ML18295A436

U.S. Nuclear Regulatory Commission Staff Review Reed College Research Reactor 2018 Financial Test for a Self-Guarantee for Decommissioning Funding

ML18295A436
Person / Time
Site:	Reed College
Issue date:	10/26/2018
From:	Geoffrey Wertz Research and Test Reactors Licensing Projects Branch
To:	Krahenbuhl M Reed College
Wertz G, NRR/DLP, 415-0893
References
EPID L-2018-LLL-0013
Download: ML18295A436 (6)

Text

October 26, 2018 Dr. Melinda Krahenbuhl, Director Reed College Reed Research Reactor 3203 Southeast Woodstock Blvd.

Portland, OR 97202-8199

SUBJECT:

U.S. NUCLEAR REGULATORY COMMISSION STAFF REVIEW RE: REED COLLEGE 2017 FINANCIAL ASSURANCE (SELF-GUARANTEE)

(EPID NO. L-2018-LLL-0013)

Dear Dr. Krahenbuhl:

Pursuant to Title 10 of the Code of Federal Regulations (10 CFR) 50.75(e)(1)(iii)(C), 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, Reed College submitted a self-guarantee letter to the U.S. Nuclear Regulatory Commission (NRC) to demonstrate financial assurance for decommissioning dated March 15, 2018 (Agencywide Documents Access and Management System Package Accession No. ML18078B285).

The NRC staff has completed its review and finds that the Reed College self-guarantee agreement meets the financial test criteria for a non-profit college that issues bonds, is sufficient for providing financial assurance, conforms to the guidance in NUREG-1757, Volume 3, Revision 1, Consolidated Decommissioning Guidance; Financial Assurance, Recordkeeping, and Timeliness, and meets the applicable requirements of 10 CFR Part 30 and 10 CFR 50.75.

Enclosed is a summary of the NRC staffs financial review of Reed Colleges submittal.

M. Krahenbuhl If you have any questions regarding this matter, please contact me at 301-415-0893 or by electronic mail at Geoffrey.Wertz@nrc.gov.

Sincerely,

/RA William Kennedy for/

Geoffrey Wertz, Project Manager Research and Test Reactors Licensing Branch Division of Licensing Projects Office of Nuclear Reactor Regulation Docket No. 50-288 License No. R-112

Enclosure:

As stated cc: See next page

Reed College Docket No. 50-288 cc:

Mayor of the City of Portland 1220 Southwest 5th Avenue Portland, OR 97204 Dr. Nigel Nicholson, Dean of Faculty Reed College 3203 Southeast Woodstock Boulevard Portland, OR 97202-8199 Hugh Porter, Acting President Reed College 3203 Southeast Woodstock Boulevard Portland, OR 97202-8199 Ken Niles, Assistant Director for Nuclear Safety Oregon Department of Energy 550 Capitol Street Northeast, 1st Floor Salem, OR 97301 Program Director Radiation Protection Services Public Health Division Oregon Health Authority 800 Northeast Oregon Street, Suite 640 Portland, OR 97232-2162 Test, Research and Training Reactor Newsletter P.O. Box 118300 University of Florida Gainesville, FL 32611

ML18295A436 *concurred via e-mail NRR-088 OFFICE NRR/DPR/PRLB/PM* NRR/DPR/PRLB/LA* NRR/DPR/PRLB/BC NRR/DPR/PRLB/PM NAME GWertz NParker AAdams (WKennedy for) GWerz (WKennedy for)

DATE 10/22/2018 10/26/18 10/26/18 10/26/18 REED COLLEGE 2017 FINANCIAL ASSURANCE (SELF-GUARANTEE) REVIEW DOCKET NO. 50-288

1.0 INTRODUCTION

By letter dated March 15, 2018 (Agencywide Documents Access and Management System (ADAMS) Accession Nos. ML180787B285 - package; ML18078B288 - cover letter), Reed College provided documentation in support of its self-guarantee for demonstrating decommissioning funding assurance to the U.S. Nuclear Regulatory Commission (NRC) staff for review. The Reed College submittal included: the Reed Institute Financial Statements, June 30, 2017 and 2016 (ADAMS Accession No. ML18074A346); the Reed College Self-Guarantee Agreement, including recitals (ADAMS Accession No. ML18078B287); and, the recent (February 2018) Reed College Research Reactor Decommissioning Cost Estimate (ADAMS Accession No. ML18074A347). Reed College indicated, with the information provided in these documents, that it meets or exceeds the financial test intended to provide assurance that Reed College can continue to maintain $3,025,125 (2017 dollars) in coverage for decommissioning funding assurance of the research reactor and related facilities located at Reed College in Portland, Oregon.

