ML25224A169
| ML25224A169 | |
| Person / Time | |
|---|---|
| Site: | Pennsylvania State University |
| Issue date: | 08/27/2025 |
| From: | Stamler B NRC/NRR/DANU/UNPL |
| To: | Unlu K Pennsylvania State Univ |
| Stamler B | |
| References | |
| EPID L-2025-NFO-0003 | |
| Download: ML25224A169 (1) | |
Text
Dr. Kenan Unlu, Director Pennsylvania State University Breazeale Nuclear Reactor 104 Breazeale Nuclear Reactor Building University Park, PA 16802-2301
SUBJECT:
U.S. NUCLEAR REGULATORY COMMISSION STAFF REVIEW RE:
PENNSYLVANIA STATE UNIVERSITY 2024 FINANCIAL TEST FOR SELF-GUARANTEE FOR DECOMMISSIONING FUNDING (EPID NO. L-2025-NFO-0003)
Dear Dr. Unlu:
By letter dated February 4, 2025 (Agencywide Document Access and Management System Accession No. ML25070A087), Pennsylvania State University (PSU) submitted a self-guarantee letter to the U.S. Nuclear Regulatory Commission (NRC) demonstrating financial assurance for decommissioning, in accordance with paragraph (e)(1)(iii)(C) of Title 10 of the Code of Federal Regulations (10 CFR) Section 50.75, Reporting and recordkeeping for decommissioning planning, and Appendix E to 10 CFR 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.
The NRC staff has completed its review and finds that the PSU self-guarantee agreement meets the financial test criteria for a non-profit college that issues bonds. PSU conforms to the guidance in NUREG-1757, Consolidated Decommissioning Guidance - Financial Assurance, Recordkeeping, and Timeliness, Volume 3, Revision 1 and meets the applicable requirements of 10 CFR Section 50.75 and Appendix E to 10 CFR Part 30. A copy of the NRC staff evaluation is enclosed.
August 27, 2025
K. Unlu If you have any questions regarding this matter, please contact Bradley Stamler at 301-415-1147, or via email at Bradley.Stamler@nrc.gov.
Sincerely, Bradley Stamler, Project Manager Non-Power Production and Utilization Facility Licensing Branch Division of Advanced Reactors and Non-Power Production and Utilization Facilities Office of Nuclear Reactor Regulation Docket No.50-005 License No. R-2
Enclosure:
As stated cc: GovDelivery Subscribers Signed by Stamler, Bradley on 08/27/25
ML25224A169 NRR-106 OFFICE NRR/DANU/PM NRR/DANU/LA NMSS/FAB/BC NRR/DANU/BC NRR/DANU/PM NAME BStamler NParker FMiller JRady BStamler DATE 8/12/2025 8/13/2025 8/26/2025 8/27/2025 8/27/2025
Enclosure SAFETY EVALUATION BY THE OFFICE OF NUCLEAR MATERIAL SAFETY AND SAFEGUARDS ANNUAL FINANCIAL TEST FOR A SELF-GUARANTEE PENNSYLVANIA STATE UNIVERSITY DOCKET NO.50-005 BACKGROUND By letter dated December 13, 2024, Pennsylvania State University (PSU) submitted its annual certification of its self-guarantee (SG) for decommissioning financial assurance for the Penn State Breazeale Reactor (PSBR), License No. R-2. PSU has two licensees issued by the U.S.
Nuclear Regulatory Commission (NRC), SNM-95 (Docket No.70-113) and License No. R-2 PSBR (Docket No.50-005). The subject review pertains to License No. R-2. SNM-95 license decommissioning financial assurance review will follow.
DISCUSSION Regulatory Requirements Consistent with the guidance in NUREG-1757, Consolidated Decommissioning Guidance; Financial Assurance, Recordkeeping, and Timeliness, Volume 3, Revision 1 and in accordance with Title 10 of the Code of Federal Regulations (10 CFR) Section 50.75, Reporting and recordkeeping for decommissioning planning, and Appendix E to 10 CFR 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. With its submittal, Penn State also provided accompanying financial statements, the Penn State SG agreement and a decommissioning cost estimate for the Penn State Radiation Facility at University Park, Hershey Medical Center, and related campuses. With the information provided in these documents, Penn State indicates it meets or exceeds the financial test intended to provide assurance that Penn State can continue maintaining the $34,268,915 (2024 dollars) in coverage for decommissioning funding assurance of the research and test reactor and related facilities located at Penn State in University Park, PA. to annually provide an SG agreement and pass a financial test pursuant to Appendix E to 10 CFR Part 30.
