IA-88-514, Draft Technical Position on Financial Assurances for Reclamation,Stabilization,Decontamination & Long-Term Surveillance & Control of U Recovery Facilities: Difference between revisions

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#REDIRECT [[IA-88-514, Forwards Summary of 870224 Meeting on Large Irradiators. Provides Guidance on Licensing of Large Irradiators & as Supplementary Ref Document to Std Review Plan for Applications for Licenses for Use of Different Irradiators]]
| number = ML20150E005
| issue date = 06/30/1988
| title = Draft Technical Position on Financial Assurances for Reclamation,Stabilization,Decontamination & Long-Term Surveillance & Control of U Recovery Facilities
| author name =
| author affiliation = NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS)
| addressee name =
| addressee affiliation =
| docket =
| license number =
| contact person =
| case reference number = FOIA-88-514
| document report number = NUDOCS 8807140281
| package number = ML20150E008
| document type = NRC TECHNICAL REPORT, TEXT-SAFETY REPORT
| page count = 78
}}
 
=Text=
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: u. k TECHNICAL POSITION ON FINANCIAL ASSURANCES FOR RECLAMATION, STABILIZATION, DECONTAMINATION AND LONG-TERM SURVEILLANCE AND CONTROL OF URANIUM RECOVERY r'ACILITIES Division of Low-Level Waste Management and Decomissioning U.S. Nuclear Regulatory Comission June, 1988 l
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                                      .                                                                                  t ABSTRACT This technical position provides guidance to uranium recovery facility licensees and license applicants in est&bitshir.g and maintaining financial assurance for the decommissioning and decontamination, ecclamation, and long-term surveillance and control of the site.
The U.S. Nuclear Regulatory Comm;ission (NRC) staff views this document as a regulatory tool for applicants, licensees, and NRC staff in implementing Title 10, Code of Federal Regulations (CFR) Part 40, Criteria 9 anc 10 of Appendix A, entitled "Criteria Relating to the Operation of Uranium Mills and the Disposition of Tailings or Wastes Produced by the Extraction or Concentration of Source Material From Ores Processed Primarily for Their $ource Material Content".
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TABLE OF CONTENTS
                                                                                                              ?" .E ABSTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . . .        1 i
l ACKNOWLEDGEMENTS. . . . . . . . . . . . . . . . . . . . . . . .      iv
 
==1.0 INTRODUCTION==
. . . . . . . . . . . . . . . . . . . . . . . . . .          1 1.1 Organization o' this Document. . . . . . . . . . . . . . .          I 1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . .          1 1.3 Regulatory Basis for Technical Position. . . . . . . . . .        2 2.0 GENERIC FINANCIAL RESPONSIBILITY GUIDELINES . . . . . . . . . .          4 2.1 Submissions and form Guidelines. . . . . . . . . . . . . .          4 2.2 Legal, Beneficiary, and Signature Guidelines . . . . . . .          5 2.3 Cost and Coverage Guidelines . . . . . . . . . . . . . . .          6 2.4 Terms, Cancellation, and Collection C,uidelines . . . . . .        7 2.5 Adjustments, Changes, and Release Guidelines . . . . . . .          8 3.0 SPECIFIC FINANCIAL ASSURANCES . . . . . . . . . . . . . . . . .          9 3.1  Surety Bends . . . . . . . . .      . . . . . . . . . . . . . . 9 3.2  Irrevocable Standby Letters of      Credit. . . . . . . . . . . 10
:                                        3.3  Parent Company Guarantees. . .      . . . . . . . . . . . . . . 12 3.4 Assets Held By a Third Party .      . . . . . . . . . . . . . . 16 3.5 Trusts . . . . . . . . . . . .      . . . . . . . . . . . . . . 16 3.6 Standby Trust. . . . . . . . .      . . . . . . . . . . . . . . 19 3.7 Other Financial Assurances . . . . . . . . . . . . . . . .      20 4.0 DETERMINING SITE SPECIFIC RECLAMATION AND STABILIZATION i                                        COST ESTIMATES. . . . . . . . . . . . . . . . . . . . . . . . .      20
,                                        4.1 Detailea Cost Information Breakdown for Mills and In-Situ Facilities . . . . . . . . . . . . . . . . . . . . 20 4.1.1      Facility Der;omissioning . . . . . . . . . . . . 20 4.1.2      Ground-Water Restoration and Well Plugging . . . 22 4.1.3      Interim Sthbilization of Tailings During the Orying Out Phase . . . . . . . . . . . . . . 23
,                                              4.1.4      Tailings 4mpoundment Area Reclamation. . . . . . 23 l
4.1.5      Radiologfcal Survey and Environmental Monitoring . . . . . . . . . . . . . . . . . . . 24 4.1.6      Project Management Costs and Miscellaneous . . . 25 j                                              4.1.7      Labor and Equipment Overhead, Contractor Profit. 25 i
4.1.8      Long-T2rm Surveillance and Control (for Mills Only) j                                                        Criterion 10 Specifies a Minimum of $250,000 in 1978 Dollars ($407,960 % December 1986 Dollars). 25 l                                            4.1.9      Contingency . . . . . . . . . . . . . . . . . . . 26 4.1.10    Adjustments to Surety Amounts . . . . . . . . . . 26 11
 
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    .        9 CONTENTS (cont'd)
Appendices A Recommended Wording for Performance and Financial Guarantee Bonds. . A-1 B Recorrenended Wording for Irrevocable Standby Letters of Credit. . . . B-1 C Recommended Wording for Parent Company Guarantees. . . . . . . . . . C-1 D Recommended Wording for Trusts . . . . . . . . . . . . . . . . . . . D-1 E Recommended Wording for Standby Trusts . . . . . . . . . . . . . . . E-1 i
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ACKNOWLEDGEMENTS i
The overall responsibility for the development of this                                                  nical position was assigned to Mary Jo S'eeman, Financial Program Manage , egulatory Branch, Division of Low-Level Waste. Management. However .a:iy individuals throughout the NRC contributed their expertise during it                                              reparation. Among those individuals who made major contributions                                            er as authors, policy reviewers, legal experts, peer reviewers, or'-(di                                        s for this document were:
Dennis So11enberger, LLWM/
Howard Rose, Uranium R                                        ery Field      ice Harry Pettengill, U                    ium Recovery Fiel                          fice                                                '
Darrel A. Nash,) B Robert Wood PTSB John Ken            , GPA/SLITP Linda          1bert, Office of General Counsel L          a Embrey, LLWM/RB i
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==1.0 INTRODUCTION==
 
1.1 Organization of This ?ocument This technical position is organized to allow applicants / licensees easy access to their respective information needs, depending on the type of financial assurance to be utilized. Chapter 1.0 is an introduction defining the purpose and regulatory basis of this technical position.
Chapter 2.0 provides generic financial assurance guidelines applicable to any financial mechanism being proposed. Items discussed include timing of submissions / format, legal / signature authority, amount of coverage, maintenance of costs, cancellation, and termination.
Chapter 3.0 presents various financial assurance mechanisms which the NRC views as acceptable. Each mechanism is presented as a section delineating terms, conditions, or guidance which are instrument-specific. Each section contains a definition, identifies roles of parties, and establishes specific guidelines for each instrnent.
The Appendices are recomended wording / language for the instruments discussed in Chapter 3.0.      This recomended wording / language incorporates the generic and instrument-specific guidance provided in Chapters 2.0 and 3.0.
Even though this document provides general guidance, it does not lessen the responsibility of the applicant / licensee to ensure that the terms and conditions of the financial instrument are clearly stated and support the regulatory requirements of 10 CFR 40, Appendix A.
1.2 Purpose This technical position provides guidance to uranium recovery facility licensees and license applicants in establishing and maintoining financial assurance for the decomissioning ano decontamination, reclamation, and i
long-term surveillance and control of the site. The U.S. Nuclear Pegulatory Comissirn (NRC) views this document as a regulatory tool for applicants, licensees, and NRC staff in implementing 10 CFR Part 40, Criteria 9 and 10 of Appendix A, entitled "Criteria Relating to the Operation of Uranium Hills and the Disposition of Tailings or Wastes Produced by the Extraction or Concentration of Source Material From Ores Processed Primarily for Their Source Material Content".
This technical position has three primary purposes:
* identifying suggestea financial assurance methods and instruments (as discussed in Criteria 9 and 10) for the decomissioning and i
decontamination of the mill and site, reclamation of any tailings or waste disposal areas and for the site's long-term surveillance and control; l                      '
promoting standardized language for the financial assurance instruments l                              so that administrative burden and cost may be reduced; and, l
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* establishing a uniform method of determining cos't estimates for decomissioning / reclamation to serve as the basis for obtaining financial assurance, so that in the event of licensee inability to pay or default, sufficient funds will be available to complete site reclamation.
This technical position will assist licensees in understanding and fulfilling the financial assurance and other regulatory requirements applicable to their
                                  ' operation. This guidance will aise benefit licensees by enabling them to
                                ' provide more detail to the financial comunity regarding various acceptable NRC financial instruments.
This techn. cal position presents acceptable methods for demonstrating compliance with the regulations. Other methods, solutions, and financial assurances may be proposed and submitted to NRC.
This technical position closely follows the intent and scope of the U.S.
Environmental Protection Agency's (EPA) document entitled, "Financial Assurance for Closure and Post-Closure Care: Requirements for Owners and Operators of Hazardous Waste Treatment, Storage and Disposal Facilities. A Guidance Manual" (May 1982, PB82-237595). Additionally, portions of the NRC technical position entitled "Funding Arrangements for Closure, Postclosure, and Long Term Care of a Low-level Waste Disposal Facility", were also utilized (June 1982).
1.3 Regulatory Basis for Technical Position Criterion 9 of Appendix A of 10 CFR Part 40 contains financial criteria for uranium mill operators. It states that financial surety arrangements must be established by each mill operator prior to the comencement of operations to assure that sufficient funds will be available to carry out the decomissioning and decontamination of the mill and site and for the reclamation of any tailings or waste disposal areas.
The amount of funds to be assured by such arrangements are to be based on Comission-approved cost estimates in a Comission-approved plan for (1) decomissioning and decontamination of the mill buildings and the milling site to levels which allow unrestricted use of these areas upon decomissioning and (2) the reclamation of tailings and/or waste disposal areas in accordance with technical criteria as delir.aated in Section I of Appendix A. The licensee shall submit this plan in conjunction with an environmental report that addresses the expected environmental impacts of the milling operation, decomissioning, and tailings reclamation, and evaluates alternatives for mitigating these impacts. The surety must also cover the payment of the charge for long-term surveillance and control required by Criterion 10 of Appendix A.
In establishing specific financial arrangements the licensee's cost estimates shall take into account total costs that would be incurred if an independent contractor were hired to perform the decomissioning and reclamation work. In order to avoid unnecessary duplication and expense, the Comission may accept financial sureties that have been consolidated with financial or surity arrangements established to meet requirements of other Federtl or State agencies and/or local governing bodies for such decomissioning, decontamination, reclamation, and long-term site surveillance and control, 2
 
