Tenn. Comp. R. & Regs. 0400-20-10-.12

Current through October 22, 2024

Section 0400-20-10-.12 - GENERAL REQUIREMENTS FOR THE ISSUANCE OF SPECIFIC LICENSES

A license application will be approved if the Division determines that:

(1) The applicant has properly trained a sufficient number of personnel to use the material in question for the purpose required in accordance with these regulations in such a manner as to protect the public health and safety or property;

(2) The applicant's proposed equipment, facilities and procedures are in good repair and working order and designed to protect the public health and safety or property;

(3) The applicant satisfies all applicable requirements of these regulations;

(4) The applicant or an existing licensee in any of the classes specified in subparagraph (a) of this paragraph and not otherwise specifically exempted by subparagraph (m) of this paragraph has provided financial assurance and a decommissioning funding plan as herein specified. (See paragraph (6) of this Rule for definitions of terms used in this paragraph.)

(a) Classes for financial assurance:

1. Major processors

2. Waste handlers

3. Ore refineries

4. Former AEC or NRC licensed facilities

5. Other persons with or applicants for a specific license as determined by the Commissioner.

(b) The financial assurance shall be filed with and maintained by the Director, in a dollar amount determined by the Commissioner as necessary to provide for the protection of public health and safety in the event of abandonment, insolvency, or other inability of the licensee to perform to the satisfaction of the Commissioner. In no instance shall the amount determined by the Commissioner be less than the decommissioning cost estimate.

(c) Each decommissioning funding plan must be submitted for review and approval and must contain the following:

1. A detailed decommissioning cost estimate, in an amount reflecting:

(i) The cost of an independent contractor to perform all decommissioning activities taking into account the probable extent of contamination, the amount of possible property damage, the costs of removal and disposal of sources of radiation used by the specific licensee, the costs of reclamation of the property, and any other relevant considerations;

(ii) The cost of meeting the 0400-20-10-.36 criteria for unrestricted use, provided that, if the applicant or licensee can demonstrate its ability to meet the provisions of paragraph (3) of Rule 0400-20-10-.36, the cost estimate may be based on meeting the paragraph (3) of Rule 0400-20-10.36 criteria;

(iii) The volume of onsite subsurface material containing residual radioactivity that will require remediation to meet the criteria for license termination; and

(iv) An adequate contingency factor;

2. Identification of and justification for using the key assumptions contained in the decommissioning cost estimate;

3. A description of the method of assuring funds for decommissioning from subparagraph (f) of this paragraph, including means for adjusting cost estimates and associated funding levels periodically over the life of the facility;

4. A certification by the licensee that financial assurance for decommissioning has been provided in the amount of the cost estimate for decommissioning; and

5. A signed original of the financial instrument obtained to satisfy the requirements of subparagraph (f) of this paragraph (unless a previously submitted and accepted financial instrument continues to cover the cost estimate for decommissioning).

(d) At the time of license renewal and at intervals not to exceed three years, the decommissioning funding plan must be resubmitted with adjustments as necessary to account for changes in costs and the extent of contamination. If the amount of financial assurance will be adjusted downward, this cannot be done until the updated decommissioning funding plan is approved. The decommissioning funding plan must update the information submitted with the original or prior approved plan, and must specifically consider the effect of the following events on decommissioning costs:

1. Spills of radioactive material producing additional residual radioactivity in onsite subsurface material;

2. Waste inventory increasing above the amount previously estimated;

3. Waste disposal costs increasing above the amount previously estimated;

4. Facility modifications;

5. Changes in authorized possession limits;

6. Actual remediation costs that exceed the previous cost estimate;

7. Onsite disposal; and

8. Use of a settling pond.

(e) Each applicant or licensee of each facility to which it is applicable must file and maintain with the Director financial assurance in accordance with the requirements of this subparagraph.

1. The applicant or licensee must choose from the financial assurance mechanisms as specified in subparagraph (f) of this paragraph. (NOTE: See also subparagraphs (g), (h), and (i) of this paragraph.)

2. The applicant or licensee must file and maintain financial assurance in an amount at least equal to the current decommissioning cost estimate, unless the Commissioner determines that a greater amount must be filed and maintained in accordance with subparagraph (b) of this paragraph.

(i) Whenever the decommissioning cost estimate increases to an amount greater than the amount of financial assurance currently filed with the Director, the licensee must, within 60 days after the increase, file additional financial assurance at least equal to this increase.

(ii) Whenever the current decommissioning cost estimate decreases, and upon the written request of the licensee, the Commissioner shall, provided the decrease is validated, reduce the amount of financial assurance required for the facility to the amount of the current decommissioning cost estimate. Upon such occurrence, the Director shall, as appropriate considering the financial assurance mechanism(s) on file, either cause to be released to the licensee cash or collateral equal to this reduction or allow the licensee to substitute for the mechanism(s) on file a new mechanism(s) in the reduced amount.

