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pdfU.S. NUCLEAR REGULATORY COMMISSION
DRAFT REGULATORY GUIDE DG-1348
Revision 1
Proposed Revision 3 to Regulatory Guide RG 1.159
Issue Date: February 2022
Technical Lead: Trent Wertz
ASSURING THE AVAILABILITY OF FUNDS FOR
DECOMMISSIONING PRODUCTION OR UTILIZATION
FACILITIES
A. INTRODUCTION
Purpose
This document provides guidance to applicants and licensees of production or utilization facilities
concerning methods acceptable to the staff of the U.S. Nuclear Regulatory Commission (NRC) for
complying with the requirements in Title 10 of the Code of Federal Regulations (10 CFR) regarding
funds for decommissioning. It also provides guidance on the content and form of the financial assurance
mechanisms in those rules. For the purposes of this guidance, power reactors are utilization facilities in
which the primary purpose is to produce electricity for commercial sale and non-power production or
utilization facilities are production or utilization facilities in which the primary purpose is not to produce
electricity for commercial sale.
Applicability
This Regulatory Guide (RG) applies to applicants and licensees subject to 10 CFR Part 50,
“Domestic Licensing of Production and Utilization Facilities,” (Ref. 1), and 10 CFR Part 52, “Licenses,
Certifications, and Approvals for Nuclear Power Plants” (Ref. 2).
Applicable Regulations
•
10 CFR 50.33, “Contents of applications; general information,” contains general requirements for
production and utilization facility license applications. Under the requirements, each applicant
must describe how reasonable assurance will be provided that funds will be available to
decommission its facility. 10 CFR 52.77, “Contents of applications; general information,”
contains similar requirements for nuclear power reactor license applications under 10 CFR
Part 52.
This RG is being issued in draft form to involve the public in the development of regulatory guidance in this area. It has not received final staff
review or approval and does not represent an NRC final staff position. Public comments are being solicited on this DG and its associated
regulatory analysis. Comments should be accompanied by appropriate supporting data. Comments may be submitted through the Federal
rulemaking Web site, http://www.regulations.gov, by searching for draft regulatory guide DG-1348. Alternatively, comments may be submitted
to Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff.
Comments must be submitted by the date indicated in the Federal Register notice.
Electronic copies of this DG, previous versions of DGs, and other recently issued guides are available through the NRC’s public Web site under
the Regulatory Guides document collection of the NRC Library at https://nrcweb.nrc.gov/reading-rm/doc-collections/reg-guides/. The DG is also
available through the NRC’s Agencywide Documents Access and Management System (ADAMS) at http://www.nrc.gov/reading-rm/adams.html,
under Accession No. ML21347A081. The regulatory analysis is associated with a rulemaking and may be found in ADAMS under Accession No.
ML22019A132.
•
10 CFR 50.75 “Reporting and recordkeeping for decommissioning planning,” establishes
requirements regarding how each licensee will provide reasonable assurance that funds will be
available to decommission its facility. The requirements address the amount of funds that must be
provided, including updates, the methods to be used for assuring funds, and provisions contained
in trust agreements for safeguarding decommissioning funds.
•
10 CFR 50.82 “Termination of license,” describes the actions that production and utilization
facility licensees must take to apply for termination of a license. It includes provisions for
spending decommissioning funds collected under 10 CFR 50.75 and requires a site specific
projected cost of managing irradiated fuel associated with the facility. 10 CFR 52.110
“Termination of license,” contains similar requirements for nuclear power reactors licensed under
10 CFR Part 52.
•
Appendix A to 10 CFR Part 30 “Criteria Relating to Use of Financial Tests and Parent Company
Guarantees for Providing Reasonable Assurance of Funds for Decommissioning,” establishes
criteria for byproduct material applicants or licensees to pass the financial test for
decommissioning funds and for obtaining parent company guarantees.
Related Guidance
•
NUREG-1307, “Report on Waste Burial Charges: Changes in Decommissioning Waste Disposal
Costs at Low-level Waste Burial Facilities” (Ref. 3), provides information that can be used in cost
estimates for low-level radioactive waste disposal.
•
NUREG-1713, “Standard Review Plan for Decommissioning Cost Estimates for Nuclear Power
Reactors” (Ref. 4), provides guidance to the NRC staff for reviewing decommissioning cost
estimates for nuclear power reactors.
•
NUREG/CR-1756, “Technology, Safety, and Costs of Decommissioning Reference Nuclear
Research and Test Reactors” (Ref. 5), provides a methodology that can be applied to estimating
decommissioning costs of nuclear research and test reactors.
•
Regulatory Guide 1.202, “Standard Format and Content of Decommissioning Cost Estimates for
Nuclear Power Reactors” (Ref. 6), provides applicants a standard format and content that can be
used in submittals of decommissioning cost estimates for nuclear power reactors.
•
NUREG-1537, Parts 1 and 2, “Guidelines for Preparing and Reviewing Applications for the
Licensing of Non-Power Reactors” (Ref. 7), provides guidance for applicants preparing
decommissioning cost estimates for non-power reactors and the NRC staff in its review of this
information.
•
Final Interim Staff Guidance Augmenting NUREG-1537, Parts 1 and 2, “‘Guidelines for
Preparing and Reviewing Applications for the Licensing of Non-Power Reactors’ for Licensing
Radioisotope Production Facilities and Aqueous Homogeneous Reactors” (Ref. 8), provides
guidance for applicants preparing decommissioning cost estimates for radioisotope production
facilities and aqueous homogeneous reactors and the NRC staff in its review of this information.
DG-1348 Revision 1, Page 2
Purpose of Regulatory Guides
The NRC issues RGs to describe to the public methods that the staff considers acceptable for use
in implementing specific parts of the agency’s regulations, to explain techniques that the staff uses in
evaluating specific problems or postulated events, and to provide guidance to applicants. Regulatory
guides are not substitutes for regulations and compliance with them is not required. Methods and
solutions that differ from those set forth in RGs will be deemed acceptable if they provide a basis for the
findings required for the issuance or continuance of a permit or license by the Commission.
Paperwork Reduction Act
This RG provides voluntary guidance for implementing mandatory information collections
covered by 10 CFR 50 and 10 CFR 52 that are subject to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et. seq.). These information collections were approved by the Office of Management and
Budget (OMB), under control numbers 3150-0017, 3150-0011, and 3150-0151 respectively. Send
comments regarding this information collection to the FOIA, Library, and Information Collections
Branch, (T6-A10M), U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, or by e-mail to
[email protected], and to the OMB reviewer at OMB Office of Information and Regulatory
Affairs, NEOB-10202 (3150-0017, 3150-0011, and 3150-0151), Office of Management and Budget,
Washington, DC 20503.
Public Protection Notification
The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of
information unless the document requesting or requiring the collection displays a currently valid OMB
control number
DG-1348 Revision 1, Page 3
TABLE OF CONTENTS
Page
A.
INTRODUCTION ........................................................................................................................... 1
B.
DISCUSSION .................................................................................................................................. 6
Reason for Revision………………………………………………………………………………..6
Discussion………………………………………………………………………………………….6
Amount of Funds for Decommissioning.......................................................................................... 6
Methods of Financial Assurance ...................................................................................................... 8
C.
STAFF REGULATORY GUIDANCE.......................................................................................... 11
1.
2.
D.
Amount of Funds for Decommissioning........................................................................... 11
1.1
Funding Requirements for the Decommissioning Report/Initial
Amounts ............................................................................................................... 11
1.2
Adjustments to Certification Amounts ................................................................ 12
1.3
Decommissioning Cost Estimates ....................................................................... 12
1.4
Adjustments to Cost Estimates ............................................................................ 12
Methods of Financial Assurance ....................................................................................... 14
2.1
Guidance Applicable to All Methods of Financial Assurance ............................. 14
2.2
Prepayment and External Sinking Fund .............................................................. 16
2.3
Guarantee Methods .............................................................................................. 21
2.4
Standby Trust ....................................................................................................... 21
2.5
Governmental Statement of Intent ....................................................................... 22
2.6
Triennial Reports ................................................................................................. 22
2.7
License Termination Plan .................................................................................... 23
2.8
Procedures for Prematurely or Previously Shutdown Reactors ........................... 24
IMPLEMENTATION .................................................................................................................... 24
GLOSSARY OF FINANCIAL TERMS..................................................................................................... 26
REFERENCES .......................................................................................................................................... 28
DG-1348 Revision 1, Page 4
APPENDIX A: EXAMPLES OF FINANCIAL ASSURANCE INSTRUMENTS ................................. A-1
A-1
Example of Escrow Agreement ...................................................................... A-2
A-1.1
Example of Certificate of Events.................................................................... A-7
A-1.2
Example of Certificate of Resolution ............................................................. A-8
A-2
Examples of Certificates of Deposit ............................................................... A-9
A-2.1
Example of Negotiable Certificate of Deposit................................................ A-9
A-2.2
Example of Nonnegotiable Certificate of Deposit........................................ A-10
A-3
Examples of Trust Fund and Standby Trust Agreements ............................. A-11
A-3.1
Example of Trust Fund Agreement .............................................................. A-11
A-3.2
Example of Standby Trust Agreement ......................................................... A-17
A-3.2.1
Example of Certificate of Events.................................................................. A-18
A-3.2.2
Example of Certificate of Resolution ........................................................... A-19
A-3.3
Example of Acknowledgment ...................................................................... A-20
A-4
Example of Payment Surety Bond................................................................ A-21
A-5
Example of Irrevocable Standby Letter of Credit......................................... A-24
A-6
Examples of Documents Recommended To Support Corporate
Guarantee ...................................................................................................... A-26
A-6.1
Example of Letter from Chief Financial Officer .......................................... A-26
A-6.2
Financial Test: Alternative I ........................................................................ A-27
A-6.3
Financial Test: Alternative II ....................................................................... A-28
A-6.4
Example of Auditor’s Special Report by Certified Public
Accountant .................................................................................................... A-29
A-6.4.1
Example of Schedule Reconciling Amounts Contained in
CFO’s Letter ................................................................................................. A-30
A-6.5
Example of Parent Company Guarantee....................................................... A-31
DG-1348 Revision 1, Page 5
B.
DISCUSSION
Reason for Revision:
This revision of RG 1.159 (Revision 3) was issued as part of a rulemaking to amend the
Commission’s regulations relating to decommissioning for nuclear power reactors. The rulemaking, titled
“Regulatory Improvements for Production and Utilization Facilities Transitioning to Decommissioning”
(RIN No: 3150-AJ59; NRC Docket ID: NRC-2015-0070), amended 10 CFR 50.75 and several other
regulations to provide for a more efficient process for transitioning to decommissioning, reduce the need
for exemptions from existing regulations and license amendment requests, and address other
decommissioning issues identified by the NRC staff that could streamline and improve the overall
decommissioning process. This revision of the RG provides guidance on the rulemaking’s modification of
the reporting period for power reactors licensed under Part 50 or Part 52 on the status of decommissioning
funds from biennial to triennial. Additionally, this revision of the RG clarifies the guidance for non-power
production or utilization facilities and fuel reprocessing plants.
Discussion
According to 10 CFR 50.2, “Definitions,” decommission means to remove a facility or site safely
from service and reduce residual radioactivity to a level that permits (1) release of the property for
unrestricted use and termination of the license; or (2) release of the property under restricted conditions
and termination of the license. As used in this context, “facility” refers to the contaminated components
(or noncontaminated components required to be dismantled to obtain access to contaminated components)
of the site, buildings and contents, and equipment associated with all NRC-licensed activities within the
scope of 10 CFR 50.75.
There are three primary methods of decommissioning:
DECON is the method in which the equipment, structures, and portions of a facility and site
containing radioactive contaminants are removed or decontaminated to a level that permits the property to
be released for use, in accordance with the NRC’s definition of decommission, shortly after cessation of
operations.
SAFSTOR is the method in which the nuclear facility is placed and maintained in a condition
that allows it to be safely stored and subsequently decontaminated (deferred decontamination) to a level
that permits the property to be released for use in accordance with the NRC’s definition of decommission.
ENTOMB is the method in which radioactive contaminants are encased in a structurally longlived material, such as concrete. The entombed structure is appropriately maintained, and continued
surveillance is carried out, until the radioactivity decays to a level permitting release of the property for
use in accordance with the NRC’s definition of decommission.
So that a lack of funds does not result in delays in, or improper conduct of, decommissioning that
may adversely affect public health and safety, the NRC’s regulations require that applicants and licensees
provide reasonable assurance that adequate funds will be available at the end of operation to
decommission the facility. To provide this reasonable assurance, the regulations require that two factors
be considered; namely, the amount of funds needed to decommission the facility and the method used to
provide financial assurance for the funds.
DG-1348 Revision 1, Page 6
Amount of Funds for Decommissioning
Estimating the minimum amount of funds needed for decommissioning is important to prevent
funding shortfalls that could adversely affect public health and safety. Requirements for establishing the
minimum funding amounts for decommissioning are set out in 10 CFR 50.33(k), 10 CFR 50.75,
10 CFR 50.82(a)(4), 10 CFR 50.82(a)(8), 10 CFR 50.82(a)(9), 10 CFR 50.82(b)(3), 10 CFR 50.82(b)(4),
10 CFR 52.110(d)(1), 10 CFR 52.110(h), and 10 CFR 52.110(i). These include the following:
(1)
An initial certification amount (or, for non-power production or utilization facility licensees, a
site-specific decommissioning cost estimate), established at the operating license stage, is
required under 10 CFR 50.75(b) and 10 CFR 50.75(c)(1).
(2)
Adjustments to the certification amount (or site-specific decommissioning cost estimate) are
required over the operating life and storage period, if any, of the facility. Specifically, 10 CFR
50.75(b) requires each power reactor licensee to adjust the initial certification amount annually by
use of the equation in 10 CFR 50.75(c)(2) (non-power production or utilization facility licensees
submit per 10 CFR 50.75(d)(1)), which provides for escalation factors for labor, energy, and
waste burial. In addition, 10 CFR 50.75(f) requires each power reactor licensee to submit, about 5
years prior to the projected end of operation (about 2 years prior for non-power production or
utilization facility licensees under 10 CFR 50.75(f)(4)), a preliminary site-specific
decommissioning cost estimate that includes an up-to-date assessment of the major factors that
could affect the cost to decommission.
(3)
A post-shutdown decommissioning activities report (PSDAR) must be submitted by the power
reactor licensee to the NRC, with a copy to the affected states. This must be done prior to or
within 2 years following permanent cessation of operations. The PSDAR must contain a
description of the planned decommissioning activities along with a schedule for their
accomplishment, a discussion whether the environmental impacts associated with site-specific
decommissioning activities will be bounded by appropriate federally issued environmental review
documents, a description of any decommissioning activities whose environmental impacts will
not be so bounded and will be evaluated prior to the performance of the activities, and a sitespecific decommissioning cost estimate, including the projected cost of managing irradiated fuel
(10 CFR 50.82(a)(4)(i) and 10 CFR 52.110(d)(1)). A non-power production or utilization facility
or fuel reprocessing plant licensee must make application for license termination within 2 years
following permanent cessation of operations, accompanied or preceded by a proposed
decommissioning plan (10 CFR 50.82(b)(1)).
(4)
A site-specific decommissioning cost estimate must be submitted to the NRC prior to the power
reactor licensee using any funds in excess of those described in 10 CFR 50.82(a)(8)(ii) or 10 CFR
52.110(h)(2). In addition, the licensee must submit such a cost estimate within 2 years following
permanent cessation of operations, if not already submitted (10 CFR 50.82(a)(8)(iii)).
(5)
A power reactor licensee is required by 10 CFR 50.82(a)(9)(ii)(F) or 10 CFR 52.110(i)(2)(vi) to
provide “[a]n updated site-specific estimate of remaining decommissioning costs…” as part of a
license termination plan. In addition, 10 CFR 50.82(a)(9)(i) and 10 CFR 52.110(i)(1) require a
licensee to submit its plan at least 2 years before the date of termination of the license. A nonpower production or utilization facility or fuel reprocessing plant licensee is required by 10 CFR
50.82(b)(4)(iv) to provide “[a]n updated cost estimate for the chosen alternative for
decommissioning…” as part of a proposed decommissioning plan.
