ML20247G978

Requests Commission Approval to Publish Notice of Final Rule Amending 10CFR30,40,50,70 & 72, Self-Guarantee of Decommissioning Funding by Non-Profit & Non-Bond Issuing Licensees

ML20247G978
Person / Time
Issue date:	03/09/1998
From:	Callan L NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:
References
FRN-63FR29535 AF64-2-020, AF64-2-20, SECY-98-046, SECY-98-046-01, SECY-98-046-R, SECY-98-46, SECY-98-46-1, SECY-98-46-R, NUDOCS 9805210031
Download: ML20247G978 (136)

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W; 'hf] i....?.*........W-RULEMAKING ISSUE March 9.1998 SECY-98-046 EQB: The Commissioners FROM L. Joseph Callan Executive Director for Operations

SUBJECT:

FINAL RULE: AMENDMENTS TO 10 CFR PARTS 30,40,50,70, AND 72-SELF-GUARANTEE OF DECOMMISSIONING FUNDING BY NON-PROFIT AND NON-BOND ISSUING LICENSEES PURPOSE: To request Commission approval to publish a notice of final rulemaking. 1 CATEGORY: This paper covers a minor policy question. BACKGRC"JND: The Commission directed the staff to develop the subject rulemaking in the Staff Requirements Memorandum on SECY-96-091, dated May 24,1996. [/ The financial criteria for self-guarantee were discussed in SECY-95 278, November 28,1995. The rulemaking plan was provided to the Commission in SECY-96-091, April 30,1996. The g( proposed rule was submitted for Commission approval in SECY-97-041, February 13,1997, and published in the Federal Reaister on April 30,1997, for a 90-day comment period. In response to the notice of proposed rulemaking, sixteen comment letters were received. All comments supported the rulemaking, although some commenters recommended some type of CONTACT: Clark Prichard, NMSS/lMNS NOTE TO BE MADE PUBLICLY AVAILABLE (301)415-6203 WHEN THE FINAL SRM IS MADE AVAILABLE 3 q., y 30 lCjff Df k" > f } {)(t y.{ t - il -l f'1 't 0 $b^ O

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O e i l The Commissioners change to the financial criteria for self-guarantee. After analyzing the comments, the staff does not see sufficient reason for changes to the proposed rule. The rule would extend the option of self-guarantee already in the Commission's regulations for qualified bond issuing commercial licensees to qualified non-profit licensees and qualified non-bond issuing commercial licensees. COORDINATION: 1 The Office of the General Counsel has no legal objection to this paper. The Office of the Chief Financial Officer has reviewed this Commission Paper and finds no resource related issues. The Office of the Chief Information Officer has reviewed the rule for information technology and information management implications and concurs in the rulemaking. RECOMMENDATION: l That the Commission: 1. Acorove the Notice of Final Rulemaking for publication (Enclosure 1). l 2. Certify that this rule, if promulgated, will not have a negative economic impact on a substantial number of small entities in order to satisfy requirements of the Regulatory Flexibility Act,5 U.S.C. 605(b). 3. NQle: a. The rulemaking would be published in the Federal Reaister b. A draft regulatory analysis will be available in the Pub ic Document Room (Enclosure 2); c. A draft environmental assessment and a finding of no significant impact have been prepared and are included in the Notice of Final Rulemaking; d. The Chief Counsel for Advocacy of the Small Business Administration will be informed of the certification regarding economic impact on small entities and the reasons for it as required by the Regulatory Flexibility Act; e. This rule contains a new information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.); f. A public announcement will be issued (Enclosure 3); g. The appropriate Congressional committees will be informed (Enclosure 6); I I j

The Commissioners h. The staff has determined that this is not a " major" rule as defined in the Small Business Regulatory Enforcement Fairness Act of 1996,5 U.S.C. 804(2), and has confirmed this determination with the Office of Management and Budget. The appropriate Congressional and GAO contacts will be informed (Enclosure 7). L. eph Callan Executive Director for Operations

Enclosures:

1. Federal Register Notice + disk

2. Draft Regulatory Analysis

3. Draft Public Announcement

4. Draft Comment Analysis

5. Notice of Proposed Rulemaking

6. Draft Congressional Letters

7. Draft SBREFA Letters Commissioners' completed vote sheets / comments should be provided directJy to the Office of the Secretary by COB Wednesday, March 25, 1998.

Commission Staff Office comments, if any, should be submitted to tLe Commissioners NLT Wednesday, March 18, 1998, with an information copy to the Office of the Secretary. If the paper is of such a nature that it requires additional review and comment, the Commissioners and the Secretariat should be apprised of when comments may be expected. DISTRIBUTION: Commissioners OGC OIG OPA OCA CIO CFO EDO REGIONS SECY

o e l ENCLOSURE 1 FEDERAL REGISTER NOTICE

O e [7590-01-P] 1 NUCLEAR REGULATORY COMMISSION 10 CFR Pads 30,40,50,70, and 72 RIN 3150-AF64 Self-Guarantee of Decommissioning Funding by Nonprofit and Non-Bond-issuing Licensees AGENCY: Nuclear Regulatory Commission. ACTION: Final rule.

SUMMARY

The Nuclear Regulatory Commission is amending its regulations to allow additional materials licensees and non-electric utility reactor licensees who meet certain financial criteria to self-guarantee funding for decommissioning. Certain commercial corporate liwnsees who issue bonds are presently allowed to self-guarantee funding if they meet stringent financial criteria. This rule allows nonprofit licensees, such as colleges, universities, and hospitals, as well as some commercial licensees who do not issue bonds, to self-guarantee funding provided they meet similarly stringent financial criteria. Allowing additional qualified licensees to use self-guarantee reduces licensee costs while providing adequate assurance that funds for decommissioning will be available when needed.

EFFECTIVE DATE: (30 days after publication)

FOR FURTHER INFORMATION CONTACT: Dr. Clark Prichard, Office of Nuclear Materials Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone (301)415-6203, e-mail cwp@nrc. gov. SUPPLEMENTARY INFORMATION: Licensees subject to 10 CFR Parts 30,40,70, and 72, whose operations involve the use of substantial amounts of nuclear materials, and those subject to 10 CFR Part 50 who are applicants for, or holders of, operating licenses for production or utilization facilities must provide financial assurance for decommissioning funding by selecting from a variety of mechanisms: surety bond or letter of credit, prepayment, insurance, an external sinking fund coupled with a surety or insurance,' parent company guarantee for licensees that have a qualifying corporate parent, and, for certain financially strong corporations, self-guarantee. A i statement of intent regarding obtaining funds to satisfy decommissioning obligations may be l used by some licensees that are govemmental entities (for example, public universities whose charter provides for a direct link to the State Govemment). To date, self-guarantee has not been available to nonprofit licensees such as hospitals and universities, or to for-profit licensees who do not issue bonds, because the financial test for i Pursuant to 10 CFR 50.75(e)(3), an electric utility can satisfy the decommissioning funding requirements with an external sinking fund, standing alone. This rulemaking does not apply to l electric utilities and does not affect the NRC's Notice of Proposed Rulemaking that addresses l decommissioning funding assurance issues associated with electric utility restructuring (see Financial Assurance Requirements for Decommissioning Nuclear Power Reactors - 62 FR 47588, September 10,1997). As part of this proposed rule, the NRC is considering amending its definition of " electric utility" and clarifying the distinction between financial assurance mechanisms applicable to power reactor licensees and non-power reactor licensees. l 2 _ _ _ _ _. - __J

self-guarantee uses the rating of the bonds issued by the licensee as one measure of the licensee's financial resources and ability to fund decommissioning. The NRC is extending the use of self-guarantee, previously limited to bond-issuing industrial corporations, to additional categories of qualified licensees. By selecting appropriate financial criteria for self-guarantee, this extension can be made without jeopardizing the present high level of financial assurance that the decommissioning obligation requires. Allowing qualified nonprofit and non-bond-issuing licensees to self-guarantee will reduce the costs of complying with NRC financial assurance requirements for those who meet the specified criteria.

Background

On December 29,1993 (58 FR 68726), as corrected on January 12,1994 (59 FR 1618), the NRC published a notice of final rulemding that allows financially strong corporations with A or better bond ratings the option of using self-guarantee as a mechanism for complying with the regulations on financial assurance for decommissioning. Self-guarantee was added to the list of financial assurance mechanisms as a cost-saving option for licensees that are able to meet the stringent financial test. The NRC's decision to add self-guarantee to the list of approved financial assurance mechanisms for qualified licensees came in response to a petition for rulemaking filed by General Electric and Westinghouse (PRM-30-59, Notice of receipt pubEshed September 25, 1991 (56 FR 48445)). The petition presented a case for allowing self-guarantee as a cost-saving option for corporate licensees that are able to pass a stringent financial test. Subsequent to the December 29,1993, final rule, the Commission initiated a study to determine whether criteria could be developed and applied by NRC for nonprofit licensees and 3

non-bond-issuing commercial licensees to use self-guarantee while maintaining the required level of confidence regarding the availability of decommissioning funds when needed. The study, " Analysis of Potential Self-Guarantee Tests for Demonstrating Financial Assurance by Nonprofit Colleges and Universities and Hospitals and by Business Firms that Do Not issue Bonds," NUREG\\CR-6514 (June 1997), identified a variety of financial criteria that could be 2 applied to additional categories of licensees regarding the use of self-guarantee. The financial criteria in this rule were selected by the NRC based on information in this report. Public Comments on the Proposed Rule The NRC published a notice of proposed rulemaking on April 30,1997, (62 FR 23394). In response to this notice,16 comments were received; 2 from States,6 from colleges and universities,3 from associations,3 from private corporations,1 from a hospital, and 1 from the United Stater Enrichment Corporation. The commenters all supported the extension of self-guarantee to qualified nonprofit and non-bond-issuing commerciallicensees. Although some commenters urged NRC to adopt the proposed rule as written, most favored some type of change to the financial criteria. 2 Single copies are available from the NRC contact. Copies are available at current rates from the U.S. Govemment Printing Office, P.O. Box 37082, Washington, DC 20402-9328 (telephone (202) 512-2249); or from the National Technical information Service by writing NTIS at 5'95 Port Royal Road, Springfield, VA 22161. Copies are available for inspection or copying for i fee from the NRC Public Document Room at 2120 L Street NW., Washington, DC; the PDFJs mailing address is Mail Stop LL-6, Washington, DC 20555-0001; telephone (202) 634-3273; fax (202) 634-3343. 4 w

i I l 1. Financial Criteria for Colleoes and Universities l The financial test criteria proposed for colleges and universities were an A or better j bond rating or, for those not having a bond rating, unrestricted endowment of at least $50 million or 30 times projected decommissioning costs, whichever was greater. There were no comments regarding the A or better bond rating, but several commenters objected to the non-bond criteria as too conservative. Comment: A commenter stated that the selected multiple of 30 times decommissioning costs is excessively conservative. NRC's basis for the 30 multiple is that an amount of money 30 times decommissioning costs invested at 3 percent would yield an annual amount sufficient i to fund those costs. The commenter said that it should not be difficult to obtain secure investments yielding 6 percent; thus an appropriate multiple would be 15 based on investment l yield. 1 Response: NRC's objective in selecting financial criteria was to provide a level of financial assurance risk similar to the financial assurance risk in the existing self-guarantee. However, for colleges and universities that do not issue bonds, lack of appropriate data on , default risk made a financial assurance risk analysis impossible. For these licensees, NRC deliberately chose financial criteria which are conservative. NRC did state in the preamble to the proposed rule, at 62 FR 32296, that [the multiple of 30 has been chosen because this would mean that any level of decommissioning costs could be covered by the annual retum on an endowment invested at 3 percent." However, it is l. important to note that NRC was not assuming (1) that institutions will in fact finance decommissioning out of endowments; (2) that endowments can be expected in all circumstances to grow at a rate of at least 3 percent annually; or (3) that institutions can be 5 l

a 0 i expected to reallocate up to 3 percent of their spending from endowments in a one-year period. Rather, the criterion was selected to serve as a measure of the overall financial strength of the institution, indicating that NRC can reasonably assume that such a college or university can be allowed to self-guarantee for the costs of decommissioning because it possesses sufficient financial strength to obtain the necessary funds when they are needed. Even assuming the premise of the commenter, NRC does not believe that reducing the multiple to 15, as the commenter suggests, is desirable. Although a real rate of retum of 3 percent may appear low under the market conditions prevailing during certain periods, there is a substantial body of empirical evidence indicating that it is a reasonable assumption. If a licensee who has been relying on a self-guarantee is required to fully fund a trust fund for decommissioning in the year before the beginning of decommissioning, and the licensee relies on eamings from endowment to crcate the trust, it is the annual eamings of the endowment for tha year immediately prior to the decommissioning that must equal the required amount. NRC has reviewed the information provided in lbbotson Associates, Stocks, Bonds, Bills, and Inflation 1995 Yearbook,1995, which published a summary of market results for the 69-year period from 1926 to 1995 for five categories of investments: small company stocks, large company stocks, long-term govemment bonds, long-term corporate bonds, and intermediate-term govemment bonds. On a year-by-year basis, less risky investments, such as treasury bills, showed the most frequent positive returns, but their annual retums also were relatively low. Riskier investments showed a broad distribution of retums, from very good to very poor. Overall, however, with the excrption of small and large company stocks, the average inflation-adjusted earnings (geometric mean) for these categories of investments were less than 3 percent. In a number of 6

i years, earnings for stocks also were less than 3 percent. Thus, real investment returns over a one-year period may not even match conservative earnings assumptions. The study of endowment sponsored by the National Council of College and University Business Officers (NACUBO) published in 1995 also emphasized a concem for this earnings variability in its analysis of college and university endowment investment. First, NACUBO's study noted that current high rates of return cannot be expected to continue indefinitely. "At a time when many public and private institutions are searching for ways to bridge the gap between revenues and expenditures, it is tempting to extrapolate these extraordinary retums into the future and to budget endowment spending accordingly. However, in this context it is instructive to note that for a representative group of institutions, the average annual real retum after spending for the 10-year period ended June 30,1994, is 4.1 percent, but for the 20 years ended June 30,1994, it is 0.9 percent." (1994 NACUBO Endowment Study, National Council of College and University Business Officers,1995, p. 4) Therefore, the NACUBO study recommends strongly that institutions keep their spending from endowment below the rate proposed by the commenter. The report states that: Historical precedent indicates that a fund invested approximately 60 percent in domestic and foreign stocks,30 percent in fixed income, and 10 percent in various other asset classes inevitably experiences recurring periods of absolute decline in market values over 3 years. Such a decline would trigger a reduction in spending for an institution sticking to a policy of spending a fixed percentage of a 3-year moving average of endowment market values.. For fiscal year 1994, the average endowment spending rate reported by responding institutions is 6.0 percent. On average, the smallest endowments ($25 million and less) spent more (7.2 percent) than the largest (4.5 7

l l l l l percent), and public institutions spent more (6.6 percent) than private institutions (5.7 percent)... With the sole exception of the 4.5 percent spent by the largest universities, l these spending rates are not compatible with most institutions' stated intention to preserve the purchasing power of their endowment. Over time, it is possible (difficult, but possible) for the exceptionally well-managed institution to spend 6.0 percent of a 3-year moving average of endowment market values, and still preserve purchasing power. However, it is courting disaster to spend at an annual rate of 6.0 percent toward the tail end of a long bull market. (1994 NACUBO Endowment Study,1995, p. 5) Based on these considerations, the NRC continues to believe that a relatively conservative criterion, such as the 30 times requirement, is a reasonable criterion for the decommissioning self-guarantee test for colleges and universities. The NRC does not accept the commenter's recommendation to adopt a substantially less stringent criterion. Comment: A commenter objected to the requirement that unrestricted endowment be at least $50 million or at least 30 times the decommissioning cost estimate, whichever is greater. The requirement should be compliance with either the $50 million figure or the 30 times decommissioning cost estimate, but not whichever is greater. Resoonse: As previously stated, NRC chose conservative financial criteria for non-bond-issuing colleges and universities, a;med at assuring the financial viability of a licensee qualified to self-guarantee. This is the only requirement that would apply to non-bond-issuing colleges and universities, whereas non-bond-issuing hospitals or commercial licensees would be subject to multiple financial ratios as financial tests. It is designed to capture two measures of financial viability: (1) overall financial strength and (2) financial strength relative to size of decommissioning obligation. The overall financial strength of an institution is heavily dependent ) 8

l l on the size of its unrestricted endowment. Specific ability to fund decommissioning expenses is i I measured by the ratio of unrestricted endowment to decommissioning costs. A financial test 1 based only on ratio to decommissioning cost might allow an institution without adequate financial strength to pass if its decommissioning costs were low. A test based only on the size of the unrestricted endowment might be inadequate for those institutions with the highest decommissioning costs. Both threshold requirements are needed to provide assurance that an institution can meet decommissioning obligations when necessary. 1 Comment: A commenter stated that NRC's rationale for a multiple of 30 implies that decommissioning costs are paid from investment yields over a 1-year period. However, it is more realistic to assume that any decommissioning activities where financial assurance 1 arrangements are involved will require considerable coordination with regulators and financial services involving 2 or 3 years to complete. This consideration also implies that the appropriate multiple should be 15 rather than 30. Resoonse: NRC recognizes that decommissioning may occur over a period longer than one year. The multiple of 30 was chosen without regard to how many years it would take to decommission a facility. The commenter is attempting to make this linkage the key factor in arriving at an appropriate multiple. However, following this line of reasoning, stretching out the l time length of decommissioning would imply ever decreasing multiples. NRC's objective is to ensure that decommissioning will take place on a timely basis. l The financial assurance regulations are intended to assure that inadequate funding does not prevent timely decommissioning. Timely decommissioning may require that all l l decommissioning funding be available up front even though decommissioning activities are not completed within a single year. For this reason NRC's criteria for determining whether a 9 f u____-_________________________

!icensee should be allowed to self-guarantee the costs of decommissioning must consider the possibility that the licensee will be required to fully fund decommissioning in the year immediately prior to the beginning of decommissioning activities. The licensee would fund a standby trust if either (1) the licensee no longer qualifies to use the self-guarantee to provide financial assurance for decommissioning, even if it was not yet required to conduct decommissioning, or (2) a licensee using a self-guarantee is required to carry out decommissioning. NRC currently does not allow licensees to consider the impact of earnings during the " payout" period (the period during which funds are being expended from the financial assurance standby trust to pay for decommissioning) in calculating the amount of funds that must be set aside for decommissioning. Therefore, the NRC disagrees with the commenter's suggestion that the expected duration of decommissioning activities should apply to the determination of the appropriate multiple. Comment: A commenter recommends that [ based on the combination of investment yield of 6 percent and investment yields over 2 to 3 years rather than 1 year] the multiplication factor [be) reduced from 30 to 10 with ample conservatism." Resoonse: For the reasons stated in responses to the preceding comments, NRC does not accept this recommendation.

2. Financial Criteria for Hosoitals The financial test criteria proposed for hospitals was an A or better bond rating or, for hospitals not having a bond rating, a financial ratios test consisting of the following:

(a) Liquidity - (current assets and depreciation fund, divided by current liabilities) greater than or equal to 2.55. 10

W l (b) Net Revenue -- (Total revenues less total expenditures divided by total revenues) greater than or equal to 0.04. (c) Leverage - (Long term debt divided by net fixed assets) less than or equal to 0.67. (d) Operating Revenues at least 100 times decommissioning costs. There were no comments regarding the bond rating criterion but there were several comments on the non-bond criteria. Comment: A commenter believed that the selected multiple of 100 [ hospital operating revenues at least 100 times decommissioning costs) was excessively conservative. It appears to reflect an expectation that the decommissioning will take a short time whereas a realistic time frame should be 2 years or more. NRC should consider a multiple of 30 or less to be appropriate. Resoonse: The requirement that hospital operating revenues be at least 100 times decommissioning costs is a criterion that NRC is proposing to use to determine whether a licensee has sufficient financial strength to self-guarantee. However, a potential consequence of self-guaranteeing could be the need to fully fund a trust fund in a short period of time if the licensee ceases to be capable of passing the self-guarantee test or if decommissioning must be carried out. As discussed above, the operating revenues multiple criterion does not reflect any expectation concerning the length of time during which decommissioning will occur. Therefore, NRC does not accept this recommendation. Comment: A commenter found the rationale that requires hospitals to meet all four financial ratios tests unclear. This commenter believed that using only the operE'ing 11

I revenues / decommissioning costs ratio would appear to provide reasonable assurance of ability I 1 to provide decommissioning funding. Resoonse: The financial ratios test for hospitals in the rule was carefully selected to l l provide a level of financial assurance risk similar to the financial assurance risk in the existing self-guarantee. The four ratios in combination represent the financial test that best achieves this goal. A financial test using just one of these ratios would not represent the same level of risk and would not provide an adequate level of financial assg19ce. Using only the ratio of operating revenues to decommissioning costr would completely ignore such determinants of financial strength as liquidity, indebtedness, and profitability. The financial test used for non-bond-issuing commercial licensees includes several ratios, not just one. The non-bond financial test for colleges and universities does use a single ratio, but it is the ratio of unrestricted endowment to decommissioning costs. Unrestricted endowment is a fund readily available to meet decommissioning expenses. Hospital operating revenues are different because these funds may not be readily available to meet decommissioning expenses due to other hospital costs.

3. Prohibition on Usino a Guarantee in Combination with Another Finqqcial Assurance Mechanism Comment: Some commenters noted that provisions in 10 CFR 30.35(f)(2),40.36(e)(2),

50.75(e)(2)(iii),70.25(f)(2) and 72.30(c)(2) provide that neither a parent company guarantee nor a guarantee by an applicant may be used in combination with other financial methods to satisfy financial assurance requirements. These commenters wanted to know the reasons for these restrictions. 12

Resoonse: This rule makes no change in the already existing prohibition against combining a parent or self-guarantee with another type of financial assurance mechanism. The issue of whether or not to allow such a combination is broader than the focus of this rule. The NRC has limited experience with parent and self-guarantee to date. It is expected that the NRC will periodically reevaluate its financial assurance program in the future and could reassess the need for the prohibition. 4. Insured Bond Ratinas Comment: Some commenters objected to the proposed financial criteria which deal with bond ratings. As proposed, for institutions that issue bonds, only a bond issuance that is " uninsured" may be used; an " insured" bond rating would not be eligible. The justification for this limitation is not warranted because bond insurers evaluate the financial condition of the prospective issuers and avoid issuing policies to universities that are not creditworthy. Consequently, the presence of bond insurance indicates that the issuer is in sound financial condition. Resoonse: Bond insurers evaluate the financial condition of the issuers of the bonds at the time the debt is insured. Bond rating agencies, such as Moodys and Standard and Poors, typically assign such bonds a triple-A rating because of the insured status of the bond NRC's concerns with accepting insured bonds as a criterion of financial assurance arise from the possibility that, over time, the insured bond rating could mask adverse changes in the financial condition of the bond issuer after the debt has been insured. The rule includes a requirement that the licensee must ascertain whether it continues to pass the financial test for self-guarantee every year. Furthermore, if the licensee no longer meets the test criteria, it must 13

notify NRC and establish altemative financial assurance. However, insured bonds would continue to hold their rating, despite declines in the financial condition of the issuer. The problem with an insured bond from the standpoint of financial assurance is that there is no criterion by which NRC can identify when a licensee / issuer no longer qualifies to self-guarantee. The bond can retain its high rating despite a decline in the financial strength of the issuer. Furthermore, the insurance coverage provided by the bond insurer, which is a guarantee of payment of principal and interest in accordance with the insured bond issue's payment schedule, will not provide any additional source of funding for decommissioning. NRC does not agree with the commenter's suggestion that it accept ratings on insured bonds as an acceptable criterion for self-guarantee. 5. Requirements for Financial Statements Comment: Some commenters objected to the proposed requirement in Appendices D and E to 10 CFR Part 30 that licensees must conduct accounting by U.S. generally accepted accounting principles (GAAP). This does not recognize the increasingly multi-national nature of materials licensees. Foreign ownership of major material licensees is currently a reality (e.g., Siemens, ABB, Framatome) and can be expected to increase in the future. The selection of accounting practices to be used is a significant corporate decision affected by many factors. It is unreasonable to require that corporate practices of major multi-national firms be changed for a licensee to be allowed to provide self-guarantee of decommissioning funding. The rule should allow licensees to certify adequate assurance that funds will be available by using other recognized and accepted accounting principles, 14

4 4 !~ Response Financial statements prepared in accordance with foreign accounting principles rather than U.S GAAP pose two problems from the standpoint of a financial test for self-guarantee. First, the financial test was developed based on an analysis of financial data for l U.S. firms. Consequently, the financial test criteria may not be applicable or effective when \\ \\ used in conjunction with financial data that were prepared in accordance with foreign l accounting practices. Second, allowing firms to rely on financial statements prepared according i to accounting principles in use in their own country could place a heavy administrative burden on NRC. The examples cited by the commenter, for instance, might require NRC to know and apply German, Swiss, and French accounting principles to assess compliance with a financial test designed using U.S. GAAP. Finally, the present financial assurance regulations allow the use of a broad range of financial assurance mechanisms in part to ensure that licensees that are unable to use a particular mechanism have other alternatives available. NRC does not expect firms to change their accounting practices in order to make use of the financial test because a number of other options are available. 6. Financial Criteria for Non-Bond-issuina Commercial Licer;:::= The financial test proposed for non-bond issuing commercial licensees was: (a) Cash flow divided by total liabilities greater than 0.15. I (b) Total liabilities divided by net worth less than 1.5. (c) Net worth greater than $10 million or at least 10 times decommissioning costs, whichever is greater. j Comment: A commenter objected to the net worth criterion of net worth greater than $10 million or at least 10 times estimated decommissioning costs. This discriminates against 15

well-funded smaller firms that could easily self-guarantee smaller decommissioning projects, but could not meet the $10 million net worth requirement. Resoonse: The NRC's objective in setting financial criteria for non-bond-issuing commercial licensees was to make the financial assurance risk of these criteria equal to the financial assurance risk of the financial criteria for licensees that issue bonds (estimated to be approximately 0.13 percent per year). According to the analysis of potential financial criteria carried out as part of the proposed rule, the financial criteria in the proposed rule meet this objective.' Firms with smaller net worth have a larger default risk than larger firms. Thus, the $10 million net worth requirement is an essential part of the overall financial test. The NRC has retained this requirement in the final rule. f l l 7. Decommissioning Cost Estimates l l i Comment: Several commenters raised the issue of how decommissionir,g costs were estimated. The NRC should encourage best available information estimates of decommissioning costs, based on historic plant experience in decommissioning and renovation, rather than commercial estimates by contractors that tend to be too high. Conservative assumptions, such as use of rates charged by contractors and high estimates of waste disposal costs, should not be used. A commenter also noted that assuming a period for short-lived isotopes to decay before decommissioning begins would be a realistic assumption. Also, a 3 " Analysis of Potential Self-Guarantee Tests for Demonstrating Financial Assurance by i Nonprofit Colleges, Universities, and Hospitals, and by Business Firms That Do Not issue Bonds," NUREG/CR-6514, p. 4.7, June 1997. 16 j

typical licensee will not have the maximum amount of material allowed by the license at the time of decommissioning. Resoonse: This rulemaking makes no changes in the requirements for how licensees estimate decommissioning costs. Decommissioning cost estimates, or use of the certification amounts in 10 CFR Part 30, are already required by existing regulations on financial assurance. This rule simply adds an additional financial assurance mechanism to those already permitted in NRC regulations. 8. Agreerant State Compatibility Status of Financial Assurance Regulations Comment: Some commenters believed that the proposed regulations should be assigned a compatibility status of Level 1 with Agreement States. This will ensure consistent requirements for financial surety arrangements and will preclude the unintended creation of competitive disadvantages between facilities in Agreement States and Non-Agreement States. Resoonse: When the proposed rule was published in the Federal Reaister (see 62 FR l 23394, April 30,1997), it was designated as a Division 2 compatibility item in accordance with the compatibility policy in effect at that time. A Division 2 level of compatibility allowed an Agreement State to promulgate equivalent, or more stringent, financial assurance regulations than those of NRC. Under the new " Policy Statement on Adequacy and Compatibility of Agreement State Programs," (see 62 FR 46517, September 3,1997) Agreement States must adopt NRC regulations having particular health and safety significance and those necessary to maintain l compatibility with the Commission's regulatory program. 17

l l l The NRC financial assurance regulations, in effect when the new policy was i implemented, were designated as having health and safety significance. Specifically, sections (a), (b), and (d) of Parts 30.35,40.36 and 70.25, which require that licensees must consider the l cost of decommissioning their facilities and that those costs must be provided for through a l l 1 financial assurance mechanism, have particular health and safety significance and were designated as category H&S. Under the H&S category, Agreement States should adopt the essential objectives of these sections in order to maintain an adequate program. The remaining sections of the rule, including those which allow self-guarantee of certain commercial corporate licensees who issue bonds if they meet stringent financial criteria, were designated as compatibility Category D. Category D means the Agreement States do not need to adopt a compatible rule. The final rule change, which will extend the self-guarantee financial assurance option to other material and non-electric utility reactor licensees that meet certain financial criteria, is also designated as compatibility Category D. Under compatibility category D, Agreement States may choose to maintain a more stringent rule by not adopting the self-guarantee option. - l 9. Requirement for Annual Passaae of Financial Test Comment: A commenter stated that Section ll.C.(2) of Appendix E to Part 30 should be modified so a qualifying licensee would not have to repeat passage of the financial test for self-guarantee every year. University endowments are very stable. In addition, Section ll.C.(3) provides sufficient assurance that NRC will be notified when a licensee no longer meets the criteria for self-guarantee. 18

