Current through February, 2024
(a) Coverage for
sudden accidental occurrences. An owner or operator of a hazardous waste
treatment, storage, or disposal facility, or a group of such facilities, must
demonstrate financial responsibility for bodily injury and property damage to
third parties caused by sudden accidental occurrences arising from operations
of the facility or group of facilities. The owner or operator must have and
maintain liability coverage for sudden accidental occurrences in the amount of
at least $1 million per occurrence with an annual aggregate of at least $2
million, exclusive of legal defense costs. This liability coverage may be
demonstrated as specified in paragraphs (a)(1), (2), (3), (4), (5), or (6):
(1) An owner or operator may demonstrate the
required liability coverage by having liability insurance as specified in this
subsection.
(i) Each insurance policy must be
amended by attachment of the Hazardous Waste Facility Liability Endorsement or
evidenced by a Certificate of Liability Insurance. The wording of the
endorsement must be identical to the wording specified in subsection
11-264-151(i). The wording of the certificate of insurance must be identical to
the wording specified in subsection 11-264-151(j). The owner or operator must
submit a signed duplicate original of the endorsement or the certificate of
insurance to the director. If requested by the director, the owner or operator
must provide a signed duplicate original of the insurance policy. An owner or
operator of a new facility must submit the signed duplicate original of the
Hazardous Waste Facility Liability Endorsement or the Certificate of Liability
Insurance to the director at least sixty days before the date on which
hazardous waste is first received for treatment, storage, or disposal. The
insurance must be effective before this initial receipt of hazardous
waste.
(ii) Each insurance policy
must be issued by an insurer which, at a minimum, is licensed to transact the
business of insurance, or eligible to provide insurance as an excess or surplus
lines insurer, in one or more states.
(2) An owner or operator may meet the
requirements of this section by passing a financial test or using the guarantee
for liability coverage as specified in subsections (f) and (g).
(3) An owner or operator may meet the
requirements of this section by obtaining a letter of credit for liability
coverage as specified in subsection (h).
(4) An owner or operator may meet the
requirements of this section by obtaining a surety bond for liability coverage
as specified in subsection (i).
(5)
An owner or operator may meet the requirements of this section by obtaining a
trust fund for liability coverage as specified in subsection (j).
(6) An owner or operator may demonstrate the
required liability coverage through the use of combinations of insurance,
financial test, guarantee, letter of credit, surety bond, and trust fund,
except that the owner or operator may not combine a financial test covering
part of the liability coverage requirement with a guarantee unless the
financial statement of the owner or operator is not consolidated with the
financial statement of the guarantor. The amounts of coverage demonstrated must
total at least the minimum amounts required by this section. If the owner or
operator demonstrates the required coverage through the use of a combination of
financial assurances under this subsection, the owner or operator shall specify
at least one such assurance as "primary'' coverage and shall specify other
assurance as "excess'' coverage.
(7) An owner or operator shall notify the
director in writing within 30 days whenever:
(i) A claim results in a reduction in the
amount of financial assurance for liability coverage provided by a financial
instrument authorized in paragraphs (a)(1) through (a)(6) of this section;
or
(ii) A Certification of Valid
Claim for bodily injury or property damages caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under paragraphs
(a)(1) through (a)(6) of this section; or
(iii) A final court order establishing a
judgment for bodily injury or property damage caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is issued against the owner or
operator or an instrument that is providing financial assurance for liability
coverage under paragraphs (a)(1) through (a)(6) of this section.
(b) Coverage for
nonsudden accidental occurrences. An owner or operator of a surface
impoundment, landfill, land treatment facility, or disposal miscellaneous unit
that is used to manage hazardous waste, or a group of such facilities, must
demonstrate financial responsibility for bodily injury and property damage to
third parties caused by nonsudden accidental occurrences arising from
operations of the facility or group of facilities. The owner or operator must
have and maintain liability coverage for nonsudden accidental occurrences in
the amount of at least $3 million per occurrence with an annual aggregate of at
least $6 million, exclusive of legal defense costs. An owner or operator who
must meet the requirements of this section may combine the required
per-occurrence coverage levels for sudden and nonsudden accidental occurrences
into a single per-occurrence level, and combine the required annual aggregate
coverage levels for sudden and nonsudden accidental occurrences into a single
annual aggregate level. Owners or operators who combine coverage levels for
sudden and nonsudden accidental occurrences must maintain liability coverage in
the amount of at least $4 million per occurrence and $8 million annual
aggregate. This liability coverage may be demonstrated as specified in
paragraphs (b) (1), (2), (3), (4), (5), or (6), of this section:
(1) An owner or operator may demonstrate the
required liability coverage by having liability insurance as specified in this
subsection.
