J-4 SDSTA Risk Transfer Protocol Manual Final July 12 2024.pdf

Table of Contents

I. GENERAL

A. Purpose - Interpretation

B. Scope

C. Protocol Structure

D. Definitions

E. The Risk Manager

F. Responsibilities

G. Document Retention

H. Inclusion in Contracts and Memoranda of Understanding ...................................................... s

I. Changes to Protocols ..................................................................................................................... s

II. REQUIRED CONTRACTUAL PROVISIONS

A. Required Clauses ............................................................................................................................ s

B. Natural Persons Entering the Underground Property

C. Waivers

Ill. INSURANCE REQUIREMENTS

A. Overview

B. Determination of Categories and Required Coverages

C. Categories of Risk

D. Standard Insurance Requirements

E. Ancillary Coverages - Workers Compensation Coverage

F. Insurance Requirements for Contracts with Certain Funding Agencies - Large "Other Risk" Projects

G. SDSTA as Contractor

IV. RISK TRANSFER IN LIEU OF OR IN CONJUNCTION WITH COMMERCIAL INSURANCE

A. Overview

B. Waiver of Insurance Requirements

C. Acceptance of Extraordinary Retentions

D. Acceptance of contractor or Project Participant "Self-Insurance"

E. Insurance or Self-Insurance Purchased or Provided by Project Participant Collaborations

V. EVIDENCE OF CONTRACTOR OR PROJECT PARTICIPANT COMPLIANCE

A. Certificates of Insurance

B. Review

C. Samples

D. Examples of Unsatisfactory Evidence of Compliance

Appendices

A - Property Donation Agreement (Excerpts)

B - Standard Indemnification Clause

C - Acknowledgment of Risk

D - Release, Agreement Not to Sue and Waiver

E - Standard Insurance Requirements

F - Sample Certificate of Insurance: Evidencing Compliance with Insurance Requirements in Category 2

G - Sample Certificate of Insurance: Evidencing Compliance with Insurance Requirements in Category 3

H - Risk Transfer Work Flow Diagram I - Risk Management Diagram

J - Supplementary Policy Guidance and Certificate of Insurance Review Checklist

I. GENERAL

A. Purpose - Interpretation

These Risk Management Protocols ("Protocols") are intended to:

Risk Transfer Protocols for SDSTA's Contractors and Project Participants

1. Establish a systematic contractual risk transfer procedure for the South Dakota Science and Technology Authority ("SDSTA");

2. Establish a written risk management plan that includes, among other things: (a) general categories of activities and associated risks organized by level of risk; (b) types of coverage and limits of liability to be required for each category; (c) criterion used to determine whether the Homestake Indemnified Parties must be named as additional insureds on commercial insurance policies required of Contractors and Project

Participants; and (d) criterion used to determine whether a retained risk plan, pool, or other form of "self-insurance" is acceptable in combination with or in lieu of commercial insurance; and

3. Ensure all Contractors and Project Participants provide insurance in compliance with the terms of the PDA and to shift risk away from the Homestake Indemnified Parties, SDSTA, and the State of South Dakota in compliance with the terms and intent of the PDA and the donation of the former Homestake Gold Mine to SDSTA.

B. Scope

These Protocols are applicable to all Contractors and Project Participants and its or their

Representatives.

C. Protocol Structure

SDSTA's risk transfer program consists of two components: standard contractual provisions and insurance requirements. The standard contractual provisions are described below in Section II.

The insurance requirements are described below in Section Ill.

D. Definitions

l. "Authorized Entrant" has the meaning given to that term in the PDA. The term does not include FRA or its Representatives or FRA's Contractors.

Risk Transfer Protocols for SDSTA's Contractors and Project Participants

2. "Contractor,, means a natural person or Entity that undertakes a contract to provide materials or labor to perform a service or do a job at SURF, including but not limited to excavation, construction, outfitting, and equipment installation, whether on the Surface

Property or in the Underground Property, and including, without limitation, natural persons and entities contracting with SDSTA, a Project Participant, or any other natural person or entity. Without limitation, the term includes any contractor or contractor

Representative that uses a hand tool or other tool as a part of their job or work. The term includes subcontractors at any level and consultants and sub-consultants at any level.

3. "DOE11 means the United States Department of Energy.

4. "Entity" means a partnership, corporation, limited liability company, or unincorporated association; a collaboration; a public or private educational institution; a public or private laboratory; a federal, state local, or other governmental entity, or any agency or instrumentality thereof; a body corporate and politic; and any other or similar organization. Without limitation, the term includes collaborations made up solely of non

US natural persons and/or Entities or a combination of US and non-US natural persons and/or Entities.

5. "FRA11 means Fermi Research Alliance, LLC, operator of the Fermi National Accelerator

Laboratory.

6. "Homestake Indemnified Parties11 has the meaning given to that term in the PDA.

7. "PDA'' means the Property Donation Agreement between and among Homestake Mining

Company of California, the State of South Dakota, and SDSTA, which is dated April 14, 2006, as amended.