E. Resoonse: Although it is true that university endowments are relatively stable and Section ll.C.(3) provides for notification, the provision for qualifying licensees to annually pass { the test is retained in the final rule. For a self-guarantee program to provide adequate assurance of decommissioning funding, the annual"requalification" provision is necessary. NRC must have assurance of financial strength on a timely basis. A self-guarantee relies solely on the licensee's ability to fund decommissioning. There is no backup such as that provided by a third-party financial assurance mechanism. The requirement for repeating the financial test yearly is not unduly burdensome on a licensee and gives NRC information on the financial condition of the licensee on a timely basis. This requirement is not unique to colleges and universities or to this rule. It is found in the self-guarantee financial tests applicable to other types of licensees, both profit and nonprofit. i 10. L!se of Self-Guarantee by the United States Enrichment Corporation Comment: The United States Enrichment Corporation (USEC) proposed that the NRC modify the language of the rule to include certificates (regulated by NRC under 10 CFR l Part 76). USEC stated that it would benefit from the opportunity to reduce the costs of complying with NRC financial assurance requirements, which USEC estimated would presently cost in excess of $100,000 per year for letters of credit and surety bonds. Resoonse: Under 10 CFR 76.35(n), USEC (or the Corporation) is required to establish financial surety arrangements to ensure that sufficient funds will be available for the ultimate disposal of waste and depleted uranium, and decontamination and decommissioning activities that are the financial responsibility of the Corporation. The funding mechanisms currently listed in the regulation as potentially acceptable for use by the Corporation include prepayment, 19

surety, insurance, and an external sinking fund, but do not include self-guarantee or statement of intent. The rule provides that the funding mechanism must " ensure availability of funds for any activities that are required to be completed " by the Corporation. USEC was created pursuant to the Energy Policy Act of 1992. It is a wholly owned i govemment corporation, whose powers are vested in a five-member Board of Directors i appointed by the President of the United States and confirmed by the Senate. However, on July 25,1997 a plan was approved by the President under which USEC will be sold either to i another corporation or to the public through a stock offering. Under the USEC Privatization Act, l l Congress set certain restrictions on foreign involvement in USEC's privatization and required that a " reliable and economical domestic source of enrichment services" exist following i I privatization. Although the NRC is not currently aware of any reason why it would be inappropriate to consider expanding the category of funding mechanisms available to the Corporation to demonstrate the availability of funds for the actions required under 10 CFR 76.35(n), NRC does not believe that it would be feasible to do so in the current rule. First, USEC was not included in any of the analyses performed to evaluate potential self-guarantee tests for demonstrating financial assurance. NRC believes that detailed analyses should be undertaken to ensure that all critical factors have been considered. Second, USEC's current and future situation with respect to the costs that it might incur is substantially diffegent from those of the licensees included in the current rulemaking. In particular, the scope and type of activities that USEC must carry out under 10 CFR 76.35(n) are very different from those conducted by hospitals and universities, and the non-bond issuing firms covered by the proposed rule. Third, the exact size of the obligations that USEC might be required to cover is uncertain l and will not be determined until a later date, although it is known that many of the costs will l 20 l

remain the responsibility of the U.S. Department of Energy (DOE). Under 10 CFR 76.35(n), DOE is responsible for those aspects of decontamination and decommissioning of the gaseous diffusion plants (GDPs) assigned to DOE under the Atomic Energy Act. DOE also is I responsible for all environmental liabilities associated with the operation of the GDPs before July 1,1993. According to USEC's Annual Report for 1996, "[e]xcept for certain accrued j l liabilities that will be specified in a memorandum of agreement entered into prior to privatization, all environmental liabilities of the Company through the date of privatization will remain obligations of the U.S. Govemment." (Notes to Financial Statementm 7. Environmental i Matters). Furthermore, as of June 30,1996, USEC had accrued liability of $303 million for transportation, conversion, and disposition of depleted uranium currently stored at the GDPs. The 1996 Annual Report states that "USEC is evaluating various proposals for the disposition of i depleted uranium, and depending on the outcome of such evaluations, the Company may be I able to reduce future cost accruals * * *. Pursuant to the USEC Privatization Act, all costs and liabilities related to the disposition of depleted uranium generated prior to the privatization date are the responsibility of DOE." Fourth, until privatization has occurred, important information about USEC's future corporate structure and ownership will remain uncertain. As noted above, Congress has allowed USEC to be sold either to another corporation or to the public through a j stock offering. Thus, the form in which privatization occurs could affect the NRC's analysis of financial assurance attematives. Because of the need to evaluate all of these factors, NRC has determined not to include 10 CFR Part 76 in the current rulemaking. Changes from the Proposed Rule 21 ___.__m.-_-----------.-----

o There are no changes from the proposed rule. Section-by-Section Description of Changes 10 CFR Part 30 Section 30.35 is amended to permit self-guarantee for financial assurance which can be used by qualified nonprofit licensees and non-bond-issuing licensees. Appendix D is added to 10 CFR Part 30 to establish requirements for self-guarantee by non-bond-issuing commercial licensees. Appendix E is added to 10 CFR Part 30 to establish requirements for self-guarantee for nonprofit college, university, and hospital licensees. 10 CFR Part 40 Section 40.36 is amended to permit self-guarantee for financial assurance which can be used by qualified nonprofit licensees and non-bond-issuing licensees. 10 CFR Part 50 Section 50.75 is amended to permit self-guarantee for financial assurance which can be used by qualified nonprofit licensees and non-bond-issuing licensees. 10 CFR Part 70 22

Section 70.25 is amended to permit self-guarantee for financial assurance which can be used by qualified nonprofit licensees and non-bond issuing licensees. 10 CFR Part 72 l Section 72.30 is amended to permit self-guarantee for financial assurance which can be used by qualified non-bond issuing licensees. l l Compatibility of Agreement State Regulations The current NRC regulation which allows self-guarantee of certain commercial corporate licensees who issue bonds if they meet stringent financial criteria is designated as compatibility Category D. This final rule change, which will extend the self-guarantee financial assurance l option to other material and non-electric utility reactor licensees that meet certain financial criteria,is also designated as a compatibility Category D. Category D means the agreement States do not need to adopt a compatible rule. The Category D designation was determined in accordance with the new " Policy Statement on Adequacy and Compatibility of Agreement State Programs," approved by the Commission on June 30,1997. The final rule change does not involve a basic radiation protection standard, activities that have direct and significant effects in multiple jurisdictions, or essential objectives which an Agreement State should adopt to avoid conflicts, gaps, or duplications in the regulation of agreement material on a nationwide basis. Therefore, Category D has been assigned to these rule provisions. l i Finding of No Significant EnvironmentalImpact: Availability 23 l

The amendments will allow qualified nonprofit and non-bond-issuing licensees the option of using self-guarantee as a mechanism for financial assurance for decommissioning. For-profit corporate licensees that issue bonds are already allowed to use self-guarantee if they meet tne regulatory criteria. Other licensees currently may elect to use a variety of financial assurance mechanisms, such as surety bonds, letters of credit, and escrow accounts to comply with decommissioning regulations. This action is intended to offer nonprofit and non-bond-issuing nuclear materials licensees and non-electric utility reactor licensees greater flexibility by allowing an additional mechanism for licensees that meet the financial criteria for use of self-guarantee. This revision to the NRC's regulations simply adds one more financial assurance mechanism to the mechanisms currently available. It does not affect the cost of decommissioning materials and non-power reactor facilities. Allowing self-guarantee for additional types of licensees does not lead to any increase in the effect on the environment of the decommissioning activities considered in the final rule published on June 27,1988, (53 FR 24018), as analyzed in the Final Generic Environmental Impact Statement on Decommissioning of Nuclear Facilities (NUREG-0586, August 1988).' Promulgation of this rule does not introduce any impacts on the environment not previously considered by the NRC. Therefore, the Commission has determined, under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in subpart A of 10 CFR Part 51, that this rule

• Copies are available at current rates from the U.S. Government Printing Office, P.O.

Box 37082, Washington, DC 20402-9328 (telephone (202) 512-2249); or from the National Technical Information Service by writing NTIS at 5285 Port Royal Road, Springfield, VA 22161. Copies are available for inspection or copying for a fee from the NRC Public Document Room at 2120 L Street NW., Washington, DC; the PDR's mailing address is Mail Stop LL-6, Washington, DC 20555; telephone (202) 634-3273; fax (202) 634-3343. 24

would not be a major Federal action significantly affecting the quality of the human environment, and therefore an environmental impact statement is not required. No other agencies or persons were contacted in making this determination. The NRC staff is not aware of any other documents related to the environmentalimpact of this action. The foregoing constitutes the environmental assessment and finding of no significant impact for this rule. Paperwork Reduction Act Statement This final rule amends information collection requirements that are subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). These requirements were approved by the Office of Management and Budget (OMB), approval number 3150-0017, - 0020,-0011,-0009, and -0132. The public reporting burden for this information collection is estimated to average 9 to 14 hours per response, including time for reviewing instructions, searching existing data j sources, gathering and maintaining the data needed, and completing and reviewing the information collection. Send comments on any aspect of this information collection, including suggestions for reducing the burden, to the information and Records Management Branch (T-6 F33), U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, or by intemet electronic mail at BJS@NRC. GOV; and to the Desk Officer, Office of Information and i Regulatory Affairs, NEOB-10202, (3150-0017), Office of Management and Budget, Washington, I DC 20503. Public Protection Notification 25

l If a document used to impose an information collection does not display a currently valid OMB control number, the NRC may not conduct or sponsor, and a person is not required to respond to, the information collection. Regulatory Analysis The NRC has prepared a regulatory analysis on this regulation. The analysis examines the costs and benefits of the alternatives considered by the NRC. The analysis is available for 4 inspections in the NRC Public Document Room,2120 L Street NW (Lower Level), Washington, 1 DC. Single copies of the analysis may be obtained from Clark Prichard, Office of Nuclear Materials Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 415-6203. I Small Business Regulatory Enforcement Faimess Act l i in accordance with the Small Business Regulatory Enforcement Faimess Act of 1996, the NRC has determined that this action is not a " major rule" and has verified this determination with the Office of Information and Regulatory Affairs, Office of Management and Budget. Regulatory Flexibility Certification 26 l

In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the Commission certifies that this rule will not have a significant economic impact on a substantial number of small entities. This rule would expand the number of options available to licensees to comply with the Commission's financial assurance requirements, thus enhancing the flexibility of these regulations. It is estimated that this rule would result in significant cost savings to qualifying licensees. Backfit Analysis The NRC nas determined that backfitting provisions (10 CFR 50.109 and 72.62) in the parts of the Commission's regulations that are being amended by this rulemaking do not apply to this rule because the rule does not impose a backfit as defined in 10 CFR 50.109(a)(1) or 72.62(a). The rule extends the self-guarantee alternative for demonstrating decommissioning financial assurance to qualified non-profit and non-bond-issuing licensees. Extending the availability of j this option does not impose a new burden on licensees of commercial power reactors or independent spent fuel storage installations (ISFSl's). Accordingly, the rulemaking does not constitute a backfit and a backfit analysis was not prepared for this final rule. 1 4 List of Subjects 27 l

10 CFR Part 30 Byproduct material, Criminal penalties, Govemment contracts, intergovemmental relations, Isotopes, Nuclear materials, Radiation protection, Reporting and recordkeeping requirements. 10 CFR Part 40 Criminal penalties, Government contracts, Hazardous materials transportation, Nuclear materials, Reporting and recordkeeping requirements, Source material, Uranium. 10 CFR Part 50 Antitrust, Classified information, Criminal p6aalties, Fire protection, intergovemmental relations, Nuclear power plants and reactors, Radiation protection, Reactor siting criteria, Reporting and recordkoeping requirements. 10 CFR Part 70 Criminal penalties, Hazardous materials transportation, Material control and accounting, Nuclear materials, Packaging and containers, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Security measures, Special nuclear material. 10 CFR Part 72 Manpower training programs, Nuclear materials, Occupational safety and health, Reporting and recordkeeping requirements, Security measures, Spent fuel. 28

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 553, the NRC is adopting the following amendments to 10 CFR Parts 30,40,50,70, and 72. l PART 30 - RULES OF GENERAL APPLICABILITY TO DOMESTIC LICENSING OF BYPRODUCT MATERIAL

1. The authority citation for Part 30 continues to read as follows:

AUTHORITY: Secs. 81,82,161,182,183,186,68 Stat. 935,948, 953,954, 955, as amended, sec. 234,83 Stat. 444, as amended (42 U.S.C. 2111,2112,2201,2232, 2233,2236,2282); secs. 201, as amended,202,206,88 Stat.1242, as amended, 1244,1246 (42 U.S.C. 5841,5842,5846). Section 30.7 also issued under Pub. L. 95-601, sec.10, 92 Stat. 2951 (42 i U.S.C. 5851). Section 30.34(b) also issued under sec.184,68 Stat. 954, as amended (42 U.S.C. 2234). Section 30.61 also issued under sec.187,68 Stat. 955 (42 U.S.C. 2237).

2. In S 30.8, paragraph (b) is revised to read as follows:

$ 30.8 information collection requirements: OMB aooroval. 29

(b) The approved information collection requirements contained in this part appear in @S 30.9,30.11,30.15,30.19,30.20,30.32,30.34,30.35,30.36,30.37,30.38,30.50, 30.51, 30.55,30.56, and Appendices A, C, D, and E.

3. In 9 30.35, the introductory text of paragraph (f)(2) is revised to read as follows:

6 30.35 Financial assurance and recordkeeoina for decommissioning. (f)(2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A to this part. A parent company guarantee may not be used in combination with other financial methods to satisfy the requirements of this section. For commercial corporations that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix C to this part. For commercial companies that do not issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs may be used if the guarantee and test are as contained in Appendix D to this part. For nonprofit entities, such as colleges, universities, and nonprofit hospitals, a guarantee of funds by the applicant or licensee j 30 I i

may be used if the guarantee and test are as contained in Appendix E to this part. A guarantee by the applicant or licensee may not be used in combination with any other financial methods I used to satisfy the requirements of this sution or in any situation where the applicant or l licensee has a parent company holdirig majority control of the voting stock of the company. Any surety method or insurance used to provide financial assurance for decommissioning must contain the following conditions: i l

4. New Appendices D and E to Part 30 are added to read as follows:

1 APPENDIX D TO PART 30 - CRITERIA RELATING TO USE OF FINANCIAL TESTS l AND SELF-GUARANTEE FOR PROVIDING REASONABLE ASSURANCE OF FUNDS 1 j FOR DECOMMISSIONING BY COMMERCIAL COMPANIES THAT HAVE NO OUTSTANDING RATED BONDS.

l. Introduction 1

l An applicant or licensee may provide reasonable assurance of the availability of l funds for decommissioning based on furnishing its own guarantee that funds will be available for decommissioning costs and on a demonstration that the company passes the financial test of Section il of this appendix. The terms of the self-guarantee are in Section lli of this l appendix. This appendix establishes criteria for passing the financial test for the self-guarantee 1 and establishes the terms for a self-guarantee. 31 l

II. FinancialTest A. To pass the financial test a company must meet the following criteria: (1) Tangible net worth greater than $10 million, or at least 10 times the total curreilt decommissioning cost estimate (or the current amount required if certification is used), whichever is greater, for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor. (2) Assets located in the United States amounting to at least 90 percent of total assets or at least 10 times the total current decommissioning cost estimate (or the current amount required 'i certification is 1.ipd) for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor. (3) A ratio of cash flow divided by total liabilities greater than 0.15 and a ratio of total liabilities divided by net worth less than 1.5. B. In addition, to pass the financial test, a company must meet all of the following requirements: (1) The company's independent certified public accountant must have compared the data used by the company in the financial test, which is required to be derived from the independently audited year end financial statement based on United States generally accepted accounting practices for the latest fiscal year, with the amounts in such financial statement. In connection with that procedure, the licensee shall inform NRC within 90 days of any matters that may cause the auditor to believe that the data specified in the financial test should be adjusted and that the company no longer passes the test. (2) After the initial financial test, the company must repeat passage of the test within 90 days after the close of each succeeding fiscal year. 32

(3) If the licensee no longer meets the requirements of paragraph II.A of this appendix, the licensee must send notice to the NRC of intent to establish alternative financial assurance as specified in NRC regulations. The notice must be sent by certified mail, return receipt requested, within 90 days after the end of the fiscal yaar for which the year end financial data show that the licensee no longer meets the firancial test requirements. The licensee must provide altemative financial assurance within 120 days after the end of such fiscal year. 1 l 111. Company Self-Guarantee The terms of a self-guarantee which an applicant or licensee fumishes must provide that: A. The guarantee shall remain in force unless the licensee sends notice of cancellation by certified mail, retum receipt requested, to the NRC. Cancellation may not occur until an altemative financial assurance mechanism is in place. B. The licensee shall provide attemative financial assurance as specified in the regulations within 90 days following receipt by the NRC of a notice of cancellation of the guarantee. C. The guarantee and financial test provisions must remain in effect until the Commission has terminated the license or until another financial assurance method acceptable to the Commission has been put in effect by the licensee. D. The applicant or licensee must provide to the Commission a written guarantee (a written commitment by a corporate officer) which states that the licensee will fund and carry out the requ; red decommissioning activities or, upon issuance of an order by the 33

Commission, the licensee will set up and fund a trust in the amount of the current cost estimates for decommissioning. APPENDIX E TO PART 30 - CRITERIA RELATING TO USE OF FINANCIAL TESTS AND SELF-GUARANTEE FOR PROVIDING REASONABLE ASSURANCE OF FUNDS FOR DECOMMISSIONING BY NONPROFIT COLLEGES, UNIVERSITIES, AND HOSPITALS

1. Introduction An applicant or licensee may provide reasonable assurance of the availability of funds for decommissioning based on furnishing its own guarantee that funds will be available for decommissioning costs and on a demonstration that the applicant or licensee passes the i

l financial test of Section 11 of this appendix. The terms of the self-guarantee are in Section lli of l this appendix. This appendix establishes criteria for passing the financial test for the self-guarantee and establishes the terms for a self-guarantee. 8

11. FinancialTest j

l A. For colleges and universities, to pass the financial test a college or l l university must meet either the criteria in Paragraph II.A.(1) or the criteria in Paragraph II.A.(2) I of this appendix. (1) For applicants or licensees that issue bonds, a current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard and Poors (S&P) or Aaa, Aa, or A as issued by Moodys. 34

(2) For applicants or licensees that do not issue bonds, unrestricted endowment consisting of assets located in the United States of at least $50 million, or at least 30 times the total current decommissioning cost estimate (or the current amount required if certification is used), whichever is greater, for all decommissioning activities for which the college or university is responsible as a self-guaranteeing licensee. B. For hospitals, to pass the financial test a hospital must meet either the criteria in Paragraph II.B.(1) or the criteria in Paragraph II.B.(2) of this appendix: (1) For applicants or licensees that issue bonds, a current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard and Poors (S&P) or Aaa, Aa, or A as issued by Moodys. (2) For applicants or licensees that do not issue bonds, all the following tests must be met: (a) (Total Revenues less total expenditures) divided by total revenues must be equal to or greater than 0.04. (b) Long term debt divided by net fixed assets must be less than or equal to 0.67. (c) (Current assets and depreciation fund) divided by current liabilities mu;t be f greater than or equal to 2.55. (d) Operating revenues must be at least 100 times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the hospital is responsible as a self-guaranteeing license. C. In addition, to pass the financial test, a licensee must meet all the following requirements: 35

(1) The licensee's independent certified public accountant must have compared the data used by the licensee in the financial test, which is required to be derived from the independently audited year end financial statements, based on United States generally accepted accounting practices, for the latest fiscal year, with the amounts in such financial statement. In connection with that procedure, the licensee shall inform NRC within 90 days of any matters coming to the attention of the auditor that cause the auditor to believe that the data specified in the financial test should be adjusted and that the licensee no longer passes the { test. (2) After the initial financial test, the licensee must repeat passage of the test within 90 days after the close of each succeeding fiscal year. (3) If the licensee no longer meets the requirements of Section I of this appendix, the licensee must send notice to the NRC of its intent to establish alternative financial assurance as specified in NRC regulations. The notice must be sent by certified mail, retum receipt requested, within 90 days after the end of the fiscal year for which the year end financial data show that the licensee no longer meets the financial test requirements. The licensee must provide alternate financial assurance within 120 days after the end of such fiscal year. Ill. Self-Guarantee The terms of a self-guarantee which an applicant or licensee fumishes must provide that-A. The guarantee shall remain in force unless the licensee sends notice of cancellation by certified mail, and/or return receipt requested, to the Commission. Cancellation may not occur unless an attemative financial assurance mechanism is in place. 36

B. The licensee shall provide alternative financial assurance as specified in the Commission's regulations within 90 days following receipt by the Commission of a notice of j cancellation of the guarantee. C. The guarantee and financial test provisions must remain in effect until the Commission has terminated the license or until another financial assurance method acceptable to the Commission has been put in effect by the licensee. D. The applicant or licensee must provide to the Commission a written guarantee (a written commitment by a corporate officer or officer of the institution) which states that the licensee will fund and carry out the required decommissioning activities or, upon l issuance of an order by the Commission, the licensee will set up and fund a trust in the amount of the current cost estimates for decommissioning. E. If, at any time, the licensee's most recent bond issuance ceases to be rated l in any category of "A" or above by either Standard and Poors or Moodys, the licensee shall provide notice in writing of such fact to the Commission within 20 days after publication of the change by the rating service. PART 40 - DOMESTIC LICENSING OF SOURCE MATERIAL

5. The authority citation for Part 40 continues to read as follows:

AUTHORITY: Secs. 62,63,64,65,81,161,182,183,186,68 Stat. 932,933, 935,948,953,954,955, as amended, secs.11e(2), 83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended,3039, sec. 234,83 Stat. 444, as amended (42 U.S.C. 2014(e)(2),2092,2093,2094, 2095,2111,2113,2114, 2201,2232,2233,2236,2282); sec. 274, Pub. L. 86-373,73 Stat. 688 (42 U.S.C. 2021); secs. 201, as amended, 202,206,88 Stat.1242, as amended, 1244,1246 37

(42 U.S.C. 5841,5842,5846); sec. 275,92 Stat. 3021, as amended by Pub. L. 97-415,96 Stat. 2067 ('2 U.S.C. 2022). Section 40.7 also issued under Pub. L. 95-601, sec.10, 92 Stat. 295142 U.S.C. 5851). Section 40.31(g) also issued under sec.122,68 Stat. 939 (42 U.S.C. 2152). Section 40.46 also issued under sec.184,68 Stat. 954, as amended (42 U.S.C. 2234). Section 40.71 also issued under sec.187,68 Stat. 955 (42 U.S.C. 2237).

6. In 9 40.36, the introductory text of paragraph (e)(2) is revised to read as follows:

6 40.36 Financial assurance and recordkeeoina for decommissioning. (e)(2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A to Part 30. A parent company guarantee may not be used in combination with other financial methods to satisfy the requirements of this section. For commercial corporations that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix C to Part 30. For commercial companies that do not issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs may be used if the 38

l guarantee and test are as contained in Appendix D to Part 30. For nonprofit entities, such as colleges, universities, and nonprofit hospitals, a guarantee of funds by the applicant or licensee may be used if the guarantee and test are as contained in Appendix E to Part 30. A guarantee by the applicant or licensee may not be used in combination with any other financial methods used to satisfy the requirements of this section or in any situation where the applicant or licensee has a parent company holding majority control of the voting stock of the cornpany. Any surety method or insurance used to provide financial assurance for decommissioning must contain the following conditions: PART 50 - DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION FACILITIES

7. The authority citation for Part 50 continues to read as follows:

AUTHORITY: Sees. 102,103,104,105,161,182,183,186,189,68 Stat. 936, 937,938,948,953,954,955,056, as amended, sec. 234,83 Stat.1244, as amended (42 U.S.C. 2132,2133,2134,2135,2201,2232,2233,2236,2239,2282); secs. 201, as amended,202,206,88 Stat.1242, as amended, 1244,1246 (42 U.S.C. 5841, 5842, 5846). Section 50.7 also issued under Pub. L. 95-601, sec.10,92 Stat. 2951 (42 U.S.C. 5851). Section 50.10 also issued under secs. 101,185, 68 3 tat. 936, 955, as amended (42 U.S.C. 2131,2235); sec.102, Pub. L. 91-190,83 Stat. 853 (42 U.S.C. 4332). Sections 50.13,50.54(dd), and 50.103 also issued under sec.108,68 Stat. 939, as amended (42 U.S.C. 2138). Sections 50.23,50.35,50.55, and 50.56 also issued under sec.185,68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a,50.55a and Appendix Q also issued under 39

l sec.102, Pub. L. 91-190,83 Stat. 853 (42 U.S.C. 4332). Sections 50.34 and 50.54 also issued under sec. 204,88 Stat.1245 (42 U.S.C. 5844). Sections 50.58,50.91, and 50.92 also issued l l l under Pub. L. 97-415,96 Stat. 2073 (42 U.S.C. 2239). Section 50.78 also issued under sec.122,68 Stat. 939 (42 U.S.C. 2152). Sections 50.80 - 50.81 also issued under sec.184,68 Stat. 954, as amended (42 U.S.C. 2234). Appendix F also issued under sec.187,68 Stat. 955 (42 U.S.C 2237).

8. In S 50.75, the introductory text of paragraph (e)(2)(iii) is r.svised to read as follows:

6 50.75 Reoortina and recordkeeoina for decommissioning olannina. (e)(2)(iii) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A to Part 30. A parent company guarantee may not be used in combination with other financial methods to satisfy the requirements of this section. For commercial corporations that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix C to Part 30. For commercial companies that do not issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs may be used if the 40

guarantee and test are as contained in Appendix D to Part 30. For nonprofit entities, such as colleges, universities, and nonprofit hospitals, a guarantee of funds by the applicant or licensee may be used if the guarantee and test are as contained in Appendix E to Part 30. A guarantee by the applicant or licensee may not be used in combination with any other financial methods used to satisfy the requirements of this section or in any situation where the applicant or licensee has a parent company holding majority control of the voting stock of the company. ) e PART 70 - DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL

9. The authority citation for Part 70 continues to read as follows:

AUTHORITY: Secs. 51,53,161,182,183,68 Stat. 929,930,948,953,954, as j amended, sec. 234,83 Stat. 444, as amended (42 U.S.C. 2071,2073,2201,2232,2233, 2282), secs. 201, as amended,202,204,206,88 Stat.1242, as amended, 1244,1245,1246 (42 U.S.C. 5841,5842,5845,5846). Sections 70.1(c) and 70.20a(b) also issued under secs. 135,141, Pub. L. 97-425,96 Stat. 2232,2241 (42 U.S.C.10155,10161). Section 70.7 also issued under Pub. L. 95-601, sec.10,92 Stat. 2951 (42 U.S.C. 5851). Section 70.21(g) also issued under sec.122,68 Stat. 939 (42 U.S.C. 2152). Section 70.31 also issued under sec. 57d, Pub. L. 93-377,88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44 also issued under sec.184,68 Stat. 954, as amended (42 U.S.C. 2234). Section 70.61 also issued under secs. 186,187,68 Stat. 955 l (42 U.S.C. 2236,2237). Section 70.62 also issued under sec.108,68 Stat. 939, as amended (42 U.S.C. 2138). 41

10. In $ 70.25, the introductory text of paragraph (f)(2) is revised to read as follows:

6 70.25 Financial assurance and recordkeeoina for decommissioning. 1 l (f)(2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A to Part 30. A parert company guarantee may not be used in combination with other financial methods to satisfy the requirements of this section. For commercial corporations that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix C to Part 30. For commercial companies that do not issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs may be used if the guarantee and test are as contained in Appendix D to Part 30. For nonprofit entities, such as colleges, universities, and nonprofit hospitals, a guarantee of funds by the applicant or licensee may be used if the guarantee and test are as contained in Appendix E to Part 30. A guarantee by the applicant or licensee may not be used in combination with any other financial methods used to satisfy the requirements of this section or in any situation where the applicant or licensee has a parent company holding majority control of the voting stock of the company. 42

Any surety method or insurance used to provide financial assurance for decommissioning must contain the following conditions: l PART 72 - LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF SPENT NUCLEAR FUEL AND HIGH-LEVEL RADIOACTIVE WASTE

11. The authority citation for Part 72 continues to read as follows:

l AUTHORITY: Secs. 51,53,57,62,63,65,69,81,161,182,183,184,186, 187,189, 68 Stat. 929, 930, 932, 933, 934, 935, 948, 953, 954, 955, as amended, sec. 234,83 Stat. 444, as amended (42 U.S.C. 2071,2073,2077,2092,2093,2095, 2099,2111,2201, 2232,2233,2234,2236,2237,2238,2282); sec. 274, Pub. L. 86-373,73 Stat. 688, as amended (42 U.S.C. 2021); sec. 201, as amended, 202,206,88 Stat.1242, as amended, 1244,1246 (42 U.S.C. 5841, 5842,5846); Pub. L. 95-601, sec.10,92 Stat. 2951 (42 U.S.C. 5851); sec.102, Pub. L. 91-190,83 Stat. 853 (42 U.S.C. 4332); Secs.131,132,133,135,137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230, 2232, 2241, sec.148, Pub. L.100-203,101 Stat. i 1330-235 (42 U.S.C.10151,10152,10153,10155,10157,10161,10168). Section 72.44(g) also issued under secs.142(b) and 148(c), (d), Pub. L.100-203,101 Stat.1330-232,1333-236 (42 U.S.C.10162(b),10168(c), (d)). Section 72.46 also issued under sec.189,68 Stat. 955 (42 U.S.C. 2239); sec.134, Pub. L. 97-425, 96 Stat. 2230 (42 U.S.C.10154). Section 72.96(d) also issued under sec.145(g), Pub. L.100-203,101 Stat. 1330-235 (42 U.S.C.10165(g)). Subpart J also issued under secs. 2(2),2(15),2(19),117(a), 141(h), Pub. L. 97-425,96 Stat. 2202,2203,2204, 2222,2244 (42 U.S.C.10101,10137(a), l 43 l

10161(h)). Subparts K and L are also issued under sec.133,98 Stat. 2230 (42 U.S.C.10153) and sec. 218(a),96 Stat. 2252 (42 U.S.C.10198).

12. In 72.30, the introductory text of paragraph (c)(2) is revised to read as follows:

6 72.30 Financial assurance and recordkeeoina for decommissioning. (c)(2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A to Part 30. A parent company guarantee may not be used in combination with other financial methods to satisfy the requirements of this section. For commercial corporations that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix C to Part 30. For commercial corporations that do not issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs may be used if the guarantee and test are as contained in Appendix D to Part 30. A guarantee by the applicant or licensee may not be used in combination with any other financial methods used to satisfy the 44

requirements of this section or in any situation where the applicant or licensee has a parent company holding majority control of the voting stock of the company. Any surety method or insurance used to provide financial assurance for decommissioning must contain the following conditions: Dated at Rockville, Maryland, this day of .1998. For the Nuclear Regulatory Commission. l John C. Hoyle Secretary of the Commission. l l j l 45

8 9 ENCLOSURE 2 REGULATORY ANALYSIS i I l i I l i l l l l I I i i l l i i

REGULATORY ANALYSIS OF DECOMMISSIONING FINANCIAL ASSURANCE SELF-GUARANTEE FOR NON-PROFIT COLLEGES AND UNIVERSITIES, HOSPITALS, AND FIRMS THAT DO NOT ISSUE BONDS

t, i 1. INTRODUCTION l

1.1 Background

j The U.S. Nuclear Regulatory Commission amended its regulations establishing general requirements for decommissioning licensee facilities on December 29,1993, to allow certain ) NRC non-electric utility licensees to self-guarantee decommissioning funding costs (58 FR i 68726; December 29,1993). In the Supplementary Information for that rulemaking, NRC noted that several commenters had suggested that NRC should allow universities and other non-profit entities to use a self guarantee. NRC responded that it planned to begin a study of extending i the availability of cost-saving financial assurance attematives to non-profit entities (58 FR 68728). NRC completed its evaluation of several altamatives for self guarantee for non-profit entities, such as colleges and universities, and for firms that are operated for profit but are unable to qualify for NRC's existing self guarantee because they do not issue bonds.' NRC published a proposed rule on self guarantee for these licensees on April 30,1997 (62 FR 23394). This Regulatory Analysis was prepared pursuant to NUREG/BR-00582 to support l NRC's regulatory action and examine the costs and benefi+.s of the attematives considered by l the Commission. l NRC currently administers approximately 5,900 licenses for the possession and use of J nuclear materials. Approximately 500 of the licensees who hold these licenses are required to provide financial assurances for decommissioning under rules promulgated in 1988 (53 FR 24018; June 27,1988), and subsequently amended by 56 FR 23471; May 21,1991,58 FR 39633; July 26,1993, 58 FR 67659; December 22,1993,58 FR 68730; December 29,1993, and 59 FR 1618; January 12,1994. NRC also currently has 33 non-electric utility reactor licensees that are colleges or universities, and must provide financial assurance for decommissioning. These licensees are affected by this rulemaking. The rules on financial assuranca for decommissioning provide that licensees under i 10 CFR Parts 30,40,50,70, and 72 must provide financial assurance to ensure that decommissioning of licensed facilities will be accomplished in a safe and timely manner and that adequate funds will be available for this purpose. According to the decommissioning 8 regulations, financial assurance must be provided by one or more of the following methods: i I" Analysis of Pothntial Self-Guarantee Tests for Demonstrating Financial Assurance by Non-Profit Colleges, Universities, and Hospitals and by Business Firms That Do Not issue Bonds," NUREG/CR-6514, June 1997.