(i) Each insurance policy must be
amended by attachment of the Hazardous Waste Facility Liability Endorsement or
evidenced by a Certificate of Liability Insurance. The wording of the
endorsement must be identical to the wording specified in subsection
11-264-151(i). The wording of the certificate of insurance must be identical to
the wording specified in subsection 11-264-151(j). The owner or operator must
submit a signed duplicate original of the endorsement or the certificate of
insurance to the director. If requested by the director, the owner or operator
must provide a signed duplicate original of the insurance policy. An owner or
operator of a new facility must submit the signed duplicate original of the
Hazardous Waste Facility Liability Endorsement or the Certificate of Liability
Insurance to the director at least sixty days before the date on which
hazardous waste is first received for treatment, storage, or disposal. The
insurance must be effective before this initial receipt of hazardous
waste.
(ii) Each insurance policy
must be issued by an insurer which, at a minimum, is licensed to transact the
business of insurance, or eligible to provide insurance as an excess or surplus
lines insurer, in one or more states.
(2) An owner or operator may meet the
requirements of this section by passing a financial test or using the guarantee
for liability coverage as specified in subsections (f) and (g).
(3) An owner or operator may meet the
requirements of this section by obtaining a letter of credit for liability
coverage as specified in subsection (h).
(4) An owner or operator may meet the
requirements of this section by obtaining a surety bond for liability coverage
as specified in subsection (i).
(5)
An owner or operator may meet the requirements of this section by obtaining a
trust fund for liability coverage as specified in subsection (j).
(6) An owner or operator may demonstrate the
required liability coverage through the use of combinations of insurance,
financial test, guarantee, letter of credit, surety bond, and trust fund,
except that the owner or operator may not combine a financial test covering
part of the liability coverage requirement with a guarantee unless the
financial statement of the owner or operator is not consolidated with the
financial statement of the guarantor. The amounts of coverage demonstrated must
total at least the minimum amount required by this section. If the owner or
operator demonstrates the required coverage through the use of a combination of
financial assurances under this subsection, the owner or operator shall specify
at least one such assurance as "primary'' coverage and shall specify other
assurance as "excess'' coverage.
(7) An owner or operator shall notify the
director in writing within 30 days whenever:
(i) A Claim results in a reduction in the
amount of financial assurance for liability coverage provided by a financial
instrument authorized in paragraphs (b)(1) through (b)(6) of this section;
or
(ii) A Certification of Valid
Claim for bodily injury or property damages caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under paragraphs
(b)(1) through (b)(6) of this section; or
(iii) A final court order establishing a
judgment for bodily injury or property damage caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is issued against the owner or
operator or an instrument that is providing financial assurance for liability
coverage under paragraphs (b)(1) through (b)(6) of this section.
(c) Request for
variance. If an owner or operator can demonstrate to the satisfaction of the
director that the levels of financial responsibility required by subsection (a)
or (b) are not consistent with the degree and duration of risk associated with
treatment, storage, or disposal at the facility or group of facilities, the
owner or operator may obtain a variance from the director. The request for a
variance must be submitted to the director as part of the application under
section 11-270-14 for a facility that does not have a permit, or pursuant to
the procedures for permit modification under section 11-271-5 for a facility
that has a permit. If granted, the variance will take the form of an adjusted
level of required liability coverage, such level to be based on the director's
assessment of the degree and duration of risk associated with the ownership or
operation of the facility or group of facilities. The director may require an
owner or operator who requests a variance to provide such technical and
engineering information as is deemed necessary by the director to determine a
level of financial responsibility other than that required by subsection (a) or
(b). Any request for a variance for a permitted facility will be treated as a
request for a permit modification under paragraph 11-270-41(a)(5) and section
11-271-5.
(d) Adjustments by the
director. If the director determines that the levels of financial
responsibility required by subsection (a) or (b) are not consistent with the
degree and duration of risk associated with treatment, storage, or disposal at
the facility or group of facilities, the director may adjust the level of
financial responsibility required under subsection (a) or (b) as may be
necessary to protect human health and the environment. This adjusted level will
be based on the director's assessment of the degree and duration of risk
associated with the ownership or operation of the facility or group of
facilities. In addition, if the director determines that there is a significant
risk to human health and the environment from nonsudden accidental occurrences
resulting from the operations of a facility that is not a surface impoundment,
landfill, or land treatment facility, he may require that an owner or operator
of the facility comply with subsection (b). An owner or operator must furnish
to the director, within a reasonable time, any information which the director
requests to determine whether cause exists for such adjustments of level or
type of coverage. Any adjustment of the level or type of coverage for a
facility that has a permit will be treated as a permit modification under
paragraph 11-270-41(a)(5) and section 11-271-5.