DG-1348 Revision 1, Page 7
The regulations in 10 CFR 50.75(b) require each power reactor applicant and licensee to provide
certification of financial assurance. The regulations in 10 CFR 50.75(d) require each non-power
production or utilization facility applicant and licensee to submit a decommissioning report as required by
10 CFR 50.33(k). The specific information noted in paragraphs 2 through 5 above must also be provided
at the appropriate time. The certification amounts in 10 CFR 50.75(c)(1) act as threshold review levels for
power reactor licensees. While not necessarily representing the actual cost of decommissioning for
specific power reactors, these certification amounts provide assurance that licensees are able to
demonstrate adequate financial responsibility, in that the bulk of the funds necessary for a safe
decommissioning are being considered and planned for early in the life of the facility, thus providing
adequate assurance that the facility will not become a risk to public health and safety when it is
decommissioned. To estimate increases in the cost of decommissioning over the operating life of the
facility, 10 CFR 50.75(c)(2) contains a formula to account for inflation that has occurred in the labor,
energy, and waste burial components of decommissioning costs.
As indicated in 10 CFR 50.75(d), each non-power production or utilization facility applicant and
licensee is to submit a cost estimate for decommissioning its facility. This initial cost estimate is not an
exact accounting of the actual cost of decommissioning but is intended to provide an approximation of
what decommissioning the reactor will cost at the proposed time of decommissioning. This estimate may
be based on information from the literature (e.g., generic studies, licensee models, experience). Pacific
Northwest Laboratory has made a detailed cost estimate of the conceptual decommissioning for research
and test reactors in NUREG/CR-1756 and Addendum 1, issued July 1983, that can be used as a basis, for
regulatory purposes, for developing estimates of the costs of decommissioning.
Use of the certification approach is the first step in providing reasonable assurance that funds will
be available to decommission the facility. Another step is that, 5 years prior to the expected end of
operations, licensees are required to submit (or for a non-power production or utilization facility, to
update 2 years prior to the expected end of operations) a preliminary site-specific decommissioning cost
estimate that includes an up-to-date assessment of the major factors that could affect the cost to
decommission and the plans for adjusting levels of funds. For a prematurely shutdown reactor, this step
may involve the licensee submittal of a site-specific decommissioning cost estimate under
10 CFR 50.82(a)(4)(i) or 10 CFR 50.82(a)(8)(iii). Also, in accordance with 10 CFR 50.82(c) or 10 CFR
52.110(l), for licensees that shut down their reactors prematurely, the collection period for any shortfall of
funds will be determined on a case-by-case basis upon application by the licensee, taking into account the
specific financial situation of each licensee. As required by 10 CFR 50.75(f), this estimated amount of
decommissioning funds is to be based on a then-current assessment of major factors that could affect
decommissioning costs and is to include relevant, up-to-date information. The third step is a licensee
evaluation of its planned decommissioning activities, the schedule for their completion, and an update to
its estimated costs to decommission the facility. This step would include development and submittal of a
PSDAR, a site-specific decommissioning cost estimate, and an irradiated fuel management plan.
Together, these steps provide reasonable assurance that the NRC’s objective will be met—namely, at the
time of permanent end of operations, sufficient funds are available to decommission the reactor in a
manner that protects public health and safety.
Methods of Financial Assurance
The NRC regulations in 10 CFR 50.75(e) specify the general requirements for methods that are
considered acceptable for providing reasonable assurance of the availability of funds for
decommissioning nuclear facilities. These methods and how they are evaluated are discussed in detail in
the supplementary information to the NRC rulemaking action that established the requirements (“General
Requirements for Decommissioning Nuclear Facilities” (53 FR 24018, dated June 27, 1988;
61 FR 39301, dated July 29, 1996; and 62 FR 39091, dated July 21, 1997)), the actions that amended the
DG-1348 Revision 1, Page 8
requirements (“Financial Assurance Requirements for Decommissioning Nuclear Power Reactors”
(63 FR 50465, dated September 22, 1998) and “Decommissioning Trust Provisions” (67 FR 78332, dated
December 24, 2002)), and in NUREG-0586, Supplement 1, “Generic Environmental Impact Statement on
Decommissioning of Nuclear Facilities,” issued November 2002. These documents present a rationale for
the acceptability of methods for providing financial assurance. The supplementary information
accompanying the final decommissioning rule indicates that, although some methods for providing
funding assurance now may not be available, they would be allowed in the event that they become
available. This guide addresses the more feasible alternatives in greater detail. Licensees are, of course,
free to use any acceptable method as it becomes available.
According to 10 CFR 50.75(e)(1), the following methods are acceptable for facilities to provide
financial assurance (see the glossary of these terms in Appendix A of this RG):
•
Prepayment—The deposit preceding the start of operation, or the transfer of a license pursuant
to 10 CFR 50.80, “Transfer of licenses,” or 10 CFR 52.105, “Transfer of combined license,” into
an account segregated from licensee assets and outside the administrative control of the licensee
and its subsidiaries or affiliates of cash or liquid assets, such that the amount of funds would be
sufficient to pay decommissioning costs at the time permanent termination of operations is
expected. Prepayment may be in the form of a trust, escrow account, government fund, certificate
of deposit, deposit of government securities, or other payment acceptable to the NRC.
•
External Sinking Fund—A fund established and maintained by setting funds aside periodically,
in an account segregated from licensee assets and outside the administrative control of the
licensee and its subsidiaries or affiliates, in which the total amount of funds would be sufficient to
pay decommissioning costs at the time permanent termination of operations is expected. An
external sinking fund may be in the form of a trust, escrow account, government fund, certificate
of deposit, deposit of government securities, or other payment acceptable to the NRC.
•
Guarantee Method—Can be in the form of surety bonds, letters of credit, or insurance. Parent
company guarantees may be used when a financial test specified in Appendix A, “Criteria
Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable
Assurance of Funds for Decommissioning,” to 10 CFR Part 30, “Rules of General Applicability
to Domestic Licensing of Byproduct Material,” is used.
•
Statement of Intent—A Statement of Intent by a government agency, if applicable, indicating
that funds for decommissioning will be obtained when necessary.
•
Contractual Obligations—Obligations on the part of a licensee’s customers, the total amount of
which, over the duration of the contracts, will provide the licensee’s total share of uncollected
funds to be needed for decommissioning pursuant to 10 CFR 50.75(c) and (f), or 10 CFR 50.82,
or 10 CFR 52.110.
•
Other Mechanisms—Refers to any other mechanism, or combination of mechanisms, that
provide assurance of decommissioning funding equivalent to that provided by the mechanisms
listed above.
Consideration of International Standards
The International Atomic Energy Agency (IAEA) works with member states and other partners to
promote the safe, secure, and peaceful use of nuclear technologies. The IAEA develops Safety
Requirements and Safety Guides for protecting people and the environment from harmful effects of
DG-1348 Revision 1, Page 9
ionizing radiation. This system of safety fundamentals, safety requirements, safety guides, and other
relevant reports, reflects an international perspective on what constitutes a high level of safety. To inform
its development of this RG, the NRC considered IAEA Safety Requirements and Safety Guides pursuant
to the Commission’s International Policy Statement (Ref. 9) and Management Directive and Handbook
6.6, “Regulatory Guides” (Ref. 10). The following IAEA Safety Requirements and Guides were
considered in the update of this RG:
•
IAEA Safety Standards, General Safety Requirement (GSR) Part 6, “Decommissioning of
Facilities” (Ref. 11)
•
IAEA Safety Standards, Safety Guide WS-G-2.1 “Decommissioning of Nuclear Power Plants and
Research Reactors” (Ref. 12)
DG-1348 Revision 1, Page 10
C. STAFF REGULATORY GUIDANCE
This section describes methods of implementing the general requirements for financial assurance
for decommissioning for production or utilization facility licensees and applicants who must comply with
10 CFR Part 50 or 10 CFR Part 52.
Regulatory Position C.1 provides guidance to applicants and licensees on establishing the amount
of funds necessary for decommissioning as required by the regulations. Regulatory Position C.2 provides
guidance on methods acceptable to the NRC for assuring funds.
1.
Amount of Funds for Decommissioning
1.1
Funding Requirements for the Decommissioning Report/Initial Amounts
1.1.1
Power Reactor Applicants and Licensees
For power reactor applicants and licensees, the initial certification amount of funds for
decommissioning is based on the formulas in 10 CFR 50.75(c)(1) and (2) and represents the minimum
funding level that applicants and licensees must meet.
At its discretion, a power reactor applicant or licensee may submit a certification based either on
the formulas provided in 10 CFR 50.75(c)(1) and (2) or, when a higher funding level is desired, on a sitespecific decommissioning cost estimate that is equal to or greater than that calculated in the formulas in
10 CFR 50.75(c)(1) and (2). A site-specific decommissioning cost estimate may include non-NRCrequired costs, but such costs should be identified. If such a combined submittal is used, licensees should
ensure that the NRC-required cost estimate for decommissioning costs is equal to or greater than the
amount stated in the formulas in 10 CFR 50.75(c)(1) and (2). For certification amounts below the amount
stated in the formulas in 10 CFR 50.75(c)(1) and (2), licensees must submit an exemption request
containing the details as outlined in Regulatory Position C.1.3.
The purpose of the decommissioning report required under 10 CFR 50.33(k) and described in
10 CFR 50.75(b) and (c), is to provide reasonable assurance that licensees have a viable plan to
accumulate funds in the certification amount, adjusted for inflation, by the projected time of permanent
cessation of operations. Each licensee should submit a statement indicating the certification amount and
inflation adjustment appropriate for its reactor or reactors, together with a photocopy or confirmed copy
of the instrument being used to provide assurance of decommissioning funding as required by 10 CFR
50.75(b)(5). If an external sinking fund is being used, the proposed amount of annual (or more frequent)
payments should be provided.
1.1.2
Non-power Production or Utilization Facility and Fuel Reprocessing Plant Applicants and
Licensees
For non-power production or utilization facility and fuel reprocessing plant applicants and
licensees, the amount of funds is to be based on a cost estimate for decommissioning the facility and
submitted to the NRC in a report required by 10 CFR 50.33(k). The cost estimate for decommissioning
the facility need not be an exact accounting of the actual cost of decommissioning but rather an estimate
of the costs for decommissioning. NUREG/CR-1756 may be used, as applicable, by applicants or
licensees for initial cost estimates, with suitable adjustments to account for the site-specific differences as
discussed in Regulatory Positions C.1.4.2 and C.1.4.3. The level of detail necessary to support the cost
estimate is discussed in Regulatory Position C.1.3.
DG-1348 Revision 1, Page 11
1.2
Adjustments to Certification Amounts
For power reactor applicants and licensees, certification amounts described in Regulatory
Position C.1.1 are to be adjusted annually, based on 10 CFR 50.75(b) and (c)(2), and should be available
for NRC inspection, as requested. The adjustment factors in 10 CFR 50.75(c)(2) are 0.65L+0.13E+0.22B,
where L, E, and B are escalation factors for labor, energy, and waste burial costs respectively. Although
these adjustments are to be made annually, they need not be submitted to the NRC. Applicants and
licensees should use the latest available version of NUREG-1307 for timely examples of determining
adjustments to certified amounts.
Because this formula does not provide for estimates of future inflation but only of inflation that
has already occurred, licensees should recalculate the certification amount each year using the previous
year’s data, as described in 10 CFR 50.75(c)(2). This recalculation is for certification purposes only and
does not affect estimated future inflation that a licensee may calculate to establish amortization or
collection schedules for rate-making or other purposes.
Applicants and licensees who have prepared a site-specific decommissioning cost estimate should
also annually prepare adjustments to the cost estimate, but these adjustments need not be submitted to the
NRC (see Regulatory Position C.1.4).
Updated calculations based on the formulas in 10 CFR 50.75(c) or on site-specific
decommissioning cost estimates, as appropriate, for power reactor licensees are to be submitted every
3 years (and in certain cases annually) to the NRC as part of the report required in 10 CFR 50.75(f)(1).
1.3
Decommissioning Cost Estimates
For power reactor licensees, five decommissioning cost estimates are required to be developed
and submitted for NRC review:
(1)
initial estimate that may be calculated according to 10 CFR 50.75(c), or that may be site-specific
and at least equal to the decommissioning cost from 10 CFR 50.75(c);
(2)
preliminary site-specific decommissioning cost estimate at or about 5 years before the projected
end of operations, in accordance with 10 CFR 50.75(f)(2);
(3)
site-specific decommissioning cost estimate contained in the PSDAR, in accordance with
10 CFR 50.82(a)(4)(i) or 10 CFR 52.110(d)(1);
(4)
site-specific decommissioning cost estimate within 2 years following permanent cessation of
operations, if not already submitted, in accordance with 10 CFR 50.82(a)(8)(iii) or 10 CFR
52.110(h)(3); and
(5)
updated site-specific estimate of remaining decommissioning costs contained in the license
termination plan, in accordance with 10 CFR 50.82(a)(9)(ii)(F) or 10 CFR 52.110(i)(2)(vi).
The NRC guidance providing details on content and format for the reporting of these cost
estimates is in RG 1.202 and in NUREG-1713.
Additionally, after submitting its site-specific decommissioning cost estimate contained in the
PSDAR, and until the licensee has completed its final radiation survey and demonstrated that residual
radioactivity has been reduced to a level that permits termination of its license, the licensee must annually
DG-1348 Revision 1, Page 12
submit to the NRC, by March 31, a financial assurance status report, in accordance with 10 CFR
50.82(a)(8)(v) or 10 CFR 52.110(h)(5).
In general, decommissioning cost estimates are provided by major activity and major
decommissioning phase or period. The cost estimate must account for the entire decommissioning work
scope but not for items that are outside the definition of decommission in 10 CFR 50.2. Examples of
activities outside the definition of decommission include, but are not limited to, (1) spent fuel
management, (2) the design and/or construction of an independent spent fuel storage installation (ISFSI),
(3) activities that are not directly related to supporting long-term storage of the facility, and (4) any other
activities not directly related to radiological decontamination of the facility or site.
Cost estimates should provide costs for each of the following (or similar) major activities and
phases, with a level of detail appropriate to the type of cost estimate:
(1)
major radioactive component removal—reactor vessel and internals, steam generators,
pressurizers, large-bore reactor coolant system piping, and other large components that are
radioactive to a comparable degree;
(2)
radiological decontamination and decommissioning—removal of remaining radioactive plant
systems, including radiological decontamination;
(3)
management and support (undistributed costs)—expenses such as labor costs of utility support
staff and decommissioning contractor staff, energy costs, regulatory costs, small tools, insurance,
and others;
(4)
waste packaging/shipping—placing waste in packages and shipping to waste vendors or burial
site;
(5)
waste burial or waste vendor—waste burial charges, including waste vendors’ processing fees;
and
(6)
contingency—allowance for unexpected costs.
Cost estimates should also include the assumptions, references, and bases for unit costs used in
developing the estimates, as well as a description of how the cost estimate accounts for inflation. The cost
estimate should be provided in current-year dollars. Escalation of the waste disposition costs is considered
separately from the general inflation rate applicable to labor, material, and energy costs. Regulatory
Position C.1.2 discusses escalation factors.
1.4
Adjustments to Decommissioning Cost Estimates
In order to maintain adequate funds until completion of decommissioning, funding provisions
should contain procedures for the periodic review and adjustment of the initial estimate and subsequent
amounts set aside, during both operation and any storage periods, based on the factors below.
1.4.1
Inflation
The effect of inflation on the estimated decommissioning cost should be determined. For
licensees subject to the certification requirements of 10 CFR 50.75(b), the certification amount should be
adjusted annually, using the formula in 10 CFR 50.75(c)(2) (see Regulatory Position C.1.2). For
licensees using site-specific decommissioning cost estimates (i.e., non-power production or utilization
DG-1348 Revision 1, Page 13
facility licensees, power reactor licensees not covered by 10 CFR 50.75(c) or exercising their option to
submit a site-specific decommissioning cost estimate, or for licensees submitting preliminary or
proposed decommissioning plans pursuant to 10 CFR 50.75(f) and 10 CFR 50.82(a)), new cost-estimate
studies should be conducted periodically to determine whether the estimate reflects cost changes from
inflation or other factors. In no case, however, should site-specific decommissioning cost estimates be
lower than the formula amounts in 10 CFR 50.75(c). As an alternative to performing new site-specific
decommissioning cost estimates, licensees may use standard measures of price indexing, such as the
annual Consumer Price Index published by U.S. Department of Labor Bureau of Labor Statistics, or the
inflation factor derived from the Implicit Price Deflator for the Gross National Product as published in
the “Survey of Current Business,” by the U.S. Department of Commerce, or in “Economic Indicators,”
by the Council of Economic Advisors. The licensee may also use the factors indicated in Regulatory
Position C.1.2 for escalating the principal components of the cost estimate. Estimates of future inflation
should bear a reasonable relationship to recent (i.e., within 10 years) economic performance or other
relevant economic conditions and factors. The licensee should document the bases for all estimates of
past and future inflation.