1. NUREG/BR-0058, Revision 2, NRC Raoulatorv Analvsis Guidelines. U.S. Nuclear Regulatory Commission,1995.

8The same four attemative methods of providing financial assurance are authorized for I licensees under Paris 30,40,50,70, and 72 in the following sections: 10 CFR S 30.35(f), l 40.36(e), 50.75(e), 70.25(f), and 72.30(c).

(1) Prepayment. Prepayment is the deposit prior to the start of operation into an account segregated from licensee assets and outside the licensee's administratiu sontrol of cash or liquid assets such that the amount of funds would be sufficient to pay decommissioning costs. Prepayment may be in the form of a trust, escrow account, govemment fund, certificate of deposit, or deposit of govemment securities. (2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be paid should the licensee default. A surety method may be in the form of a surety bond, letter of credit, or line of credit. A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as specified in Appendix A of 10 CFR Part 30. A parent company guarantee may not be used in combination with any other financial metnods to satisfy the decommissioning financial assurance requirements. (3) An extemal sinking fund in which deposits are made at least annually, coupled with a surety method or insurance, the value of which may decrease by the amount being accumulated in the sinking fund. An extemal sinking fund is a fund established and maintained by setting aside funds periodically in an account segregated from licensee assets and outside the licensee's administrative control in which the total araount of funds would be sufficient to pay decommissioning costs at any time termination of operation is expected. An extemal sinking fund may be in the form of a trust, escrow account, govemment fund, certificate of deposit, or deposit of govemment securities. (4) In the case of Federal, State, or local govemment licensees, a statement of intent containing a pledge from a responsible official indicating that funds for decommissioning "will be obtained when necessary."d (5) A company self-guarantee, for firms that have at least one class of equity security registered under the Security Act of 1934, that firms can qualify to use if they demonstrate that they possess tangible net worth at least 10 times the current decommissioning cost estimate (or the current certification amount); at least 90 percent of total assets, or assets at least 10 times the current decommissioning cost estimate (or the current certification amount)in the United States; and a current rating of A or above for the firm's most recent bond issuance. d53 FR 24018; June 27,1988. 2

With the exception of the financial test component of the parent company guarantee and i the self-guarantee, the terms and conditions of the various financial mechanisms that may be used as proof of financial assurance for decommissioning are provided in guidance.5 The financial test requirements for the parent company guarantee are provided in the ) regulations at 10 CFR Part 30 Appendix A, while the financial test requirements for the self-guarantee are provided in the regulations at 10 CFR Part 30 Appendix C. Both sets of requirements are referenced in other pertinent Parts ' The self-guarantee established in 1993 for bond issuing commercial firms under the decommissioning financial assurance regulations contains two elements: a guarantee and an underlying financial test submission. Under this mechanism, a firm may submit a guarantee to [ NRC affirming that it will fund and carry out the required decommissioning activities or, upon l issuance of an order by the Commission, will set up and fund a trust in the amount of the current cost estimates for decommissioning. A firm seeking to self-guarantee also is required to notify NRC immediately if it no longer continues to satisfy the criteria for self-guarantee. For such a self-guarantee to be acceptable, the firm must demonstrate that it has adequate financial resources to cover the costs of decommissioning activities. It makes such a l demonstration when it provides specified documentation to NRC that it passes a financial test that measures the financial strength of the firm. The financial test requires the firm to demonstrate that it meets all of the following criteria. It must demonstrate that it possesses tangible net worth at least 10 times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the company is responsible as a self-guaranteeing licensee and as a parent-guarantor. Tangible not worth is defined as net worth minus goodwill, patents, trademarks, and copyrights. The firm also must show that it possesses assets in the United States amounting to at least 90 percent of its total assets or at least 10 times the sum of the current decommissioning cost estimates being covered by the test. Third, the firm also must demonstrate that it has a current rating for its most recent bond issuance of AAA, AA, or A as issued by Standard and Poors (S&P) or Asa, Aa, or A as issued by Moodys. 1.2 Statement of the Problem The NRC has decided to complete rulemaking to make the self-guarantee option available to a broader range of qualified licensees. Until now, non-profit entities are generally precluded from 1 6U.S. Nuclear Regulatory Commission, Reaulatorv Guide 3.66. Standard Format and Content of Financial Assurance Mechanisms Reauired for Decommissioning Under 10 CFR Pads 30. 40. 70. and 72. June 1990. 6 The decommissioning regulations do not define " parent company." NRC has provided in Regulatorv Guide 3.66 that in order to qualify as a parent company, a firm must demonstrate j that it has " majority control of the licensee's voting stock." Reaulatorv Guide 3.66. pp. 3-21 and 3-23. 3-l

use of the current self-guarantee because as a class they cannot satisfy some of its requirements. In particular, (a) they do not issue securities registered under the Securities Exchange Act of 1934 and/or (b) their financial accounting and reporting practices have traditionally made use of fund accounting procedures that do not generate the same measures that are used as financial criteria in the financial tests for eligibility to use the corporate parent guarantee or the original self-guarantee used by the NRC.7 Many colleges and universities, however, are in a very strong financial condition, with large endowment funds that could be used if necessary for decommissioning funding, and they have demonstrated considerable institutionallongevity and continuity. Some hospitals also are financially and institutionally strong. Although firms that do not issue bonds are frequently smaller and may be less financially secure, the absence of any bond issuance also can reflect the control of financial resources large enough to render unnecessary any resort to outside funding. Thus, some non-bond-issuing firms are also in a strong financial position. The prima'y issues addressed in this analysis are (1) whether non-profit licensees are of sufficient financial strength and stability so that self-guarantees provided by them would provide adequate financial assurance; (2) whether adequate measures of the financial strength and stability of non-profit licensees can be identified; and (3) whether use of self-guarantees would substantially reduce the costs of financial assurance to those non-profit licensees that qualify for use of a self-guarantee mechanism. 1.3 Objective of the Rulemaking NRC's objective in promulgating a self-guarantee mechanism for non-profit colleges and universities and hospitals and for-profit firms that do not issue bonds is to reduce the cost burden of financial assurance on licensees while providing NRC with sufficient assurance that decommissioning costs will be funded when necessary. 2. PRELIMINARY IDENTIFICATION AND DESCRIPTION OF OPTIONS NRC considered three regulatory options: (1) no action; (2) adopt the same test for self-guarantee for all types of non-profit and non-bond-issuing institutions; and (3) adopt different tests to determine the qualification of colleges and universities, hospitals, and non-bond-issuing firms to self guarantee the costs of decomrnissioning. It soon became apparent that differences in accounting methods precluded option (2). 7The decommissioning regulations do not define " parent company." NRC has provided in Retulatorv Guide 3.66 that in order to qualify as a parent company, a firm must demonstrate that it has

• majority control of the licensee's voting stock." Reaulatorv Guide 3.66 pp. 3-21 and 3-23.

l J 4 2.1 Option 1: No Action Under Option 1, NRC would not develop a test or tests to determine the qualification of colleges and universities, hospitals, or non-bond-issuing firms to self-guarantee for decommissioning costs. Such licensees that are unable to qualify to self-guarantee using the tests currently adopted in 10 CFR Part 30 Appendix C would be required to obtain an attemative form of financial assurance. As at present, they will be required to demonstrate { financial assurance using one of the other financial assurance methods currently allowed (i.e., prepayment, surety method or insurance, extemal sinking fund coupled with a surety method or insurance, or statement ofintent). 2.2 Option 2: Adopt a Single. Test for Self-Guarantee for All Non-Profit Entities and l for Firms That Do Not issue Bonds l I Under Option 2, NRC would allow licensees to self-guarantee if they qualified under a test that would apply to all categories of licensees that are currently unable to use the current test for self-guarantee. After examination of the financial accounting and reporting systems of I colleges and universities, hospitals, and firms that do not issue bonds, however, NRC concluded that the disparate nature of these systems precluded the development of financial criteria that would serve for all three. NRC therefore ceased evaluation of this option. 2.3 Option 3: Adopt Tests for Self-Guarantee That are Designed to Apply to the Specific Financial Accounting and Reporting Procedures Used by Non-Profit Entities and Firms that Do Not issue Bonds Under Option 3, NRC would allow licensees to self-guarantee based on their ability to qualify under financial test criteria designed to apply to their specific financial accounting and reporting procedures. Such criteria would address, for example, the special characteristic of colleges and universities, that they sometimes possess large endowments that are set aside, with and without restrictions, to pay particular obligations of the institution. As much as possible, the criteria below reflect MRC's attempt to make the financial assurance risk of the financial tests included in this rulemaking comparable to the financial assurance risk of the existing financial tests. The tests include the following: For colleges and universities: An A or better bond rating by S&P or Moodys (for uninsured, unguaranteed, and uncollateralized bonds). For those colleges and universities that do not have a bond rating, a level of unrestricted endowment of at least $50 million, or at least 30 times the decommissioning costs, whichever is larger. l I

i i For hospitals: i An A or better bond rating by S&P or Moodys (for uninsured, unguaranteed, and l uncollateralized bonds). j For those hospitals that do not have a bond rating, satisfying three financial ratios and a size criterion would be required. The three measures are: (1) liquidity (current assets and depreciation fund divided by current liabilities) equal to or greater than 2.55; (2) leverage (long term debt divided by net fixed assets) equal to or less then 0.67; and j (3) revenues (total revenues minus total expenditures divided by total revenues) equal to or greater than 0.04. Also required, is a minimum size criterion - operating revenue 100 times decommissioning costs. For firms that do not issue bonds: Those firms that do not issue bonds would satisfy three financial criteria. The three measures are: (1) cash flow divided by total liabilities greater than 0.15; (2) total liabilities divided by not worth less than 1.5; and (3) net worth greater than $10 million, or at least 10 times decommissioning costs, whichever is greater. 3. ANALYSIS OF OPTIONS 3.1 Methodology The method used by NRC to analyze the three regulatory options described above, to determine the number of licensees able to use each of the self-guarantee options, and to evaluate the costs and benefits of each option consists of several key steps. First, NRC developed a financial data base of material licensees subject to financial assurance i requirements under 10 CFR Parts 30,40,50,70, or 72. This data base was developed from records in the NRC License Tracking System (LTS). The LTS contains information about licensees, including their name and address, license number (s) (which in tum indicate whether the licenses is a Part 30, 40, 50, 70, or 72 licensee), specific activity codes, and whether or not the licensee is required to provide financial assurance for decommissioning. From the LTS, a database was developed that identified those colleges and universities and hospitals that are NRC licensees and are required to provide financial assurance for decommissioning. Additional information was added to the data base from a variety of sources. Data on NRC's non-electric utility reactor licensees which are colleges and universities was assembled. NRC next developed attemative financial criteria to be used as tests to evaluate the qualification of licensees to self-guarantee. These criteria and their combination into financial tests were based on suggestions contained in comments submitted to NRC and on extrapolations from the criteria ultimately developed for the original 1993 self-guarantee rulemaking. Next, NRC used the data base of information about colleges and universities, hospitals, and non-bond-issuing firms to evaluate the availability and assurance risk of the self-guarantee options. Finally, NRC calculated and compared the costs and benefits of each regulatory option..

i l Availability l The " availability" of the self-guarantee option refers to the number of NRC licensees that could use a particular option given their ability to satisfy the financial requirements of the option. Using the data base described above, NRC first identified each licensee of a particular type (i.e., college or university, hospital, or for-profit firm that does not issue bonds) that was required to provide financial assurance for decommissioning. NRC then calculated availability q by counting those licensees whose financial condition indicated that they would pass the criteria. Many public colleges and universities can use the statement ofintent mechanism for financial assurance. While some of these licensees could pass the test for self-guarantee, it l was assumed that most would not apply for self-guarantee because they already can use a l virtually cost-free financial assurance mechanism. Assurance Risk i Although the licensee always retains primary responsibility for performance of the decommissioning regardless of sne method of assurance used, most financial assurance mechanisms (e.g., prepayment mechanisms and surety mechanisms) provide a secondary level of protection to guard against the possibility that the licensee may be unable to meet its decommissioning obligation. Thus, the assurance risk associated with most mechanisms I equals the possibility that b.gib the licensee and the financial assurance provider (e.g., banks, l sureties) will be unable to meet the required obligations. In the case of self-guarantees, the guarantor is not required to set funds aside or obtain a third-party guarantee if it can demonstrate by means of a financial test that its financial resources are sufficient to pay the assured costs whenever those costs come due. Thus, for self-guarantees, the assurance risk equals the possibility that the licensee will be unable to I meet the required obligations. In other words, the assurance provided by a self-guarantee is exposed to the risk that a decline in the financial condition of the self-guarantor will not be identified in time so that a prepayment or third-party financial assurance mechanism can be obtained to replace the self-guarantee. I NRC sought to minimize this risk associated with self-guarantees by, first, including a bond rating criterion in the tests designed for colleges and universities and hospitals. Long-term experience suggests that institutions with A or better bond ratings generally are financially stable and do not enter precipitously into financial decline. In addition, the bond rating agencies track the financial performance of the institutions for which they have issued ratings, and downgrade those ratings if they receive information that the financial situation of the institution is declining. In order to ensure that the bond rating is an assessment of the financial strength of the institution, and not of some other entity, NRC specified that the bond ratings that may be used for qualification for self-guarantee may n91 be insured ratings. , l L

Second, NRC sought to minimize the assurance risk associated with the other financial criteria in the rule (i.e., the requirement for " unrestricted" endowment for colleges and universities, the financial ratio requirements for hospitals, and the financial ratio requirements for non-bond-issuing firms) by adopting conservative values for those criteria, and whenever possible by attempting to correlate those criteria to an equivalent degree of risk posed by the bond rating requirement. Costs and Benefits The total costs of the self-guarantee include, in addition to implementation costs, the public and private costs associated with the self-guarantee mechanism. Private costs consist primarily of the fees that licensees must pay to a third party in order to obtain a financial assurance mechanism. Thus, licensees can avoid much of the private cost of financial assurance if they can provide a self-guarantee. Estimates of private costs were derived from the number of licensees able to pass the self-guarantee test. Public costs of a self-guarantee include the decommissioning costs that are assured by the self-guarantee but which the licensee does not pay due to bankruptcy. Although public costs can largely be avoided by not allowing the self-guarantee, the igial cost (i.e., public plus private) may be reduced by allowing the self-guarantee if private costs decline more than public costs rise. The public costs of the self-guarantee mechanism are calculated by multiplying the assurance risk by the amount of the decommissioning costs expected to be assured using the mechanism. NRC found it difficult to estimate the public costs of failures by col' ages and universities and hospitals because of the extreme rarity of failures of such institutions with the level of financial strength and the size that would be capable of using the financial test. NRC's estimates of public costs for firms that do not issue bonds reflect the assurance risk of each self-guarantee by net worth category. The net benefit of a self-guarantee would equal the savings to licensees resulting from use of the self-guarantee mechanism (rather than from a more expensive third-party mechanism) minus any increase in public costs. 3.2 Availability of Self-Guarantee Options NRC's analysis indicates that the financial test for colleges and universities included in Option 3 could be used by approximately 30 college and university licensees. Most of those qualifying would do so because they have an uninsured bond rating of A or better. The remaining would qualify because their estimated unrestricted endowments exceed $50 million. Of the 23 materials licensees that would qualify for the self-guarantee,18 are private institutions and 5 are pubsc institutions. For the Part 50 reactor licensees that are colleges and universities,4 private institutions would qualify. All of the public institutions presently use statement of intent, and this analysis assumes that they would continue to do so.. - _

6 The financial test for hospitals included in Option 3 could be used by approximately 12 hospitals, out of the 26 hospitals that are NRC materials licensees that must provide financial assurance. Eleven of the 12 would qualify because they have an A or better bond rating. The remaining hospital would qualify because it passes the ratio tests. It currently has no rated bonds. Ter. of the 12 hospitals that would qualify for self guarantee are not-for-profit institutions; two have state govemment affiliations. The financial test for firms that do not issue bonds in Option 3 could be used by approximately 3 firms, out of the 31 firms that were identified as NRC materials licensees that must provide financial assurance but have not issued rated bonds.s 3.3 Assurance Risk Because of the very low failure rates for colleges and universities, particularly institutions of the endowment size and longevity exhibited by the colleges and universities passing the test for self-guarantee, and for hospitals, NRC had almost no historical data from which to measure 1 assurance risk. Therefore, the assurance risk was measured by the estimated failure rate for A or better rated bonds, since almost all of the colleges and universities and hospitals that would qualify for use of self-guarantee would qualify on the basis that they possess such bond ratings. For A-rated or better bonds, the estimated annual assurance risk is 0.13 percent, based on. historical data from Moodys. In other words, there is a 0.13 percent chance that a licensee using the self-guarantee will go bankrupt and be unable to cover the costs of decommissioning in a given year. In addition, the premise of the bond ratings is that all A-rated bonds should be of the same approximate risk (i.e., different bond ratings are assigned to different risk categories).' Therefore, differences in the size or other characteristics of colleges and universities and hospitals are r,91 expected to affect this assurance risk. 3.4 Public and Private Costs of Self-Guarantee Options 8Even if firms do not plan to issue bonds, they can obtain so-called " indicative" bond ratings from Moodys and S&P. Such ratings are explained by Moodys as follows: Issuers contemplating the issuance of debt at some future date are offered an indicative rating on a prospective issue. The rating is indicated on a confidential basis, subject to certain limitations in the event of debt issuance by the applicant in any of the capital markets. The indicative rating is subject to revision or withdrawal at any time, without notice, is any information (or lack of information) warrants such action, in the sole opinion of Moodys. The likelihood of firms obtaining such indicative ratings solely to satisfy NRC's requirements for qualifying for self-guarantee must be considered to be extremely low, however, because of Moodys, the fixed fee for such ratings, for all types of firms and for long and short-term ratings, is $45,000, in most cases, financial assurance provided from a third-party, such as a surety, would be less expensive. However, if a licensee must put up l substantial collateral to obtain an attemate instrument, like a letter of credit, it may be cost-effective to get the bond rating to use self-guarantee. I

i In this analysis, public costs are defined as the amount of decommissioning costs that would be required to be paid by the public sector due to the financial failure of self-guaranteeing licensees without the substitution of another source of financial assurance or the failure of a third party financial assurance mechanism. Private costs are defined as the cost of financial assurance mechanisms that must be obtained by licensees in order to comply with regulatory requirements. Mechanisms based on financial tests, such as a self-guarantee, reduce private costs by allowing licensees to demonstrate financial assurance without incurring the fees associated with the use of third party mechanisms such as letters of credit, surety bonds, etc. The private costs associated with financial test mechanisms are assumed to be the costs of preparing the necessary submissions to NRC, which are estimated as only a few hundred dollars. Table 3.1 presents and compares the estimated private costs, public costs, and total costs (private plus public costs) of NRC's decommissioning financial assurance requirements for colleges and universities, hospitals, and firms that do not issue bonds with and without the self-guarantee. s _ ______ -

l l l Table 3.1 Private and Public Costs of Financial Assurance With and Without Self-Guarantee, including Research Reactor Licensees and Impacts of Statement of Intent for Public Colleges and i Universities' \\ Private Public Total Costs Costs Costs Financial Assurance Option $ (000) $ (000) $ (000) i i 1: All eligible licensees use bank letter of credit $ (000) Colleges and Universities (66 @ $750) 1,733 19.6 1,752.6 (33 @ $2,000) 1 Hospitals (26 licensees) 293 3.3 2%.3 Non-bord issuing Firms (31 licensees) 349 3.9 352.9 Total 2,375 26.9 2,401.9 2: All licensees use letter of credit, except all Part 50 public schools ard 75 % of other public schools use Statements of Intent Colleges and Universities 585 103.4 688.4 Hospitals (26 licensees) 293 3.3 2%.3 Non-bond Issuing Firms (31 licensees) 349 3.9 352.9 Total 1,227 110.7 1,337.7 3: All qualified licensees use self-guarantee; others use letter of i credit, except all Pan 50 public schools and 75 % of other public schools use Statement of Intent - Colleges and Universities 206.2 114.4 320.7 Hospitals (12 qualify of 26) 157 13.4 170.9 Non-bord issuing Firms (3 qualify of 31) 315 6.4 321.4 Total 678.7 134.4 813.1 4: Difference between 2 atd 3 548.2 (23.6) 524.5

• Source: ICF calculations. The costs in the table do not reflect any decrease in private decommissioning costs that would occur if the public assumes the decommissioning costs that are unfunded by the private sector.

Altixnigh some licensees hold several licenses, it is assumed here that each licensee holds one license, except I when a school holds both a reactor and materials licenses.

• Represents 30 Part 30,40,70, or 72 licenses held by public institutions using Statements of Intent and 10 using letters of credit, and 26 Pan 30,40,70, or 72 licenses heki by private institutions using letters of credit; also represents 26 Pan 50 licenses held by public institutions using Statements of Intent, as well as 6 Pan 50 licenses held by private institutions using letters of credit.

" Represents 30 Pan 30,40,70, or 72 licenses held by public institutions using Statements of Intent 5 using self-guarantee, and 5 using letters of credit, and 26 Pan 30,40, 70, or 72 licenses held by private institutions with 18 l using self-guarantee and 8 using letters of credit; also represents 26 Pan 50 licenses held by public institutions using Statements of Intent; as well as 4 Pan 50 licenses hekt by private institutions using self-guarantee and 2 using a letter of credit. l - 11. l J

Table 3.1 presents and compares the estimated private costs, public costs, and total costs (private plus public ccsta) of NRC's decommissioning financial assurance requirements for colleges and universities, hospitals, and firms that do not issue bonds. The first scenario in the table presents a baseiine that includes colleges and universities that are regulated under Part 50 as well as under Parts 30,40, and 70. It thus includes college and university licensees with research reactors. Although some colleges and universities hold licenses under both Part 50 and Parts 30,40, or 70, they are treated separately for this analysis. For estimating the baseline for this scenario, licensees are assumed to use letters of credit at annual cost of 1.5 percent of their face value. The assurance risk assumed for letters of credit was based on the estimated assurance risk of standby letters of credit issued by FDIC insured banks from 1984 through 1990,0.017 percent per annum. Licensees under Parts 30, 40,70, and 72 are assumed to have decommissioning costs of 750K per licensee. Licensees under Part 50 are assumed to have decommissioning costs of $2 million (a licensee under both Part 50 and Parts 30,40,70, or 72 would have decommissioning costs of $2.75 million). The second scenario presents an altemate baseline that assumes that, for materials licensees,75 percent of public colleges and universities use statements ofintent to provide financial assurance and the remaining 25 percent use letters of credit. For reactor licensees, 26 public institutions use statement of intent and 6 private institutions use a letter of credit. The statement of intent is assumed to have no cost, and the assurance risk of the statement of intent is assumed to be the equivalent of self-guarantee, or 0.13 percent per annum. The third scenario in the table estimates the costs if all licensees in the three categories under investigation that meet the financial conditions of the self-guarantee (except for public colleges and universities) are assumed to use the self-guarantee and licensees that are unable to use a self-guarantee are assumed to use a letter of credit. In addition, however, this scenario assumes the same breakdown of licensees use a statement of intent as above and the remaining are divided between those licensees that qualify to use self-guarantee and those that are unable to use self-guarantee and therefore use a letter of credit. Finally, the difference in costs between scenario two and three is given. As Table 3.1 demonstrates, while private costs decline substantially under a self-guarantee, public costs rise. Total costs, however, are lower when the self-guarantee mechanism is available. Allowing use of the self-guarantee (Option 3) reduces total annual costs by approximately $500,000. 3.5 Decision Rationale for Selection of Option On the basis of the analyses summarized above, the Commission has chosen Option 3.. _ _ _ _ - _ - _ - _ - - _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _

1 I 4. FINANCIAL AND ECONOMIC IMPACTS OF SELF-GUARANTEE RULEMAKING l 4.1 Impacts on Licensees Adoption of a self-guarantee option is not expected to produce any negative financial or economic impacts. Because a self-guarantee option will generate cost savings for those licensees able to use the self-guarantee, the rulemaking is expected to produce positive financialimpacts. Other licensees that cannot use the self-guarantee, including licensees that qualify as small businesses, will be unaffected by the rulemaking and therefore should not experience significant impacts. Costs for licensees qualifying for self-guarantee would be reduced relative to licensees unable to qualify. However, the purpose of this rule is to reduce cost burdens where iustified. l 4.2 Impacts on NRC and the States No significant impacts are expected for NRC or the States because the effort to review and administer the self-guarantee is expected to be comparable to or less than the burden i associated with other mechanisms currently allowed. In each case, NRC or the States will be required to review financial assurance submissions, and the size and scope of self-guarantee submissions are not expected to differ significantly from the mechanisms already allowed. 5. IMPLICATIONS FOR OTHER NRC REGULATORY PROGRAMS I Currently, self-guarantees are not allowed in NRC's financial assurance programs for low-level radioactive waste disposal facilities, uranium recovery facilities, or for power reactors. j While much of the analysis behind the self-guarantee rulemaking may be generally applicable l to these other programs, licensees in these programs may also be significantly different from materials licensees in at least two ways: (1) The decommissioning cost estimates typical of these licensees may be much higher than is typical of materials licensees. Higher costs estimates could alter the optimal balance between public and private costs. l (2) The financial characteristics of these licensees may be very different from those of l materials licensees. Different financial characteristics could suggest different financial test criteria and perhaps different baseline failure rates. Because the present analysis, for the reasons stated above, may not fully apply to NRC's other financial assurance programs, NRC is not allowing a self-guarantee option for these programs at the present time. i - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

REFERENCES Draft NUREG/CR-6514, Analysis of Potential Self-Guarantee Tests for Demonstrating Financial Assurance by Nonorofit Colleaes and Universities and Hosoitals and by Business Firms that Do Not Issue Bonds. Draft Reoort. June 1997. b ___ ____ _ -

0 0 ENCLOSURE 3 PUBLIC ANNOUNCEMENT 4 i i l

l I l NRC TO ALLOW MORE LICENSEES TO USE SELF-GUARANTEE FOR DECOMMISSIONING FUNDING The Nuclear Regulatory Commission is amending its regulations to allow additional licensees who meet stringent financial criteria to self-guarantee adequate funds for decommissioning. The amendments extend the option of using a self-guarantee to non-profit licensees, such as universities and hospitals, and to for-profit licensees who do not issue bonds. Since 1993, NRC regulations have permitted financially strong for-profit corporate licensees (other than electric utilities), with bond ratings of A or better, to use a proceddre called "self-guarantee" to ensure that adequate funds will be available for decommissioning. Other methods-available to all licensees-include a surety bond or letter of credit, prepayment, insurance, or external sinking fund. Under a self-guarantee, the licensee gives the Commission a written commitment that the licensee will fund and carry out the required decommissioning activities. Licensees who use this option must pass an annual financial test and report promptly to the NRC any deterioration in financial condition. Licensees affected by the amended regulations would have to meet the following financial criteria: -For colleges and universities, either (1) a bond rating of A or better; or (2) for institutions that do not issue bonds, an unrestricted endowment of at least $50 million or at least 30 times the estimated decommissioning costs, whichever is greater. 1

--For hospitals, either (1) a bond rating of A or better; or (2) for hospitals that do not issue bonds, satisfaction of four tests specified in the regulations for liquidity, net revenue, j l leverage, and size. --For industrial corporations that do not issue bonds, satisfaction of the following tests: net worth would have to be greater than $10 million or at least 10 times the estimated decommissioning costs, whichever is greater; cash flow would have to be more than 15% of liabilities; and liabilities would have to be less than 150% of net worth. ) The NRC estimates that 25 to 30 college and university licensees,10 to 14 hospitals, and two to four non-bond-issuing industrial companies might qualify for self-guarantee. Further details on the rule are contained in a Federal Register notice to be published shortly. The revisions will be effective 30 days after the Federal Register notice. 2

