Code of Massachusetts Regulations
105 CMR - DEPARTMENT OF PUBLIC HEALTH
Title 105 CMR 120.000 - The Control of Radiation
RECORDS
Section 120.198 - Appendix E: Criteria Relating to Use of Financial Tests and Self Guarantees for Providing Reasonable Assurance of Funds for Decommissioning

Universal Citation: 105 CMR 120.000 MA Code of Regs 120.198

Current through Register 1531, September 27, 2024

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 105 CMR 120.198: Appendix E, Section II. The terms of the self-guarantee are in 105 CMR 120.198: Appendix E, Section III. 105 CMR 120.198: Appendix E 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 following criteria:
(1) Tangible net worth of at least $21 million, and at least ten times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor.

(2) Assets located in the United States amounting to at least 90% of total assets or at least ten times the total current decommissioning cost estimate (or the current amount required if certification is used) for all decommissioning activities for which the company is responsible as self-guaranteeing licensee and as parent-guarantor.

(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 Poors (S&P), 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 have compared 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. 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.

(3) After the initial financial test, the company must repeat passage of the test within 90 days after the close of each succeeding fiscal year.

(C) If the licensee no longer meets the requirements of 105 CMR 120.198: Appendix E, Section II.(A), the licensee must send immediate notice to the Agency of its intent to establish alternate financial assurance as specified in the Agency'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 Agency. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by the Agency, as evidenced by the return receipts.

(B) The licensee shall provide alternative financial assurance as specified in the Agency's regulations within 90 days following receipt by the Agency of a notice of cancellation of the guarantee.

(C) The 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 in effect by the licensee.

(D) 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.

(E) 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 Poors or Moodys, 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 Poors and Moodys, the licensee no longer meets the requirements of 105 CMR 120 198: Appendix E, Section II.(A).

(F) 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.

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