3. An applicant for a license must file the financial assurance instruments(s) before the license can be issued.

4. The financial assurance must be maintained by the applicant or licensee until the Commissioner releases the licensee from the requirements of this subparagraph, as specified in this part, or until the Commissioner orders forfeiture of the financial assurance as provided in part 5 of this subparagraph.

5. The Commissioner may order that any financial assurance filed by a licensee pursuant to this subparagraph be forfeited to the State if the Commissioner determines that the licensee has failed to perform decommissioning in a manner deemed acceptable by the Commissioner to assure health and safety from radiation hazards and other license requirements when required to do so. Any such forfeiture action shall follow the procedures provided in subparagraph (j) of this paragraph.

(f) Mechanisms of financial assurance.

1. Surety Bond

An applicant or licensee may satisfy the requirements of subparagraph (e) of this paragraph by obtaining and filing a surety bond which conforms to the requirements of this part.

(i) The surety company issuing the bond must be licensed to do business as a surety in Tennessee.

(ii) The wording of the surety bond must be identical to the wording specified in part (l)1 of this paragraph.

(iii) The bond must guarantee that:

(I) Funds will be available to perform decommissioning in a manner deemed acceptable by the Commissioner to assure health and safety from radiation hazards and other requirements of the license for the facility whenever required to do so.

(II) The licensee will provide alternate financial assurance as specified in this paragraph and obtain the Director's written approval of the assurance provided within 90 days of receipt by both the licensee and the Director of a notice of cancellation of the bond from the surety.

(iv) Under the terms of the bond, the surety will become liable on the bond obligation when the licensee fails to perform as guaranteed by the bond. Following a determination by the Commissioner that the licensee has failed to so perform, under the terms of the bond the surety will perform decommissioning to the satisfaction of the State as guaranteed by the bond or will forfeit the amount of the penal sum, as provided in part (e)5 of this paragraph.

(v) The penal sum of the bond must be in an amount at least adequate to provide the necessary financial assurance.

(vi) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the licensee and to the Director. Cancellation may not occur, however, during the 180 days beginning on the date of receipt of the notice of cancellation by both the licensee and the Director, as evidenced by the return receipts.

(vii) The surety will not be liable for deficiencies in the performance of decommissioning after the Commissioner releases the licensee from the financial assurance requirements as provided in part (e)4 of this paragraph.

2. Personal Bond Supported by a Letter of Credit

(i) The institution issuing the letter of credit must be an entity which has the authority to issue letter of credit and whose letter-of-credit operations are regulated and examined by a Federal or State agency.

(ii) The wording of the letter of credit must be identical to the wording specified in part (l)2 of this paragraph.

(iii) The letter of credit must be accompanied by a letter from the licensee referring to the letter of credit by number, issuing institution and date and providing the following information: The radioactive material license number, name and address of the facility and the amount of funds assured for decommissioning of the facility by the letter of credit. (NOTE: This letter from the licensee may also contain his personal performance guarantee.)

(iv) The letter of credit must be irrevocable and issued for a period of at least one year. The letter of credit must provide that the expiration date will be automatically extended for a period of at least one year unless, at least 180 days before the current expiration date, the issuing institution notifies both the licensee and the Director by certified mail of a decision not to extend the expiration date. Under the terms of the letter of credit, the 180 days will begin on the date when both the licensee and the Director have received the notice, as evidenced by the return receipts.

(v) The letter of credit must be issued in an amount at least adequate to provide the necessary financial assurance.

(vi) The Commissioner may draw on the letter of credit upon forfeiture as provided in part (e)5 of this paragraph. The Commissioner will also draw on the letter of credit if the licensee does not establish alternate financial assurance as specified in this paragraph and obtain written approval of such alternate assurance from the Director within 90 days after receipt by both the licensee and the Director of a notice from the issuing institution that it has decided not to extend the letter of credit beyond the current expiration date. The Director may delay the drawing if the issuing institution grants an extension of the term of the credit. During the last 30 days of any such extension the Commissioner will draw on the letter of credit if the licensee has failed to provide alternate financial assurance as specified in this paragraph and obtain written approval of such assurance from the Director.

3. Personal Bond Supported by Insurance

(i) The insurer must be licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in the State of Tennessee.

(ii) The insurance policy must be accompanied by a certificate of insurance whose wording is identical to the wording specified in part (l)3 of this paragraph.

(iii) The insurance policy must be for a face amount at least adequate to provide the necessary financial assurance. The term "face amount" means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the face amount, although the insurer's future liability will be lowered by the amount of the payments.

(iv) The insurance policy must guarantee that funds will be available for decommissioning whenever decommissioning is necessary.

(v) Upon forfeiture of financial assurance as provided in part (e)5 of this paragraph, the Commissioner will direct the insurer to pay the full face amount to the State.

(vi) The licensee must maintain the policy in full force and effect until the Commissioner releases the financial assurance mechanism as provided in this paragraph. Failure to pay the premium, without substitution of alternate financial assurance as specified in this paragraph, will constitute a significant violation of these rules, warranting such remedy as the Commissioner deems necessary. Such violation will be deemed to begin upon receipt by the Director of a notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration.