1 ) l \\ ) I ENCLOSURE 4 DRAFT COMMENT ANALYSIS 1 I l

DETAILED COMMENT

SUMMARY

AND RESPONSE 1. Standbv Trust Aareements Comment: "Many licensees use a letter of credit and standby trust agreement to assure decommissioning.... [T]he NRC model standby trust agreement in Reg. Guide 3.66 provides for funds to be released to the licensee for decommissioning purposes. This action can defeat the intent of the regulations because, if the licensee has filed for bankruptcy, they legally become a separate entity from the licensee that initially filed financial assurance arrangements and under the constraints of bankruptcy proceedings those funds could be used for purposes other than decommissioning. CORAR recommends that NRC replaces this model i with one that provides for the regulator to manage the decommissioning funds in the event of bankruptcy. The benefit of this recommendation is that it will assure the intent of the regulation, it will provide a model that regulatory staff can use to process licensee submissions and the arrangements carry less risk to the bank providing the service and consequently less cost to the licensee." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: NRC does not agree that the current model in Regulatory Guide 3.66 for L the standby trust requires funds to be released to the licensee in all circumstances nor does it ' believe that funds placed in the standby trust can or should become available in bankruptcy to be used for other purposes. In fact, the standby trust language provided in Reg. Guide 3.66 was developed, in part, to address issues arising in the bankruptcy of the licensee. I Under the terms of Section 5 of the trust, "In the event of the Grantor's default 9.t inability to direct decommissioning activities. the Trustee shall make payments from the fund as the NRC shall direct, in writing, to provide for the payment of the costs of required activities covered by this Agreement."(emphasis added) The NRC interprets this language to provide that if the licensee is solvent and capable of conducting the decommissioning, NRC can direct the trustee to make payments from the trust to compensate the licensee for funds that it has expended for decommissioning activities, upon presentation of suitable documentation of such expenditures. However, if the licensee is insolvent and its business affairs are under the supervision of a bankruptcy court and/or a trustee in bankruptcy, NRC probably would take the position that the licensee is " unable to direct decommissioning activities." In that case, NRC can provide instructions to the trustee of the standby trust to make payments from the trust to a third party, such as a contractor, who is performing the decommissioning activities. Under the appropriate circumstances, such as a reorganization under the Bankruptcy Code, in which the licensee serves as a " debtor in possession" and continues to direct its business activities, and if suitable agreements can be made between the trustee in bankruptcy or the bankruptcy court and the NRC, the NRC might conclude that the licensee continues to be able to direct decommissioning activities.- In that case, NRC might instruct the trustee of the standby trust to make payments to the licensee, but those payments would be made only after the licensee has provided proof that decommissioning activities have been carried out. In no case, however, j should funds in the standby trust become part of the bankruptcy estate, or be used for a purpose other than decommissioning. Therefore, NRC dieagrees with this comment, since in the NRC's opinion the standby trust currently provides for suitable protection against the l l bankruptcy of the licensee. NRC also notes that if funds in a financial assurance mechanism, such as a letter of credit, were to go directly to NRC instead of into the standby trust, the NRC would be obligated by law to place such funds immediately into the control of the Treasury, with the potential effect of delaying decommissioning. 2. Financial Criteria for Colleaes and Universities l l (a) Comment: "The selected multiple of 30 is excessively conservative. It should not be l difficult to obtain secure investments yielding 6%. CORAR recommends that an appropriate l multiple would be 15 based on investment yield." l l CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: NRC's objective m selecting financial criteria was to provide a level of financial assurance risk similar to the financial assurance risk in the existing self-guarantee. However, for colleges and universities that do not issue bonds, lack of appropriate data on default risk made a financial assurance risk analysis impossible. For these licensees, NRC deliberately chose financial criteria which are conservative. NRC did state in the preamble to the proposed rule, at 62 FR 32296, that "[t]he multiple of 30 has been chosen because this would mean that any level of decommissioning costs could be covered by the annual retum on an endowment invested at 3 percent." However, it is important to note that NRC was not assuming (1) that institutions will in fact finance decommissioning out of endowments; (2) that endowments can be expected in all circumstances to grow at a rate of at least 3 percent annually; or (3) that institutions can be expected to reallocate up to 3 percent of their spending from endowments in a one-year period. Rather, the criterion was selected to serve as a measure of the overall financial strength of the institution, indicating that NRC can reasonably assume that such a college or university can be allowed to self-guarantee for the costs of decommissioning because it possesses sufficient financial strength to obtain the necessary funds when they are needed. Even assuming the premise of the commenter, NRC does not believe that reducing the multiple to 15, as the commenter suggests, is desirable. First, colleges and universities can be expected '.c, have budgeted expenditures from endowments in advance. Reallocating that spending to address decommissioning costs may be difficult. Other sources of funds, including borrowing, may be a more efficient resource to use than endowment to pay the costs of decommissioning. Endowme.its of the size required by the 30 times criterion should ensure that the necessary funds can be obtained. Second, although a real rate of return of 3 percent may appear low under the market conditions prevailing during certain periods, there is a substantial body of empirical evidence indicating that it is a reasonable assumption. If a licensee who has been relying on a self-guarantee is required to fully fund a trust fund for decommissioning in the year prior to the beginning of decommissioning, and the

, licensee relies on earnings from endowment to create the trust, it is the annual earnings of the endowment for the year immediately prior to the decommissioning that must equal the required amount. NRC has reviewed the information provided in Ibbotson Associates, Stocks, Bonds, Bills, and inflation 1995 Yearbook,1995, which published a summary of market results for the 69 year period from 1926 to 1995 for five categories of investments: small company stocks, large company stocks, long-term government bonds, long-term corporate bonds, and intermediate-term government bonds. On a year-by-year basis, less risky investments, such as treasury bills, showed the most frequent positive returns, but their annual returns also were reiatively low. Riskier investments showed a broad distribution of returns, from very good to very poor. Overall, however, with the exception of small and large company stocks, the average inflation adjusted eamings (geometric mean) for these categories of investments were less than 3 percent. In a number of years, earrcings for stocks also were less than 3 percent. Thus, realinvestment returns os er a one-year period may not even match conservative earnings assumptions. The study of endowment sponsored by the National Council of College and University Business Officers (NACUBO) published in 1995 also emphasized a concern for this earnings variability in its analysis of ccillege and university endowment investment. First, NACUBO's study noted that current high rates of retum cannot be expected to continue indefinitely. "At a time when many public and private institutions are searching for ways to bridge the gap between revenues and expenditures, it is tempting to extrapolate these extraordinary retums into the future and to budget endowment spending accordingly. In this context, however, it is instructive to note that for a representative group of institutions, the average annual real retum after spending for the 10-year period ended June 30,1994, is 4.1%, but for the 20 years ended June 30,1994, it is 0.9%." (1994 NACUBO Endowment Study,1995, p. 4) The NACUBO study therefore recommends strongly that institutions keep their spending from endowment below the rate proposed by the commenter. The report says: Historical precedent indicates that a fund invested approximately 60% in domestic and foreign stocks,30% in fixed income, and 10% in various other asset classes inevitably experiences recurring periods of absolute decline in market values over three years. Such a decline would trigger a reduction in spending for an institution sticking to a policy of spending a fixed percentage of a three-year moving average of endowment market values.. For fiscal year 1994, the average endowment spending rate reported by responding institutions is 6.0%. On average, the smallest endowments ($25 million and less) spent mon, (7.2%) than the largest (4.5%), and public institutions spent more (6.6%) than private institutions (5.7%). . With the sole exception of the 4.5% spent by the largest universities, these spending rates are not compatible with most institutions' stated intention to preserve the purchasing power of their endowment. Over time, it is possible (difficult, but possible) for the exceptionally

_4 well-managed institution to spend 6.0% of a three-year moving average of endowment market values, and still preserve purchasing power. However, it is courting disaster to spend at an annual rate of 6.0% toward the tail end of a long bull market. (1994 NACUBO Endowment Study,1995, p. 5) Although to date the bull market existing in 1994-1995 is continuing, there is also current evidence that market fluctuations can adversely impact spending plans of colleges and universities. (See, for example, " Market Swings Take Colleges and Endowments Along For the Ride," The New York Times, August 20,1997, A30). Based on these consicierations, the NRC continues to believe that a relatively conservative criterion, such as the 30 times requirement, is a reasonable criterion for the decommissioning self-guarantee test for colleges and universities, and does not accept the commenter's recommendation to adopt a substantially less stringent criterion. The 30 times criterion is not a requirement that prevents a significant number of additional licensees from qualifying for self-guarantee. It applies only to colleges and universities that do not qualify on the basis of an A or better bond rating. Of the 27 colleges and universities estimated to qualify, over 75% do so on the basis of their bond rating. For the remaining licensees, the absolute unrestricted endowment level ($50 million) is the restricting factor. At most, only a few (1-3) additional licensees might qualify if the 30 times criterion were relaxed. (b) Comment: A commenter objected to the requirement in the non-bond rating financial test for colleges and universities that unrestricted endowment be at least $50 million or at least 30 times the decommissioning cost estimate, whichever is greater. "No explanation is provided as to why an endowment that is at least 30 times projected decommissioning costs is not an adequate standard. Nor, given the size of projected decommissioning costs for college and university licensees, is there any reason why an unrestricted endowment of at least $50 million is not by itself an adequate standard. Rather than requiring compliance with the greater of the two tests, compliance with either of the tests would appear more than adequate to provide financial assurance." American Councilon Education Response: This requirement is aimed at assuring the financial viability of a licensee qualified to self-guarantee. This is the only requirement for non-bond issuing colleges and universities, unlike that for non-bond issuing hospitals or commercial licensees-which use multiple financial ratios as financial tests. It is designed to capture two measures of financial viability; overall financial strength, and financial strength relative to size of decommissioning obligation. The overall financial strength of an institution is heavily dependent on size of unrestricted endowment. Specific ability to fund dec:,mmissioning expenses is measured by the ratio of unrestricted endowment to decommissioning costs. A financial test based only on ratio to decommissioning cost might allow an institution without adequate financial strength to pass if its decommissioning costs were low. A test based only on size of unrestricted endowment might be inadequate for those institutions with the highest decommissioning costs. Both threshold requirements are needed to provide assurance that an institution can meet

. decommissioning obligations when necessary. (c) Comment: NRC's rationale for a multiple of 30 " implies that decommissioning costs are paid from investment yields over a one year period. However, it is more realistic to assume that any decommissioning activities where financial assurance arrangements are involved will require considerable coordination with regulators and financial services involving two or three years to complete. This consideration also implies that the appropriate multiple should be 15 rather than 30." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) l Response: NRC recognizes that decommissioning may occur over a period longer than one year. The multiple of 30 was chosen without regard to how many years it would take to decommission a facility. The commenter is attempting to make this linkage the key factor in arriving at an appropriate multiple. However, following this line of reasoning, stretching out the time length of decommissioning would imply ever decreasing multiples. NRC's objective is to ensure that decommissioning will take place on a timely basis. The financial assurance regulations are intended to assure that inadequate funding does not prevent timely decommissioning. Timely decommissioning may require that all decommissioning funding be available up front even though decommissioning activities are not completed within a single year period. For this reason NRC's criteria for determining whether a licensee should be allowed to self-guarantee the costs of decommissioning must consider the possibility that the licensee will be required to fully fund decommissioning in the year immediately prior to the beginning of decommissioning activities. The licensee would fund a standby trust either (1) if the licensee no longer qualified to use the self-guarantee to provide financial assurance for decommissioning, even if it was not yet required to conduct decommissioning, or (2) if a licensee using a self-guarantee is required to carry out decommissioning. NRC currently does not allow licensees to consider the impact of eamings during the " payout" period (the period during which funds are being expended from the financial assurance standby trust to pay for decommissioning) in calculating the amount of funds that must be set aside for decommissioning. Therefore, the commenter's suggestion concoming the expected duration of decommissioning activities is not relevant to the determination of the appropriate multiple.' l i Comment: "CORAR recommends that [ based on the combination of investment yield of l 6% and investment yields over two to three years rather than one year) the multiplication factor l [be) reduced from 30 to 10 with ample conservatism." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: For the reasons stated in responses to the preceding comments, NRC does not accept this recommendation. l .A

.. 3. Financial Criteria for Hosoitall (a) Comment: "The selected multiple of 100 [ hospital operating revenues at least 100 times decommissioning costs)is excessively conservative. It appears to reflect an expectation that the decommissioning will take a short time whereas a realistic time frame should be two years or more. CORAR recommends that the NRC considers a multiple of 30 or less to be appropriate." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: As noted above, the requirement that hospital operating revenues be at least.100 times decommissioning costs is a criterion that NRC is proposing to use to determine if a licensee has sufficient financial strength to self-guarantee. A potential consequence of self-guaranteeing, however, could be the requirement to fully fund a trust fund in a short period of time, if the licensee ceases to be capable of passing the self-guarantee test or if decommissioning must be carried out. As discussed above, the operating revenues multiple criterion does not reflect any expectation conceming the length of time during which decommissioning will occur. Therefore, NRC does not accept this recommendation. The multiple of 100 times decommissioning costs is not a significant restricting factor in limiting the number of hospitals that could qualify for self-guarantee. The requirement applies only to hospitals that cannot qualify on the basis of an A or better bond rating. Of the estimated 12 qualifying hospitals, all but 1 would do so by having an A or better bond rating. Of the 26 non-profit hospitals in *.he NRC database analyzed in the Regulatory Analysis, all have operating revenues in excess of 100 times the average decommissioning cost estimates submitted by hospitals to NRC ($372,000). All but 2 have operating revenues in excess of 100 times the highest decommissioning certification amount ($750,000). This indicates that only a few (1-2) additional licensees might qualify if this requirement were dropped. (b) Comment: A commenter found the rationale for requiring hospitals to meet all four financial ratios tests unclear. This commenter believed that using only one ratio-operating revenues / decommissioning costs-would appear to provide reasonable assurance of ability to provide decommissioning funding. State of New York Deparfment of Health Response: The financial ratios test for hospitals in the rule was carefully selected to provide a level of financial assumnce risk similar to the financial assurance risk in the existing self-guarantee. The four ratios ir. ;ombination represent the best financial test identified which achieves this goal. A financial test using just one of these ratios would not represent the same level of risk, and would not provide an adequate level of financial assurance. Using only the ratio of operating revenues to decommissioning costs would completely ignore such determinants of financial strength as liquidity, indebtedness, and profitability. The financial test used for non-bond issuing commercial licensees includes several ratios, not just one. The non-bond financial test for colleges and universities does use a single ratio, but it is the ratio of unrestricted endowment to decommissioning costs. Unrestricted endowment is a fund readily

l. available to meet decommissioning expenses. Hospital operating revenues is different; these funds may not be readily available to meet decommissioning expenses due to other hospital costs. A detailed explanation of the four ratios can be found in NUREG/CR-6514, " Analysis of Potential Self-Guarantee Tests for Demonstrating Financial Assurance by Non-Profit Colleges, Universities, and Hospitals and by Business Firms That Do Not issue Bonds". 4. Formula for Establishing Net Worth l Comment "CORAR observes that Net Worth is defined as Assets minus Liabilities and that Liabilities include decommissioning cost estimates. It therefore appears that the liabilities are double counted in [the requirements that total liabilities divided by net worth be less than 1.5, and net worth be greater than $10 million or at least 10 times decommissioning costs). We recommend that decommissioning costs be explicitly excluded from liabilities in these criteria. Thc modified formula will continue to provide adequate financial assurance." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) l Response: NRC has no evidence that all licensees currently are including estimates of their future decommissioning costs in their financial statements as part of their recognized liabilities. In some cases, companies choose to describe future decommissioning costs as only a potential future liability, recognizing them in footnotes to their financial reports, but not including them in their balancs sheets. Second, even when a licensee includes decommissioning costs in its 'Jabilities in its financial statements, such inclusion does not lead to " double counting," as suggested by the commenter, although it does make the total liabilities to l net worth ratio more difficult to satisfy. However, the NRC has concluded that such stringency is reasonable, because a self-guarantee does not provide the same " defense in depth" as financial assurance provided by third-party mechanisms such as letters of credit. Finally, NRC l notes that future national accounting standards are likely to require decommissioning costs to be included in financial statement liabilities. The Financial Accounting Standards Board (FASB) has circulated for comment, but not yet finalized, a financial accounting standard (No.158-B) relating to obligations that are incurred for the closure or removal of long-lived assets. Under this standard, the liability for decommissioning (stated as the present value of the estimated future cash outflows required to satisfy the obligation) would be recognized in the entity's financial statements, either on the face of the statement of financial position or in the notes to the financial statements. NRC is reluctant to adopt a regulatory definition that would be inconsistent with the FASB standard. l 5. Study to Evaluate Benefits of Financial Assurance Comment "While CORAR appreciates the need for financial assurance for licensees with significant historic radionuclides inventories it is not clear whsther the regulatory measures are effective. CORAR therefore recommends that the NRC should publish an evaluation that clearly shows that the benefit to society in ensuring decommissioning and reduction in public dose is justified by the cost of maintaining financial assurance arrangements, regulatory costs in reviewing financial assurance arrangements and costs of adverse effects of financial 1

. assurance arrangements on licensee radiation protection resources and financial and operational viability." CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: NRC agrees with the commenter that there is a need for financial assurance requirements for licensees. However, the Commission does not agree that detailed study is needed to further demonstrate the effectiveness of the current financial assurance requirements. In 1988 NRC stated the rationale for financial assurance in the preamble to the regulations promulgating financial assurance requirements for decommissioning: "[l] adequate or untimely consideration of decommissioning, specifically in the areas of planning and financial assurance, could result in s.gnificant adverse health, safety, and environmental impacts." (53 FR 24019, June 27,1988) In the course of its development of the decommissioning requirements, including an Advanced Notice of Proposed Rulemaking in 1978 and a Notice of Proposed Rulemaking in 1985, the Commission received and considered public comments on - the need for financial assurance for decommissioning. The Commission's conclusion, which was particularly directed at the need for financial assurance for reactor decommissioning, also applies to decommissioning of other licensed facilities: In carrying out its licensing and related regulatory responsibilities... the NRC has determined that this regulation is needed because there is a significant radiation hazard asecciated with nondecommissioned nuclear facilities. The NRC has also determined the P e public health and safety can best be protected by promulgating a rule requiring reasonable assurance that at the time of termination of operations adequate funds are available so that decommissioning can be carried out in a safe and timely manner and that lack of funds does not result in delays that may cause potential health and safety problems. (53 FR 24037, June 27,1988) NRC's experience since 1988 supports this conclusion. In several cases, termination of operations by licensees that had not set aside sufficient funds (e.g., because such termination occurred prior to the promulgation of the decommissioning financial assurance requirements) has raised the issue whether safe and timely decommissioning will occur and has required extensive efforts by the NRC to ensure protection of public health and safety. In contrast, the NRC has not experienced any failures of the financial assurance requirements to date. Therefore, it does not agree with the comment that a detailed review of the benefits of the requirements is required. 6. National Insurance Proaram for Non-Utility Licensees Comment "The NRC should consider promoting a nationalinsurance program for all non-utility licensees with the objective of reducing the cost of demonstrating financial assurance."

l l l CORAR (Council on Radionuclides and Radiopharmaceuticals, Inc.) Response: The NRC does not believe that it should promote a national insurance program for t l this purpose. Whatever the issues involved in such a program are, there is no reason that this should be an NRC responsibility. Similar programs have been established through industry associations. This rulemaking, which simply adds to the list of acceptable financial assurance l mechanisms, has no direct link to the pros and cons of such an insurance program. l 7. Definition of Liouidity for Hosoitals Comment: "[Under the criteria for hospitals,] '" liquidity' is incorrectly defined twice as ' current assets and depreciation fund. divided by current liabilities.' (emphasis added) The same mistake is made in ll.B.(2)(c) of the proposed Appendix E to Part 30. The underscored l language should be deleted. Inclusion of ' depreciation fund' in the liquidity test makes no sense l from an accounting perspective. The study upon which the proposed rule is based, NUREG/CR-6514, correctly defines the liquidity test on page 32 as ' Liquidity,' measured by the current ratio (current assets divided by current liabilities).'" State ofIllinois, Department of Nuclear Safety i Response: As the commenter notes, the ratio that NRC has selected as one criterion for self-guarantee is the so-called " current ratio." Generally, it is defined as current assets divided by current liabilities. In some cases, however, particularly involving hospitals, the ratio in the proposed rule that is quoted by the commenter is used. For example, HCIA Inc., which prepares the annual Profiles of U.S. Hospitals, which collects and evaluates information on the financial, operational, and clinical performance of about 6,500 hospitals in the U.S., defines liquidity for purposes of its report as follows: Liquidity is measured by a hospital's current ratio, which is computed as the sum of the hospital's current assets and depreciation fund divided by its current liabilities. (HCIA,1996 Profiles of U.S. Hospitals,1995, p. 2) The primary source relied upon by HCIA is the Medicare cost report, which is filed annually with the U.S. Department of Health and Human Services by every U.S. hospital that participates in the Medicare program. Hospitals must describe the method of depreciation that they use, note whether depreciation is funded, and provide the balance in the depreciation fund, if any, at the end of the reporting period. (See Form HCFA-2552, the Hospital and Health Care Cost Report Certification and Settlement Summary) Thus, hospitals should have the information necessary to respond to this criterion. NRC recognizes that the detailed information presented in Medicare cost reports is not always presented in the same way in other financial reports prepared by hospitals. In particular, hospitals do not always provide information about their depreciation fund, if any, in their financial statements and balance sheets, and therefore hospitals' independently audited year-end financial statements may not contain information on the depreciation fund. The NRC believes, however, that even if a hospital uses a figure for " current assets" from its financial

. statement, and that figure does not include the hospital's depreciation fund, this should not pose a problem from the standpoint of qualifying to self-guarantee. The effect will be to make the test criterion somewhat more stringent. That stringency can be addressed by the licensee if it desires, by noting in its submission that it is adjusting the current assets from its financial statement by the addition of information on its depreciation fund fmm another source. Therefore, NRC does not agree that it is necessary to revise the dennition of liquidity. 8. Prohibition on Usina a Guarantee in Combination with Another Financial Assurance Mechanism Comment: " Provisions in 10 CFR 30.35(f)(2), 40.36(e)(2), 50.75(e)(2)(iii), 70.25(f)(2) and 72.30(c)(2), provide that neither a parent company guarantee nor a guarantee by an applicant may be used in combination with other financial methods to satisfy financial assurance requirements. What are the reasons for these restrictions? It would seem that the licensing agency would, for instance, have stronger financial assurance for decommissioning if there were a 50% prepayment and a 50% guarantee than if there [is) just a 100% guarantee." State ofIllinois, Department of Nuclear Safety Response: This rulemaking makes no change in the already existing prohibition against combining a parent or self-guarantee with another type of financ;al assurance mechanism. The issue of whether or not to allow such a combination is broader than the focus of this rulemaking. The NRC has limited experience with parent and self-guarantee to date. It is expected that NRC will periodically reevaluate its financial assurance program in the future, and could assess the need for the prohibition. 9. Need for Definitions of Accountina Terms Comment: "Fansteel... suggests that the final rule include definitions for the various accounting terms used in the rule. For example, the proposed rule uses the term ' cash flow' but does not define it, whereas the current parent guarantee rule (10 CFR 30, Appendix B) uses t.Se term 'the sum of net income plus depreciation, depletion and amortization,' but does not mention cash flow. NUREG/CR-6514 defines cash flow as ' net income plus depreciation, depletion and amortization.' Without the NUREG, one might conclude that the use of different terms in similar rules suggests that different meanings are intended. This confusion can be avoided by defining the terms in the rule, rather than relying on documents merely referenced in the rulemaking notice to provide clarity." The US Enrichment Corporation wanted a definition of " cash flow"in Appendix D to be defined. Fansteel, incorporated, US Enrichment Corporation Response: NRC intends the definitions of accounting terms used in similar financial assurance rules to be consistent from rule to rule. The detailed criteria for the financial tests for use of the parent guarantee, self-guarantee, and the self-guarantee by non-profit and non-bond

.- l issuing licensees under the proposed rule all will be found in appendices to 10 CFR Part 30 l (Appendix A, Appendix C, and Appendix D, respectively). Therefore, NRC will review the l regulations and determine if definitions should be added. In many cases, however, the NRC places material illustrating or explaining basic regulatory requirements in regulatory guidance. NRC will also review the guidance on financial assurance for decommissioning, Regulatory Guide 3.66, Standard Format and Content of Financia! Msurance Mechanisms Required for Decommissioning Under 10 CFR PARTS 30, 40, 70, and 72, June 1990, to ensure that all necessary definitions are included and that the definitions are consistent. 10. Insured Bond Ratinos Comment: "[T]he criteria in the proposed rule are unnecessarily restrictive and could be modified without any significant reduction in financial assurance. The first issue concems I l the ability to rely upon bond ratings. As proposed, for those institutions that issue bonds, only a bond issuance that is ' uninsured' may be relied upon. The justification for this limitation is that ' insured bond ratings are in fact the rating of the insurance company' rather than the college or university itself. 62 Fed. Reg. at 23396. However, as the NRC's own study acknowledges, bond insurers ' evaluate the financial condition of the issuers to insure and avoid issuing policies to universities that are not creditworthy. Consequently, the presence of bond insurance (and l the triple-A rating that accompanies it) indicates that the issuer is in sound financial condition.' ] NUREG/CR-6514, $2.5.2 at p.18. Thus, the existence of bond insurance provides further i assurance that the institution is financially secure, and should support the acceptability of the self-guarantee, rather than disqualifying the bond issuance from consideration." American Councilon Education l-Response: NRC agrees that bond insurers evaluate the financial condition of the l issuers of the bonds at the time the debt is insured, and that bond rating agencies, such as l Moodys and Standard and Poors typically assign such bonds a triple-A rating. However, the rating agencies do not directly consider the creditworthiness of the bond issuer when assigning ratings on insured bonds; rather, the rating corresponds to the rating of the bond insurer. NRC's concems with accepting insured bonds as a criterion of financial assurance arise from the possibility that over time the insured bond rating could mask potential adverse changes in the financial condition of the bond issuer after the debt has been insured. The preposed rule includes a requirement that the licensee must review whether it continues to pass the financial test for self-guarantee every year. Furthermore, if the licensee no longer meets the test criteria, it must notify NRC and establish attemate financial assurance. However, insured bonds would continue to hold their rating, despite declines in the financial condition of i the issuer. ) i The study quoted by the commenter addresses this issue immediately after the text quoted above: Bond insurance companies evaluate the financial condition of the issuers they insure and avoid issuing policies to universities that are not creditworthy. ) i

. Consequently, the presence of bond insurance (and the triple-A rating that accompanies it) indicates that the issuer is in sound financial condition. In fact almost all insured university debt would receive an investment grade rating (i.e., Baa/BBB or higher) without insurance. [However, i}f an issuer's financial condition deteriorates, the rating on its insured bonds remains constant.... If.. . surveillance causes the insurer to believe that an issuer may be in jeopardy of defaulting on insured debt payments, the insurer may advise the issuer of ways to improve its financial condition and avoid default. The problem from the standpoint of financial assurance is that an insured bond does not provide a criterion by which NRC can identify when a licensee / issuer no longer qualifies to self-guarantee. The bond can retain its high rating despite a decline in the financial strength of the issuer. Furthermore, the insurance coverage provided by the bond insurer - a guarantee of payment of principal and interest in accordance with the insured bond issue's payment schedule - will not provide any additional source of funding for decommissioning. NRC therefore does not agree with the commenter's suggestion that it accept ratings on insured bonds as an acceptable criterion for self-guarantee. 11. Requirements for Financial Statements Comment: 'The requirements for licensees pursuing self-guarantees should reflect the realities of the licensee community, in particular, the proposed requirement (Appendices D and E) that licensees conduct accounting per U.S. generally accepted accounting principles (GAAP) does not recognize the increasingly multi-national nature of materials licensees. Foreign ownership of major material licensees is currently a reality (e.g., Siemens, ABB, Framatome) and can be expected to increase in the future. The selection of accounting practices to be used is a significant corporate decision affected by many factors. It is unreasonable to require that corporate practices of major multi-national firms be changed for a licensee to be allowed to provide self-guarantee of decommissioning funding. The rule should allow that adequate assurance that funds will be available can be provided using other recognized and accepted accounting principles." Nuclear EnergyInstitute Response: Financial statements prepared in accordance with foreign accounting principles rather than U.S. generally accepted accounting principles pose two problems, from the standpoint of a financial test for self-guarantee. First, the financial test was developed based on an analysis of financial data for U.S. firms. Consequently, the financial test criteria may not be applicable or effective when used in conjunction with financial data that were prepared in accordance with foreign accounting practices. Second, allowing firms to rely on financial statements prepared according to accounting principles in use in their own country could place a heavy administrative burden on NRC. The examples cited by the commenter, for instance, might require NRC to know and apply German, Swise, and French accounting principles to assess compliance with a financial test designed using U.S. GAAP. Finally, NRC has authorized the use of a broad range of financial assurance mechanisms in part to ensure that licensees that are unable to use a particular mechanism have other attematives available. )

4 i. NRC does not expect firms to change their accounting practices in order to make use of the financial test, because a number of other options are evailable. 12. Which Financial Criteria Apolv When a University Also includes a Hospital Comment: "The proposed rule does not make clear which financial criteria apply when a university also includes a hospital." State of New York Department of Health Response: The activity of the licensee determines the appropriate financial criteria. If a hospital is the licensee, even if the hospital is within a university, the financial criteria for hospitals would be applicable. 13. What is the Bond Issuina Entity Comment: "The proposed rule does not make clear what it means for the non-profit to ' issue bonds.' in New York State, tax-exempt bonds issued for colleges and universities are placed through the Dormitory Authority of the State of New York. The Dormitory Authority, a public agency, takes no financial risk in the transaction, and the bonds are rated based on the financial strength of the college or university for whom they are issued. The bonds are not, strictly speaking, issued to the market directly by the institutions themselves; they are the bonds of the Authority." State of New York Department of Health Response: The NRC would look closely at three attributes of a particular bond, to determine whether it could be used to satisfy the self-guarantee bond-rating criterion. First, the bond should be attributable to the college or university licensee that is attempting to use its rating. That is, even if the bond is issued to the market by a special state authority, such as the Dormitory Authority, the bond issuance should be clearly linked, on its face or in supporting documentation supplied to the NRC, with the college or university. Second, the bond issuance should be linked only with that college or university seeking to rely upon it for financial assurance. That is, it should not be linked to two or more institutions. Third, the bond's rating should be based DDly on the financial strength of the college or university for whom the bond is issued. That is, the bond's rating should not reflect any assessment of the financial strength of the issuing authority. It is important to note, however, that other factors also may be important, and that NRC will address each situation according to the facts of the licensee's particular submission. 13. Definition of " Uninsured. Uncollateralirad. and Unencumbered Bonds" Comment: "What is meant by ' uninsured, uncollateralized and unencumbered bonds?" Would a bond for which no property is mortgaged but a priority claim is given to bondholders on i

. certain receivables (e.g., room and board payments) be considered 'collateralized' or ' encumbered'?" State of New York Department of Health Response:" Collateral"is defined as an asset pledged as security to ensure payment or performance of an obligation. A collateralized bond can be a bond backed by the cash flow from such obligations as a pool of loans, lease payments, or receivables. Such asset-backed securities generally are rated with reference to the quality of the pledged assets, in contrast to unsecured bonds, which are rated with reference to the overall financial condition and future prospects of the issuer. Although NRC will address each situation according to the facts of the licensee's particular submission, bonds backed by the cash flow from certain specified receivables are unlikely to qualify as " uninsured, uncollateralized and unencumbered." 14. Acolication of Criteria for issuers of Uninsured. Uncollateralized. and Unencumbered

Bonds, t

Comment: "Do any criteria apply when a non-profit has issued bonds, but none are ' uninsured, uncollateralized and unencumbered?' Such institutions could not meet the first test, and the second test appears to be restricted to ' applicants and licensees that do not issue bonds,' regardless of what sorts of bonds these eight be." State of New York Department of Health Response: A licensee that has not issued any uninsured, uncollateralized, or unencumbered bonds clearly cannot use the bond-rating criterion to qualify to self-guarantee. However, a licensee that has issued insured, collateralized, or otherwise encumbered bonds may in fact be able to demonstrate that it satisfies the alternative criteria. The NRC did not intend for the rule language quoted by the commenter to restrict the use of the attemative test for self-guarantee, if the licensee can satisfy the attemative criteria. 15. Meanino of Unrestricted Endowment Comment: "What is meant by unrestricted ' endowment?' Most institutions have what are referred to generally as ' endowments' that consist substantially of funds functioning in that capacity, even though the donors contributed them in such a way that the funds would not necessarily be regarded, strictly speaking, as ' endowment' in the narrower legal sense of that term. Many institutions of great financial strength may not meet the criteria if a strict legal definition is applied." State of New York Department of Health Response: As defined by NACUBO, endowment is " assets donated by individuals or organizations to provide permanent capital and an ongoing stream of current income for an institution." NRC considers unrestricted endowment to be endowment that is not limited by the

. terms of its donation to use for a specified purpose; that is not subject to any reversionary interest if not used for a specified purpose; and whose principal or interest are not required to be spent by a particular specified date. An analysis prepared for NRC of the impact of this criterion indicated that institutions of financial strength would not be precluded by the unrestricted endowment requirement from qualifying for self-guarantee. 15. Financial Criteria for Non-Bond issuina Commercial Licensees Comment: A commenter objected to the net worth criteria-net worth greater than $10 million or at least 10 times estimated decommissioning costs. This discriminates against well-funded smaller firms that could easily self-guarantee smaller decommissioning projects, but could not meet the $10 million net worth requirement. Stan A. Huber Consultants Response: The NRC's objective in setting financial criteria for non-bond issuing commerciallicensees was to make the financial assurance risk of these criteria equal to the financial assurance risk of the financial criteria for those licensees that issue bonds (estimated to be approximately 0.13 percent per year). According to the analysis of potential financial criteria carried out as part of the proposed rule, the financial criteria in the proposed rule meet this objective.' Firms with smaller net worth have a larger default risk than larger firms. Thus, the $10 million net worth requirement is an essential part of the overall financial test. Moreover, eliminating the $10 million requirement would not allow more than a few (1-2) additional licensees to qualify. The analysis in NUREG/CR-6514, (p. 4.6) estimates that all non-bond issuing firms in the NRC licensee database have a $10 million net worth. 16. Decommissioning Cost Estimates Comment: Several commenters raised the issue of how decommissioning costs estimates were arrived at. The NRC should encourage best available information estimates of decommissioning costs, based on historic plant experience in decommissioning and renovation, rather than commercial estimates by contractors which tend to be too high. Conservative assumptions, such as use of rates charged by contractors and high estimates of waste disposal l costs, should not be used. A commenter also noted that assuming a period for short-lived isotopes to decay before decommissioning begins would be a realistic assumption. Also, a typical licensee will not have the maximum amount of material allowed by the license at the time of decommissioning. CORAR, Amersham, NuclearEnergyInstitute i 1 1 " Analysis of Potential Self-Guarantee Tests for Demonstrating Financial Assurance ny Non-Profit Colleges Universities, and Hospitals, and by Business Firms That Do Not Issue Bonds. NUREG/CR-6514

p. 4.7.

