ML22074A091
| ML22074A091 | |
| Person / Time | |
|---|---|
| Site: | 07000925 |
| Issue date: | 03/15/2022 |
| From: | Lux J Environmental Properties Management |
| To: | Ian Irvin, John Marshall, James Smith, Till Bill Von Document Control Desk, Office of Nuclear Material Safety and Safeguards |
| References | |
| Download: ML22074A091 (6) | |
Text
March 15, 2022 Mr. James Smith Ms. Jane Marshall U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission 11555 Rockville Pike 11555 Rockville Pike Rockville, MD 20852-2738 Rockville, MD 20852-2738 Mr. Ian Irvin Mr. Bill Von Till U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission 11555 Rockville Pike 11555 Rockville Pike Rockville, MD 20852-2738 Rockville, Md 20852-2738 Mr. Paul Davis Ms. Pamela Dizikes Oklahoma Dept. of Environmental Quality Oklahoma Dept. of Environmental Quality 707 North Robinson 707 North Robinson Oklahoma City, OK 73101 Oklahoma City, OK 73101 Ms. Kelly Dixon Oklahoma Dept. of Environmental Quality 707 North Robinson Oklahoma City, OK 73101 Re: Docket No. 07000925; License No. SNM-928 Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations To the beneficiaries of the Cimarron Environmental Response Trust:
Solely as Trustee for the Cimarron Environmental Response Trust (CERT), Environmental Properties Management LLC (EPM) submits herein information related to Section 3.2.4 of the Environmental Response Trust Agreement (Cimarron), herein referred to as the Trust Agreement.
This letter is being submitted to both the U. S. Nuclear Regulatory Commission (NRC) and the Oklahoma Department of Environmental Quality (DEQ) in recognition of the fact that both agencies are beneficiaries of the CERT, and both agencies have a vested interest in the adequacy of funds to conduct remediation at the Cimarron Site. In addition, as beneficiaries of the CERT, both agencies were consulted by EPM (as the Trustee of the CERT) for concurrence with the application of the requirements stipulated in Section 3.2.4 of the Trust agreement. Note that the costs presented herein are rounded to the nearest thousand dollars for simplicity.
The Trust Agreement states, The Cimarron Trustee shall also notify the Deputy Director, Decommissioning & Uranium Recovery Licensing Directorate, Division of Waste Management and Environmental Protection, Office of Federal and State Materials and Environmental 9400 Ward Parkway
- Kansas City, MO 64114 Page 1 of 6 Tel: 405-642-5152
- jlux@envpm.com
Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations Management Programs, and the Regional Administrator, NRC Region IV, NRC Region IV, 611 Ryan Plaza Drive, Suite 400, Arlington, TX 76011-8064, by certified registered mail, no later than 180 days prior to the anticipated date, that all contractual and other projected obligations will have exhausted 25%, 50%, and 75% of the Cimarron Federal Environmental Cost Account.
Upon notification that 75% of the Cimarron Federal Environmental Cost Account has been exhausted, the Cimarron Trustee shall cease remediation work and commence passive maintenance and monitoring only of the Site in order to provide for the protection of the public health and safety using the remaining funds in the Cimarron Trust Federal Environmental Cost Account to fund monitoring and maintenance until further order of the NRC; provided however, that no more than 5% of the remaining funds available in the Cimarron Trust Federal Environmental Cost Account shall be spent in any six-month period without NRC approval. The assets of the Cimarron Standby Trust shall not be accessed by the Cimarron Trustee until further order of the NRC.
On February 7, 2018, EPM submitted a document entitled, Cimarron Environmental Response Trust, Federal Environmental Cost Account, Provisions for NRC Notification via email to the NRC and the DEQ to obtain clarification of this requirement. That document noted that when the Trust Agreement was executed, in addition to the initial funding of the Trust accounts by Tronox, additional funds would be received from Anadarko Litigation. It would have been easy to calculate 25%, 50%, and 75% of the Federal Environmental Cost Account (herein the Federal Account) if the total contributions to the account consisted only of the initial funding
($6,558,000) and the distributions to the Federal Account from the Anadarko Litigation
($59,711,000), for a total of $66,269,000.