8. "Project Participant11 means a natural person or Entity that undertakes, or participates in the undertaking of, an experiment, investigation, examination, or other, similar scientific or engineering activity at SURF, including without limitation the excavation or construction of laboratory space or infrastructure associated with or necessary for the experiment, investigation, examination, or other, similar scientific or engineering activity.

The term "Project Participant" does not include a Contractor engaged by a natural person or Entity solely for the purpose of the excavation or construction of laboratory space or infrastructure associated with or necessary for the experiment, investigation, examination, or other, similar scientific or engineering activity. The term "Project

Participant" includes, without limitation, a public or private educational institution or a laboratory which is a member of a collaboration or which employs a natural person who is a member of a collaboration. The term does not include DOE or any other funding agency. The term does not include a natural person who is an employee of a Project

Participant that undertakes an experiment, investigation, examination, or other, similar scientific or engineering activity at SURF.

9. "Representative" means any natural person or Entity, including elected officials, officers, directors, employees, agents, consultants, lessees, licensees, and invitees, that any

Contractor, Project Participant, or other natural person or Entity invites onto, or allows or authorizes to conduct any activities at SURF. Without limiting the generality of the foregoing, the term includes natural person or Entity members of collaborations and natural persons representing collaborations.

10. "Risk Manager" means a qualified person employed by the Authority for the purpose of managing the risk of the Authority and interpreting and carrying out the terms of these

Protocols.

11. "Risk Management Consultant" means a qualified consultant, not an employee of SDSTA, engaged for the purpose of assisting the Risk Management Consultant and carrying out the other tasks assigned to the Risk Management Consultant by these Protocols.

12. "SURF", means the Sanford Underground Research Facility, owned and controlled by

SDSTA, and located in and near Lead, South Dakota, including both the Surface Property and the Underground Property, and any other SDSTA-owned or -controlled property.

13. "Surface Property" means the surface estate at SURF as described in Part 1 of Exhibit A to the PDA.

14. "Underground Property" means the subsurface estate and mineral estate at SURF as described in Part 2 of Exhibit A to the PDA, which includes all rights owned by SDSTA in the subsurface estate and mineral estate underlying the Surface Property.

E. The Risk Manager

SDSTA shall at all times employ a qualified internal Risk Manager and as necessary and/or required by these Protocols, a Risk Management Consultant.

F. Responsibilities

Contractors and Project Participants

1. The Executive Director will ensure that all requirements of the PDA are met. The Executive

Director will ensure compliance by allocating resources and delegating responsibility concerning contract review and insurance compliance to the Risk Manager.

2. The Risk Manager will be responsible for categorizing all Contractors and Project

Participants and its or their Representatives by appropriate level of risk.

3. The Risk Manager is responsible for the development of a risk management program that includes decision making tools, standardized categorization parameters to be used to determine types of coverage, limits of liability, and whether a retained risk plan, pool, or other form of "self-insurance" is acceptable.

4. The Risk Manager ensures the proper risk management contract language in compliance with these Protocols is applied and inserted within each contract on a case-by-case basis.

5. The Risk Management Consultant will upon request review the Risk Manager's determinations concerning types and amounts of coverage required of "Other Risk"

Contractors and Project Participants and will periodically review the Risk Manager's determinations concerning the level of risk assigned to particular Contractors and Project

Participants. The Risk Management Consultant will be identified and retained by the

Executive Director, in consultation with SDSTA's general counsel.

6. The Risk Manager shall have the separate and independent duty and ability to report directly to the SDSTA Board of Directors and to general counsel for SDSTA.

G. Document Retention

1. SDSTA shall retain copies of all Contracts to which SDSTA is a party, Memoranda of

Understanding, or other Agreements with Contractors and Project Participants, insurance certificates, and policies for a minimum of ten (10) years after final completion or final decommissioning.

2. Anything in this document to the contrary notwithstanding, SDSTA shall at all times comply with the document retention provisions of PDA section 6.10 (c).

H. Inclusion in Contracts and Memoranda of Understanding

Contractors and Project Participants

In all projects (whether conducted by SDSTA or a Project Participant) involving competitive bids, requests for proposals, or any other form of solicitation, the insurance and other requirements set out in this document will be provided to each interested Contractor prior to bid submission.

Prior to final execution of a contract with any Contractor or a Memorandum of Understanding or other agreement with a Project Participant, regardless of whether a competitive bid, request for proposal, or other form of solicitation was utilized in connection therewith, the Risk Manager will verify the contract or memorandum contains the appropriate indemnification and insurance requirement language to ensure the requirements of this document have been met. SDSTA acknowledges that the Site Access Agreement (Version 1) used by the management and operating contractor for Fermi National Accelerator Laboratory for DUNE collaborators complies with these Risk Transfer Protocols.

I. Changes to Protocols

1. The Risk Manager makes minor changes for work flow and integration.

2. The Risk Manager delegates responsibilities for formatting, version numbers, document control, and grammatical changes.

3. The Risk Manager notifies the Executive Director of the need for major conceptual changes.

4. Major changes, such as changes to limits of coverage, require the review and approval of

SDSTA's general counsel, DOE, and the Board of Directors, and must thereafter be submitted to Homestake. Major changes do not take effect until the later of approval by

DOE or submission to Homestake. No changes shall have retroactive application.

