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Home My WebLink AboutDRC-2012-001942 - 0901a0688030af91State of Utah GARY R HERBERT Governor GREG BELL Lieutenant Governor Apnl 19,2012 Department o Environmental Quality Amanda Smith Executive Director DIVISION OF RADIATION CONTROL Rusty Lundberg Director pRC-2012-001942 CERTIFIED MAIL RETURN RECEIPT REOUESTED Mr David C Frydenlund Vice President and General Counsel Denison Mines (USA) Corp (DUSA) 1050 Seventeenth St Suite 950 Denver, Colorado, 80265 Subject Compliance - License Condition 9 5, Surety Update, Radioactive Matenals Licen^ ^ UTI900479, DUSA White Mesa Mill Request for Information Dear Mr Frydenlund On March 6, 2012 the DRC received the capUoned Surety Update, which responds to Revision 3 2 of the Reclamation Plan for the White Mesa Mill which was submitted to the DRC on January 28, 2011 Upon review of the Surety Update, DRC Staff requests the following information 1 The Reclamation Plan and Surety Estimate represent an orderly closure of the facility at the end of its design life As such, the presented closure is necessarily general inasmuch as modifications to the facility cannot be forecast with total accuracy The DRC can expect the actual work to deviate somewhat from the stmcture presented in the Surety Estimate in the event of an unexpected business failure Premature closure would necessitate re-engmeenng, or a modification of the closure plan NUREG-1620, Appendix C, p C-4 specifies inclusion in Surety costs for "engineenng design, review, and change " Engineering design will be required, at a minimum, to adjust grades from those anticipated m the closure plan and those extant in the event of untimely closure Please include a Surety line item for engineenng and redesign, valued at 2 25% ofthe Subtotal Direct Costs line item in the Surety 2 DUSA has provided an estimate of labor required for mill decommissioning using General Decision UTI 200043 for heavy constmction in San Juan County dated January 6, 2012 (General Decision), accessed on the US Department of Labor website The General Decision represents minimum umon wages to be paid NUREG-1620, Appendix C, p C-4 encourages Surety reviewers to compare umt costs to standard constmction cost guides, citing RSMeans as one source of such cost data Upon doing so, DRC Staff noted that the RSMeans data for labor generally exceeded the rates incorporated m the Surety Estimate RSMeans provides an average wage actually paid by 195 North 1950 West • Salt Uke City, UT Mailing Address P O Box 144850 • Salt Uke City, UT 84114-4850 Telephone(801) 536-4250-Fax (801) 533-4097'TDD (801)536-4414 www deq Utah gov Printed on 100% recycled paper David C Frydenlund Apnl 19, 2012 Page 2 contractors for labor Both data sets included figures with and without labor burden (taxes, benefits, etc) DRC Staff concluded that reliance on the General Decision would underestimate the cost of labor DUSA has relied on third-party vendor quotations for equipment costs m the Surety Estimate As stated above, NUREG-1620, Appendix C, p C-4 encourages Surety reviewers to compare unit costs to standard constmction cost guides, citing RSMeans as one source of such cost data RSMeans provides a robust dataset for equipment rental costs Furthermore, RSMeans represents an unbiased third-party data source, and eliminates the potential for underestimating costs due to discounting DRC Staff reviewed a subset ofthe quotes DUSA provided in the Surety Estimate against similar items m RSMeans In most cases the costs presented in the Surety Estimate agreed well with those m the RSMeans data set, however, RSMeans differed significantly from the General Decision on labor rates The equipment costs DUSA included m the Surety Estimate bore 2012 dates, so DRC Staff had no issue with currency of quotations For consistency. Staff would prefer to rely on RSMeans for as much equipment cost data as possible Please revise the Surety Estimate to reflect labor and equipment rental rates in the current RSMeans data set Dunng review of the Surety Estimate, DRC Staff was unable to clearly delineate where the reclamation activities outlined in Part 11 A 1 of the Amended Nitrate Stipulated Consent Agreement dated September 30, 2011 (SCA) appeared DUSA provided clanfication that the soil removal requirement appears