provided such arrangements are considered adequate to satisfy these requirements and that the portion of the surety which covers the decomissioning and reclamation of the mill, mill tailings site and associated areas, and the long-term funding charge is claarly identified ano ccmitted for use in accomplishing these activities.
The regulations further specify that the licensee's surety mechanism will be reviewed annually by the Comission to assure that sufficient funds would be available for completion of the reclamation plan if the work had to be performed by an independent contractor. The amount of financial responsibility should be adjusted to recognize any increases or decreases resulting from inflation, changes in engineering plans, activities performed, and any other conditions affecting costs. Regardless of whether reclamation is phased through the life of the operation or takes place at the end of operations, an appropriate portion of surety liability shall be retained until final compliance with the reclamation plan is determined. This will yield a surety that is sufficient at all times to cover all the costs of decommissioning and reclamation of the areas that are expected to be disturbed before the next license renewal. Criterion 9 states that the surety must also cover the payment of Criterion    10.the charge 10 Criterion  for stipulates long-term that surveillance and charge a minimum    control of required by (1978
                                                                                          $250,000 dollars) to cover the costs of long-term surveillance must be paid by each mill operator to the general treasury of the United States or to an appropriate State agency prior to the termination of a uranium or thorium mill license.
Other conditions are established in Criterion 10 regarding the total charge to cover the costs of long-term surveillance and control.
The term of the financial assurance must be open endeo, unless it can be ceronstrated that another arrangerent would provide an equivalent level of assurance. This assurance couW be provided with a financial instrument which is written for a specified perioo of time (e.g. 5 years), yet which must be renewed unless the financial assurance provider notifies the automatically beneficiary      (the  Comission or State regulatory agency) and the principal (the licensee) some reasonable time (90 days) prior to the renewal date of its intention not to renew. In such a sitn tion, the financial assurance requirement still exists and the licensee would be required to submit an l                acceptable replacement surety within 30 days to allow the regulatory agency at
{                  1 east 60 days to collect.
Proof of forfeiture must not be necessary to collect the surety so that in the l
event that the licensee cculd not provide an acceptable replacement surety within the required time, the surety shall be automatically collected prior to its expiration. The conditions described above shall be clearly stated on any financial assurance instrument which is not open-ended, and must be agreed to by all parties.
Financial responsibility arrangements for uranium mills that are generally acceptable to the ; omission staff include:
!                  of (a) government Surety bonds; (b) securities;      (e) posits; cash de irrevocable    letters(c)  certificates or lines            of deposit; of credit; and (f)      (d) l combinations of the above or such other types of arrangements as may be approved by the Comission.
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However, self-insurance or of arrangement which essentially constitutes self-insurance (e.g., a contract with a state or federal agency) will oct satisfy the financial assurance requirements, since this provides no additional protection other than that which already exists through license requirements.
2.0 GEffERIC FINANCIAL RESPONSIBILITY GUIDELINES Chapter 2.0 provides generic guidance applicable to all financial assurance instruments being proposed by uranium recovtry facility licensees and license ap)1icants. The guidance contained in this chapter is not meant to be exiaustive; however, the NRC finds these conditions acceptable for a financial instrumtnt and anticipates that they would be used to evaluate financial assurances proposed by applicants / licensees. Meeting these generic guidelines should facilitate the review of applicants'/ licensees' submissions under 10 CFR 40 Appendix A, Criteria 9 and 10.
If an applicant / licensee proposes alternate financial assurance ;nechanisms or language other than that recomended in Appendices A-E of this document, the applicant / licensee must allow for the additional time NRC will require to review them.        Therefore, the ap)11 cant / licensee should submit to NRC all      ,
documentation at dates earlier t1an those suggested in this document.
When an applicant /'.icensee submits a new financial assurance instrunent or a revision other than a periodic update to the NRC, such submissions will be deemed to constitute a request for license amendment and should thus be accompanied by the NRC's $150.00 applisation fee.
2.1 Submissions and Form Guidelines i
The financial instrument should be submitted directly to the U.S. Nuclear i                    Regulatory Comission, Director, Uranium Recovery Field Office, 730 Sims Street, Suite 100A, Golden, Colorado 80401.
An applicant must submit the financial instrument to the state or federal government authority prior to the comencement of operations at the Jranium recovery f acility(ies). The NRC staff recomends that the i
financial instrument be submitted 120 days prior to planned start of processing.
I                      The financial instruments should clearly state the regulatory authority for their establishment. Each instrument should contain a statement as follows:
* This financial instrument is being established to carry out the activities as defined under Title 10, Chapter I of the Code of Federal Regulations (CFR) Part 40 Appendix A. These regulations were established to implement the Atomic Energy Act of 1954, as amended, Title II of the Energy Reorganization Act of 1974, and Title !! of the Uranium Hill Tailings Radiation Control Act of 1978.
The financial instrument should clearly state that it is issued pursuant l                      to the obligations of the Comission-approved plan for the decontamination and decomissioning of the mill and site and for the reclamation of any l
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tailings or waste disposal areas (hereafter referred to as the "Reclamation and Stabilization Plan").
The financial instrument should be organized to allow the NRC (not less than annually) to review the adequacy of the coverage accounting for variations in the a> proved reclamation and stabilization plans, in inflation,andintieoperationsofthefacility(ies).
The financial instrument's form should allow the NRC licensing staff to determine that it is properly signed and notarized, that it covers estimated costs for the facility (ies), and is effective for the proper period.
Each instrument should clearly identify the NRC license number, the type of instrument being used, the amount covered by each instrument, the effective date of each instrument, and the period of coverage.
All financial instruments, the original and any additions or replacements, should describe and pertain to the licensed facility (ies) covered under the existing license.
2.2 Legal, Beneficiary and Signature Guidelines Qualifications and authority of the issuer to issue and execute the financial instrument should appear in the instrument. Certification of legal authority must be provided to NRC. For sureties, the issuer should cortify listing in Circular 570 of the U.S. Department of Treasary, and that the surety is licensed in the State where the instrument is issuad.
For letters of credit, the bank providing the letter of credit should certify that it is regulated and examined in the State where the facility is located.
* The instrument should specify that the financial issuer's liability is joint and several.
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'              The    firm name proprietorship  of and the legal status ((i.e., corporation, partnership, or solelicens of a parent guarantee)principalshculo appear on the financial instrument.
* The instrument's named beneficiary should specify the NRC or other governmental acency acceptable to the NRC, such as a State regulatory agency.
* If the instrument's beneficiary is a State regulatory agency, the licensee must submit to the NRC written verification of the State's agreement to use assured funds to carry out the activitics required by the NRC approved
(              Reclamation and Stabilization Plan for the facility covered by the instrument.
* All signatories must be legally bound t" the instrument. The applicant / licensee should ensure that parties signing the various documents are legally authorized to act as representatives for the firm in these tranractions.
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                                              -    Corporations -- Two corporate officers preferably the reesident and vice president should sign the instrument and should designate their legal capacity.
The legal authority of the corporate signatories should be described and substantiated by an attached copy of a resolution of the shareholders or board of directors or other certified evidence.
The corporate seal must be affixed.                                      ,
                                              -    Partnership -- At least one partner should sign the financial instrument.
                                              -    Limited Partnership -- The general partner or a party authorized to sign for the general partner must sign. (The limited partners are prohibited from participating in the management and control of the p(artnership    by the 1976), which has  beenUniform adopted Limited  Partnership)Act, Revised i 303 by most states.
                                              -    Jointly Owned -- (not a partnership) All owners enust sign the financial instrument.
                                              -    Power of Attorney -- If applicable, the attorney-in-fact acting on behalf of the issuer should sign the financial instrument.
If an attorney-in-fact signs the financial instrutnent, a copy of a properly executed power of attorney in favor of the attorney-in-fact should be attached.
                                              -    Resident Agent -If applicable, the instrutnent should include the signature of the qualified resident agent of the financial organization issuing the instrument, who should be certified to do business in the State where the facility (ies) is located.
Certification should be documented and provided to NRC.
* Each party should sign his or her o'n name.
2.3 Cost and Coverage Guidelines The financial instrument should be adjustable so that the covered amount is sufficient at all times to cover any cost changes due to inflation or modifications stabilization andin the work plans long-term  carefor the uranium of the decomissioning, recoveryreclamation,).
facility (ies The amount of the financial instrument, whether provided by a single instrument or a combination of instruments, must equal to or be greater than the current cost estimates found in the current approved Reclamation and Stabilization Plan (including tailings reclamation, decomissioning, groundwater restoration, and long-term care). Additionally, the amount of the financial instrument should reflect total costs incurred if an independent contractor were hired to perform the required activities.
The arount of coverage may be larger than the actual cost estimate because of projected inflation costs.
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The financial instrument should provide coverage throughout the term of the license.
Multiple financial instruments are acceptable, with the exception of parent company guarantees, which may not be used in comtination with other financial methods. If multiple financial instruments are used for a single facility, the combined coverage should be equal to or greater than the cost estimates for the facility identified in the current version of the NRC approved Reclimation and Stabilization Plan.
A financial instrument may be used for 4 principal (licensee) having
;                                        multiple licensed facilities. In addition to other stated guidance, this single instrument must identify by each facility the an.ount of coverage, the type of facility, the NRC license number, and location of the activities.
2.4 Terms, Cancellation, and Collection Guidelines                      ,
The instrument should state the terms and conditions under which the licensee may cancel the instrument and should require that the licensee notify the NRC, the appropriate State or Federal agency and receive approval prior to cancellation.
  '                                      The term of the financial instrument should be open-ended or, if written i                                      for a specified term, the instrument must provide that it be renewed eutematically unless, 90 days or more days prior to the renewal or expi-ration date, the issuer notifies the Comission, the beneficiary, and the licensee of its intention not tu renew.
The financial instrument cannot be cancelled during the 90-day notifi-cation period. The 90-day notification seriod begins with the receipt date of the notice by the licensee and tie NRC (and the State, if applicable) as evidenced by the return receipts, i
The licensee is responsible for obtaining another financial instrument j                                      within 30 days of receipt of intent to cancel if the financial institution or corporate guarantor gives notice that it intends to cancel.
An issuer of a financial instrument should notify the licensee and the NRC i'                                      (also the State, if applicable), by certified mail of its intent to cancel the financial instrum nt. Notification to all parties of no less than 90 days of intent must be received.
If the owner or operating responsibility for an uranium recovery faci-lity(ies) is transferred, the NRC will not allow the existing financial
;                                        instrument to be terminated until the new licensec has obtained an instrument acceptable to NRC for the licensed uranium recovery f                                      f acility(ies).
The instrument must provide that the beneficiary may automatically collect l
the 4.ssured amount prior to the date of expiration without proof of l
cefault or forfeiture so that if the licensee fails to provide an alternative acceptable to the NRC wi' '      30 days of receipt of the i
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notification of cancellation, the funds are automatically collected before expiration.
A licensee should imediately obtain replacetaent financial assurance coverage in the event of bankruptcy of the organization acting as trustee, or the issuer of the financial instrument.
* Each licensee should com 40,640.41 Paragraph (f)whichply with  the terms became          and effective  conditions February    of 10 CFR Part 8,1987(52 Federal Re ister dated January 12,1987) regarding bankruptcy notification.
140.41(    s ates that each licensee shall notify the appropriate NRC Regional Administrator, in writing, insnediately following the filing of a voluntary or involuntary petition for bankruptcy.
If the financial instrument is a letter of credit or bond, it should be accompanied by a standby trust to automatically receive assets in the event of licensee bankruptcy or default.
2.5 Adjustments, Changes, and Release Guidelines Annual updates of financial instruments are necessary even if cost estintes are sufficient to cover another year's inflation and no other changes have taken place.
Financial instruments should be adjusted for inflation either by recalculating the cost estimate in current dollars or by using the inflation factor derived from the Consumer Price Index published by the U.S. Department of Labor, Eureau of Labor Statistics. The adjustment should be made within 30 days of the anniversary of the license expiration date.
If the current cost estimates exceed the coverage of the existing financial assurance mechanisms, additional coverage should be obtained and evidence of 16 submitted to NRC within 60 days af ter the cost estimate increase.
If, during the operating life of the uranium recovery facility, the cost estimate for closure, stabilization, and reclas tion decreases due to a change in operating plans or other factors, the licensee my apply to NRC for approval prior to cancellatior.
Licensees my change the type. of financial instrument in use with prior written approval frcm NRC. To obtain approval, the new assurance should comply with NRC's regulations for eligibility found in 10 CFR Part 40,
:                                                  Appendix A, Criteria 9 and 10. The new assurance, if approved, should become effective before or at the tire the existing assurance expires.
If a letter of credit or a surety bond will be a mechanism, the licensee should also establish a standby trust fund. Conditions for a standby trust when using letters of credit or surety bonds are discussed in Chapter 3.0.
The instrument should be established so that the uranium recovery licensee will have his financial assurance released by the NRC after the NRC has concurred that closure, stabilization, and reclamation of the uranium I                                                    recovery facility (ies) has been accomplished in corpliance with the i
l 8
l I
L
 
current aporoved Reclamation and Stabilization Plan and the license has been terminated.
Additionally, the licensee should show that the long-term care funds have been transfarred to the appropriate parties as identified in Criteria 10, Appendix A rf 10 CFR 40 at license termination. The NRC will send written notification to the licensee allowing termination of the financial assurance mechanisms and a return of any funds held (except for the long-termcarefunds).
3.0 FINANCIAL ASSURANCE OPTIONS This chaptef provides specific guidance to licensees on the types of financial as:,urances that the NRC has found to be acceptable. The discussion contained herein differs from Cha)ter 2.0 in that it more explicitly defines the requirements and terms of eac1 individual mechanism. Chapter 2.0 provides generic guidance applicable to all financial assurance options.
3.1 Sure.ty Bonds A surety bond is a contract that a licensee (sometimes called the PRINCIPAL) can enter into with a qualified surety company (sometir,es called the SURETY) and also a guarantee that responsibilities spelled out in the bond will be undertue. Two standard types of surety instruments are allowed, financipi guarantee bonds and performance bonds.        Recommended wording for each Instrument is found in Appendix A of this document, and it is recomended that          ;
both instruments submitted to the NRC be accompanied by a standby trust fund.            <
Standby trust funds are discussed in more detail in section 3.6.                        .
t Both types of sureties are intended to ensure that adequate funds will be rade          -
available by the surety, if the licensee fails to perform activities specified 4
)
in their NRC approved Reclamation and Stabilization Plan or fails to provide            ,
for the long-term surveillance fee.
The performance bund provides assurance that if the licensee fails to perform their activities as is required in the Reclamation and Stabilization Plan, then the surety corpany will either pay the amount covered by the bond into a
,                                                                                stanoby trust, or arrange and pay to have the responsibilities carried out. The l                                                                                financial guarantee bond stipulates that the surety will fund the standby trust i                                                                                fund in the amount guaranteed by the bond, if the licensee fails to perform the activities specified in their NRC approved Reclas.ation and Stabilization Plan, i                                                                                An acceptable bond for the purposes of this technical position should meet the following considerations, in addition to the general guidelines stated in chapter 2.0.
* It is recomended that liceneves wishing to use a surety bond should also establish a standby trust fund at the same time. Both the bond and standby trust agreement should be submitted as evidence of financial assurance.                                                                      ,
The surety bond should contain terms so that any funds drawn under this instrument should be placed directly into the standby trust fur.d by the institution making the payment. (In this regard, the Cc m ission is r
9
 
following the approach of EPA, who imposed this ' requirement after they found that without such a mechanism, any funds drawn under a surety bont which would be payable to the EPA would have to be paid into the U.S.
to                              t Treasury  andofcould closure care          not be used a hazardous                                                      waste            specifically(ies) facility      pay (31    for closure U.S.C.        and post-63302(b)).
j t                        Licensees wishing to use a suret.y bond should first enter into a contract I                        with a qualified surety. The NRL staff considers qualified sureties to be those listed in the most currently issued versinn of the U.S. Department of Treasury's Circular 570, which is "Surety Companies Acceptable en Federal Bonds".
Circular 570 is published approximately July 1 of each year, with periodical updates appearing in the Federal Register. Circular 570 specifies the amount of liability the surety can maintain at any point in 1                          time without reinsurance. Also this Circular 570 lists those States in which each qualified surety is licensed to enter into a surety bond. A surety bond used to meet the NRC financial assurance requirements should be signed in one of those States. The surety bond should certify that the surety ccmpany is listed in Circular 570 and has not exceeded its specified level of liability exposure, i
The wording for surety bonds should follow the sample in Appendix A of l                          this technical position. The penal sum of a surety bond must be in an Jmount equal to or greater than the cost estimates in the current Reclama-tion and Stabilization Plan, along with the cost estimates for long-term care which should be adjusted to current dollars. The licensee wishing to use this instrument should verify that the amount and the terms and conditions are satisfactory to the NRC during the licensing review.
l 3.2 Irrevocable Standby Letters of Credit i
l                    A letter of credit is another financial assurance satisfactory to the NRC. The
!                    recommended language shown in Appendix B is for an irrevocable standby documen-I                  tary type letter of credit. This type of letter of credit enables the NRC to l                    provide written documentation to the issuing institution stipulating the I                    deposit of funds in a standby trust when the licensee fails to perform j                    reclamation and stabilization activities, i
i                    A letter of credit is a binding arrangement by which the credit of one party, i                    the issuer, such as a bank, is extended on behalf of a second party called the l                    ACCOUNT PARTY, to a third party the BENEFICIARY. The licensee would be the                                                                                -
j                    ACCOUNT PARTY, and the NRC (or suitable state agency) woulo be the BENEFICIARY.
i F
,                  The terms for letters of creoits evolved from the Uniform Commercial Code and l                    the Uniform Customs and Practice of Documentary credits, published by the l                    International Chanber of Comerce. The first party, the ISSUER, allows the                                                                                .
l BENEFICIARY to draw funds upon the presentation of documents in accordance with the terms of the letter of credit.
The letter of credit mechanism allowed for NRC licensees for financial assurance is different in major ways from standard commercial versions; I
10 l--.      - - - . - - _ - -                                                          -__                                      __ - -
 