II. REQUIRED CONTRACTUAL PROVISIONS

A. Required Clauses

Except as otherwise provided below, a standard indemnification clause will be included in all contracts, Memoranda of Understanding, or other agreements between SDSTA and Contractors, and between Project Participants and their Contractors of any tier. A provision requiring natural persons entering the Underground Property to execute an Acknowledgement of Risk and the

Release and Agreement Not to Sue and Waiver will be included in all contracts, Memoranda of

Understanding, or other agreements between SDSTA and Contractors or Project Participants, between Project Participants and their Contractors, and between general Contractors and their subcontractors and consultants of any tier when the Underground Property is entered or the work or activities directly relate to the Underground Property.

1. Indemnification. This provision requires a Contractor to assume liability for, defend, and indemnify the Homestake Indemnified Parties, SDSTA and the State of South Dakota, and

SDSTA's and the State of South Dakota's elected officials, appointed officials, employees and agents from and against losses arising from the Contractor's negligence or intentional acts and the negligence or intentional acts of the Contractor's officers, directors, employees, agents, subcontractors of any tier, or consultants. This requirement does not apply to Contractors of Authorized Entrants or to Contractors in the "Low Risk" category.

The standard form of indemnification clause is shown in Appendix B.

2. Acknowledgment of Risk. Under this provision, Contractors and Project Participants and their Representatives are advised that all natural persons who enter the Underground

Property are required to declare that they have investigated and been advised on the risks associated with going underground. The required form of Acknowledgment of Risk is shown in Appendix C. This requirement does not apply to Authorized Entrants.

3. Release, Agreement Not to Sue and Waiver (the "Release"). Under this provision, Contractors and Project Participants and their Representatives are advised that all natural persons who enter or conduct work or activities directly related to the Underground

Property must agree to release, discharge, and not sue the Homestake Indemnified

Parties, SDSTA, the State of South Dakota, and SDSTA's and the State of South Dakota's elected officials, appointed officials, employees, and agents from and for any claims, actions, or proceedings of any kind related to or arising out of damage to their health, bodily injury, death and/or damage to their property in any way associated with entry, presence in, or activities upon, in, or around SURF. The required form of Release, Agreement Not to Sue and Waiver is shown in Appendix D. This Requirements does not apply to Authorized Entrants.

B. Natural Persons Entering the Underground Property

Anything elsewhere in these Protocols to the contrary notwithstanding, except for Authorized

Entrants, all natural persons entering the Underground Property for any reason or under any authority must execute the Acknowledgement of Risk and the Release, Agreement Not to Sue and Waiver prior to entering the Underground Property. Except for Authorized Entrants, this requirement applies to all elected officials, officers, agents, and employees of SDSTA, the State of South Dakota, the United States, and all other governmental entities.

C. Waivers

Contractors and Project Participants

The requirement for execution of the standard indemnification clause may be waived by SDSTA's

Executive Director, in consultation with SDSTA's legal counsel. Execution of the Acknowledgment of Risk and of the Release, Agreement Not to Sue and Waiver are required by the PDA and may only be waived by the Executive Director, in consultation with SDSTA's legal counsel and with

Homestake's written consent. The PDA requires Homestake's approval of the forms of the

Acknowledgment of Risk and the Release and Agreement Not to Sue and Waiver. Accordingly, no changes may be made to those forms without Homestake's written consent.

Ill. INSURANCE REQUIREMENTS

A. Overview

These guidelines establish four (4) broad categories of Contractors and Project Participants, based on the nature and extent of their activities on SDSTA property. The categories are

"Negligible Risk," "Low Risk," "Intermediate Risk" and "Other Risk." The following subsections set out the criteria for classifying Contractors and Project Participants and the insurance requirements for each, as well as establishing criteria for requiring certain supplemental forms of coverage and determining when the Homestake Indemnified Parties must be included as additional insureds. The insurance requirements of this document apply not only to Contractors contracting with SDSTA, but also Contractors contracting with Project Participants for work at

SURF.

B. Determination of Categories and Required Coverages - Ratings for Commercial Insurers.

The Risk Manager shall assign categories of risk and determine types and levels of coverage based upon the following criteria.

The Risk Manager, after evaluating the risks presented by the proposed Project Participant activity or Contract, may decrease the limits otherwise required by these Protocols and may waive coverages otherwise required if the Risk Manager determines reduced limits and/or a waiver of certain coverages will adequately address the risks presented.

Commercial insurance coverage must be provided by an insurer with an A.M. Best rating of A, VII or greater.

C. Categories of Risk

Contractors and Project Participants

1. Category One ("Negligible Risk"). Contractors and Project Participants whose activities are conducted on the Surface Property only and present a negligible risk of property damage and bodily injury. Examples of these types of activities include:

a) Onsite classroom training;

b) Mail or small parcel delivery (e.g., FedEx or UPS);

c) Meal delivery;

d) Office equipment repair and maintenance; and

e) Project Participant who arrives to select location to collect a sample.