(e) Period of coverage. Within sixty days
after receiving certifications from the owner or operator and an independent
registered professional engineer that final closure has been completed in
accordance with the approved closure plan, the director will notify the owner
or operator in writing that he is no longer required by this section to
maintain liability coverage for that facility, unless the director has reason
to believe that closure has not been in accordance with the approved closure
plan.
(f) Financial test for
liability coverage.
(1) An owner or operator
may satisfy the requirements of this section by demonstrating that he passes a
financial test as specified in this subsection. To pass this test the owner or
operator must meet the criteria of subparagraph (f)(1)(i) or (ii).
(i) The owner or operator must have:
(A) Net working capital and tangible net
worth each at least six times the amount of liability coverage to be
demonstrated by this test; and
(B)
Tangible net worth of at least ten million dollars; and
(C) Assets in the United States amounting to
either:
(1) At least ninety percent of his
total assets; or
(2) At least six
times the amount of liability coverage to be demonstrated by this
test.
(ii)
The owner or operator must have:
(A) A
current rating for his 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;
and
(B) Tangible net worth of at
least ten million dollars; and
(C)
Tangible net worth at least six times the amount of liability coverage to be
demonstrated by this test; and
(D)
Assets in the United States amounting to either:
(1) At least ninety percent of his total
assets; or
(2) At least six times
the amount of liability coverage to be demonstrated by this test.
(2) The phrase "amount of liability
coverage'' as used in paragraph (f)(1) refers to the annual aggregate amounts
for which coverage is required under subsections (a) and (b).
(3) To demonstrate that he meets this test,
the owner or operator must submit the following three items to the director:
(i) A letter signed by the owner's or
operator's chief financial officer and worded as specified in subsection
11-264-151(g). If an owner or operator is using the financial test to
demonstrate both assurance for closure or post-closure care, as specified by
subsections 11-264-143(f), 11-264-145(f), 11-265-143(e), and 11-265-145(e), and
liability coverage, he must submit the letter specified in subsection
11-264-151(g) to cover both forms of financial responsibility; a separate
letter as specified in subsection 11-264-151(f) is not required.
(ii) A copy of the independent certified
public accountant's report on examination of the owner's or operator's
financial statements for the latest completed fiscal year.
(iii) A special report from the owner's or
operator's independent certified public accountant to the owner or operator
stating that:
(A) He has compared the data
which the letter from the chief financial officer specifies as having been
derived from the independently audited, year-end financial statements for the
latest fiscal year with the amounts in such financial statements; and
(B) In connection with that procedure, no
matters came to his attention which caused him to believe that the specified
data should be adjusted.
(4) An owner or operator of a new facility
must submit the items specified in paragraph (f)(3) to the director at least
sixty days before the date on which hazardous waste is first received for
treatment, storage, or disposal.
(5) After the initial submission of items
specified in paragraph (f)(3), the owner or operator must send updated
information to the director within ninety days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in paragraph (f)(3).
(6)
If the owner or operator no longer meets the requirements of paragraph (f)(1)
of this section, he must obtain insurance, a letter of credit, a surety bond, a
trust fund, or a guarantee for the entire amount of required liability coverage
as specified in this section. Evidence of liability coverage must be submitted
to the director within 90 days after the end of the fiscal year for which the
year-end financial data show that the owner or operator no longer meets the
test requirements.
(7) The director
may disallow use of this test on the basis of qualifications in the opinion
expressed by the independent certified public accountant in his report on
examination of the owner's or operator's financial statements (see subparagraph
(f)(3)(ii)). An adverse opinion or a disclaimer of opinion will be cause for
disallowance. The director will evaluate other qualifications on an individual
basis. The owner or operator must provide evidence of insurance for the entire
amount of required liability coverage as specified in this section within
thirty days after notification of disallowance.
(g) Guarantee for
liability coverage.
(1) Subject to paragraph
(g)(2), an owner or operator may meet the requirements of this section by
obtaining a written guarantee, hereinafter referred to as "guarantee.'' The
guarantor must be the direct or higher-tier parent corporation of the owner or
operator, a firm whose parent corporation is also the parent corporation of the
owner or operator, or a firm with a "substantial business relationship'' with
the owner or operator. The guarantor must meet the requirements for owners or
operators in paragraphs (f)(1) through (f)(6). The wording of the guarantee
must be identical to the wording specified in paragraph 11-264-151(h)(2). A
certified copy of the guarantee must accompany the items sent to the director
as specified in paragraph (f)(3). One of these items must be the letter from
the guarantor's chief financial officer. If the guarantor's parent corporation
is also the parent corporation of the owner or operator, this letter must
describe the value received in consideration of the guarantee. If the guarantor
is a firm with a "substantial business relationship'' with the owner or
operator, this letter must describe this "substantial business relationship''
and the value received in consideration of the guarantee.
