Alabama Administrative Code › Title 420 - ALABAMA STATE BOARD OF HEALTH › Chapter 420-3-26 - RADIATION CONTROL › Section 420-3-26-.02 - Licensing › Appendix A - Criteria Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable Assurance of Funds for Decommissioning

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 obtaining a parent
				  company guarantee that funds will be available for decommissioning costs and on
				  a demonstration that the company passes the financial tests 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 and
				  establishes the terms for obtaining the parent company guarantee.
II. Financial Test:
A. To pass the financial test, the parent company must meet
				  the criteria of either A.1 or A. 2 of this appendix:
1. The parent company must have:
(i) 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
				  depreciation, depletion, and amortization to total liabilities greater than
				  0.1; and a ratio of current assets to current liabilities greater than
				  1.5.
(ii) Net working capital and tangible net worth each at least
				  six times the current decommissioning cost estimates for the total of all
				  facilities or parts thereof (or prescribed amount if a certification is
				  used).
(iii) Tangible net worth of at least $10 million.
(iv) Assets located in the United States amounting to at
				  least 90 percent of the total assets or at least six times the current
				  decommissioning cost estimates for the total of all facilities or parts thereof
				  (or prescribed amount if a certification is used).
2. The parent company must have:
(i) A current rating for its most recent bond issuance of
				  AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as
				  issued by Moody's.
(ii) Tangible net worth at least 6 times the total current
				  decommissioning cost estimates for the total of all facilities or parts thereof
				  (or prescribed amount if a certification is used).
(iii) Tangible net worth of at least $10 million.
(iv) Assets located in the United States amounting to at
				  least 90 percent of the total assets or at least six times the current
				  decommissioning cost estimates for all facilities or parts thereof (or
				  prescribed amount if certification is used).
B. The parent company's independent certified public
				  accountant must have compared the data used by the parent company in the
				  financial test which is derived from the independently audited, year-end
				  financial statements for the latest fiscal year, with the amounts in such
				  financial statement. In connection with that 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 company no longer passes the
				  test.
C. 1. After the initial financial test, the parent company
				  must repeat passage of the test within 90 days after the close of each
				  succeeding fiscal year.
2. If the parent company no longer meets the requirements of
				  Section A of this appendix, the licensee must send immediate notice to the
				  Agency of its intent to establish alternate financial assurance as specified in
				  Agency Rules within 120 days of such notice.
III. Parent Company Guarantee:
The terms of a parent company guarantee which an applicant or
				  licensee obtains must provide that:
A. The parent company guarantee will remain in force unless
				  the guarantor sends notice of cancellation by certified mail to the Agency.
				  Cancellation may not occur, however, during the 120 days beginning on the date
				  of receipt of the notice of cancellation by both the licensee and the Agency,
				  as evidenced by the return receipt.
B. If the licensee fails to provide alternative financial
				  assurance as specified in Agency Rules within 90 days following receipt by the
				  licensee and Agency of a notice of cancellation of the parent company guarantee
				  from the guarantor, the guarantor will provide such alternative financial
				  assurance in the name of the licensee.
C. The parent company 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 into
				  effect by the licensee.
D. If a trust is established for decommissioning costs, the
				  trustee and trust must be acceptable to the Agency. An acceptable trustee
				  includes an appropriate state or federal government agency or an entity which
				  has the authority to act as a trustee and whose trust operations are regulated
				  and examined by a federal or state agency.
E. The licensee will promptly forward to the Agency and the
				  licensee's independent auditor all reports covering the latest fiscal year
				  filed by the licensee with the Securities and Exchange Commission pursuant to
				  the requirements of Section 13 of the Securities and Exchange Act of
				  1934.
F. 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 will provide notice in writing of such fact to
				  the Agency within 20 days after publication of the change by the rating
				  service. If the licensee's most recent bond issuance ceases to be rated in any
				  category of A or above by both Standard and Poor's and Moody's, the licensee no
				  longer meets the requirements of Section II.A of this appendix.
G. The applicant or licensee must provide to the Agency a
				  written guarantee (a written commitment by a corporate officer) 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.