . . .. *
'*~
- g} . . .
l 'k 1 20 , tot tat.133 235 2 Dated at Rockville, Maryland, this 22nd d'y of May,1998. (2) A sumty method, insurance, or UAC 10151,10152,10153,10155,10157, Other guarantee method. These methods 10181,10168). For the Nuclear Regulatory Commission. guaranteethat decommissioning costs Section 72.44(g) also issued under secs. ' hha C Hoyle, will be paid. A surety method may be 48(c) dL 'I I j42]b) , O Secretaryof the Commission. In the rm of a surety bond, letter of . 10162(b).10168(ch (d)). Section 72.46 also (FR Doc. 96-14385 Filed 5-29-98; 8:45 aml credit, or line of credit. A parent issued under sec.189,68 Stat. 955 (42 U.S C smAsie caos rose.ei.,
?
c:mpany guarantee of funds for 2239); sec.134. Puh L 97-425,96 Stat. 2230 dec mmissioning costs based on a * , (42 USC 10154). Section 72.96(d) also , % 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 U.S.C 10165(g)). ,
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