i            .
j
* The NRC version can only be cancelled with 90 da~ys advance notice by certified i                      mail to all parties before the current expiration date, and                                                                                                                                          l
                  '    If the licensee cannot provide an alternative financial assurance mechanism within 30 days of notifica"on of cancellation, the hRC will cause the letter i                        >f credit to be drawn upon for the necessary amount of closure and                                                                                                                                ;
1tabilization cost, and
* ihe liRC version must be extended automatically for at least one year if it is l                      tot cancelled.
  ;              The issuer offers this assurance in exchange for a fee paid by the licensee.
:                The 1 censee also undertakes to repay, with interest, any funds drawn through the lutter of credit, tiRC highly reconenends that the wording of the letter of credit closely follow the sample language shown in Appendix B, although the j                  terms of the credit arrangen,ent between the licensee and the issuer may depend on individual circumstances and negotiations.
Licensees should also establish a standby trust fund at the same time, if they                                                                                                                            :
>              wish to use a letter of credit, and if they do not wish to have the State as                                                                                                                                ,
!                  the named beneficiary. Under the terms of the letter of credit, any funds                                                                                                                                l l
orawn under this instrument are to be placed directly into the standby trust                                                                                                                              I 4
fund by the institution making the payment. In this regard, the Cormission is                                                                                                                              l j                  following the lead of EPA, who imposed this requirement after they found that i                without such a mechanisn, any funds drawn under a surety bond which would be
,                  payable to the EPA would have to be paid into the U.S. Treasury and could not                                                                                                                            l be used specificall                                                                                                                                                                                      1
'                waste facility (ies)y (31                                                                .
to payU.S.C.for closure 63302(b)) and post-closure care of a hazardous                                      l
!                  In addition to the criteria specified in Chapter 2.0, the following terms and conditions should be met by a licensee wishing to use a letter of credit.
;                  '    The issuing institution for the letter of credit should be an entity that
]
has the authority to issue a letter of credit, and whote letter of credit j                        operations are regulated and examined by a Federal or State agency. (All i
domestic commercial banks and some mutual savings banks, domestic branches                                                                                                                        <
'                        of foreign banks, credit unions, and savings and loan associations satisfy                                                                                                                        t
;                        this requirenent and should so certify.)                                                                                                                                                          (
2                                                                                                                                                                                                                          'I
* Letters of credit should conspicuously state that they are irrevocable letters of credit and that the bank's undertaking should be limited to the amount of
.                        the instrument.
* The bank's obligation to pay should arise only upon the presentation of a                                                                                                                          l draf t ur other document (s) as specified in the letter of credit, and the bank                                                                                                                    i must not be called upon to determine questions of fact or law at issue between                                                                                                                    ,
!,                      the account party and the beneficiary.                                                                                                                                                            t I
* Letters of credit should be effective and irrevocable for at all times they are
!                        in effect during the coverage period specified in the license. If the letter                                                                                                                      ;
of credit ends af ter a one year period, it should be automatically renewed                                                                                                                        [
unless the issuer notifies the NRC and the account party that is it cancelling                                                                                                                    l
!                        S0 days prior to cancellation.                                                                                                                                                                    ,
I
!                                                                                                                                                11                                                                        ,
i                                                                                                                                                                                                                          f' L      _ - - .
* The letter of credit should contain a definite time periud over which it is effective.
                                          #      The licensee should submit the letter of credit itself and a separate letter stating the amount of credit applicable to the licensed site. This letter must also include the letter of credit number, name of the insurer, date, license number, name and address of mill, and the amount of funds assured for closure, reclamation and long-term care of the site.
* The NRC or the State is the only party authorized to draw upon the letter of credit. if the licenset fulfills its obligations, the NRC will not draw upon the letter of credit.
                                          '    The letter of credit can be terminated by the licensee when (1) alternate financial assurance has been established by the licensee and approved by the NRC, or (2) when the license has been terminated by the NRC. The only permissible evidence of termination of the license is a written termination notice by the NRC.
3.3 >arent Company Guarantees The NRC financial assurance requirements for uranium recovery facilities may be satisfied by the use of a parent company guarantee, whereby the licensee's parent company or corporation passes one of the two specified financial tests as detailed in Appendix C and agrees to guarantee the performance of or payment for decorsnissioning, reclamation, stabilization, and long-term surveillance and control of the uranium recovery facility (ies).
A parent company guarantee acceptable to NR0 should state that the parent company has adequate resources to cover the cost of decommissioning, reclama-tion, stabilization, and long-term surveillance and control of the uranium recovery f acility(ies). The tests used to determine that adequate resources atterned after those developed by the U.S. Environmental are available are p(EPA) for sites permitted under the Resource Conservation and Protection Recovery ActAgency (RCRA ).
However, because the domestic uranium industry currently is not economically viable, because the risk of default consequently is higher, and because of added requirements for groundwater remediation, the NRC is reevaluating the continued use of parent company guarantees as an allowable financial assurance mechanism by Part 40 licensees. Until such time as the NRC corpletes its reevaluation, it has enhanced the assurance provided by the parent company guarantee in two ways. First, all licensee subsidiaries whose perforr.ance/ costs are being guaranteed by parent companies must show a positive tangible net worth. Second, the parent company providing the guarantee nust show a tangible net worth of at least $20 million rather than the $10 million previously required.
Use of this instrument requires the NRC to completely re-evaluate every parent company at least annually, even if there has been no change in decom-missioning, cost estimates  reclamation, for the uranium    stabilization,            recovery facility  and long-(term ies). surveillance and control 12
 
i                                                                                                                                                  i An acceptable parent company guarantee for the purposes of this technical          l position should have the following characteristics:
* The authorization and capacity of the parent company to enter into the guarantee should be certified and documentation included in the submission.
* The parent company guarantee should be signed by the parent firm's Board of Directors and by the firm's legal counsel who shall certify that the finn can legally engage in the guarantee, t
                                                              '      If the guarantor is a corporation, the authorizing documentation should      ,
include a Board of Directors' resolution or shareholders' vote or similar verification and aroof that the corporation can validly execute a guarantee under tie laws of the State of its incorporation, and its bylaws  .
and articles of incorporation.                                              [
i
* If the guarantor is a partnership, joint venture, syndicate, or other      j business entity, each party with a beneficial interest, direct or indirect, shoule sign the agreement.
l
* The parent company guarantee should specify that all bound parties shall    l i                                                                    be jointly and severally liable for all litigation costs incurred by the    !
beneficiary in any successf ul effort to enforce the agreement against the  t guarantor.
I
'                                                            '      If a registered agent for service of process is used, their name, address, i l                                                                    and telephone number should be listed in the parent company guarantee.      l 1
* To qualify for a parent corpany guarantee, the parent company should hold
;                                                                      at least 51 percent of the voting stock of the licensee's firm.
* The parent compan.y's financial statements should be audited by an independent certified public accountant and the accountant's certification ;
provided to NRC as shown in Appendix C. If the accountant gives an adverse opinion or a disclaimer of opinion of the financial statements, j
the parent company can not qualify for the financial test. Furthermore,    r' if the accountant gives a qualtfied opinion of the financial statements, the NRC may disallow the use of the financial test.
I
* The parent cospany guarantee's financial test requirements may be satisfied by meeting one of the two alternative sets of test criteria      l s>ecified in Appendix C. The tests have a nuster of points in cosenon, but i
t1ere are two important differences,                                      f r
i                                                              First, Alternative I requires the parent company guarantor to demonstrate        !
financial soundness by passing at least two o' three financial ratios, while      !
Alternative 11 requires the parent company gut tantor to demonstrate financial soundness with an invettment grade bond rating Second, Alternative I requires    !
i                                                                the parent cospany guarantor to have a large axunt of working capital relative  l
!                                                                to reclamation, deconenissioning and long-term surveillance and control cost    i estimates, while Alternative 11 has no such requirement. Both tests require      l f
the parent company to have a large amount of tangible net worth and U.S. assets relative to reclamation and closure estimates, and a minimum absolute level of  [
i 13                                    i i
 
1 .
tangible net worth ($20 million). Also, the licensee subsidiary whose per-formance/ cost is being guaranteed must show a positive tangible net worth.
* To use the parent company guarantee as a means of satisfying a licensee's      l financial requirements for reclaniation, decomissioning and long-term          i surveillance and control, the licensee should submit the folicwing              '
I                                      docurents on an annual basis to the NRC.
(a) Chief FQancial Officer's Letter including Cost                              ;
                                                ,Qtimates and Data from Audited Financial 5taterents i                                        The parent company should provide the 14RC with a letter signed by its chief fine.,c.ial officer. The wording should be equivalent to the wording in the exemp'e provided in Appendix C.
The chief financial officer of the parent company should certify in the
]                                         letter that the licensee meets the criteria of the financial test. The          ,
1                                        letter should also:
)                                        --    specify the facilities to be covered by the test, including NRC          ,
i                                              license number, name, address, and current decommissioning,              i reclamation, stabilization, and long term surveillance and control cost estimates to be covered by the test; J
                                          --    indicate the date on which the required documents will, if currently i                                              unavailable be submitted (within 90 days of the end of the fiscal i                                              year);
i 2                                        --    certify that the year-end financial statements of the firm will be audited by an independent certified public accountant.
l
                                          --    attest that the licensee (s) for which the guarantee is being made has a positive tangible net worth.
(b) Accountant's Opinion l                                        The licensee should submit to the NRC a copy of the inoependent certified i                                        public accountant's opinion of the parent company's year-end finan:ial statements and footnotes for the latest complete fiscal year. A SEC 10Q l
j                                        form is acceptable.        Additionally, the following SEC reports should be i
if applicable: SEC Fore 8-X and SEC 130. There is ro NRC submitted, suggested form or wording for this accountant's opinion.
]
(c) Auditor's Special Report i
i                                        The parent company should submit a special report from an independent certified public accountant to the NRC that contains the accountant's confirmation that the financial data contained in the letter from the l                                        chief financial officer can be derived from the independently audited year-end financial statements and footnotes for the latest complete fiscal year.      The auditor's special report shoulo also state that no matters l
care to the attention of the independent certified public accountant whict.
I                                        caused him to belioie that the infortnation in the c' lief financial 14 L
 
(        .
i 4
officer's letter should be adjusted. Appendix C contains a sample                  l
                                                                                                ~
at,ditor's special report.                                                          ,
(d) parent Company Guarantee                                                      i A licensee wishing to use the parent company guarantee st.ould also submit        i a written guarentee agreement to the NRC completed by the parent company, using language as specified in Appendix C. The parent company should submit annually, the guarantee agreement, the chief financial officer's letter complet6d by the parent company, and the accountant's opinion and          !
the auditor's special report completed by the independent certified public accountants hired by the parent company. The written guarantee states that the guarantor meets or exceads all the requirements of the financial test criteria, including the submittal of the accountant's opinion; the special report, and the letter from the chief financial officer. The written guarantee specifies that in the event the licensee fails to perform the required decomissionin i
recovery facility (ies)theng andthereclamation  activities parent company        at must guarantor  the uranium Jo so, or      J j            set up a standby trust fund for the arount of the cost estinates fu these i
activities.
* The licensee should submit revised information annually within 90 days of    ,
i the clots of the parent c ;:ny': fi:c;l year.      .t with the it.ititi    ;
i submittal, the revised information ihould consist of a letter from the chief financial offit.er, the accou5 tant's opinion, and the auditor's
!                special report from an independent certified public accountant. Except      i i                for the accountant's opinion, exa1ples of thew documents can be found in    <
;                Appendix C.                                                                >
* NRC staff n.ay deter-ine that a re port of financial conditions in addition l
)                  to the required annual reports it necessary, i
'                                                                                              l The NRC b raterials,ased on the parent company's financial reports or any othern      ;
meets the financial test criteria. If so, the licensee should provide      '
alternate financial assurance within 30 days after receiving nutification of this determination. The existing mechanism should not be terminated      i until the alternate mechanism is effective.                                (
l
* The parent company should corply with 540.41 paragraph (f) regarding        l l
bankruptcy notification. Also, if either the company holding the uranium    l 1                  recovery facility license or the parent coepany is sold or merged, the new  I parent company should meet all the criteria for the financial test or      j l                  provide alternate financial assurance, i
A parent company wishing ta, cancel its guarantee of financial assurance should notify the NRC and the licensee by certified mail of its intent to j
cancel. Actual cancellation is not allowed for 90 days from the receipt    (
date of the notice of canct'lation by both the licensee and the NRC as evidenced by the return receipts.
l, l            '
The parent guarantor t:ay request NRC approval to terminate the parent i                  enepany guarantee in two situations:
l                                                  15
 
e (1) when alternate financial assurance has been subs +.ituted and approved by the NRC; or, (2) when the license has been terminated by the NRC.
* Licensees should ensure that the financial test criteria are still satisfied if cost estimates increase or decrease.
* Two officers of uranium recovery facility (ies) and two officers of the parent guarantor who are authorized to bind the respective organizations should sign the agreements. A copy of such authorization for each person signing should be attached to the parent company guarantee. The corporate seal should be affixed.
                            '      The parent company guarantur should certify and demonstrate that it has full authority under the laws of the state of its incorporation, its erticles of incorporation and bylaws to enter into this guarantee; and, that the guarantor has full approval from its Board of Directors to enter into m guarantee.
3.4 Assets Held by a Third party Such As a State Fund Licensees may demonstrate financial assurance by depositing assets such as cash, certificates of deposits, deposits of government securities with a third party such as a trust fund or the State where the uranium recovery facility (ies) is located. If a licensee purchases several $100,000 certificates of deposits from the same institution, they should be structured so that each is eligible forFederalDepositInsuranceCorporation's(FDIC) insurance.
It is beyond the scope of this technical position to attempt to address the variety of possible contractual rechanisms that a State could set up. However, if a licensee proposes to have a State hold their assets, the NRC would evaluate each on a case by case basis. Additionally, if such a State-administered trust fund had a combined feature, (i.e., one that was set up to guarantee closure and reclamation of the uranium recovery facilities.)
tien the NRC will need *o carefully evaluate it to ascertain that the trust has funds clearly dedicated to meet the license's requirements for funding of reclaration, and long term surveillance and control of the deccarnissioning, urantur  recovery f4cility(ies),
t 3.5 Trusts A trust is a *.hree-party agreement whereby one party, called the GRANTOR (also called the t uster) transfers sore assets to a second party called the TRUSTEi..
to hold on behalf of a third party, called the BENEFICIARY. The entire arrangement is governed by a trust agreerent that sets cut the responsibilities and rights of each party, Appendix D contains recomending wording for tMs type of inst *ument.
For a uranium recovery f acility(ies) licensee, the licensee is the M ANTOR, a bank uranium or recovery other entity  wouldwas facilit)(ies) be located the TRUSTEE,)and      the NRC (or the would be the BENEFICIARY. The State where th
:                                                                        16 l
i
 