2. Category Two ("Low Risk"). Contractors and Project Participants that:

a). Will be conducting construction activities on the Surface Property only, and will not be using heavy construction equipment except in connection with a contract of

$50,000.00 or less; or b). Will have fewer than ten (10) employees or natural persons who are Representatives of a Project Participant present at SURF (Surface Property or Underground Property) at any one time; and c). Will not be using or storing explosives, suffocative, caustic or otherwise dangerous materials.

Examples of "low risk" Contractors or Project Participants are:

I. Contractor working on water treatment plant modifications;

II. Project Participant that has graduate students assisting in biological surveys in the Underground Property; and

Ill. Consultants not participating in design or quality control inspection.

3. Category Three ("Intermediate Risk"). All Contractors and Project Participants doing work or with a presence on the Surface Property not included in categories One, Two, or Four, and all Contractors and Project Participants doing work in or with a presence in the

Underground Property not included in category Two or category Four. Examples of

Contractor or Project Participant activities that may be appropriate for this category include the following:

a) Structural work on the Surface Property, including the use of heavy construction equipment in connection with a contract of more than $50,000.00, excavation, or blasting.

b) Infrastructure work on the Surface Property.

c) Transportation on the Surface Property.

d) Presence at SURF (Surface Property or Underground Property) at any one time of 10

- 19 Contractor employees or of 10-19 natural persons who are Representatives of a

Project Participant.

e) Work in buildings occupied by 20 - 49 persons or adjoining a building occupied by 20

- 49 persons.

f) Use of storage of suffocative or other hazardous materials on the Surface Property.

4. Category Four ("Other Risk"). Contractors and Project Participants doing work or with a presence on the Surface Property or in the Underground Property meeting one or more of the following criteria:

a) Contractors or Project Participants conducting particularly hazardous activities, such as excavation, blasting, or the presence, use, or handling of suffocative, caustic, or other hazardous materials in the Underground Property.

b) Use of heavy equipment in the Underground Property.

c) Underground Property infrastructure work.

d) Underground Property transportation or movement of equipment or personnel, including hoists and winches.

e} Work in buildings occupied by fifty or more people, or adjoining a building occupied by fifty or more people.

f} The presence onsite at SURF (Surface Property and/or Underground Property} of twenty or more employees of a Contractor or its subcontractors and consultants, or of twenty or more natural person Representatives of a Project Participant.

g} Contracts or Projects with a value of $5 million or more.

h} Installation or manipulation of high-voltage infrastructure and related equipment.

D. Standard Insurance Requirements

1. See Appendix E for detailed standard insurance requirements for each category of risk.

, E. Ancillary Coverages - Workers Compensation Coverage

Contract

1. Illustration 1 describes when supplemental insurance coverages should be required; in many cases more than one type of insurance may be required. To use Illustration 1, identify the activity(ies} to be performed by the Contractor or Project Participant in the first column of the table. Then note the insurance coverage necessary to protect against losses that may arise from that activity. Finally, proceed to Section 111.E.2 below to determine whether to modify the standard insurance requirements.

Illust ration 1

Ancilla ry Coverage Requirements by Contract Activity Involved

Contractor's Activity Professional Pollution Builders Aviation/Drone Cargo Installation

Automobile

Involved Liability Liability Risk Liability Insurance Floater Liability

Construction or X

Remodeling X (excluding

Projects - (including contracts

Construction contractsfor for or remodeling gradingor grading or projects over p_aving} paving}

$50,000

Hazardous or

Waste

Materials -

Removal of asbestos or lead-based paint; or the use, application, transport, removal, cleanup, or disposal of hazardous material in quantities of

100 gallons or more; or the disposal, treatment, transport, or storage of waste.

Installation of

Equipment

X

X

((when the installation or testing of the equipment involves the use of involves the use of asphyxiants

(including otherwise benign gases or vapors which displace

Risk Transfer Protocols for SDSTA's

X

Professional

Services -

Services from an accountant, architect, attorney, claims administration firm, consultant

(including X design consultants), engineer, financial advisor, medical professional, or other person who maintains a professional license.

Supply- FOB

Destinations -

Supplying of all goods and equipment breathable air) or hazardous or other materials excluded from coverage under a commercial general liability policy)

Risk Transfer Protocols for SDSTA's Contractors and Project Participants

X

(as appropriate) X where contractor is responsible for the goods/ equipment to the point of delivery (FOB destination).

Use of Aircraft

/Helicopters

Use of automobiles, but excluding natural persons operating personal leased, hired, or owned automobiles

Use of drones

X

X

Risk Transfer Protocols for SDSTA's Contractors and Project Participants

{as appropriate}

2. Based upon Illustration 1 above, the following supplemental coverages shall be required.

a. Aviation/ Drone Liability Insurance

i. Aviation liability insurance coverage shall provide limits of not less than

$5,000,000 per occurrence for airplanes/helicopters with seven {7} seats or less;

$10,000,000.00 per occurrence for aircraft/helicopters with eight (8) to twelve

(12} seats; and $25,000,000.00 for aircraft/helicopters of greater than twelve (12} seats, for aircraft/helicopters utilized for material or equipment delivery to SURF, and for aircraft/helicopters utilized for firefighter or material application (such as dust control}. Coverage for material application shall include coverage for overspray and chemical drift.

ii. Drone liability coverage shall provide limits of not less than $1,000,000.00 per occurrence and $1,000,000.00 aggregate.

