Jntnrnmalfnal Iho&oie hl

August 12, 2011

ATTN: Document-Control Desk

U.S. Nuclear Regulatory Commission

Washington, DC 20555-0001

NRC Docket No. 40-9086

Subject: Submittal of Responses to Requests for Additional Information (RAI)

TAC L32739

To Whom it May Concern,

The following documents are provided as a response to the US Nuclear Regulatory Commission

RAIs pertaining to the International Isotopes Fluorine Products Inc. December 30, 2009

application to license a depleted uranium hexafluoride de-conversion and fluorine extraction

process facility.

(1) Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application- Financial Assurance (Public)

(2) Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application- Financial Assurance (Non-Public)

An affidavit is also included to withhold Enclosure (2) as proprietary information.

Please contact me by phone at 208 524-5300 or email at iomillerkintisoid.com if you have any

questions regarding this letter or require additional information.

Sincerely,

John J. Miller, CHP

Radiation Safety Officer

JJM-2011-45

Enclosures as Stated

cc: Dr. Matthew Bartlett

U.S. Nuclear Regulatory Commission

Mail Stop E2C40M

6003 Executive Blvd.

Rockville, MD 20852

4137 Commerce Circle, Idaho Falls, Idaho 83401

Phone: 208-524-5300, 800-699-3108 Fax: 208-424-1411

Website: www.intisoid.com
International Isotopes Inc.

Affidavit Declaring Confidential Information Submitted Under 10 CFR 2.3 90

Proprietary - Commercial and Financial Information

Document:

Company Officer:

Title:

Company:

Declaration:

Enclosure (2) of JJM-2011-45

Laurie McKenzie-Carter

Chief Financial Officer

International Isotopes Inc. (INIS)

Enclosures (2) of JJM-2011-45, Response to Second Follow-up

Request for Additional Information to Support the IIFP License

Application- Financial Assurance contains detailed cost estimates for

the de-conversion of depleted uranium hexafluoride that if made

publically available could limit our ability to negotiate de-conversion

service contracts with potential clients.

Laurie McKenzie-Carter CFO Date

4137 Commerce Circle, Idaho Falls, Idaho 83401

Phone: 208-524-5300, 800-699-3108 Fax: 208-524-1411

Website: www.intisoid.com
Enclosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

Request #1: Related to Follow-up Question RAI FA-FI-1

Clarify the basis for Converting the residual DUF6 Inventory (NUREG-1 757, Volume 3, Appendix A. 3.1)

The referenced guidance states that "the labor estimates, materials costs, and other factors of the cost

estimate should have a clear and reasonable basis." Table 10-18 states that the estimated cost to deconvert the DUF6 inventory to Depleted Uranium Oxide is $ . It does not appear that INIS provided

a basis for this estimated cost. Please provide addition information as to how thisfigure was determined

(e.g., labor hours and unit costs, utilities, insurance, taxes, fees, etc.).

RESPONSE TO REQUEST #1: As stated and explained in the previously submitted response to

"Follow-up Question RAI FA-FI-1", INIS, at its IIFP Facility, intends to make final disposition of any

DUF 6 remaining on-site at the time of a decommissioning decision by processing all the residual

inventory through the normal operating plant process resulting in depleted uranium oxide. The uranium

oxide will be disposed at a licensed off-site in the same manner that IIFP utilized for disposal of depleted

uranium oxide during its normal years of operation.

The basis for estimating the cost of processing the residual inventory of DUF 6 and the disposal of the

resulting oxide is discussed below:

I. The amount of residual DUF 6 inventory to be processed for the purposes of allocating the

associated costs to the decommissioning and financial assurance plan is based on a DUF6 average

inventory of 25 cylinders at the time of the decommissioning decision. IIFP is not a long-term

DUF6 storage facility. The IIFP Facility during its years of operation would have been processing

the contents of DUF 6 cylinders within a few days of when cylinders were received, inspected and

accepted. The 25 remaining cylinders would contain a total of approximately 687,500 pounds of

DUF 6.

2. The residual inventory of DUF6 will be converted to boron trifluoride (BF3) product and waste

depleted uranium oxide. For purposes of the financial assurance cost estimates, no credit is taken

for any sales of the BF 3 product.