(vii) The policy must provide that the insurer may not cancel, terminate, or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy must, at a minimum, provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may elect to cancel, terminate, or fail to renew the policy by sending notice by certified mail to the licensee and the Director. Cancellation, termination, or failure to renew may not occur, however, during the 180 days beginning with the date of receipt of the notice by both the Director and the licensee, as evidenced by the return receipts. Cancellation, termination, or failure to renew may not occur and the policy will remain in full force and effect in the event that on or before the date of expiration:

(I) The Commissioner deems the facility abandoned;

(II) The license is terminated or revoked or renewal is denied;

(III) Closure is ordered by the Commissioner or a court of competent jurisdiction;

(IV) The licensee is named as debtor in a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code; or

(V) The premium due is paid.

(viii) Commencing on the date that liability to make payments pursuant to the policy accrues, the insurer will thereafter annually increase the face amount of the policy. Such increase must be equivalent to the face amount of the policy, less any payments made, multiplied by an amount equivalent to 85 percent of the most recent investment rate or of the equivalent coupon-issue yield announced by the U.S. Treasury for 26-week Treasury securities.

4. Personal Bond Supported by Securities

An applicant or licensee may satisfy the requirements of subparagraph (e) of this paragraph by filing his personal performance guarantee accompanied by collateral in the form of securities. He must guarantee sufficient funds to perform decommissioning in accordance with acceptable practices for protection of health and safety and other requirements of the license for the facility. The securities supporting this guarantee must be fully registered as to principal and interest in such manner as to identify the State and the Division as holder of such collateral and to also identify that person filing such collateral. These securities must have a current market value at least adequate to provide the necessary financial assurance and must be included among the following types:

(i) Negotiable certificates of deposit assigned irrevocably to the State.

(I) Such certificates of deposit must be automatically renewable and must be assigned to the State in writing and recorded as such in the records of the financial institution issuing such certificate.

(II) Such certificates of deposit must also include a statement signed by an officer of the issuing financial institution which waives all rights of lien which the institution has or might have against the certificate.

(ii) Negotiable United States Treasury securities assigned irrevocably to the State.

(iii) Negotiable general obligation municipal or corporate bonds which have at least an "A" rating by Moody's and/or Standard & Poor's rating services and which are assigned irrevocably to the State.

5. Personal Bond Supported by Cash

An applicant or licensee may satisfy the requirements of subparagraph (e) of this paragraph by filing his personal performance guarantee accompanied by cash in an amount at least adequate to provide the necessary financial assurance.

6. Financial Test and Corporate Guarantee

(i) An applicant or licensee may satisfy the requirements of subparagraph (e) of this paragraph by demonstrating that he passes a financial test as specified in this part. To pass this test the licensee must meet the criteria of either item (I) or (II) of this subpart as follows:

(I) The applicant or licensee must have:

I. 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 greater than 0.1, and a ratio of current assets to current liabilities greater than 1.5;

II. Net working capital and tangible net worth each at least six times the current decommissioning cost estimate;

III. Tangible net worth of at least $10 million; and

IV. Assets in the United States amounting to at least 90 percent of this total assets or at least six times the current decommissioning cost estimate.

(II) The applicant or licensee must have:

I. A current rating for his most recent bond issuance of AAA, AA, A or BBB as issued by Standard & Poor's, or Aaa, Aa, A or Baa as issued by Moody's;

II. Tangible net worth at least six times the current decommissioning cost estimate;

III. Tangible net worth of at least $10 million; and

IV. Assets located in the United States amounting to at least 90 percent of his total assets or at least six times the current decommissioning cost estimate.

(ii) The phrase "current decommissioning cost estimates" as used in subpart (i) of this part refers to the cost estimates required to be shown in paragraphs 1 through 4 of the letter from the applicant's or licensee's chief financial officer.

(iii) To demonstrate that he meets this test, the applicant or licensee must submit the following items to the Director:

(I) A letter signed by the applicant's or licensee's chief financial officer and worded as specified in part (l)4 of this paragraph;

(II) A copy of the independent certified public accountant's report on examination of the applicant's or licensee's financial statements for the latest completed fiscal year; and

(III) A special report from the applicant's or licensee's independent certified public accountant to the applicant or licensee stating that:

I. He has compared the data which the letter from the chief financial officer specifies as having been derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements; and

II. In connection with that procedure, no matters came to his attention which caused him to believe that the specified data should be adjusted.

(iv) After the initial submission of items specified in subpart (iii) of this part, the licensee must send updated information to the Director within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in subpart (iii) of this part.

(v) If the licensee no longer meets the requirements of subpart (i) of this part, he must send notice to the Director of intent to establish alternate financial assurance as specified in this paragraph. The notice must be sent by certified mail within 90 days after the end of the fiscal year for which the year-end financial data show that the licensee no longer meets the requirements. The licensee must provide the alternate financial assurance within 120 days after the end of such fiscal year.