X

iii. The policy shall be endorsed to include SDSTA and its directors, officers, employees, and agents as additional insureds, and a waiver of subrogation in favor of SDSTA and its directors, officers, employees, and agents.

b. Builders Risk Insurance

i. All Risk Builders Risk insurance shall include Special Form coverage or its equivalent, at replacement cost for materials, supplies, equipment, machinery and fixtures that are, or will become, part of SDSTA-owned property, and shall include the cost of labor to repair or replace the damaged or destroyed materials, equipment, machinery, and fixtures. Such insurance shall:

(a) Remain in effect until completion of the work and acceptance by SDSTA; and

(b} Include coverage for earthquake, flood, ordinance or law, temporary offsite storage, debris removal, pollutant cleanup and removal, preservation of property, excavation costs, landscaping, shrubs and plants, and full collapse coverage during construction.

c. Cargo Insurance

i. Cargo insurance coverage shall cover the value of the goods or equipment to be delivered until the goods or equipment is accepted by the owner.

d. Installation Floater

i. Installation floater coverage shall cover the value of the equipment to be installed.

Such insurance shall include:

(a) The owner as insured; and

(b) Coverage for testing, water damage, mechanical breakdown, and electrical injury.

e. Pollution Liability Insurance

i. Contractor's pollution liability or substantially similar commercial insurance coverage shall provide a limit for bodily injury, property damage, cleanup, and defense costs with limits not less than $10,000,000.00 per claim and

$10,000,000.00 annual aggregate. The Risk Manager will consider the coverage afforded by other policies, including exclusions in other forms of coverage, when determining whether to require pollution liability insurance coverage for equipment installation. The Risk Manager may require lower limits of liability for work which the Risk Manager concludes will result in risks not requiring these higher limits. The requirements of this subsection may be met by way of an appropriate project-specific commercial pollution liability policy.

ii. The policy shall be endorsed to include SDSTA and its directors, officers, employees, and agents; the State of South Dakota and its elected officials, appointed officials, employees, and agents; the Homestake Indemnified Parties;

the United States Department of Energy; and any other parties as required by the applicable contract as additional named insureds.

f. Professional Liability Insurance

Professional liability insurance coverage shall provide limits not less than

$1,000,000 per claim and $2,000,000 annual aggregate or as otherwise provided in Appendix E. Limits of $5,000,000.00 per claim and $10,000,000.00 aggregate shall apply to contracts involving design work for excavation and other work involving a risk of subsidence or collapse in the Underground Property. The aggregate limit of liability shall apply separately to SDSTA. Professional liability insurance shall not be required of Project Participants who are self-performing the design of equipment associated with an experiment located at SURF or the employees of such Project Participants.

g. Automobile coverage

Proof of automobile liability coverage is not required of natural persons operating their personal hired, leased, or owned automobiles. However, all natural persons and entities, including Contractors, Project Participants, their officers, directors, agents, employees, and representatives are reminded South

Dakota law requires persons operating motor vehicles in South Dakota to establish proof of financial responsibility, including through automobile liability insurance. See SDCL Ch. 32-35.

3. a. Contractors and US-based Project Participants must prior to the affected person coming onsite at SURF provide SDSTA with evidence of workers compensation coverage complying with the requirements of SDCL 62-5-1 through 62-5-5. Contractors and US based Project Participants may not elect to operate outside SDCL Title 62. (See SDCL 62-

5-7). In lieu of the foregoing, a Contractor or US-based Project Participant may provide evidence of compliance with the same or similar requirements of another state or territory of the United States and evidence of coverage for employees working at SURF.

b. Project Participants who are not US-based but whose home countries require or provide for workers compensation coverage which by law may provide coverage for employees working at SURF must provide evidence to SDSTA of such coverage before working on site at SURF

c. Project Participants who are not US-based and whose home countries do not require or provide for workers compensation coverage which by law could apply to employees working at SURF must prior to coming onsite at SURF provide SDSTA evidence of medical insurance coverage.

F. Insurance Requirements for Contracts with Certain Funding Agencies - Large "Other Risk"

Projects

1. The insurance requirements for contracts, including grant agreements, entered into between SDSTA and the United States government and its contractors and subcontractors to provide funding for the general operations and maintenance of SURF shall be negotiated by the Executive Director, in consultation with the Chairperson of the Board, SDSTA's legal counsel, and the Risk Management Consultant, taking into account the insurance requirement provisions of the PDA and these Protocols, the risk to SDSTA and the State of South Dakota, and the overall best interests of the overall mission of SDSTA.

2. For "Other Risk" projects with 50 or more persons underground at any one time or with a project cost of $50,000.000.00 or more the Contractor or Project Participant, as applicable, must provide an owner-controlled insurance program or other, similar "wrap up" insurance program with broad form liability coverage with limits of liability of not less than $25,000,000.00 per occurrence and $25,000,000.00 aggregate; without limiting the generality of the foregoing, the program may not include an exclusion for underground subsidence or underground water impoundment. The program need not include coverage for damage to DOE-owned property. Workers compensation coverage may be provided through the program or as provided in Article 111, Subsection E.4 of these protocols.

