ML100500404

Aerotest Operations, Inc., Request for Additional Information Regarding the Proposed Indirect License Transfer of the Aerotest Radiography and Research Reactor for Facility Operating License No. R-98

ML100500404
Person / Time
Site:	Aerotest
Issue date:	02/23/2010
From:	Montgomery C K Research and Test Reactors Licensing Branch
To:	Brisighella D Aerotest
MONTGOMERY C K, NRR/PRTA 415-3398
References
TAC ME1887
Download: ML100500404 (7)

Text

February 23, 2010

Mr. Dario Brisighella, President

Aerotest Operations, Inc.

3350 Airport Road Ogden, UT 84405

SUBJECT:

AEROTEST OPERATIONS, INC. - REQUEST FOR ADDITIONAL INFORMATION REGARDINGTHE PROPOSED INDIRECT LICENSE TRANSFER OF THE AEROTEST RADIOGRAPHY AND RESEARCH REACTOR (TAC NO. ME1887)

Dear Mr. Brisighella:

The U.S. Nuclear Regulatory Commission is reviewing your January 7, 2010 application for consent to transfer Facility Operating License No. R-98 for the Aerotest Radiography and Research Reactor (ARRR). During our review, questions have arisen for which we require additional information and clarification. Please provide responses to the enclosed request for additional information no later than March 26, 2010. In accordance with Title 10 of the

Code of Federal Regulations Part 50.30(b), your response must be executed in a signed original under oath or affirmation.

If you have any questions regarding this review, please contact me at 301-415-3398 or by electronic mail to Cindy.Montgomery@nrc.gov. Sincerely, /RA/ Cindy K. Montgomery, Project Manager Research and Test Reactors Licensing Branch Division of Policy and Rulemaking Office of Nuclear Reactor Regulation

Docket No. 50-228

License No. R-98

Enclosure:

As stated

cc w/encl: See next page

ML100500404 NRR-088 OFFICE PRLB: PM PRLB: LA PFPB:PM PRLB: BC PRLB: PM NAME CMontgomery GLappert JSimpson KBrock CMontgomery DATE 2/19/2010 2/22/2010 2/22/2010 2/23/10 2/23/10 Aerotest Operations, Inc.

Docket No. 50-228 cc:

Michael S. Anderson Vice President for Legal Affairs and General Counsel Autoliv ASP, Inc.

1320 Pacific Drive Auburn Hills, MI 48326

Robert B. Haemer Pillsbury Winthrop Shaw Pittman LLP

2300 N Street, NW Washington, DC 20037-1122 OFFICE OF NUCLEAR REACTOR REGULATION REQUEST FOR ADDITIONAL INFORMATION REGARDING THE INDIRECT LICENSE TRANSFER AEROTEST RADIOGRAPHY AND RESEARCH REACTOR FACILITY OPERATING LICENSE NO. R-98 DOCKET NO. 50-288 Financial Qualifications

As required by Title 10 of the Code of Federal Regulations (10 CFR) Section 50.80(b)(1)(i), "[A]n application for transfer of a license shall include] for a construction permit or operating license under this part, as much of the information described in §50.33 and 50.34 of this part with respect to the identity and technical and financial qualifications of the proposed transferee as would be required by those sections if the application were for an initial license." To comply with this requirement, please provide the following additional information to the January 7, 2010, amended on February 2, 2010, indirect license transfer application (the application) of Aerotest

Operations, Inc., (Aerotest) from OEA Aerospace, Inc., and OEA, Inc., subsidiaries of Autoliv ASP, Inc., (Autoliv, seller applicant) to X-Ray Industries, Inc., (X-Ray Industries, buyer

applicant).

1. Pursuant to 10 CFR 50.80(b)(2), provide a statement of the purposes for which the transfer of the license is requested, and the nature of the transaction necessitating or making desirable the transfer of the license.

2. As described in 10 CFR 50.33(a)-(d), provide all of the general information for X-Ray Industries, OEA Aerospace, Inc., OEA, Inc., and any X-Ray Industries-owned entities in the ownership chain of the prospective licensee, including, but not limited to names, addresses and citizenship of the principal officers. Describe the relationship of OEA Aerospace, Inc., and OEA, Inc., and ownership interest as it relates to the proposed license transfer.

3. Please state whether X-Ray Industries is owned, controlled, or dominated by an alien, a foreign corporation, or foreign government, and, if so, give details.

4. Pursuant to 10 CFR 50.80(b)(1)(i), please provide a copy of X-Ray Industries latest annual financial statements since they were not included in the license transfer application.

5. Pursuant to 10 CFR 50.33(f)(2), "-the applicant shall submit information that demonstrates the applicant possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license." In order for the U. S. Nuclear Regulatory Commission (NRC) staff to complete its review of

the application, please provide the following additional information to complete its

review: (a) A projected income statement for the first five years of operations of Aerotest which includes, at a minimum, the following six line items: total revenue; total operating expense (O&M); net operating income; other income, expenses, and taxes; decommissioning funding, and net income after tax.