(vi) The Director may, based on a reasonable belief that the licensee may no longer meet the requirements of subpart (i) of this part, require reports of financial condition at any time from the licensee in addition to those specified in subpart (iii) of this part. If the Director finds, on the basis of such reports or other information, that the licensee no longer meets the requirements of subpart (i) of this part, the licensee must provide alternate financial assurance as specified in this paragraph within 30 days after notification of such a finding.

(vii) The Director may disallow use of this test on the basis of qualifications in the opinion expressed by the independent certified public accountant in his report on examination of the applicant's or licensee's financial statements. An adverse opinion or a disclaimer of opinion will be cause for disallowance. The Director will evaluate other qualifications on an individual basis. The applicant or licensee must provide alternate financial assurance as specified in this paragraph within 30 days after notification of the disallowance.

(viii) An applicant or licensee may meet the requirements of subparagraph (e) of this paragraph by obtaining a written guarantee, hereafter referred to as "corporate guarantee." The guarantor must be the parent corporation of the licensee. The guarantor must meet the requirements for applicants or licensees in subparts (i) through (vii) of this part and must comply with the terms of the corporate guarantee. The wording of the corporate guarantee must be identical to the wording specified in part (l)5 of this paragraph. The corporate guarantee must accompany the items sent to the Director as specified in subpart (iii) of this part. The terms of the corporate guarantee must provide that:

(I) If the licensee fails to perform decommissioning of a facility covered by a corporate guarantee for decommissioning in accordance with acceptable practices to protect health and safety and other license requirements whenever required to do so, the guarantor will do so or forfeit to the State monies in an amount equal to the current decommissioning cost estimate for the facility, as provided in part (e)5 of this paragraph.

(II) The corporate guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail to the licensee and to the Director. Cancellation may not occur, however, during the 180 days beginning on the date of receipt of the notice of cancellation by both the licensee and the Director as evidenced by the return receipts.

(III) If the licensee fails to provide alternate financial assurance as specified in this paragraph and obtain the written approval of such alternate assurance from the Director within 90 days after receipt by both the licensee and the Director of a notice of cancellation of the corporate guarantee from the guarantor, the guarantor will provide such alternative financial assurance in the name of the licensee.

(g) Use of Multiple Financial Mechanisms

In meeting the requirements of subparagraph (e) of this paragraph, an applicant or licensee may utilize more than one financial assurance mechanism per facility. These mechanisms are limited to personal bonds supported by letters of credit, insurance, securities or cash. The mechanisms must be as specified in subparagraph (f) of this paragraph, except that it is the combination of mechanisms, rather than the single mechanism, which must provide financial assurance for the necessary amount.

(h) Use of a Financial Mechanism for Multiple Facilities

An applicant or licensee may use a financial assurance mechanism specified in subparagraph (f) of this paragraph to meet the requirements of subparagraph (e) of this paragraph for more than one facility he owns or operates in Tennessee. If so, the mechanism submitted to the Director must include a list showing, for each facility, the license number, name, address, and amount of funds for decommissioning care assured by the mechanism. The amount of funds available through the mechanism must be no less than the sum of funds that would be available if a separate mechanism had been filed and maintained for each facility.

(i) Substituting Alternate Financial Assurance

In meeting the requirements of subparagraph (e) of this paragraph, a licensee may substitute alternate financial assurance meeting the requirements of this paragraph for the financial assurance already filed with the Director for the facility. However, the existing financial assurance shall not be released by the Commissioner until the substitute financial assurance has been received and approved by him.

(j) Procedures for Forfeiture of Financial Assurance

1. Upon the determination of abandonment, insolvency, or other inability of the licensee to perform to the satisfaction of the Commissioner, a notice of noncompliance shall be served upon the licensee. Such notice shall be hand-delivered or forwarded by certified mail. The notice of non-compliance shall specify in what respects the licensee has failed to perform as required.

2. If the Commissioner determines that the licensee has failed to perform as specified in the notice of non-compliance, or as specified in any subsequent compliance agreement which may have been reached by the licensee and the Commissioner, the Director shall cause a notice of show cause meeting to be served upon the licensee. Such notice shall be signed by the Director and either hand-delivered or forwarded by certified mail to the licensee. The notice of show cause meeting shall establish the date, time, and location of a meeting scheduled to provide the licensee with the opportunity to show cause why the Director should not pursue forfeiture of the financial assurance filed to guarantee such performance.

3. If no mutual compliance agreement is reached at the show cause meeting, or, upon the Commissioner's determination that the licensee has failed to perform as specified in such agreement that was reached, the Director shall request the Commissioner to order forfeiture of the financial assurance filed to guarantee such performance.

4. The Commissioner shall order forfeiture of the financial assurance upon his validation of the Director's determinations and upon his determination that the procedures of this subparagraph have been followed. The Commissioner may, however, at his discretion, provide opportunity for the licensee to be heard before himself before issuing such order. Upon issuance a copy of the order shall be hand-delivered or forwarded by certified mail to the licensee. Any such order issued by the Commissioner shall become effective 30 days after the receipt by the licensee.