However, additional contributions from interest, oil and gas royalties, and property sales had added over $1,045,000 to the Federal Account by the end of November 2017, and interest and oil and gas royalties would continue to represent sources of contributions. To meet Trust Agreement obligations, EPM further engaged NRC and DEQ for concurrence to determine the value of the Federal Account upon which 25%, 50%, and 75% of the Federal Account would be based.
The February 7, 2018, document proposed the following interpretation of Section 3.2.4 of the Trust Agreement:
- 1. The value of the Federal Account upon which the 25%, 50%, and 75% criteria stipulated in Section 3.2.4 of the Agreement is equal to the sum of the Federal Account and the Standby Trust at the time the Decommissioning Plan is approved.
9400 Ward Parkway
- Kansas City, MO 64114 Page 2 of 6 Tel: 405-642-5152
- jlux@envpm.com
Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations
- 2. NRC has authority to direct the Trustee to continue remediation after being notified that 75%
of the Federal Account will be expended within 180 days, if NRC believes that sufficient funding remains to achieve termination of the NRC license.
During a monthly project status teleconference conducted February 14, 2018, the NRC and the DEQ approved the proposal to request concurrence of the above interpretation from the US Department of Justice (DOJ). Consequently, EPM submitted a letter to Mr. Rob Yalen of the DOJ on March 8, 2018. That letter stated that it is our understanding that NRCs concern is to know how much money is available in the Federal Account relative to what is needed to achieve license termination. Therefore, for the purposes of preventing the exhaustion of the Federal Account prior to achieving license termination, the preference of both NRC and EPM is to baseline the value of the Federal Account at the time the decommissioning plan and decommissioning cost are approved. In an email dated March 19, 2018, Mr. Yalen responded, We have no objection to this resolution of the issue.
The decommissioning plan includes a decommissioning cost estimate (DCE) which may constitute projected obligations upon approval of the decommissioning plan. However, because the DCE does not represent a contractual obligation, EPM does not consider the submission of a DCE to trigger the 75% provision in Section 3.2.4.
Estimating the Projected Value of the Federal Account per Section 3.2.4 The following table presents the total contributions that have been received in the Federal Account from inception through the end of 2021, the total expenditures from the Federal Account from inception through the end of 2021, and the percent of costs incurred.
Federal Standby Combined Federal Account Account Trust & Standby Trust Total of All Contributions to
$79,153,000 $3,880,000 $83,033,000 the Account Expenditures From
$23,896,000 $0 $23,896,000 The Account Value at the
$55,257,000 $3,880,000 $59,137,000 End of 2021 Note: NRC fees from inception of the Trust through the end of 2021 total approximately
$5,934,000, constituting over one-fourth of the total expenditures from the Federal Account.
9400 Ward Parkway
- Kansas City, MO 64114 Page 3 of 6 Tel: 405-642-5152
- jlux@envpm.com
Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations The DCE provided in the Draft DP submitted in November 2021, presents the cost of pre-construction work (Table 16-1), based on the assumed approval of the DP in April of 2023. It includes an estimate for license compliance and NRC fees of approximately $2,030,000 (paid entirely out of the Federal Account), and approximately $3,080,000 in decommissioning costs (93.2%, or $2,870,000 to be paid out of the Federal Account).
Not including contributions received between January 1, 2022, and the assumed April 2023 approval of the DP, this would result in an Initial Federal Account value (per Section 3.2.4) of approximately $54,237,000 upon approval of the Decommissioning Plan. Based on the above interpretation of Section 3.2.4 of the Trust Agreement, this is the value of the Federal Account to which the various triggers in Section 3.2.4 would apply. 75% of the Initial Federal Account will have been spent when approximately $13,570,000 remains in the Federal Account.
It appears to be unlikely that the NRC will issue an amended license approving the DP until 2024. The additional expenditure of funds during each month added to the schedule means that the figures provided in the above paragraph represent a best-case scenario.
Projecting the Cost of Construction and Remediation Based on the current DCE, over $18,300,000, or approximately one-third of the Initial Federal Account, would be spent between the anticipated approval of the DP and the time construction is completed. This would result in a Federal Account value of approximately $35,970,000 when groundwater remediation begins. If groundwater remediation were to be terminated when 75%
of the Federal Account has been spent, only approximately $22,400,000 would be available for groundwater remediation.