    ~
licensee, as grantor, deposits assets into the trust, fund which is held in trust by the trustee. The funds are then available if necessary to pay for decommissiocing, reclamation, stabilization and long-term surveillance and control of the ur:.Wm recovery facility (ies).
The trustee is EC.,MWerec h invest the funds during the existence of the trust.
Trustee investments may be haited by State law. Any investment income accrues to the trust, and etducer *ae amount the licensee must put into it. The license.c usually pays a f a for the trust services provided.
An acceptable trust for the purposes of this technical position should comply      ,
with the following criteria.
A trustee should be an entity that has the legal authority to act as trustee and whose trust operations are regulated and examined by a Federal or State agency. The trustee should certify that it has this legal authority.
The wording of the trust language should be irrevocable; that is, it cannot be changed or terminated by the licensee, except with the written agreement vi the trustee and the beneficiary.
* The trust should contain at all times sufficient assets to accomplish decomissioning, reclamation, stabilization, and long-te:1 surveillance and control of the site. The licensee remains responsible at all times for the full amount of decommissioning, reclamation, stabilization, and any  long-(term f acility ies). surveillance and control of the uranium recovery
* The trust agreement shoulti be signed by both the licensee and the trustee.
It must also identify the uranium recovery facilities and the cost estimates, as well as identifying tne liquid asset used to establish the trust fund.
* A trust fund can contain more than interest bearing cash deposits.
Liquid assets such as government securities or notes can be placed in trusts. However, if a non-cash item such as trust receipts are placcd in it, then special consideration should be given to ensure proper asset evaluation. (A trust receipt is an instrument acknowledging that the licensee holds items of inventory for sale in trust for the trustee.) If other types of assets were allowed, the trustees should agree to pay the governmental authority a stipulated cash amount. NRC will refuse to allow assets to be placed in trust that are of a speculative nature or whose value is di#ficult to estimate. NRC may require a licensee submitting non-cash assets to pay for an independent estimator to periodically evaluate the value of such assets. If assets other than cash are deposited into the trust fund, it may be necessary for the trustee to buy and sell securities with the approval of government staff, or to take other steps to ranage the assets in order to maximize their value.
However, unless specified under the terms of the trust, a trustee should invest under a "reasonably prudent" investor f tandard as defined by statute or case law of the jurisdiction whers the trust is located.
17
* The NRC staff would consider any individual or organization for the position of trustee in addition tc financial in.'.itutions, who can succeed in obtaining insurance for the position. (This type of insurance is currently available and is commonly obtained by banks and by other financial institutions.)
* The terms of the trust should define the investment responsibilities of the bank.
* The trustee should have possession of the assets or funds placed in trust by the party who created the trust. The trustee should have the legal interest in the funds, since he has control over it, can sue to protect it, and is responsible for its preservation.
* The trustees should be under a fiduciary duty to comply with the terms of this trust and, unless the trust provides otherwise, are liable for breaches of this duty.
* The trustee is allowed to invest in time or demand deposits of the trustee institution, up to the amount insured by law. The trustee is permitted to put trust fund assets into any appropriate, "comon, comingled, or              .
collective trust fund created by the Trustee", in other words, a comon trust.
* Once the trust fund is established, the licensee should make additional necessary payme.nts into the trust ' .id su that sufficient funds are available to reflect any changes        the cost estimates for site decom-missioning, reclamation, stabilizi: ion, and long-term surveillance and control.
i
* The trust agreement shuuld contain language requiring the trustee to submit annually to the licensee and NRC a statement of the valuation of the assets in the trust funds, detailing the results of investment activity and the expenses levied against the fund. Securities in the trust fund should be valued at their market 'talue no more thar 60 days prior to the anniversary date of the fund. The licensee may object, in writing to the trustee's investment activities or to expenses levied l
against the trust fund within 90 days of receiving the valuation statement. However, if objections do exist, the licensee is still obligated to deposit the necessary funds into the trust to ensure that the amount available is equal to the cost estimates in the approved Plan.
* Horeover, if the licensea sells or transfers operating responsibility for the facility (ies) for which the t st fund provides financial assurance, the trust fund will not automat'      ly transfer to the next owner. The NRC would haso to approve a new fin,        .1 assurance through the license condition for the f acility(ies),            y licensee could enter into an agreement with the old licensee,    .
the trust fund is transferred to the new cwner. This, however, wuuld require amendments to the trust l
agreerent that should be approved by the trusta and the NRC.
* The licensee should alert the trust that he is responsible for annual valuations of the trust, for notifying the NRC if the licensee ' ails to 18
 
t make payment when directed to do so by the Comission, and for making payments out of the trust fund at thi direction of the NRC.
A change in trustees will not affect the existence of the trust itself.
The trustee may be changed if the licensee is dissatisfied with the performance of the trustee or if the trustee resigns; the trustee should be ch6nged if the trustee in:;titution enters bankruptcy or ceases to meet the trustee qualifications. For either case, the trustee can be changed only upon agreement by the licensee, the trustee, and the NRC.
The trust agreement should be signed by the licensee and the trustee and is properly notarized.
The amount of coverage should reflect NRC-approved cost estimates for reclamation,(decomissioning, and control Site Reclamation anddecontamination, Stabilization Plan)and    long-term for the  uraniumsurveillance recovery facility (ies).
Disbursements by the trustee for reclamation, decomissioning, decontamination, and long-term surveillance and control expenses sha'' be approved by the NRC (or other Beneficiary) prior to release.
3.6 Standby Trusts It is recomended that a licensee include a standby trust fund when submitting a letter of credit or surety bond (performance or financial guarantee) to comply with the financial assurance requirements of 10 CFR Part 40, Appendix A.
A recomended format for a standby trust is found in Appendix E of this document. In the event of a licensee failure to comply with their approved cost estimates for reclamation, decomissioning, decontamination and long-term surveillance and control parent company guarantors also have the option of submitting (and funding),a standby trust fund, instead of actually performing such activities.
The pecse of the standby trust is to receive any funds that may eventually be paid by the surety company, financial institution issuing the letter of credit, or sarent company. NRC recomends the use of standby trusts because without suci an instrument, 31 U.S.C. 53302(b) requires NRC to deposit any assets received parent companyfrom the  surety) guarantee  to bond be paidordirectly letter into of credit  (or,Trea the U.S. if applicable, ury.      the Standby trust funds are similar to trust funds as described in Section 3.5, except that the following activities are no_t required with the standby tru.;t:
            -    regular payments into the standby trust; (it is only funded in the event that the surety bond, parer,t company guarantee, or letter of creditiscollected);
            -    updating the trust agreement to show current cost estimates and annual valuations; and,
              -    notices of nonpayment to the NRC.
19
 
3.7 Other Financial Assurances The previously described financial assurances are considered by the NRC to be connon, standardized financial mechanisms that would adequately provide financial security fw the purposes of this technical position. Additionally, the staff will consioer other financial assurances on a case-by-case basis, provided the licensee can demonstrate that the method provides an adequate degree of security, and also meets the generic guidelines mentioned in Chapter 2.0. A combination of the financial assurances discussed above may be proposed by the licensees with the exception of parent company guarantees, which may not be used in combination with other financial mechanisms. However, combinations would have to be approved by the NRC.
                                                                                              ^
4.0 DETERMINING SITE SPECIFIC RECLAMATION AND STABILIZATION COST ESTIMATES As required under Criteria 9 and 10 of 10 CFR Part 40, Appendix A, the licensee shall supply sufficient information for NRC to verify that the amount of coverage provided by the financial assurance accounts for all necessary activities required under the license to allow the license to be terminated.
Cost estimates for the following activities (where applicable) should be submitted to NRC with the initial license application or reclamation plan and updated annually as specified in the license and as provided in the technical criteria of Appendix A of 10 CFR Part 40. Cost estimates must be calculated on the basis of cortpletion of all activities by a third party. Unit costs, calculations, references, assumptions on equipment and operator efficiencies, etc., must be provided.
4.1 Detailed Cost Information Breakdown for Mills an'd In-Situ Facilities The detailed cost information necessary to verify the cost estimates for the above categorles of closure work is described in the following outline.
4 4.1.1      FACILITY DECOMMISSIONING Hill Site Decorimissioning. - Dismantling, decontamination and/or disposal of l
all structures and equipment. - Excavation and burial of containinated earth (in the vicinity of the mill site, ore storage area, access roads around the perimeter of the tailings disposal site, evaporation pond residues, etc.). -
Reclamation of disturbed areas from the above cleanup activities.
l            In Situ Facility Deconnissioning - This includes dismantling, decontamination I            and disposal of all structures and equipment. This may be accomplished in two l            phases, in the first phase, only the equipment not used for ground-water
>            restoration is removed. The remaining equhment would be removed in a second phase, when ground-water restoration and well )1ugging is complete. The
[            suildings used for the in-situ operations may >e decontaminated and released l            for unrertricted use.
I A. Salvageablebuildingandequipmentdecontamination(list). For each building or pieces of equipment listud, the following data should be provided.
20 i
: 1.          Labor for dismantling and decontamination
: a. Person-hours and categorie' of labor
: b. Average hourly wage for each category
: c. Total labor cost (benefits, insurance, etc., and all labor overhead must be included here or calculated on the basis of total project labor)
: 2.          Equipment and material for dismantling and dccontamination
: a. Itemization of equipment and material to be used for decontamination
: b. Itemized cost for material and equipment cost per hour listed in (a) above (equipment costs must include hourly operating,ownershipandoverheadexpenses)
: c. Operating hours for each piece of equipment
: d. Total equipment and material cost B. fion-salvageable building end equipment disposal
: 1.          List of major categories of building and equipment to be disposed of and their corresponding quantities
: a. Structures (list each major) (tons of material and building volurre cubic feet)
: b. Foundationconcrete(cubicyards)
: c. ProcessEquipment(tons)
: d. Piping & Insulation (lumpsum)
: e. Electrical & Instrumentation (lump sum)
: 2.          Unit cost of disposal for each item above (include equipment, labor, material, transportation,anddisposalcosts) j l            3.          List and state how each chemical solution within the mill area l                        will be disposed of along with the associated cost of disposal i            4          Total cost I          C. Restoration of contaminated areas (ore storage pad, access roads, processarea,evaporationpondresidues,etc.)
l i
Removal and Disposal of Evaporation Pond and Residues - These materials should be transported to a licensed tailings area or licensed disposal site. The quantity of material to be removed ar.d the di;tance to the disposal site and the fees charged by the 21
 
receiving facility are important cord    ations'in determining the costs of disposal.
Reclamation - This entails rece              wil fields and evaporation ponds and placing 1-              er materials acceptable to NRC. This may also include ,
: 1. Removal
: a. Area, depth and quantity of material to be removed (area, feet and cubic yard--or size of liner if appropriate)
: b. Unit cost (include excavation, loading, transportation and deposition)
: c. Total cost (equipment and labor) 1
: 2. Revegetation
: a. Area to be revegetated (acre)
: b. Unit cost (include fill material, replacing topsoil, and revegetationcost) i
: c. Total cost (equipment, labor arid materials) 4.1.2      GROUND-WATER RESTORATION AND WELL PLUGGING Mill Site Ground-Water Restoration - A major concern in the termination of a mill license is the restoration of aquifers that have been contaminated by the operation of a tailings impoundment. As this concern is added to the site-specific reclamation plans, the licensee should include these costs in their i        surety until the licensee is released from further ground water restoration
;        activities.
In Situ Site Ground-Water Restoration - In most cases, ground-water restoration consists of ground water sweeping and water treatment with partial reinjection.
The water treatment equipment used during the uranium recovery phase of the o>eration is generally suitable for the restoration phase. The capital cost of l        tiis equipment is usually absorbed during the initial stages of the operation I        leaving only the costs of operation, maintenance and replacement filters for the restoration phase. However, if additional or replacement equipment will be required for restoration, associated costs shoulo be detailed here.
l        A. Method of restoration
: 1. Projected length of time required to complete restoration l
22 1
 