(b) The source(s) of funds to cover the operating costs pursuant to 10 CFR 50.33(b)(1)(c).

(c) A projected balance sheet, which recognizes decommissioning costs as a liability, as allowed by 10 CFR 50.33(f)(5).

6. Pursuant to 10 CFR 50.75(d)(1), "[e]ach non-power reactor applicant for or holder of an operating license for a production or utilization facility shall submit a decommissioning report as required by §50.33(k) of this part." Under 50.75(d)(2) the report must "(i) Contain a cost estimate for decommissioning the facility; (ii) Indicate which method or methods described in paragraph (e) of this section as acceptable to the NRC will be used to provide funds for decommissioning; and (iii) Provide a description of the means of adjusting the cost estimate and associated level periodically over the life of the facility."

In order for the NRC staff to complete its review, provide the basis for the decommissioning cost estimate in Attachment 1: "Decommissioning Funding Analysis for Aerotest Radiography and

Research Reactor." The NRC staff notes that the previous decommissioning cost estimate, stated in the April 28, 2009 teleconference, was $4.7 million, but the new estimate in the January 7, 2010 license transfer application was $2.3 million. Please provide:

(a) Clarification of the actual current cost to decommission the ARRR to meet the NRC's radiological release criteria for decommissioning the facility for unrestricted use to comply with 10 CFR 50.75(d)(2), including but not limited to the following information:

(1) A description of the basis on how the decommissioning cost estimate was developed, including, but not limited to:

I. labor, energy, and waste disposal cost assumptions for the Aerotest facility;

II. A description of Sites A, B, and C, which were used to develop the square foot cost estimate, including the dates of these estimates;

III. For Sites A, B, and C, provide the size of the reactor; the amount of radioactive waste; the unit disposal costs of radioactive waste;

the extent of contamination; labor-hours; and time to complete decommissioning. Compare the values of Sites A, B, and C to the values of the Aerotest facility. Provide supporting documentation for all calculations, including square footage calculations.

(2) Clarification of the total amount of decommissioning financial assurance to be provided. The NRC staff notes that the application states that the amount needed to provide decommissioning funding assurance (Attachment 1) is $1,150,000 based on a net present value calculation.

Since Aerotest does not qualify to use an external sinking fund, the full amount of the decommissioning cost estimate must be covered using one or more of the acceptable funding mechanisms noted in 10 CFR 50.75(e);

such as prepayment or a letter of credit.

(3) Provide the basis for including a 2% real rate of return calculation through 2045. (4) Provide the source of the $2 million in funding listed as "Amount available initially."

(5) Provide the source of the $1.25 million in additional funding listed as "Amount available in 2015."

(6) What guarantee(s) can X-Ray Industries provide to demonstrate that required decommissioning funds will be obtained and deposited into the

trust fund?

(b) Clarification of the decommissioning financial assurance method or methods to be used to provide financial assurance per NRC regulations. The Buyer's Commitment letter (Attachment 2) dated January 6, 2010, is not an acceptable decommissioning financial assurance mechanism. The NRC staff notes that an acceptable decommissioning financial assurance mechanism will clearly state the party responsible to provide decommissioning funding.

(c) A statement of the decommissioning method to be used (e.g., DECON, SAFSTOR, or other method) and the estimated length of time required to decommission the facility.

(d) A description of the means of adjusting the cost estimate and associated funding level periodically over the life of the facility, to comply with 10 CFR 50.75(d)(2)(ii).

Since the application does not provide this information, please update the application to include a full description of the method to be used as the means of adjusting the cost estimate and associated funding level periodically over the life of the facility.

Technical Qualifications

7. Pursuant to 10 CFR 2.1315(b) "Where administrative license amendments are necessary to reflect an approved transfer, such amendments will be included in the order that approves the transfer-" Please provide proposed modifications to the Technical Specifications for the proposed indirect transfer of ownership from Autoliv ASP, Inc., to X-Ray Industries to conform the license to reflect the transfers of control (e.g. changes to the name of the licensee). Please provide a markup of the current Technical Specifications and a copy of the proposed Technical Specifications incorporating the changes.

8. Pursuant to 10 CFR 50.80 (b)(1)(i) "An application for transfer of a license shall include:

-as much of the information described in §§ 50.33 and 50.34 of this part with respect to the identity and technical and financial qualifications of the proposed transferee as would be required by those sections if the application were for an initial license-" Furthermore, pursuant to 10 CFR 50.33(f) "The Commission may request-information regarding a licensee's ability to continue the conduct of the activities authorized by the license and to decommission the facility."

Your January 7, 2010 license transfer application states that "The Parties are aware of no changes in personnel or duties related to the licensed programs. The Buyer intends to retain the current management team at the facility, except Scott W. Thams

[President, X-Ray Industries, Inc.] will replace Dario Brisighella [President, Aerotest

Operations, Inc.]" In order for the NRC staff to complete its review, please confirm that the management and technical personnel at the Aerotest Radiography and Research Reactor located in San Ramone, California who are responsible for licensed activities including reactor safety and nuclear safety will become employees of X-Ray Industries and will not change due to the license transfer.