3. A thirty (30)-day period is required (calculated) for processing the residual DUF 6 inventory and is

based on the plant normal production rates of BF 3 at 255 pounds per hour using an 85% onstream (i.e., 15 % average downtime for maintenance). The total processing time of 30 days is

based on operating 24 hours per day and 7 days per week and consists of approximately 25 days

operating at normal production rate with an allowance of 5 days total of partial production (rampup) for cold-startup and for the equipment shut down at the end of the period. This BF 3

production rate and on-stream time consumes an approximate average of 25,050 pounds per day

of DUF 6 and generates about 19,215 pounds per day of depleted uranium oxide for disposal

during the 25 day full production period. An additional 61, 250 pounds of DUF6 is estimated to

be converted during the short start-up (ramp-up) period with an additional 46, 980 pounds of

uranium oxide being generated for disposal.

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Endosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

4. As discussed in the response to previously submitted RAI response FA-FI-1, the cost estimate for

processing the residual DUF 6 inventory is based on the IIFP facility operating cost for converting

the DUF 6 to product BF 3 and the waste depleted uranium oxide. However, the labor cost for the

pre-decommissioning work is based on using a third-party contractor. These labor costs are

estimated by taking the normal facility operating direct wages and applying the third-party

contractor fringe benefits, overheads and profits (See explanation of third-party contractor labor

cost basis in the Financial Assurance RAls Official Responses, Revision B, 6/20/11, RAI # FAL.A and FA-I.B).

5. The Table I below identifies and explains the basis for the operating costs to process the subject

residual DUF6 inventory and ready it for disposal as uranium oxide. Costs for shipping and

disposal of the oxide are included in the "Transportation and Disposal" cost line of the IIFP

License Application Chapter 10 Revision B, Table 10-18 (also in Financial Assurance RAls

Official Responses Revision B, dated 6/20/2011). The shipping and disposal costs for just the

uranium oxide generated (2825 cubic feet) as of a result of processing the residual DUF6

inventory are $130,724 and $653,621, respectively. Any packaging costs (mostly labor) is part of

the operating costs (shown below) for processing the residual DUF 6 inventory; essentially the

same cost as those would be for normal packaging during the IIFP Facility production years. The

dollar per day cost expressed in Table I is derived from the IIFP financial model estimate for one

year of normal full production and then divided by days in the year to obtain the average per day

cost. In this manner, the plant indirect and overhead costs are included as well as the variable

costs of an average day conversion of DUF6 and producing BF 3.

Table 1. Basis for Operating Cost to Process Residual DUF6 Residual Inventory of the IIFP

Facility at the Time of Decommissioning

Cost Area Per Day 30-day Comments

Cost Cost

Raw Materials $ $ B203 raw material at $1.50 /lb. and on-site generated H2 gas at

$2.39/lb. are the only raw materials required to process the

DUF 6 inventory.

Treating Agents Includes KOH and Ca(OH) 2 used for scrubbing process off-gas

and treating/removing fluorides from scrubber solutions and

recycling the water.

Electrical Power Based on operating the DUF6 reaction vessel, two BF3

production lines of pre-heaters and rotary calciners and all the

general plant indirect electrical usage.

Liquid Nitrogen LN2 is used for pre-condenser and cold traps for collecting BF3

(LN2) product; the resulting nitrogen gas is reused for seal purges and

purging equipment prior to maintenance. The cost is based on

estimated LN2 usage for collecting the amount of BF 3 product

from de-conversion of the residual DUF6 inventory.

Other utilities; Mainly steam for vaporizing DUF6 in the autoclave room, but

steam, plant air, does include the average "other" utilities costs for the general

water plant indirect areas as well as for the variable direct costs of

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Endosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

converting DUF6 and producina BF-.

Maintenance

materials and

operating supplies

Based on the normal annual maintenance material and operating

supply usage for the entire facility. Does not include

maintenance labor cost as that is in the Labor Cost line. The

maintenance material cost is likely to be conservatively high

because during the brief 30-day operating period only

maintenance would be done that involved safety, regulatory

requirements and corrective maintenance to keep the facility

ooerating for the short term as it will be decommissioned. + *

Miscellaneous

waste disposal

Includes transport and disposal cost for any RCRA, sanitary, and

miscellaneous LLW (other than uranium oxide). Based on the

estimate waste generated per year as described in the IIFP

Environmental Report (ER) and any updated ER RAI responses.

