Subchapter G. FINANCIAL ASSURANCES
AND LIABILITY
Sec.
236.601. Scope.
236.602. Applicant qualifications and assurance.
236.603. Assurance for onsite cleanup during operation.
236.604. Assurance for liability during operation.
236.605. Funding for site closure and decommissioning.
236.606. Assurance for long term care.
236.607. Assurance for liability following site closure.
Cross References This subchapter cited in 25 Pa. Code § 236.211 (relating to financial information); and 25 Pa. Code § 236.225 (relating to requirements for issuance of a license).
§ 236.601. Scope.
The applicant is required to demonstrate, prior to receipt of a license, that funds are available to cover costs for all phases of the facility life. The applicant is provided with several examples of financial or surety arrangements that are acceptable for demonstrating that the necessary funds are available.
§ 236.602. Applicant qualifications and assurance.
Prior to the issuance of a license the applicant shall show to the satisfaction of the Department that the applicant has or can reasonably expect to have necessary funds to cover the estimated costs of conducting licensed activities over the planned operating life of the project, including costs for construction, operation, closure, postclosure monitoring and emergencies related to the disposal facility.
§ 236.603. Assurance for onsite cleanup during operation.
(a) Prior to receipt of a license, and annually thereafter, the applicant shall provide assurances to the satisfaction of the Department that sufficient funds are available to cover emergency actions necessary to prevent the unpermitted release of radioactive material to the general environment. See § § 236.13 and 236.15 (relating to protection of the general population and environment from releases of radioactivity; and protection of individuals during operations). In determining the cost of taking emergency actions, the applicant shall provide to the Department any information requested by the Department related to the management, transportation and disposal of low-level radioactivity waste.
(b) The Department will consider factors that may affect the cost of taking emergency actions. The factors include site and waste characteristics, facility design and operating procedures. Based on consideration of the factors, the Department will determine an amount necessary for compliance with the financial assurance requirements of this section. Its determination will include consideration of costs incurred if an independent contractor were hired to perform the work.
(c) Compliance with the financial assurance requirements of this section does not affect the licensee’s duty to take emergency actions or have available funds that may be necessary to enable the licensee to take required emergency actions.
(d) Subject to the approval of the Department, the applicant may use financial assurance, insurance or surety arrangements or a combination of arrangements to meet the financial assurance requirements of this section.
§ 236.604. Assurance for liability during operation.
(a) Prior to accepting waste, the licensee shall have in effect insurance or other financial assurance approved by the Department to compensate persons for bodily injury or property damage from sudden or nonsudden incidents arising from the operation of the facility.
(b) In approving the licensee’s insurance or other financial assurance, the Department will consider factors that may affect the licensee’s potential exposure to liability. The factors include site and waste characteristics, facility design, operating procedures, population within 3 miles of the facility and industrial, commercial or other economic activity within 3 miles of the site.
(c) In approving the licensee’s insurance or other financial assurance the Department will consider the licensee’s potential exposure to liability as a result of claims for bodily injury or property damage brought against the licensee; and the licensee’s duty to defend and indemnify the Commonwealth, the host municipality, the host county and their agents and employes against claims, actions, demands, liabilities and losses at law and equity.
(d) Based on consideration of the factors described in subsections (b) and (c), the Department will determine an amount initially sufficient for providing liability coverage in compliance with this section. The amount determined may not be less than the capital cost of bidding for, siting, acquiring, licensing, planning, developing and constructing the facility.
(e) After commencement of operation, the licensee shall annually provide to the Department information the Department deems necessary for its consideration in determining additional amounts of liability coverage necessary to meet the requirements of the act and this chapter. In determining the additional amounts of liability coverage required, the Department will consider the factors identified in subsections (b) and (c).
(f) The determination and approval by the Department of amounts or types of financial assurance under this section does not affect the licensee’s liability or the duty of the licensee to have available funds that may be necessary to satisfy the liability.
(g) Subject to the approval of the Department, the licensee may use an insurance, financial or surety arrangement or combination of arrangements to provide the assurances required by this section. The licensee may provide evidence of commercial insurance, alone or in combination with other acceptable financial or surety arrangements, to satisfy the requirements of this section.
(h) Evidence of commercial insurance shall include the insurer’s policy, including endorsements thereto, evidencing the liability insurance coverage it intends to issue covering the facility for third party claims for bodily injury and property damage caused by sudden incidents or nonsudden incidents arising from the operation of the facility.
(i) A commercial insurance policy offered to comply with the requirement for compensation of third parties for bodily injury and property damage caused by sudden or nonsudden incidents arising from the operation of the facility shall contain the following provisions:
(1) Bankruptcy or insolvency of the insured does not relieve the insurer of its obligations under the policy.
(2) The insurer is liable for the payment of any amount within a deductible which may apply to the policy, with a right of reimbursement by the insured or, in the alternative, the insurer includes, within the policy, a provision to pay on behalf of the insured a deductible amount.
(3) The beginning and ending dates, including tail periods, for the policy.
(4) The insurer will give at least 90 days notice to the Department and the insured before cancellation, termination or expiration of the policy, if upon expiration, the policy will not be renewed.
(5) The policy may not be cancelled by anyone before the expiration of the 90-day notice period.
