Section 22246 - CalRecycle - Financial Means Test (California Code of Regulations)

§ 22246. CalRecycle - Financial Means Test

(a) To pass the financial means test, an operator or a guarantor shall be a private entity and shall meet the criteria of (d), (e), (f) or (g) based on independently audited year-end financial statements for the latest completed fiscal year.

(b) The phrase "amount of liability coverage to be demonstrated by the test" as used in (d) and (e) refers to the amount of liability coverage required by § 22216.

(c) The phrase "current cost estimates covered by the test" as used in (f) and (g) refers to the current postclosure cost estimate required by (h)(1) to be shown in paragraphs 1 and 2 of the letter from the chief financial officer.

(d) To cover operating liability the operator or guarantor shall have:

(1) Net working capital and tangible net worth each at least six times the amount of liability coverage to be demonstrated by the test; and

(2) Tangible net worth of at least $15 million; and

(3) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the amount of liability coverage to be demonstrated by the test.

(e) To cover operating liability the operator or guarantor shall have:

(1) A current rating for its most recent bond issuance of AAA, AA, A, or BBB issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's; and

(2) Tangible net worth of at least six times the amount of liability coverage to be demonstrated by the test; and

(3) Tangible net worth of at least $15 million; and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the amount of liability coverage to be demonstrated by the test.

(f) To cover postclosure maintenance the operator or guarantor shall have:

(1) Two of the following three ratios: a ratio of total liabilities to net worth that is less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities that is greater than 0.1; and a ratio of current assets to current liabilities that is greater than 1.5; and

(2) Net working capital and tangible net worth each at least six times the sum of the current cost estimate covered by the test; and

(3) Tangible net worth of at least $15 million; and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the sum of the current cost estimate covered by the test.

(g) To cover postclosure maintenance the operator or guarantor shall have:

(1) A current rating for its most recent bond issuance of AAA, AA, A, or BBB issued by Standard and Poor or Aaa, Aa, A, or Baa as issued by Moody's; and

(2) Tangible net worth at least six times the sum of the current cost estimate covered by the test, and

(3) Tangible net worth of at least $15 million and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the sum of the current cost estimate covered by the test.

(h) Within 90 days after the close of each financial reporting year, the operator or the guarantor shall submit the following items to CalRecycle and, in the case of a guarantor, to the operator;

(1) A letter on the operator's or guarantor's official letterhead stationary that is worded and completed as specified in form CalRecycle 104 which contains an original signature of the operator's or guarantor's chief financial officer.

(A) An operator or guarantor shall use form CalRecycle 104 (03/17) to demonstrate or guarantee financial responsibility for liability coverage only or postclosure costs only or both liability and postclosure maintenance. If the operator or guarantor is using a similar financial means test to demonstrate liability coverage and/or postclosure maintenance for facilities in other states, the operator shall list those out-of- state facilities, as well as the California facilities on this test.

(2) A copy of an independent certified public accountant's report on examination of the operator's or guarantor's financial statements for the latest completed fiscal year, with a copy of the operator's or guarantor's financial statements for the latest completed fiscal year.

(3) A letter from an independent certified public accountant stating that:

(A) He or she has compared the data in the letter in (h)(1), from the chief financial officer specified as having been derived from the financial statements for the latest completed fiscal year of the operator or the guarantor, with the amounts in the financial statements; and

(B) Based on the comparison, no matters came to his or her attention that caused him or her to believe that the specified data should be adjusted.

(4) If the operator or the guarantor is required to make such a filing, a copy of the operator's or guarantor's most recent form 10-K filed with the U.S. Securities and Exchange Commission.

(i) The CIWMB may require updated financial statements at any time from the operator or guarantor. If the CIWMB finds that the operator or guarantor no longer meets the financial means test requirements of (d),(e),(f), or (g) based on such reports or other information, including but not limited to, credit reports and reports from other state agencies, the operator shall obtain alternate coverage within 60 days after receiving the notification of such a finding.

(j) If, at the time of its annual filing, an operator using the financial means test fails to meet the requirements of the financial means test under (d),(e),(f), or (g), the operator shall obtain alternate coverage within 60 days after the determination of such failure.

(k) If the operator fails to obtain alternate coverage within the times specified in (i) or (j), the operator shall notify the CIWMB by certified mail within 10 days of such failure.

(1. New section filed 6-18-97; operative 7-18-97 (Register 97, No. 25). 2. Amendment of section heading and subsections (d)(2), (e)(3), (f)(3), (g)(3), (h)(1) and (h)(1)(A) filed 2-25-2008; operative 2-25-2008 pursuant to Government Code section 11343.4(Register 2008, No. 9). 3. Change without regulatory effect amending section heading and subsections (h)-(h)(1)(A) and amending form CalRecycle (formerly CIWMB) 104 (incorporated by reference) filed 12-11-2017 pursuant to section 100, title 1, California Code of Regulations (Register 2017, No. 50).)

Note: Authority cited: Sections 40502 and 43040, Public Resources Code. Reference: Sections 43040 and 43103, Public Resources Code.

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