Staff Review Staff Review of Self-Guarantee and Supporting Documentation In its December 14, 2024, request, PSU submitted documentation to demonstrate the universitys continued eligibility to use the SG. The submittal consisted of the following:
An updated SG and associated Financial Test signed by the Associate Vice President for Finance; An Independent Accountants Report and Schedule of Reconciling Amounts contained in NRC annual certification letter with amounts in the licensees consolidated financial statements; and PSUs audited financial statements (with a web link) for the most recent fiscal year (FY),
including auditors opinion on the financial statements The SG agreement states that the guarantee was made by the PSU, a nonprofit university, organized under the laws of the Commonwealth of Pennsylvania, to the NRC, on behalf of the university as licensee. PSU has full authority and capacity to enter into this SG by the bylaws of the Trustees of the PSU. The agreements certified financial decommissioning amount takes into consideration the base estimate as of 2019 and projects it to 2024 with a compounded interest to come up with the needed estimate for 2024 and adds 25 percent contingency. The SG agreement is signed by Mrs. Virginia A. Teachy, Associate Vice President for Finance.
On the basis of its review, the NRC staff finds the estimated amount to be reasonable and has determined that the licensee has an acceptable method of financial assurance to decommission, so as to protect public health and minimize danger to life or property. Therefore, the NRC staff finds that the licensee meets the requirement of 10 CFR 50.75(e)(1)(iii)(C), for License No. R-2.
For PSU to qualify for the use of a SG, it must satisfy the criteria found in 10 CFR Part 30, Appendix E, Section II.A.1 or A.2. PSUs SG submission intends to demonstrate compliance with 10 CFR Part 30, Appendix E, Section II.A.1 (the Financial Test). The Financial Test, in pertinent part, requires that PSU have a current rating for its most recent bond issuance of AAA, AA, A as issued by Standard & Poors or Aaa, Aa, or A as issued by Moodys.
As part of the SG submission, PSU included the identification of the Financial Test used and used the guidance in NUREG 1757, Volume 3, Appendix A, Checklist 9-B, to demonstrate passage of the Financial Test.
The SG submission states that the current bond rating of the most recent uninsured, uncollateralized, and unencumbered bond issuance is AA, as issued by Standard & Poors and a rating of Aa1, as issued by Moodys. The licensees statement was compared with Standard &
Poor's Global Ratings and Moodys Ratings to PSU dated, December 13, 2024, by PSUs independent auditor and found no exceptions. Therefore, PSU meets the requirement of 10 CFR Part 30, Appendix E, Section II.A.1.
In addition, 10 CFR Part 30, Appendix E, Section II.C.(1) requires an independent certified public accountant of the licensee to compare the data used by the licensee in the financial test, which is derived from the independently audited, year-end financial statements for the latest FY, with the amounts in such financial statement. The accountant must evaluate the licensee's off-balance sheet transactions and provide an opinion on whether those transactions could materially adversely affect the licensee's ability to pay decommissioning costs. The accountant must verify that a bond rating, if used to demonstrate passage of the financial test, meets the requirements of Section II.
As part of December 14, 2024, submittal, PSU included an independent auditors' report made to the Board of Trustees of the PSU, University Park, Pennsylvania. Consolidated financial statements of the PSU and its subsidiaries were audited. The financial statements comprise the financial position as of June 30, 2024, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. The independent auditor stated an opinion that the consolidated financial statements present fairly, in all material respects, the financial position of the university as of June 30, 2024.
