Alabama Administrative Code › Title 420 - ALABAMA STATE BOARD OF HEALTH › Chapter 420-3-26 - RADIATION CONTROL › Section 420-3-26-.02 - Licensing › Appendix D - Criteria Relating to Use of Financial Tests and Self-Guarantee for Providing Reasonable Assurance for Decommissioning by Nonprofit Colleges, Universities, and Hospitals

Current through Register Vol. 42, No. 9, June 28, 2024
I. Introduction
An applicant or licensee may provide reasonable assurance of
				  the availability of funds for decommissioning based on furnishing its own
				  guarantee that funds will be available for decommissioning costs and on a
				  demonstration that the applicant or licensee passes the financial test of
				  Section II of this appendix. The terms of the self-guarantee are in Section III
				  of this appendix. This appendix establishes criteria for passing the financial
				  test for the self-guarantee and establishes the terms for a
				  self-guarantee.
II. Financial Test
A. For colleges and universities, to pass the financial test
				  a college or university must meet either the criteria in paragraph II.A.(1) or
				  the criteria in paragraph II.A.(2) of this appendix.
(1) For applicants or licensees that issue bonds, a current
				  rating for its most recent uninsured, uncollateralized, and unencumbered bond
				  issuance of AAA, AA, or A as issued by Standard and Poor's (S&P) or Aaa,
				  Aa, or A as issued by Moody's.
(2) For applicants or licensees that do not issue bonds,
				  unrestricted endowment consisting of assets located within the United States of
				  at least $50 million, or at least 30 times the total current decommissioning
				  cost estimate (or the current amount required if certification is used),
				  whichever is greater for all decommissioning activities for which the college
				  or university is responsible as a self-guaranteeing licensee.
B. For hospitals, to pass the financial test a hospital must
				  meet either the criteria in paragraph II.B. (1) or the criteria in paragraph
				  II.B.(2) of this appendix:
(1) For applicants or licensees that issue bonds, a current
				  rating for its most current uninsured, uncollateralized, and unencumbered bond
				  issuance of AAA, AA, or A as issued by Standard and Poor's (S&P) or Aaa,
				  Aa, or A as issued by Moody's.
(2) For applicants or licensees that do not issue bonds, all
				  of the following tests must be met:
(Total revenues less total expenditures) divided by total
				  revenues must be equal to or greater than 0.04.
(b) Long term debt divided by net fixed assets must be less
				  than or equal to 0.67.
(c) (Current assets and depreciation fund) divided by current
				  liabilities must be greater than or equal to 2.55.
(d) Operating revenues must be at least 100 times the total
				  current decommissioning cost estimate (or the current amount required if
				  certification is used) for all decommissioning activities for which the
				  hospital is responsible as a self-guaranteeing license.
C. In addition, to pass the financial test, a licensee must
				  meet all of the following requirements:
1. The licensee's independent certified public accountant
				  must have compared the data used by the licensee in the financial test, which
				  is required to be derived from the independently audited year-end financial
				  statements, based on United States generally accepted accounting practices, for
				  the latest fiscal year, with the amounts in such financial statement. In
				  connection with procedure, the licensee shall inform the Agency within 90 days
				  of any matters coming to the attention of the auditor that cause the auditor to
				  believe that the data specified in the financial test should be adjusted and
				  that the licensee no longer passes the test.
2. After the initial financial test, the licensee must repeat
				  passage of the test within 90 days after the close of each succeeding fiscal
				  year.
3. If the licensee no longer meets the requirements of
				  Section I of this appendix, the licensee must send notice to the Agency of its
				  intent to establish alternative financial assurance as specified in Agency
				  rules. The notice must be sent by certified mail, return receipt requested,
				  within 90 days after the end of the fiscal year for which the year-end
				  financial data show that the licensee no longer meets the financial data
				  requirements. The licensee must provide alternate financial assurance within
				  120 days after the end of such fiscal year.
III. Self-Guarantee The terms of a self-guarantee which an
				  applicant or licensee furnishes must provide that:
A. The guarantee shall remain in force unless the licensee
				  sends notice of cancellation by certified mail, return receipt requested, to
				  the Agency. Cancellation may not occur unless an alternative financial
				  assurance mechanism is in place.
B. The licensee shall provide alternative financial assurance
				  as specified in Agency rules within 90 days following receipt by the Agency of
				  a notice of cancellation of the guarantee.
C. The guarantee and financial test provisions must remain in
				  effect until the Agency has terminated the license or until another financial
				  assurance method acceptable to the Agency has been put in effect by the
				  licensee.
D. The applicant or licensee must provide to the Agency a
				  written guarantee (a written commitment by a corporate officer or officer of
				  the institution) which states that the licensee will fund and carry out the
				  required decommissioning activities or, upon issuance of an order by the
				  Agency, the licensee will set up and fund a trust in the amount of the current
				  cost estimates for decommissioning.
E. If, at any time, the licensee's most recent bond issuance
				  ceases to be rated in any category of "A" or above by either Standard and
				  Poor's or Moody's, the licensee shall provide notice in writing of such fact to
				  the Agency within 20 days after publication of the change by the rating
				  service.