1.4.2
Technological and Status Changes
For site-specific decommissioning cost estimates, the effect of technological changes or changes
in plant status (e.g., whether the plant has been shut down for an extended period) on the cost estimate
should be determined. This could include reasonably determined recent developments in
decontamination, waste processing and disposal, or cutting equipment and other technology; updated
information about the facility conditions, such as larger levels of contamination than anticipated; updated
waste disposal conditions; updated residual radioactivity limits; and experience gained from the actual
decommissioning of similar facilities.
1.4.3
Frequency of Adjustment
Adjustment to the certification amount and site-specific decommissioning cost estimates should
be made at least once a year for the effects described in Regulatory Position C.1.4.1. Adjustment to sitespecific decommissioning cost estimates for the effects described in Regulatory Position C.1.4.2 should
be made according to the amount of change experienced, as appropriate, but in no event, less than once
every 5 years. Regulatory Position C.2.1.5 addresses adjustments to funding levels to account for
adjustments to the certification amount or site-specific decommissioning cost estimates.
2.
Methods of Financial Assurance
Methods to provide reasonable financial assurance for funds to decommission are in
10 CFR 50.75. The following sections provide specific guidance to licensees for complying with the
various methods specified in 10 CFR 50.75.
2.1
Guidance Applicable to All Methods of Financial Assurance
2.1.1
If more than one licensee owns a facility, the method should provide a clear indication of the
funding provisions made by each licensee or agent acting for a licensee. Multiple licensees may,
at their discretion, pool decommissioning funds for a jointly-owned facility or facilities, as long
as the contribution of each licensee and each facility is separately identifiable within the methods
being used. Decommissioning funding plans may be submitted either jointly or separately by colicensees. However, each licensee should ensure the accuracy of its share of the total NRCrequired amount being certified plus periodic adjustments.
DG-1348 Revision 1, Page 14
2.1.2
The applicant or licensee should indicate that the method used provides, or will provide, at the
projected cessation of operations, an amount at least equal to the estimated or certified
decommissioning cost for the facility, when earnings are taken into account, as permitted by
10 CFR 50.75(e)(1)(i) and (ii). If a licensee uses a combination of different methods for assuring
decommissioning funds, the combined total of the methods being used should equal the
certification amount, plus adjustments projected to be needed. At its discretion, a licensee may
use an assurance method to provide funds for the adjusted certification amount plus non-NRCrequired decommissioning costs, as long as each portion can be identified.
2.1.3
The applicant or licensee should provide evidence that the parties signing the financial instrument
(for the applicant or licensee) are authorized to represent the organization in the transaction.
2.1.4
The applicant or licensee should provide evidence that the financial instrument is either a
confirmed copy or a photocopy of the original instrument.
2.1.5
A licensee is required by 10 CFR 50.75(b)(1) to provide assurance that at any time during the life
of the facility, through termination of the license, adequate funds will be available to complete
decommissioning (see 61 FR 39278). Pursuant to 10 CFR 50.75(b)(2), the minimum amount of
financial assurance required for decommissioning must be adjusted annually, using a rate at least
equal to that stated in 10 CFR 50.75(c)(2). The licensee should calculate the amount of the
adjustment as of December 31 of each year. If the amount of financial assurance provided by the
licensee does not equal or exceed the minimum required amount of financial assurance
recalculated on December 31, then the licensee must adjust the amount of financial assurance it
provides, such that it meets or exceeds the required amount.
Each of the methods of financial assurance should be adjustable to take into account variations in
earnings and adjustments in the amount of funds being set aside for decommissioning both during
operation and during storage periods, if any (see Regulatory Position C.1.4). Adjustments to the
annual amount of funds being set aside may be made to coincide with rate cases considered by a
licensee’s public utility commission (PUC) or by the Federal Energy Regulatory Commission
(FERC). Adjustments also may be made to reflect the schedule of “ruling amounts” established
by the Internal Revenue Service under Section 468A of the Internal Revenue Code for a
qualified1 Nuclear Decommissioning Reserve Fund. However, the sum of the adjusted ruling
amount in a qualified account plus the target amount in a nonqualified account should at least
equal the amount indicated in 10 CFR 50.75(c). For licensees that are no longer rate-regulated or
do not have access to a non-by-passable charge, in every case, needed adjustments to the amount
of funds set aside should be made at least once every 3 years, in conjunction with the triennial
report. Therefore, shortfalls identified in a triennial report must be corrected by the time the next
triennial report is due.
A licensee that may rely exclusively on an external sinking fund to provide financial assurance
under the circumstances defined in 10 CFR 50.75(e)(ii)(A) or (B) (that is, where the total cost of
decommissioning is provided through rates established by cost-of-service ratemaking or non-bypassable charges) may make a good-faith effort to obtain rate relief to cover its shortfall. A
licensee meeting these criteria should inform its rate regulator by March 31 of each year when a
shortfall in financial assurance has occurred as of December 31 of the preceding year. The
information should include the NRC minimum financial assurance requirement, the actual
amount of the licensee’s decommissioning financial assurance, and the amount of additional cost
1
The NRC uses the terms “qualified” and “nonqualified” as defined by the Internal Revenue Service in Section 468A of
its Code.
DG-1348 Revision 1, Page 15
recovery needed to meet the NRC amount. The licensee should request its rate regulator to
consider scheduling a review of decommissioning cost recovery within a year. A copy of the
information and request should be included in the licensee’s decommissioning fund status report
in the years that the report is required. The licensee is expected to make adjustments to the
amount of funds set aside as necessary to meet the minimum requirement of 10 CFR 50.75(c), but
in every case, within 5 years.
However, under the provisions of 10 CFR 50.75(e)(2), the NRC reserves the right to review, as
needed, the rate of accumulation of decommissioning funds and, either independently or in
cooperation with the FERC and the licensee’s state PUC, take additional actions as appropriate on
a case-by-case basis, including modification of the licensee’s schedule for the accumulation of
funds.
2.1.6
The licensee should maintain continuity in the funding method as follows:
2.1.6.1 If the licensee decides to change the funding method during the life of the facility or during the
storage period, the licensee should notify the Document Control Desk as specified in 10 CFR
50.4, “Written communications,” or 10 CFR 52.3, “Written communications,” as appropriate, of
this change at least 30 working days in advance of its effective date. Significant modifications to
a funding method should also be submitted to the Document Control Desk as specified in 10 CFR
50.4 or 10 CFR 52.3, as appropriate, at least 30 working days prior to the proposed effective date
of the amendment, providing the text of the amendment and a statement of the reason for the
amendment.
2.1.6.2 If ownership or operating responsibility for a facility is transferred, the existing financial
assurance method is to be maintained until such transfer is approved by the NRC pursuant to
10 CFR 50.80 or 10 CFR 52.105, and the transfer has been effected. (Sale-leaseback agreements
do not require new or amended financial assurance mechanisms unless so provided by such
agreements.)
2.1.6.3 An acceptable assurance method is to be maintained until the 10 CFR Part 50 or 10 CFR Part 52
license is terminated.
2.1.7
A licensee may use a single account to commingle its NRC-required radiological
decommissioning funds with its non-radiological decommissioning funds (e.g., site restoration),
as long as the licensee is able to identify and provide an accounting for the NRC-required
radiological decommissioning funds that are contained within its single account.
2.2
Prepayment and External Sinking Fund
These funding methods should have the following characteristics:
2.2.1
An applicant or licensee using an escrow account, a certificate of deposit, or a trust agreement to
satisfy 10 CFR 50.75(c) may use the examples of these methods in Appendices A-1,
A-2, and A-3 of this guide. These sample forms have been provided for general guidance.
Specific provisions may not be applicable to particular licensees and may be modified as a
licensee’s specific situation warrants. The NRC expects that all prepayment or external sinking
fund mechanisms will, at a minimum, satisfy the following conditions: (a) the instrument will
meet the requirements of state law for that instrument, (b) it will provide for the segregation of
decommissioning funds from the licensee’s other assets, (c) it will ensure that the funds are
outside the administrative control of the licensee, (d) it will ensure that special care is taken to
DG-1348 Revision 1, Page 16
safeguard the funds from investment risks, and (e) it will provide safeguards against improper
payments from the funds.
The conditions stipulated in 10 CFR 50.75(e)(1)(i) and (ii), that a prepayment account or an
external sinking fund, respectively, be “segregated from licensee assets,” are intended to ensure
that the integrity of decommissioning funds will be maintained, especially with respect to
protection from creditors in a bankruptcy situation, and to ensure continuity of funding during
license transfers. A case-by-case “reasonableness” standard will be applied to licensee
compliance with this provision. Key indicators of segregation include separation of the funds
from the other assets of the licensee, through a transfer to an independent custodian or manager,
and separate accounting. The phrase “segregation from licensee assets” does not require that the
fund be placed in an entity, such as a grantor trust, that is established as a separate tax-paying
entity. Licensees should be aware, however, that such a trust will provide greater protection in
bankruptcy than the escrow or certificate of deposit.
2.2.2
The following key provisions should be included in the trust instrument (or, when relevant, in the
escrow or government fund agreement) to ensure that it is acceptable to the NRC:
2.2.2.1 The trust agreement should state the purpose of the trust, and the nuclear facility must be
identified. An acceptable statement of purpose is the statement required for a trust agreement to
qualify as a Nuclear Decommissioning Reserve Fund under Section 468A of the Internal Revenue
Code.
2.2.2.2 The trust agreement should specify that the trust fund is established for the benefit of the licensee
of the facility and/or the NRC, but only to the extent, in the case of the NRC, that the provisions
of 31 U.S.C. 3302(b) would not be applicable. More than one licensee may be identified. A single
trust agreement may establish two or more Nuclear Decommissioning Funds when a nuclear
power plant is owned by two or more licensees.
2.2.2.3 The trust agreement should specify the obligations of the trustee and, if applicable, the investment
manager with respect to investments, specifically for nonelectric utilities, as described below
under Regulatory Position C.2.2.3.
2.2.2.4 The trust agreement should specify the circumstances under which payments will be made from
the trust. It must provide that no disbursements or payments may be made from the trust by the
trustee, other than for payment of ordinary administrative expenses (examples of ordinary
administrative expenses are set out in the Internal Revenue Code, Section 468A) or withdrawals
pursuant to 10 CFR 50.82(a)(8) or 10 CFR 52.110(h)(1), until the licensee has first given the
NRC 30 working days prior written notice, and that no disbursements or payments from the trust
may be made if the licensee receives prior written notice of objection from the Director, Office of
Nuclear Reactor Regulation, or the Director, Office of Nuclear Material Safety and Safeguards, as
appropriate. As noted in 10 CFR 50.82(a)(8)(ii) or 10 CFR 52.110(h)(2), 3 percent of the generic
amount specified in 10 CFR 50.75 may be used for decommissioning planning, and such amounts
may be expended during the operating life of a plant without any requirement for written notice to
be made. Also, licensees who have submitted the certifications required under
10 CFR 50.82(a)(1) or 10 CFR 52.110(a) and commencing 90 days after the NRC receives the
PSDAR may use an additional 20 percent without any requirements for notice to be made. After
decommissioning has begun, no further notification need be made to the NRC unless otherwise
required. See Regulatory Guide 1.184, “Decommissioning of Nuclear Power Reactors,” for
additional guidance on the appropriate use of decommissioning funds.
DG-1348 Revision 1, Page 17
2.2.2.5 For nonelectric-utility licensees, the trust agreement must specify that amendments to the trust
must be executed in writing, and that the agreement cannot be amended in any material respect
without 30 working days prior written notification from the licensee to the Document Control
Desk as specified in 10 CFR 50.4 or 10 CFR 52.3, as appropriate. The trust agreement of an
electric utility licensee must follow the requirements for trust amendments as specified in the
trusts themselves or in the requisite state regulations.
2.2.2.6 The NRC defines “material” modifications to include, but not be limited to, actions such as:
change of trustee; change to any key provision of the trust, particularly including the investment
provisions; change of the provisions related to withdrawals from the trust; changes related to the
beneficiary; changes related to the duration or term of the trust; changes that could affect the
ability of the trust agreement to provide reasonable assurance of decommissioning funds; and
changes to the terms of providing information to the NRC. Modifications that are not material
include, for example, changes in fee structures paid to a trustee; changes in arbitration provisions
between the trustee and the licensee; changes in investment advisor or investment manager, if
applicable; and changes in investments, provided the changes comply with other aspects of the
regulations.
2.2.3
The trust agreement should specify that the trustee’s obligations, or obligations of one or more
investment managers, with respect to investments, include: (1) day-to-day management of the
trust, guided by general investment instructions provided by the licensee or the licensee’s
designated investment manager; (2) the obligation of the trustee and/or investment manager to
ensure that trust investments are made pursuant to an applicable standard of care, whether in
investing or otherwise, required by state or federal law or regulation, or in the absence of such
standard, a “prudent investor” standard as set forth in 18 CFR 35.32(a)(3) or any successor
regulation; and (3) the obligation of the trustee and/or investment manager, if applicable, to avoid
specifically prohibited investments, as described below.
2.2.3.1 The requirement that the trust should not be under the “administrative control of the licensee”
will be met if day-to-day investment decisions are made by the trustee or investment manager and
not by the licensee. Licensees may exercise general management oversight of trust fund
investments to the extent allowed under state trust law. The NRC staff recognizes that licensees
have legitimate interests and responsibilities in ensuring appropriate investment strategies for
these funds and monitoring the progress of investments, and licensees may issue investment
guidelines to a trustee or investment manager. However, licensees should avoid active day-to-day
management of these funds. In this regard, if a trustee is unable to act as an investment manager,
use of a professional investment manager may be necessary. A licensee or its affiliate may act as
an investment manager in the case of passive fund management of trust funds, where
management is limited to investments tracking market indices. For example, a licensee may
maintain a fund that purchases and sells equities in order to track the Standard & Poor’s
500 Index. Such passive funds may make direct investments in securities or obligations of the
licensee for the trust (or its affiliates) or of other reactor licensees (or their affiliates), provided
that such investments are consistent with the requirements to track the applicable index and are
consistent with NRC restrictions and other regulatory requirements.
2.2.3.2 For nonelectric-utility licensees, the trust agreement must prohibit investments in securities or
other obligations of the licensee (the grantor) or any other owner or operator of any nuclear power
reactor as well as their affiliates, subsidiaries, successors, or assigns. An affiliate is any company
that controls, is controlled by, or is under common control with the licensee or any other owner or
operator of the facility. A subsidiary is any company that is owned or controlled directly or
indirectly by the licensee or any other owner or operator of the facility. A successor or assign is a
DG-1348 Revision 1, Page 18
company that has acquired possessory rights to the licensee, the facility, or any other owner or
operator of the facility. The trust agreement also must prohibit investments in a mutual fund in
which at least 50 percent of the fund is invested in the securities of a licensee or parent company
whose subsidiary is an owner or operator of a foreign or domestic nuclear power plant.
2.2.3.3 For nonelectric-utility licensees, indirect ownership of securities or other obligations of any
owners or operators of nuclear power plants through investments in securities tied to market
indices or through mutual funds in which less than 50 percent of the fund is invested in the
securities of a licensee or parent company whose subsidiary is an owner or operator of a foreign
or domestic nuclear power plant is allowed, provided that no more than 10 percent of the total
value of the grantor’s trust assets may be indirectly invested in the securities of any entity owning
or operating one or more nuclear power plants.
2.2.3.4 Investments selected with the approval of, or guidance from, the state PUC with jurisdiction over
the licensee, or from the FERC, would be acceptable to the NRC staff.
2.2.4
The escrow account, certificate of deposit, or trust agreement must comply with applicable state
law for such instruments.
2.2.5
The financial assurance instrument, signed by individuals authorized to act for the appropriate
parties, should be maintained in the licensee’s records and be available for inspection until
termination of the 10 CFR Part 50 or 10 CFR Part 52 license. If feasible, licensees should
maintain records or duplicates onsite.