5. If necessary, upon the effective date of the order of forfeiture, the Commissioner shall give notice to the State Attorney General who shall collect the forfeiture.

6. All funds from forfeited financial assurances shall be deposited in the State's radiation reclamation trust fund account for use by the Commissioner as set forth in T.C.A. § 68-202-405.

(k) Incapacity of Applicants or Licensees, Guarantors, or Financial Institutions.

1. An applicant or licensee must notify the Director by certified mail of the commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming the applicant or licensee as debtor, within 10 days after commencement of the proceeding. A guarantor of a corporate guarantee as specified in part (f)6 of this paragraph must make such a notification if he is named as debtor, as required under the terms of the corporate guarantee.

2. An applicant or licensee who fulfills the requirements of this paragraph by obtaining a surety bond, letter of credit or insurance policy will be deemed to be without the required financial assurance in the event of bankruptcy of the issuing institution or a suspension or revocation of the authority of the institution issuing the surety bond, letter of credit or insurance policy to issue such instruments. The applicant or licensee must establish other financial assurance within 30 days after such an event.

(l) Wording of the Instruments

1. A surety bond guaranteeing funds for decommissioning as specified in part (f)1 of this paragraph, must be worded as follows except that the instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

SURETY BOND

Date bond executed: ____________________

Effective date: ____________________

Principal: (legal name and business address of applicant or licensee)

Type of organization: (insert "individual," "joint venture," "partnership" or "corporation")

State of incorporation: ____________________

Surety(ies): (Name(s) and business address(es))

License number, name, address and decommissioning cost for each facility guaranteed by this bond (list amounts separately): $____________________

Total penal sum of bond: $____________________

Surety's bond number: ____________________

KNOW ALL PERSONS BY THESE PRESENTS, that we, the Principal and Surety(ies) hereto are firmly bound to the State of Tennessee, Department of Environment and Conservation (hereinafter called "Department"), 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 Surety(ies) 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 said Principal is required, under the Tennessee Radiological Health Service Act, as amended, to have a license in order to receive, possess, store and use radioactive material at the facility identified above, and

WHEREAS said Principal is required to provide financial assurance for decommissioning as a condition of the license;

NOW, THEREFORE, the conditions of this obligation are such that if the Principal shall faithfully perform decommissioning, whenever required to do so, of each facility for which this bond guarantees funds for decommissioning, to the satisfaction of the Commissioner, State of Tennessee, Department of Environment and Conservation in accordance with acceptable practices for protection of health and safety pursuant to all applicable laws, statutes, rules and regulations, as such laws, statutes, rules and regulations may be amended,

OR, if the Principal shall provide alternate financial assurance as specified in paragraph (4) of Rule 0400-20-10-.12, and obtain the written approval of such assurance from the Director, Division of Radiological Health (hereinafter called "Director"), within 90 days after the date notice of cancellation is received by both the Principal and the Director from the Surety(ies), 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 Director that the Principal has been found in violation of the decommissioning requirements of the Division, for a facility for which this bond guarantees funds for performance of decommissioning, the Surety(ies) shall forfeit the decommissioning cost amount guaranteed for the facility to the Department as directed by the Director.

Upon notification by the Director that the Principal has filed to provide alternate financial assurance as specified in paragraph (4) of Rule 0400-20-10-.12, and obtain written approval of such assurance from the Director during the 30 days following receipt by both the Principal and the Director of a notice of cancellation of the bond, the Surety(ies) shall forfeit funds in the amount guaranteed for the facility(ies) to the Department as directed by the Director.

The Surety(ies) hereby waive(s) notification of amendments to licenses, applicable laws, statutes, rules and regulations and agree(s) that no such amendment shall in any way alleviate its (their) obligation on this bond.

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 Director, provided, however, that cancellation shall not occur during the 180 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Director, as evidenced by the return receipts.

The Principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Director.

IN WITNESS WHEREOF, the Principal and Surety(ies) have executed this SURETY 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) and that the wording of this surety bond is identical to the wording specified in part (4)(l)1 of Rule 0400-20-10-.12 as such regulation was constituted on the date this bond was executed.

PRINCIPAL

(Signature(s))

(Name(s))

(Title(s))

(Corporate seal)

CORPORATE SURETY(IES)

(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 above.) Bond premium: $____________________

2. A letter of credit, as specified in part (f)2 of this paragraph, must be worded as follows except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

IRREVOCABLE STANDBY LETTER OF CREDIT

Director

Division of Radiological Health

State of Tennessee, Department of Environment and Conservation

Dear Sir or Madam:

We hereby establish our Irrevocable Standby Letter of Credit No. __________in your favor, at the request and for the account of (applicant's or licensee'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 th,e draft is payable pursuant to rules issued under authority of the Tennessee Radiological Health Service Act, as amended."