Table 16-4 of the Draft DP presents the projected cost to operate the groundwater remediation and water treatment systems as designed. Based on those project costs the 75% trigger would be reached approximately four years before groundwater achieves the NRC criterion in BA1, and nearly eight years before the projected date of license termination. The NRC could authorize the use of the remaining Federal Account funds to continue operating. Approximately $3,000,000 would remain in the Federal Account when groundwater in BA1 is projected to achieve the NRC criterion. The cost of post-remediation activities (presented in Table 16-4 of the Draft DP) is estimated at over $5,000,000, which exceeds the $3,000,000 projected to be available. It is worth repeating for clarification that the values presented in this section do include the Standby Trust funds in the value of the Federal Account, and do not include any contingency.
Factors Impacting the Decommissioning Cost Estimate The guidance for preparation of a DCE in NUREG-1757 stipulates that a 25% contingency should be applied to the DCE. Decades of groundwater remediation experience nationwide has 9400 Ward Parkway
- Kansas City, MO 64114 Page 4 of 6 Tel: 405-642-5152
- jlux@envpm.com
Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations demonstrated that remediation of groundwater by extraction; in many cases treatment has taken longer and cost more than anticipated. Contractors working on the groundwater remediation processes have been encouraged to incorporate conservative assumptions into their designs and models to minimize the likelihood of underestimating the duration of remediation. But this is a risk that must be considered, and not being able to apply any contingency to the DCE may increase the risk associated with the duration of remediation.
Since the inception of the Trust, costs incurred have averaged approximately $2,500,000, or slightly over $200,000 per month. The scope of work for the next sixteen months includes both significant effort in advancing the design, issuing and evaluating bids, and a significant review effort by NRC personnel. The estimated cost for work performed from the beginning of 2022 to the end of April 2023 (the assumed date by which a license amendment approving the DP is issued) is nearly $5,700,000. The NRC has indicated that it will take approximately two years from the formal submission of the DP to issuance of a license amendment. Adding another year to the schedule will require the expenditure of additional millions of dollars, which reduces the funding available for active remediation.
EPM requests that NRC take measures to compress the schedule by crashing and fast-tracking.
Crashing the project, defined as providing additional resources to critical path tasks, may not be a solution if adding reviewers to the project doesnt significantly shorten the schedule. Fast-tracking, defined as initiating critical path activities before their predecessors are completed, appears to be a more achievable approach. For instance, past schedules provided by the NRC have indicated that preparation of the Environmental Assessment (EA) and Safety Evaluation Report (SER) begin after receipt and review of licensee responses to Requests for Additional Information (based on the detailed technical review of the DP); a process which the schedule indicated would take 10 months.
NRC must realize that there is very little radiological risk or adverse environmental impact associated with the proposed decommissioning activities, and potential issues that could present a legitimate risk have been addressed in response to the multiple requests for information that have already been issued. There is no reason the EA and the SER could not already be prepared or be prepared during the detailed technical review of the DP, and then revised if needed after receipt of responses to RAIs. We feel the effort (and cost) to revise drafts of the EA and the SER would be far less significant than the addition of months to the schedule.
Finally, the costs presented in Tables 16-1 through 16-4 are based on a 3% escalation of costs presented in the 2018 decommissioning plan. The last time actual vendor-generated cost estimates were developed was in 2015. EPM is in the process of soliciting current cost estimates 9400 Ward Parkway
- Kansas City, MO 64114 Page 5 of 6 Tel: 405-642-5152
- jlux@envpm.com
Environmental Response Trust Agreement Section 3.2.4 Requirement to Notify the NRC re: Federal Cost Account Financial Obligations for fabrication and construction that better accommodate potential post-COVID or actual escalation of material and labor costs.
EPM will update the DCE in the DP that will be formally submitted after addressing the NRCs January 31 comments on the pre-application audit of the Draft DP. Upon submission of the DP, EPM will request a meeting with NRC and DEQ management to discuss, both as regulators and as beneficiaries of the Trust, the issues presented by the adequacy or inadequacy of funding and to obtain concurrence on a path forward.
If you have any questions or desire clarification, please call me at (405) 641-5152.
Sincerely, Jeff Lux, P.E.
Project Manager cc: Michael Broderick, DEQ (electronic copy)
Robert Evans, NRC Region IV (electronic copy)
NRC Public Document Room (electronic copy 9400 Ward Parkway
- Kansas City, MO 64114 Page 6 of 6 Tel: 405-642-5152
- jlux@envpm.com