O B. Volume of aquifer required to be restored - area and thickness of aquifer -- number of required pumping cycles -- cycling time C. Labor and equipment cost estimates associated with aquifer restoration (e.g.,ROunit)
D. Verification sample analysis
: 1. number of samples
: 2. unit cost for sample collection and analysis (per sample)
: 3. total cost for verification sample analysis E. Well plugging
: 1. number of drill holes to be plugged
: 2. depth and size of each drill hole
: 3. material to be used for plugging--include acquisition, transportation, and plugging 4    Total cost for well plugging F. Total cost for ground-water restoration 4.1.3      INTERIM STABILIZATION OF TAILINGS DURING THE DRYING OUT PHASE Interim Stabilization of the Tailings During Drying - Placement of soil, chemical spraying, snow fences or other control measures over dry tailings to minimize dusting or dispersal of particulates.
A. Drying time B. Area of dry exposed tailings for each year during the drying period (acresfor            years)
C. Unit cost for placement of soil, chemical spraying or other methods (Priceperacre)(Includematerial, labor,and equipment)
D. Cost for an enhanced evaporation system, where included in thereclamation and stabilization plan. - Capital cost, labor and cperating cost E. Seepage control costs where necessary to alleviate adverse ground-water impacts.
F. Total cost of interim tailings stabilization 4.1.4      TAILINGS IMP 0UNDMENT AREA RECLAMATION 23
 
Tailings Impoundment Area Reclamation - Earthwork necessary to recontour the tailings in order to prepare for cover placement. - Placerent of cover materials - revegetation and/or placement of riprap. - Construction of diversion channels or other measures required for long-term stability.
A. Area and quantity of cover material (acres, cubic yards)
B. Location and size of borrow area that serves as a source of cover material. (Include distance from borrow area to tailings impoundment, grade ano quantity of material from each borrow area)
C. Labor and equipment unit cost for each type of material (include excavation, loading, transportation, depositing, spreading, and compacting; detailing costs and equipment types and calculations for each function)
D. Estimated costs for revegetation of tailings pile, if applicable,andborrowareas(labor,equipmentendmaterials)
E. Estimated costs for riprap / rock armor, if applicable (labor, materials,transportationandequipment)
F. Estimated costs for special engineered features - diversion channels,)
equipment    spillways, etc. (in unit costs) (labor, materials and G. Estimated costs for a quality assurance program including field and laboratory testing to assure that the "as built" system conforms to design specifications. Indicate nurrber and type of tests, labor and equipment costs.
H. Fencing costs (unit costs for labor and materials) total length and type of material I. Additional control measures, if necessary (guard service, etc.)
J. Total cost If the reclamation plan calls for different layers of soil, such as clay, etc.,
Items IVA. through IVF above should be provided for each layer. Reclamation estimates may not always have to include the entire project area (i.e., operations which involve phased reclamation need only include coverage for the maximum area impacted during the period of the license.)
4.1.5      RADIOLOGICAL SURVEY AND ENVIRONMENTAL MONITORING Radiological Survey - Gama surveys and soil samples for radium in areas to be released for unrestricted use. Soils around the mill building, tr.ilings piles, well field, evaporation ponds and process buildings should be analyzed for radium content. A gama survey of all areas should be made prior to release for unrestricted use. All equipment released for unrestricted use should be 24
 
t equipment released for unrestricted use should be surveyed and records maintained.
A. Soil samples for radium B. Decommissioning equipment and building smear samples C. Gamna survey D. Environmental monitoring Costs of labor, materials and analysis for continuation of environmental monitoring and inspection program throughout reclamation E. Total cost
: 1. Number of each kind sample listed above
: 2. Unit cost for sample and analysis (price per sample)
: 3. Total cost for radiological survey 4.1.6        PROJECT MANAGEMENT COSTS AND MISCELLANEOUS Itemize estimated ccsts associated with project management, engineering changes, mobilizction costs, legal expenses, power costs during reclamation, quality control radiological safety costs, etc.
4.1.7        LABOR AND EQUIPMENT OVERHEAD, CONTRACTOR PROFIT Overhead costs for labor and equipment and contractor profit may be calculated ds separate items or loaded into hourly rates. If included in hourly r&tes, the unit costs must identify the percentages applied for each area.
4.1.8        LONG-TERM SURVEILLANCE AND CONTROL (FOR MILLS ONLY) CRITER10N 10 SPECIFIES A MINIMUM OF $250,000 IN 1978 OOLLARS (5407,960 IN DECEMBER 1986 DOLLARS)
Long-term surveillance and control fund to cover the control fund to cover the cost of government agency site inspection, monitoring, and control measures, if necessary.
Certain additional measures may be required at some sites. The cost of these measures should be added to the basic cost of annual inspection of the site by government authorities as required under Criterion 10. Costs for these measures should be funded entirely from earnings of the long-term surveillance and control fund without using fund principal. These measures include, but are not i          limited to:
A. Unit cost of repairing or replacing fencing, including length of fence; l
l l
25
 
B. Limited long-term groundwater monitoring to confirm that no groundwater problems exist at the site; and C. Additional control measures, if needed.
4.1.9        CONTINGENCY The licensee should include a contingency amount to the total cost estimate for the final site closure. The staff currently considers a 15% contingency to be an acceptable minimum amount. Additiunally, the licensee should include a 10%
minimum contingency for contract administration in the event the licensee defaults and the State or Federal Government is required to administer a contract to carry out the licensee's reclamation and decommissioning responsibility.
4.1.10        ADJUSTMENTS TO SURETY AMOUNTS The licensee is required by 10 CFR 40, Appendix A, Criteria 9 and 10 to adjust their cost estimates annually to account for inflation and changes in reclamation plans. The submission should be in the form of a request for amendment to the license.
A.      Adjustments for inflation The    licensee the cost          should estimates        submitninety for inflation  a revised  surety)
(90 days prior incorporating  adjustments t to each anniversary of the date on which the first reclamation plan and cost estimate was approved. The adjustment should be made using the inflation rate indicated by the change in the Consumer Price Index published by the U.S. Department of Labor, Bureau of Labor Statistics.
B.      Changes in Plans Changes in the process such as size or methud of operation.
Licensee initiated changes in reclamation plans or reclamation / decommissioning activities performed.
Adjustments to reclamation plans required by the NRC.
Proposed revisions to reclanation plans must be thoroughly documented and cost estimates and the basis for cost estimated detailed for NRC review and appro',al. Where a licensee is authorized by the NRC to secure a surety arrangement with the state, no reduction to the surety amount shall be initiated without prior NRC approval. Copies of all correspondence relating to the surety between the licensee and the State shall be provided to the NRC. If authorized by the NRC to maintain a surety with the State as the beneficiary, it is the responsibility of the licensee to provide the NRC with verification of same, ensure that the dgreement with the State specifically identifies the 26
 
financial surety's application to the mill facility, ISL facility, tailings and related area decommissioning / reclamation and transfer of the long-term surveillance and control fee to the U.S. Department of the Treasury prior to license termination.
All costs (unit and total) are to be estimated on the basis of independent contractor costs (include overhead and profit in unit costs or as a percentage of total). Equipment owned by the licensee and the availability of licensee staff should not be considered in the estimate to reduce cost calculations.
All costs should be based on current year dollars. Credit for salvage value is -
g:nerally not acceptable on the estimated costs.
The NRC staff review may include a comparison of unit cost estim6tes with standard construction cost guides (e.g., Dodge Guide, Data Quest) and discussions with appropriate state or local authorities (highway cost construction). The licensee should provide supporting information or tne basis for their selection of the unit cost figures used in their estimates.
27 I
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APPENDICES Appendix A.."Reconunended Wording for Performance and Financial Guarantee Sonds" Appendix B.."Recomended Wording for Irrevocable Standby Letters of Credit" Appendix C.."Recommended Wording for F6 tent Company Guarantees" Appendix D.."Recomended Wording for Trusts" Appendix E.."Recommended Wording for Standby Trusts" 1
i
 
o APPENDIX A-1 RECOMMENDED WORb!NG FOR A PERFORMANCE BOND AND APPENDIX A-2 RECOMMENDED WORDING FOR A FINANCIAL GUARANTEE BOND i
ii l
 
s APPENDIX A-1 RECOMMENDED WORDING FOR PERFORMANCE BOND Date bond executed:
Effective date Principal:    [legalnameandbusinessaddressofowneroroperator]
Type of organization: [ insert "individual," "joint venture,"
          "partnership,"or"corporation")
State of incorporation:
Surety (ies): [name(s) and business address (es)]
NRC Source Material License Number, name, address, and reclama1. ion, decomis-sioning, stabilization, and long-term surveillance and control amount (s) for each uranium recovery facility guaranteed by this bond:
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 bcund to the U.S. Nuclear Regulatory Commission (hereinafter called NRC), in the above penal sum for the payment of which we bind ourselves, our h. irs, 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 paymant of suen sum only as is set forth opposite the name of such Surety, but if no limit of liability is t          indicated, the limit of liability shall be the full amount of the penal sum.
WHEREAS, the United States Nuclear Regulatory Comission, "NRC," an agency of the United States Government, pursuant to the Atomic Energy Act of 1954, as l
amended, the Energy Reorganization Act of 1974, and the Uranium Hill Tailings Radiation Control Ar.t of 1978, has prorulgated regulations in Title 10, Chapter 1 of the Code of Federal Regulations, Part 40, Appendix A, Criteria 9 and 10.
l These regulations, applicable to the Gra-tor, require that a licensee of a
.          uranium recovery facility shall provide ,ssurance that funds will be available l          when needed in accordarce with the approved Reclamation and Stabilization Plan and also for the long term surveillance and control of the uranium recovery facility.
WHEREAS, said principal is required, under these regulations to have license in
,          order to own or operate each uranium recovery facility identified above, and l
A-1
 
e  .
APPENDIX A-1 RECOMMENDED WORDING FOR PERFORMANCE BOND Whereas said Principal is required to provide financial assurance for stabili-zation, deconinissioning, reclamation and long-term surveillance and control as a condition of the license, and Whereas said Principal shall e3tablish a standby trust fund when a surety bond is used to provide such financial assurance; Now, Therefore, the conditions of the obligation are such that if the Principal shall faithfully perform reclamation and stabilization, and make arrangements to transfer funds for iong-term surveillance and control to an approved regulatory authority, whenever required to do so, of each uranium recovery facility for which this bond guarantees reclamation and stabilization, in accordance with license conditions, pursuant to all applicable laws, statutes, rules, and regulations, as such laws, statutes, rules, and regulations may be amended.
And, if the Principal shall faithfully perform reclamation, and stabilization, and make arrangements to transfer the funds for long-term surveillance and control to an approved regulatory authority, in accordance with license conditions, 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, and obtain the NRC's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the Principal and the NRC 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 his failed to fulfill the conditions described above.
Upon notification by NRC that the Principal has been fcund in violation of the license conditions of 10 CFR Part 40, Appendix A, for a uranium recovery facility for which this bond guarantees performance of reclamation, stabili-zation, decocrnissioning, decontamination, and long-term surveillance and control, the Surety (ies) or their agents shall either perform in accordance with licensing, or place the amount guaranteed for the uranium recovery facility into the standby trust fund as directed Fy the NRC.
Upon notification by the NRC that the Principal has failed to provide alternate financial assurance and obtain written approval of such assurance from the NRC during the 90 days following receipt by both the Principal and the NRC of a notice of cancellation of the bond, the Surety (ies) shall place funds in the amount guaranteed for the uranium recovery facility (ies) into the standby trust fund as directed by the NRC.
A-E
 
APPENDIX A-1 RECOMMENDED WORDING FOR PERFORMANCE BOND The Surety (ies) hereby waive (s) notification of amerdments to stabilization and reclamation plans, permits, applicable laws, statutes, rules, and regulations and agrees 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 shal' 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 uranium recovery licensee and to the NRC, provided, however, that cancellation shall not occur during the 90 days beginning on the date of receipt of the notice o' cancellation by both the Principal and the NRC, 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 NRC in which the bonded facility (ies) is (are) located.
[The following paragraph is an cptional rider that may be included but is not required.]
Principal and Surety (ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new reclamation, stabilization, decommissioning, decontamination, and long-term care amount, provided that the penal sum does not increase by more than 20 percent in any one year, and no decrease in the penal sum takes place without the written permission of the NRC.
In Witness Whereof, The Principal (s) and Surety (ies) have executed this Performance Bond and have affixed their seals on the date set forth above.
1 I
i A-3
                                                                                            -[m
 
APPENDIX A-1 RECOMMENDED WORDING FOR PERFORMANCE BOND The perscas whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal.and Surety (ies).
Principal
[ Signature (s)]
[Name(s)]
[ Title (s)]
[Corporateseal)
CorporateSurety(ies)
[Na.e(s)andaddress]
State of incorporation:
Liability limit:  $
[ Signature (s)]
[Name(s) and title (s)]
[Corporateseal]
[For every co-surety, provide signature (s), corporate seal, and other information in the same manner as for Surety above.]
l        Bond premium:    $
9 A-4
 
APPENDIX A-2 RECOPE ::ED WORDING FOR A FINANCIAL GUARANTEE BOND Date bond executed:
Effective date:                      _
Principal: [legalnameandbusinessaddressofowneroroperator]
Type of organization: [ insert "individual," "joint venture," "partnership," or "corporation"]
State of incorperation:
Surety (iesi: [name(s)andbusinessaddress(es)]
NRC Source Materidl License Number, name, address, and reclamation, decom-missioning and long-terrn surveillance and control amount (s) for each uranium recovery facility guaranteed by this bond:
Total penal sum of bond:    $
Surety's bond number:
Know All Persons By These Presents, That we, the Principal and Surety (ies) hereto at e firmly bound to the U.S. Nuclear Regulatory Comission (NRC),
(hereinafter called NRC), 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 jcint action or actions agair.st any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Princial, for the payment of such sum only as is set forth opposite the name of suc, Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum.
WHEREAS, the United States Nuclear Regulatory Comission, "NRC," an agency of the United States Government, pursuant te the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, and the Uranium Mill Tailings Radiation Control Act of 1978, has promulgated regulations in Title 10 Chapter I of the Code of Federal Regulations, Part 40, Appendix A, Criteria 9 and 10.
These regulations, applicable to the Principal, require that a licensee of a uranium recovery facility shall provide assurance that funds will be available when needed in accordance with the approved Reclamation and Stabilization Plan I                                  dnd also for any lor.9-term surveillance and Control of the uranium recovery I
facility.
WHEREAS, said Principal shall establish a standby trust fund when a surety bond is used to provide such financial assurance.
Now, Therefore, the conditions of the obligation are such that if the Principal shall faithfully, before the beginning of reclamation and decomissioning of each facility identified above, fund the stanoby trust fund in the amount (s) idertified above for the facility, A-5
 