2.2.6
The trustee of a fund should be an entity that has the authority to act as a trustee and whose trust
operations are regulated or examined by a state or federal agency or, if a government fund is
being used, the appropriate state or federal government agency. The word “national” in the title of
a financial institution signals that the institution is federally regulated, as do the initials “N.A.,” or
the words “National Association,” or “a national banking association.” The “examinations”
department of the appropriate district office of the U.S. Office of the Comptroller of the Currency
can provide information about whether the institution has trust powers. The word “State” in the
title of a financial institution signals that the institution is State-regulated. The examinations
department of the applicable state banking authority can provide information about whether the
institution has trust powers. Domestic branches of foreign banks may be either federally regulated
or state-regulated.
2.2.7
A trust agreement should include a clause in which the trustee accepts the responsibility of
trusteeship.
2.2.8
Annual deposits in an external sinking fund, including projected earnings, should attempt to
approximate the total amount remaining to be accumulated, divided by the remaining years of the
license, as determined by the initial and updated certification amount specified in
10 CFR 50.75(c)(1) and (2) or in a site-specific decommissioning cost estimate.
2.2.8.1 During plant operation, arithmetic precision is not required for fund accumulation rates. If, during
the course of collecting funds, a licensee has accumulated significantly greater decommissioning
funds than anticipated, it may reduce its remaining contributions commensurately. Likewise, if a
licensee is significantly behind in collections, increased contributions should be used to make up
the deficit. However, licensees should avoid undue reliance on contributions weighted in constant
dollars toward the end of projected facility operating life. Additionally, the NRC staff considers
reliance on an estimated tax deduction for decommissioning expenses, at the time such expenses
DG-1348 Revision 1, Page 19
are incurred, to be a form of internal reserve and thus not allowed under 10 CFR 50.75(e). If
sufficient rate relief by a state PUC or FERC is ultimately not obtained, the licensee’s
stockholders will be expected to cover decommissioning costs through reduced return on equity.
Projected rates of earnings on an external sinking fund during plant operation should reasonably
approximate the historical real rate of earnings (i.e., after inflation and taxes) obtained by a given
type of investment.
2.2.8.2 For decommissioning funds that are prepaid or in external sinking fund accounts, the regulations
in 10 CFR 50.75(e)(i) and (ii) allow a credit for projected earnings of up to a 2-percent annual
real rate of return (i.e., nominal rate less inflation and taxes) from the time of the future funds’
collection as a factor in calculating the total amount of funds that would be sufficient to pay
decommissioning costs. This allowed credit may be greater than 2 percent if a licensee is subject
to a rate-setting authority that will provide the total amount of funds necessary for
decommissioning and the authority has specifically presumed a higher rate. The period of time
for which the credit may be taken is determined by whether the generic formula amount or a sitespecific decommissioning cost estimate with a specified safe-storage period is used as the basis
for estimating decommissioning costs, as discussed below.
2.2.8.3 For licensees that use the generic formula amount for decommissioning cost estimates during the
period of plant operation, this credit may be taken for the remaining years left on the operating
license, and an additional pro rata credit may be taken into the presumed immediate
dismantlement period (i.e., the first 7 years after shutdown), as long as such credit reflects the
expected cash flow of expenditures during this period. If the NRC has approved license renewal
for a plant, the licensee may take the credit during the extended license period.
2.2.8.4 A licensee that uses a site-specific decommissioning cost estimate may take the allowed credit
through the projected decommissioning period, provided that the site-specific decommissioning
cost estimate is based on a period of safe storage that is specifically described in the estimate.
This decommissioning period includes the period of safe storage, final dismantlement, and license
termination. The allowed credit during the period of safe storage must reflect any withdrawals
from decommissioning funds during this period, such as withdrawals to pay for annual costs to
maintain the facility in a safe storage condition.
2.2.8.5 When a licensee adjusts the cost estimate for decommissioning annually, pursuant to
10 CFR 50.75(b)(2), the adjusted estimate less amounts already accumulated should form the
basis of future collections, which can take into account the allowed credit. Funds already
accumulated, plus scheduled fund contributions, in the case of those licensees authorized to
utilize external sinking funds, plus projected earnings on these funds, should be sufficient to pay
decommissioning costs at the time termination of operation is expected, allowing for extending
the real rate of return credit into the decommissioning period, as noted above.
2.2.8.6 Actual earnings on existing funds may be used to calculate the need for future funds. However,
pursuant to 10 CFR 50.75(f)(2)-(3), when a power reactor licensee is within 5 years or when a
non-power production or utilization facility licensee is within 2 years of the projected end of
operations and submits its preliminary site-specific decommissioning cost estimate, the licensee
may take up to a 2-percent earnings credit (or a higher credit, if specifically presumed by a ratesetting authority) over a storage period, as long as the storage period and its cost implications for
total decommissioning costs are specifically addressed in the preliminary site-specific
decommissioning cost estimate.
DG-1348 Revision 1, Page 20
2.2.8.7 Licensees who operate multiple modular reactors at a single site may take credit for earnings in
such a manner that the assumptions for earnings credit track the cash flows for decommissioning
expenses for each module.
2.3
Guarantee Methods
Guarantee methods include surety bonds, letters of credit, and insurance. Acceptable guarantee
methods should have the following characteristics:
2.3.1
An applicant or licensee that uses a surety bond, letter of credit, or parent guarantee may use the
sample wording for these methods contained in Appendices A-4, A-5, and A-6, respectively.
These sample forms have been provided for illustrative purposes. Specific provisions may not be
applicable to particular licensees and may be modified as a licensee’s specific situation warrants.
However, each licensee should be sure that the instrument being used conforms to applicable
state law.
2.3.2
The following documents should be maintained in the licensee’s records and be available for
inspection by the NRC:
(1)
for surety bonds, an originally signed duplicate or confirmed copy of the surety bond, signed by
individuals authorized to act for the licensee and the surety company;
(2)
for letters of credit, an originally signed duplicate or confirmed copy of the letter of credit, signed
by individuals authorized to act for the licensee and the financial institution;
(3)
for insurance, an original or copy of the insurance policy together with a certificate by insurers
issuing the policy stating that the copy is a true copy of the currently effective policy issued to the
licensee; and
(4)
a standby trust fund to receive funds if the surety, letter of credit, or insurance is drawn upon.
2.3.3
The following should be considered for financial institutions used as guarantors:
(1)
For surety bonds, the surety company must be listed by the U.S. Department of the Treasury in
the most recent edition of Circular 570 and have a coverage limit sufficient to cover the cost
estimates for which assurance is sought. Circular 570 is published annually about July 1 and is
updated in the Federal Register.
(2)
For letters of credit, the issuing institution must be an entity that has the authority to issue a letter
of credit, and whose letter of credit operations are regulated and examined by a federal or state
agency.
(3)
For insurance, the insurance company must be licensed by state regulatory authorities to transact
business as an insurer in one or more states.
2.4
Standby Trust
2.4.1
Under the decommissioning regulations, a licensee or applicant using a surety bond, letter of
credit, or insurance must establish a “standby” trust fund to receive funds from the other financial
instruments, if necessary. Under this arrangement, the beneficiary may draw on the funds held in
the instruments listed and deposit them directly into the standby trust for use as required for
DG-1348 Revision 1, Page 21
decommissioning. In addition to the instruments listed, applicants or licensees using parent
company guarantees, certificates of deposit, or government securities should establish a standby
trust.
2.4.2
An applicant or licensee establishing a standby trust is directed to the sample wording for the
instrument contained in Appendix A-3.2.
2.4.3
Appropriate documentation regarding the standby trust should be maintained in the licensee’s
records as indicated in Regulatory Position C.2.2.5.
2.5
Governmental Statement of Intent
A government licensee or applicant, as designated in 10 CFR 50.75(e), can submit a statement of
intent that contains a cost estimate for decommissioning and indicates that funds for decommissioning
will be obtained when necessary. Federal licensees are the only government licensees allowed to use a
statement of intent for power reactors. As defined in 10 CFR 50.2, “Federal licensee means any NRC
licensee, the obligations of which are guaranteed by and supported by the full faith and credit of the
United States Government.” Non-power production or utilization facility licensees using a statement of
intent may be federal, state, or local government entities. The statement of intent should contain the
following:
(1)
identification of the facility or facilities for which it provides the financial assurance and the
corresponding decommissioning costs,
(2)
an indication that funds for decommissioning will be requested and obtained sufficiently in
advance of decommissioning to prevent delay of required activities, and
(3)
evidence of the authority of the official of the government entity to sign the statement of intent
and evidence that the licensee’s decommissioning obligation is supported by the full faith and
credit of the U.S. Government, or as applicable, the state or local government.
A signed copy of the statement of intent that funds will be obtained when necessary should be
maintained in the licensee’s records and be available for inspection.
2.6
2.6.1
Triennial Reports
Pursuant to 10 CFR 50.75(f)(1), each power reactor licensee shall report, on a calendar-year
basis, to the NRC by March 31, 2021, and at least once every 3 years thereafter on the status of
its decommissioning funding provided by the financial assurance methods described in 10 CFR
50.75(e)(1) for each reactor or part of a reactor that it owns. However, each holder of a
combined license under 10 CFR Part 52 need not begin reporting until the date that the
Commission has made the finding under 10 CFR 52.103(g). The information in this report must
include, at a minimum: (1) an estimate of the amount of decommissioning funds to be required,
pursuant to 10 CFR 50.75(b) and (c), or a site-specific decommissioning cost estimate, if
greater than the amount in 10 CFR 50.75(c), as appropriate (or for a reactor that is neither a
BWR or a PWR); (2) the amount accumulated to the end of the calendar year preceding the
date of the report to meet 10 CFR 50.75 requirements; (3) a schedule of the annual amounts
remaining to be collected; (4) the assumptions used regarding rates of escalation in
decommissioning costs, rates of earnings on decommissioning funds, and rates of other factors
used in funding projections; (5) any contracts upon which the licensee is relying, pursuant to
10 CFR 50.75(e)(1)(v); and (6) any modifications to a licensee’s current method of providing
DG-1348 Revision 1, Page 22
financial assurance occurring since the last submitted report, including any material
modifications to decommissioning trust agreements. Once a power reactor licensee has
determined that it is within 5 years of permanent cessation of operations, it shall submit this
report annually. Licensees of plants involved in mergers or acquisitions are also required to
submit this report annually until the NRC has approved the merger or acquisition pursuant to
10 CFR 50.80 or 10 CFR 52.105. For such licensees, this report may be submitted as part of the
license transfer application, provided that it contains the information described above. The
NRC staff interprets this provision to require licensees to revert to a triennial reporting cycle
upon completion of the merger or acquisition.
2.6.2
As long as the information described above is included in the report, no specific reporting format
is required. The licensee should state with respect to any reporting item whether the item is not
applicable, if appropriate. As part of the report, licensees do not need to submit a complete listing
of all investments, although it is helpful to indicate broad categories of investments as a percent
of the total trust portfolio (e.g., equities equal 20 percent of the total value of the trust, federal
government bonds and notes equal 50 percent of the total value of the trust, etc.). In addition,
each licensee should indicate the assurance mechanism being used as a source of revenues for the
external sinking fund (e.g., traditional “cost-of-service” ratemaking, a non-bypassable charge,
long-term contracts that the NRC has found to be acceptable pursuant to 10 CFR 50.75(e)(1)(v)).2
If the assumed real earnings rate on an external sinking fund exceeds 2 percent, each licensee
should indicate the specific rate ruling or decision by its rate regulator that documents the
earnings rate being used, as provided in 10 CFR 50.75(e)(1)(i) or (ii). If a licensee is using an
assurance mechanism other than an external sinking fund, it should include adjustments to the
assurance mechanisms (e.g., a surety bond or letter of credit) as part of the report to account for
any escalation since the previous report.
2.7
License Termination Plan
The regulation in 10 CFR 50.82(a)(9) requires that all power reactor licensees that commenced
operation must submit an application for termination of license, which must be accompanied or preceded
by a license termination plan. The license termination plan must include an updated site-specific estimate
of remaining decommissioning costs and identification of sources of funds for license termination, spent
fuel management, and ISFSI decommissioning, as applicable, as described in detail in RG 1.179,
“Standard Format and Content of License Termination Plans for Nuclear Power Reactors” (Ref. 13), and
NUREG-1700, “Standard Review Plan for Evaluating Nuclear Power Reactor License Termination
Plans” (Ref. 14). The regulation in 10 CFR 50.82(b) requires that, for non-power production or utilization
facilities and fuel reprocessing plants, a licensee that permanently ceases operations must make
application for license termination within 2 years following permanent cessation of operations, and in no
case later than 1 year prior to expiration of the operating license. Each application for termination of a
license must be accompanied or preceded by a proposed decommissioning plan, which must include an
updated cost estimate for the chosen alternative for decommissioning, comparison of that estimate with
present funds set aside for decommissioning, and plan for assuring the availability of adequate funds for
completion of decommissioning, as described in detail in NUREG-1537 and NUREG/CR-1756.
2
To the extent that power reactor licensees have received rate regulatory approval to use market-based rates for a
significant portion of their nuclear-related revenues (i.e., greater than 20 percent), the NRC will not consider them to be
subject to traditional cost-of-service rate regulation for that portion of their rates.
DG-1348 Revision 1, Page 23
2.8
Procedures for Prematurely or Previously Shutdown Reactors
The funding requirements of 10 CFR 50.75, 10 CFR 50.82, and 10 CFR 52.110 apply to 10 CFR
Part 50 or 10 CFR Part 52 facilities, including those that were shut down prior to the effective date in the
rule, because these facilities possess a 10 CFR Part 50 or 10 CFR Part 52 license, albeit potentially
modified. For a facility that has permanently ceased operation before the expiration of its license, in
accordance with the provisions of 10 CFR 50.82(c), the collection period for any shortfall of funds will be
determined upon application by the licensee, on a case-by-case basis taking into account the specific
financial situation of each licensee.
Each licensee should provide the following:
2.8.1
information on how reasonable assurance will be provided that funds will be available to
decommission the facility;
2.8.2
information on the amount of funds necessary for decommissioning, as required by
10 CFR 50.75(f) (i.e., a site-specific decommissioning cost estimate that includes provisions for
adjusting the estimate should be submitted based on Regulatory Position C.1); and
2.8.3
information on the method of financial assurance to be used, as required by 10 CFR 50.75(e).
That is, funds needed to complete decommissioning are to be placed in an account segregated
from licensee assets and outside the licensee’s administrative control, or a surety method or
funding statement of intent should be maintained based on Regulatory Position C.2.
DG-1348 Revision 1, Page 24
D.
IMPLEMENTATION
The NRC staff may use this regulatory guide as a reference in its regulatory processes, such as licensing,
inspection, or enforcement. However, the NRC staff does not intend to use the guidance in this regulatory
guide to support NRC staff actions in a manner that would constitute backfitting as that term is defined in
10 CFR 50.109, “Backfitting,” and 10 CFR 72.62, “Backfitting,” and as described in NRC Management
Directive 8.4, “Management of Backfitting, Forward Fitting, Issue Finality, and Information Requests,”
(Ref. 15), nor does the NRC staff intend to use the guidance to affect the issue finality of an approval
under 10 CFR Part 52, “Licenses, Certifications, and Approvals for Nuclear Power Plants.”
DG-1348 Revision 1, Page 25
GLOSSARY OF FINANCIAL TERMS
certificate of deposit (CD)—A bank’s, or other financial institution’s, written acknowledgment of the
receipt and deposit of a sum of money by the licensee or applicant and its promise of repayment.