The requirement for a "wrap-up" insurance program may be waived if the Project

Participant can demonstrate such coverage is not available in the commercial insurance market or is not available at a cost comparable to similar insurance for another commercial or civil project with a similar risk profile; in the event of such a waiver, the

"Other Risk" insurance requirements of these Protocols shall remain in effect. In addition to such owner-controlled or other "wrap up" insurance program, SDSTA shall control the purchase of its own general liability and pollution coverage as required by the PDA, the cost of which shall be paid by the Project Participant or other external funding source so long as the cost is reasonable.

3. Anything elsewhere in these Protocols to the contrary notwithstanding, property insurance coverage shall not be required for DOE-owned property.

G. SDSTA as a Contractor

1. In a case where SDSTA serves in the capacity of contractor for any service or project, it will provide appropriate additional insured liability insurance coverage for the service or project subject to the exclusions, sub-limits, and other terms of the applicable insurance policy or other coverage document. The Homestake Indemnified Parties shall be named as an insured or additional insured on any such coverage.

2. Such insurance coverage will be provided through SDSTA's captive primary or excess liability tower, or separate commercial policy.

IV. RISK TRANSFER IN LIEU OF OR IN CONJUNCTION WITH COMMERCIAL INSURANCE

A. Overview

There may be instances where Contractors or Project Participants cannot or will not provide commercial insurance with the coverages and limits of coverage described above. The following sections describe when SDSTA will waive or modify insurance requirements or accept "self insurance."

B. Waiver of Insurance Requirements.

1. There may be situations where it is necessary or appropriate to modify (but not make more restrictive than provided herein) or waive certain insurance requirements. These include situations where:

a) There is negligible risk of loss from a particular activity. For example, where the

Contractor will not be operating a vehicle in performance of the work, the business automobile insurance requirement will be waived;

b) Requiring insurance is inconsistent with industry practice. For example, certain service providers may be unwilling to agree to standard insurance requirements, and it may not be able to procure the service from another provider willing to procure the otherwise required insurance ~overage. In these situations, SDSTA will do its best to negotiate the most favorable terms possible to adequately protect SDSTA; and

c) The Contractor provides a highly-specialized service such that:

(1) The Contractor has substantial leverage in the negotiation process; and

(2) SDSTA has no reasonable alternative markets for the services required.

2. In these circumstances and where otherwise appropriate, SDSTA in consultation with the

Risk Management Consultant (except with respect to the Negligible Risk and Low Risk categories, in which case no consultation is required), will negotiate the most favorable terms possible and will seek alternative means of transferring and mitigating risk, such as bonding, letters of credit, cash deposits, additional training, additional supervision by

SDSTA personnel and/or the provision of qualified SDSTA personnel to accompany the

Contractor or Project Participants or their Representatives as necessary and appropriate.

3. The Risk Manager, in consultation with the Risk Management Consultant, will consider requests from Contractors and Project Participants to reduce the limits of liability or types of coverage required based on the cost of such insurance to the Contractor or Project

Participant if reasonably necessary to enable the Contractor or Project Participant to compete for or participate in work at SURF. Such consideration shall include an evaluation of the risks associated with the specific work to be undertaken and of the consequences to other Contractors, Project Participants, SDSTA, the Homestake Indemnified Parties or others of an uninsured or underinsured loss.

C. Acceptance of Extraordinary Retentions

In some circumstances, SDSTA, after consultation with the Risk Management Consultant, will accept extraordinary retentions in lieu of traditional commercial insurance. For the purposes of these protocols, the term "extraordinary retention" means retention or deductibles of

$100,000.00. When evaluating proposals to transfer risk in that fashion, the Risk Manager, in consultation with the Risk Management Consultant, shall consider whether the Contractor is publicly-traded or the financial strength of Contractors which are not publicly-traded. The Risk

Manager may require proof the Contractor has sufficient means to pay claims within the proposed retention amount, including a certification or letter to that effect from a CPA or other consultant

D. Acceptance of Contractor or Project Participant "Self-Insurance"

Some Contractors or Project Participants may offer coverage through a captive insurance company, "self-insurance," or some combination of the foregoing, sometimes coupled with reinsurance or excess insurance. When evaluating the acceptability of such offers, the Risk

Manager, in consultation with the Risk Management Consultant, shall consider the following:

1. The ability of the offered coverage to provide scope and amounts of coverage reasonably equivalent to those available with a commercial insurance product.

2. Evidence that the alternative arrangement has sufficient financial security to pay claims as presented. A letter from a CPA or actuary may be required providing the CPA's or actuary's conclusion, after utilizing appropriate accounting or actuarial guidelines, that the offered coverage vehicle has sufficient means to provide the required limits.

3. Evidence that the alternative arrangement has an adequate claims management system in place to provide proper handling of claims should they arise.