as part of the volume labeled as Removal of Contaminated Matenal under Ammonium Sulfate Crystal Tanks DUSA has calculated a volume of soil requinng removal of 1,926 cubic yards, then used a more conservative 6,000 cubic yards of soil m the conversion to machine hours for cost calculations DRC Staff was unsure how the footprint of the reclamation under the SCA compared with the footpnnt for the anticipated cleanup under the Ammonium Sulfate Crystal Tanks, and whether the soil to be removed under the SCA encompasses all or part of the 1,926 cubic yards of contaminated soil represented in the estimate Part 11 A 2 of the SCA addresses arresting migration of the nitrate plume m the groundwater, associated with the contaminated soil discussed preceding paragraph DRC Staff was unable to identify m the Surety Estimate costs for groundwater pumping associated with arresting the migration of the plume Please clanfy how DUSA has accounted for the soil to be removed and the pumping costs associated with arresting migration of the nitrate plume under the SCA Additionally, groundwater pumping cost to remediate the Chloroform plume must also be mcluded in the Surety Estimate The groundwater pumping costs for both the Nitrate and Chloroform plumes should be for a minimum of 5 years License Condition 9 5 of the License requires inclusion of a contingency line item in the Surety Estimate, and sets the minimum value of the contingency at 15% This is consistent with what is found m NUREG-1620, Rev 1 (Standard Review Plan for the Review of a Reclamation Plan for Mill Tailmgs Sites Under Title II of the Uranium Mill Tailings Radiation Control Act of 1978) DUSA has included a contingency line item in the amount of 15% However, given the industry's history of exceeding surety budgets, the value of 15% seems low, therefore, because of the uncertamty in contamination levels, waste disposal costs, and other costs David C Frydenlund Apnl 19, 2012 Page 3 associated with decommissioning, the cost estimate should apply a higher contingency factor NUREG-1757 Vol 3 (Consolidated NMSS Decommissiomng Guidance Financial Assurance, Record keeping, and Timelmess) recommends establishing a 25% contingency, citmg such a contingency as "reasonable assurance for unforeseen circumstances that could increase decommissiomng costs " Please increase the contingency line item to 25% 5 For ease of review, Mobilization and Management/Support should appear m the summary Surety Estimate as separate line items The current summary lumps these items in the Miscellaneous category In the summary, the Mobilization line item should include the sum of the Equipment Mobilization and Office Facilities as subcategories Please respond in wnting within 30 calendar days of receipt of this letter with the requested revisions to the Surety Estimate You may direct any questions you may have to Russ Topham at 801 536 4256 Thank you for your continued cooperation UTAH RADIATION CONTROL BOARD Rusty Lundberg^ (_J Executive Secretary RL/RJTijt LO .3- O [T r^ • HI a a U.S. Postal Service™ CERTIFIED MAIL™ RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) For delivery mformation visit our website at vww.usps.comlT^ • 2 (' (I Postage Certified Fee RE 4/19/12 license cond 9 RFI/RT David C Frydenlund Vice President & General Counsel Denison Mines (USA) Corp (DUSA) 105017th ST STE 950 Denver CO 80265 PS Form 3100. August 200S See Reverse for Instructions SENDER: COMPLETE THIS SECTION Complete itenns 1, 2, and 3 Also complete Item 4 If Restricted Delivery is desired Print your name and address on the reverse so that we can return the card to you Attach this card to the back of the mailpiece, or on the front if space permits 1 Art!cle-A£ldrs"4sed to COMPLETE THIS SECTION ON DELIVERY C Date OT oeiiver> RE 4/19/12 license cond 9 RFI / RT David C Frydenlund Vice President & General Counsel Denison Mines (USA) Corp (DUSA) 1050 17th ST STE 950 Denver CO 80265 D Is delivery address different from item 1 ? • Yes - If YES, enter delivery address below ^ • No 3 Service Type t^Certified Mai! • Registered • Insured Mail • Express Mail • Retum Receipt for Merchandise • COD '4 Restricted Delivery? (Extra Fee) • Yes 2 Article Number (Transfer from service label) 7011 0110 DDDl 7T51 0455 PS Form 3811, February 2004 Domestic Return Receipt 102595-0£