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Notes to Financial Statements
June 30,1998
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1. NATURE OF ORGANIZATION
The Midwest Interstate Low-Level Radioactive Waste Compact (The Midwest Compact) was formally established in October, 1983, to meet state responsibilities under the Federal Low-Level Radioactive Waste Policy Act of 1980 (PL 96-573) and the Low-Level Radioactive Waste Policy Amendments Act of 1985 (PL 99-240). The Midwest Compact consists of six states: Indiana, Iowa, Minnesota, Missouri, Ohio, and Wisconsin. The Midwest Compact established the Midwest Interstate Low-Level Radioactive Waste Compact Commission (the Commission), composed of one voting member representative from each member state.
The Commission follows the guidelines established in Statement of Financial Accounting Standards
(SFAS) No. 116, Accounting for contributions Received and Contributions Made and SFAS No. 117,
Financial Statements of Not-for-Profit Organizations. In accordance with SFAS No. 116, contributions
received are recorded as unrestricted, temporarily restricted, or permanently restricted sup-port,
depending on the existence and/or nature of any donor restrictions. In accordance with SFAS
No. 117, the Organization is required to report information regarding its financial position and activities
according to three classes of net assets: unrestricted net assets, temporarily restricted net assets,
and permanently restricted net assets. The Commission has no temporarily or permanently restricted
net assets. As permitted, the Commission also uses fund accounting, and has also presented its
financial statement by fund.
Management has determined that expenses incurred are primarily related to its program of providing
for waste disposal capacity.
The Organization classifies its funds as follows:
General Fund - The General Fund is the operational fund of the Commission. From inception
through June 30, 1989, the Midwest Compact’s state members contributed to the Fund based on an
approved annual budget. When future operational funding became available from rebate funds
received by the Commission, the member states suspended contributions to the General Fund.
Rebate Fund - Rebate Funds are derived from disposal surcharges that were levied on generators of
low-level radioactive waste from January 1986 through December 1992. The surcharges were mandated
by the 1985 Low-level Radioactive Waste Policy Amendments Act, and 25% of the surcharges
were placed in an escrow account administered by the Department of Energy. Rebates of the
escrowed amounts served as an incentive to regions and states to meet Federal milestones for the
development of their own disposal facilities. Use of these funds is restricted by law and classified as a
deferred item in the accompanying financial statements. However, consistent with the Amendments
Act, Rebate fund monies may be withdrawn and used by the Commission to the extent needed for
general operations. The Commission recognizes revenues from the Rebate Fund when amounts are
transferred for general operations. (See Note 5).
Export Fee Fund - The Export Fee Fund was established August 18, 1987, when the Commission
approved a resolution imposing an export fee on Midwest Compact utilities. The funds are to be
advanced to the host state to cover pre-operational costs for development of a regional disposal facility,
excluding construction. (See Notes 3 and 5).
Accounting Estimates
Management uses estimates and assumptions in preparing these financial statements in accordance
with generally accepted accounting principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could differ from those estimates.
Revenue Recognition
All support and revenue are considered to be available for general use unless specifically restricted.
Cash
The commission includes in cash the amount held in an interest bearing checking account.
Investment cash or cash equivalents within the Rebate and Export Fee Funds are included in investments
in the accompanying statement of financial position due to the nature and the terms of those
funds.
Investments
The Commission adopted Statement of Financial Accounting Standards (SFAS) No. 124, Accounting
for Certain Investments Held by Not-for-Profit Organizations as of July 1, 1996. Under SFAS No. 124
the commission’s investments are recorded at fair value based on quoted market prices. Realized and
unrealized gains and losses are restricted under the terms of the Rebate and Export Fee Funds and
are recorded in the same manner as interest and dividend earnings within those funds.
Property and Equipment
Property and Equipment are stated at the lower of cost or estimated fair value. The commission uses
the straight line method for depreciation purposes over the economic life of such capitalized items.
Income Tax Status
The Commission has been declared tax exempt under the Internal Revenue Code and, accordingly,
there is no provision for income taxes in the accompanying financial statements
Employee Benefit Plan
A simplified Employee Pension Plan for salaried employees is based on a discretionary percent of the
compensation of the eligible employees and is funded currently.
As discussed in Note 2, the Export Fee Fund was established in 1987 as a result of a resolution
passed by the Commission to impose fees on Midwest Compact utilities. The export fees are to be
advanced to and used by the designated host state to cover pre-operational costs for development of
a disposal facility.
The Commission has treated all export fees received as an advance from the utilities to be repaid at
some point in the future at an interest rate that has yet to be determined. Interest expense on the
advances equal to the net earnings of the Fund is therefore accrued and retained in a liability
account on behalf of the utilities, which totalled $1,355,852 at June 30, 1998. Funds advanced to the
host state for pre-operational development costs were charged against Export Fee Fund earnings
through June 30, 1997. Funds advanced to phase-out the development activities in fiscal year 1998
were funded by Rebate Fund via transfers to the General fund (Note 5). During the fourth quarter of
fiscal 1998, the Commission made a partial distribution of export fees of $6,673,396 as follows (See
Notes):
In June 1997, based on the reduction in levels of low-level radioactive waste and the continuing
availability of low-level radioactive waste facilities with sufficient capacity to accept waste for a
lengthy, although indefinite time, the commission adopted a resolution halting all activities related to
development of a low-level waste disposal facility. The Commission then adopted a resolution authorizing
dissolution and distribution of the Fund.
A dispute has arisen among the utilities which contributed to the Fund concerning its proper distribution.
In order to secure resolution of the dispute in a single proceeding, on or about June 4, 1998,
the Commission filed an action for interpleader in the United States District Court for the District of
Minnesota. In its prayer for relied, the Commission requested that the utilities, all named as defendants
in the action, be ordered to interplead and settle among themselves their respective rights and
claims to the Fund. The utilities answered and filed counterclaims against the Commission, alleging
that the Commission breached undefined fiduciary duties and responsibilities by not recognizing the
superiority of their respective, and competing, claims to the Fund. The Commission intends to vigorously
contest the counterclaims.
It expected that this interpleader action will be resolved in fiscal year 2000.
Investments are recorded at market value, and consist of the following at June 30, 1998:
Given the nature and restrictions of the Rebate and Export Fee Funds, investment earnings are accumulated
with the deferred rebate and interest payable - utilities accounts of the respective funds
until restrictions are satisfied. At that time earnings are then recognized as revenue within the statement
of activities. A reconciliation of investment accounts by fund and a summary of earnings follows:
On June 26, 1997 the commission voted to halt development activities in Ohio for a regional disposal
facility for low-level radioactive waste. Any Ohio development expenses incurred during the phase-out
funding period (July 1, 1997 through September 30, 1997), were reimbursed from the
Commission’s Rebate fund rather than from the Export Fee Fund. The Ohio Low-Level Waste Facility
Development Authority (the Authority) and the Ohio Health Department (the Department) have
prepared final expenditure reports. The Commission reviewed the activities of both the authority and
the Department for the phase-out period July 1, 1997 through September 30, 1997. Upon completion
of the close-out program review, The Export Fee Fund had a final accounting. The final accounting
identified an overcharge by the State of Ohio of $84,351. The Rebate Fund reimbursed the Export
Fee Fund for this amount which is recorded as a receivable in the Rebate fund.
During fiscal year 1999, the Commission intends to monitor national and regional developments
regarding management of low-level radioactive waste, and will review office and staffing requirements
ar the June 1999 annual meeting.
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P.O. Box 2659
Madison, WI 53701-2659
Phone: (608) 267-4793
FAX: (608) 267-4799
mwllrcw@midwestcompact.org