Current through Register Vol. 43, No. 52, December 26, 2024
(a) Each
applicant or licensee providing assurance of the availability of funds for
decommissioning based on a parent company guarantee that funds will be
available for decommissioning costs based on a demonstration that the parent
company passes a financial test shall meet the following standards:
(b) Each licensee or applicant applying to
the department for recognition of a parent company guarantee for the purposes
of complying with the requirements of K.A.R. 28-35-180b shall be required to
show that the parent company guarantee meets the following criteria:
(1) Each parent company shall meet two of the
following three ratios:
(A) A ratio of total
liabilities to net worth that is less than 2.0;
(B) a ratio of the sum of net income plus
depreciation, depletion, and amortization to total liabilities that is greater
than 0.1; or
(C) a ratio of
current assets to current liabilities that is greater than 1.5.
(2) Each parent company shall have
net working capital and tangible net worth each of which is equal a minimum of
six times the current decommissioning cost estimates, or the prescribed amount
if a certification is used based on the requirements of K.A.R. 28-35-180b.
(3) Each parent company shall have
assets located in the United States amounting to at least 90 percent of the
company's total assets or at least six times the current decommissioning cost
estimates, or at least six times the prescribed amount if a certification is
used based on the requirements of K.A.R. 28-35-180b.
(4) Each parent company shall have the
following:
(A) A current rating for the
company's 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;
(B) a tangible net worth at least six times
the current decommissioning cost estimate, or the prescribed amount if a
certification is used based on the requirements of K.A.R. 28-35-180b;
(C) a tangible net worth of at
least $10 million; and
(D) assets
located in the United States amounting to at least 90 percent of the company's
total assets or at least six times the current decommissioning cost estimates,
or at least six times the prescribed amount if certification is used based on
the requirements of K.A.R. 28-35-180b.
(c) The parent company's independent
certified public accountant shall compare the data used by the parent company
in the financial test, which shall be derived from the independently audited,
year-end financial statements for the latest fiscal year, with the amounts in
the financial statement. If any matters come to the auditor's attention 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, the licensee
shall notify the department within 90 days of the date the auditor identifies
the matter.
(d) After the initial
financial test, the parent company shall be required to pass the test within 90
days after the close of each succeeding fiscal year.
(1) If the parent company no longer meets the
requirements of subsection (a), the licensee shall notify the department of the
licensee's intent to establish alternate financial assurance as specified in
these regulations.
(2) The notice
shall be sent by certified mail within 90 days after the end of the fiscal year
for which the year end financial data shows that the parent company no longer
meets the financial test requirements.
(3) The licensee shall provide alternate
financial assurance within 120 days after the end of a fiscal year for which
the year-end financial data shows that the parent company no longer meets the
financial test requirements.
(e) Each parent company guarantee obtained by
an applicant or licensee shall contain terms that provide the following
information:
(1) The parent company guarantee
shall remain in force unless the guarantor sends notice of cancellation by
certified mail to the licensee and the department. The guarantee shall not be
canceled during the 120 days beginning on the date of receipt of the notice of
cancellation by both the licensee and the department, as evidenced by the
return receipts.
(2) If the
licensee fails to provide alternate financial assurance within 90 days after
receipt of a notice of cancellation of the parent company guarantee by the
licensee and the department, the guarantor shall provide the alternative
financial assurance in the name of the licensee.
(3) The parent company guarantee and
financial test provisions shall remain in effect until the secretary has
terminated the license.
(4) If a
trust is established for decommissioning costs, the trustee and trust shall be
acceptable to the secretary. An acceptable trustee may be an appropriate state
or federal government agency or an entity that has the authority to act as a
trustee and whose trust operations are regulated and examined by a federal or
state agency.