I ! Response: This rulemaking makes no changes in requirements for how licensees estimate decommissioning costs. Decommissioning cost estimates, or use of the certification amounts in 10 CFR Part 30, are already required by existing regulations on financial assurance. This rule simply adds an additional financial assurance mechanism to those already permitted in NRC regulations. 17. Aareement State Comontibility Status of Financial assurance Regulations Comment: The proposed regulations should be assigned a compatibility status of Level 1 with Agreement States. This will assure consistent requirements for financial surety arrangements, and will preclude the unintended creation of competitive disadvantages between facilities in Agreement States and Non-Agreement States. CORAR, Amersham, NuclearEnergyInstitute Response: When the proposed rule was published in the Federal Register (see 62 FR 23394, April 30,1997), it was designated as a Division 2 compatibility item in accordance with the compatibility policy in effect at that time. A Division 2 level of compatibility allowed an Agreement State to promulgate equivalent, or more stringent, financial assurance regulations than those of NRC. Under the new " Policy Statement on Adequacy and Compatibility of Areement State Programs," (see 62 FR 46517, September 3,1997) Agreement States must adopt NRC regulations having particular health and safety significance and those necessary to maintain compatibility with the Commission's regulatory program. The NRC financial assurance regulations, in effect when the new policy was implemented, were designated as having health and safety significance. Specifically, sections (a), (b), and (d) of Parts 30.35,40.36 and 70.25, which require that licensees must consider the cost of decommissioning their facilities and that those costs must be provided for through a financial assurance mechanism, have particular health and safety significance and were designated as category H&S. Under the H&S category, Agreement States should adopt the essential objectives of these sections in order to maintain an adequate program. The remaining sections of the rule, including those which allow self-guarantee of certain commercial corporate licensees who issue bonds if they meet stringent financial criteria, were designated as compatibility Category D. Category D means the Agreement States do not need to adopt a compatible rule. The final rule change, which will extend the self-guarantee financial assurance option to other material and non-electric utility reactor licensees that meet certain financial criteria, is also designated as compatibility Category D. Under compatibility category D, Agreement States may choose to maintain a more stringent rule by not adopting the self-guarantee option. 18. Aoolicability of Rule in Findina of No Significant imoact Section Comment: A commenter noted that in the " Finding of No Significant Impact" section,

, the phrase "non-power reactor licensees" is used to describe the applicability of the proposed rule. This is incorrect; the correct phrase should be "non-electric utility" licensees. 1 State ofIllinois, Department of Nuclear Safety l Response: The commenter is correct; this has been changed in the final rule. l 19. Requirement for Annual Passaae of Financial Test Comment: A commenter stated that Section 11. C. (2) of Appendix E should be modifmwi so that a qualifying licensoe would not have to repeat passage of the financial test for self-guarantee every year. University endowments are very stable. In addition, section 11. C. (3) provides sufficient assurance that NRC will be notified when a licensee no longer meets the criteria for self-guarantee. University of Delaware Response: While it is true that university endowments are relatively stable and Section

11. C. (3) provides for notification, the provision for qualifying licensees to repeat passage of the test is retained in the final rule. For a self-guarantee program to provide adequate assurance of decommissioning funding, the annual "requalification" provision is necessary. NRC must have assurance of financial strength on a timely basis. A self-guarantee relies solely on the licensees ability to fund decommissioning; there is no backup such as provided by a third party financial assurance mechanism. The requirement for repeating the financial test yearly is not unduly burdensome on a licensee, and it gives NRC information on the financial condition of the licensee on a timely basis. This requirement is not unique to colleges and universities or to this rule; it is found in the self-guarantee financial tests applicable to other types of licensees, both profit and non-profit.

20. Use of Self-Guarantee by the United States Enrichment Corporation Comment: The US Enrichment Corporation proposed that the NRC modify the language of the rule to include certificates (resulated under 10 CFR Part 76 by NRC). USEC stated that it would benefit from the opportunity to reduce the costs of complying with NRC financial assurance requirements, which USEC estimated would presently cost in excess of $100,000 per year for letters of credit and surety bonds. Response: Under 10 CFR 976.35(n), the Un!ted States Enrichment Corporation (USEC or the Corporation) is required to establish financial surety arrangements to ensure that sufficient funds will be available for the ultimate disposal of waste and depleted uranium and decontamination and decommissioning activities which are the financial responsibility of the Corporation. The funding mechanisms currently listed in the regulation as potentially acceptable for use by the Corporation include prepayment, surety, insurance, and an external

- 18,- sinking fund, but do not include self-guarantee or statement of intent. The rule provides that the funding mechanism must " ensure availability of funds for any activities that are required to be completed. . " by the Corporation. USEC was created pursuant to the Energy Policy Act of 1992. It is a wholly-owned government corporation, whose powers are vested in a five-member Board of Directors appointed by the President of the United States and confirmed by the Senate. On July 25, 1997, however, a plan was approved by the President under which USEC will be sold either to another corporation or to the public through a stock offering. Under the USEC Privatization Act, Congress set certain restrictions on foreign involvement in USEC's privatization, and required that a " relia' ole and economical domestic source of enrichment services" exist following q privatization. Although the NRC is not currently aware of any reason why it would be inappropriate to consider expanding the category of funding mechanisms available to the Corporation to demonstrate the availability of funds for the actions required under 10 CFR 76.35(n), it does not believe that it would be feasible to do so in the current rulemaking. First, USEC was not included in any of the analysis performed to evaluate potential self-guarantee tests for demonstrating financial assurance. NRC believes that detailed analysis should be undertaken to ensure that all critical factors have been considered. Second, USEC's current and future situation with respect to the costs that it might incur is substantially different from the licensees included in the current rulemaking. In particular, the scope and type of activities that USEC mast carry out under 10 CFR 76.35(n) are very different from those conducted by hospitals and universities and the non-bond issuing firms covered by the proposed rule. Third, the exact size of the obligations that USEC might be required to cover is uncertain, and will not be determined until a later date, although it is known that many of the costs will remain the responsibility of the U.S. Department of Energy (DOE). Under 10 CFR 76.35(n), DOE is responsible for those aspects of decontamination and decommissioning of the gaseous diffusion plants (GDPs) assigned to DOE under the Atomic Energy Act. DOE also is responsible for all environmental liabilities associated with the operation of the GDPs prior to July 1,1993. According to USEC's Annual Report for 1996, "[e)xcept for certain accrued liabilities that will be specified in a memorandum of agreement entered into prior to privatization, all environmentalliabilities of the Company through the date of privatization will remain obligations c' the U.S. government." (Notes to Financial Statements: 7. Environmental Matters). Furthermore, as of June 30,1996, USEC had accrued liability of $303 million for transportation, conversion, and disposition of depleted uranium currently stored at the GDPs. The 1996 Annual Report states that "USEC is evaluating various proposals for the disposition of depleted uranium, and depending on the outcome of such evaluations, the Company may be able to reduce future cost accruals. Pursuant to the USEC Privatization Act, all costs and liabilities related to the disposition of depleted uranium generated prior to the privatization date are the responsibility of DOE." Fourth, until privatization has occurred, important information about USEC's future corporate structure and ownership will remain uncertain. As noted above, Congress has allowed for USEC to be sold either to another corporation or to the public through a stock offering. Thus, the form in which privatization occurs could affect the NRC's analysis of financial assurance attematives. Because of the need to evaluate all of these factors, NRC has determined not to include Part 76 in the current rulemaking.

19 - 21. Obtainina a Bond Ratina Even if a Licensee Does Not lasue Bonds Comment: A commenter noted that while the " Supplementary Information" section of the notice of proposed rulemaking said that a licensee that did not issue bonds could obtain an indicative bond rating, the proposed rule text did not state this. State ofIllinois, Department of Nuclear Safety Response: As the NRC stated in the Supplementary information accompanying the proposed rule, the fact that a licensee has not issued bonds is not necessarily a sign of financial weakness. "(L]ack of any bond issuance could reflect financial resources great enough to preclude the need to issue debt." (62 FR 23396, April 30,1997) Therefore, as the commenter correctly notes, the preamble went on to say the following: Even if an applicant or licensee were a non-profit entity or a for-profit firm that does not issue bonds, it may obtain a bond rating from one of the major ratings agencies. This option would be allowed. Having obtained a bond rating, the licensee would be subject to the same requirements as the bond-issuing institutions. (Ibid.) By " obtaining a bond rating" the NRC meant securing a so-called " indicative" bond rating from Moodys or Standard & Poors. In banking and finance, an " indication"is a notation next to a price quote that it is for information only. Similarly, " indicative" bond ratings, which are available for a relatively large fixed fee, are informative in nature, and are provided as an indication of what a rating would be if the firm were to issue debt. Moodys explains such ratings as follows: Issuers contemplating the issuance of debt at some future date are offered an indicative rating on a prospective issue. The rating is indicated on a confidential basis, subject to certain limitations in the event of debt issuance by the applicant in any of the capital markets. The indicative rating is subject to revision or withdrawal at any time, without notice, if any information (or lack of information) warrants such action, in the sole opinion of Moodys. A licensee seeking to use such a rating would be required to submit the rating and name l of the rating service, but it would not be able to provide NRC information on the dates of i issuance and maturity of the bond, nor certify that the rating pertained to its "most recent" l issuance. Instead, it would need to explain that the rating was an indicative rating. NRC's approach to defining the criteria for the financial tests for use of the parent guarantee and self-guarantee is to place the basic requirements in appendices to 10 CFR Part 30 and to place material illustrating or explaining the basic regulatory requirements in regulatory 4 guidance. Information conceming the use of indicative bond ratings to satisfy the bond rating criterion and details conceming the information that a licensee should submit to quality for such j use are more appropriately included in guidance material than in the regulation. NRC will . review the guidance on financial assurance for decommissioning, Regulatory Guide 3.66,

.. Standard Format and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR PARTS 30, 40, 70, and 72, June 1990, to ensure that the necessary explanation of the use of indicative bond ratings is included. l

rAN A. HuBER CONSULTANTS, INC. o 200 N. CEDAR ROAD c NEW LENOX, IL 60451 : (800) 383-0468 : (815) 485-6161 : FAX (815 385-May 14,1997 0FFCI C,' '.: , 7;., y DCCM. ~ a.. r;-..:. Secretary Attn: Docketing and Service Branch -.;1.!3@#sl# # U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 ((,2 gg a33 N) RE: Proposed NRC Financial Assurance Rule for Non-Utility Decommissioning REF: Federal Register, Vol. 62 No. 83

Dear Secretary:

The proposed rule for non-utility decommissioning indicates that industrial ) corporations would need to meet not only a series of financial ratio tests but also have a " net worth of greater than ten million dollars or at least ten (10) times the estimated decommissioning costs, whicheveris creater". The words *whicheveris greater"is discriminatory against well funded smaller firms that could easily self-guarantee smaller decommissioning projects, but could not meet the requirement of a net worth of at least 10 million dollars. A smaller firm that meets the financial criteria tests and has a net worth at least ten times greater than the estimated decommissioning costs should enjoy the same privileges as the larger firms with likely larger decommissioning costs for their facilities. Unless the words "whicheveris greater"are eliminated from the proposed rule, only larger firms with net worth's of greater than 10 million dollars will benefit. Many hundreds of millions more collars could be saved each year by allowing all licensees to meet equal financial assurance criteria. Thank you for your consideration. Sincerely, Stan A. Huber Consultants, Inc. A Mv Stan A. Huber President

k P rillcertill l'Ilis e rsits Office of the Vice President for Finance and Administrario3,g .tl8 Nanau Hall. Pnnecron.. ew Jerses 08544 5264 N 97 JUN 16 P3 :31 l June 12,1997 0FFICL 0:.d ' r.E i F 00CKEf E.1 M- "- i? M ' Secretary U.S. Nuclear Regulatory Commission DOC.._"" NdWBER nn Washington, D.C. 20555-0001 Po.CPCSED RULE TH 30,40,60,70! 7,2 ( (,Q F/2 2 3394) Attn: Docketino and Service Branch Re: Federal Register / Vol. 62, No. 83 / Wednesday, April 30,1997 / Proposed Rules, page 23394, Nuclear Regulatory Commission 10 CFR Parts 30,40, 50,70, and 72 Self-Guarantee of Decommissioning Funding by Non-Profit and Non-flond issuing Licensees l Princeton University commends the NRC's proposed rule 10 CFR parts 30,40,50,70, and 72 as referenced above permitting financially strong non-profit licensees the option to self-guarantee as a mechanism to ensure that adequate financial resources are available to fund and carry-out required decommissioning l On behalf of the University, I am writing this letter in my capacity as activities. l Assistant Vice President for Finance and Administration at Princeton University with responsibility for the Office of Environmental Health and Safety. We heartily agree with your finding that private universities which can meet the proposed stringent financial test can achieve significant cost savings without any loss of confidence for the NRC that funds for decommissioning will be available when needed. To illustrate the cost-savings at an institutionallevel, Princeton j University (rated AAA by S&P and Aaa by Moody's) spends roughly $12,000 each year to n' 'ntain its letter-of-credit, which is, at the current time, the least expensive financial assurance option for Princeton University. We therefore urge that the NRC adopt the proposed rule as written so that non-i profit licensees who meet the NRC's stringent financial criteria have available to them the same financial assurance options presently available to corporate licensees Sincerely, ) > k ~ L Lt.A.A. Laurel Harvey ~ Assistant Vice President for Finance and Administration 9706170286 970612 PDR PR 30 62FR23394 PDR

R DOCKETED Coi69% fiC Radwnuclkies and Radiopharmaceuticals, Inc. 3911 Campolmdo Crive Moraga,CA 945561551 71 JL -9 M1 :47 510ns3.is50 Fax: 510/2831850 July 2,1997 thy H. Kramer, Ph.D, FACNP OFFICE OF SECRETARY Eucuuw Drrecer DOCKETiHC, & SERVICE BRANCE Secretary DOCKET NtWBER g30A060'7077A U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 (b0FRasa%) Attention: Docketing and Service Branch

Reference:

Federal Register, Vol. 62, No. 83, April 30,1997. Proposed Rule: Self Guarantee of Decommissioning Funding by Non-Profit and Non-Bond Issuing Licensees These comments are submitted on behalf of the Council on Radionuclides and -~ Radiophannaceuticals (CORAR). CORAR members include the major manufacturers and distributors of radiopharmaceuticals, radioactive sources and research radionuclides used in the U.S. for therapeutic and diagnostic medical applications and for industrial, environmental and biomedical research and quality control. CORAR members and their customers are U.S. Nuclear Regulatory Commission (NRC) or Agreement State licensees and therefore interested in this proposed rule. CORAR supports the NRC's proposal to allow additional licensees to self-guarantee funding for decommissioning. CORAR welcomes the approach taken by the NRC and recommends extending this effort by reconsidering the values used in current and pmposed financial tests to ensure that the program is cost effective. CORAR has enclosed detailed comments on this proposal and made additional recommendations to satisfy the intent of the regulations. We appreciate the opportunity to comment on this proposed rule and would be glad to provide clarification or additional information. Sincerely yo / ,14 Leonard R. Smith, CHP Chairperson, CORAR Committee on Regulatory and Legislative issues

CORAR COMMENTS ON PROPOSED RULE: SELF GUARANTEE OF DECOMMISSIONING FUNDING BY NON-PROFIT AND NON-BOND ISSUING LICENSEES. l 1. Page 23395, column 1, paragraph 1: " Allowing qualified non-profit and non-bond-issuing licensees to use self-guarantee would reduce the costs of complying with NRC financial assurance requirements while providing adequate confidence to the NRC that funds for decommissioning will be available when needed". a. CORAR agrees that extending the use of self-guarantees would reduce the costs of complying with NRC fmancial assurance requirements. b. Many licensees have insufficient fmancial strength to meet the current stringent regulatory conditions and tests to qualify for self guarantee. They are therefore forced to seek alternative fmancial assurance arrangements, letters of credit being a common solution. However, because of their financial status, these licensees are reqmred to pay very high fees for the necessary banking services. Furthermore the establishment of, a letter of credit often reduces a licensee's available credit which can weaken the licensee's fmancial and operational flexibility. Current NRC requirements for demonstrating financial assurance can therefore indirectly weaken the financial viability of smaller licensees and can be expected to statistically cause some licensees to fail and precipitate the very condition that the NRC seeks to protect against. c. The NRC should be aware that fees to maintain financial assurance arrangements are often paid out of the Radiation Protection budget. Consequently the payment of high fees can adversely affect the radiation protection program It is not unusual for fmancial assurance fees to consume from 10 to 20% of the radiation protection budget. d. Clearly any viable financial assurance mechanism that is less costly tlan current practice should be preferable to the licensee, regulator and the public. CORAR agrees that licensees should be required to provide adequate confidence e. to the NRC that funds for decommissioning will be available when needed. It is clear too that the costs for maintaining this assurance should be miniminA to preserve the financial, operational and radiation protection capability of the licensee. 1

f. There are three areas where the costs for demonstrating financial assurance could be reduced if NRC were to change its current licensing practice. These are: i. Many licensees use commercial contractors to estimate the cost of decommissioning the licensed facility. Contractors commonly over estimate the cost to provide for generous profit margins and ultra conservative contingencies in the event that they are contracted to decommission the facility. NRC should encourage best estimates of decommissioning costs and prefer estimates based on historic plant experience in decommissioning and renovation rather than commercial estimates. ii. Many licensees use a letter pf credit and standby trust agreement to assure decommissioning. NRC Regions and Ayssent state staff have limited financial and legal expertise and rely heavily on comparing licensee financial assurance arrangements with models presented in Regulatory Guide 3.66. However the NRC model standby trust agreement in Reg. Guide 3.66 provides for funds to be released to the licensee for decommissioning purposes. This action can defeat the intent of the regulations because, if the licensee has filed for bankruptcy, they legally become a separate entity from the licensee that initially filed financial assurance arrangements and under the constraints of bankruptcy proceedings those funds could be used for purposes other than decommissionir.g. CORAR recommends that NRC replaces this model with one that provides for the regulator to manage the decommissioning funds in the event of bankruptcy. The benefit of this recommendation is that it will assure the intent of the regulation, it will provide a model that regulatory staff can use to process licensee submissions and the arrangements carry less risk to the bank providing the services and consequently less cost to the licensee. iii. NRC has had considerable experience in reviewing financial assurance submissions. CORAR recommends that the-NRC should consider reevaluating the quantities used in both the proposed and current financial tests in 10CFR30. CORAR rnmintaina that such a review should indicate that financial tests for self guarantee and parent guarantee could be relaxed by a factor of two and still provide adequate assurance. This would have the benefit of making a self guarantee accessible to more licensees and reduce any unproductive financial burden on them. 2

f l.' 2. Page 23396, column 2, paragraph 4: "The multiple tf 30 has been chosen because this would mean that any level of decommissioning costs could be covered by the annual return on an endorsement i invested at 3 percent". l

a. '

The selected multiple of 30 is excessively conservative. It should not be difficult i to obtain secure investments yielding 6%. CORAR recommends that an l appropriate multiple would be 15 based on investment yield. b. The above statement implies that decommissioning costs are paid from investment yields over a one year period. However, it is more realistic to assume that any decommissioning activities where financial assurance arrangements are involved will require considerable coordination with regulators and financial services involving two or three years to complete. This consideration also implies that the appropriate multiple should be 15 rather than 30. CORAR recommends that the above two considerations can be combined and the c. multiplication factor reduced from 30 to 10 with ample conservativism 3. Page 233%, column 3, paragraph 6: l .... hospital operating revenues to be at least 100 times decommissioning costs". The selected multiple of 100 is excessively conservative. It appears to reflect an expectation that the decommissioning will take a short time whereas a realistic time i frame should be two years or more. CORAR recommends that the NRC considers a l multiple of 30 or less to be more appropriate. l l 4. Page 233%, column 3, paragraph 7: l "The proposed criterion is..., totalliabilities divided by Net Worth less than 1.5, and l Net Worth greater than $10 million or at least 10 times decommissioning costs,...." CORAR observes that Net Worth is defined as Assets minus Liabilities and that i Liabilities include decommissioning cost estunates. It therefore appears that the liabilities are double counted in the above criteria. We recommend that decommissioning costs be explicitly excluded from Liabilities in these criteria. The modified formula will continue to provide adequate f'mancial assurance. 3

5. Page 23397, column 2, paragraph 2: "The NRC invites comments on the generalissue of the compatibility status ofits financial assurance regulations". CORAR asserts that fmancial assurance regulations should be assigned level I strict compatibility status We recommend this because fmancial assurance arrangements can have a significant effect on the financial and operational viability of a licensee Consequently Agreement States with more stringent regulatory requirements can cause competitive disadvantages to licensees. 6. Other Considerations a. While CORAR appreciates the need for financial assurance for licensees with significant historic radionuclides inventories it is not clear whether the regulatory measures are effective. CORAR therefore recomm:nds that the NRC should publish an evaluation that clearly shows that the benefit to society in ensuring decommissioning and reduction in public dose isjustified by the cost of maintaining financial assurance arrangements, regulatory costs in reviewing i financial assurance arrangements and costs of adverse effects of financial assurance arrangements on licensee radiation protection resources and financial and operational viability. b. The NRC should consider promoting a national insurance program for all non-utility licensees with the objective of reducing the cost of demonstrating financial assurance. 4 l l i

b 9 TATE OF ' U.NOP DEPARTMENT OF NLCLEAR MFdTiggC TED 1035 OUTER 1%R b. ?RI\\ ii 9PRINCFIELD, ILL!NOlc 'M 37 J1. 22 A10:05 217-7 8 -9900 n.mr.n t'nu M hm Ew 0FFICE OF MMETARY I - ' 733,n, y, (TDI)- w_, Gm. enu 00CKEMG 3 2 ViCE BRANC4 July 18,1997 DOCKET NtNBER Secretary of the Commission PROPOSED RULE N So.Yo to 7p7; U.S. Nuclear Regulatory Commission {g,gg,7ggg) Washington, D.C. 20555 l l Attention: Docketing and Service Branch Re: Proposed Rule, "ScIf-Guarantee of Decommissioning Funding by Non-Profit and Non-Bond Issuing Licensees." Gentlemen: The Illinois Department of Nuclear Safety (Department) hereby submits its comments on the referenced proposed rule. The proposed rule represents changes to surety rules that would allow non-profit licensees and commercial licensees who do not issue bonds, the option to use self-guarantee as a surety funding mechanism. Specific comments on the proposed rule are detailed below. 1. Under II. Analyses of Financial Criteria, A. Criteria for Colleges and Universities, there is a statement that non-profit entities or for-profit firms that do not issue bonds may opt to obtain a bond rating from one of the major ratings agencies. However, the proposed language in Section 30.35 does not clearly indicate this option. 2. Under H. Analyses of Financial Criteria, B. Criteria for Hospitals, iiquidity"is incorrectly defined twice as turrent assets and depr-Adon fund, divided by current liabilities." (emphasis added) 'Ihe same mistake is made in II.B.(2)(c) of the proposed Appendix E to Part 30. The underscored language should be deleted. Inclusion of 'tiepreciation fund"in the liquidity test makes no sense from an accounting perspective. The study upon which the prW rule is based, NUREG/CR-6514, correctly defines the liquidity test on page 32 as " Liquidity,' measured by the current ratio (current assets divided by current liabilities)." l l

Secretary of the Commission Page 2 July 17,1997 3. Provisions in 10 CFR 30.35(f)(2), 40.36(e)(2), 50.75(e)(2)(iii), 70.25(f)(2) and 72.30(c)(2), provide that neither a parent company guarantee nor a guarantee by an applicant may be used in combination with other financial methods to satisfy financial assurance requirements. What are the reasons for these restrictions? It would seem that the licensing agency would, for instance, have stronger financial assurance for decommissioning if there were a 50% prepayment and a 50% guarantee than if there if just a 100% guarantee. 4. Under Finding of No Significant Environmental Impact, the notice states that, "Ihe pwpcc.cd action is intended to offer non-profit and non bond-issuing nuclear materials licensees and non-nower r**ctar liarm greater flexibility by allowing an additional mechanism that meet the financial criteria for use of self guarantee." (emphasis added) The underscored language inaccurately reflects the scope of the proposed rule to reactor licensees. The factor which determines whether a Part 50 reactor licensee can use the new mechanism is whether the licensee is an electric utility, not whether the reactor is a power reactor. See section 50.75(e)(2). In other words, a non-electric utility licensed to operate a power reactor under Part 50 could use the new guarantee mechanism. This issue is correctly addressed in the first sentence of the Summary at the beginning of the notice, which refers to ' hon-electric utility reactor licensees." Overall, we believe that the NRC has increased the flexiFdity of this rule by developing additional surety options for licensees. If you have any questions regarding these comments, please contact either me or Kathy Allen at (217) 785-9947. Sincerely, fL G.03 A Steven C. Collins, Chief Division of Radioactive Materials SCC:kaa Jim Lynch, State. Agreements Officer, RIII ec: l

e.,*ce* ov ta-:a# 0; ace ro'"n cm.cago ilMo s 60064 pno e #64; 66H900 tan i8 h 6ei4307 l July 23, 1997 0FFICE OF SEC CETARY 00CKEIG & CERVICE Secretary gggg;pq U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 DOCKET NWBER nn PROPOSED RULE rA 30,vo,So,70s 73 Attention: Docketing and Service Branch gpgggg99 Re: NRC Proposed Rule on Self-Guarantee of Decommissioning Funding by Non-Profn and Non-Bond Issuing Licensees 62 Fed. Ren. 23394 Nril 30.1997)

Dear Secretary:

I am writing on behalf of Fansteel Inc. in support of the NRC's proposed rule and to offer comments for NRC's consideration in the Final Rule. Fansteel supports the concept that non-profit and non-bond issuing licent.ees should be allowed to self-gurrantee the avadability of decommissioning funds. We believe, however, that the proposed fmancial test for non-bond issuing industrial corporations is unduly restrictive and that the final rule should adopt a less restrictive test similar to that currently used for parent company guarantees. In the proposed rule, industrial corporations would have to meet the following criteria: Cash Flow -- Total Liabilities > 0.15; Total Liabilities + Net Worth < l.5; and i Net Worth > $10 MM or 10 times the decommissioning costs, whichever is greater. 1 PI-93933.01

Fansteel These are the same criteria evaluated as Option 4 for non-bond issuing business firms in ( NUREG/CR-6514 " Analysis of Potential Self-Guarantee Tests for Demonstrating Financial I Assurance by Non-Pro 6t Colleges, Universities and Hospitals and by Business Firms That Do Not l l Issue Bonds." That analysis concluded that only six percent (2 of 36) licensees considered in the study would be able to pass such a rigorous finanAl test. NUREG/CR-6514 also analyzed a less restrictive financial test, identified as Option 2, which presented only a moderate assurance risk. The criteria for this test are: Cash Flow + Total Liability > 0.? u Total Liability + Net Worth < l.5. This is the same test being considered by EPA for both parent company guarantees and self-guarantees for hazardous and nonhanrdous waste management facilities under RCRA. The analyses for this option concluded that 69% (25 of 36) licensees would be able to qualify for the self-guarantee under this option. For comparison, NRC currently accepts a parent company guarantee where the parent company satis 6es two of the following three ratios: Total Liability + Net Worth < 2.0; Cash Flow + Total Liability > 0.1; and Current Assets + Current Liabilities > 1.5. The parent company must also have net working capital and tangible net worth each at least six times the decommissioning cost estimate; a tangible net worth of at least $10 MM; and at least 90% ofits assets, or assets worth six times the decommissioning cost estimate, located in the United States. This is the same test currently used by EPA for parent guarantees for closure and post-closure costs at RCRA facilities. 2-