In addition to the financial test, PSUs auditor evaluated PSUs off-balance sheet exposure. The auditor recalculated PSUs off-balance sheet exposure for mathematical accuracy and compared that exposure to the universitys total 2024 net assets prepared by PSU and confirmed the total off-balance-sheet exposure is less than the total net assets reported in the 2024 Annual Certification report. Regarding the adequacy of PSUs submittal and it proposed use of a self-guarantee, regulatory guidance contained in NUREG-1757, section 4.3.2.6, Self-guarantees, states, in part, that a submittal used to satisfy the requirements of Appendix E will be acceptable if such submittal includes the self-guarantee agreement, the Chief Financial Officers (CFO) Certification, the independent Auditors Report, and Financial Statements. In its submittal, the licensee provided: a letter from PSUs Associate Vice President for Budget and Finance containing the self-guarantee test; an independent auditors report confirming PSUs Office of Budget and Finance letter and reconciling amounts with the licensees financial statements; the licenses audited financial statements for the most recent FY; and self-guarantee agreement (originally signed duplicate). The NRC staff also notes that Subsection II(C)(1) of Appendix E requires the licensees independent certified public accountant to evaluate the licensees off-balance sheet transactions and render an opinion on whether these transactions may have adverse effect on the licensee ability to pay for decommissioning costs. The guidelines established by the American Institute of Certified Public Accountants prohibit an accountant from rendering such an opinion. In this regard, Plante &
Moran, PLLC, the independent auditor retained by PSU, stated, we found no exceptions as the result of the procedures for the Penn States most recent uninsured, uncollateralized, and unencumbered bond issuance and comparing the 2024 bond ratings to the letters sent to the NRC, as well as the recalculations of the off-balance sheet exposure and the total off-balance sheet exposure to be less than the total net assets reported in the 2024 NRC Annual Certification Letter.
The NRC staff determined that the licensee had their independent certified public accountant to compare the data used by the licensee in the financial test, which is derived from the independently audited, year-end financial statements for the latest FY, with the amounts in such financial statement. The accountant evaluated off-balance sheet transactions and noted that the off-balance sheet exposures were less than PSUs total assets. The accountant verified the bond rating meets the requirements of 10 CFR Part 30, Section II. Therefore, the NRC staff finds that the licensee meets the requirement of 10 CFR Part 30, Appendix E, Section II(C)(1).
The NRC staff notes that the NRC is currently addressing, through rulemaking, changes to its surety requirements used by licensees. These changes are responsive to the 2010, Dodd-Frank Wall Street Reform and Consumer Protection Act legislation (Dodd-Frank),
which, among other things, seeks to have agencies remove reference to or requirements for reliance on credit ratings, and impacts NRCs financial tests for colleges, universities and hospitals who use SGs for providing reasonable assurance of funds for decommissioning. As a result, the NRC staff would disallow reliance on use of credit ratings as a financial test for providing reasonable assurance of funds for decommissioning. In the case of a university or college currently relying on bonds ratings to qualify for use of a SG, such as Penn State, licensees would instead rely on the financial test in 10 CFR Part 30, Appendix E, Section II.A.(2). This financial test requires that the licensee unrestricted endowment criteria consisting of assets located in the United States of at least $50 million, or at least 30 times the total current decommissioning cost estimate, whichever is greater.
As provided in the Penn State SG agreement submittal, the licensees financial statements reflect total positive net assets of $13,754,762,000 (June 30, 2024), and a cost to decommission the radiation facilities of $34,268,915 (2024 dollars). Accordingly, the licensees assets are greater than 30 times the total current decommissioning cost estimate and therefore meets the endowment criteria in 10 CFR Part 30, Appendix E, Section II.A.(2).
Based on NRC staffs analyses, the licensee meets the financial test for use of a SG using either credit ratings or unrestricted endowment criteria. In consideration of the above, the NRC staff finds that Penn State has fulfilled the requirements for a university seeking to provide decommissioning funding assurance using a SG.
CONCLUSION The NRC staff has reviewed the decommissioning financial assurance mechanism for the research and test reactor at Penn State University. Based on the NRC staffs review of the submittal as it applies to License No. R-2, the staff finds that the licensee provided complete documentation, including a letter from Penn States Associate Vice President for Budget and Finance containing the self-guarantee financial test; an independent auditors report confirming the Associate Vice President/Treasurer letter and reconciling amounts with the licensees financial statements; and the licensees audited financial statements for the most recent FY. In addition, the NRC staff finds that the SG agreement meets the financial criteria for a non-profit university that issues bonds, is sufficient for providing financial assurance ($34,268,915 in 2024 dollars). Therefore, the NRC staff concludes that PSU meets the requirements of 10 CFR Part 30, Appendix E and 10 CFR 50.75.
Principal Contributor: E. Tabakov, NMSS