Section 120.198 - Appendix F: Criteria Relating to Use of Financial Tests and Self Guarantees for Providing Reasonable Assurance of Funds for Decommissioning by Commercial Companies That Have No Outstanding Rated BondsI.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 F, Section II. The terms of the self-guarantee are in 105 CMR 120.198: Appendix F, Section III. 105 CMR 120.198: Appendix F 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 greater than $21 million, or at least ten 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 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 ratio of cash flow divided by total liabilities greater than 0.15 and a ratio of total liabilities divided by net worth less than 1.5.(B) In addition, to pass the financial test, a company must meet all of the following additional requirements: (1) The company's independent certified public accountant must have compared the data used by the company in the financial test, which is required to be derived from the independently audited year end financial statement based on United States generally accepted accounting practices 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 that may 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.(2) After the initial financial test, the company must repeat passage of the test within 90 days after the close of each succeeding fiscal year.(3) If the licensee no longer meets the requirements of 105 CMR 120.198: Appendix F, Section II.(A), the licensee must send immediate notice to the Agency of its intent to establish alternate financial assurance as specified in 105 CMR 120.125(C). 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 alternative financial assurance within 120 days after the end of such fiscal year.III.Company 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, return receipt requested, to the Agency. Cancellation may not occur until an alternative financial assurance mechanism is in place.(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 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.Amended by Mass Register Issue 1373, eff. 9/7/2018.