When using a CD to demonstrate financial assurance for decommissioning, the licensee deposits,
with a bank or other financial institution, funds sufficient to cover the certification amount or sitespecific cost of decommissioning the licensed facility and receives a CD.
contractual obligations— Defined in 10 CFR 50.75(e)(1).
decommissioning financial assurance—The system of regulation used by the NRC to ensure that funds
are available when needed for decommissioning. The term also refers to the total amount of
assurance provided using one or more of the methods specified in 10 CFR 50.75(e). A licensee is
required to provide financial assurance at all times during the life of the facility, through
termination of the license, that adequate funds will be available to complete decommissioning.
escrow account—An account containing funds deposited by the licensee or applicant and held by a bank
or other financial institution. An escrow account differs from similar accounts in that the licensee
or applicant provides funds that are held by the escrow until the happening of a contingency or
the performance of a condition, such as commencement of decommissioning, and then the funds
are released to the grantor or the grantor’s designee or, if appropriate, placed in the standby trust.
external sinking fund—A fund, established and maintained by setting funds aside periodically in an
account segregated from licensee assets and outside the administrative control of the licensee and
its subsidiaries or affiliates, in which the total amount of funds would be sufficient to pay
decommissioning costs at the time permanent termination of operations is expected. An external
sinking fund may be in the form of a trust, escrow account, government fund, CD, deposit of
government securities, or other payment acceptable to the NRC.
financial test—An accounting ratio requirement, net worth requirement, bond rating requirement, or
similar requirement or combination of requirements that measures the financial strength of a firm
providing financial assurance. The financial test is used by a firm that provides a guarantee to a
licensee, to show its own financial strength and its ability to support the guarantee. This
mechanism is unavailable to electric-utility (power-reactor) licensees. (See Appendix A, “Criteria
Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable
Assurance of Funds for Decommissioning,” to 10 CFR Part 30, “Rules of General Applicability
to Domestic Licensing of Byproduct Material.”)
insurance—Insurance, in this case, would be similar to surety bonding, as discussed below, in that it
would guarantee that decommissioning costs will be paid to a trustee, should the licensee default.
letter of credit—A binding agreement by which the issuing party, such as a bank or other financial
institution, agrees on behalf of the applicant or licensee (the account party) to pay a governmental
or government-approved authority (the beneficiary) in the event of any default by the licensee in
the performance of decommissioning.
line of credit—An arrangement of the licensee with a lender (a bank or other financial institution) in
which the lender agrees to provide funds required for decommissioning of the licensee’s facility.
The maximum amount of credit stated in the contract between the applicant or licensee and the
lender must be at least sufficient to equal the certified or estimated cost of decommissioning.
DG-1348 Revision 1, Page 26
parent company guarantee—A promise by one party (the guarantor) to pay specified debts or perform
specified obligations of another party (the principal) in the event that the principal fails to satisfy
the debts or obligations. Specifically, to satisfy the decommissioning regulations, an applicant’s
or licensee’s parent corporation guarantees providing specified dollar amounts to fund
performance of decommissioning in the event of the licensee’s default. A parent company
guarantee can only be used if the parent company passes a financial test. (See Appendix A to
10 CFR Part 30.)
prepayment—The deposit preceding the start of operation, or the transfer of a license pursuant to
10 CFR 50.80 or 10 CFR 52.105 into an account segregated from licensee assets and outside the
administrative control of the licensee and its subsidiaries or affiliates of cash or liquid assets, such
that the amount of funds would be sufficient to pay decommissioning costs at the time permanent
termination of operations is expected. Prepayment may be in the form of a trust, escrow account,
government fund, CD, deposit of government securities, or other payment acceptable to the NRC.
shortfall—The difference between the amount of financial assurance provided by the licensee and the
amount of financial assurance required, when the amount provided is less than the amount
required.
standby trust fund—A trust fund (see below) set up to receive funds from a surety, letter of credit,
insurance, or guarantee when payment is made from them, to ensure that the funds remain
available for decommissioning.
surety bond—A guarantee that decommissioning costs will be paid, should the licensee default. The
surety bond is a contract that the licensee or applicant (the principal) enters into with a qualified
surety company (the surety) to assure the Commission or state regulatory agency that the licensee
will fulfill its decommissioning obligations. In the event of the licensee’s default, the surety
guarantees that decommissioning costs will be paid.
trust fund—A three-party agreement whereby the licensee or applicant, called the grantor or trustor,
transfers assets to a trustee, such as a bank, other financial institution, or governmental authority,
to hold on behalf of the beneficiary (e.g., a state agency, or the NRC). The assets may be at least
equal to the cost of decommissioning (prepayment) or may build up over time, such that the
amount of funds should be sufficient to pay decommissioning costs (external sinking fund).
DG-1348 Revision 1, Page 27
REFERENCES3
1.
U.S. Code of Federal Regulations (CFR), “Domestic Licensing of Production and Utilization
Facilities,” Part 50, Chapter I, Title 10, “Energy4.”
2.
CFR, “Licenses, Certifications, and Approvals for Nuclear Power Plants,” Part 52, Chapter I,
Title 10, “Energy.”
3.
U.S. Nuclear Regulatory Commission, (NRC), NUREG-1307, “Report on Waste Burial
Charges,” Washington, DC.
4.
NRC, NUREG-1713, “Standard Review Plan for Decommissioning Cost Estimates for Nuclear
Power Reactors,” Washington, DC.
5.
NRC, NUREG/CR-1756, “Technology, Safety, and Costs of Decommissioning Reference
Nuclear Research and Test Reactors,” July 1983, Washington, DC.
6.
NRC, Regulatory Guide 1.202, “Standard Format and Content of Decommissioning Cost
Estimates for Nuclear Power Reactors,” Washington, DC.
7.
NRC, NUREG 1537, Parts 1 and 2, “Guidelines for Preparing and Reviewing Applications for
the Licensing of Non-Power Reactors,” February 1996, Washington, DC.
8.
NRC, Final ISG Augmenting NUREG-1537, Parts 1 and 2, “Guidelines for Preparing and
Reviewing Applications for the Licensing of Non-Power Reactors,” for Licensing Radioisotope
Production Facilities and Aqueous Homogeneous Reactors, dated October 2012, Washington,
DC.
9.
NRC, “Nuclear Regulatory Commission International Policy Statement,” Federal Register,
Vol. 79, No. 132, July 10, 2014, pp. 39415-39418.
10.
NRC, Management Directive (MD) 6.6, “Regulatory Guides, Washington, DC, May 2, 2016
(ADAMS Accession No. ML18073A170).
11.
International Atomic Energy Agency (IAEA) Safety Standards, General Safety Requirement
(GSR) Part 6, “Decommissioning of Facilities5.”
12.
IAEA Safety Standards Safety Guide WS-G-2.1 “Decommissioning of Nuclear Power Plants and
Research Reactors.”
3
Publicly available NRC published documents are available electronically through the NRC Library under Document
Collections on the NRC’s public Web site at: http://www.nrc.gov/reading-rm/doc-collections/. The documents can also
be viewed on-line or printed for a fee in the NRC’s Public Document Room (PDR) at 11555 Rockville Pike, Rockville,
MD; the mailing address is USNRC PDR, Washington, DC 20555; telephone (301) 415-4737 or (800) 397-4209; fax
(301) 415-3548; and e-mail [email protected].
4
The Code of Federal Regulations may be obtained electronically from the U.S. Government Printing Office at:
http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR
5
Copies of International Atomic Energy Agency (IAEA) documents may be obtained through their Web site:
https://www.iaea.org/ or by writing the International Atomic Energy Agency, P.O. Box 100 Wagramer Strasse 5, A1400 Vienna, Austria.
DG-1348 Revision 1, Page 28
13.
NRC, Regulatory Guide 1.179, “Standard Format and Content of License Termination Plans for
Nuclear Power Reactors,” Washington, DC.
14.
NRC, NUREG-1700, “Standard Review Plan for Evaluating Nuclear Power Reactor License
Termination Plans,” Washington, DC.
15.
NRC, Management Directive 8.4, “Management of Facility-Specific Backfitting and Information
Collection,” Washington, DC.
DG-1348 Revision 1, Page 29
APPENDIX A
EXAMPLES OF FINANCIAL ASSURANCE INSTRUMENTS
The following formats for financial assurance instruments provide examples of language and
provisions for compliance with financial assurance requirements for decommissioning for some of the
mechanisms allowed in the U.S. Nuclear Regulatory Commission’s (NRC’s) regulations. Although the
specific language is not required by decommissioning regulations, except for certain provisions,
applicants and licensees will find that its use will simplify the submittal process. Licensees may add,
delete, or modify sample provisions as their circumstances warrant. However, licensees should ensure that
the financial assurance instruments being used are valid under applicable state law and comply with the
NRC’s decommissioning regulations in Title 10, Section 50.33 and Section 52.77, “Contents of
Applications; General Information,” of the Code of Federal Regulations (10 CFR 50.33 and 10 CFR
52.77); 10 CFR 50.75, “Reporting and recordkeeping for decommissioning planning”; and 10 CFR 50.82
and 10 CFR 52.110, “Termination of license.”
DG-1348 Revision 1, Appendix A, Page A-1
APPENDIX A-1
EXAMPLE OF ESCROW AGREEMENT
ESCROW NUMBER ___________
Paragraph 1. Establishment of Escrow Account
It is agreed between the parties that [insert name of licensee], licensee, has elected to establish an
escrow account with [insert name, address, and position of escrow agent] to provide financial assurance
for decommissioning of the facility(ies) in the amounts shown below:
[For each facility for which financial assurance is provided by the escrow Agreement, list
facility name, address, and license and/or docket number, corresponding estimated or
certified decommissioning costs, and indicate amount of financial assurance provided by
the escrow account.]
Paragraph 2. Description of Property in Escrow Account
It is hereby acknowledged by the parties that [list the assets that have been delivered to the
escrow agent and indicate the value of each item] has (have) been delivered to escrow and will remain in
the escrow account created by this Agreement until one of the two conditions stated in paragraph 3 of this
Agreement has been satisfied.
[Insert name of licensee] warrants to and agrees with [insert name of escrow agent] that, unless
otherwise expressly set forth in this Agreement, there is no security interest in the property in the escrow
account or any part thereof; no financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically or generally) the escrow
account or any part thereof; and the escrow agent shall have no responsibility at any time to ascertain
whether or not any security interest exists or to file any financing statement under the Uniform
Commercial Code with respect to the escrow account or any part thereof.
Paragraph 3. Conditions of Escrow Agreement
The property described in paragraph 2 above will remain in the escrow account created by this
Agreement until one of the two following conditions has been satisfied: (1) the decommissioning
activities required by 10 CFR Part 50 have been authorized pursuant to paragraph 4 or completed, the
license has been terminated, the facility site is available for use for public or private purpose, pursuant to
NRC regulations, or the escrow account has been terminated by notice, in writing, from [insert name of
licensee]; or (2) the escrow agent, [insert name of the escrow agent], has been notified by the [insert NRC
or name of the state regulatory agency], in writing, that the licensee, [name of licensee], has defaulted on
the agreed obligation to carry out the decommissioning for the above listed facility(ies).
Paragraph 4. Disbursement of Property in Escrow Account
The [insert name of escrow agent] shall make payments from the escrow account upon the
presentation of a certificate duly executed by the Secretary or appropriate Officer of the [insert name of
licensee] attesting to the occurrence of the events, and in the form set forth in the attached Specimen
Certificate, and upon presentation of a certification attesting to the following conditions:
(1)
that decommissioning is proceeding pursuant to an NRC-noticed or NRC-approved plan, and
DG-1348 Revision 1, Appendix A, Page A-2
(2)
that the funds withdrawn will be expended for activities undertaken pursuant to that plan.
Or upon [insert name of escrow agent] receiving written notification of licensee default from the
[insert NRC or state regulatory agency], [insert name of escrow agent] shall make payments from the
escrow account as the [insert NRC or name of state regulatory agency] shall direct, in writing, to provide
for the payment of the costs of the required decommissioning activities covered by this Agreement. The
escrow agent shall reimburse the licensee or other persons as specified by the [insert NRC or State
regulatory agency] from the escrow account for expenses for required activities in such amounts as the
[insert NRC or name of the state regulatory agency] shall direct in writing. In addition, the escrow agent
shall refund to [insert name of licensee] such amounts as the [insert NRC or the name of the state
regulatory agency] specifies, in writing. Upon refund, such funds shall no longer constitute part of the
escrow account as described in paragraph 2 above.
Except for withdrawals being made pursuant to 10 CFR 50.82(a)(8) or 10 CFR 52.110(h)(1), or
for payments of ordinary administrative costs (including taxes) and other incidental expenses of the fund
(including legal, accounting, actuarial, and trustee expenses) in connection with the operation of the fund,
no disbursement or payment may be made from the trust, escrow account, government fund, or other
account used to segregate and manage the funds until written notice of the intention to make a
disbursement or payment has been submitted to the Document Control Desk as specified in 10 CFR 50.4
or 10 CFR 52.3, as applicable, at least 30 working days prior to the date of the intended disbursement or
payment. The disbursement or payment from the trust, escrow account, government fund, or other
account may be made following the 30-day notice period if the person responsible for managing the trust,
escrow account, government fund, or other account does not receive written notice of objection from the
Director, Office of Nuclear Reactor Regulation, Director, Office of New Reactors, or the Director, Office
of Nuclear Material Safety and Safeguards, as applicable, within the notice period. Disbursements or
payments from the trust, escrow account, government fund, or other account used to segregate and
manage the funds, other than for payment of ordinary administrative costs (including taxes) and other
incidental expenses of the fund (including legal, accounting, actuarial, and trustee expenses) in connection
with the operation of the fund, are restricted to decommissioning expenses or transfer to another financial
assurance method acceptable under 10 CFR 50.75(e) until final decommissioning has been completed.
After decommissioning has begun and withdrawals from the decommissioning fund are made pursuant to
10 CFR 50.82(a)(8) or 10 CFR 52.110(h)(1), no further notification need be made to the NRC.
Paragraph 5. Irrevocability
It is also agreed between the parties that this escrow is revocable upon delivery to [insert name of
escrow agent], the escrow agent, only on the occurrence of one of the conditions described in paragraph 3
above or by transfer of the funds held in escrow to another financial assurance mechanism permitted
under 10 CFR 50.75(e).
Paragraph 6. Powers of the Escrow Agent
The only powers and duties of the escrow agent shall be to hold the escrow property and to invest
and dispose of it in accordance with the terms of this Agreement.
Escrow Account Management
The escrow agent shall invest and reinvest the principal and income of the escrow account and
keep the escrow account invested as a single fund, without distinction between principal and income, in
accordance with general investment policies and guidelines, which the [insert name of licensee] may
communicate in writing to the escrow agent from time to time, subject, however, to the provisions of the
DG-1348 Revision 1, Appendix A, Page A-3
escrow account; the escrow agent shall discharge its duties with respect to the escrow account solely in
the interest of [insert name of licensee] decommissioning obligation and with the care, skill, prudence,
and diligence, under the circumstances then prevailing, that persons of prudence, acting in like capacity
and familiar with such matters, would use in the conduct of an enterprise of like character and with like
aims; except that:
(a)
Securities or other obligations of the licensee, or any other owner or operator of any nuclear
power reactor, or any of their affiliates, subsidiaries, successors, or assigns, as defined in the
Investment Company Act of 1940, as amended (15 U. S. C. 80A-2(a)), or in a mutual fund in
which at least 50 percent of the fund is invested in the securities of an NRC licensee of a nuclear
power plant or parent company whose subsidiary is an owner or operator of a foreign or domestic
nuclear power plant, shall not be acquired or held. Investments tied to market indices or other
nonnuclear-sector collective, commingled, or mutual funds (i.e., a mutual fund in which less than
50 percent of the fund is invested in the securities of a licensee or a parent company whose
subsidiary is an owner or operator of a foreign or domestic nuclear power plant) may be acquired
or held, provided, however, that no more than 10 percent of trust assets may be indirectly
invested in securities of any entity owning or operating one or more nuclear power plants.
(b)
For a reasonable time, not to exceed ___ days, the escrow agent is authorized to hold uninvested
cash, awaiting investment or distribution, without liability for the payment of interest thereon.
The licensee, its affiliates, and its subsidiaries are prohibited from being engaged as investment
manager for the funds or from giving day-to-day management direction of the funds’ investments or
direction on individual investments by the funds, except in the case of passive fund management of trust
funds where such management is limited to investments-tracking market indices.
Express Power of the Escrow Agent
Without in any way limiting the powers and discretion conferred upon the escrow agent by other
provisions of this Agreement or by law, the escrow agent is expressly authorized and empowered:
(a)
to register any securities held in the escrow account in its own name and to hold any security in
bearer form or in book entry, or to deposit or arrange for the deposit of any securities issued by
the U.S. Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but
the books and records of the escrow agent shall at all times show that all such securities are part
of the escrow account;
(b)
to deposit any cash in the escrow account in interest-bearing accounts or savings certificates;
(c)
to pay taxes, from the account, of any kind that may be assessed or levied against the escrow
account and all brokerage commissions incurred by the escrow account.
Paragraph 7. Annual Valuation
After delivery has been made into this escrow account, the escrow agent shall [monthly,
quarterly, annually] furnish to the licensee a statement confirming the value of the escrow account. Any
securities in the account shall be valued at market value within a reasonable time before issuance of such
statement. The failure of the licensee to object in writing to the escrow agent within 90 days after the
statement has been furnished to the licensee shall constitute a conclusively binding assent by the licensee,
barring the licensee from asserting any claim or liability against the escrow agent with respect to the
matters disclosed in the statement.
