Current through Reg. 50, No. 13; March 28, 2025
(a) An
owner or operator may satisfy the requirements of a fully funded trust or
standby trust fund as provided in §
37.201 of this title (relating to
Trust Fund), except within 60 days following the executive director's final
review and approval of closure or post closure expenditures for reimbursement,
release of funds shall occur.
(b)
An owner or operator may satisfy the requirements of a surety bond guaranteeing
payment as provided in §
37.211 of this title (relating to
Surety Bond Guaranteeing Payment) except:
(1)
the surety must also be licensed in the State of Texas;
(2) cancellation may not occur during the 90
days beginning on the date of receipt of the notice of cancellation;
and
(3) the bond must guarantee
that the owner or operator will provide alternate financial assurance within 30
days after receipt of a notice of cancellation of the bond.
(c) An owner or operator may
satisfy the requirements of an irrevocable standby letter of credit as provided
in §
37.231 of this title (relating to
Irrevocable Standby Letter of Credit), except:
(1) the letter of credit shall be
automatically extended unless the issuer provides notice of cancellation at
least 90 days before the current expiration date. Under the terms of the letter
of credit, the 90 days shall begin on the date when both the owner or operator
and the executive director have received the notice, as evidenced by the return
receipts; and
(2) in accordance
with §
37.231(h) of
this title, the executive director shall draw on the letter of credit within 30
days after receipt of notice from the issuing institution that the letter of
credit will not be extended, or within 60 days of an extension, if the owner or
operator fails to establish and obtain approval of such alternate financial
assurance from the executive director.
(d) A statement of intent may be used by a
governmental entity subject to this subchapter. The statement of intent shall
be subject to the executive director's approval and shall include the
following:
(1) a statement that funds will be
made immediately available upon demand by the executive director;
(2) the signature of an authorized official
who has the authority to bind the governmental entity into a financial
obligation, and has the authority to sign the statement of intent;
(3) name of facility(ies), license number,
and physical and mailing addresses; and
(4) corresponding current cost
estimates.
(e) An owner
or operator may satisfy the requirements of financial assurance by establishing
an external sinking fund as specified in this subsection. An external sinking
fund has two components: a sinking fund account and a financial assurance
mechanism such that the total of both equals, at all times, the current cost
estimate. A sinking fund account is an account segregated from the owner's or
operator's assets and is outside the owner's or operator's administrative
control. As the value of the sinking fund account increases, the value of the
second financial assurance mechanism decreases. When the external sinking fund
account is equal to the current cost estimate, the second financial assurance
mechanism will no longer be required to be maintained.
(1) An external sinking fund account shall be
approved by the executive director and administered by a third party that is
regulated and examined by a federal or state agency.
(2) The external sinking fund is established
and maintained by setting aside funds periodically, at least
annually.
(f) An owner
or operator may satisfy the requirements of financial assurance by obtaining
insurance that conforms to the requirements of this subsection, in addition to
the requirements specified in Subchapters A and B of this chapter (relating to
General Financial Assurance Requirements; and Financial Assurance Requirements
for Closure, Post Closure, and Corrective Action), and submitting an
originally-signed endorsement to the insurance policy to the executive
director.
(1) At a minimum, the insurer on
the policy must be authorized to transact or be a surplus lines insurer
eligible to engage in the business of insurance in Texas and have a minimum
financial strength rating of "A" and a financial size category of "XV" as
assigned by the A.M. Best Company.
(2) The insurance policy must designate the
commission as an additional insured.
(3) The owner or operator must maintain the
policy in full force and effect until the executive director consents to
termination of the policy. Failure to pay the premium, without substitution of
alternate financial assurance as specified in this subchapter, shall constitute
a violation of these regulations, warranting such remedy as the executive
director deems necessary. Such violation shall be deemed to begin upon receipt
by the executive 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 of the policy.
(4) The
policy must provide that the insurer may not cancsel, terminate, or fail to
renew the policy except for failure to pay the premium. The automatic renewal
of the policy shall, 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 owner or operator and the
executive director. Cancellation, termination, or failure to renew may not
occur, however, during 120 days beginning with the date of receipt of the
notice by both the executive director and the owner or operator, as evidenced
by the return receipts. The policy must also provide that the insurer shall pay
the face amount of the insurance policy to the State of Texas for deposit as
specified under §
37.9045(a)(6) of
this title (relating to Financial Assurance Requirements for Closure, Post
Closure, and Corrective Action), if the executive director does not approve
acceptable replacement financial assurance within 90 days of receiving notice
by certified mail from the insurer of its election to cancel, terminate, or not
renew the policy.
(5) The insurance
policy may not contain an exclusion for intentional, willful, knowing, or
deliberate noncompliance with a statute, regulation, order, notice, or
government instruction.
(6) The
wording of the endorsement to the insurance policy must be identical to the
wording specified in §
37.9052 of this title (relating to
Endorsement).
(7) The insurance
policy must be issued for a face amount at least equal to the current cost
estimate for closure, post closure, or corrective action, except when a
combination of mechanisms are used in accordance with §
37.41 of this title (relating to
Use of Multiple Financial Assurance Mechanisms). Actual payments by the insurer
shall not change the face amount, although the insurer's future liability shall
be lowered by the amount of the payments.
(8) The insurance policy must guarantee that
funds shall be available to provide for closure, post closure, or corrective
action of the facility. The policy shall also guarantee that once closure, post
closure, or corrective action begins, the issuer shall be responsible for
paying out funds, up to an amount equal to the face amount of the policy, upon
the direction of the executive director, to such party or parties as the
executive director specifies.
