Appendix E to Part 30 - Criteria Relating to Use of Financial Tests and Self-Guarantee For Providing Reasonable Assurance of Funds For Decommissioning by Nonprofit Colleges, Universities, and Hospitals
10:1.0.1.1.20.2.91.1.19 : Appendix E
Appendix E to Part 30 - Criteria Relating to Use of Financial Tests
and Self-Guarantee For Providing Reasonable Assurance of Funds For
Decommissioning by Nonprofit Colleges, Universities, and Hospitals
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 (including adjustments
of + or −) as issued by Standard and Poor's (S&P) or Aaa, Aa,
or A (including adjustments of 1, 2, or 3) as issued by
Moody's.
(2) For applicants or licensees that do not issue bonds,
unrestricted endowment consisting of assets located in 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 recent uninsured, uncollateralized, and
unencumbered bond issuance of AAA, AA, or A (including adjustments
of + or −) as issued by Standard and Poor's or Aaa, Aa, or A
(including adjustments of 1, 2, or 3) as issued by Moody's.
(2) For applicants or licensees that do not issue bonds, all the
following tests must be met:
(a) (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 the following requirements:
(1) The licensee's independent certified public accountant must
compare the data used by the licensee 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 licensee's
off-balance sheet transactions and provide an opinion on whether
those transactions could materially adversely affect the licensee'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 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 licensee no longer passes the test.
(2) After the initial financial test, the licensee must repeat
passage of 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.
(3) If the licensee no longer meets the requirements of Section
I of this appendix, the licensee must send notice to the NRC of its
intent to establish alternative financial assurance as specified in
NRC regulations. 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 test 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, and/or return receipt
requested, to the Commission. Cancellation may not occur unless an
alternative financial assurance mechanism is in place.
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 applicant or licensee must provide to the Commission 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 Commission, the licensee will fund the
standby trust in the amount of the current cost estimates for
decommissioning.
E. (1) 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 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−” and above by Standard and Poor's or
in any category of “A3” and above by Moody's, the licensee no
longer meets the requirements of Section II.A. of this
appendix.
F. (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 the part of these regulations that governs the
issuance of the license for which the guarantor has accepted the
obligation to pay for decommissioning costs.
G. 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
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.
H. The guarantor must notify the NRC, in writing, immediately
following the occurrence of any event listed in paragraph G 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.
[63 FR 29542, June 1, 1998, as amended at 76 FR 35568, June 17,
2011]