DG-1348 Revision 1, Appendix A, Page A-4
Paragraph 8. Successor Escrow Agent
Upon 90 days prior notice to the licensee, [insert name of licensee], the escrow agent may resign;
upon 90 days’ notice to the escrow agent, the licensee, [insert name of licensee], may replace the escrow
agent, provided that such resignation or replacement is not effective until the escrow agent has appointed
a successor escrow agent and this successor accepts the appointment, or another financial assurance
instrument has been secured, pursuant to paragraph 5. The successor escrow agent shall have the same
powers and duties as those conferred upon the escrow agent under this Agreement. Upon the successor’s
acceptance of the appointment, the escrow agent shall assign, transfer, and pay over to the successor the
funds and properties then constituting the escrow account. If, for any reason, the licensee cannot or does
not act in the event of the resignation of the escrow agent, the escrow agent may apply to a court of
competent jurisdiction for the appointment of a successor, or for instructions. The successor escrow agent
shall specify the date on which it assumes administration of the escrow account in a writing sent to the
licensee and the current escrow agent by certified mail 10 days before the change becomes effective. Any
expense incurred by the escrow agent as a result of any of the acts contemplated by this paragraph shall
be paid as provided in paragraph 10 of this Agreement.
Paragraph 9. Instructions to the Escrow Agent
All orders, requests, and instructions from the licensee to the escrow agent shall be in writing,
signed by such persons as are signatories to this Agreement, or such other designees as the licensee may
designate in writing. All orders, requests, and instructions from the [insert the NRC or the name of the
state regulatory agency] shall be in writing, signed by the designees of the [insert the NRC or the name of
the state regulatory agency]. The escrow agent shall be fully protected in acting in accordance with such
orders, requests, and instructions. The escrow agent shall have the right to assume, in the absence of
written notice to the contrary, that no event constituting a change or a termination of the authority of any
person to act on behalf of the licensee or [insert the NRC or the name of the state regulatory agency]
under this Agreement has occurred. The escrow agent shall have no duty to act in the absence of such
orders, requests, and instructions from the licensee and/or [insert the NRC or the name of the state
regulatory agency], except as provided in this Agreement.
Paragraph 10. Compensation and Expenses of the Escrow Agent
The fee of the escrow agent for its services in establishing the escrow account shall be $_____,
payable at the time of the execution of this Agreement, to be borne by [insert the name of the licensee],
licensee.
Expenses of the escrow agent for the administration of the escrow account, the compensation of
the escrow agent for services subsequent to the establishing of the escrow account to the extent not paid
directly by the licensee, and all other proper charges and disbursements shall be paid from the escrow
account.
Paragraph 11. Amendment to This Agreement
This Agreement may be amended by an instrument in writing executed by the licensee and the
escrow agent. However, this Agreement may not be amended in any material respect without written
notification to the Document Control Desk as specified in 10 CFR 50.4 or 10 CFR 52.3, as applicable, at
least 30 working days prior to the proposed effective date of the amendment. The escrow account may not
be amended if the person responsible for managing that account receives written notice of objection from
the Director of either the Office of Nuclear Reactor Regulation, the Office of New Reactors, or the Office
of Nuclear Material Safety and Safeguards, as applicable, within the notice period.
DG-1348 Revision 1, Appendix A, Page A-5
Paragraph 12. Termination
This Agreement can be terminated by written notice of termination to the escrow agent, signed by
[insert the name of licensee], licensee, and by the [insert the NRC or the name of the State regulatory
agency] alone, if the licensee has ceased to exist.
Paragraph 13. Interpretation
This escrow Agreement constitutes the entire agreement between [insert the name of licensee]
and [insert the name of the escrow agent]. The escrow agent shall not be bound by any other agreement or
contract entered into by [insert name of licensee], and the only document that may be referenced in case
of ambiguity in this escrow Agreement is the licensing agreement between [insert name of licensee] and
the United States Nuclear Regulatory Commission, or its successor.
Paragraph 14. Acceptance of Appointment by Escrow Agent
[Insert name, address, and position of escrow agent] does hereby acknowledge its appointment by
[insert name of licensee], the licensee, to serve as escrow agent for the escrow account created under this
Agreement, and agrees to carry out its obligations and duties as stated in this escrow Agreement.
Paragraph 15. Severability
If any part of this Agreement is invalid, it shall not affect the remaining provisions, which remain
valid and enforceable.
Paragraph 16. Effectiveness
This Agreement shall not become effective (and the escrow agent shall have no responsibility
hereunder except to return the escrow property to the [insert name of licensee]) until the escrow agent
shall have received the following and shall have advised [insert name of licensee] in writing that the same
are in form and substance satisfactory to the escrow agent:
Certified resolution of its Board of Directors authorizing the making and performance of this
Agreement;
Certificate as to the names and specimen signatures of its officers or representatives authorized to
sign this Agreement and notices, instructions, and other communications hereunder.
[Signatures and positions of the designees of the licensee and the escrow agent.]
[Insert name of escrow agent]
By ____________________________
Name _________________________
Title ___________________________
[Insert name of licensee]
By _________________________
Name _______________________
Title ________________________
Date
Witness by Notary Public
DG-1348 Revision 1, Appendix A, Page A-6
APPENDIX A-1.1
EXAMPLE OF CERTIFICATE OF EVENTS
[Insert name and address of escrow agent]
Attention: Escrow Division
Gentlemen:
In accordance with the terms of the Agreement with you dated ________, I, ____________,
[Authorized Officer] of [insert name of licensee], hereby certify that the following events have occurred:
1.
[Insert name of licensee] has begun the decommissioning of its facilities located at [insert
location of facility] (hereinafter called the decommissioning).
2.
Ninety days after the plans and procedures for the commencement and conduct of the
decommissioning have been either noticed in the Federal Register by the United States
Nuclear Regulatory Commission (NRC), or its successor (copy of notice attached), or in
the case of a license termination plan, approved by the NRC, or its successor (copy of
approval attached).
3.
The Board of Directors of [insert name of licensee] has adopted the attached resolution
authorizing the commencing of the decommissioning.
_________________________
[Authorized Officer] of [insert name of licensee]
_________________________
Date
DG-1348 Revision 1, Appendix A, Page A-7
APPENDIX A-1.2
EXAMPLE OF CERTIFICATE OF RESOLUTION
I, ______________________, do hereby certify that I am [Authorized Officer] of [insert name of
licensee], a [insert state of incorporation] corporation, and that the resolution listed below was duly
adopted at a meeting of this Corporation’s Board of Directors on ______________________, 20__.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this
Corporation this _____ day of _____________, 20__.
_____________________________
[Authorized Officer] of
[insert name of licensee]
RESOLVED, that this Board of Directors hereby authorizes the President or such other employee
of the Company as he may designate [insert name, as appropriate, “to enter into an escrow agreement,” or
“to commence decommissioning activities at (name of facility)”] with the [insert name of escrow agent],
in accordance with the terms and conditions described to this Board of Directors at this meeting and with
such other terms and conditions as the President shall have approved with and upon the advice of
Counsel.
DG-1348 Revision 1, Appendix A, Page A-8
APPENDIX A-2
EXAMPLES OF CERTIFICATES OF DEPOSIT
APPENDIX A-2.1
EXAMPLE OF NEGOTIABLE CERTIFICATE OF DEPOSIT PAYABLE
AT THE EXPIRATION OF A SPECIFIED TIME
CERTIFICATE OF DEPOSIT
______________________
(Financial Institution)
Place ________________________________________
No. _______________
__________________
(Date)
[Insert name of licensee or applicant] has deposited not subject to check ______ dollars ($
)
payable to the order of the holder in current funds not less than 30 days after date, upon surrender of this
certificate properly endorsed, with interest at the rate of
percent per annum from date to maturity
only. The rate of interest payable hereunder is subject to change by the bank to such extent as may be
necessary to comply with requirements of the Federal Reserve Board, made from time to time pursuant to
the Federal Reserve Act.
These funds are deposited for the purpose of providing financial assurance for the cost of
decommissioning activities, as required under Title 10, Part 50, of the Code of Federal Regulations.
Accordingly, this certificate will be renewed automatically unless written notice of (1) the default of the
[insert name of licensee or applicant] on these obligations, (2) the termination of the facility license, or
(3) the substitution of another financial assurance mechanism is received from [the name of licensee or
applicant].
_________________________
Cashier or Officer
Note:
The negotiable Certificate of Deposit should be in the possession of the trustee of the concurrently created
standby trust or the escrow agent of an escrow account.
The certificate should be for a limited time period, such as 1 to 5 years, so that the face value can be
adjusted.
DG-1348 Revision 1, Appendix A, Page A-9
APPENDIX A-2.2
EXAMPLE OF NONNEGOTIABLE CERTIFICATE OF DEPOSIT
PAYABLE ON A CERTAIN DATE
CERTIFICATE OF DEPOSIT
(Financial Institution)
Certificate of Deposit
_________________________, 20__
[Insert name of licensee or applicant] has deposited in the financial institution the sum of
_______________ dollars ($ ________), payable to [state regulatory agency (if the agency can hold
special funds under applicable state law), trustee of standby trust, or escrow agent] _________________
months after date, with interest thereon at the rate of _____ percent per annum from date, upon
presentation of this certificate properly endorsed. These funds are deposited for the purpose of providing
financial assurance for the cost of decommissioning activities as required under Title 10, Part 50, of the
Code of Federal Regulations. Accordingly, this certificate will be renewed automatically unless written
notice of (1) the default of the [insert name of licensee or applicant] on these obligations, (2) the
termination of the facility license, or (3) the substitution of another financial assurance mechanism is
received from [the name of the licensee or applicant].
Cashier or Officer
Note: The certificate should be for a limited time period, such as 1 to 5 years, so that the face value can
be adjusted.
DG-1348 Revision 1, Appendix A, Page A-10
APPENDIX A-3
EXAMPLES OF TRUST FUND AND STANDBY TRUST
AGREEMENTS
APPENDIX A-3.1
EXAMPLE OF TRUST FUND AGREEMENT
TRUST AGREEMENT, the Agreement is entered into as of [date] by and between [name of
NRC licensee], a [name of state] [insert “corporation,” “partnership,” “association,” or “proprietorship”],
herein referred to as the “Grantor,” and [name and address of an appropriate state or federal government
agency or an entity that has the authority to act as trustee and whose trust operations are regulated or
examined by a state or federal agency], the “Trustee.”
WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agency of the U.S.
Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization
Act of 1974, has promulgated regulations in Title 10, Part 50, of the Code of Federal Regulations
(10 CFR Part 50). These regulations, applicable to the Grantor, require that a holder of, or an applicant
for, a license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when
needed for required decommissioning activities.
WHEREAS, the Grantor has elected to use a trust fund to provide [insert “all” or “part”] of such
financial assurance for the facilities identified herein and also provide such additional decommissioning
funds, not required by the NRC, as the Grantor may elect;
WHEREAS, the Grantor, acting through its duly authorized officers, has selected the Trustee to
be the trustee under this Agreement, and the Trustee is willing to act as trustee,
NOW, THEREFORE, the Grantor and the Trustee agree as follows:
Section 1. Definitions. As used in this Agreement:
(a)
The term “Grantor” means the NRC licensee who enters into this Agreement and any successors
or assigns of the Grantor.
(b)
The term “Trustee” means the trustee who enters into this Agreement and any successor Trustee.
Section 2. Costs of Decommissioning. This Agreement pertains to the costs of decommissioning the
facility identified in License Number [insert license number], issued pursuant to 10 CFR Part 50.
Section 3. Establishment of Fund. The Grantor and Trustee hereby establish a Trust Fund (the Fund) for
the benefit of [insert the Grantor or other appropriate beneficiary such as a state agency or the NRC, but
only to the extent the provisions of 31 U.S.C. 3302(b) would not be applicable]. The Grantor and the
Trustee intend that no third party shall have access to the Fund except as provided herein. [Modification
of this provision to cover sale-leaseback agreements should be made contingent upon continued
dedication of the trust to provide funds for decommissioning.]
DG-1348 Revision 1, Appendix A, Page A-11
Section 4. Payments Constituting the Fund. Payments made to the Trustee for the Fund shall consist of
cash, securities, or other liquid assets acceptable to the Trustee. The Fund is established initially as
consisting of property acceptable to the Trustee. Such property and any other property subsequently
transferred to the Trustee are referred to as the “Fund,” together with all earnings and profits thereon, less
any payments or distributions made by the Trustee pursuant to this Agreement. The Fund shall be held by
the Trustee, IN TRUST, as hereinafter provided.
Section 5. Payment for Required Activities Specified in the Plan. The Trustee shall make payments from
the Fund to the Grantor or to a decommissioning contractor of the Grantor, as the Grantor may designate,
upon presentation to the Trustee of the following:
(a)
a certificate duly executed by the [Authorized Officer] of the Grantor, attesting to the occurrence
of the events, and in the form set forth in the attached Specimen Certificate (see certificate
following standby trust), and
(b)
a certificate attesting to the following conditions: (1) that decommissioning is proceeding
pursuant to an NRC-noticed plan, and (2) that the funds withdrawn will be expended for activities
undertaken pursuant to that plan.
Notwithstanding the foregoing, except for payments for administrative costs (including taxes) and
other incidental expenses of the Fund (including legal, accounting, actuarial, and Trustee expenses) in
connection with the operation of the Fund, no disbursements or payments from the Fund shall be made:
(1) unless 30 working days prior written notice of such disbursement or payment has been made to the
NRC or (2) if the Trustee receives written notice of an objection from the NRC’s Director of the Office of
Nuclear Reactor Regulation, the Director of the Office of New Reactors, or the Director of the Office of
Nuclear Material Safety and Safeguards, as applicable. Except that the foregoing shall not apply if the
Grantor is making a withdrawal pursuant to 10 CFR 50.82(a)(8).
In the event of the Grantor’s default or inability to direct decommissioning activities, the Trustee
shall: (1) make payments from the Fund as the NRC or state agency shall direct, in writing, to provide for
the payment of the costs of required activities covered by this Agreement; (2) make disbursements to the
Grantor or other persons as specified by the NRC, or state agency, from the Fund for expenditures for
required activities in such amounts as the NRC, or state agency, shall direct in writing; and (3) refund to
the Grantor such amounts remaining after the license has been terminated or as the NRC or state agency
specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.
Section 6. Trust Management. The Trustee shall invest and reinvest the principal and income of the Fund
and keep the Fund invested as a single fund, without distinction between principal and income, in
accordance with general investment policies and guidelines, which the Grantor may communicate in
writing to the Trustee from time to time, subject, however, to the provisions of this section. In investing,
reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge its duties with
respect to the Fund in the best interest of the beneficiary and with the care, skill, prudence, and diligence
under the circumstances then prevailing, which persons of prudence, acting in a like capacity and familiar
with such matters, would use in the conduct of an enterprise of a like character and with like aims; except
that:
(a)
Securities or other obligations of the Grantor, or any other owner or operator of any nuclear
power reactor, or any of their affiliates, subsidiaries, successors, or assigns, as defined in the
Investment Company Act of 1940, as amended (15 U.S.C. 80A-2(a)), or in a mutual fund in
which at least 50 percent of the Fund is invested in the securities of an NRC licensee of a nuclear
power plant, or a parent company whose subsidiary is an owner or operator of a foreign or
DG-1348 Revision 1, Appendix A, Page A-12
domestic nuclear power plant, shall not be acquired or held. Investments tied to market indices or
other nonnuclear-sector collective, commingled, or mutual funds (i.e., a mutual fund in which less
than 50 percent of the Fund is invested in the securities of a licensee or a parent company whose
subsidiary is an owner or operator of a foreign or domestic nuclear power plant) may be acquired
or held, provided, however, that no more than 10 percent of trust assets may be indirectly
invested in securities of any entity owning or operating one or more nuclear power plants.
(b)
For a reasonable time, not to exceed ___ days, the Trustee is authorized to hold uninvested cash,
awaiting investment or distribution, without liability for the payment of interest thereon.
(c)
Any person directing investments made in the trusts shall adhere to the [applicable State-specific
investment standard and/or the] “prudent investor” standard as specified in 18 CFR 35.32(a)(3) of
the Federal Energy Regulatory Commission regulations or any successor regulation thereto (the
“Prudent Investor Standard”); and
(d)
The Grantor, its affiliates, and its subsidiaries are prohibited from acting as investment manager
for the funds or from giving day-to-day management direction of the funds’ investments or
direction on individual investments by the funds except that the Grantor, or an affiliate or
subsidiary, may act as an investment manager in the case of passive fund management of trust
funds where management is limited to investment-tracking market indices.