This letter of credit is effective as of (date) and shall expire on (date at least one year later), but such expiration date shall be automatically extended for a period of (at least one year) on (date) and on each successive expiration date, unless, at least 180 days before the current expiration date, we notify both you and (applicant's or licensee's name) by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event you are so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 180 days after the date of receipt by both you and (licensee's name), as shown on the signed return receipts.

Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall forfeit the amount of the draft to the State of Tennessee in accordance with your instructions.

We certify that the wording of this letter of credit is identical to the wording specified in part (4)(l)2 of Rule 0400-20-10-.12 as such regulation was constituted on the date shown immediately below.

(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").

3. A Certificate of insurance, as specified in part (f)3 of this paragraph must be worded as follows except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

CERTIFICATE OF INSURANCE FOR DECOMMISSIONING

Name and Address of Insurer (herein called the "Insurer") : ______________________________

Name and Address of Insured (herein called the "Insured") : ______________________________

Facilities Covered: (List for each facility: The license number, name, address, and the amount of insurance for decommissioning (these amounts for all facilities covered must total the face amount shown below))

Face Amount: $ ______________________________

Policy Number: ______________________________

Effective Date: ______________________________

The Insurer hereby certifies that it has issued to the Insured the policy of insurance identified above to provide financial assurance for decommissioning the facilities identified above. The Insurer further warrants that such policy conforms in all respects with the requirements of part (4)(l)3 of Rule 0400-20-10.12, as applicable and as such rules were constituted on the date shown immediately below. It is agreed that any provision of the policy inconsistent with such regulation is hereby amended to eliminate such inconsistency.

Whenever requested by the Director, Division of Radiological Health, State of Tennessee, Department of Environment and Conservation, the Insurer agrees to furnish to the Director, Division of Radiological Health a duplicate original of the policy listed above, including all endorsements thereon.

I hereby certify that the wording of this certificate is identical to the wording specified in part (4)(l)3 of Rule 0400-20-10-.12 as such regulation was constituted on the date shown immediately below.

(Authorized signature for Insurer)

(Name of person signing)

(Title of person signing)

Signature of witness or notary: ____________________

(Date)

4. A letter from the chief financial officer, as specified in part (f)6 of this paragraph must be worded as follows except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

LETTER FROM CHIEF FINANCIAL OFFICER

(Address to Director, Division of Radiological Health)

I am the chief financial officer of (name and address of firm). This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in paragraph (4) of Rule 0400-20-10-.12.

(Fill out the following four paragraphs regarding facilities and associated cost estimates. If your firm has no facilities that belong in a particular paragraph, write "None" in the space indicated. For each facility, include its license number, name, address, and current decommissioning cost estimates.)

1. This firm is the licensee at the following facility for which financial assurance for decommissioning is demonstrated through the financial test specified in paragraph (4) of Rule 0400-20-10-.12. The current decommissioning cost estimate covered by the test is: $______________.

2. This firm guarantees, through the corporate guarantee specified in paragraph (4) of Rule 0400-20-10-.12, the decommissioning of the following facility owned or operated by a subsidiary of this firm. The current cost estimates for decommissioning so guaranteed is: $ ______________.

3. In other states, this firm, as licensee or guarantor, is demonstrating financial assurance for decommissioning of the following facilities through the use of a test equivalent or substantially equivalent to the financial test specified in paragraph (4) of Rule 0400-20-10-.12. The current decommissioning cost estimates covered by such a test are shown for each facility: $ ______________.

4. This firm is the licensee of the following facilities receiving, possessing, using or storing radioactive material for which financial assurance for decommissioning is not demonstrated either to the Division, another State, or the U.S. Nuclear Regulatory Commission through the financial test or any other financial assurance mechanisms specified in paragraph (4) of Rule 0400-20-10-.12 or equivalent or substantially equivalent mechanisms. The current decommissioning cost estimates not covered by such financial assurance are shown for each facility: $ ___________________.

This firm (insert "is required" or "is not required") to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal year.

The 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 statement for the latest completed fiscal year, ending (date).

(Fill in Alternative I if the criteria of item (f)6(i)(I) of this paragraph are used. Fill in Alternative II if the criteria of item (f)6(i)(II) of this paragraph are used).

ALTERNATIVE I

1.	Sum of current decommissioning cost estimates (total of all cost estimates shown in the four paragraphs above)		$ ___________
*2.	Total liabilities (if any portion of the decommissioning cost estimate is included in total liabilities, 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 U.S. (required only if less than 90% of firm's assets are located in the U.S.)		$ ____________
YES	NO
10.	Is line 3 at least $10 million?	______	______
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% of firm's assets located in the U.S.? If not, complete line 14	______	______
14.	Is line 9 at least 6 times line 1?	______	______
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?	______	______

