PENNSTATE KENAN UNLU, Ph.D. Phone: (814) 865-6351 Director, Radiation Science and Engineering Center Fax: (814) 863-4840 Professor, Department of Mechanical and Nuclear Engineering E-mail: k-unlu(ZOsu.edu The Pennsylvania State University University Park, PA 16802-2304 June 11, 2009 US Nuclear Regulatory Commission ATTN: Mr. William Kennedy, Project Manager Office of Nuclear Reactor Regulation Mail Stop 012-G13 One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738 Reference: Pennsylvania State University Breazeale Nuclear Reactor Docket No.50-005, License No. R-2 USNRC Request for Additional Information (RAI) dated May 6, 2009 Subject: Response to RAI dated May 6, 2009 Dear Mr. Kennedy: The attachment to this letter answers the questions presented in the RAI dated May 6, 2009. The response and attachments do not contain any sensitive information. If there are any questions regarding the information submitted, please contact Mr. Mark Trump, Associate Director for Operations at the RSEC. I declare under penalty of perjury that the foregoing is true and correct. Executed on 7 II .e .1.OD Sincere,1 yours, Kenan Unlti Director, Radiation Science and Engineering Center Professor, Department of Mechanical and Nuclear Engineering cc: E.J. Pell (w/o) A.A. Atchley (w/o) D. Sathianathan (w/o) M.A. Trump College of Engineering An Equal Opportunity University PSU RESPONSE TO NRC REQUEST FOR ADDITIONAL INFORMATION REGARDING FINANCIAL QUALIFICATIONS FOR THE PENN STATE BREAZEALE REACTOR LICENSE RENEWAL (TAC NO MC9534) As required by Title 10 of the Code of FederalRegulations (10 CFR) Section 50.33(1)(2), "[applicantsto renew or extend the term of an operating license for a nonpower reactorshall include the financialinformation that is requiredin an applicationfor an initial license." To comply with this requirement,please provide the following supplemental information to the Pennsylvania State University (the University, the applicant) requestfor additionalinformation (RAI) responses dated October 31, 2008: 1. Under 10 CFR 50.33(d), "Contents of applications;general information," certain information is requiredfrom the applicant, the University, as applicable. While the University provided some of the informationpursuant to 10 CFR 50.33(d), additionalinformation is still required. To comply with the regulation,please update the application to include the following information:, 1 (a) In which state is the University incorporatedand the principallocation where the University does business. The Pennsylvania State University is incorporated in Pennsylvania. Its principal location of business is in University Park, PA 16802. 1 (b) Names addresses and citizenship of the directors andprincipalofficers. The names and addresses of the principal officers are attached. 2. The U.S. Nuclear Regulatory Commission (NRC) RAI (3) dated June 16, 2008, requested that the University update the application to 2008 to include: (1) a current (2008) cost estimate for decommissioning the facility showing costs of labor, waste disposal, other items (such as energy, equipment, and supplies), a contingency factor (normally 25%o), and total decommissioning costs in 2008 dollars to meet the NRCs radiologicalrelease criteria; (2) a statement of the decommissioning method to be used (e.g., DECON); and "(3) afull identification of the specific means of adjusting the cost estimate (e.g., consumer price index, waste burial cost datafrom NUREG-1307, or laborprice index) periodicallyover the life of the facility and a numerical example updating the 2008 cost estimate. Page 1 of 4 PSU RESPONSE TO NRC REQUEST FOR ADDITIONAL INFORMATION REGARDING FINANCIAL QUALIFICATIONS FOR THE PENN STATE BREAZEALE REACTOR LICENSE RENEWAL (TAC NO MC9534) In orderfor the NRC staff to complete its financial qualificationsreview, the NRC staff still needs the following additionalinformation: 2 (a) A breakdown of costs of labor, waste disposal, and other items (such as energy, equipment, and supplies) in current (2008) dollars. The decommissioning of the Georgia Institute of Technology's 5 MW research reactor cost $7,151,464 in 2001 dollars. In house discussions indicated that this was a better, more complete, and more conservative (higher) estimate of PSU's projected decommissioning costs than could be performed using any existent method. Using the U. S. Bureau of Labor Statistics Consumer Price Index (CPI) Calculator, that would be $8,681,980 in 2008 dollars. Instead of the CPI, Penn State used a more conservative (higher) 5% inflation rate because it was thought this would more accurately reflect the costs associated with decommissioning. The Georgia Institute of Technology's actual costs included the costs of an outside contractor (labor), waste disposal, consultant support, supplies, and other incidental costs. 