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§ 30197.6. Criteria Relating to Use of Financial Tests and Self-Guarantee for Providing Reasona...

17 CA ADC § 30197.6Barclays Official California Code of Regulations

Barclays California Code of Regulations
Title 17. Public Health
Division 1. State Department of Health Services (Refs & Annos)
Chapter 5. Sanitation (Environmental) (Refs & Annos)
Subchapter 4. Radiation
Group 2. Licensing of Radioactive Materials
Article 4. Licenses
17 CCR § 30197.6
§ 30197.6. Criteria Relating to Use of Financial Tests and Self-Guarantee for Providing Reasonable Surety of Funds for Decommissioning by Nonprofit Colleges, Universities, and Hospitals.
Currentness
(a) A nonprofit college, university or hospital applicant or licensee may provide reasonable surety of the availability of funds for decommissioning based on furnishing its own guarantee that funds will be available for decommissioning costs by demonstrating that the applicant or licensee passes the financial test specified in subsections (b) or (c), as applicable, and provided the self-guarantee contains the terms specified in subsection (f).
(b) For colleges and universities to pass the financial test one of the following shall be met:
(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; or
(2) For applicants or licensees that do not issue bonds, an 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 prescribed amount if certification is used pursuant to sections 30197(b)(2), 30197.1(b)(2), or 30197.2(b)(2), as applicable), whichever is greater, for all decommissioning activities for which the college or university is responsible as a self-guaranteeing licensee.
(c) For hospitals to pass the financial test one of the following shall be met:
(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 S&P or Aaa, Aa, or A (including adjustments of 1, 2, or 3) as issued by Moody's; or
(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; and
(D) Operating revenues must be at least 100 times the total current decommissioning cost estimate (or the prescribed amount if certification is used pursuant to sections 30197(b)(2), 30197.1(b)(2), or 30197.2(b)(2), as applicable) for all decommissioning activities for which the hospital is responsible as a self-guaranteeing license.
(d) The licensee's independent certified public accountant must have compared the data used by the licensee in the financial test, which is required to be 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 in subsections (b) or (c). In connection with that procedure, the licensee shall inform the Department 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 licensee no longer passes the test.
(e) After the initial financial test, the licensee must annually pass the tests specified in subsections (b) or (c) and provide documentation of its continued eligibility to use the self-guarantee to the Department within 90 days after the close of each succeeding fiscal year. If the licensee no longer meets the requirements of subsection (b) or (c), as applicable, the licensee shall send notice to the Department of its intent to establish alternative financial surety as specified in section 30195.1. The notice shall 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 shall provide alternate financial surety within 120 days after the end of such fiscal year.
(f) The terms of a self-guarantee which an applicant or licensee furnishes shall provide that:
(1) The guarantee shall remain in force unless the licensee sends notice of cancellation by certified mail, return receipt requested, to the Department; cancellation may not occur unless an alternative financial surety mechanism is in place;
(2) The licensee shall provide alternative financial surety pursuant to section 30195.1 within 90 days following receipt by the Department of a notice of cancellation of the guarantee;
(3) The guarantee and financial test provisions must remain in effect until the Department has terminated the license or until another financial surety method acceptable to the Department has been put in effect by the licensee;
(4) The applicant or licensee must provide to the Department 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 Department, the licensee will set up and fund a trust or deposit to the Financial Surety Account within the Radiation Control Fund administered by the Department pursuant to Health and Safety Code Section 115092 in the amount of the current cost estimates for decommissioning;
(5) 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 Department in writing 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-” 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 subsection (b) or (c);
(6) A standby trust or deposit into the Financial Surety Account within the Radiation Control Fund administered by the Department pursuant to Health and Safety Code Section 115092 must be established for decommissioning costs before the self-guarantee agreement is submitted. The trustee and trust must be acceptable to the Department. 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 Department has the right to change the trustee. An acceptable trust shall meet the regulatory criteria established in this section that governs the issuance of the license for which the guarantor has accepted the obligation to pay for decommissioning costs;
(7) 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 Department may:
(A) Declare that the financial surety guaranteed by the self-guarantee agreement is immediately due and payable to the standby trust or to the Financial Surety Account within the Radiation Control Fund administered by the Department pursuant to Health and Safety Code Section 115092, without prior demand or any other notice of any kind, both of which are expressly waived by guarantor; and
(B) Exercise any and all of its other rights under applicable law; and
(8) The guarantor must notify the Department, in writing, immediately following the occurrence of any event listed in paragraph (7), 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 as soon as possible to the standby trust or to the Financial Surety Account within the Radiation Control Fund administered by the Department pursuant to Health and Safety Code Section 115092.

Credits

Note: Authority cited: Sections 115000, 115091 and 131200, Health and Safety Code. Reference: Sections 114965, 114970, 115060, 115091, 115092, 115235, 131050, 131051 and 131052, Health and Safety Code.
History
1. New section filed 2-26-2019; operative 4-1-2019 (Register 2019, No. 9).
This database is current through 4/26/24 Register 2024, No. 17.
Cal. Admin. Code tit. 17, § 30197.6, 17 CA ADC § 30197.6
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