Ala. Admin. Code 420, ch. 420-3-26, 420-3-26-.02, app A
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 company passes the financial tests 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 and establishes the terms for obtaining the parent company guarantee.
II. Financial Test:
A. To pass the financial test, the parent company must meet the criteria of either A.1 or A. 2 of this appendix:
1. The parent company must have:
(i) Two of the following three ratios: A ratio of total liabilities to 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.
(ii) Net working capital and tangible net worth each 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).
(iii) Tangible net worth of at least $10 million.
(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).
2. The parent company must have:
(i) A current rating for its 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.
(ii) Tangible net worth at least 6 times the total current decommissioning cost estimates for the total of all facilities or parts thereof (or prescribed amount if a certification is used).
(iii) Tangible net worth of at least $10 million.
(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 all facilities or parts thereof (or prescribed amount if certification is used).
B. The parent company's independent certified public accountant must have compared 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. 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.
C. 1. After the initial financial test, the parent company must repeat passage of the test within 90 days after the close of each succeeding fiscal year.
2. If the parent company no longer meets the requirements of Section A of this appendix, the licensee must send immediate notice to the Agency of its intent to establish alternate financial assurance as specified in Agency Rules within 120 days of such notice.
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 Agency. 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 Agency, as evidenced by the return receipt.
B. If the licensee fails to provide alternative financial assurance as specified in Agency Rules within 90 days following receipt by the licensee and Agency of a notice of cancellation of the parent company guarantee from the guarantor, the guarantor will provide such alternative financial assurance in the name of the licensee.
C. The parent company 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 into effect by the licensee.
D. If a trust is established for decommissioning costs, the trustee and trust must be acceptable to the Agency. 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.
E. 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.
F. 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 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 Poor's and Moody's, the licensee no longer meets the requirements of Section II.A of this appendix.
G. 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.
Ala. Admin. Code 420, ch. 420-3-26, 420-3-26-.02, app A