ALTERNATIVE II

1.	Sum of current decommissioning cost estimates (total of all cost estimates shown in the four paragraphs above)		$ _________
2.	Current bond rating of most recent issuance of this firm and name of rating service		_______
3.	Date of issuance of bond
4.	Date of maturity of bond		_______
*5.	Tangible net worth		$ ____________
*6.	Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.)		$ _________
YES	NO
7.	Is line 5 at least $10 million?	______	______
8.	Is line 5 at least 6 times line 1?	______	______
9.	Are at least 90% of firm's assets located in the U.S.? If not, complete line 10.
10.	Is line 6 at least 6 times line 1?	______	______

5. A corporate guarantee, as specified in part (f)6 of this paragraph, must be worded as follows except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

CORPORATE GUARANTEE FOR DECOMMISSIONING

Guarantee made this (date) by (name of guaranteeing entity), a business corporation organized under the laws of the State of (insert name of State), herein referred to as guarantor, to the State of Tennessee, Department of Environment and Conservation ("Department"), obligee, on behalf of our subsidiary (applicant or licensee) of (business address).

Recitals

1. Guarantor meets or exceeds the financial test criteria and agrees to comply with the reporting requirements for guarantors as specified in part (4)(f)6 of Rule 0400-20-10-.12.

2. (Applicant or licensee) owns or operates and is licensed by the Department to receive, possess, store and use radioactive material at the facility covered by this guarantee: (List for the facility: license number, name and address).

3. For value received from (licensee), guarantor guarantees to the Department that in the event that (licensee) fails to perform decommissioning of the above facility in a manner deemed acceptable by the Commissioner to assure health and safety from radiation hazards and other license requirements, the guarantor shall do so or forfeit to the State of Tennessee, as specified in paragraph (4) of Rule 0400-20-10.12 monies in an amount equal to the current decommissioning cost estimates as specified in paragraph (4) of Rule 0400-20-10-.12.

4. Guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor shall send within 30 days, by certified mail, notice to the Director of the Department's Division of Radiological Health ("Division Director") and to (licensee) that he intends to provide alternate financial assurance as specified in paragraph (4) of Rule 0400-20-10-.12, in the name of (licensee). Within 90 days after the end of such fiscal year, the guarantor shall establish such financial assurance unless (licensee) has done so.

5. The guarantor agrees to notify the Division Director, by certified mail, of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days after commencement of this proceeding.

6. Guarantor agrees that within 30 days after being notified by the Division Director of a determination that guarantor no longer meets the financial test criteria or that he is disallowed from continuing as a guarantor for decommissioning he shall establish alternate financial assurance as specified in paragraph (4) of Rule 0400-20-10-.12 in the name of (licensee) unless (licensee) has done so.

7. Guarantor agrees to remain bound under this guarantee notwithstanding any or all of the following: amendment or modification of the license, the extension or reduction of the time of performance of decommissioning or any other modification or alteration of an obligation of the licensee pursuant to these rules.

8. Guarantor agrees to remain bound under this guarantee for so long as (licensee) must comply with the applicable financial assurance requirements of paragraph (4) of Rule 0400-20-10-.12 for the abovelisted facility, except that guarantor may cancel this guarantee by sending notice by certified mail to the Division Director and to (licensee), such cancellation to become effective no earlier than 180 days after receipt of such notice by both the Department and (licensee), as evidenced by the return receipts.

9. Guarantor agrees that if (licensee) fails to provide alternate financial assurance as specified in paragraph (4) of Rule 0400-20-10-.12, and obtain written approval of such assurance from the Division Director within 30 days after a notice of cancellation by the guarantor is received by the Division Director from guarantor, guarantor shall provide such alternate financial assurance in the name of (licensee).

10. Guarantor expressly waives notice of acceptance of this guarantee by the Department or by (licensee). Guarantor also expressly waives notice of amendments or modification of the facility license.

I hereby certify that the wording of this guarantee is identical to the wording specified in part (4)(l)5 of Rule 0400-20-10-.12 as such rules were in effect on the date first above written.

Effective Date: ____________________

(Name of guarantor)

(Authorized signature for guarantor)

(Name of person signing)

(Title of person signing)

Signature of witness or notary: ____________________

(m) Persons licensed at the time these financial assurance rules become effective and upon notice by the Department must, within a period of 90 days following such notice, provide the required financial assurance.

(n) The Department may reevaluate, at any time, the adequacy of existing financial assurance and may require their adjustment by either increasing or decreasing the amount of financial assurance required so that adequate funds will be available.

(o) Except that the following persons are exempt from the requirements of this paragraph:

1. State and local government agencies.

2. Educational institutions accredited by the Southern Association of Colleges and Schools.

3. Licensees of the State Licensing Board for the Healing Arts and those medical facilities possessing or utilizing radioactive materials for medical purposes when supervised by such licensees.