2 (b) A statement of the decommissioningmethod to be used (e.g., DECON or other method). In order to comply with the Pennsylvania State University's longstanding commitment to the ecology of Pennsylvania this PSU property will be decontaminated to meet the requirements of 10 CFR 20.1402 Radiological criteria for unrestricted use. This does not necessarily imply that the building will be removed, rather that the building and subsurface will be analyzed and characterized so that the site meets this criterion and is approved for release for unrestricted use. At the time decommissioning begins, Penn State will determine the best computer codes and instrumentation for this particular situation. 2 (c) A justification of the use of 5 percent inflationfactor as the specific means of adjusting the cost estimate periodicallyover the life of the facility (e.g., independent study, consumer price index long-term historicaldata, etc.). Since 2001 the average consumer price index has average d ,bout 2.85%. As stated bo--ve-,, itwash--6-ght-that a 5% inflation rate would more accurately reflect the costs associated with this type of project. Page 2 of 4 PSU RESPONSE TO NRC REQUEST FOR ADDITIONAL INFORMATION REGARDING FINANCIAL QUALIFICATIONS FOR THE PENN STATE BREAZEALE REACTOR LICENSE RENEWAL (TAC NO MC9534) 2 (d) A numerical example showing how previous cost estimates were updated to arrive at the 2008 decommissioningcost estimate. $7,141,464 x 1.0285 ^ 7years = $ 8,689,389 at 2.85% CPI $7,141,464 x 1.05 A 7 years = $10,048,104 at assumed 5% per year Contingency funds 25%= $ 2,512026 Total - $12,560,130 3. The applicationstates that the University is using a self-guarantee to fund and carry out its decommissioning activities. For renewal of the PSBR license, please provide the following additionalinformation as a supplement to the RAI responses submitted by the University on October 31, 2008, for the NRC staffs review. 3 (a) Provide the Auditor's Special Report confirming the ChiefExecutive Officer (CEO) or ChiefFinancial Officer (CFO) letter and reconcilingamounts in the CEO or CFO letter with the University'sfinancial statements (refer to A. 14.11 of NUREG-1 757, Vol. 3, "Consolidated NMSS Decommissioning Guidance,"for the model of the Auditor's Special Report). The requested Auditor's Special Report is not yet available for the fiscal year. The report will be forwarded under separate cover with reference to this request as soon as it available. \,13"(b) Provide the facility's addressfor which the guaranteeprovides financialassurance within the letter submitted by the Corporate Controller,and the Self-Guarantee Agreement (the NRC staff notes that this was provided within the Self-Guarantee Agreement dated December 11, 2006). See attached Certification of Financial Assurance from the Corporate Controller and the attached Self-Guarantee Agreement 3(c) Documentation that the signator of the Self-GuaranteeAgreement (e.g., Corporate Controller), if not the CEO or CFO, has the authority to bind the University in the self- guarantee. See attached documentation stating those individuals who have authority to bind the University. Page 3 of 4 PSU RESPONSE TO NRC REQUEST FOR ADDITIONAL INFORMATION REGARDING FINANCIAL QUALIFICATIONS FOR THE PENN STATE BREAZEALE REACTOR LICENSE RENEWAL (TAC NO MC9534) 3(d) The correctperiod that the guarantoragrees to submitfinancial statements and financial test data (refer to Section ll. C.3 of Appendix E to 10 CFR Part30for Recital 8 regardingsuch time period). If PSU no longer meets the requirements of Section I of appendix E to Part 30, self guarantee, PSU will provide notice within 90 days after the year end financial data is available. 3(e) The relevantpage(s) of the Self-GuaranteeAgreement that includes the signature of a witness or notary (the NRC staff notes that the requiredsignatures were provided within Self-GuaranteeAgreement dated December 11, 2006). See last page of the attached Self-Guarantee Agreement Page 4 of 4 PENNSTATE owz The Pennsylvania State University Joseph J. Doncsecz 814-865-1355 Corporate Controller 408 Old Main Fax: 814-863-0701 University Park, PA 16802-1505 June 10, 2009 William B. Kennedy, Project Manager Research and Test Reactors Branch A Division of Policy and Rulemaking Office of Nuclear Reactor Regulation Mail Stop 12 D3 Nuclear Regulatory Commission Washington, D.C. 20555-0001 Re: Certification of Financial Assurance License number: R-2 Address: Radiation Science and Engineering Center The Pennsylvania State University, University Park, PA University Park, PA 16802 Dear Mr. Kennedy, I am the Corporate Controller of the Pennsylvania State University located at 408 Old Main, University Park, PA 16802, a non-profit University.