Appendix A to Part 30 - Criteria Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable Assurance of Funds for Decommissioning
10:1.0.1.1.20.2.91.1.15 : Appendix A
Appendix A to Part 30 - Criteria Relating to Use of Financial Tests
and Parent Company Guarantees for Providing Reasonable Assurance of
Funds for Decommissioning 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 parent
company passes a financial test. This appendix establishes criteria
for passing the financial test and for obtaining the parent company
guarantee.
II. Financial Test
A. To pass the financial test, the parent company must meet the
criteria of either paragraph A.1 or A.2 of this section. For
purposes of applying the Appendix A criteria, tangible net worth
must be calculated to exclude all intangible assets and the net
book value of the nuclear facility and site, and total net worth,
which may include intangible assets, must be calculated to exclude
the net book value and goodwill of the nuclear facility and
site.
1. The parent company must have:
(i) Two of the following three ratios: A ratio of total
liabilities to total 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; and
(ii) Net working capital and tangible net worth each at least
six times the amount of decommissioning funds being assured by a
parent company guarantee for the total of all nuclear facilities or
parts thereof (or prescribed amount if a certification is used);
and
(iii) Tangible net worth of at least $21 million; and
(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),
or, for a power reactor licensee, at least six times the amount of
decommissioning funds being assured by a parent company guarantee
for the total of all reactor units or parts thereof.
2. The parent company must have:
(i) A current rating for its most recent uninsured,
uncollateralized, and unencumbered bond issuance of AAA, AA, A, or
BBB (including adjustments of + and −) as issued by Standard and
Poor's or Aaa, Aa, A, or Baa (including adjustment of 1, 2, or 3)
as issued by Moody's; and
(ii) Total net worth at least six times the amount of
decommissioning funds being assured by a parent company guarantee
for the total of all nuclear facilities or parts thereof (or
prescribed amount if a certification is used); and
(iii) Tangible net worth of at least $21 million; and
(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),
or, for a power reactor licensee, at least six times the amount of
decommissioning funds being assured by a parent company guarantee
for the total of all reactor units or parts thereof.
B. The parent company's independent certified public accountant
must compare 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. The accountant must evaluate the
parent company's off-balance sheet transactions and provide an
opinion on whether those transactions could materially adversely
affect the parent company's ability to pay for decommissioning
costs. The accountant must verify that a bond rating, if used to
demonstrate passage of the financial test, meets the requirements
of paragraph A of this section. In connection with the auditing
procedure, the licensee must inform the NRC within 90 days of any
matters coming to the auditor's attention which 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
annually pass the test and provide documentation of its continued
eligibility to use the parent company guarantee to the Commission
within 90 days after the close of each succeeding fiscal year.
2. If the parent company no longer meets the requirements of
paragraph A of this section, the licensee must send notice to the
Commission of intent to establish alternate financial assurance as
specified in the Commission's regulations. The notice must be sent
by certified mail within 90 days after the end of the fiscal year
for which the year end financial data show that the parent company
no longer meets the financial test requirements. The licensee must
provide alternate financial assurance within 120 days after the end
of such fiscal year.
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
licensee and the Commission. 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 Commission, as
evidenced by the return receipts.
B. If the licensee fails to provide alternate financial
assurance as specified in the Commission's regulations within 90
days after receipt by the licensee and Commission of a notice of
cancellation of the parent company guarantee from the guarantor,
the guarantor will provide alternative financial assurance that
meets the provisions of the Commission's regulations in the name of
the licensee.
C. The parent company guarantee and financial test provisions
must remain in effect until the Commission has terminated the
license, accepted in writing the parent company's alternate
financial assurances, or accepted in writing the licensee's
financial assurances.
D. A standby trust to protect public health and safety and the
environment must be established for decommissioning costs before
the parent company guarantee agreement is submitted. The trustee
and trust must be acceptable to the Commission. An acceptable
trustee includes an appropriate State or Federal Government agency
or an entity which has the authority to act as a trustee, whose
trust operations are regulated and examined by a Federal or State
agency. The Commission has the right to change the trustee. An
acceptable trust will meet the regulatory criteria established in
these regulations that govern the issuance of the license for which
the guarantor has accepted the obligation to pay for
decommissioning costs.
E. The guarantor must agree that it would be subject to
Commission orders to make payments under the guarantee
agreement.
F. The guarantor must agree that if the guarantor admits in
writing its inability to pay its debts generally, or makes a
general assignment for the benefit of creditors, or any proceeding
is instituted by or against the guarantor seeking to adjudicate it
as bankrupt or insolvent, or seeking dissolution, liquidation,
winding-up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian, or other similar official for the
guarantor or for any substantial part of its property, or the
guarantor takes any action to authorize or effect any of the
actions stated in this paragraph, then the Commission may:
1. Declare that the financial assurance guaranteed by the parent
company guarantee agreement is immediately due and payable to the
standby trust set up to protect the public health and safety and
the environment, without diligence, presentment, demand, protest or
any other notice of any kind, all of which are expressly waived by
guarantor; and
2. Exercise any and all of its other rights under applicable
law.
G. 1. The guarantor must agree to notify the NRC, in writing,
immediately following the filing of a voluntary or involuntary
petition for bankruptcy under any chapter of title 11 (Bankruptcy)
of the United States Code, or the occurrence of any other event
listed in paragraph F of this Appendix, by or against:
(i) The guarantor;
(ii) The licensee;
(iii) An entity (as that term is defined in 11 U.S.C. 101(14))
controlling the licensee or listing the license or licensee as
property of the estate; or
(iv) An affiliate (as that term is defined in 11 U.S.C. 101(2))
of the licensee.
2. This notification must include:
(i) A description of the event, including major creditors, the
amounts involved, and the actions taken to assure that the amount
of funds guaranteed by the parent company guarantee for
decommissioning will be transferred to the standby trust as soon as
possible;
(ii) If a petition of bankruptcy was filed, the identity of the
bankruptcy court in which the petition for bankruptcy was filed;
and
(iii) The date of filing of any petitions.
[53 FR 24046, June 27, 1988, as amended at 63 FR 50479, Sept. 22,
1998; 76 FR 35565, June 17, 2011]