(9)
An owner or operator or any other person authorized to perform closure, post
closure, or corrective action may request reimbursement for closure, post
closure, or corrective action expenditures by submitting itemized bills to the
executive director. The request shall include an explanation of the expenses
and all applicable itemized bills. The owner or operator may request
reimbursement for partial closure only if the remaining value of the policy is
sufficient to cover the maximum costs of closing the facility over its
remaining operating life. Within 60 days after receiving bills for closure,
post closure, or corrective action activities, the executive director shall
determine whether the closure, post closure, or corrective action expenditures
are in accordance with the approved closure, post closure, or corrective action
activities or are otherwise justified and, if so, shall instruct the insurer to
make reimbursement in such amounts as the executive director specifies in
writing. If the executive director has reason to believe that the maximum cost
of closure, post closure, or corrective action over the remaining life of the
facility will be greater than the face amount of the policy, the executive
director may withhold reimbursement of such amounts as deemed prudent until the
executive director determines, in accordance with Subchapters A and B of this
chapter, that the owner or operator is no longer required to maintain financial
assurance requirements for closure, post closure, or corrective action of the
facility. If the executive director does not instruct the insurer to make such
reimbursements, the executive director shall provide the owner or operator with
a detailed written statement of reasons.
(10) 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% of the most recent investment rate or of the
equivalent coupon issue yield announced by the United States Treasury for
26-week Treasury securities.
(11)
Upon notification by the executive director that the institutional control
period has begun, the insurer will pay the remaining face amount of the policy
to the State of Texas for deposit as specified under §
37.9045(a)(6) of
this title.
(g) This
subsection applies only to owner or operators required to provide financial
assurance under Chapter 336, Subchapter M of this title (relating to Licensing
of Radioactive Substances Processing and Storage Facilities). Owners or
operators required to provide financial assurance under Chapter 336, Subchapter
M of this title may satisfy the requirements of financial assurance by
demonstrating that it passes a financial test as provided in §
37.251 of this title (relating to
Financial Test), except the owner or operator which has issued rated bonds must
also meet the criteria of paragraphs (1) and (3) of this subsection, or the
owner or operator which has not issued rated bonds must also meet the criteria
of paragraphs (2) and (3) of this subsection.
(1) The owner or operator must have:
(A) tangible net worth of at least ten times
the total current cost estimate (or the current amount required if a
certification is used) for all closure activities;
(B) assets located in the United States
amounting to at least 90% of total assets or at least ten times the total
current cost estimate (or the current amount required if a certification is
used) for all closure activities;
(C) a current rating for its most recent bond
issuance of AAA, AA, or A as issued by Standard and Poor's, or AAA, AA, A as
issued by Moody's; and
(D) at least
one class of equity securities registered under the Securities Exchange Act of
1934.
(2) The owner or
operator must have:
(A) tangible net worth
greater than $10 million, or of at least ten times the total current cost
estimate (or the current amount required if a certification is used) for all
closure activities, whichever is greater;
(B) assets located in the United States
amounting to at least 90% of total assets or at least ten times the total
current cost estimate (or the current amount required if a certification is
used) for all closure activities;
(C) a ratio of cash flow divided by total
liabilities greater than 0.15; and
(D) a ratio of total liabilities divided by
net worth less than 1.5.
(3) To demonstrate that the owner or operator
meets the test, it must submit the following items to the executive director:
(A) a letter signed by the owner's or
operator's chief financial officer and worded identically to the wording
specified in §
37.9025(a) of
this title (relating to Wording of Financial Assurance Mechanisms);
and
(B) a written guarantee,
hereafter referred to as "self-guarantee," signed by an authorized
representative which meets the requirements specified in §
37.261 of this title (relating to
Corporate Guarantee). The wording of the self-guarantee shall be acceptable to
the executive director and must include the following:
(i) the owner or operator will fund and carry
out the required closure or post closure activities, or upon issuance of an
order by the executive director, the owner or operator will set up and fund a
trust, as specified in §
37.201 of this title in the name
of the owner or operator, in the amount of the current cost estimates;
and
(ii) if, at any time, the
owner's or operator's most recent bond issuance ceases to be rated in any
category of "A" or above by either Standard and Poor's or Moody's, the owner or
operator will provide notice in writing of such fact to the executive director
within 20 days after publication of the change by the rating service. If the
owner's or operator's most recent bond issuance ceases to be rated in any
category of "A" or above by both Standard and Poor's and Moody's, the owner or
operator no longer meets the requirements of paragraph (1) of this
subsection.
(h) This subsection only applies to owners or
operators required to provide financial assurance under Chapter 336, Subchapter
M of this title. A parent company controlling a majority of the voting stock of
the owner or operator may satisfy the requirements of financial assurance by
demonstrating that it passes a financial test as specified in §
37.251 of this title, and by
meeting the requirements of a corporate guarantee as specified in §
37.261 of this title. The
guarantor shall also comply with the requirements identified in this
subsection.
(1) The wording of the corporate
guarantee as specified in §
37.361 of this title (relating to
Corporate Guarantee) shall also include:
(A)
the signatures of two officers of the owner or operator and two officers of the
guarantor who are authorized to bind the respective entities; and
(2) The guarantor shall also certify and
submit to the executive director that the guarantor has:
(A) majority control of the owner or
operator;
(B) full authority under
the laws of the state under which it is incorporated and its articles of
incorporation and bylaws to enter into this corporate guarantee;
(C) full approval from its board of directors
to enter into this corporate guarantee; and
(D) authorization of each
signatory.
(i) A parent company guarantee may not be
used in combination with other financial assurance mechanisms to satisfy the
requirements of this subchapter. A financial test by the owner or operator may
not be used in combination with any other financial assurance mechanisms to
satisfy the requirements of this subchapter or in any situation where the owner
or operator has a parent company holding majority control of the voting stock
of the company.