APPENDIX A-2 RECOMMENDED WORDING FOR A FINANCIAL GUARANTEE BOND Or, if the Principal shall fund the standby trust fund in such amount (s) after an order to begin reclamation and decommissioning is issued by an NRC or a U.S. district court or other court of competent jurisdiction, Or, if the Principal shall provide alternate financial assurance, and obtain the NRC's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the Prircipal and the NRC 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 becorre liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notifica-tion by NRC that the Principal has failed to perform as guaranteed by this bond, the Surety (ies) shall place funds in the amount guaranteed for the facility (ies) into the standby trust fund as directed by NRC.
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 renal sum.
The Surety (ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the NRC provided, however, that cancel-lation shall not occur during the 90 days beginning on the date of receipt of the notice of cancellation by both the Principal and the NRC, as evidenced by the return rec 9ipts.
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 NRC.                                                                  (
[The following paragraph is an optional rider that may be included but is not required.]
Pr!ncipal and Surely (ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new reclarration, decommissioning, stabilization, l      and long term care ar:,unt, provided that the penal sum does not increase by more than 20 percent in any one year, and no decrease in the penal sum takes place without the written permission of the NRC.
:      In Witness Whereof, the Principal and Surety (ies) have executed this Financial l
Guarantee Bond and have affixed their seals on the date set forth above.
l A-6 l                  -                                                                    -
 
APPENDIX A-2 RECOMMENDED WORDING FOR A FINANCIAL GUARANTEE BOND 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).
Principal
[ Signature (s)]
[Name(s)]
[ Title (s)]
[CorporateSurety(tes)
[Nameandaddress]
State of incorporation:
Liability limit: $
[ Signature (s)]
[Nare(s) and title (s)]
[Corporateseal]
[For every co-surety, provide signature (s), corporate seal, and other information in the same manner as for Surety above.]
l        Bond premium:    $
r f
e i
I
'                                                A-7
 
i 4
4 e
APPENDIX B RECOMMENDED l10RDING FOR AN IRREVOCABLE STAN B-1
 
APPENDIX B RECOMMENDED WORDING FOR IRREVOCABLE STANDBY LETTER OF CREDIT CREDIT NO. [InsertNo.]
ThisCreditExpires[insertdate]
Issued To:                          United States Nuclear Regulatory Comission Washington, D.C. 20555
 
==Dear Sir or Madan:==
 
We hereby establish our Irrevocable Standby Letter of Credit No, in your favor, at the request and for the account of
[ licensee's name and address] up to the aggregate amount of [in words]
U.S. dollars $ _                                , available upon presentation of (1) your sight draft, bearitig reference to this letter of credit No.                      , and (2) your signed statement reading as follows: "I certify that that the amount of the draft is payable parsuant to regulations issued under authority of the Urenium M'll Tailings Radiation Control Act of 1978."
This letter of credit is issued in accordance with regulations issued under authority of the United States Nuclear Regulatory Comission, "NRC', an agency of the United States Government, pursuant to the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, and the Uranium 11111 Tailings Radiation Control Act of 1978. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 40, Appendix A, Criteria 9 and 10.                These reguations require that a licensee of a uranium recovery facility shall provide a.surance that funds will be available when needed in accordance with the approved Reclamation and Stabilization Plan and also for any long-term surveillance and control of the reanium recovery facility.
This letter of credit is effective as of [dats] and shall expire on [date at least one year later), but such expiration dite shall be automatically extend 2d for a period of [at least one year] on [date' and on each successive expiration date, both you          unless,[at and licensee's least 90  days as name),  before shownthe oncur    tht ent expiration signed          date, we If return receipts. notify
[ licensee'sname)isunabletosecurealternativefinancialassuranceto replace this letter of credit, the NRC may draw upon the full value of this letter of credit prior to cancellation.
The bank shall give imediate notice to the licensee and the United States Nuclear Regulatory Comission of: (a) any notice received or action filed alleging the insolvency or bankruptcy of the bank; or (b) alleging any violations revocation of            ofregulatory the bank'srequirements      which to chatter or license          could  result in susp(ension do business;  or        orc) the bank, for any reason, becomes unable to fulfill its obligation under the letter of credit.
B-2
 
APPENDIX B RECOMMENDED WORDING FOR IRREVOCABLE STANDBY LETTER OF CREDIT 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 within 30 days, and t.- shall deposit the amount of the draft directly into the standby trust funa of [ license 4's name] in accurdance with your instructions.
Each draf t must bear upon its face the clause "Drawn under Letter of Credit No.              , dated                , and the total of this draft and all other drafts previously drawn under this Letter of Credit does not exceed (fill in amount)      .
[ Signatures (s) and title (s) of official (s) of issuing institution] [date]
This tredit 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"].
(
B-;
 
e APPEliDIX C RECOMMEllDED h0RDitlG AND DOCUMEliTS FOR A PARENT COMPANY GUARANTEE C-1
 
APPENDIX C RECOMMENDED WORDING AND DOCUMENTS FOR A PARENT COMPANY GUARANTEE i                                                    This appendix contains the following documentation recommended to support a parent company guarantee where the NRC is the Beneficiary (or Obligee):
* Letter from chief financial officer of ;5e parent company, including cost estimates ar.d data from audited financial statements; and Accountant's opinion of parent company's year end financial statements and footnotes for the latest complete fiscal year; Auditor's Special Report by a Certified Pub'ic Accountant; 3 rent Company Guarantee i
I i
l i
C-2
: l.  .
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE RECOMMENDED WORDING FOR LETTER FROM CHIEF FINANCIAt. OFFICER (Adoress to U.S. Nuclear Regulatory Comission)
I am the chief financial officer of [name and address of firm.],4[ insert"individual,""jointventure,""partnership,"or"corporation."]
This letter is in support of this firm's use of the financisl test to demon-strate financial assurance, as specified in 10 CFR Part 40, Appendix A.
[ Fill out the following paragraph regarding facilities and associated cost estimates. For each facility, include its license nurser, name, address, and current cost estimates found for reclamation, stabilization, decomissioning and long-term surveillance and control.]
This firm guarantees, through the parent company guarantee submitted for compliance under 10 CFR Part 40, Appendix A, the decontamination, stabilization, decomissioning, reclamation, and long-term surveillance and control of the following facilities owned or operated by subsidiaries of this firm. The current cost ettimates for the reclamation, stabilization, decontamination, decomissioning, and long-term surveillance and control so guaranteed are shown for each facility:
I further attest that the licensee (s) for which this parent company guarantee is being made has (have) a positive tangible net wurth.
This firm [ insert "is required" ur "is not required") to file a Forn 10K with the Securities and Exchange Comission (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 derivec from this firm's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended [date].
[FillinAlternativeIorAlternative11.]
C-3
 
1 .  .
                                    '                                                                  C APPENDIX C                                        '.'
RECOMNENDED WORDING FOR A PAREl4T COMPANY GUARAllT!I RECOPNENDEU WORDING FOR LETTER FROM CHIEF FINAflCIAL OFFICER (CONT'D.)
ALTERNATIVE I
: 1. Sum of current decommissioning, decontamination, reclamation, stabilization, estirrates for f and acilitylong[-term surveillance and control costinsert license number] [ total o cost estimates shown in previous paragraphs above]        ~~" $
          *2. Total liabilities [if any portion of decontamination, reclamation, stabilization, or long-term surveillance and control cost estimates is inclund in total liabilities, you may deduct the an,ount of that portion frcm this line and add that amount to lines 3and4]                                                        $_
            *3. Tangible net worth                                                  $
          *4    Net worth                                                          5 5
            *5. Current assets
            *6. Current liabilities                                                5
            *7. Net working capital [line 5 minus line 6]                          5
            *8. The sum of net income plus det,reciation, depletion, and an.ortiz6 tion                                      $
            *9. Total assets in U.S. (required only if less                        i      __
than 90 percent of firm's assets are located in the U.S.)
Yes M
: 10. Is line 3 at least $20 million?                                    -
: 11. Is line 3 at least 6 times line 17                                -
: 12. Is line 7 at least C times line, 17                                    -
: 13. A9 at least 90 percent of firm s assets located in the U.S.? If not, corrplete line 14.
14  Is line 9 at least 6 times line 17                                ~"
: 15. Is line 2 divided by line 4 less than 2.07                          -
: 16. Is line 3 divided by line 2 greater than 0.17                                        g,
: 17. Is line 5 divided by line 1 greater than 1.5?                        _                ..
* Denotes figures derty-        . '
* iancial state'.ents.
C-4
 
l APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE RECOMMENDED WORDING 'UR LETTER FROM CHIEF FINANNAL 0FFICER,(COMT'D.)
ALTERNATIVE II
: 1.      Sum of current deconuissioning, decontamination, reclamation, stabilization, and long-term surveillance and control cost estimates for facility [ insert license number] [ total of all cost estimates shown in previous parir ahs above]
: 2.      Current bond rating of most recent issuance of '.his firm and name of rating service                                  $
                                                                                                                )
: 3.      Date of issuance of bond
: 4.      Date of maturity of bond
              *5. Tangible net worth [if any portions of the reclamation,                                  ,
staoilization, decontamination, deconnissioning, and                                    g long-term surveillance and control estimates are included                                G in "total liabilities" on your firm's financial statements,                              ;
add the amount of that portion to this line).                    $
              "6. Total assets in U.S. (required only if iess than                  5 90 percent of firrr's assets are lo,:ated in the U.S.)
Yes                No
: 7.      Is line 5 at least $20 million.?
: 8.      Is line 5 at least 6 times line 1?                                -
              *9. Are at least 90 percent of firm's assets                          -                  ~~  '
                      'ocated in the U.S.? If not, cornplete line 10.
: 10. Is line 6 at least 6 times line 17
* Denotes figures cerived from financial staten:ents.
C-5
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT C0ftPANY GUARANTEE RECOMMENDED WORDING FOR LETTER FROM CHIEF FINANCIAL OFFICER (CONT'D)
I hereby certify that the wording of this letter is true and correct to the best of my knowledge.
[ Signature]
[Name]
[ Title]
[Date]
C-6
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE EXAMPLE OF AUDITOR'S SPECIAL REPORT CONFIRMATION OF CHIEF FINANCIAL OFFICER'5 LETTER We have examined the financial statements of [com)any nane] for the year ended
[date),andhaveissuedourreportthereondated:date).Ourexaminationwas made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
The [ Company] has prepared documents to denenstrate its financial responsibility under the NRC's financial assurance regulations, in compliance with Appendix A, of  10 CFR Part 40. This letter is furnished to assist the licensee [ insert NRC license number and name usedforotherpurposes). in complying with these regulations and should not be The attached schedule reconciles the specified information furnished in the Chief Financial Officer's Letter in response to the regulations with the Corp 6ny's financial statements. In connection therewith, we have:
: 1. Agreed the amounts in the column "per financial statements" with amounts contained in the Company's financial statements for the year ended [date].
: 2. Agreed the amount in the column "per Chief Financial Officer's Letter" to the Letter prepared in response to the NRC's request.
: 3. Agreed the amounts in the colurm "reconciling items" to analyses prepared by the Company setting forth the indicated items.
4  Recomputed the totals and percentages.
Because the above procedures do not constitute an examinatien made in accordance eith generally accepted auditing standards, we do not express an opinion on any amounts or items referred to above. In connection with the procedures referred to above, no matters came to our ettention that cause us to believe the Chief Financial Officer's Letter and supporting information should be adjusted.
C-7
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE ATTACHMENT TO AUDITOR'S SPECIAL REPORT SAMPLE SCHEDULE RECONCILING AMOUNTS CONTAINED IN CHIEF FINANCIAL OFFICER 5 LETTER TO AMOUNT 5'IN FINANCIAL STATEMENTS KYZ COMPANY YEAR ENDEU DECEMBER 31, 19XI Line Number                                                      Per                  Recon- Per in                                                        Financial ciling CF0's CFO's Letter                                                  Statements Items Letter 6          Current liabilities                              X Long-term debt                                    X Deferred income taxes                            X Total                                      XX Accrued decommissioning, reclamation, and long-term surveillance and control costs included in current liabilities                                          X Totalliabilities(less accrued decommissioning, reclamation, and long-term surveillance and control costs)                                                X 4          Net Worth                                        XX Less: Cost in excess of
<                            value of tangible assets acquired                                            X IX Accrued decommissioning, reclamati.c,i, and long-term surveillance and control costs included in current                                                  X liabilities Tangible net worth (plus accrued decommissioning, reclamation, and long-term surveillance and control costs)                                                XX
[balanceofschedulenotillustrated]
[This illustratt i Details the formand of schedule rt:encilingwhichitemsiswill contemplated.
differinspecificsituations.]
1 C-8
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE Guarantee made this (date) by [name of guaranteeing entity), a [ insert "individual," "joint venture", "
under the laws of the State ofinsert          [partnersh'p",    or "corporation"]
                                                                ' e of States, herein referredorganized to as guarantor, to the United States Nuclear F Julatory Commission (NRC), or state agency found acceptable to the NRC, [ inst tnameofstateagency] obligee,on behalf of our subsidiary [ licensee) of f einessaddress).
Recitals
: 1.        Guarantor has full authority and capacity to enter into this guarantee
[(If the guarantor is a corporation, add the following phrase) under its bylaws, uarantor's  articles state of of incorporation,]and      the laws incorporation , its State        of the State of [ insert of incorporation.
Guarantor should indicate which financial test is being used.]
: 2. This guarantee is being issued to comply with regulations issued by the the United States Nuclear Regulatory Commission, "NRC." an agency of the United States Government, pursuant to the Atomic Energy Act of 1954 as amended,theEnergyReorganizationActof1974,andtheUraniumMill Tailings Radiation Control Act of 1978. NRC has promulgated regulations in Title 10, Chapter ! of the Code of Federal Regulations, Part 40, Appendix A, Criteria 9 and 10. These regulations require that a licensee of a uranium recovery facility shall provide assurance that funds will be available when needed in accordance with the approved Reclamation and Stabilization Plan and also for any long-ttrm surveillance and control of the uranium recovery facility.
: 3.        Guarantormeetsorexceedsthefollowingfinancialtestcriteria(ins"',
statementindicatingwhichfinancialtestisbeingused.]andagrees comply with all notification requirements for sureties as specified in 10 CFR Part 40, Appendix A:
Guarantee shall meet une of the following two financial tests:
(a) (i) The guarantor's most recently issued senior cred(t obligations are rated "BBB" or higher by Standard and Poor's Corporation, or "Eaa" or higher l
by Moody's Investors Service, Inc,; and (ii) The guarantor's tangible net worth is at least $20 million and is equal to or greater thar six times the sum of current NRC-aporoved cost estima+es for decomissioning, decontamination, reclamation, stabilization, and long-term surveillance and control; and (iii) The guarantor's assets located in the United States amount to at least 90 percent of its tclal assets or at least six times the amount of the current NRC-approved cost estimates for decomissioning, decontami-nation, reclamation, stabilization, and long-term surveillance and control required by the license;
(
C-9
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE SE (b) (i) Guarantor's tangible net worth and net working capital are each equal to or greater than six times the sun of the current cost estimates for decom-missioning, decontamination, reclamation, stabilization, and long-term surveillance and control required by the license; and (ii) Guarantor's assets located in the United States amount to at least 90 percent of its total assets or at least six timas the amount of the current NRC-approved cost estimates for deconnissioning, decontamination, reclamation, stabilization, and any long-term surveillance and control required by the license; and (iii) Guarantor meets 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 cepreciation, depletion, and amortization to total liabilities greater than 0.1; and a ratio of current assets to current liabilities greater than 1.5.,
and (iv) Guarantor's tangible net worth is at least $20 million dollars.
4    Guarantor owns 5; percent or more of the voting stock of the following licensee (s) covered by this guarantee. List for each licensee: Nare, address, the uranium recovery facilities owned or operated by each licensee, and the correspondin                        Guarantor also certifies that the licensee (s)g license numbers.]for which this guarantee is being (have) a positive tangible net worth.
: 5.    "Reclamation and Stabilization Plans" as used below refers to the plans maintained as required by 10 CFR Part 40, Appendix A, for the decontam-ination, deconnissioning, reclamation, stabilization, and long-term surveillance and control of facilities identified above.
: 6. Forvaluereceivedfrom[ licensee],[(Iftheguarantorisacorporation, add) and pursuant to the authority conferred upon the guarantor by (the unanimous resolution of its directors) (or) (the majority vote of its shareholders), a certified copy of which is attached.] guarantor guarantees to NRC that in the event the licensee fails to perform the activities required in the NRC approved Reclamation and Stabilization Plan, as required by License No. [ insert numbers), the gusrantor shall:
: a. Carry out the required activities, of
: b. Set up a trust fund in favor of the above identified beneficiary in the arount of these current NRC-approved cc e estimates for these activities, anc
: c. In addition, the licensee or guarantor shall cover the eventual payment of the amount for long-term surveillance and control, if any, as required by 10 CFR Part 40, Appendix A.
C-10
 