(j) The insurance policy shall be issued by a primary insurer or coinsurers licensed or authorized to do business in this Commonwealth or designated by the Insurance Commissioner as an eligible surplus lines insurer. The primary insurer may reinsure the insurance policy with secondary insurers—reinsurers—who are licensed or authorized to do business in Canada, West Germany, Switzerland, France, or a state of the United States.
(k) The primary insurer may be a commercial insurer, a captive insurer—subject to subsection (j)—or a risk retention group as defined in the Product Liability Risk Retention Act of 1981 (15 U.S.C.A. § § 3901—3906) as amended by the Liability Risk Retention Act of 1986 (15 U.S.C.A. § § 3901—3903).
(l) The policy shall provide that the insurer will adhere to the insurance law of the Commonwealth regarding settlement of claims and will be bound by the Unfair Insurance Practices Act (40 P. S. § § 1171.1—1171.15).
(m) The insurance policy shall follow the comprehensive general liability policy forms approved by the Insurance Department and shall include coverage for environmental impairment liability.
§ 236.605. Funding for site closure and decommissioning.
(a) The applicant shall provide assurances prior to the receipt of a license that sufficient funds are available to carry out disposal site closure and decommissioning, including decontamination or dismantlement of structures. The applicant shall also provide assurances regarding closure and stabilization of the disposal site so that following transfer of the disposal site to this Commonwealth, the need for ongoing active maintenance is eliminated to the extent practicable and only minor custodial care, surveillance and monitoring are required. These assurances shall be based on cost estimates submitted by the applicant and which reflect the Department approved plan for disposal site closure and decommissioning. The applicant’s cost estimates shall take into account the total costs that would be incurred if an independent contractor were hired to perform the closure and decommissioning work.
(b) The licensee’s financial or surety arrangement shall be submitted as part of the application, and annually thereafter, for review by the Department to assure that sufficient funds will be available for completion of the closure and decommissioning plan.
(c) The amount of the licensee’s financial or surety arrangement shall change in accordance with changes in the predicted costs of closure and decommissioning. Factors affecting closure and decommissioning cost estimates include inflation, increases in the amount of disturbed land, changes in engineering plans, closure and stabilization that has already been accomplished, and other conditions affecting costs. The financial or surety arrangement shall be sufficient to cover the costs of closure and decommissioning of the disposal units that are expected to be used before the next 5 year review period.
(d) The surety arrangement shall be written for a specified period of time, shall name the Department as the obligee and shall be automatically renewable unless the surety notifies the Department, and the principal—the licensee—at least 90 days prior to the renewal date, of its intention not to renew. In this situation, the licensee shall submit a replacement surety within 30 days after notification of cancellation. If the licensee fails to provide a replacement surety acceptable to the Department within 30 days before the cancellation becomes effective, the failure constitutes grounds for forfeiture of the surety.
(e) Surety bonds will only be acceptable if issued by a surety authorized to do business in this Commonwealth. If the principal place of business of a surety is outside of this Commonwealth the surety bond shall be signed by an authorized Commonwealth resident agent of the surety.
(f) Proof of the licensee’s failure to replace the surety is not necessary for the Department to exercise its right of default. The right of the Department to declare a default because of the licensee’s failure to replace the surety shall be a condition of the obligation.
(g) Financial or surety arrangements generally acceptable to the Department include surety bonds, cash deposits, certificates of deposit, government securities rated at least BBB by Standard and Poor or Baa by Moody’s Investor Services, trust accounts, irrevocable stand-by letters of credit, trust funds and combinations thereof or other types of arrangements that may be approved by the Department. Self-insurance, or an arrangement which essentially constitutes self-insurance, does not satisfy the financial or surety requirements as they apply to private-sector applicants.
(h) The licensee’s financial or surety arrangement shall remain in effect until the closure and decommissioning program has been completed and approved by the Department, and the license has been transferred to the Commonwealth Custodial Agency.
§ 236.606. Assurance for long term care.
Prior to the issuance of the license, the applicant shall provide for the approval of the Department, an agreement between the applicant and the Commonwealth that binds the applicant to ensuring that funds will be collected by the applicant and transferred to the Commonwealth for the purpose of covering the costs of monitoring and required remedial action during the long term care period. The Department will review on an annual basis, funds collected by the operator and paid to the Commonwealth to ensure sufficient funds will be available to provide for long term care.
§ 236.607. Assurance for liability following site closure.
(a) Upon receipt of a license the operator shall collect and transfer to the Commonwealth, at least monthly, funds for paying liability claims against the site operator, Commonwealth, host municipality and host county.
(b) The Department will assure that surcharges levied for deposit into the Protection Fund are adequate to establish a fund of at least $100 million indexed to increase with cost of living adjustments, upon the date of termination of the operator’s license.
(c) The Protection Fund shall be used to pay liability claims, including personal injury or property damage, as follows:
(1) Against the Commonwealth, host municipality and host county arising from their responsibilities under the act.
(2) Against the regional facility licensee after the termination of the license and which arose from the operation of the regional facility during the term of the license.
(d) The Department will review the Protection Fund annually to ensure sufficient funds will be available to meet the requirements of subsection (a).
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