Unit cost for miscellaneous LLW is the same transport and

disposal rate as that used for uranium oxide as defined in

oreviouslv submitted RAI resoonse FA-5.

Insurance and fees -+ I

and fees Based on a rate of 1% of the plant direct fixed-capital

investment (Reference: "Plant Design and Economics for

Chemical Engineers", K.D. Timmerhaus, fifth edition, McGrawHill Publishers). This insurance does not include "workers

compensation" as it is included as part of the Labor Cost.

Labor Based on using third-party contractor with fringes, overhead and

profits applied as defined in RAI response FA-l B. The thirdparty contractor fringes, overhead and profits are applied to IIFP

normal direct wage rates to obtain the third-party labor costs.

The IIFP salary employee wage rate is derived from a salary

surveys conducted by job position. A New Mexico Department

of Workforce Solutions hourly wage survey was used for

operators, craft and laborers by job category. The direct wage

unit cost (without benefits and overheads) used is an average of

$ 22.74/hour for operators, craft and laborers at regular rate

with hourly-wage employees working regular time hours

during the 30-day operating period. Also, the hourly-wage

employees are estimated to work approximately an additional

over-time hours during the period at a 1.5 times premium wage

rate equating to $34.10/ hour. The direct unit cost for salary

employees used is an average of approximately $5020 per 30-

day month. For the 30-day period to process the DUF6 residual

inventory a workforce of salary staff( hours total) is

required. The direct wages were then multiplied by 2.128 for

applying the third-party contractor fringes, overheads and

profits.

Total $ $ The costs are estimated in year 2009 dollars and include third-

(Shown in Table party contractor labor with fringes, overheads and profits. This

10-18 of RAI FA-1 total does not include the 25% contingency but it is applied in

response) the Table 10-18 response to "Financial Assurance RAIS Official

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Endosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

Response, Revision B, 6/20/11 and is referenced in RAI FA1 .A. (Note the $784,345 transportation and disposal costs for the

waste depleted uranium oxide is not included in this operating

cost total but is included in the Table 10-18, line 6

_ "Transportation and Disposal" cost.)

License Documentation Impact Request #1: None. This response is being provided as follow-up

clarification to FA RAI responses that have already been submitted to NRC.

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Enclosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

Request #2: Related to Follow-up Question RAI FA-F1-7

40.36(d) requires that INIS provide certification offinancial assurance along with the

decommissioning funding plan (at the time the license is issued). Since INIS has requested to provide

the financial assurance instruments 6 months prior to startup and fund them 21 days before

operations, you will need an exemption to the applicable portion of 40.36(d). The exemption can be

combined with the incremental funding exemption, ifyou decide to make that request. Otherwise it

will need to be its own exemption request. The exemption will need to meet the requirements in 40.14

(for example see, Section 1.2.4 of the ARE VA Eagle Rock SAR -ML091210638). Ifpossible, the

request should be incorporated into the license application (Generally in Chapter I in a section

entitled - Special Exemptions of Special Authorizations).

The following information would need to be incorporated into the exemption request:

To be consistent with the license application, the exemption should request to delay providing a

financial instrument until sometime before licensed material is at the site. With respect to delaying

the instrument, the request should also clarify whether any material, including contamination of

equipment or structures, will be present at the site during the time that no financial instrument is in

place.

RESPONSE TO REQUEST #2: IIFP will request an exemption from §40.36(d) to provide

financial assurance instruments 6 months prior to startup and to fund the financial assurance

instruments 21 days prior to start-up. Submitting the financial assurance instruments to the NRC six

months prior to operations provides a sufficient amount of time for NRC to review the financial

assurance instruments before operations are scheduled to commence. Funding these instruments 21

days prior to operations minimizes the costs associated with funding the financial assurance

instruments at a time when there is no decommissioning liability.

All structures associated with the facility will be constructed on site and will not become potentially

contaminated with radioactive materials prior to licensed operations. Radioactively contaminated

equipment obtained from the Sequoyah Fuels facility will be decontaminated prior to transfer to the

construction site. If radioactive contamination associated with Sequoyah Fuels equipment cannot be

decontaminated to unrestricted use levels, then the financial assurance for decommissioning will be

funded in full or in part sufficient to cover the decommissioning costs associated with equipment

containing residual radioactive contamination.