Section 7. Commingling and Investment. The Trustee is expressly authorized in its discretion:
(a)
to transfer, from time to time, any or all of the assets of the Fund to any common, commingled, or
collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to
all of the provisions thereof, to be commingled with the assets of other trusts participating therein;
and
(b)
to purchase shares in any investment company registered under the Investment Company Act of
1940 (15 U.S.C. 80A-1 et seq.), including one that may be created, managed, or underwritten, or
to which investment advice is rendered, or the shares of which are sold by the Trustee. The
Trustee may vote such shares in its discretion.
Section 8. Express Powers of Trustee. Without in any way limiting the powers and discretion conferred
upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized
and empowered:
(a)
to sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or
private sale, as necessary, for prudent management of the Fund;
(b)
to make, execute, acknowledge, and deliver any and all documents of transfer and conveyance
and any and all other instruments that may be necessary or appropriate to carry out the powers
herein granted;
(c)
to register any securities held in the Fund in its own name, or in the name of a nominee, and to
hold any security in bearer form or in book entry, or to combine certificates representing such
securities with certificates of the same issue held by the Trustee in other fiduciary capacities, to
reinvest interest and dividend payments and funds from matured and redeemed instruments, to
file proper forms concerning securities held in the Fund in a timely fashion with appropriate
government agencies, or to deposit or arrange for the deposit of such securities in a qualified
central depository, even though, when so deposited, such securities may be merged and held in
DG-1348 Revision 1, Appendix A, Page A-13
bulk in the name of the nominee or such depository with other securities deposited therein by
another person, or to deposit or arrange for the deposit of any securities issued by the
U.S. Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the
books and records of the Trustee shall at all times show that all such securities are part of the
Fund;
(d)
to deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates
issued by the Trustee, in its separate corporate capacity, or in any other banking institution
affiliated with the Trustee; and
(e)
to compromise or otherwise adjust all claims in favor of or against the Fund.
Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect
of the Fund and all brokerage commissions incurred by the Fund may be paid from the Fund. All other
expenses incurred by the Trustee in connection with the administration of this Trust, including fees for
legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by
the Grantor, and all other proper charges and disbursements of the Trustee, may be paid from the Fund.
Section 10. Annual Valuation. After payment has been made into this Trust Fund, the Trustee shall
[monthly, quarterly, annually] furnish to the Grantor a statement confirming the value of the Trust. Any
securities in the Fund shall be valued at market value within a reasonable time of such statement. The
failure of the Grantor to object in writing to the Trustee within __ days after the statement has been
furnished to the Grantor shall constitute a conclusively binding assent by the Grantor, barring the Grantor
from asserting any claim or liability against the Trustee with respect to the matters disclosed in the
statement.
Section 11. Advice of Counsel. The Trustee may, from time to time, consult with counsel, who may be
counsel to the Grantor, with respect to any question arising as to the construction of this Agreement or
any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in
acting on the advice of counsel.
Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its
services, as agreed upon in writing from time to time with the Grantor.
Section 13. Successor Trustee. Upon ____ days’ notice to the Grantor, the Trustee may resign; upon ____
days’ notice to the Trustee, the Grantor may replace the Trustee; but such resignation or replacement shall
not be effective until the Grantor has either appointed a successor Trustee and this successor accepts the
appointment, or implements another financial assurance mechanism specified in 10 CFR 50.75(e). The
successor Trustee shall have the same powers and duties as those conferred upon the Trustee hereunder.
Upon the successor Trustee’s acceptance of the appointment, the Trustee shall assign, transfer, and pay
over to the successor Trustee the funds and properties then constituting the Fund. If, for any reason, the
Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a
court of competent jurisdiction for the appointment of a successor Trustee or for instructions. The
successor Trustee shall specify the date on which it assumes administration of the Trust in a writing sent
to the Grantor and the present Trustee by certified mail ___ days before such change becomes effective.
Any expenses incurred by the Trustee as a result of any of the acts contemplated by this section shall be
paid as provided in Section 9.
Section 14. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee
shall be in writing, signed by such persons as are signatories to this Agreement or such other designees as
the Grantor may designate in writing. The Trustee shall be fully protected in acting without inquiry in
DG-1348 Revision 1, Appendix A, Page A-14
accordance with the Grantor’s orders, requests, and instructions. If the NRC or state agency issues orders,
requests, or instructions to the Trustee in the event of Grantor default, these shall be in writing, signed by
the NRC, state agency, or their designees, and the Trustee shall act and shall be fully protected in acting,
in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in
the absence of written notice to the contrary, that no event constituting a change or a termination of the
authority of any person to act on behalf of the Grantor, the NRC, or state agency, hereunder, has occurred.
The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the
Grantor and/or the NRC, or state agency, except as provided for herein.
Section 15. Amendment of Agreement. This Agreement may be amended by an instrument in writing
executed by the Grantor, the Trustee, and, if applicable, the NRC or state agency, or by the Trustee and
the NRC or state agency, if the Grantor ceases to exist. Notwithstanding any provision herein to the
contrary, this Agreement cannot be modified in any material respect without first providing 30 working
days prior written notice to the NRC’s Director of the Office of Nuclear Reactor Regulation, the Director
of the Office of New Reactors, or the Director of the Office of Nuclear Material Safety and Safeguards, as
applicable. This Agreement may not be amended if the Trustee receives written notice of objection from
the Director, Office of Nuclear Reactor Regulation, the Director, Office of New Reactors, or the Director,
Office of Nuclear Materials Safety and Safeguards, as applicable, within the notice period.
Section 16. Termination. This trust agreement shall continue until terminated at the written agreement of
the Grantor, the Trustee, and, if applicable, the NRC or state agency, or by the Trustee and the NRC or
state agency if the Grantor ceases to exist. Upon termination of the Trust, all remaining Trust property,
less final Trust administration expenses, shall be delivered to the Grantor or its successor, or transferred to
another financial assurance mechanism specified in 10 CFR 50.75(e), as appropriate.
Section 17. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in
connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying
out any directions by the Grantor, the NRC, or state agency, issued in accordance with this Agreement.
The Trustee shall be indemnified and saved harmless by the Grantor or from the Fund, or both, from and
against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its
official capacity, including all expenses reasonably incurred in its defense, in the event the Grantor fails to
provide such defense.
Section 18. Choice of Law. This Agreement shall be administered, construed, and enforced according to
the laws of the State of [insert name of State].
Section 19. Interpretation and Severability. As used in this Agreement, words in the singular include the
plural and words in the plural include the singular. The descriptive headings for each section of this
Agreement shall not affect the interpretation or the legal efficacy of this Agreement. If any part of this
Agreement is invalid, it shall not affect the remaining provisions, which will remain valid and
enforceable.
DG-1348 Revision 1, Appendix A, Page A-15
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by the
respective officers duly authorized and the incorporate seals to be hereunto affixed and attested as of the
date first written above.
ATTEST:
[Insert name of licensee (Grantor)]
[Signature of representative of Grantor]
[Title]
[Title]
[Seal]
[Insert name of Trustee]
[Signature of representative of Trustee]
[Title]
ATTEST:
[Title]
Seal]
DG-1348 Revision 1, Appendix A, Page A-16
APPENDIX A-3.2
EXAMPLE OF STANDBY TRUST AGREEMENT
TRUST AGREEMENT, the Agreement entered into as of [date] by and between [name of NRC
licensee], a [name of State] [insert “corporation,” “partnership,” “association,” or “proprietorship”],
herein referred to as the “Grantor,” and [name and address of an appropriate state or federal government
agency or an entity that has the authority to act as trustee and whose trust operations are regulated or
examined by a state or federal agency], the “Trustee.”
WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agency of the
U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy
Reorganization Act of 1974, has promulgated regulations in Title 10 of the Code of Federal Regulations
(10 CFR), Part 50, and 10 CFR Part 52. These regulations, applicable to the Grantor, require that a holder
of, or an applicant for, a 10 CFR Part 50 or 10 CFR Part 52 license provide assurance that funds will be
available when needed for required decommissioning activities.
WHEREAS, the Grantor has elected to use a [insert “letter of credit,” “line of credit,” “surety
bond,” “insurance policy,” “parent guarantee,” “certificate(s) of deposit,” or “deposit of government
securities”] to provide [insert “all” or “part”] of such financial assurance for the facilities identified
herein; and
WHEREAS, when payment is made under a [insert “letter of credit,” “line of credit,” “surety
bond,” “insurance policy,” “certificate(s) of deposit,” “deposit of government securities,” or “parent
guarantee”], this Standby Trust shall be used for the receipt of such payment; and
WHEREAS, the Grantor, acting through its duly authorized officers, has selected the Trustee to
be the trustee under this Agreement, and the Trustee is willing to act as trustee,
NOW, THEREFORE, the Grantor and the Trustee agree as follows:
[The remainder of the recommended wording for the Standby Trust Agreement is as indicated in
A-3.1 for the Trust Fund Agreement except that the words “Standby Trust Fund” should be substituted in
Section 3 and Section 10 in place of the words “Trust Fund.”]
DG-1348 Revision 1, Appendix A, Page A-17
APPENDIX A-3.2.1
EXAMPLE OF CERTIFICATE OF EVENTS
[Insert name and address of Trustee]
Attention: Trust Division
Gentlemen:
In accordance with the terms of the Agreement with you dated _________, I, ______________,
[Authorized Officer] of [insert name of licensee], hereby certify that the following events have occurred:
1.
[Insert name of licensee] has begun the decommissioning of its facility located at [insert
location of facility] (hereinafter called the decommissioning).
2.
The plans and procedures for the commencement and conduct of the decommissioning
have been noticed and approved by the U.S. Nuclear Regulatory Commission, or its
successor, on ________________ (copy of approval attached).
3.
The Board of Directors of [insert name of licensee] has adopted the attached resolution
authorizing the commencement of the decommissioning.
_______________________________________
[Authorized Officer] of [insert name of licensee]
_______________________________________
Date
DG-1348 Revision 1, Appendix A, Page A-18
APPENDIX A-3.2.2
EXAMPLE OF CERTIFICATE OF RESOLUTION
I, _____________, do hereby certify that I am [Authorized Officer] of [insert name of licensee], a
[insert State of incorporation) corporation, and that the resolution listed below was duly adopted at a
meeting of this Corporation’s Board of Directors on ____________, 20 __.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this
Corporation this ____ day of _____________, 20 __.
____________________________
[Authorized Officer]
RESOLVED, that this Board of Directors hereby authorizes the President, or such other
employee of the Company as he may designate, to commence decommissioning activities at [insert name
of facility], in accordance with the terms and conditions described to this Board of Directors at this
meeting and with such other terms and conditions as the President shall approve with and upon the advice
of Counsel.
DG-1348 Revision 1, Appendix A, Page A-19
APPENDIX A-3.3
EXAMPLE OF ACKNOWLEDGMENT
ACKNOWLEDGMENT
[The following is an example of the acknowledgment that should accompany the trust Agreement
for a standby trust fund or trust fund.]
STATE OF ___________
To Wit _________
CITY OF __________
On this ______ day of _________, before me, a notary public in and for the city and State
aforesaid, personally appeared ___________, and she/he did depose and say that she/he is the [title], of
[financial institution], Trustee, which executed the above instrument, that she/he knows the seal of said
association; that the seal affixed to such instrument is such corporate seal; that it was so affixed by order
of the association; and that she/he signed her/his name thereto by like order.
[Signature of notary public]
My Commission Expires: ________________________
[Date]
DG-1348 Revision 1, Appendix A, Page A-20
APPENDIX A-4
EXAMPLE OF PAYMENT SURETY BOND
PAYMENT SURETY BOND
Date bond executed: _________________________
Effective date: _______________________
Principal: [legal name and business address of licensee or applicant]
Type of organization: [insert “proprietorship,” “joint venture,” “partnership” or “corporation”]
State of incorporation: ___________________ (if applicable)
NRC license number, name and address of facility, and amount(s) for decommissioning activity
guaranteed by this bond: _____________________
Surety(ies) [name(s) and business address(es)]
Type of organization: [insert “proprietorship,” “joint venture,” “partnership” or “corporation”]
State of incorporation: __________________ (if applicable)
Surety’s qualification in jurisdiction where licensed facility(ies) is (are) located
Surety’s bond number: _________________
Total penal sum of bond: $________________
Know all persons by these presents, That we, the Principal and Surety(ies) hereto, are firmly bound to the
[insert U.S. Nuclear Regulatory Commission (hereinafter called NRC) or the name of the state agency] in
the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators,
successors, and assigns jointly and severally; provided that, where the Sureties are corporations acting as
co-sureties, we, the Sureties, bind ourselves in such sum “jointly and severally” only for the purpose of
allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds
itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite
the name of such Surety; but if no limit of liability is indicated, the limit of liability shall be the full
amount of the penal sum.
WHEREAS, the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as
amended, and the Energy Reorganization Act of 1974, has promulgated regulations in Title 10 of the
Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52 applicable to the Principal, which
require that a license holder or an applicant for a license provide financial assurance that funds will be
available when needed for facility decommissioning;
NOW, THEREFORE, the conditions of the obligation are such that if the Principal shall faithfully, before
the beginning of decommissioning of each facility identified above, fund the standby trust fund in the
amount(s) identified above for the facility;
DG-1348 Revision 1, Appendix A, Page A-21
Or, if the Principal shall fund the standby trust fund in such amount(s) after an order to begin facility
decommissioning is issued by [insert “the NRC” or the name of the state agency], or a U.S. district court
or other court of competent jurisdiction;
Or, if the Principal shall provide alternative financial assurance and obtain the written approval of the
[insert “NRC” or the name of the state agency] of such assurance, within 30 days after the date a notice of
cancellation from the Surety(ies) is received by both the Principal and the [insert “NRC” or the name of
the state agency], then this obligation shall be null and void; otherwise it is to remain in full force and
effect.
The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill
the conditions described above. Upon notification by the [insert “NRC” or the name of the state agency]
that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) shall place funds in the
amount guaranteed for the facility(ies) into the standby trust fund.
The liability of the Surety(ies) shall not be discharged by any payment or succession of payments
hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of
the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal
sum.
The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal
and to the [insert “NRC” or the name of the state agency] provided, however, that cancellation shall not
occur during the 90 days, beginning on the date of receipt of the notice of cancellation by both the
Principal and the [insert “NRC” or the name of the state agency], as evidenced by the return receipts.
The Principal may terminate this bond by sending written notice to the [insert “NRC” or name of state
agency] and to Surety(ies) 90 days prior to the proposed date of termination, provided, however, that no
such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of
the bond from the [insert “NRC” or the name of the state agency].
The Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees
a new amount, provided that the penal sum does not increase by more than 20 percent in any one year.
In Witness Whereof, the Principal and Surety(ies) have executed this financial guarantee bond and have
affixed their seals on the date set forth above.
The persons whose signatures appear below hereby certify that they are authorized to execute this surety
bond on behalf of the Principal and Surety(ies).
Principal
[Signature(s)]
[Name(s)]
[Title(s)]
[Corporate seal]
Corporate Surety(ies)
DG-1348 Revision 1, Appendix A, Page A-22
[Name and address]
State of incorporation: _________________
Liability limit: $_________________
[Signature(s)]
[Name(s) and title(s)]
[Corporate seal]
[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for
Surety(ies) above.]
Bond premium: $_______________
DG-1348 Revision 1, Appendix A, Page A-23
APPENDIX A-5
EXAMPLE OF IRREVOCABLE STANDBY LETTER OF
CREDIT
STANDBY LETTER OF CREDIT NO. [INSERT NO.]
This Credit Expires [ insert date ]
Issued To:
[Insert U.S. Nuclear Regulatory Commission; Washington, DC 20555, or name and
address of appropriate state agency.]
Dear Sir or Madam:
We hereby establish our Standby Letter of Credit No. _________________ in your favor, at the request
and for the account of [applicant’s name and address], up to the aggregate amount of [in words],
U.S. dollars $___________ available upon presentation of:
(1) your sight draft, bearing reference to this Letter of Credit No.__________, and
(2) your signed statement reading as follows: “I certify that the amount of the draft is payable pursuant
to regulations issued under authority of __________________.”