The NRC staff performed its review using the guidance provided in NUREG-1757, Volume 3, Revision 1, Consolidated Decommissioning Guidance; Financial Assurance, Recordkeeping, and Timeliness, and the requirements in Title 10 of the Code of Federal Regulations (10 CFR) 50.75, Reporting and recordkeeping for decommissioning planning, and 10 CFR Part 30, Appendix E, Criteria Relating to Use of Financial Tests and Self-Guarantee for Providing Reasonable Assurance of Funds for Decommissioning by Nonprofit Colleges, Universities and Hospitals.

2.0 ANALYSIS The requirements of 10 CFR 50.75(e)(1)(iii)(C), state, in part, that [f]or non-profit entities, such as colleges, a guarantee of funds by the applicant or licensee may be used if the guarantee and test are as contained in appendix E to 10 CFR part 30. As a non-profit college, Reed College qualifies to use the self-guarantee as reflected in Appendix E to 10 CFR Part 30. The NRC staff evaluated Reed Colleges submittal pursuant to the elements specified in Appendix E to 10 CFR Part 30, including the financial test requirements, self-guarantee requirements, and additional requirements, as contained in Section II, Financial Test, and Section III, Self-Guarantee, and guidance contained in NUREG-1757.

Regarding the adequacy of Reed Colleges submittal and its proposed 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. As stated above, the licensee provided in its submittal: a letter from Reed Colleges (Office of the Treasurer) Vice President/Treasurer containing the self-guarantee financial test; an independent auditors report confirming the Reed College Office of the Treasurer letter and reconciling amounts with the licensees financial statements; and the licensees audited financial statements for the most Enclosure

recent fiscal year. The NRC staff notes that the self-guarantee agreement (originally signed duplicate) was not submitted with the application as recommended in NUREG-1757 guidance; however, the NRC staff confirmed that this agreement is in the NRCs possession and remains unchanged (ADAMS Accession No. ML092200010; page 281). The NRC staff also notes that Subsection II(C)(1) of Appendix E to 10 CFR Part 30 requires the licensees independent certified public accountant to evaluate the licensees off-balance sheet transactions and render an opinion on whether those transactions could adversely affect the licensees 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, KPMG LLP, the independent auditor retained by Reed College, stated, In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of The Reed Institute [Reed College]. The NRC staff concluded that the information provided in the Reed College submittal was acceptable to support of the licensees use of a self-guarantee for decommissioning funding.

Regarding Reed College financial test requirements, Appendix E to 10 CFR Part 30 requires a bond issuing licensee to have a current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of Aaa, Aa, or A (including adjustments of 1, 2, or 3) as issued by Moodys. As stated in the Reed College Self-Guarantee Agreement provided with its March 15, 2018, submittal, the Moodys bond rating for Reed Colleges most recent uninsured, uncollateralized, and unencumbered bond was rated Aa2/VMIG 1. The Moodys bond rating of Aa2/VMIG 1, meets the test criteria of Aaa, Aa, or A as provided in Appendix E to 10 CFR Part 30.

In consideration of the above, Reed College has fulfilled the requirements for a bond issuing university seeking to provide decommissioning funding assurance using a self-guarantee.

3.0 CONCLUSION

The NRC staff has reviewed the financial assurance for decommissioning the Reed College research reactor. Based on its review, the NRC staff finds that the licensee provided complete documentation, including a letter from Reed Colleges Vice President/Treasurer containing the self-guarantee financial test; an independent auditors report confirming the Vice President/Treasurer letter and reconciling amounts with the licensees financial statements; and the licensees audited financial statements for the most recent fiscal year. In addition, the NRC staff finds that the self-guarantee agreement meets the financial test criteria for a non-profit college that issues bonds, is sufficient for providing financial assurance ($3,025,125 in 2017 dollars) for decommissioning of the Reed College research reactor and related facilities, and conforms to NRC guidance. Therefore, the NRC staff concludes that Reed College meets the requirements of 10 CFR Part 30, Appendix E and 10 CFR 50.75.