1 l I Fansteel The proposed self-guarantee standard appears to be inconsistent with the existing parent guarantee standard used by the NRC, and it appears to favor corporate form over financial substance. For example, a licensee which is not a subsidiary of another company could pass the parent-guarantee test but not the self-guarantee test. This licensee would have to use other means to financially assure its decommissioning cost estimate-all of which entail significant costs. Another licensee with the same decommissioning cost estunate, but which has a parent company, could use a parent company guarantee as long as the parent satis 6es the less restrictive Gnnnst test for parent companies. Thus, it is possible that a financially weaker parent company can guarantee a given amount, whereas a stronger company which has no parent cannot guarantee the same amount, and will incur signi6 cant additional costs to satisfy its financial assurance obligations. The potential for such an outcome should not be countenanced by the NRC. Fansteel believes that NRC should adopt for the self-guarantee test to be employed by non-bond issuing business fums either the current parent guarantee criteria or the NUREG/CR-6514 Option 2 criteria. Either test would not unfairly disenminate against companies which do not have parent companies (or which did not establish subsidiaries for their licensed activities) and which are otherwise financially sound. Additionally, more licensees would be able to employ these methods, thereby saving the costs that would be incurred when other Gamel assurance mechanisms are employed. Fansteel also suggests that the final rule include definitions for the various accounting terms used in the rule. For example, the proposed rule uses the term " cash flow" but does not define it, whereas the current parent guarantee rule (10 CFR 30, Appendix B) uses the l l term "the sum of net income plus depreciation, depletion and amortization," but does not mention i cash flow. NUREG/CR-6514 defines cash flow as " net income plus depreciation, depletion and Fansteel amortization." Without the NUREG, one might conclude that the use of different terms in similar rules suggests that different meanings are intended. This confusion can be avoided by defining the terms in the rule, rather than relying on documents merely referenced in the rulemaking notice to provide clarity. We hope these comments are helpful as the NRC moves to finahre this rule. Very truly yours, FANSTEEL INC. f, $5 Michael J. Mocmak Vice President and General Counsel l 1 l 1 l l l D h DOCKETED USNRC W JJl. 25 A10:31 July 22,1997 0FFICE OF EECPETMY ^'"'"h"""*"8"' 00CKE716 & 3ERViCE 2636 s. clearbrook Drive Bi4A N O Arhngton Heights. IL 60005 tel(847) 5934300 g U.S. Nuclear Regulatory Commission PROPOSED RULE m 30 W m # M Washington, D.C. 20555-0001 ((,p pg pg3yf TAmersham 6 76, nuns snou cn,ur, Attention: Docketing and Service Branch Re: Federal register, Vol 62, No. 83, April 30,1997. Proposed Rule: Self Guarantee of Decommissioning Funding by Non-Profit and Non-Bond Issuing Licensees These comments are submitted by Amersham IIoldings, Inc., a manufacturer and distributor of radiopharmaceuticals, ' life science research radiochemical and sealed sources used in medicine and in quality and safety as.surance. Amersham currently maintains financial surety arrangements with the Illinois Department of Nuclear Safety in accordance with its Agreement State licensing regulations. General Comments Amersham supports this NRC Proposed Rule as it provides licensees the opportunity to self-guarantee the costs of decommissioning. We recognize and appreciate the need for NRC to ensure that reasonable and responsible arrangements are established for licensee accountability of decommissioning costs. At the same time, the current methods available for demonstration of financial surety by licensees often result in estimates of decommissioning costs that include conservative ast.umptions and, therefore, unrealistically high. The financial burden ofletters of cmdit, surety bends, and other approved mechanisms of financial surety may actually lead licensees to bankruptcy which may make some of the financial provisions available for decommissioning. While the option of self-guarantee is viewed as a more reasonable and cost effective means of holding licensees accountable for long term decommissioning liability, Amersham provides the following specific comments regarding the mechanisms of financial surety which include the suggestion of some modifications to the financial tests used to qualify certain non-bond issuing industrial corporations for self-guarantee. These modifications could make the self-guarantee option available to a wider range of licensees while still assuring the funding of decommissioning. l $ggg1[ic Comments 1. Estimated costs of decommissioning should not rely upon worst case conservative assumptions such as the prime rates charged by contractors or theoretical waste disposal I L

2 costs. The estimated costs of decommiss.oning and waste disposal should be based upon licensee and industry experience. The estimate of decommissioning liability should include the costs of activities associated 2. with site assessment, post decommissioning surveys, decontamination, dismantling and packaging and disposal of waste, and should not include the estimated cost of disp finished goods in inventory and other materials in process and facilities that have value. Licensees should not be required to assume disposal costs for the total amount of material they are authorized to possess in their decommissioning estimates. Licensees, particularly those with relatively short-lived radionuclides, should be given the 3. option of estimating the cost of site access control over the period of time necessary to significantly decay the radioactivity to reduce actual cleanup and disposal costs. The that decommissioning occurs over a time span should be allowed to be considered rather than the requirement to estimate the cost of decommissioning at the time the facility ceases operation. The proposed regulations should be assigned a compatibility status of Level 1 to ensure 4. consistent requirements for financial surety arrangements and to avoid competitive disadvantages. The proposed criteria for non-bond issuing industrial corporations should be modified to 5. enable more licensees to qualify while still providing adequate financial surety to cover the cost of decommissioning: The second proposed criterion is total liabilities divided by net worth must be less 5.1 than 1.5. Since net worth is defined as assets minus liabilities, liabilities are factored into this formula in both total liabi;ities and net worth. This formula should be changed to total assets divided by the quantity of balance sheet liabilities plus decommissioning liability must be greater than 1.5. This formula makes more sense and more realistically reflects a licensee's ability to shut down and have the necessary assets to pay off remaining liabilities and decommissioning costs with a considerable margin remaining. The third criterion is net worth greater than $10 million or at least 10 times 5.2 decommissioning costs, whichever is greater. Again, since the definition of net worth is assets minus liabilities, it appears that the application of decommissioning costs in this relationship is reAnvhnt. In addition, finished goods and other valuable assets should not be included in decommissioning costs. If these are considered as

3 both decommissioning liabilities and assets in the determination of net worth, then the licensee is unfairly penalized using this criterion. This penalty is further exacerbated iflicensees are required to determine the cost of decommissioning based on total license possession rather than a realistic projection of actual decommissioning and disposal liabilities on site. Amersham appreciates the opportunity to comment on this very important proposed rule and is willing to answer any questions or provide additional information as required. Sincerely, Mark A. Doruff, CHP Director, Environmental and Safety Regulatory Affairs i I l

C 8 NUCLEAR REACTOR LABORATO AN INTERDEPARTMENTAL CENTER OF % m, MASSACHUSETTS INSTITUTE OF TECHNOLOGY n x 21 '00 7 Actuation Ana#ysis JOHN A BERNARD 138 Albany Street, Cambridge. MA 02:39-4296 C=' C"*"'5" 0FFICE CF SECgEIARY Teletas No (617) 253-73@ Director 00CKEIING & SERV CE Reteio,'ema:n.er-9 oirecio, a R. actor operai.ons rei Ne ie'7> 253-4202 Pnncips! Researen Enginee' BRANCH July 24,1997 DOCKET NLMBERnm PROPOSED RLLE TR M M40.7B# 4 Secretary ((p#F#D3394) 7 U.S. Nuclear Regulatory Commission Washington,DC 20555 Attention: Rulemakmgs and Adjudications Staff

Subject:

Proposed Rule on Self-Guarantee for Decommissioning Funding Gentlemen: The Massachusetts Institute of Technology supports the proposed rule that would allow colleges and universities with either a certain bond ratmg or a certam unrestncted endowment to utilize self-guarantee as a means of financial assurance for decommissioning. Sincerely, (WL ohn A. Bernard, Ph.D Dutctor MIT Nuclear Reactor Laboratory JAB /CRM cc: USNRC - Senior Project Manager, NRR/ONDD USNRC - Region I-Project Scientist, Effluents Radiation Protection Section (ERPS) FRSSB/DRSS J. D. Litster, MIT l

((YOF DOCKETED 3: USNPC Aa OFFICE OF THE PROVOST 129 Hutt,$rn Half L nnenitt of Delaware s ' E M W " ' ' """ W JUL 29 P3 :28 Fas 302 811 2020 July 25 1997 0 FFICt C.* 3 R t.,.,,d y DOCKER.G : :s cri bM - U M_c7 Ntyggg Secretary John C. Hoyle PROPOSEDR E b p g /g g U. S. Nuclear Regulatory Commission Attention: Docketing and Service Branch / (0 2 I A 0 3 3 ( Washington, DC 20555-0001 8 Proposed rule regarding self-guarantee of decommissioning funding by Non-Pr RE: Licensees

Dear Secretary Hoyle:

The University of Delaware strongly endorses the proposed rule allowing universities and other non-profit organizations to self-guarantee the funds for decommissioning costs. N f are most universities very stable institutions, but they are perhaps the least likely licensee type l to terminate licensed activities and require decommissioning. One change in the proposed ru is recommended. As proposed, Appendix E to Part 30 section II.C.(2) requires that licensees annually " repe passage of the test" to ensure that they continue te pass all self-guarantee criteria. How the only financial test under criteria II.A.(20) is the maintenance of at least a $50 million d endowment. University endowments are, by nature, stable and secure. Universities meeting the endowment criteria should not need to perform annual financial test. Section II.C.(3) provides suffi ient assurance that the NRC will be notified if a university no longer meet endowment criteria. The University recunmends that section II.C.s2; cf Appendix E to Part 30 be modified to read: (2) After the initial financial test, licensees qualifying for self guarantee under criteria B.(2) must repeat passage of the test within 90 days after the close of each succeeding fiscal year. The University of Delaware appreciates the opportunity to comment on this important issue. Sincerely, 4 Melvyn D. Schiavelli Provost ss ...s r- ..,;, s -,, x.,

AMERICAN COUNCIL.ON EDUCATION Og_{.D c%ce of vice mes oen, one cenerai counsei '97 Jul. 29 P3 :29 July 28,1997 0FW GT T,.~l U-DOC lt.'--

• o The Honorable John C. Hoyle Secretary U.S. Nuclear Regulatory Commission DOCKET NUWBER 11555 Rockville Pike g

PROPOSED RULE rn 30 4040,704 7' Rockville, MD 20852 ( l,2 FR 43394[ ' ' Y MS Ol6G15 Attn: Docketing and Service Branch Re: Proposed RuN Concerning Self-Guarantee of Decommissioning Funding By Non-Profit and Non-Bond Issuing Licensees 62 Fed. Reg. 23394 (April 30,1997)

Dear Sir:

On April 30,1997, the Nuclear Regulatory Commission (NRC) published a proposed rule which would expand the categories of NRC licensees who may self-guarantee their decommissioning funding obligations. On behalf of the higher education associations listed below, we wish to submit the following comments on the proposed rule. On January 11,1993, the NRC published a proposed rule amending its decommissioning funding regulations to allow licensees that meet specified financial tes.s, issue bonds that are rated "A' or better, and have equity securities registered under the Securities Exchange Act of 1934 to self-guarantee their decommissioning funding obligations. Absent meeting these tests / these licensees w uld be obligated to provide decommissioning funding assurcr. by means of letters of credit, surety bonds on other types of third party fmancial assurance at a cost estimated by the NRC of 1.5 percent of the amount of financial assurance required. Several commentors filed comments on the proposed rule, urging that the self-guarantee mechanism be made available to educational institutions and other non-profit entities. While the NRC did not adopt these comments when it issued the final rule, in the Supplementary Information accompanying the final rule, the NRC announced that it would undertake a study of potential self-guarantees for non-proiit licensees other than universities and would review the applicability of self-guarantees to universities after a fee recovery rulemaking. 58 Fed. Reg. 68726,68728 (1993). One Dupont Carde. NW. Suite 838. Washington. DC 20036-1193 Phone (202) 939 9355 FAX (202) 833-4762 Interner: Sheldon_Sreinboch@ ACE.NCHE.EDO

4 July 28,1997 Page2 The promised study, issued this year, identified alternative financial tests that might serve as the basis for self-guarantee by non-profit universities and hospitals and for-profit firms that do not issue bonds. NUREG/CR-6514, " Analysis of Potential Self-Guarantee Tests For Demonstrating Financial Assurance By Nonprofit Colleges and Universities and Hospitals and By Business Firms That Do Not Issue Bonds" (June 1997). Based on this study, the NRC has now proposed that non-profit colleges and universities may demonstrate decommissioning financial assurance by self-guarantee if they meet the following tests: 1. for those issuing bonds, a current rating of "A" or bett.t; and 2. for those not issuing bonds, an unrestricted endowment with assets in the United States of at least $50 million, or at least 30 times total current decommissioning cost. estimate (or the current amount required if certification is used), whichever is greater. The signatory organizations strongly support the NRC's amendment of its regulations to allow non-profit colleges and universities to self-guarantee their decommissioning funding obligations. The financial stability and longevity of such institutions is at least equal to commercial and industrial entities for which self-guarantees are allowed under NRC regulations. We do, however, believe that in two respects the criteria in the proposed rule are unnecessarily restrictive and could be modified without any significant reduction % financial assurann. The first issue concerns the soility to rc'y upon bond ratings. As prop sed, for those insti*>tions that issue bonds, only a bond issuance that is "unmsured" may be relied upon. The justification for this limitation is that " insured bond ratings are in fact the rating of the insurance company," rather than the college or university itself. 62 Fed. Reg. at 23396. However, as the NRC's own study acknowledges, bond insurers " evaluate the financial condition of the issuers to insure and avoid issuing policies to universities that are not creditworthy. Consequently, the presence of bond insurance (and the triple-A rating that accompanies it) indicates that the issuer is in sound financial condition." NUREG/CR4514,9 2.5.2 at p.18. Thus, the existence of bond insurance provides further assurance that the institution is fmancially secure, and should support the acceptability of the self-guarantee, rather than disqualifying the bond issuance from consideration.

a e July 28,1997 Page 3 1 The second comment focuses on the test adopted for non-bond-issuing colleges and universities. As proposed, a college or university must have unrestricted endowment of at least $50 million or at least 30 times the decommissioning cost estimate, whichever is greater. No explanation is provided as to why an endowment that is at least 30 times projected decommissioning costs is not an adequate standard. Nor, given the size of projected decommissioning costs for college and university licensees, is there any reason why an unrestricted endowment of at least $50 million is not by itself an adequate standard. Rather than requiring compliance with the greater of the two tests, compliance with either of the tests would appear more than adequate to provide fmancial assurance. This would be especially true for materials licensees, whose projected decommissioning costs are likely to be siptificantly less than those for facility licensees. 1 Since the proposed rule requires that the college or university assess its compliance with the financial criteria on an annual basis (teg proposed App. l E to 10 CFR Part 30, @ II. C), the NRC will have continued assurance that the financial well-being of the institution remains sound (or else alternate financial amtrance mechanisms are required). The suggested revisions to the financial criteria discussed above will therefore maintain the same high degree of assurance as the proposed rule, while avoiding unnecessarily restrictive and wasteful requirements. At a time when all organizations are seeking to use their resources in the most efficient possible manner, reducing unnecessary costs without significantly affecting decommissioning assurance ought to be the Commission's goal. The two suggested modifications to the proposed rule would be consistent with this goal. We appreciate the opportunity to submit these comments, Sin crely, / Sheldon Elliot Ste' bach m On behalf of the following associations: American Council on Education Association of American Medical Colleges Council on Governmental Relations National Association of State Universities and Land-Grant Colleges 1

' MASSACHUSETTS INSTITUTE OF TECHNOLOGY DOCKETED USNRC @a Of5ce of Sponsored Programs Telephone (617) 253-3856 Mammachusetts Institute of Technology J pgg3f73g i 77 M====chusetts Avenue, E19-750 ppoweII@ nut.edu Cambridge, MA 02139 4307 / OFFICE OF SECRETARY 00CKETING & ?,ERVICE July 29,1997 BRANCH DOCKET NUWBER PROPOSED RULE O 30. V0.50 7047 (42 f4 233f4) U. S. Nuclear Regulatory Commicalon Washington, DC 20555-0001 Attention: Docketing and Service Branch

Subject:

Self-Guarantee of Decommiuloning Funding To Whom It May Concern: First, accept my apology for the late response to NRC's proposed amendment that appeared in the 400/97 Federal Register. We at MIT heartily agree with the proposed amendment. We have found the cost associated with adhering to NRC's current financial assurance requirements to be quite significant. Allowing qualified non-profits, such as MIT, to use self-guarantee would significantly reduce these costs. Sincerely yo @C Paul C. Powell Assistant Director PCP/mm xc: Dr.Prichard 1 i

} OCKETED USNRC NUUEAR ENERGY IN Sit T U T E VI JUL 30 All:21 0FFICE OF SECRETARY DOCKEilNG & SERV CE ,,,,,,.x,,,,,,,. BRANCH

=

Direct Lee 202 739 6126 mtemet fmkqnes org July 29,1997 DOCKET MMBER PROPOSED RULE $30 40,5o,704 ya Mr. John C. Hoyle

1. 1. 283M)

Secretary b U.S. Nuclear Regulatory Commi sion Washmgton, DC 20555-Or 91 ATTENTION: Docketing and Service Branch

SUBJECT:

Comments on Proposed Rules for Self Guarantee of Decommissioning Funding by Non Bond Issuing Licensees (62 FR 23394) By a Federal Register Notice published April 30,1997, the Nuclear Regulatory Comminnion (NRC) requested comment on a proposed rule change that would extend current authority for licensees to "self guarantee" decomminnioning funding. Under l this approach, certain financially strong licensees are not required to provide financial assurance for the decommissioning of their facilities through one of the mechanisms allowed by rule (e.g., surety bond, letter of credit, pre-payment). Licensees using self-guarantees are permitted to rely upon corporate funds to cover decommissioning costs. The current criteria allowing licensees to use F-;ur ' :es are based on corporate bond ratings. This option is therefore not available to non pront orgamzations and corporate entities that do not issue bonds. The proposed rule would add quahfymg criteria to permit certam of thesa licensees also to use self guarantees. The Nuclear Energy Institutet (NEI) supports the extension of the self-guarantee principle to additionallicensees. NEI recogmzes NRC's responsibility to provide for reasonable assurance that funds will be available to decommission licensed facilities. This assurance should be provided with the muumum burden necessary on licensees. Allowing additional licensees to utilize self-guarantees is a laudable step in that direction. However, we believe that NRC should reconsider the conservative nature of some assumptions reqmred to be made in estimating decommianioning costs. More 8 NEl is the organization responsible for establishing unified nuclear industry policy on matters affecting the nuclear energy industry, including the regult tory aspects of generic operational and technical issues. NEI's members include all utilities licensed to' operate commercial nuclear power plants in the United States, nuclear plant designers, major architect / engineering firms, fuel fabrication facilities, materials licensees, and other organizations and individuals involved in the nuclear energy industry. 1770 a $Taget Nw swit400 W A 5*nNGTON DC 20000-3708 PMONE 202 730 0000

1. Aa 202 785 4010

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Mr. John C. Hoy'le July 29,1997 Peg 32 realistic assumptions would have the effect of estimating costs more realistically and reducing the projected funds for which assurance must be sought. Specific comments on I such assumptions and other issues are presented in the enclosure to this letter. NEI commends the NRC for this initiative, and appreciates the opportunity to provide comments. If there are any questions regarding our comments, please contact me. I Sincerely, M' Felix M. Ellar

Director, Material Licensees & Nuclear Insurance Enclosure c:

Marvin Fertel

Soecific Comments on NRC Prooosal to Extend Self. Guarantee

1. Estimated decomminaioning costs should be based on best available information.

Use of conservative assumptions such as the prime rates charged by contractors or unreasonably high estimates of waste disposal costs should not be required. Other considerations that would result in more realistic cost estimates (such as delays to allow short-lived radioactivity to decay as discussed below) should be allowed. In general, decommianioning cost estimates should be based on actual experience, rather than conservative worst-case assumptions. ~

f. m.stimates of decomminaioning costs should not be required to assume disposal of the marimum amount of material permitted by the license. Typically, the licensee seldom comes close to having the maximum amount of material permitted by the license. It is more reamanable to assume that the licensee would have minimal linanaad material on site when gomg into dacammianianing Additionally, licensees are engaged in cammart:ial activities to produce products. It is reasonaute to assume that some portion of the licensed manmum quantity will be in the form of finished product that will have value and will not be disposed of. In fact, assummg otherwise would be an unr===anahle assumption.

3. Decommissioning costs can be reduced significantly by allowing a period for short-i lived ieotopes to decay before decomminaioning and dismantlement begins. Such delay, to reduce ultimate cost, is the likely scenario in cases where licensed activities occupy only a small portion of the licensee's facility. Licensees should be permitted i

to consider choosing to implement those procedures rather than be required to base their cost estianates on assuming immediate dacammiamianmg l 1

4. h requirements for licensees pursuing self-guarantees should reflect the realities of the licensee community. In particular, the proposed requirement (Appendices D and E) that licensees conduct accounting per U.S. generally accepted accounting principles (GAAP) does not racagai a the increasingly multi national nature of materials licensees. Foreign ownership of major material licensees is currently a reality (e.g., Siemens, ABB, Framatome) and can be expected to increase in the future. h selection of a : counting practices to be used is a significant corporate decision affected by many factors. It is ur.aronable to require that corporate practices of major multi-national firms be changed for a licensee to be allowed to provide self-guarantee of decomminaioning funding. h rule should allow that adequate assutance that funds will be available can be provided using other raar-ai-ad and accepted accounting practices.

1

5. h proposed regulations should be assigned a compatibility status of Level I with 1

Agreement States. This will assure consistent requirements for financial surety arrangements, and will preclude the unintended creation of competitive disadvantages between facilities in Agreement States and Non Agreement States. I, l tw

00CKETEp 1 1.,,,,,,,:n USNPC 2 DemocracyCenter sees % or= YI AUG -4 A8 :39 Tel: (301) $@-3200 Far (301) 564-3201 United %tes 0FFICE OF SECR' fan Emichment Corponaion 00CKE TitiG P,. iU B n :,: l DOCKET NtRBER j PROPOSED RULE N 30Ao,ss70+7% l l August 1,1997 Q pgg33 l2 1 S--.rj SERIAL: GDP 97-0137 US Nuclear Pagn1*mry Commk= ion l Wa=hiantan. D.C. 20555-0001 l Attention: DMan and Service Branch l 1 Paducah Gaseous Diffusion Plant (PGDP) Portsmouth Gaseous Diffusion Plant (PORTS) AVLIS Uranium Enrichment Plant Docket Nos. 70-700170-7002,70-3089 USEC Comments on NRC's Proposed Rule "Self-Guarantee of Deconnaissioning Funding by Non-Profit and Non-Bond Issning Licensees," (62 Fed. Reg. 23395)

Dear Sir:

On behalf of the United States Enricinnent Corporation (USEC), I am pleased to provide tie following comma

• on the NRC's Proposed Rule, "Scif-Guarantee ofD~ammiacinaing Fundir's l

by Non-Profit and Non-Bond Tunms Licensees." The proposed amendment would extend current authority for licturfs to self-gisr ae d de:+

=k- : -g A= dine. It is not clear that wtificatans. such as USEC, would also be M wy to reduce the msts ofWyieg wkb this d-- ;y. USEC would also benefit from tinsw NRC finanmal assurance reqti= =- :- It was tw;y estimated that the costs of OMiaig Letras of Credit and Surety Bends for our gaseous difmeinn pisnes is in excess of $100,000 per yea r.

Allowing cert

• st= to demonstrate -- f:-=+ with the proposed finaneist criteria required to self-guamatee would reduce - uph= costs while ymridig ad-e-te conMaar= to the NRC that funds for ds;c-

=Me will be available when needed. It is proposed that the NRC modzfy the 1===na_=e of the proposed rule to clarzfy that it also applies to certifim-The term " cash flow" is und=&=d in Appaadie D. USEC understands the taan to mean th e

" sum of net income plus depreciation, daal +iaa, and amomzstion." It is proposed that the NRC modify the I***"*S* of the proposed rule to define the term cash flow.- Officesin Paducah. Kentucky Portsmouth, Ohio Washington.DC

U.S. Nudear Pet =ary Commission l Dc-4 --g and Service Branch August 1,1997 GDP 97-0137, Page 2 Thenicyou for the Wundif to provide our input to the Commiainn's evaluation process. We would be pleased to discuss these enmmenk with you. Please contact Ms. Licamarie Jarriel at (3 31) 564-3247. Sincerely, n 0 A-l.- Steven A. Toelle Nuclear F 1*ary Assurance and Policy Manager .f i e

( FRED HUTCHNSON 00CKETED CANOR REiEARCH USNRC CENTER 97 ALG -5 A10 :50 0FFICE OF SECRETARY July 29,1997 00CKEiiE 4 IERVICE BRANt:H Secretary U.S. Nuclear Regulatory Commission CKET NWBER 1 Washington, D.C. 20555-001 D RULE $ao,<topo,7o+7a. Attn: Rulmancing and Adjudications Staff [6 7M 4gg g) l . Re: Federal Regie:r/Vol.62, No. 83 / WalWay, April 30,1997 / Proposed Ru es, Page 23394, Nuclear Regulatory Commission 10 CFR Parts 30,40,50,70 and 72 Self-Guarantee of Decommissioning Funding by Non-Profit and Non-Bond Issuing Licensees On behalf of Fred Hutchinson Cancer Research Center, as a Health Physicist, I strongly feel that the NRC's proposed rule is highly beneficial to Institutes like us. It not only allows us to act accordingly and also organize ahead of time with our financial situation in much more efficient way. Non-profit organizations like Fred Hutchinson Cancer Research Center, can achieve a significant cost savings without any loss of confidence for the NRC and Agreement State that funds for decommissioning will be available when needed. We therefore urge that the NRC adopts the proposed rule as written so that non-profit licensees who meet the NRC's stringent fmancial criteria have available to them the same financial assurance options presently availab!c to corporate licensees. Respectfully, 9ey %6k t 1 Rao M.Goriparthi F adiation Safety Officer / Health Physicist Environmental Health & Safety Department Fred Hutchiison Cancer Research Center l l f 1124 Columbia Street Seattle. Washington 98104-2092 206 667 5000 o ---

HARVARD UNIVERSITY RADIKnoM 3AFEW COMMrrrEE DOCKETED USHRC '97 AUG -8 All '28 BERTHA K. MADRAS, Pa.D. 0FFICE OF SEC a 2138 Chair August 1,1997 00CKETISG &, Jostra P. RINc, PH.D., CHP g2,;g gi 1:(617) 495 2060 Radiation Protection Officer Fax: (617) 495 0593 Secretary NUMBER U. S. Nuclear Regulatory Commission PROPOSED RULE ?$ sq nio, go, go + 7a_, Washington, D. C. 20555-00; { 6,nFRagg y) Attn: Docketing and Service Branch h

Subject:

Proposed rule on Self-Guarantee of Decommissioning Funding by Non-ProSt and Non-Bond issuing Licensees Federal Register / Vol 62, No. 83/ Wednesday, April 30,1997/ Proposed Rules, page 23394 Harvard University supports the proposed rule Decommissioning Funding for 10 CFR 30,40,50, 70, and 72 as referenced above to permit financially strong non-profit licensees the option of self-guarantee of the fimancial resources to fund and complete decommissioning of licensed activities. We agree with your finding that private universities, which can meet the stringent financial criteria, would reduce the costs of complying with financial assurance requirements while providing adequate confidence that the decommissioning funds were available. This mie would allow these institutions the self-guarantee option that is now only available to bond-issuing industrial corporations. We urge that the NRC adopt the proposed rule as written so that not for profit licensees who meet the proposed criteria have available to them the same financial assurance options currently available to corporatelicensees Sincerely, Bertha K. Madras, Ph.D. Chair cc: E. Barkley J. GrifTm R.McGaw i J. Ring l I )

gg1 STATE OF NEW XQQ< I DEPARTMENT OF FEAETH l 11 University Place Albany, New York 12203-3399 97 Atro -7 P 4 :18 Barbara A. DeBuono, M.D.. M.P.H. Dennis P. Whalen Cornmasjoner Executin Deputy Commissioner CYE7N. :q g.,y ....~ l . TVt':E .16 nLMS:5. MOPOSED HULs PR aogo so 7y22 e,e Mneasm) ~ ,5 July 29,1997 Secretary U.S. Nuclear Regulatory Commission l Washmgton, DC 20555-0001 Attn: Docketing and Service Branch RE: Comments on Proposed Rule - Self-Guarantee of Decommissioning Funding The New York State Department of Health submits the following comments on the above l proposed rulemaking. L

1. The proposed rule does not make clear which financial criteria apply when a university also includes a hospital.

2. The proposed rule does not make clear what it means for the non-profit to " issue bonds." In New York State, tax-exempt bonds issued for colleges and universities are placed through the Dormitory Authority of the State of New York. The Dormitory Authority, a public agency, takes no financial risk in the transaction, and the bonds are rated based on the financial strength of the college or university for whom they are issued. The bonds are not, strictly speakmg, issued to the market directly by the institutions themselves; they are the bonds of the Authority.

3. What is meant by " uninsured, uncollateralized and unencumbered bonds"? Would a bond for which no pegdy is mortgaged but a priority claim is given to bondholders on certam receivables (e.g., room and board payments) be considered "collateralized" or

" encumbered"? l

4. Do any criteria apply when a non-profit has issued bonds, but none are " uninsured, uncollateralized and unencumbered"? Such institutions could not meet the first test, and the second test appears to be restricted to " applicants and licensees that do not issues bonds," regardless of what sorts of bonds those might be.

5. What is meant by unrestricted endowment 7 Most institutions have what are referred 2 University Place, Rm. 375, Albany, N.Y I2203 Tele:518N58-6485 FAX: 518M58-6434 9708190056 970729

)$/O PDR PR 30 62FR23394 PDR

to generally as " endowments" that consists substantially of funds functioning in that capacity, even though the donors contributed them in such a way that the funds would not necessarily be regarded, strictly speaking, as " endowment" in the narrower legal sense of that term. Many institutions of great financial strength may not meet the criteria if a strict l legal definition is applied.

6. The rationale for requiring hospitals to meet all four financial tests is unclear. It would appear that implementation of test d, " operating revenues / decommissioning costs" would provide reasonable assurance of ability to provide decommissioning funding.