E. Insurance or Self-Insurance Purchased or Provided by Project Participant Collaborations

In many instances, there will not be a single Project Participant. Rather, a Project may be sponsored by a collaboration of various public and/or private laboratories or institutions of higher learning. In those circumstances, it is the responsibility of the collaboration, through its

Project Participants, to provide commercial insurance, "self-insurance," or some combination of of the foregoing sufficient to satisfy the requirements of these Protocols. Except for Projects in the "Other Risk" category with more than 50 persons underground at any one time and with a cost of $50,000,000 or more, the Risk Manager, in consultation with the Risk Management

Consultant, may accept evidence of commercial insurance, self-insurance, of some combination of the foregoing that, taken together, result in limits of liability consistent with those required by these Protocols. Any coverage purchased or otherwise provided by SDSTA for Project

Participants is in addition to, and not a substitute for, the coverage required of Project

Participants by these Protocols.

V. EVIDENCE OF CONTRACTOR OR PROJECT PARTICIPANT COMPLIANCE

A. Certificates of Insurance or Similar Evidence of Coverage

Each Contractor and Project Participant is required to provide SDSTA with evidence of compliance with SDSTA's insurance requirements prior to commencement of work. The evidence of compliance will consist of a certificate of insurance or similar document issued by the

Contractor's insurer or broker, or a similar document issued by a risk pool or "self-insurance" fund. Unless similar assurances of limits, nature and extent of coverage, and exclusions may be obtained from another authoritative source, to the fullest extent possible without violating confidentiality obligations, copies of policies and/or other coverage documents shall be provided upon request.

B. Review

The insurance demonstrated on the evidence of coverage document (which may include a certificate of insurance) will be compared to the contract requirements by the Risk Manager or the Risk Manager's designee. To assist SDSTA personnel reviewing the proof of coverage, the completed contract review checklist may be used in lieu of the actual contract. The Risk Manager or designee will review the evidence of insurance to verify:

1. The Contractor or Project Participant maintains the type of coverage and limits required in the contract, memorandum of understanding, or similar document;

2. The Contractor's or Project Participant's insurers maintain financial ratings acceptable to

SDSTA and the Risk Management Consultant;

3. The Contractor's or Project Participant's policies are current;

4. The required "additional insured" language is included with respect to the Contractor's general liability policy (and pollution liability policy where applicable);

5. The appropriate cancellation notice language is included; and

6. Other insurance requirement provisions are compiled with, and the evidence of coverage otherwise contains complete and accurate information.

C. Samples

Contractors and Project Participants

Sample certificates of insurance are provided in the following appendices.

1. Appendix F - Evidence of insurance required by contracts under Category 2.

2. Appendix G - Evidence of insurance required by contracts under Category 3.

Appendix J includes a certificate of insurance review checklist. SDSTA may use the checklist to assist in and document the review of the evidence of coverage provided. The checklist items are ordered as they would ordinarily appear on a typical certificate of insurance.

D. Examples of Unsatisfactory Evidence of Compliance

When reviewing certificates of insurance there may be om1ss1ons, inaccuracies, or other instances where the evidence of coverage does not appear to provide reliable evidence of compliance with SDSTA requirements. Common examples of those deficiencies and how SDSTA responds to them are listed below.

1. The Contractor or Project Participant is not the insured. This may be an error on the part of the issuer. For example, it is possible the parent company of the Contractor is named.

If so, SDSTA asks for evidence of coverage that identifies both the parent and its subsidiary as the insured.

2. The insurer is not rated by A.M. Best or maintains an A.M. Best rating below A-, VII.

3. The actual name(s) of the insurer(s) may be missing or inaccurately displayed on the evidence of coverage. The name must be re-confirmed with the agent/broker. If the evidence of coverage does not accurately reflect the name(s) of the coverage provider, the Risk Manager shall be notified and the evidence rejected.

4. Contractor or Project Participant evidences of coverage have effective dates later than the contract or memorandum of understanding effective date. The Contractor or Project

Participant must provide documentation evidencing coverage effective prior to or coincidental with the contract's effective date or the project's initiation date.

5. Contractor or Project Participant coverages expire prior to contract expiration or project completion SDSTA will schedule follow-up contact with the Contractor, Project

Participant, or its or their broker or other representative at the time the evidence of coverage is scheduled to be renewed. The date scheduled for follow-up will be no less than two (2} weeks prior to expiration of the coverage. SDSTA will request that updated proof be issued evidencing coverage with a coverage period of an additional twelve (12} months. The failure to maintain continuous coverage will result in a stop work order from

SDSTA.

6. The evidence provided does not match SDSTA requirements. The Contractor or Project

Participant must supply evidence of the coverage required. Some Contractors or Project

Participants may have more than one coverage provider. If the evidence of coverage being reviewed does not include all required coverages, it is possible the Contractor or

Project Participant needs to request the other coverage providers to issue documentation evidencing the missing insurance.

7. Coverage limits do not match SDSTA requirements. Be sure excess liability limits are considered. These limits are often listed separately on the evidence of coverage, and are not included in the commercial general liability coverage limits. If necessary, the

Contractor or Project Participant must submit revised evidence of coverage evidencing the required limits.