(i) If the owner or operator fails to satisfy
a judgment based on a determination of liability for bodily injury or property
damage to third parties caused by sudden or nonsudden accidental occurrences
(or both as the case may be), arising from the operation of facilities covered
by this corporate guarantee, or fails to pay an amount agreed to in settlement
of claims arising from or alleged to arise from such injury or damage, the
guarantor will do so up to the limits of coverage.
(ii) [Reserved]
(2)
(i) In
the case of corporations incorporated in the United States, a guarantee may be
used to satisfy the requirements of this section only if the Attorneys General
or Insurance Commissioners of:
(A) the state
in which the guarantor is incorporated, and
(B) the State have submitted written
statements to the director that a guarantee executed as described in this
section and paragraph 11-264-151(h)(2) is a legally valid and enforceable
obligation in the state in which the guarantor is incorporated and in the State
of Hawaii, respectively.
(ii) In the case of corporations incorporated
outside the United States, a guarantee may be used to satisfy the requirements
of this section only if:
(A) the non-U.S.
corporation has identified a registered agent for service of process in the
State of Hawaii and in the state in which it has its principal place of
business, and
(B) the Attorney
General or Insurance Commissioner of the State of Hawaii and the state in which
the guarantor corporation has its principal place of business, have submitted
written statements to the director that a guarantee executed as described in
this section and paragraph 11-264-151(h)(2) is a legally valid and enforceable
obligation in the State of Hawaii and in the state in which the guarantor
corporation has its principal place of business, respectively.
(h) Letter
of credit for liability coverage.
(1) An
owner or operator may satisfy the requirements of this section by obtaining an
irrevocable standby letter or credit that conforms to the requirements of this
subsection and submitting a copy of the letter of credit to the
director.
(2) The financial
institution issuing the letter of credit must be an entity that has the
authority to issue letters of credit and whose letter of credit operations are
regulated and examined by a federal or State agency.
(3) The wording of the letter of credit must
be identical to the wording specified in subsection 11-264-151(k).
(4) An owner or operator who uses a letter of
credit to satisfy the requirements of this section may also establish a standby
trust fund. Under the terms of such a letter of credit, all amounts paid
pursuant to a draft by the trustee of the standby trust will be deposited by
the issuing institution into the standby trust in accordance with instructions
from the trustee. The trustee of the standby trust fund must be an entity which
has the authority to act as a trustee and whose trust operations are regulated
and examined by the State.
(5) The
wording of the standby trust fund must be identical to the wording specified in
subsection 11-264-151(n).
(i) Surety bond for liability coverage.
(1) An owner or operator may satisfy the
requirements of this section by obtaining a surety bond that conforms to the
requirements of this subsection and submitting a copy of the bond to the
director.
(2) The surety company
issuing the bond must be among those listed as acceptable sureties on Federal
bonds in the most recent Circular 570 of the U.S. Department of the
Treasury.
(3) The wording of the
surety bond must be identical to the wording specified in subsection
11-264-151(l).
(4) A surety bond
may be used to satisfy the requirements of this section only if the Attorneys
General or Insurance Commissioners of:
(i)
the state in which the surety is incorporated, and
(ii) the State of Hawaii have submitted
written statements to the director that a surety bond executed as described in
this section and subsection 11-264-151(l) is a legally valid and enforceable
obligation in the state in which the surety is incorporated and in the State of
Hawaii, respectively.
(j) Trust fund for liability coverage.
(1) An owner or operator may satisfy the
requirements of this section by establishing a trust fund that conforms to the
requirements of this subsection and submitting an originally signed duplicate
of the trust agreement to the director.
(2) The trustee must be an entity which has
the authority to act as a trustee and whose trust operations are regulated and
examined by the State.
(3) The
trust fund for liability coverage must be funded for the full amount of the
liability coverage to be provided by the trust fund before it may be relied
upon to satisfy the requirements of this section. If at any time after the
trust fund is created the amount of funds in the trust fund is reduced below
the full amount of the liability coverage to be provided, the owner or
operator, by the anniversary date of the establishment of the fund, must either
add sufficient funds to the trust fund to cause its value to equal the full
amount of liability coverage to be provided, or obtain other financial
assurance as specified in this section to cover the difference. For purposes of
this subsection, "the full amount of the liability coverage to be provided''
means the amount of coverage for sudden and/or nonsudden occurrences required
to be provided by the owner or operator by this section, less the amount of
financial assurance for liability coverage that is being provided by other
financial assurance mechanisms being used to demonstrate financial assurance by
the owner or operator.
(4) The
wording of the trust fund must be identical to the wording specified in
subsection 11-264-151(m).