4. Veterinarians possessing or utilizing radioactive materials in their veterinary practice.

5. Persons possessing or utilizing radioactive materials for "in vitro" medical purposes.

6. Persons possessing or utilizing only generally licensed quantities of radioactive materials.

(p) Each person licensed under this chapter shall keep records of information important to the decommissioning of a facility in an identified location until the site is released for unrestricted use. Before licensed activities are transferred or assigned in accordance with Rule 0400-20-10-.16, a licensee shall transfer all records described in this paragraph to the new licensee. In this case, the new licensee will be responsible for maintaining these records until the license is terminated. If records important to the decommissioning of a facility are kept for other purposes, reference to these records and their locations may be used. Information the Division considers important to decommissioning consists of:

1. Records of spills or other unusual occurrences involving the spread of contamination in and around the facility, equipment, or site (These records may be limited to instances when contamination remains after any cleanup procedures or when there is reasonable likelihood that contaminants may have spread to inaccessible areas as in the case of possible seepage into porous materials such as concrete. These records must include any known information on identification of involved nuclides, quantities, forms, and concentrations);

2. As-built drawings and modifications of structures and equipment in restricted areas where radioactive materials are used and/or stored, and of locations of possible inaccessible contamination such as buried pipes which may be subject to contamination (If required drawings are referenced, each relevant document need not be indexed individually. If drawings are not available, the licensee shall substitute appropriate records of available information concerning these areas and locations);

3. Except for areas containing only sealed sources (provided the sources have not leaked or no contamination remains after any leak) or byproduct materials having only half-lives of less than 65 days, a list contained in a single document and updated every two years, of the following:

(i) All areas designated and formerly designated restricted areas as defined in paragraph (62) of Rule 0400-20-05-.32;

(ii) All areas outside of restricted areas that require documentation under part 1 of this subparagraph;

(iii) All areas outside of restricted areas where current and previous wastes have been buried as documented under Rule 0400-20-05-.137; and

(iv) All areas outside of restricted areas that contain material such that, if the license expired, the licensee would be required to either decontaminate the area to meet the criteria for decommissioning in Rule 0400-20-10-.36, or apply for approval for disposal under Rule 0400-20-05-.121.

4. Records of the cost estimate performed for the decommissioning funding plan or of the amount certified for decommissioning, and records of the funding method used for assuring funds if either a funding plan or certification is used.

(5) The applicant or an existing licensee, for whom financial assurance is required and where it is intended that the licensed facility will eventually cease to operate while containing, storing or possessing radioactive sources on the premises and will require continuing and perpetual care or surveillance over the facility to protect public health, safety or welfare, shall deposit sums to a Perpetual Care Trust Fund maintained by the Commissioner in the name of the State.

(a) The Commissioner shall consider the following in making his determination of the Perpetual Care Trust Fund deposits for each individual applicant or licensee.

1. The nature of the licensed radioactive material; including its radiotoxicity, half-life, chemical and physical form and containment;

2. Size and type of facility to be decommissioned; and

3. The anticipated cost to the State of perpetual care and surveillance.

(b) The Department may reevaluate at any time the adequacy of a licensee's contributions to the existing Perpetual Care Trust Fund and may adjust by increasing or decreasing the rate of contribution or the specified amount required of a licensee so that the fund may be adequate in amount to meet perpetual care requirements of that licensee.

(6) Definitions of terms used in paragraph (4) of this rule.

(a) "Current decommissioning cost estimate" means the most recent of the estimates prepared in accordance with paragraph (4).

(b) "Director" means the Director of the Division of Radiological Health of the Department of Environment and Conservation.

(c) "Parent corporation" means a corporation which directly owns at least 50 percent of the voting stock of the corporation which is the facility owner or operator; the latter corporation is deemed a "subsidiary" of the parent corporation.

(d) The following terms are used in the specifications for the financial tests for financial assurance for decommissioning. The definitions are intended to assist in the understanding of these rules and are not intended to limit the meanings of terms in a way that conflicts with generally accepted accounting practices.

1. "Assets" means all existing and all probable future economic benefits obtained or controlled by a particular entity.

2. "Current assets" means cash or other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.

3. "Current liabilities" means obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets or the creation of other current liabilities.

4. "Independently audited" refers to an audit performed by an independent certified public accountant in accordance with generally accepted auditing standards.

5. "Liabilities" means probable future sacrifices of economic benefits arising from present obligations to transfer assets or provide services to other entities in the future as a result of past transactions or events.

6. "Net working capital" means current assets minus current liabilities.

7. "Net worth" means total assets minus total liabilities and is equivalent to owner's equity.

8. "Tangible net worth" means the tangible assets that remain after deducting liabilities; such assets would not include intangibles such as goodwill and rights to patents of royalties.

Tenn. Comp. R. & Regs. 0400-20-10-.12

Original rule filed February 22, 2012; effective May 22, 2012. Amendments to rules 0400-20-04.04, 0400-20-05-.70, 0400-20-10-.04, 0400-20-10-.10 through 044-20-10-.13, 0400-20-10-.21, 0400-2010-.33, 0400-20-10-.36, 0400-20-10-.38, and original rules 0400-20-13-.01 through 0400-20-13-.08 filed June 14, 2017; effective September 12, 2017. Amendments filed September 1, 2021; effective 11/30/2021.

Authority: T.C.A. §§ 4-5-201, et seq.; 68-202-101, et seq.; and 68-202-201, et seq.