8. The evidence of coverage does not include evidence of the existence of an additional insured endorsement naming the appropriate parties as additional insureds. The evidence provided may fail to identify one or all of the appropriate parties as additional insured. If the Contractor or Project Participant is unwilling to provide evidence of this endorsement with appropriate language, notify the Risk Manager and reject the certificate(s}.

9. The evidence of coverage discloses a retention and/or deductible in excess of the amount permitted under these Protocols. SDSTA is relying on the evidence of coverage issuer to report retentions on the evidence documentation.

10. Cancellation notice is less than 10 days for nonpayment and 30 days for other causes or is unspecified. New evidence indicating the proper notice of cancellation of provision will be requested.

11. The evidence is not authenticated in some appropriate fashion. The Contractor or

Project Participant must provide authenticated evidence of coverage prior to commencement of work.

Appendix A

Property Donation Agreement (Excerpts) follows:

846078;1

1. I (bhh-1) "Risk Manager" means a qualified Person employed by the Authority for the pwpose of managing the risk of the Authority.

(b ). Section 6.10 - Covenants in Leases and Agreements - is amended to read as

.I

6.1 O(a) Prior to authorizing any Person, inclu~g any Representative of the State or the Authority, to enter the Underground Property, the Authority shall prepare a written agreement, in a form consistent with best industry practices for the underground mining industry and that is reasonably acceptable to Homestake, that includes, among other things, (i) a declaration that the Pers~n has investigated the risks associated with the Surface Property and the Underground Property, (ii) a declaration that the Person has developed an informed understanding of the risks associated with going underground, and (ill) an agreement that the Person will and does release, discharge and agree not to sue any Homestake Indemnified Party from or as a result of any damage or injury to such Person or its property. The Authority covenants that, as a condition of entering the Underground Property, each Person requesting to enter the Underground Property will be required ~o execute such written agreement, provided, that an Authorized Entrant will not be required to execute such written agreement

(b). Prior to authorizing any Contractor or Project Sponsor or its or their Representatives to enter the Underground Property, the Authority shall prepare a written agreement, in a form that is reasonably acceptable to Home~e. that includes, ainong·othei- things, (i) a declaration that the Contractor or Project _Sponsor, as applicable, has investigated the risks associated with the Surface Property and the Underground Property, (ii) a declaration that the Contractor or Project Sponsor, as applicable, .has developed an •informed ~derstanding of the risks associated with going underground, and (iii) an agr~ement to be executed by each Contractor in which it agrees that it will and does release, discharge and agree not to sue the Homestake Indemnified Parties with respect. to any damage or injury to any Person or property caused by the Contractor or its Representatives and an agreement to be executed by each Project Sponsor in which it agrees that it will and does release, discharge and agree not to sue the Homestake Indemnified Parties with respect to any damage or injuzy to any Person or property caused by the Project Sponsor or its Representatives. The Authority covenants that, as a condition of permitting any Contractor ·or its Representatives or any Project Sponsor or

846078.1 its Representatives to enter the Underground Property, each Contractor or Project Sponsor requesting to enter the Underground Property on its own behalf or on behalf of its Representatives will be required to execute such written agreement.

• ( c) The Authority shall retain all written agreem~nts executed pursuant .

to paragraphs (a) and (b) of this Section and shall not destroy them with :

respect to any Person until seven years after the last occupancy of the Assets by that Person.

(d) The Authority shall employ a Risk Manager on a full"time basis (though the Risk Manager may perform other duties for the Authority).

The Risk Manager shall report to the Executive Director, but shall also have the separate and independent duty and ability to report directly to the Board of Directors. Tpe Authority shall, in consultation with a reputable independent risk management consultant, adopt a written risk management plan that includes, among other things, (i) general categories of Contractors and Project Sponsors, organized by level of risk, (ii) the types of coverage and limits of liability to be required for each category, (iii) a • requirement that the Homestake Indemnified parties be named as additional insureds on all commercial insurance policies required of Project Sponsors, (iv) the criterion used to determine whether the Hopiestake Indemnified Parties must be named as additional insureds on commercial ~urance policies required of Contractors, and (v) the criterion to be used to determine whether a retained risk plan o~ pool is acceptable in combination with or in lieu of commercial insurance. The risk management plan sliali delegate to the Risk. Manager the power t~ categorize a Contractor or Project Sponsor. As to relatively low levels of risk, the risk management plan shall proyide that the Risk Manager's decision concerning types of coverage, limits of liability and whether a retained risk plan or pool is acceptable in combination with or in lieu of commercial insurance shall be final. As to relatively high levels of risk, the Risk Manager's decision shall be subject to review and approval by a reputable in~ependent risk management consultant. The Authority shall fully_ implement and not deviate from said risk management plan;

provided, however, that the Authority may amend the risk management plan from time-to-time so ~ong as it provides a· copy to Homestake prior to implementation. Until such time as the risk management plan has been adopted and implemented, and a copy provided to Homestake, the original provisions of this Section 6.10 (prior to this Amendment) shall remain in full force and effect.

Appendix B

Standard Indemnification Clause

To the fullest extent permitted by…