The Department supports the concept of self-guarantee for medical and academic institutions as there is little evidence these institutions pose a risk ofleaving a contamination problem. However the proposed rule prescribes strict financial tests that are unclear and appear to be over restrictive and possibly not true indicators of financial strength. Consideration should be given to includmg the detailed financial tests in a guidance document much like the current financial assuredness rule. Further Agreement States should have additional flexibility determine the requirements for financial assurance especially in the case of hospitals. For example, the Department has considerable regulatory control over the operation of hospitals including the issuance of operating certificates, approving certificates of need and overseeing closures. We appreciate the opportunity to comment. Please contact me if you have any questions or need additionalinformation. Sincerely i b Stephen M. Gavitt, Chief Radioactive Materials Section Bureau of Envimamental Radiation Protection 2 University Place, Rm. 375, Albany, N.Y. I2203 Tele:518/458-6485 FAX: 518f458-6434

REED C0LLEGE ' Portland,ggoz USNRC EDWIN O. MdAALANE " " " " " ' " ^ " " DOCKET NUMBER W SEP 22 P3 :38 PROPOSED RULE P6suo, l OFFICE G $209.." HY la2FRa33'lij) kg ADJUDICATIONS STAFF nuLeuggw5 so September 17,1997 - - - ] Secretary j U.S. Nuclear Regulatory Commission" 11555 Rockville Pike, MS Ol6G15 l Rockville, Maryland 20852 Attn.: Docketing and Service Branch i Subj.: Comments on Proposed Rules for Self-Guarantee of Decommissioning Funding by Non-Profit Issuing Licensees (62 FR 23394)

Dear Sir:

On April 30,1997, the Nuclear Regulatory Commission (NRC) published a l proposed rule which would expand the categories of NRC licensees who may self-i guarantee their decommissioning funding obligations. Reed College strongly supports the Proposed Rule. It would allow Reed College to meet the proposed stringent financial test and achieve significant cost savings without any loss of confidence for the NRC that funds for decommissioning l will be available when needed. l l We appreciate the opportunity to submit these comments. l . Sincerely, 0 Edwin O. MEF ane Vice President / Treasurer l l l l 3203 Southeast Woodstock Boulevard Portland. Oregon 97202-8199 Telephone (503) 771 1112

O e ? O l ENCLOSURE 5 FRN (PROPOSED RULE) DTD 4/30/97 A l

l i 23394 Federal Registr / Vol. 62 No. 83 / Wednesday, April 30, 1997 / Propos:d Rules {, 1993 (excluding the cro Unit Number of members Program, Rural Utilities Service, which production was t$s in years ine highest and telephone number (202) 720-9554. in which production was the lowest) as Kansas 2 s reported by the National Agricultural} Louisiana 2 SNMWARNOM4AR l Statistia Service (NASS) of the U.S. Tenressee

2 Background

Carolina."~ Department of Agriculture. The proposed regulations that are the Proposed representation on the Board Mictngan 2 subject of these corrections, supersede r (62)is based on average production North Dakota 2 paragraph (c) of $ 1703.110 as proposed i IIvels for the years 1992-1996 Marytand - 2 and would affect persons submitting (rxcluding the crops in years in which wisconsin 2 applications for financial assistance production was the highest and in Vrgn=a 1 under 7 CFR 1703, subpart D. Title VII, a which rod was the lowest) as Geor 'M _ section 704, of the Federal Agriculture i Pat by oum 1 Alabama 1 Improvement and Reform Act of 1996 %e nusnber of geographical units Delaware 1 (Pub. L 104-127) amended Chapter 1 of w remain at 30. Texas 1 subtitle D of title XXIII of the Food, This proposed rule would adjust Pennsykarna -._ 1 Agriculture, Conservation, and Trade representation on the Board as follows: Ohlehoma - 1 Act of 1990 by authorizing the Secretary New. heresy 1 of Agriculture to make loans for Eassem Region distance learning and telemedicine 8" E 'Pmposed services in rural areas. The proposed Q tion regulations would amend 7 CFR part We Flonda, Rhode Island, 1703 to set forth the rules for this new 3 4 Vermont, New loan program to be administered by the Mmnesota 3 4

Hampstwe, RUS.

Soum Dehota 2 3 of Need for Correction Norm Dakota 2 D ~~ coluntma and As published, the proposed "ueno Board adjustment as proposed by this Weseem I regulations contain errors which may Prove to be misleading and are in need rulemahng would be effective,if (Montana. Wy. of clarification. ad:pted, with the 1998 nominations and oming. Colorado, Appointments. New Mexico. Correction of Publication I List of %e in 7 CFR 1220 an, ' wash Accordingly, the Federal Register Administrative practice and mgion Oregon, document 97-9422 published on April procedure. Advertising. Agricultural Nevada. Cablar. 16,1997, at 62 FR 18677 is corrected as '"* H**"'i and follows: research, Marketing agreements, W Reporting and recordkeeping $ 1703.113 [ Corrected] "9" 1.On page 18686, in the third P od Deted: April 24.1997. column, in 51703.113, paragraph (c). For the reasons set forth in the. Barry L carpeeter, line three, the date "May 31,1997 "is l preamble,it is proposed that Title 7. - Direcror, Liverrock ond Seed Division. corrected to read "(60 days from the I part 1220 be amended as follows: IFR Doc 97-11105 Wed 4 97; 8:45 ami date Of publication of the final rulel,." 2 On page 18686,in the third PART 1230-80YBEAN PROMOTION, - = coes 3 w RESEARCN, AND cnaams naarsg column, in $ 1703.113, paragreph (c), NTION line 24. the date "by M1y 31"is i DEPARTMENTOF AGRICUt.TURE corrected to read "!not later than 60 1.no authority citation for 7 CFR days from the date of publication of the part 1220 continues to read as follows: Rural Utilisse Servios final rulel." l Aseherty: 7 U.S.C. 6301-4311. 7 CFR Port 1703 Det*d: APru 23,1997.

2. In $1220.201, the table pas 572-A331 immedime,! following paragraph (a)is Administmtor, Rumt Urilities Service.

f ,, vised to reed as follows: Dietence Learning and Telemedicine (FR Doc. 97-11102 Filed 4-29-97; 8:45 aml Loan and Grant Program; Correction ""' " C088 8*

• g,g g,,,,,,,

(:) * *

• AGescv: Rural Utilities Service, USDA.

ACTiost: Proposed rule: Correction. NUCLEAR REGULATORY tMt Number of menters Neanag summeAny:This dam =mn contains I lanse 4 corrections to the pmposed regulations 10 CFR Parts 30,40,50,70, mid 72 lose 4 which were published Wednesday, Mmessen 4 April 16,1997 (62 FR 18686). De fun 31EO-AFS4 EN',g_'n ePP'$non Self Guarantee of Decommissioning l Mosest 3 a Ohio 3 g, Funtsng by Non-Pront and Mon-Bond Arhoness 3 leeuing Licenseen Nee,esen, 3 Fon rusman anomaAvion cowrAct: Scame Daheen - 3 Barbara L Eddy, Deputy Assistant Aosecv: Nuclear Regulatory Mammagspi 2 Administrator, Telecommunications Commission. 1 j

I Federal Register / Vol. 62 No. 83 / Wednesd:y, April 30, 1997 / Proposed Rul:s ' 23395' ~ ' ACTION: Proposed ruls. DC 20555, t:liph'one (301)415-6203, e-final ruirmaking thtt cllows fin ncially mail cwp@nrc. gov. strong corporations with A or better

SUMMARY

"I be Nuclear Regulatory SUPPLEMENTARY INFORMATION: Licensees bond ratings the option of using self-Commission is proposing to amend its subject to 10 CFR Parts 30,40,70, and guarantee as a mechanism for regulations to allow additional materials 72, whose operations involve the use of complying with the regulations on licensees and non-electric utility reactor substanthl amounts of nuclear financial assurance for licensees who meet cenain financial materials, and those subject to 10 CFR decommissioning. Self-guarantee was criteria to self-guarantee funding for part 50 who are opplicants for or added to the list of anancial assurance decommissioning. Certain commercial holders of operating licenses for mechanisms as a cost-saving option for those licensees able to meet the corporate licensees who issue bonds are production or utilization facilities must presently allowed to self-guarantee provide financial assurance for stringent financial test required. The funding if they meet stringent financial decommissioning funding by selecting NRC's self-guarantee procedure requires criteria. The proposed rule would allow from a variety of mechanisms: surety liansees to pass the financial test non-profit licensees, such as colleges, bond or letter of credit, prepayment, annually. In addition, NRC's universities, and hospitals, and ako insurance, an external sinking fund requirements for self-guarantee provide some commerciallicensees who da not coupled with a surety or insurance.i for early reporting by licensees of any issue bonds, to self-guarantee fundirg, parent company guarantee for liansees deteriorationin Anancialcondition.

The NRC's decision to add self-provided they meet similarly stringeut that have a qualifying corporate parent. nnancial criteria. Allowing que.lified and, for artain Anancially strong tee by qualified hmneaas to the non-profit and non-bond-issuing corporations, self-guarantee. A st of approved Anandal assurance licensees to use self-guarantee would statement ofintent regardmg +-inin. mach =ni-came in response to a Petition for rulmnaHng filed by General reduce the costs of canplying with NRC funds to satisfy darv===leminuing ~ Anancial assurance requirements w hile obligations may be used by some Electric and Wastinghnna= (PRM-30-59, providing adequate mafidence to the licensees that are governmental entities notice of reasipt published September NRC that funds for d-=3ssioning (for example, public universities whose 25,1991 (56 FR 48445). %e petition will be available when needed. chart er provides for a direct link to the Presented a mee for allowing self-State *.;cvernment). guarantee as a cost-saving option for DATLs: Submit comments by July 29 Anas curundy using self-NPaak busees aW to pass a 1997. Comments received after this date guararitee must pass a stringent stringerit EnanM teGe E will be considered if it is practical to do Snanc al test that is given in Appendix Published a notice of proposed so, but the NRC is able to assure C to 10 CFR Part 30. Self-guarantee is rulemaking on January 11,1993 (58 FR svnsideration only for comments currently not available to non-profit 3515), m response to the petition. received dn or before this date~ licensees, such as hospitals and Several mmmant letters were remived AD0 MESSES: Comments may be sent to universities, of to for-profit licensees from universities requesting that self-the Se::retary, U.S. Nuclear Regulatory who da not issue bonds, because the guarantee also be applied to non-profit Commission Washington, DC 20555-financial test for self-guarantee uses the *;ntities able to pass a Enannat test. At 0001, Attn: Docketing and Service rating of the bonds issued by the that time, the NRC had not conducted Branch. Hand deliver comments to licemee as one measure ofits financial an analysis of the E=anshility of applying 11545 Rockville Pike, Rockville, resources and ability to fund self-guarantee to non-profit entities. In Maryland, between 7:45 a.m. and 4:15 decoinmissiomng. the final rule, the NRC stated that "In p.m. on Federal workdays. Tha NRC has determined that the use order to ev*and the use of self-guarantee Single copies of this proposed of se'.f guarantee, currently limited to to non-proSt entities, new criteria rulemaking may be obtained by written bonti-issuing industrial corporations, would have to be developed to assess request to Distribution and Servias cc,uf d be made available to additional the An=ncial strength of the non-profit Section Printing, Graphics and Majj catrgories c!!imasses without limnsees. Development of Anancial Services Branch, Of5ce of isolardizing the present high level of criteria to assess the qualifications of a finnncial assurance that the non-profit entity to provide a self-Administration, U.S. Nuclear Regulatory Commission Washington DC 20555-dec commissioning obligation requires. guarantee is hkely to renuire detailed 0001, or by telefax to (301) 415-2260. Allowing qualified non-pro 6t and non-consideration of the different Enancial For information on submitting bosid issuing lir=n-to use self - accounting methods used by medical en-mants electronically see the guarantee would reduce the costs of institutions.De Anancialaccounting coSP ying with NRC Anancial and reporting of non-proEt entities are l discussion under Electronic Arr=== in the Supplementary Information section. assurance requirements for those who unique and substantially different from Certain doen==nea related to this meet the specified criteria. the accounting and reporting of for-Profit entities"(58 FR 68728). ru - a=Hn= including mmments L Backgroung Subsequent to the Dar==nhar 29,1993, t received, renay be examinad at the NRC On

Dearnbar 29,

m3 (58 FR 68726), Enal rule, the,=nmie=ian initiated a e Public Document Room,2120 L Street as carected on Jan 12,1994 (59 FR study to determine whether criteria NW. (lower Level), Washington' DC. 1618), the NRC pub, a notim of could be developed and applied by NRC Dese name documents also may he i r non-pront hn=n==== and non-bond viewed and downloaded electronically ' P=auant to 1o Itso m x3Lanel= cat issuing w wial limn-to use self-via the Electronic Bulletm Board 8 guarantee while===3a'-3a3a= the t wish am asannal.i=u 't.od. required level of confidence regardmg established by NRC for this ru - a=Hn=~ aandas as wi w., mm. .ppry to as indicated in the diaen== ion under the availability of darv=n=l== inning en=caric utint and d e es ca the recs Electronic Acx:esa. Adv.ac. Nath= elProposed " M-whd funds when needed.De study, Fost MmTHER pePOmeATION CONTACT: Dr. addransa i t funding usena" " Analysis of Potential Self-Cuarantee Clark Prichard, Office of Nuclear g",","n""[" gyarias Tests for Demonstrating Financial 3

N=c3== Pow = maanar 41 nt Assurance by Nonpro6t Colleges and Regulatory Research.,U.S. Nuclear Regulatory enemi== ion, Washington, 154U April s. toest Universities and Hospitals and by a

] ~ ) a ) 23396 FedIrd Register / Vol. 62, No. 83 / Wednesday, April 30, 1997 / Proposed Rules Business Firms that Do Not issue the institution that holds the NRC ratings. For the same reasons outlined Bonds " NUREG/CR-6514,2 identified a license. above, a enterion of an A or better bond variety of financial criteria that could be Regarding financial criteria that are rating could be used for hospital applied to additional categories of based on factors other than bond ratings, licensees. The A or better rating should licensees regarding the use of self. quantitative estimates of financial be for unguaranteed. uninsured, or guarantee. The financial criteria assurance risk are not available because uncollateralized bonds. proposed here were selected by the NRC of the lack of a large financial database For hospital licensees without a bond based on information in this report. The such ar. that maintained by the bond. rating. three financial ratios are NRC believes that the financial criteria rating agencies on bond-issuing entities. identified as most accurate indicators of proposed in this notice would maintain The NRC has deliberately chosen non. financial strength:(1) liquidity-the high level of assurance of bond rating financial criteria that are (current assets and depreciation fund, availability of decommissioning funding conservative. The NRC regulations have divided by current liabilities). (2) net provided by the present self-guarante, included a self-guarantee mechanism for revenue-(total revenue less total machanism for bond. issuing licensees. only a few years. It seems prudent to set expenses, divided by total revenue), and the threshold financial criteria at a high (3) leverage-{ ratio of long term debt to D. Analysis of Fi===ca=1 Criteria level. At some future time, as more not fixed assets). Numerical values for b NRC must have evidence of experience is gained with self. these ratios have been developed by adequate En==cial strength on the part guarantee, the financial criteria can be reviewing the financial characteristics of of the Iw=== to ensure that reviewed, and appropriate revisions can hospitals. N licensee must meet all d=cammi==ioning fundmg obligations be proposed. three ratios.The proposed values are as will be emot when the need arises. If self. A. Criteria for Colleges and Universities f Ilows, and based upon the analysis guarantee is permitted, the applicant or performed for the NPC, represent a level licensee must submit a basis for APProximately 75 percent of NRC's of financial risk comparable to an A concluding that d= commissioning college and university licensees issue bond rating: financial assurance is still provided. bonds and have bond ratings. Bond (a) Liquidity-(Current assets and Firiancial strength does not necessarily rating can thus be used as a basis for depreciation fund, divided by current depend on the type oflicensee. Many financial criteria for most college and liabilities) greater than or equal to 2.55. colleges and universities have very uruversity licensees. Note that many, (b) Net revenue-(Total revenues less strong Snancid positions, with large college or university bcensees are total expenditures divided by total endowment funds that could be used, if Public institutions and a large portion of revenues) greater than or equal to.04. 8 needed, for decommissioning funding. these can u e a governmental statement (c) Leverage-(Long term debt divided Some hospitals are also quite financially ofintent that funds for by net fixed assets) less than or equal to l strong. With respect to non-band issuing decommissioning will be obtained when .67. commercial Srms, their lack of any bond riecessary, a==A==i-= which does not in addition, a hospital must be of a issuance could renect An=acial involve any significant cost to the minimum size relative to estimated resources greet enough to preclude the limasse.N NRC believes that the A or d= commissioning costs. & financial need to issue debt. better bond rating (for uninsured bonds) test calls for hospital operating revenues if a college, university, or hospital has criterion used in the extsting. elf-to be at least 100 times an A or better bond reting. the financial guarantee financial test can also be used d=camml== inning costs. assurance risk of allowing it to self. as the criterion in a nn==ci=I test for use guaranese d===mi==ianing fundmg is by colleges and universities. Even if an C. Criterio For Non.Bondissuing cosaperable to the An== rial assurance apphcant or bcensee were a non-proSt IndustrialCorporations i risk of institutions currently allowed to entity or a for.proSt firm that does not A ""*"'i=1 ratios test is an alternative sota- - - too.This dak is also based on issue bonds, it may obtain a bond rating to band rating which is currently an A'orbetterbond .N risk of from one of the major ratings agencies. allowed by NRC regulations.& NRC, l delsult dindustrial issuers with his option would be allowed. Having Parent guarantee test in Appendix A to an A or better bond rating has been obtained a bond rating, the 1= to Nan 30 includes a ratio tem as methmated at less than 1 pescent would be subpect to the same an alternatin to a bond rating test.N = 11y.s An A or better band reting requirements as the band.isming ProPeed erhodon is Cash Flw didded in,ue=a== &M se h has passed a institutions. try Total Liabdities greater than 0.15,. ,,g,,,,,g,, 't For hcensees without a bond reting, a Total Liabilities divided by Net Worth ratings agencies ofits ability"to most levelof unresencted endowment of et less than 1.5, and Not Worth gmeter Saancid " ^- - Bond retings are least 850 million, or at least 30 tim== than 810 million or at least to times cons. '"--N costs, whichever is g prossend -'- - ^- to changes in the issuer's A===rimi whichever is larger, =hantIbe sumc6==t greater. Den==el=1 assurana risk of condition.N A or hase=r bond rating " "II" "8* d 8'I' - . his level using such a criterion is methanted to be abould be for uninsurnd bonds. As of endowment is adequate to generate comparable to the risk =ada'=d with di====I in NUREC/Ot4514. insured annual income==h' to meer the cunent ngul=Haa=

• bond retings am in aset the rating of the upper range of==H= wad D. Cost Savuqss

===lan mas N f insuring company and sney not apply to Cost savings would result because gg g,,g,g 2 ,mw quahfying lia====== would not have to sm Y es".* Yhe W other types d R== Mal am ammm could b covered by the annual - stas L St. ser Washimpen, DC: the PINT's melang return on an endowment invested at 3 aanrance lanruments och as h d addsene is bdall Slup IJ4 Washingsum.DC asses-pg,gggg, east: subsphema tass) ase-aaras ha tass) ese- +=Amstymis of Panamein! = "e-- Tomas br asas. semelm empium oss semilable tem the feC

3. CryteriaforHospitals N=====ag Pimmanal Assmmans by Nampsm8t semies.

Callsyns med Umhusmiums med Hospiamin med by scusymmes amme nuesehe med omisek asams. Approximately 50 percent of hospital seminum risms ihm de sa lmas amads". NUsEC/ hemmeys aymessi es,msi pomme,y test, p,33. tw==-issue bonds and have band ca.ast4. tems, p. 47. l

Federd Ragister / Vol. 62 No. 83 / Wednesday, April 30, 1997 / Proposzd Rulzs 23397 Estimates of the numbers of NRC for colleges and universities includes credit or surety bonds. These types of licensees who could qualify for self-estimates for the reactors licensed to anancial assurance instruments typically cost a licensee approximately guarantee under the proposed Anancial them as well as materials licenses: 1.5 percent per annum of the amount of criteria and estimated total cost savings financial assurance purebaa~1 on an annual basis are as follows, and Total annual Wh qualdying '"d'"y 25-30 $350-5400 conege and Universey 10-14 $120-$150 2-4 $20-540 Hospdal... Non-Bond lasuing industnal The total cost savings for all licensees which can be used by qualified non-directly via Internet. Background documents on the rul=== king are also estimated to qualify for self-guarantee bond issuing licensees. availabic, as practical, for downloading could range from approximately $500K ly, w for a r - t and viewmg on the bulletin board. to 3600K per annum. Groeter cost savings would result if Agreement (A) Agreement Stateimplementation If using a personal computer and modem, the NRC rud=== king subsystem States allow self-guarantee for their Issues on FedWorld can be anc=== i duectly I"""" Financial assmance mach==t=== are a by dialing the toll free number (e00) There would be no signi8 cant cost Division II compatibility item. 30W72. Cosamunication sohware impact on NRC as review time for the Agreement States may adopt regulations - should be set as follows: i- - various financial assurance==chand=== of equal or greater stringency. States ["ty to none, data bits to 8, and stop is essentially the same. would therefore have the option to

i. :I'i,r;'Er"%NE '*

^ - =' - +r ---- -Fa a sa--',' m o^=ha;i e g <l'" te do s rulemaking subsystem can be accessed Anancial assurance regulations if this by selecting the " Rules Menu" option, 20 CFR Port 30 proposed rule becomes final. The the C u.* wrs will existing Agreement State regulations on Section 30.35 is amended to permit u yet da a ce tates "H Information Center" option that have the flexibility to allow self- [can M *" bx D is added to 10 CFR Part 7,I,**

• The NRC F W gg, NRC 30 to establish requir====*= for self-a,, g g,,,,,g g,, g also be accessed by a direct dial phone number forthe main FedWorld BBS, guarantee by non-bond issuing the compatibility status of its Enancial (703) 321-3339, or by using Telnet via

"""""cial he====== Appendix Eis assurance @does. Internet fedworld. gov,if usm' g(703) added to 10 CFR Part 30 to establish requirements for self-guarantee for non-(B)FinancialCritorioforNon Bond 321-3339 to contact FedWorld, the NRC ront college, university, and hospital Issuing Entities subsystem will be accessed from the main FedWorld menu by selecting the As diar"-- ' substantial data exist on the default risks===actated with various "Megulatory, Government 10 CFR Part 40 /J= ministration and State Systems." levels of bond rating. However, a Section 40.36 is amended to permit auandtadve sedame is not avdlable for then selectag " Regulatory Information self uarantee for Ammactal assurance 1 a..,.i=1 amurance risk ented Mall." At that point, a menu will be which can be used by g aliA=d non-with the non-bond criteria displayed that has an option "U.S. t Nuclear Regulatory Commission" that tlicensees and r.c H issuing proposed here.The invites ea=-t on whether these proposed will take the user to the NRC online main menu.The NRC online area also criteria are s=me -ely rigorous with can be accessed directly by typing "/go 20(7R Part 50 respect to A=ancial aneurance risk, or NRC" at a FedWorld -==d line. If Sareian 50.75 is annended to permit conversely, whether they are so the user accesses NRC from FedWorld's self guarantee for An==c4=I amusence t as to exclude 1E==== who which can be used by g=HA=d non-d not be excluded because their main menu,he or she may return to P.at ine=-- and non-bond issuins A=anc=i posiden is such that b ' FedWorld by selecting the" Return to ur== - u..,ial assurance risk is acceptable. FedWorld" option from the NRC online Main M== Howner,if the use 20 CFR Part 70 Electronic Access accesses NRC at FedWorld by using C-*i-70.25 is==== dad to permit Comments may be submitted NRC's toll-free an=har, he or she will self guarantee for An=eial assurance electronically,in either ASC11 text or have full access to all NRC systems but which can be used by g=liA=d non-Wordperfect format (version 5.1 or will not have access to the = min t incensees and non-band issuing later), by calling the NRC Electronic FedWorld system. Bulletin Board (BBS) on FedWorld. The If the user -*=ce= Fedworld using bulletin board may be accessed using a Teln.t, he or she will ese the NRC area 20 CFR Post 72 personal computer, a =ada= and one and snenus, including ;be Rules Menu. Section 72.30 is amended to permit of the -=a=1y available Although the user willbe able to download docu-*= and leave self-guarantee for Anancial assurnace communications software ;-- 4 ;-. or Ak

~~ 'y-23398 Federal Register / Vo'. 62, No. 83 / Wednesday, April 30, 1997 / Proposed Rules n essages, ho or she will not be able to rule would not introduce any impacts Nuclear Regulatory Commission, write comsr.ents or upload files on the environment not previously Washington. DC 20555-0001, or by (commenN). If the user contacts considered by the NRC. Therefore, the Internet electronic mail at FedWorld using FTP, all files can be Commission has determined, under the BIS 1@NRC.COV; and to the Desk accessed and downloaded but uploads National Environmental Policy Act of Officer. Office ofInformation and are not allowed all the user will see is 1969, as amended, and the Regulatory affairs. NEOB-10202. (3150-a list of files withat descriptions Commission's regulations in subpart A 0017. -4020. -0011, -0009, and -01320. (normal Copher lood An index file is of 10 CFR Part 51, that this proposed Office of Management and Budget, available listing and Jer.ribing all files rule would not be a major Federal action Washington. DC 20503. within a subdirectory. There is a 15 significantly affecting the quality of the Comments to OMB on the collections minute time limit for FTP access. human environment, and therefore an ofinformation or on the above issues Although FedWorld also can be environmental impact statement is not should be submitted by May 30,1997. ace===ad through the World Wide Web, required. No other agencies or persons Comments received after this date will like FTP that mode only provides access were contacted in making this be considered if it is practical to do so, for downloading Sics and noes not determination, and the NRC staffis not but assurance of consideration cannot display the NRC Rules Menu. aware of any other documents related to be given to comments received after this For more information on NRC bulletin the environmental impact of this action. date' boards call Mr. Arthur Davis, Systems The foregoing constitutes the Integretfon and Development Branch, environmental assessment and finding Public Protection NotaScation NRC. Washington, DC 20555, telephone of no sigrdficant impact for this (301)415-5780:e-maH AXD3#nrc. gov. pmposed rule. The NRC may not canduct or sponsor, and a person is not required to respond Finding ofNo Signik.a.at Paperwerk Reduction Act Statement to, a collection ofinformation unless it EnviromanentalImpact: Availability This proposed rule amends displays a currently valid OMB control The proposed amendments would information collection requirements that "*" ~ r.llow quaiined non-profit and non-are subject to the Paperwork Reduction Regulatory Analysis bond-issuing !;censees the option of Act of 1995 (44 U.S.C. 3501 et seq.). using self-guarantee as a mechanicm for This rule has been submitted to the The NRC has prepared a draft fin =neial assurance for Office of Management and Budget for regulat ry analysis o this proposed decommissioning. For-proSt corporate review and approval of the information Nguaion. The analysis ex= mines the licensees that issus bonds are already collection requirements. costs and beneSts of the alternatives a31 owed to use self-guarantee if they The public reporting burden for this considered by the NRC.The draft L.teet the regulatory criteria. Other collection ofinformation is estimated to analys,s as available for inspection in i

icensees may currently elect to use a average 9-14 hours per response, the NRC Public Document Room,2120 rariety of An=ncial assurance including the time for reviewing L Struet NW (Lower Level), Washington.

==ek-=8-suct as surety bonds, instructions, searching existing data DC. Single copies of the analysis may be letters of credit, and esemw accounts to sources, gathering and maintaining the obtained imm Clark Prichard, Office of comply with decommi==ioning data needed, and completing and Nuclear Regulatory Research, U.S. regulaeons.The proposed action is reviewing the collection ofinformation. Nuclear Regulatory Commi= ion, intended to offer non-proSt and ann-The U.S. Nuclear Regulatory Washington, DC 20555, telephone (301) bond-issaing nuclear materials licensees Commi=mion is seeking public comment 415-6203. 'ed non-power reactor licensees greater on the potential impact of the collection The NRC requests public comment on dexiallity by allowing an additional ofinformation contained in the the draft analysis. Cominents on the mer4=nia= for licensees that meet the proposed rule and on the following draft analysis may be submitted to the Snauial critaria for use of self-issues. NRC as indice-d under the AcosissaES guar==n==

1. la the proposed mllection of heading

'this proposed revision to the NRC's information -==ry for the proper Flanrindh*y Car *'Araha= mgut=*iana simply would add one more ;- ' - = of the functions of h fin== rial aneurance mech==nen to the NRC, including whether the information In accord =nm with the Regulatory

==ra==l=== currently available. It will have practical utility? Flexibility Act of1980,(5 U.S.C. wouM not a5ect the cost of

2. Is the estimate of the burden 605(b)), the n==l==lari certifies that e

dann==I==laning metanals and non-correct? this rule will not, if pmmulgated, have power:==etar anci1Mies. All wing self-

3. le thorn a way to enhance the a significant econa=le impact on a f

guerentse for additional types of quality, utility, and clarity of the substantial number of small entities. licensees would not lead to any inaense information to be collected? This proposed rule would expand the in the =N=r* on the environment of the

4. How can the burden of the number of options available to ha--

2-- ' ' "-- activities ansidered cxular+ san ofinformation be =lai=8*-d to comply with the n==haion's e in the Baal rule puhll=had on June 27 including the use of automated financial assurance requirements, thus 1988 (53 FR 24018), ca analysed in the collarthn *=chniques? =nhancing the flexibility of these Final Generic Envir====neal Impact Send -==nts on any aspect of this regulations. It is==thn= earl that this Statsenent on ru > a + of pmp~osed collection ofinformation, proposed rule, if promulgated as final. Nuclear Facilities (NUREG-05e8, l3== euggetions for mducing the would result in signifie=nt cost savings August,1988).s Pmmulgation of this burden, to the Information and Records to qualifying 11mn==== Y-71 Branch (T-6 F33), U.S..

• c.,e atwuano enes simhas se, Beck 6t Adyeie inspemane, no.empying lur e aus tuan abe NRC Public Co.ormramma Printing OtSon. P.0L nas 3?oset.

'Ibe NRC has dat==sninart that the er nom .e atas t. Anet Nw Gewur washimense.DCasees-esse r '.

taarptz-tmail. Wag== DCassss-cept. ' '

23eek er tum the M='amal Tes&=iral Rafarimetime barirfit rule,10 CFR 50.109, does not 12eepsm-arrs: aus taerlau-sus. capan's susy be servem by wresses terts se sees Prei noyet a d. apply to this propond rule and, inmmesed at currens runs hom the U.s. sprime sed.vA zzist. therefore, that a hackfit analysis is not s c ) 1

'. i i Federal Register / Vol. 62. No. 83 / Wednesday. April 30, 1997 / Proposed Rules 23399 l 1 required for this prop 2 sed rule, because PART 30-RULES OF GENERAL. guarantee of funds by the applicant or 10 CFR 50.109 addresses only the APPLICABILITY TO DOMESTIC licensee may be used if the guarantee process for controlling backfits of LICENSING OF BYPRODUCT and test are as contained in Appendix l nuclear power reactors and this MATERIAL E to this Part. A guarantee by the l applicant or licensee may not be used in i proposed rule does not affect the

1. The authority citation for Part 30 combination with any other tinancial l

Commission's decom nissioning e n mues read as fonows: financial assurance requirements methods used to satisfy the I regarding nuclear power reactors (see Authority: Secs. st. s2.161.182.183.186. requirements of this section or in any 68 Stat. 935. 948,953. 954. 955,as amended. situation where the applicant or Statement of Considerations: Final SC Rule-Revision of Backfitting Process $1211220\\.222.2 licensee has a parent company holdiag 6 22 for Power Reactors 50 FR 38097; secs. 201, as amended. 202,206. as Stat.