APPENDIX C REC 0 MENDED WORDING FOR A PARENT COMPANY GUARANTEE
[lfthelicenseeisanNRClicenseebutaStateisthenamed beneficiary, the guarantee documentation should include written verification from the State agreeing to use the trust funds to carry out the required activities described in the NRC approved Reclamation Stabilization Plan for the named facility (ies).]
: 7. Guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule annuclly within 90 days of the close of the parent company guarantor's fiscal year.
: 8. Guarentor 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 60 days, by certified mail, notice to the NRC andto[thelicensee]thatitintendstoprovidealternatefinancial assurance as specified in Appendix A of 10 CFR Part 40, in the name of
[ licensee]. Within 90 days after the end of the fiscal year, the guarantor shallestablishsuchfinticialassuranceunless[ licensee]hasdoneso.
: 9.      The guaranter also agrees to notify the beneficiary promptly if the ownership of the licensee or the parent firm is transferred and to maintain this guarantee until the new parent firm or the licensee provides alternate financial assurance acceptable to the beneficiary, certified mail, of a voluntary
: 10. The                                  guarantor,proceeding  agrees to notify or involuntary                                                        underthe NRC Title  11 by(Bankruptcy), U.S. Code naming guarantor as debtor, within 10 days af ter connencement of the proceeding, t
!                11. Guarantor agrees that within 30 days after being notified by NRC of a determination that guarantor no longer reets the financial test criteria or that he is disallowed from continuing as a guarantor for the uranium recovery facility under license number [ insert license number] it shall establish an alternate financial assurance as specified in 10 CFR Part 40, AppendixA,asapplicableinthenameof[ licensee]unless[ licensee]has done so.
: 12.      Guarantor as well as its successors and assigns agrees to remain bound jcintly and severally under this guarantee notwithstanding any or all of the following: amendment or modifice. tion of license or NRC-approved 4
Reclamation or Stabilization Plan nr that f acility, the extension or reduction of the time of performante of reclamation, stabilization, ceconmissioning, and decontamination, or for long-term surveillance and control or any other nodification or alteration of an obligation of the licensee pursuant to 10 CFR Part 40,
: 13. Guarantor agrees to remain bound under this guarantee for so long as
[ licensee] inust comply with the applicable financial assurance require-ments of 10 CFR Part 40, Appendix A, for the previously listed facilities, except that guarantor may cancel this guarantee by sending notice by C-11
 
APPENDIX C RECOMMENDED WORDING FOR A PARENT COMPANY GUARANTEE certified mail to the NRC and to [ licensee], such cancellation to become effective no earlier than 90 days after receipt of such notice by both i
NRC and [ licensee] as evidenced by the return receipts.
,        14. Guarantoragreesthattf[ licensee]failstoprovidealternatefinancial
;            assurance as specified in 10 CFR Part 40, Appendix A as applicable, and                    ;
obtain written approval of such assurance from the NRC within 60 days after a notice of cancellation by the guarantor is received by the NRC from the guarantor, guarantor shall provide such alternate financial assuranca in the name of [ licensee] or make full paynent under the guarantee.                                                                                '
15.
Guarantor    expressly]
NRC or by [licensac      waives notice
                                    . Guarantor          of acceptance also expressly        of thisofguarantee waives notice    amendments by the or modifications of the Reclamation and Stabilization Plan and of amendments or modifications of the license.
1
: 16. If the guarantor files Financial Reports with the U.S. Securities and Exchange Conmission, then he shall prorptly submit them to the NRC durin~g each year in which this guarantee is in effect.
I hereby certify that this guarantee is true and correct to the best
{            cf my knowledge.
l Effective Date:
[NareofGuarantor]
[AuthorizedSignatureforguarantor)
[Nameofpersonsigning]
[Titleofpersonsigning]
Signatu e of witness or notary:
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9 APPENDIX 0 RECOMMENDED WORDING FOR A TRUST FUND I
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APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT TRUSTAGREEMENT,[theAgreement],"enteredintoasof[date]byandbetween
[nameofNRClicensee),a[nameofState][ insert"corporation,""partnership,"
                                    "association," or "proprietorship"], the "Grantor," and [name of corporate trustee],[ insert"incorporatedintheStateof                          " or "a national bank"],
the "Trustee."
WHEREAS, the United States Nuclear Regulatory Commission. *NRC," an agency of the United States Government, pursuant to the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, and the Uranium Mill Tailings Radiation Control Act of 1978 has promulgated regulations in Title 10, Chapter
'                                    I of the Ccde of Federal Regulations Part 40, Appendix A, Criteria 9 and 10.
These regulations, applicable to the Grantor, require that a licensee of a uranium recovery facility shall provide assurance that funds will be available when needed in ar.cordance with the approved Reclamation and Stabilization Plan l                                    and also for any long-term surveillance and control of the uranium recovery facility.
WHEREAS, the Grantor has elected to establish a trust to provide all                                  .
or part of such financial assurance for the facilities identified herein, WHEREAS, the Grcntor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee.
NOW, THEREFORE, the Grantor and the Trustee agree as follows:
Section 1. Definitions.              As used in this Agreement:
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(a) The term "Grantor" means the NRC licensee who enters into this Agreement and any successors or assigns of the Grantor.
(b) The term "Trustee" means the Trustee who enters into this
* Agreement and eny successor Trustee.
Section 2.      Identification of Uranium Recovery facilities and Cost Estir.ates.
This Agreement pertains to the facilities and NRC-approved cost estimates                            ;
identified in license nuder insertlicensenumber]andshowninScheduleA.
[0nScheduleA,foreachfaci[lity,listtheNRCliceMenuder,name, address,                                  j and the current reclamation, stabilization, and long term surveillance and                          l control estirates or portions thereof, for which financial assurance is demonstrated by this Agreement.]
Section 3. Establishment of Fund. The Grantor and the Trustee hereby                              '
e=tablish a trust fund (the "Fund") for the benefit of NRC. The Grantor and l
the Trustee intend that r.o third party have access to the Fund except as herein                    ,
provided. The Fund is established initially as consisting of the property.                          l which is acceptable to the Trustee, described in Schedule B attached iereto.                        i Such Property and any other property subsequently transferred to the Trustee is                    ;
referred to as the Fund, together with all earnings and profits thereon, less D-2
 
L APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT any payr.ents or distributicns made by the Trustee pursuant to this Agreement.
The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor hall it undertake any responsibility for              .
the amount of adequacy of, nor any duty to collect from the Grantor, any pay-ments necessary to dischargo any liabilities of the Grantor established by NRC.
Section 4.      Payment for Reclamation. Stabilization. and Long-Term Surveillance and control. The Trustee shall make payments from the Fund as NRC shall direct, in writing, to provide for the payment of the costs of reclamation, stabilization, and long-term surveillance and control of the facilities covered b, this Agreeinent. The Trustee shall reimburse the Grantor or other persons as specified by the NRC from the Fund for reclamation, stabilization and long-term surveillance and control expenditures, in such amounts as the NRC shall direct in writing.      In addition, the Trustee shall refund to the Grantor such amounts as the NRC specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.
Section 5.      Payments Corprising the Fund. Payments made to the Trustee for the Fund shall consist of cash or securities acceptable to the Trustee.
Section 6.      Trustee Management. The 'i.mstee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the grantor may comunicate in writing to the Trustee from time to time, subject, however, to the provisions of this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, i
the Trustee shall discharge his duties with respect to the Fund solely in              I the interest of the beneficiary and with the care, skill, prudence, and dili-          ;
gence under the circumstances then prevailing which persons of prudence, ecting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that:
(i) Securities or other obligations of the Grantor, or any other owner or operator of the f acilities, or any of their affiliates as defined in the              5 l
Investment Company Act of 1940, as amended,15 U.S.C. 80a-2.(a), shall not be acquired or held, unless they are securities or other obligations of the                ,
Federal or a State government; (ii) The Trustee is authorized to invest the Fund in tic
* or demand deposits of the Trustee, to the extent insured by an agency of the Federal or State government, and (iii) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payrent of interest thereon.
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t APPENDIX D RECOMMENDEO WORDING FOR TRUST FUND AGREEMENT Section 7.        Ccmingling and Investment.
(a) To transfer from time to time any or all of the assets of the Fund to any comon, comingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of *.he provisions thereof, to be comingled with the assets of other trusts participating therein; arid (b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S.C. 806-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion.
Section 8. Express Powers of Trustee. Without in any way limiting the powers and discretions conferred upon the Trustee by the other provisions of tiis Agreement or by law, the Trustee is expressly authorized and empowered:                    ,
(a)Tosell, exchange, convey, transfer o property held by it, by public or private sale.r            otherwise No person          dispose dealing with the  of any Trustee shall be bound to see to the 6pplication of the purchase money or to inquire into the validity or expediency of any such sale or other disposition;
)
(b) To make, execute, acknowladge, and deliver any and all documents of transfer and conveyance and any and all other instrun>ents that may be necessary or appropriate to carry out the powers herein granteo; (c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or
'                          to combine certificates representing such securities with certificates of tha sate issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qual.fied central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instru-mentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such se:urities are part of the              !
t Fund,                                                                                      i l                                  (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trurtee, in its separate corporate capacity, or in any banking institution affiliated with the Trustee, to the extent insured by an agency of the Federal or State government; and I
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e a APPENDIX 0 RECOMMENDED WORDING FOR TRUST FUND AGREEMENT (e)Tocompromiseorotherwiseadjustallclaimsinfuvorofo/
against the Fund.
Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund.
Section 10. Annual Valuation. The Trustee shall annually, at least 30 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the NRC 2 statement confinning the value of the Trust. Any securities in the Fund shall be valued at market value as of no more than 60 days prior to the anniversary date of the establishment of the Fund. The failure of the Grantor to object in writing to the Trustee within 90 days af ter the statement has been furnished to the Grantor ano the NRC shall constitute a conclusively binding assent by the Grantor, barrirg the Grantor from asserting any clair or liability against the Truster with respect to matters disclosed in the statement.
1                                            Section 11. Advice of Counsel. The Trustee may from time to time consult with 4
counsel, who may be counsel to the Grantor, with respect to any question arising as to the construction of this Agrecrent er any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advise of counsel.
Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from tine to time with the Grantor.    (See Schedule C.)
Section 13. Successor Trustee The Trustee may resign or the Grantor may replace the Trustee, uut such resignation or replacement shall not be effective until the Grantor has appointed a successor Trustee and this successor accepts the appointment. The successor trustee shall have the savne powers ano duties as those conferred upon the Trustee hereunder. Upon the successor trustee's J                                            acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund.
If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions.
The successor trustee shall specify the date in which it assums administration of the trust in a writing sent to the Grantor, the NRC and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 9.
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APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT Section 14. Instructions to the Trustee All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in the attached Exhibit A or such cther designees as the Grantor may designate by amendment to Exhibit A. The Trustee shall be fully protected in acting without inquiry in accordence with the Grantor's orders, requests, and instructions. All orders, requests ano instructions by the NRC to the Trustee shall be in writing, si ned by the NRC, or their designees, and'the Trustee shall act and shall be b11y protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event consti-tuting a change or a termination of the authority of any person to act on behalf of the Grantor ur NRC hereunder has occurred.        The Trustee shall have no duty to act in the absence of such orders, requests and instructions from the Grantor or the NRC, except as provided for herein.
Section 15. Notice of Nonpaynents.        The Trustee shall notify the Grantor and the NRC by certified mail within 10 days folicwing the expiration of the 30-day period af ter the anniversary of the establishment of the Trust, if no payinent is received from the Grantor during that period. After the pay-in period is completed, the Trustee sh611 not be required to send a notice of nonpayment.
l                      Section 16. Amendment of Agreement. This Agreement may be amended by an instru-ment in writing executed by the Grantor, the Trustee, and the NRC or by the Trustee and the NRC if the Grantor ceases to exist.
I
)                      Section 17. Irrevocability and Termination. Subject to the right of the
;                      parties to amend this Agreement as provided in Section 16, this Trust shall be l
1rrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the NRC or by the Trustee and the NRC, if the Grantor i                      ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust adrninistration expenses, shall be delivered to the Grantor.
~
Section 18. Insnu.nity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good
                                  ~
f aith, in the adminieration of this Trust, or in carrying out any directions by the Grantor or the NRC issued in accordance with this Agreement. The Trustee shall be indemnified and saved hartless by the Grantor or from the Trust Fund, or both, from and against any personal liability to which the
'                      Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense.
Sectiun 19. Choice of Law. This Agreement shall be acministered, construed, and enforced according to the laws of the State of [ insert nare of State].
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APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT Section 20_. Interpretation. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descrip-tive headings for each Section of this Agreement shall not affect the inter-pretation or the legal efficacy of this Agreement.
Ih WITNESS WHEREOF the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the data first above written.
[SignatureofGrantor]
Attest:                                                    [ Title]
[ Title]
[ Seal]
[SignatureofTrustee]
Attest:                                                    [ Title]
[ Title]
[ Seal]
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APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT                                                          <
SAMPLE EXHIBIT A The following is an example of the certification of acknowledgment which must accompany the trust agreement for a trust fund, STATE OF COUNTY OF                                                                                                                  ,
Onthis[date],beforeme,personallycame[nameoflicensee]known,who,                                                      ,
being by me duly sworn did depose and say that she/he resides at [ address],
that she/he is [ title) of [(corporation], the corporation described in and which executed the above instrument; that he/she knows the seal of siid Ass 0c-1      iation, that the seal affixed to such instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and                                              ,
that she/he signed her/his name thereto by like order.
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[ Notary Public 51gnaturej                                              ;
i My Commission Expires:
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                                                                                                                                  ?
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APPENDIX D REC 0 m ENDED WORDING FOR TRUST FUND AGREEMENT SAMPLE SCHEDULE A TNiAgreementdemonstratesfinancialassuranceforthefollowing):
cost estimates (s) for the following uranium recovery facility (ies U.S. NUCLEAR REG'.'t.ATORY                                                    COST ESTIMATES C0KHSS10N                    NAME OF      ADDRESS OF            DEMONSTRATED BY LICENSE NLHBER                FACILITY      FACILITY            THIS AGREEMENT The cost estimates listed here were last adjusted and approved by the NRCon[date].
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APPENDIX D        -
RECOMMENDED WORDING FOR TRUST FUND AGREEMENT SAMPLE SCHEDULE B The fund is established initially as consisting of the following property: [$dollaramount]asevidencedby[ property].
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APPENDIX D RECOMMENDED WORDING FOR TRUST FUND AGREEMENT SAMPLE SCHEDULE C
            , Trustees fees shall be $      .
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APPEhDIX E REC 0FFENDED WORDlhG FOR A STANDBY TRUST 4
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L APPENDIX E REi.0MMENDED WORDING FOR STANDBY TRUST TRUSTAGREEMENT,((theAgreement)[enteredintoasof[date]byandbetween[name of licensee], a nameofState]s insert "corporation", "partnership," "asso-ciation," or "proprietorship]",- the "Grantor," and [name of a "national bank]",
the "Trustee."
WHEREAS, the United States Nuclear Regulatory Commission, "NRC," an agency of the United States Government, pursuant to the Atomic Energy Act of 1954 as amended,theEnergyReorganizationActof1974,andtheUraniumMillTaIlings Radiation Control Act of 1978, has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 40, Appendix A, Criteria 9 and 10.
These regulations, applicable to the Grantor, require that a licensee of a uranium recovery facility shall provide assurance that funds will be available when needed in accordance with the approved Reclamation and Stat 11124 tion Plan and also for any long term surveillance and control of the uranium recovery f acility.
WHEREAS, the Grantor has elected to establish a [ insert "letter of credit,"
            "surety bond," or "parent guarantee"] to provide all or part of such financial assurance for the facilities identified herein, and WHEREAS, when payment is made under a [ insert "letter of credit", "surety bond", or "parent guarantee"] this standby trust shall be used for the receipt of such payment, and WHEREAS the Grantor has elected to establish a standby trust to provide all or part of such financial assurance for the facilities identified herein, WHEREAS, the Grantor, at: ting through its duly authorized officers, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee.
HOW, THEREFORE, the Grantor and the Trustee agree as follows:
Section 1. Definitions. As useo in this Agreement:
(a) the term "Grantor" means the licensee who enters into this Agreement and any successors or assigns of the Grantor.
(b) The term "Trustee" means the trustee who enters into this Agreement and any 4
successor Trustee.
Section 2. Identificat. ion of Uranium Recovery Facilities and Cost Estimates. This Agreement pertains to the facilities and cost estimates identified in 1Tcense ruireer [ insert Itcense number) and shown in Schedule A.
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        . .                                                                                                                              L APPENDIX E RECOMMENDED WORDING FOR STANDBY TRUST Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a standby trust fund (the "Fund") for the benefit of NRC. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided.
Section 4. Payments Comprising the Fund. Payments made to the Trustee for the Fund shaTT consist or cash cr securittes acceptable to the Trustee. The fund is funded initially as consisting of the property, which is acceptable to the Trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the Trustee is referred to as the Fund, together with all earnings and profits thereon, less any payments or distribu-tions made by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by NRC.
Section 5.
Payment for Reclamation, Stabilization. and Long Term Surveillance  -
and Control. The Trustee shall make payments from the Fund as the NRC shall direct, in writing, to provide for the payment of the costs of reclamation, stabilization, and if necessary, long term surveillance and control of the facilities covered by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the NRC from the Fund for reclamation, stabilization, and long tenn surveillance and control expenditures in such
  -        amounts as the NRC shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts os the NRC specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.
Section 6. Trustee Management. The Trustee shall ins st and reinvest the principal and income of the Fund and keep the Fund ir asted as a single fund, withoutdistinctionbetweenprincipalandincome,inaccordancewithgeneral investm.t policies and guidelines which the Grantor may coesnunicate in writing to the Trustee from time to time, suNect, however, to the provisions v this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with respect to the Fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstance then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an t:nter) rise of a like character and with like aims; except that: (1) Securities or otier obligations of the Grantor, or any other owner or operator of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 8Ca-2(a), shall not be acquired or held, unless they are securities or other obligations of the Federal or a State government; E-3
 
APPENDIX E RECOMMENDED WORDING FOR STANDBY TRUST 3
(ii) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal or State government; and (iii) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable tine and without liability for the papt of interest thereon.
Section 7. Corsningling and Investment. The Trustee is expressly authorized in its discretion:
(a) To transfer from time te time any or all of the assets of the Fund to any      I corsoon, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provision thereof, to be commingled with the assets of other trusts participating therein, and
!          (b) To purchase shares in any investment company registered under the Company Act of 1940, 15 U.S.C. 80a-1 et seq., including one which may be created, managed, underwritten, or to which investrent advice is rendered or the shares of which are sold by the Trustee. The Trustee ray vote such shares in its discretion.
i          Section 8. Cxpress Powers of Trustee. Without in any way limiting the powers end discretf ons conf erred upon the Trustee by the other provisions of this Agreement oi by law, the Trustee is expressly authorized and empowered:
.            (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held 'y it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase runey or to inquire into the validity or expediency of any such sale or other disposition; i            (b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (c) To register any securities held in the Fund in its own name or in the name of a nominee and to h31d any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issued held by the Trustee in other fiduciary capacities or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominte of such depositcry with other securities ceposited therein by another person, or to deposit or arrange for the deposit of any securities issued by i
the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books, and records of the Trustee shall at all such securities are part of the Fund; I
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i APPENDIX E RECONNENDED WORDING FOR STANDBY TRUST (d) or savings certificates issued by the Trustee, in its separ the extent insured by an agency of the Federal or State (e) the Fund.        To compromise or otherwise adjust all claims in favor of or against Section 9. Taxes and Expenses.
                                                                        ~
All taxes of any kind that r,ay be assessed cr by levied            against the Fund  shallorbeinpaid respect from of thethe  Fund and all brokerage comission incurred Fund.
All other expenses incurred by the Trustee in connection with the tdministration of this Trust, including fees for legal services rendered tu the Trustee, the compensation of the Trustee to the disbursements of the Trustee shall be paid from the Fund. extent Section 10. Annual Valuation After Payment has been made into date of receipt of payment into the Fund, furnish to the Grantor and to the NRC, a statement confirming the value of the Trust.                          Any securities the anniversary date of establishment of the Fund.in the Fund sha to object in writing to the Trustee within 90 days afThe                      ter failure of the Grantor i
the statement  has been furnished to the Grantor and the NRC shall constitute a conclusively binding assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to the matters disclosed in the statement.
}
_Section 11. Advice of Counsel. The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any question arising hereunder.                      as to the construction of this Agreernent or any action to be taken law, in acting upcn the advice of counsel.The Trustee shall be fully protected, Section 12.
_ Trustee Compensation. The Trustee shall be entitled to reasonable compensation the                        Grantor. for      its services as agreed upon in writing from time to time with (See Schedula C.)
^
Section 13. Successor Trustee.                                The Trustee may resign er the Grantor ray replace the Trustee, but such~ resignation or replacerent shall not be effective
'.        untilappointment.
the                            the Grantor has appointed a successor Trustee and this successor accepts as those conferred upon the Trustee hereunder.The successor trustee shall have
)
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APPENDIX E                                    ,
REC 0tWENDED WORDING FOR STANDBY TRtlST Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and pro-perties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction of the appointnent of a successor trustee or for instructions. The successor trustee shall specify the date on which it assurnes administration of the trust in a writing sent to the Grantor, the NRC, and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by t11s Section shall be paid as provided in Section 9.
Section 14    Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in the attached Exhibit A or such other designees as the Grantor may designate by arrendment to Exhibit A. The Trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requerits, and instructions by the NRC to the Trustee shall be in writing, signed by the NRC, or their designees, and the Trustee shall be ect and shall fully protected in 6cting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assure, in the absence of written notice to the contrary, that no event constituting a change or a ternanation of the authority of any person to act on behalf of the Granter or NRC hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and the instructions from the Grantor or !!RC, except as provided for herein.
Section 15. Amendrnent by Agreerrent. This Agreement may be amended by an Tnstrument in writing executed by the Grantor, the Trustee, and the NRC, or by the Trustee and the NRC, if the Grantor ceases to exist.
Section 16. Irrevocability and Termination. Subject to the right of the parties to amend this Agreenent as provided in Section 16, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the NRC, or by the Trustee and the NRC, if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property less final trust administration expenses shall be delivered to the Grantor.
Section 17. Imunity and Indemnification. The trustee shall not incur personal liability of any nature in connection with any art. or omission, made in good faith, in the administration of this Trust, or N carrying out any directions by the Grantor or the NRC issued in accordance with this Agreerent. The Tn stee shall be indemnified and saved harmless by the Granter or from the Trust Fund, or both, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official  ,
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APPENDIX E RECOMMENDED WORDING FOR STANDBY TRUST capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense.
Section 18. Choice of Law. This Agreement shall be administered, construed, and enforced according to the lews of the State of (insert name of state).
Section 19. Interpretation. As used in this Agreerent, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each Section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixta and attested as of the date first above written.
[SignatureofGrahtur]
Attest:                                            [ Title]
[ Title}
[ Seal)
                                                                                          ' Signature of Trusteel
                                                                                          ' Title) 9 E-7
 
          .                                                                                                                    I APPENDIX E RECOMMENDED WORDING FOR STANDBY TRUST                                    i SAMPLE EIRTETT A The following is an example of the certification of acknowledgment which must acccmpany the trust agreecent for a trust fund.                                    i STATE OF                                                                                      t To Wit:
CITY OF ___
On this          day of            before me, a notary public in and fortheCityandStateaforesaid,personallyappeared                            , and he did depose and say that he is the                  of          , national ban 6ing association, Trustee, and who executed the above 1'strument; that he Liows the seal of said Association, that the seal affixed to such instrument i' fech i
Corporate Seal; that it was so affixed by order of the Association, and that he signed his name thereto by like order,
[ Notary Public]
My Commission Expires:                                                                        ;
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    ,          - _ _ _ _ . . -                -.-  . _ _. _ - . = . - ._. _ __-                  _ _ _ -          ._ .. --.
 
APPENDIX E RECOMMENDED WORDING FOR STANDBY TRUST SAMPLE SCHEDULE A ThisAgreementdencnstratesfinancialassuranceforthefollowingcostestimates(s) fer the following uranium recovery facility (its):
COST ESTIMATES FOR U.S. NUCLEAR                                                                                            WHICH FINANCIAL REGULATORY                                                                                              ASSURANCES BEING COMMIS$10N            NAME OF                  ADDRESS OF                                            DEMONSTRATED BY LICENSE NUPBER        FACILITY                  FACILITY                                              THIS AGREEMENT The cost estimates listed here were last adjusted and approved by the NRC on
[date).
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APPENDIX E RECOPliENDED WORDING TOR STANDBY TRUST SAMPLE SCREDUEE B AMOUNT  _.
AS EVIDENCED BY E-10
 
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  .. e APPENDIX E RECOMEWED WORDING FOR STAND 8Y TRUST SAMPLE SCRlRET C
                    , Trt.3 tees fees shall be $    .
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                              . . -}}

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