Appendix C to Part 30 - Criteria Relating to Use of Financial Tests and Self Guarantees for Providing Reasonable Assurance of Funds for Decommissioning
10:1.0.1.1.20.2.91.1.17 : Appendix C
Appendix C to Part 30 - Criteria Relating to Use of Financial Tests
and Self 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 furnishing its
own guarantee that funds will be available for decommissioning
costs and on a demonstration that the company 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. To pass the financial test a company must meet all of the
criteria set forth in this section. For purposes of applying the
Appendix C 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. These criteria
include:
(1) Tangible net worth of at least $21 million, and total net
worth at least 10 times the amount of decommissioning funds being
assured by a self-guarantee for all decommissioning activities for
which the company is responsible as self-guaranteeing licensee and
as parent-guarantor for the total of all nuclear facilities or
parts thereof (or the current amount required if certification is
used).
(2) Assets located in the United States amounting to at least 90
percent of total assets or at least 10 times the amount of
decommissioning funds being assured by a self-guarantee, for all
decommissioning activities for which the company is responsible as
self-guaranteeing licensee and as parent-guarantor for the total of
all nuclear facilities or parts thereof (or the current amount
required if certification is used).
(3) A current rating for its most recent uninsured,
uncollateralized, and unencumbered bond issuance of AAA, AA, or A
(including adjustments of + and −) as issued by Standard and
Poor's, or Aaa, Aa, or A (including adjustments of 1, 2, or 3) as
issued by Moody's.
B. To pass the financial test, a company must meet all of the
following additional requirements:
(1) The company must have at least one class of equity
securities registered under the Securities Exchange Act of
1934.
(2) The company's independent certified public accountant must
compare the data used by the 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 company's
off-balance sheet transactions and provide an opinion on whether
those transactions could materially adversely affect the 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 Section II, paragraph A
of this appendix. 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.
(3) After the initial financial test, the company must annually
pass the test and provide documentation of its continued
eligibility to use the self-guarantee to the Commission within 90
days after the close of each succeeding fiscal year.
C. If the licensee no longer meets the requirements of Section
II.A. of this appendix, the licensee must send immediate notice to
the Commission of its intent to establish alternate financial
assurance as specified in the Commission's regulations within 120
days of such notice.
III. Company Self-Guarantee
The terms of a self-guarantee which an applicant or licensee
furnishes must provide that:
A. The guarantee will remain in force unless the licensee sends
notice of cancellation by certified mail to the Commission.
Cancellation may not occur, however, during the 120 days beginning
on the date of receipt of the notice of cancellation by the
Commission, as evidenced by the return receipt.
B. The licensee shall provide alternative financial assurance as
specified in the Commission's regulations within 90 days following
receipt by the Commission of a notice of cancellation of the
guarantee.
C. The guarantee and financial test provisions must remain in
effect until the Commission has terminated the license or until
another financial assurance method acceptable to the Commission has
been put in effect by the licensee.
D. The licensee will promptly forward to the Commission 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.
E. (1) If, at any time, the licensee's most recent bond issuance
ceases to be rated in any category of “A−” and above by Standard
and Poor's or in any category of “A3” and above by Moody's, the
licensee will notify the Commission in writing within 20 days after
publication of the change by the rating service.
(2) 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.
F. The applicant or licensee must provide to the Commission 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
Commission, the licensee will fund the standby trust in the amount
guaranteed by the self-guarantee agreement.
G. (1) A standby trust to protect public health and safety and
the environment must be established for decommissioning costs
before the self-guarantee agreement is submitted.
(2) 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 and 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.
H. 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
self-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.
I. The guarantor must notify the NRC, in writing, immediately
following the occurrence of any event listed in paragraph H of this
appendix, and must include 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 self-guarantee
agreement for decommissioning will be transferred to the standby
trust as soon as possible.
[58 FR 68730, Dec. 29, 1993; 59 FR 1618, Jan. 12, 1994, as amended
at 63 FR 50479, Sept. 22, 1998; 76 FR 35566, June 17, 2011]