License Documentation Impact Request #2: A new section, 1.5 Special Exemptions and Special

Authorizations will be included in Revision B to the License Application. The new section replaces

the IIFP License Application Chapter I section 1.6 which will be renumbered to be 1.7. All ensuing

sections of the Chapter 1 will be sequentially renumbered, accordingly. The following exemption

request will be added to the 1.5 section and will read as follows:

1.5 Special Exemptions and Special Authorizations

In accordance with 10 CFR §40.14 (CFR, 2011), "Specific exemptions," IIFP requests an exemption

from certain provisions of 10 CFR 40.36 (CFR, 2011), "Financial assurance and recordkeeping for

decommissioning," Paragraph (d). Specifically, 10 CFR 40.36(d) requires that "...the

Page 1 5
Enclosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

decommissioning funding plan must also contain a certification by the licensee that financial

assurance for decommissioning has been provided in the amount of the cost estimate for

decommissioning...."

As stated in Section 1.2.2 Financial Qualification of the License Application; "IIFP presently intends

to utilize a surety bond and Standby Trust Fund method to provide reasonable financial assurance of

decommissioning funding will be available at the time of decommissioning the facility. At least six

months prior to startup of the Phase 1 facility, IIFP will provide NRC the financial assurance

instrument that IIFP intends to execute. Upon finalization of the specific funding instrument to be

used and at least 21 days prior to the commencement of operations, IIFP will supplement its

application to include the signed, executed documentation."

The iustification to provide the financial assurance instruments to the NRC 6 months prior to

operations and to fund the instruments 21 days prior to operations is to allow issuance of the license

so construction can commence without accruing costs associated with funding the financial assurance

mechanism while at the same time providing the NRC with a sufficient amount of time to review the

financial assurance instruments before licensed material would be brought on site.

Radioactively contaminated equipment obtained from the Sequoyah Fuels facility will be

decontaminated prior to transfer to the construction site. If radioactive contamination associated with

Sequoyah Fuels equipment cannot be decontaminated to unrestricted use levels, then the financial

assurance for decommissioning will be funded in full or in part sufficient to cover the

decommissioning costs associated with equipment containing residual radioactive contamination.

Therefore, IIFP specifically requests an exemption from the 10 CFR 40.36(d) (CFR, 2011)

requirement that the "decommissioning funding plan must also contain a certification by the licensee

that financial assurance for decommissioning has been provided in the amount of the cost estimate for

decommissioning and a signed original of the financial instrument obtained to satisfy the

requirements of paragraph (e) of this section"; and alternatively that IIFP can provide the financial

assurance instruments to the NRC 6 months prior to operation and to fund these instruments 21 days

prior to the commencement of licensed operations.

Consistent with &40.14(a);

Granting the exemption is authorized by law:

The decommissioning liability associated with a site that does not possess licensed material, as would

be the case during construction, should be considered zero. This is consistent with the Prepayment

funding mechanism described in §40.36(e)(i) which states (emphasis added); "Prepayment is the

deposit prior to the start of operation into an account segregated from licensee assets and outside

the licensee's administrative control...". This method of funding is also consistent with International

Isotope Inc. License SUB-1587 Amendment 1 (Docket No. 40-9058) Block 17.

Granting the exemptions will not endanger life or property or the common defense and security;

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Endosure 1 JJM-2011-45 August 12, 2011

Response to Second Follow-up Request for Additional Information to Support the IIFP

License Application

FINANCIAL ASSURANCE

Delaying the funding of financial assurance until licensed operations with radioactive materials

commences does not endanger life or property or the common defense and security because the cost

associated with decommission the facility during the construction phase is considered zero. Financial

assurance for decommission will be in place prior to licensed operations when the decommission

liability costs would be assured.

Granting the exemptions is otherwise in the public interest:

Requiring funds to be set aside for the cost of decommissioning the facility prior to licensed

operations presents an undue financial burden on ILFP. The decommissioning liability associated with

the IIFP facility during the construction phase is considered to be zero. The cost associated with

maintaining financial assurance instruments during the construction phase of the project is not

warranted, these costs could be allocated toward construction activities which provide employment

opportunities to the local community which is in the public interest.

Granting the exemption meets the categorical exclusion criteria cited in 5l1.22(c)(25)(vi)(H) and (1)

and therefore does not require a revision to the Environmental Report submitted with the License

Application or a standalone environmental review.

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