• rnajordy control oW vodng M of the company. Any surety met)wd or September 20,1985).

1242. as amended. 1244.1246 (42 U.S.C $841. 5842. 5s46). insurance used to provtde fir.ancial List of Subjects section 30.7 also issued under Pub. L 95 assurance for decommission.ng must 601, sec.10,92 Stat. 2951 (42 U.S.C 5851). contain the following conditions: 10 CFR Part 30 Section 30.34(b) also issued under sec.134. 6s Stat. 9x. as amended (42 U.S.C 22341

4. New Appendices D and E to Part 30 Byproduct material. Criminal Section 30.61 also issued under sec.1n7. 68 are added to read as fo11owo-Penalties Government contracts.

S:st. 955 (42 U.S.C 2237). Intergovernmental relations. Isotopes.

2. In 6 30.8 Paragraph (b) is revised to Appendix D to Part 30- Cruaria Relating to Nuclear materials. Radiation protection.

1. • • d 88 I II "8 Use of Fi=== rial Tesas and self4maramese Reportmg and recohp%

for W e. ..u. Assuramm of t:ial n=r===-laning by r'7-Rated requirements. $ 30.8 Informe6on coelection Funds for Companies hat Have No C - rec 4 .6 0148 approvat. 10 CTR Part 40 Bonds Crimin I penalties.Covernment (b) The approved information

1. Introduction contracts. Hazardous materials collection requirements contained in An applicant or limnsee may provide transportation. Nuclear materials, this part appear in $$ 30.9. 30.11,30.15, reasonable assurance of the availability of 30.19,30.20,30.32.30.34,30.35,30.36 funds for decommissioning based on Reporting and recordkeeping 30.37.30.38,30.50,30.51,30.55,30.56 furnishing its own guarantee that funds will requirements. Source maten,al, be available for decommissioning costs and and Appendices A. C. D. and E.

on a demonstration that the cornpany passes

Uranium, the financial test of Section II of this to CFR Pad 50

3. In 5 30.35. the introductory text c.

appendix. The terms of the self. guarantee are paragraph (f)(2) is revised to read as in Section m of this appendix. This appendix Antitrust. Classified informat2on, follows: establishes criteria for passing the financial Criminal penalties. Fire protectior2. test for & self uarantee and establishes the Intergovernmental relations. Nuciaar $ 30.35 Financial moeurance and terms for a selfguarantee. power plants and reactors. Radiation reconnesping for decomisesoning. g, gj,,,cj,f 7,,, protection. Peactor siting criteria. A. To pass the financial test a company Reporting and recordkeeping M,,, must meet h following criteria: o tee m ods million ti times the to nt 10 CFR Part 70 guarantee thatAara==issioning costs decximmissioning mst estimate (or b will be paid. A surety method may be current amount required if certification is Cruninal penalties. Hazardous in the form of a ;urety bond, letter of used), whichever is greater, for all materials transportation. Material credit, or line of credit. A parent dommmissioning activities for which the control and accounting. Nuc'sar company guarantee of funds for company is responsible as self guaranteeing matenals. Packaging and cx>ntainers, decommissioning costs based on a licensee and as parent-guarantor. (2) Assets located in 6e United Statu Radiation protection. Reporting and nnancial test may be used if the recordkeeping requirements, Scientific guarante.e and test are as contained in "",,,i,Dt Permn ,o nt equipment. Security measures. Special Appendix A to this Part. A parent

a. vim...-ioning cost estimate (or the nuclear material.

company guarentee may not be used in current===a' required if certi5 cation is combination with other fi sancial used) for all d====la=ioning activities for 1 72 methods to satisfy the requirements of which the company is responsible as self-Manpower training programs Nuclear this section. Fce cx>mmercial guarantying he-a-and as parent-materials. Occupational safety and cx>rporations that issue bonds, a Q g' g g;,g g heahh, Reporting and recordkeeping guarantee of funds by the applicant or liabilities greater than 0.15 and a ratio of licensee i r d-='====ia= costs requirements. Security measures, Spent total liabihties divided by not worth less than g,,g, based on a finannal test may be used if 1.5. the guarantee and test are as contained B. In addition, to pass the finannal test, a For the reasons set out in the in Appendix C to this Part. For mmpany must meet all of b following preamble and under the authority of the commercial companies that do not issue requirements: Atomic Energy Act of 1954, as amended, bonds, a guarantee of funds by the it) The company's independent certified the Energy Reorganization Act of 1974, applicant or licensee for Public accountant must haw compared,the d*** used &e i=ny a se as===ndad, and 5 U.S.C. 553. the NRC decommie=ioning costs may be used if = g, g is proposing to adopt the followmg the guarantee and test are as =n'= mad independently audited year end financial amendments to 10 CFR Parts 30,40. 50 in Appendix D to this Part. For non- ,,..-t based on United States generally 7D, and 72. profit entities. such as colleges. eccmpted acxxpunting practicas for & latest universities, and non-profit hospitals, a fiscal year, with the amounts in such a

1 le l 23400 Federd RegistIr / Vol. 62. No. 83 / Wednesday. April 30. 1997 / Proposed Rules financial statement. In connection with that II. Fanoncial Test The notice must be sent by certified mail, procedure, the hcensee shall inform NRC within 90 days of any matters that may cause A. For colleges and universities, to pass the return receipt requested, within 90 days after ths auditor to believe that the data specified financial test a college or university must the end of the fiscal year for which the year in the financial test should be adjusted and meet either the critena in Paragraph II. A. (1) end financial data show that the hcensee no thtt the company no longer passes the test. or the criteria in Paragraph II. A. (21 of this longer meets the financial test requirements. (2) After the initial financial test. the Appendix. The licensee must provide alternate financial company must repeat passage of the test . (1) For applicants or licensees that issue assurance within 120 days after the end of with days aher the close of each bonds, a current ratmg for its most recent such fiscal year. uninsured, uncollateralized. and Ill The Terms of a Self Cuorontee Which on A (3)If the licens e no longer meets the or as e St d d and [S Appheant or Licensee Furnsshes Must requirements of paragraph II. A of this rppendix, the licensee must send notice to or Aaa. Aa, or A as issued by Moodys. the NRC of intent to establish ahernate (2) For applicants or licensees that do not A. The guarantee shall remain in force financial assurance as specified in NRC issue bonds. unrestricted endowment unless the licensee sends notice of regulations. The notice must be sent b consistmg of assets located in the United cancellation by certified mail, and/or return certified mail. return receipt request States of at least 350 million, or at least 30 receipt requested, to the Commission. within 90 days after the end of the fiscal year times the total current decommissioning cost Cancellation may not occur unless an for which the year end financial data show estimate (or the curnat amount required if alternate financial assurance mechanism is in that the limasse no longer mets the certification s used), whichever is greater. l P ace. financial test requirements. N licensee for all demmmissioning activities for which B. N licensee shall provide alternative must provide alternate financial assurance the college or university is responsible as a financial assurana as specified in the within 120 days after the end of such fiscal self-guarsateeing licensee. Commission's regulations within 90 days B. For hospitals, to pass the financial test following receipt by the Commission of a yacr. a hospital must meet either the criteria in notice of cancellation of the guararme E CompanySelf-Cuarantee Paragraph II. B. (1) or the enteria in C The guarantee and financial test h terms of a self-guarantee which an Paragraph II. B. (2) of this Appendix: provisions must remain in effect until the applicant or licensee furnishes must provide (1) For applicants or licensees that issue Commission has terminated the license or th:t: bonds a current rating for its most recent until another financial assurance method A. The guarantee shall remain in fora uninsured, uncollatershred, and acceptable to the Commission has been put unless the licensee sends notice of unencumbered bond issuance of AAA. AA. in effect by the licensee. cancellation by certified mail, return receipt or A as issued by Standard and Poors (S&P) D. The applicant or licensee must provide requested, to the NRC Cancellation may not or Aaa. Aa, or A as issued by Moodys. ta the Commission a written guarantee (a occur until an alternate financial assurance (2) For applicants or licensees that do not written commitment by a corporate officer or mechanisro is in place. issue bonds. all of the following tests must officer of the institution) which states that be met: B. The licensee shall pmvide alternative the licensee will fund and carry out the financial assurance as specified in the (a) (Total Revenues less total expenditures) required decommissioning activities or.upon regulations within 90 days following receipt divided by total revenues must be equal to issuance of rs order by the Commission, the or greater than.04. licensee will set up and fund a trust in the by the NitC of a notim of cancellation of the (b) Long term debt divided by net fined ar.ount of the cunent met estimates for - guarantee. C h guarantee and financial test assets must be less than or equal to.67. dara amissioning. (c) (Current assets and depreciation fund) F. If. at any tune the limnase's most sucent Provisions must romaan in effect until the W' - has terminated the license or o vided by current liabilities must be greater' bond issuance ceases to be rated la any than or equal to 2.55. catagory of "A" or above by either Standard until==aehr financial assurunes method (d) Operating revenues must la at least 100 in dInct by the 1-=m and Poors or Moodys, the licensee shal! % " - to the F - -- has been put times the total current decommissioning cost provide notice in writing of such fact to die D. N applicant or le==- must provide estimate (or the current amount required il Commission within 20 days after pubhcation to the h6=.am a written guarantse (a certification is used) for all decosamissioning of the change by the reting service. activities for which the hospitalis writter. communiteset by a corporate ot5 car) which semese that the licoasse will hand and responsible as a self-guerenteeing license. PART 40-DOMESTIC UCENSdNG OF C in addition, to pass the fi==adal test, a SOURCE MATERIAL carry out the requued ' N licensee must enest all of the following e"'"'*i"* " lesmene of as order by.e requirements: S.The authori citation (or Part 40 hasasse wil su.d. tr.st .e am.u.t of.l est up and (1) The licensee's ' ' ' tcertine ,ubuc =_=-=. must i;e.e o.m,a,ed.d <=== e m s ca.re.t m.t e estamatmo fori does used by the hceossela then===dal test. Aetherty: Secs. 82. 83. St. 66. 81.161, E to Pad N which is requhod to be derived frema the 182.183.186. Se Stat.937,933.935,948 P-Relanag to b ef Wal Tests ad ' _tly audited year and n===r4=1 963.954,955,as====dmal seca.11e(2). 43. Minerantee for Pmelding statsenets, bened on Uniend Staeus smearelly

84. Pub. L 95-404,92 Stat. 3033, as Emesonabis Assurance of Funds for acmepted accounting psurew== for the letsst

-A=.a 3039. sec. 234. 43 Stat. 444 as naml year,with the amounts la such amended (42 U.S4 2e14(e)(2). 2002,20e3 l - by Neo-Preat fi===r4=1==*====' la aa===ce a= with that 20e4.20es.2111.2113.2114,2201.2232 % L)akserhties, and " 'M Procedure, the t====== shall inform NRC 2233,2236. 22s2h sec. 274. Pub. L e6-373. E I"##d*88d"" withia to days of any===a-o casalag to the 73 Seet. 60s (42 U.S C 2021); secs. 201, as attention of the audiant that cause the auditor annended. 202,20s, as Sest.1242, as An appliment or lir==- may prowlds to bellowe that the doen =padn=8 in the

====d=d 1244.124s (42 U.SE 5841,5442. sensemable assusence of the avoisentlity of 1 fi===r4=1 est should be edpusted and that the 5846); sec. 775. 92 Stat. 3021 as ammaded by t funde for '

hamed on hcommes no longer passes the test. -

Pub. L 97-415. 98 Stat. 20s7 (42 U.S.C j furalshing les own guaramano that funds will (2) Ahar the initial naamcial test, the 2022L he evadable ler '

costs and licenses sonst sepeat passess of the test Sectira 40.7 also issued sander Puk L 95-ce e demonsmeties that the apphemmt or withia 90 days star the class of each 801. eFc.10,92 Stat. 2951 (42 U.S.C 5451L hr===== passes the Aansadal test of Section suceseding asm! year.

Sectium edL31(g) also issued under sec.122. II of this appmedia.The turnas of the self-(3)If the licamsse ao longer nuests the es Sest. 939 (42 U.SL 2152). Secties 40.44 gusgemens me im Session IE of this appsedix..' - of Secaine L of this appendix. anno issued under sec. lat es Stat. 954, as This appendix =sahak== ariseria inr passtag the besesse asust seed motice to the NitC of -==d d (42 U.SC 2234). m= rela = 40.71 also the Ammacial test lur the self.guaramese and its inteet to==s=hha herness A===r4=1 issued under sec.187 as Stat. 955 (42 U.SE a h he terms far a @ _ ten. assurance as specnSed la NRC regulations. 2237). t l

~ Faderal Register / Vol. 62. No. 83 / Wednesday, April 30, 1997 / Proposed Rules 23401

6. In $ 43.36 the introductory text of 185. 68 Stat. 936,955, as amended (42 U.S.C decommissioning must contain the paragraph (e)(2) is revised to read as follows:

2131. 2235h sec.102, Pub. L. 91-190,83 Stat. following conditions: 853 (42 U.S.C 4332). Sections 50.13. $ 40.36 Anancial assurance and 50.54(dd), and 50.103 also issued under sec. socordkeeping for decommissioning. 108,68 Stat. 939, as amended (42 U.S.C 2138). Sections 50.23,50.35,50.55, and 50.56 PART 70-DOMESTIC UCENSING OF (.) * *

• also issued under sec.1b5. 68 Stat. 955 (42 SPECIAL NUCLEAR MATERIAL (2) A surety method, insurance, or U.S.C 2235). Sections 50.33a. 50.55a and l

other guarantee method. These methods Appendix Q also issued under sec.102, Pub.

9. The authority citation for Part 70 guarantee that decommissioning costs Q190 83 Stat. 853 (42f 433 c ntinues to read as follows:

I 9,., ,9, e u der willbe paid. A surety method may be sec. 204,88 Stat.1245 (42 U.S.C. 5844). Authority: Secs.51,53,161,182,183.68 in the form of a surety bond, letter of Sections 50.58. 50.91, and 50.92 also issued Stat. 929,930,948 C53,954. as amended. credit, or line of credit. A parent under Pub. L 97-415,96 Stat. 2073 (42 . sec. 234,83 Stat. 4<4, as amended (42 USC l company guarantee of funds for U.S.C 2239). Section 50.78 also issued under 2071, 2073, 2201, 2232, 2233, 2282); secs. decomminioning costs based on a sec.122,68 Stat. 939 (42 U.S.C 2152). E as amended. 202,204,206,88 Stat. l financial test may be used if the Sections 50.80-50.81 also issued under sec. 1242, as amended. 1244,1245,1246 (42 USC 184,68 Stat. 954, as amended (42 U.S.C 5841,5842.5845,5846). guarantee and test are as contained in Appendix A to Part 30. A pamnt f,U Sections M.1(c) and 70.20nM also issued P 7, 3ts 95 (42 U S C 2 37 under secs. 135,141 Pub. L 97-425. 96 Stat. company guarantee may not be used in

8. In 5 50.75 the introductory text of 2232,2241 (42 USC 10155,10161). Section combinadon with othe 6nancial paragraph (e)(2)(iii) is revised to read as 70.7 also issued under Pub. L 95-601, sec.

methods to satisfy the requirements of goggo,,. this section. For commercial 10,92 Stat. 2951 (42 USC 5851). Section corporations that issue bonds, a $ 50.75 Reporting and recordkeeping tor 70.21(g) also issued under sec.122,68 Stat. guarantae of funds by the applicant or decommissioning planning. 939 (42 USC 2152). Section 70.31 also issued under sec. 57d, Pub. L 93-377,88 Stat. 475 hcensee for decomminaioning costs based on a An=nei=1 test may be used if (e) * * * (42 USC 2077). Sections 70.36 and 70.44 also the guarantee and test are as contained (2) * *

• issued under sec.184,68 Stat. 954, as in Appendix C to Part 30. For (iii) A surety method, insurance, or amended (42 USC 2234). Section 70.61 also commercial companies that do not issue other guarantee method. These methods issued under secs. 186,187,68 Stat. 955 (42 bonds, a guarantee of funis by the guarantee that decommissioning costs USC 2236,2237). cwetion 70.62 atso issued applicant or licensee for will be paid. A surety method may be under sec.108,68 Stat. 939, as amended (42 decommissioning costs may be used if in the form of a surety bond, letter of USC 2138).

the guarantee and test are as contained credit, or line of credit. A parent in~ Appendix D to Part 30. For non-profit company guarantee of funds for

10. In S 70.25, the introductory text of entities, such as colleges, universities, decommissioning costs based on a Pmgraph (f)(2)is revised to read as follows:

and non-pmfit hospitals, a guarantee of financial test may be used if the funds by the applicant or licensee may guarantee and test are as contained in $ 70.25 Anan e am m and be used if the guarantee and test are as Appendix A to Part 30. A parent - ',4,,._- contained in Appendix E to Part 30. A company guarantee may not be used in - 4, guarantee by the applicant or licensee combination with other financial may not be used in combination with methods to satisfy the requirements of (f) * *

• any other financial methods used to this section. For commercial (2) A surety method, insurance, or satisfy the requirements of this section corporations that issue bonds, a other guarantee method. These methods or in any situation where the applicant guarantee of funds by the applicant or guarantee that dea==i=ioning costs or bran-has a parent company licensee for decommissionmg costs will be paid. A surety method may be holding majority contml of the voting based on a financial test may be used if in the form of a surety bond, letter of stock of the company. Any surety the guarantee and test are as contained credit, or line of credit. A parent method or insurance used to pmvide in Appendix C to Part 30. For C MPany guarantee of funds fw fissancial assurance for commercial companies that do not issue denuninioning costs based on a dann=minalaning must contain the bonds, a guart.ntee of funds by the financial test may be used if the following condi.tions:

applicant or hcensee for guarantee and test are as contained in decommi==ioning costs may be used if the guarantee and test are as antained Appendix A to Part 30. A parent PART 50--DOMESTIC UCENSING OF in Appendix D to Part 30. For non-profit company guarantee may not be used in combination with other finmacial PRODUCTION AND UTluZATION entities, such as colleges, universities, FACluTIES and non-profit hospitals, a guarantee of snethods to satisfy the requirements of this section. For commarcial funds by the applicant or licensee may

7. The authority citation for Part 50 be used if the guarantee and test are as corporations that issue bonds, a o nunues to read as follows:

contamed in Appendix E to Part 30. A guamntee of funds by the applicant or

4. Secs.102,103,104, los 161.

guarantee by the applicant or licensee licensee im d-a-ai=ioning costs ^' is2, tas, tea, te9 sa Stat. sas, e37, s38, may not be used in combination with based on a Aa=arial test may be used if osa, ess,954, ess, eso, as. d=d, sec. any other financhal methods used to the guarantee and test are as contained 234, as Stat.1244, as easeded (42 USC. satisfy the requirements of this section - in Appendix C to Part 30, For !$* 2N 22 2'h a s'. h' a* r in any situati n where the applicant commarcial companies that do not issue 202,20s, as Stat.1242, as "4 1244. or licensee has a parent company bonds, a guarantee of funds by the 124s (42 UAC. sa41, se42, seesl. holding majority contml of the voting applicant or lican-for he'aa 50.7 also issued under Pub. L 95 stock of the company, Any surety decommissioning costs may be used if sol, sec. to, s2 Stat. 2ss1 (42 U.S.C. ses11 method or insurance used to provide the guarantee and test are as contained S=r*6aa scL10 also issued under secs.101, financial assurance for in Appendix D to Part 30. For non-profit aI

23402 Federal Register / Vol. 62. No. 83 / Wednesday, April 30, 1997 / Proposed Rules entities, such as colleges, universities, will be paid. A surety method may be Abex AC electric motor having an r.nd non-profit bospitals, a guarantee of in the form of a surety bond, letter of improved fan. This proposal is funds by the applicant or licensee may credit. or line of credit. A parent prompted by reports indicating that the be used if the guarantee and test are as company guarantee of funds for integrated hydraulic package (IHP) unit contained in Appendix E to Part 30. A decommissioning costs based on a stopped functioning during flight guarantee by the applicant or licensee financial test may be used if the because the fan on the AC electric motor may not be used in combination with guarantee and test are as contained in came into contact with the housing of any other financial methods used to Appendix A to Part 30. A parent the motor due to inadequate clearance. satisfy the requirements of this section company guarantee may not be used in The actions specified by the proposed or in any situation where the applicant combination with other financial AD are intended to prevent loss of IHP or licensee has a parent company methods to satisfy the requirements of function that, if combined with other holding majority control of the voting this section. For commercial hydraulic system failures, could result stock of the company. Any surety corporations that issue bonds. a in reduced controllability of the method orinsurance used to provide guarantee of funds by the applicant or airplane. financial assurance for licensee for decommissioning costs decommissioning must contain the based on a financial test may be used if DATES: Comments must be received by following conditions: the guarantee and test are as contained June 9.1997. in Appendix C to Part 30. For AoonEssEs: Submit comments in commercial corporations that do not triplicate to the Federal Aviation PART 72-UCENSING issue bonds, a guarantee of funds by the REQUIREMENTS FOR THE applicant or licensee for Administration (FAA). Transport INDEPENDEMI' STORAGE OF SPENT decommissioning costs may be used if Airplane Directorate. ANM-103, NUCLEAR FUEL AND HIGH-LEVEL the guarantee and test are as contained Atrention: Rules Docket No. 96-NM-RADIOACTIVE WASTE in Appendix D to Part 30. A guarantee 221-AD.1601 Lind Avenue, SW.,

11. The authority citation for Part 72 by the applicant or licensee may not be Renton, Washington 98055-4056.

Comments may be inspected at this continues to read as follows: U location between 9:00 a.m. and 3:00 m d ed sfy Authonty: Secs. 51.53.57.62.63.65.69. et.161.1e2.1s3.184.186.187.189. 6s Stat. requirements of this section or in any p.m., Monday through Friday, except 929,930.932.933.934.935,948.953.954. situation where the applicant or Federal holidays. licensee has a partat company holding The service information referenced in n$ed US$7 3.2It72092. majority control of the voting stock of the proposed rule may be obtained from a 2o93.2095,2099.2111.2201.2232,2233. the company. Any surety meth0d or SAAB Alltraft AB.SAAB Aircraft 2234. 2236. 2237,2238. 2282h sec. 274. Pub. insurance used to provide financial Product Support. S-581.88. Link 6 ping. L 86-373. 73 Stat. 688, as amended (42 USC assurance for decommissioning must Sweden. 2021h sec. 201, as amendeed. 202. 2o6. 88 contain the following conditions: This information may t$e examined at Stst.1242, as amended. 1244.1246 (42 USC the FAA. Transport Airplane ~

2. Q '

Dated at Rockville. Maryland, this 24th day Directorate.1601 Lind Avenue. SW. ^ 2 (42 o A ril,1997. 91-190. 83 Stat. 853 (42 USC 4332): Secs P Renton. Washington. 131,132.133,135.137,141. Pub. L 97-425. For the Nuclear Regulatory Commission. 96 Stat. 2229,2230,2232. 2241. sec.148 John C. Hoyle. Pub. L 100-203.101 Stat.1330-235 (42 USC Secretary of the Commission. Ruth Harder. Aerospace Engineer. 10151.10152,10153,10155,10157.10161* 10168). lFR Doc. 97-11203 Filed 4-29-47: 8:45 am) FAA. Transport Airplane Directorate. Section 72.44(g) also issued under secs. '"" coos new 1601 Lind Avenue. SW., Renton, 142fb) and 14s(c). (d). Pub. L 200-201.101 Stat.1330-232.1330-236 (42 USC 10162fb). Washingon 98055-.356: telephone 1016a(c). (dll. Section 72.46 also issued DEPARTMENT OF TR/,NSPORTATION (206) 227-1721; fax (206) 227-1149. under sec.189.64 Stat. 955 (42 USC 2239L SUPPLEMENTARY INFORMATION: sec.134. Pub. L 97-425,96 Stat. 2230 (42 Federal Aviation Administration USC 10154). Section 72.96(d) also issued Cmn==nts Invited under sec.145(g). Puh L 100-203.101 Stat. 14 CFR Part 39 + 1330-235 (42 USC 10165(g)). Subpart I also Interested persons are invited to issued under secs. 2(2) 2(15). 2(19).117(a). ( c -A@

1. cipate in the making 0f b 141[h). Pub. L 97-425,96 Stat. 2202. 2203.

RIN 21M64 Proposed rule by submitting such 2204. 2222. 22 '.4 (42 USC 10101.10137(a), written data, views, or arguments as 10161(h)). Subparts K and L are also 6ssued under sec.133. 9a Stat. 2230 (42 USC 10m) Alneorthiness DirecWves; Saab Model they may desire. Communications shall and sec. 21s(a). 96 Stat. 2252 (42 USC SAAB 2000 Series Airplanes identify the Rules Docket number and Acescv: Federal Aviation be submit *.ed in triplicate to the address 101981.

12. In $ 72.30 the introductory text of Administration. DGr.

speciSed above. All communications received on or before the closing date follows:ph (c)(2) is revised to read as paragra Action: Notice of proposed miemaking for comments, specified above, will be (NPRM). considered before taking action on the 572.30 R .-., Planning

SUMMARY

This document proposes the Proposed mle. The proposals catained oncending snancing and m - 4.v.

adoption of a new airworthiness ist this atice may be changed in light directive (AD) that is applicable to f the comments received. (c) * *

• certain Saab Model SAAB 2000 series Comments are specifically invited on (2) A surety method. insurance, or airplanes. This proposal would require the overall regulatory, economic, other guarantee method. These methods replacing the Abex alternating current environmental and energy aspects of guarantae that decommiazioning costs (AC) electric motor with a new modified the proposed rule. All comments

l l l 1 ENCLOSURE 6 CONGRESSIONAL LETTERS

/,ecp* "%,2 I 4 UNITED STATES S S NUCLEAR REGULATORY COMMISSION If WASHINGTON, D.C. 206N1 4,.....,o The Honorable Dan Schaefer, Chairman Subcommittee on Energy and Power Committee on Commerce United States House of Representatives Washington, DC 20515

Dear Mr. Chairman:

The U.S. Nuclear Regulatory Commission ir,tends to publish the enclosed final amendments to the Commission's rules in 10 CFR Parts 30,40,50, and 72 in the Federal Reaister shortly. The amendments would allow certain qualifying non-profit licensees, such as universities, colleges, and hospitals, and non-bond issuing business licensees to use self-guarantee as an additional mechanism for financial assurance for decommissioning. Sincerely, i Dennis K. Rathbun, Director Office of Congressional Affairs i

Enclosure:

Federal Register Notice cc: Representative Ralph Hall

a p2 Kaco k p* UNITED STATES g ,j NUCLEAR REGULATORY COMMISSION '2 WASHINGTON, D.C. 20555-0001 49.....,o The Honorable James M. Inhofe, Chairman Subcommittee on Clean Air, Wetlands, Private, Property and Nuclear Safety Committee on Environment and Public Works United States Senate Washington, DC 20510

Dear Mr. Chairman:

The U.S. Nuclear Regulatory Commission intends to publish the enclosed final amendments to the Commission's rules in 10 CFR Parts 30,40,50, and 72 in the Federal Reaister shortly. The amendments would allow certain qualifying non-profit licensees, such as universities, colleges, and hospitals, and non-bond issuing business licensees to use self-l guarantee as an additional mechanism for financial assurance for decommissioning. Sincerely, t Dennis K. Rathbun, Director Office of Congressional Affairs

Enclosure:

Federal Register Notice cc: Senator Bob Graham I

I ENCLOSURE 7 ENF01 CEMENT IRN S A RS ~ -- ---__

t@ Mo ( u [" UNITED STATES NUCLEAR REGULATORY COMMISSION o WASHINGTON, D.C. 20555-0001 \\, *****/ The Honorable Al Gore i President of the United States Senate Washington, DC 20510

Dear Mr. President:

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Faimess Act of 1996, 5 U.S.C. 801, the U.S. Nuclear Regulatory Commission is submitting final amendments to the Commission's rules in 10 CFR Parts 30,40,50,70, and 72. The NRC is amending its regulations to allow additional categories of licensees to qualify to use self-guarantee as an additional mechanism for complying with financial assurance requirements. We have determined that this rule is not a " major rule" as defined in 5 U.S.C. 804(2). We have l confirmed this determination with the Office of Management and Budget. l Enclosed is a copy of the final rule that is being transmitted to the Office of the Federal Register for publication. This final rule will become effective 30 days after it is published in the Federal l Reaister. Sincerely, l r l Dennis K. Rathbun, Director Office of Congressional Affairs

Enclosure:

Final Rule l s

po ney [ t UNITED STATES g j NUCLEAR REGULATORY COMMISSION 2 WASHINGTON, D.C. 20t66 4001 '+9.....,o l The Honorable Newt Gingrich Speaker of the United States House of Representatives Washington, DC 20515

Dear Mr. Speaker:

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Faimess Act of 1996, 5 U.S.C. 801, the U.S. Nuclear Regulatory Commission is submitting final amendments to the Commission's rules in 10 CFR Parts 30,40,50,70, and 72. The NRC is amending its regulations to allow additional categories of licensees to qualify to use self-guarantee as an additional mechanism for complying with financial assurance requirements. We have determined that this rule is not a " major rule" as defined in 5 U.S.C. 804(2). We have confirmed this determination with the Office of Management and Budget. Enclosed is a copy of the final rule that is being transmitted to the Office of the Federal Register for publication. This final rule will become effective 30 days after it is published in the Federal Reaister. Sincerely, Dennis K. Rathbun, Director Office of Congressional Affairs

Enclosure:

Final Rule _________-.______________----__J

- r,1-pa ceco po -+3 UNITED STATES NUCLEAR REGULATORY COMMISSION o f WASHINGTON, o.C. 20556 0001 l %,.....,o Mr. Robert P. Murphy General Counsel General Accounting Office Room 7175 j 441 G. Street, NW. Washington, DC 20548

Dear Mr. Murphy:

j 1 Pursuant to Subtitle E of the Small Business Regulatory Enforcement Faimess Act of 1996, 5 U.S.C. 801, the U.S. Nuclear Regulatory Commission is submitting final amendments to the Commission's rules in 10 CFR Parts 30,40,50,70, and 72. The NRC is amending its regulations to allow additional categories of licensees to qualify to use self-guarantee as an additional mechanism for complying with financial assurance requirements. We have determined that this rule is not a " major rule" as defined in 5 U.S.C. 804(2). We have confirmed this determination with the Office of Management and Budget. Enclosed is a copy of the final rule that is being transmitted to the Office of the Federal Register for publication. This final rule will become effective 30 days after it is published in the Federal Reaister. Sincerely, Dennis K. Rathbun, Director Office of Congressional Affairs

Enclosure:

Final Rule _}}