This letter of credit is issued in accordance with regulations issued under the authority of the U.S. Nuclear
Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act
of 1954, as amended, and the Energy Reorganization Act of 1974. The NRC has promulgated regulations
in Title 10 of the Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52, which require that
a holder of, or an applicant for, a license issued under 10 CFR Part 50 or 10 CFR Part 52 provide
assurance that funds will be available when needed for decommissioning.
This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such
expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each
successive expiration date, unless, at least 90 days before the current expiration date, we notify both you
and [licensee’s name], as shown on the signed return receipts. If [licensee’s name] is unable to secure
alternative financial assurance to replace this letter of credit within 30 days of notification of cancellation,
the NRC may draw upon the full value of this letter of credit before cancellation to the extent the
provisions of 31 U.S.C. 3302(b) would not be applicable. We shall give immediate notice to the applicant
and the [insert “NRC” or name of state agency] of any notice received or action filed alleging (1) the
insolvency or bankruptcy of the financial institution or (2) any violations of regulatory requirements that
could result in suspension or revocation of the bank’s charter or license to do business. We also shall give
immediate notice if we, for any reason, become unable to fulfill our obligation under the letter of credit.
Whenever this letter of credit is drawn on, under, and in compliance with the terms of this letter of credit,
we shall duly honor such draft upon its presentation to us within 30 days, and we shall deposit the amount
of the draft directly into the standby trust fund of [licensee’s name], in accordance with your instructions.
DG-1348 Revision 1, Appendix A, Page A-24
Each draft must bear on its face the clause: “Drawn under Letter of Credit No. ______, dated
___________, and the total of this draft and all other drafts previously drawn under this letter of credit
does not exceed [fill in amount].”
[Signature(s) and title(s) of official(s) of issuing institution]
[Date]
This credit is subject to [insert “the most recent edition of the Uniform Customs and Practice for
Documentary Credits, published by the International Chamber of Commerce,” or “the Uniform
Commercial Code”].
DG-1348 Revision 1, Appendix A, Page A-25
APPENDIX A-6
EXAMPLES OF DOCUMENTS RECOMMENDED TO SUPPORT
CORPORATE GUARANTEE
APPENDIX A-6.1
EXAMPLE OF LETTER FROM CHIEF FINANCIAL OFFICER OF
CORPORATE PARENT, INCLUDING COST ESTIMATES AND DATA
FROM AUDITED FINANCIAL STATEMENTS
[Address to U. S. Nuclear Regulatory Commission or state regulatory agency]
I am the chief financial officer of [name and address of firm], a [insert “proprietorship,” “joint venture,”
“partnership,” or “corporation”]. This letter is in support of this firm’s use of the financial test to
demonstrate financial assurance, as specified in Title 10 of the Code of Federal Regulations
(10 CFR), Part 50, or 10 CFR Part 52.
[Complete the following paragraph regarding facility(ies) and associated cost estimates. For each facility,
include its license number, name, address, and current cost estimates for the specified activities.]
This firm guarantees, through the parent company guarantee submitted to demonstrate compliance under
10 CFR Part 50 or 10 CFR Part 52, the decommissioning of the following facility(ies) owned or operated
by subsidiary(ies) of this firm. The current cost estimates or certified amounts for decommissioning, and
the amounts being guaranteed, are shown for each facility:
Name of Facility
Location of
Facility
Current Cost
Estimates
Amount Being
Guaranteed
This firm [insert “is required” or “is not required”] to file a Form 10K with the U.S. Securities and
Exchange Commission for the latest fiscal year.
This fiscal year of this firm ends on [month, day]. The figures for the following items marked with an
asterisk are derived from this firm’s independently audited, year-end financial statements and footnotes
for the latest completed fiscal year, ended [date].
[Insert completed Alternative I or Alternative II.]
I hereby certify that the content of this letter is true and correct to the best of my knowledge.
[Signature]
[Name]
[Title]
[Date]
DG-1348 Revision 1, Appendix A, Page A-26
APPENDIX A-6.2
FINANCIAL TEST: ALTERNATIVE I
1.
Decommissioning cost estimates or guaranteed amount for facility [insert
license number] (total of all cost estimates shown in paragraph above)
$______
Total liabilities (if any portion of the cost estimates for decommissioning is
included in total liabilities on your firm’s financial statements, you may deduct
the amount of that portion from this line and add that amount to lines 3 and 4)
$______
*3.
Tangible net worth**
$______
*4.
Net worth
$______
*5.
Current assets
$______
*6.
Current liabilities
$______
*7.
Net working capital (line 5 minus line 6)
$______
*8.
The sum of net income plus depreciation, depletion, and amortization
$______
*9.
Total assets in United States (required only if less than 90 percent of firm’s
assets are located in the United States)
$______
*2.
10.
Is line 3 at least $10 million?
Yes
____
11.
Is line 3 at least 6 times line 1?
____
____
12.
Is line 7 at least 6 times line 1?
____
____
13.
Are at least 90 percent of firm’s assets located in the United
States? If not, complete line 14.
____
____
Is line 9 at least 6 times line 1?
____
____
14.
No
____
Guarantor must meet two of the following three ratios:
15.
Is line 2 divided by line 4 less than 2.0?
____
____
16.
Is line 8 divided by line 2 greater than 0.1?
____
____
17.
Is line 5 divided by line 6 greater than 1.5?
____
____
___________________
*
Denotes figures derived from financial statements.
**
Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.
DG-1348 Revision 1, Appendix A, Page A-27
APPENDIX A-6.3
FINANCIAL TEST: ALTERNATIVE II
1.
Decommissioning cost estimates or guaranteed amount for facility [insert
license number] (total cost of all cost estimates should be stated in paragraphs
above)
2.
Current bond rating of most recent unsecured issuance of this firm
Rating __________
Name of rating service _______________________
3.
Date of issuance of bond __________
4.
Date of maturity of bond __________
*5.
Tangible net worth** (if any portion of estimates for decommissioning is
included in total liabilities on your firm’s financial statements, you may add
the amount of that portion to this line)
$______
$______
*6.
Total assets in United States (required only if less than 90 percent of firm’s
assets are located in the United States)
7.
Is line 5 at least $10 million?
Yes
____
No
____
8.
Is line 5 at least 6 times line 1?
____
____
9.
Are at least 90 percent of firm’s assets located in the United
States? If not, complete line 10.
____
____
10.
Is line 6 at least 6 times line 1?
____
____
11.
Is the rating specified on line 2 “BBB” or better (if issued by
Standard & Poor’s) or “Baa” or better (if issued by Moody’s)?
____
____
___________________
*
Denotes figures derived from financial statements.
**
Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.
DG-1348 Revision 1, Appendix A, Page A-28
APPENDIX A-6.4
EXAMPLE OF AUDITOR’S SPECIAL REPORT BY CERTIFIED PUBLIC
ACCOUNTANT
CONFIRMATION OF CHIEF FINANCIAL OFFICER’S LETTER
We have examined the financial statements of [company name] for the year ended [date], and have issued
our report thereon, dated [date]. Our examination was made in accordance with generally accepted
auditing standards and, accordingly, included such tests of the accounting records and such other auditing
procedures as we considered necessary.
The [company name] has prepared documents to demonstrate its financial responsibility under the NRC’s
financial assurance regulations, under Title 10, Part 50, of the Code of Federal Regulations. This letter is
furnished to assist the licensee, [insert NRC license number and name], in complying with these
regulations and should not be used for other purposes.
The attached schedule reconciles the specified information furnished in the chief financial officer’s
(CFO’s) letter in response to the regulations with the company’s financial statements. In connection
therewith, we have
confirmed that the amounts in the column “Per Financial Statements” agree with amounts contained in the
company’s financial statements for the year ended [date];
confirmed that the amount in the column “Per CEO’s Letter” agrees with the letter prepared in response
to the NRC’s request;
confirmed that the amount in the column “Reconciling Items” agrees with analyses prepared by the
company setting forth the indicated items; and
recomputed the totals and percentages.
Because the procedures in 1–4 above do not constitute a full examination made in accordance with
generally accepted auditing standards, we do not express an opinion on the manner in which the amounts
were derived in the items referred to above. In connection with the procedures referred to above, no
matters came to our attention that cause us to believe that the chief financial officer’s letter and
supporting information should be adjusted.
____________________
Signature
____________________
Date
DG-1348 Revision 1, Appendix A, Page A-29
APPENDIX A-6.4.1
EXAMPLE OF SCHEDULE RECONCILING AMOUNTS
CONTAINED IN CFO’S LETTER WITH AMOUNTS IN
FINANCIAL STATEMENTS
This illustrates the form of schedule that is contemplated. Details and reconciling items will differ in
specific situations.
XYZ COMPANY
YEAR ENDED DECEMBER 31, 20XX
Line Number in CFO’s Letter
Total current liabilities
Long-term debt
Deferred income taxes
Per Financial
Statements
X
X
X
XX
Accrued decommissioning costs included in current
liabilities
X
Total liabilities (less accrued decommissioning costs)
X
Net worth
X
Less: Cost in excess of value of tangible assets
acquired
Accrued decommissioning costs included in
current liabilities
Tangible net worth (plus decommissioning
costs)
X
X
X
XX
(Balance of schedule is not illustrated.)
DG-1348 Revision 1, Appendix A, Page A-30
Reconciling
Items
Per
CFO’s
Letter
APPENDIX A-6.5
EXAMPLE OF PARENT COMPANY GUARANTEE
PARENT COMPANY GUARANTEE
Guarantee made this [date] by [name of guaranteeing entity], a [insert “proprietorship,” “joint venture,”
“partnership,” or “corporation”] organized under the laws of the State of [insert name of State], herein
referred to as “Guarantor,” to our subsidiary [licensee] of [business address], obligee.
Recitals
(1)
The Guarantor has full authority and capacity to enter into this guarantee [if Guarantor is a
corporation, add the following phrase “under its bylaws, articles of incorporation, and the laws of
the State of [insert Guarantor’s State of incorporation], its State of incorporation”]. [If the
Guarantor has a Board of Directors, insert the following: “Guarantor has approval from its Board
of Directors to enter into this guarantee.”]
(2)
This guarantee is being issued so that [the licensee] will be in compliance with regulations issued
by the U.S. Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant
to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. The
NRC has promulgated regulations in Title 10 of the Code of Federal Regulations
(10 CFR), Part 50, and 10 CFR Part 52, which require that a holder of, or an applicant for, a
license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when
needed for required decommissioning activities.
(3)
This guarantee is issued to provide financial assurance for decommissioning activities for
[identify licensed facility(ies)] as required by 10 CFR Part 50 or 10 CFR Part 52, the
decommissioning costs and guarantee amount for which are as follows: [insert amount of
decommissioning cost guaranteed for each identified facility].
(4)
The Guarantor meets or exceeds the following financial test criteria [insert statement indicating
which financial test is being used] and agrees to notify [the licensee] and the NRC of any changes
in its ability to meet the criteria, in compliance with the notification requirements as specified in
10 CFR Part 50 or 10 CFR Part 52.
The Guarantor meets one of the following two financial tests:
(a)(i) a current rating of its most recent bond issuance of AAA, AA, A, or BBB as issued by
Standard and Poor’s, or Aaa, Aa, A, or Baa as rated by Moody’s; and
(ii) tangible net worth is at least $10 million and at least 6 times the current decommissioning
cost estimate or guarantee amount (or prescribed amount if a certification is used); and
(iii) assets located in the United States amounting to at least 90 percent of its total assets or at
least 6 times the current decommissioning cost or guarantee amount (or prescribed amount if
certification is used). or
DG-1348 Revision 1, Appendix A, Page A-31
(b)(i) net working capital and tangible net worth each at least 6 times the current
decommissioning cost estimates or guarantee amounts (or prescribed amount if certification is
used); and
(ii) assets located in the United States amounting to at least 90 percent of its total assets or at
least 6 times the amount of the current decommissioning cost estimates or guarantee amounts
(or prescribed amount if certification is used); and
(iii) meets two of the following three ratios: a ratio of total liabilities to net worth less
than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to
total liabilities that is greater than 0.1; and a ratio of current assets to current liabilities that is
greater than 1.5; and
(iv) tangible net worth of at least $10 million.
(5)
The Guarantor has majority control of the voting stock for the following licensee(s) covered by
this guarantee. (List for each licensee: name, address, the facility(ies) owned or operated by each
licensee, and the corresponding license number(s).)
(6)
“Decommissioning activities,” as used below, refers to the activities required by 10 CFR Part 50
or 10 CFR Part 52 for decommissioning the facility(ies) identified above.
(7)
For value received from [licensees] (if the Guarantor is a corporation, add “and pursuant to the
authority conferred upon the Guarantor by (“the unanimous resolution of its directors” or “the
majority vote of its shareholders”), a certified copy of which is attached”), the Guarantor
guarantees that if the licensee fails to perform the required decommissioning activities, as
required by License No. [insert license number], caused by lack of funds, the Guarantor shall
(a)
provide all funds necessary, up to the amount of this guarantee [in 20__ dollars and as
adjusted for inflation], to carry out the required activities, or
(b)
set up a trust fund in favor of [the licensee] in the amount of these current cost estimates
or guarantee amount for these activities.
(8)
The Guarantor agrees to submit revised financial statements, financial test data, and a special
auditor’s report and reconciling schedule to the NRC annually within 90 days of the close of the
parent Guarantor’s fiscal year.
(9)
The Guarantor and the licensee agree that if the Guarantor fails to meet the financial test criteria
at any time after this guarantee is established, the Guarantor and the licensee shall send, within
90 days of the end of the fiscal year in which the Guarantor fails to meet the financial test criteria,
by certified mail, notice to the NRC. If [the licensee] fails to provide alternative financial
assurance, as specified in 10 CFR Part 50 or 10 CFR Part 52, as applicable, and obtain written
approval of such assurance from the NRC within 180 days of the end of such fiscal year, the
Guarantor shall provide such alternative financial assurance in the name of [licensee] or make full
payment under the guarantee to a standby trust established by [licensee].
(10)
Independent of any notification under paragraph 8 above, if the NRC determines for any reason
that the Guarantor no longer meets the financial test criteria or that it is disallowed from
continuing as a Guarantor for the facility under License No. [insert license number], the
Guarantor agrees that, within 90 days after being notified by the NRC of such determination, an
DG-1348 Revision 1, Appendix A, Page A-32
alternative financial assurance mechanism, as specified in 10 CFR Part 50 or 10 CFR Part 52, as
applicable, shall be established by the Guarantor in the name of [licensee] unless [licensee] has
done so.
(11)
The Guarantor, as well as its successors and assigns, shall remain bound jointly and severally
under this guarantee, notwithstanding any or all of the following: amendment or modification of
license or NRC-approved decommissioning funding plan for that facility, the extension or
reduction of the time of performance of required activities, or any other modification or alteration
of an obligation of the licensee pursuant to 10 CFR Part 50 or 10 CFR Part 52.
(12)
The Guarantor agrees that it will be liable for all litigation costs incurred by [the licensee] or the
NRC in any successful effort to enforce the agreement against the Guarantor.
(13)
The Guarantor agrees to remain bound under this guarantee for as long as [licensee] must comply
with the applicable financial assurance requirements of 10 CFR Part 50 or 10 CFR Part 52, for the
previously listed facility(ies), except that the Guarantor may cancel this guarantee by sending
notice by certified mail to the NRC and to [licensee], such cancellation to become effective no
earlier than 120 days after receipt of such notice by both the NRC and [licensee], as evidenced by
the return receipts. If the licensee fails to provide alternative financial assurance as specified in
10 CFR Part 50 or 10 CFR Part 52, as applicable, and to obtain written approval of such
assurance within 120 days after the sending of the above notice by the Guarantor, the Guarantor
shall provide such alternative financial assurance.
(14)
The Guarantor expressly waives notice of acceptance of this guarantee by the NRC or by
[licensee]. The Guarantor also expressly waives notice of amendments or modification of the
decommissioning requirements and of amendments or modifications of the license.
(15)
If the Guarantor files financial reports with the U.S. Securities and Exchange Commission, then it
shall promptly submit them to the NRC during each year in which this guarantee is in effect.
I hereby certify that this guarantee is true and correct to the best of my knowledge.
Effective date: ________________________
[Name of Guarantor]
[Authorized signature for Guarantor]
[Name of person signing]
[Title of person signing]
Signature of witness or notary: ________________________
[Name of licensee]
[Authorized signature for licensee]
[Title of person signing]
Signature of witness or notary: ______________________
DG-1348 Revision 1, Appendix A, Page A-33
| File Type | application/pdf |
| File Modified | 2022-03-02 |
| File Created | 2022-02-28 |