Current through Register Vol. 48, No. 38, September 20, 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 subsections (a)(1), (a)(2), (a)(3), (a)(4),
(a)(5), or (a)(6):
1) An owner or operator
may demonstrate the required liability coverage by having liability insurance,
as specified in this subsection (a).
A) 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 and of the certificate of insurance must be that
specified in Section
724.251.
The owner or operator must submit a signed duplicate original of the
endorsement or the certificate of insurance to the Agency. If requested by the
Agency, 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 Agency at least 60 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.
B) Each insurance
policy must be issued by an insurer that is licensed by the Illinois Department
of Insurance.
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 pursuant to this subsection
(a), the owner or operator must specify at least one such assurance as
"primary" coverage and must specify other such assurance as "excess"
coverage.
7) An owner or operator
must notify the Agency within 30 days whenever any of the following occurs:
A) A claim results in a reduction in the
amount of financial assurance for liability coverage provided by a financial
instrument authorized in subsections (a)(1) through (a)(6);
B) A Certification of Valid Claim for bodily
injury or property damages caused by 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 pursuant to subsections (a)(1) through (a)(6); or
C) A final court order establishing a
judgement 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 pursuant to subsections (a)(1) through (a)(6).
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 meeting 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 subsections (b)(1), (b)(2),
(b)(3), (b)(4), (b)(5), or (b)(6):
1) An
owner or operator may demonstrate the required liability coverage by having
liability insurance, as specified in this subsection (b).
A) 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
that specified in Section 724.251. The wording of the certificate of insurance
must be that specified in Section 724.251. The owner or operator must submit a
signed duplicate original of the endorsement or the certificate of insurance to
the Agency. If requested by the Agency, 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
Agency at least 60 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.
B) Each insurance policy must be issued by an
insurer that is licensed by the Illinois Department of Insurance.
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 pursuant to this subsection (b), the owner or operator
must specify at least one such assurance as "primary" coverage and must specify
other such assurance as "excess" coverage.
7) An owner or operator must notify the
Agency within 30 days whenever any of the following occurs:
A) A claim results in a reduction in the
amount of financial assurance for liability coverage provided by a financial
instrument authorized in subsections (b)(1) through (b)(6);
B) A Certification of Valid Claim for bodily
injury or property damages caused by 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 pursuant to subsections (b)(1) through (b)(6); or
C) 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 pursuant to subsections (b)(1) through (b)(6).
c) Request for Adjusted Level of
Required Liability Coverage. If an owner or operator demonstrates to the Agency
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 an adjusted level of required liability coverage
from the Agency. The request for an adjusted level of required liability
coverage must be submitted to the Agency as part of the application pursuant to
35 Ill. Adm. Code
703.182 for a
facility that does not have a permit, or pursuant to the procedures for permit
modification pursuant to 35 Ill. Adm. Code
705.128
for a facility that has a permit. If granted, the modification will take the
form of an adjusted level of required liability coverage, such level to be
based on the Agency assessment of the degree and duration of risk associated
with the ownership or operation of the facility or group of facilities. The
Agency may require an owner or operator who requests an adjusted level of
required liability coverage to provide such technical and engineering
information as is necessary to determine a level of financial responsibility
other than that required by subsection (a) or (b). Any request for an adjusted
level of required liability coverage for a permitted facility will be treated
as a request for a permit modification pursuant to 35 Ill. Adm. Code
703.271(e)(3)
and 705.128.
d) Adjustments by the
Agency. If the Agency 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 Agency must adjust the level of financial
responsibility required pursuant to subsection (a) or (b) as may be necessary
to adequately protect human health and the environment. This adjusted level
must be based on the Agency'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 Agency 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, the Agency may require that an owner or
operator of the facility comply with subsection (b). An owner or operator must
furnish to the Agency, within a time specified by the Agency in the request,
which must be not be less than 30 days, any information that the Agency
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 pursuant to
35 Ill. Adm. Code
703.271(e)(3)
and 705.128.
e) Period of Coverage.
Within 60 days after receiving certifications from the owner or operator and a
qualified Professional Engineer that final closure has been completed in
accordance with the approved closure plan, the Agency must notify the owner or
operator in writing that the owner or operator is no longer required by this
Section to maintain liability coverage for that facility, unless the Agency
determines 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 it passes a
financial test as specified in this subsection (f). To pass this test the owner
or operator must meet the criteria of subsection (f)(1)(A) or (f)(1)(B):
A) The owner or operator must have the
following:
i) Net working capital and tangible
net worth each at least six times the amount of liability coverage to be
demonstrated by this test;
ii)
Tangible net worth of at least $10 million; and
iii) Assets in the United States amounting to
either of the following: at least 90 percent of the total assets; or at least
six times the amount of liability coverage to be demonstrated by this
test.
B) The owner or
operator must have the following:
i) A current
rating for its 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;
ii) Tangible net worth of at least $10
million;
iii) Tangible net worth at
least six times the amount of liability coverage to be demonstrated by this
test; and
iv) Assets in the United
States amounting to either of the following: at least 90 percent of the total
assets; or 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 subsection (f)(1), refers to the annual aggregate amounts for which
coverage is required pursuant to subsections (a) and (b).
3) To demonstrate that it meets this test,
the owner or operator must submit the following three items to the Agency:
A) A letter signed by the owner's or
operator's chief financial officer and worded as specified in Section 724.251.
If an owner or operator is using the financial test to demonstrate both
assurance for closure or post-closure care, as specified by Sections
724.243(f)
and
724.245(f)
and 35 Ill. Adm. Code
725.243(e)
and
725.245(e),
and liability coverage, it must submit the letter specified in Section
724.251
to cover both forms of financial responsibility; a separate letter, as
specified in Section 724.251, is not required.
B) 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.
C) A special report from the owner's or
operator's independent certified public accountant to the owner or operator
stating the following:
i) The accountant has
compared the data that 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
ii) In connection
with that procedure, no matters came to the accountant's attention that caused
the accountant to believe that the specified data should be
adjusted.
4) An
owner or operator of a new facility must submit the items specified in
subsection (f)(3) to the Agency at least 60 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 subsection (f)(3), the owner of operator must
send updated information to the Agency within 90 days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in subsection (f)(3).
6)
If the owner or operator no longer meets the requirements of subsection (f)(1),
the owner or operator 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 insurance must be submitted
to the Agency 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 Agency
may disallow use of this test on the basis of qualifications in the opinion
expressed by the independent certified public accountant in the accountant's
report on examination of the owner's or operator's financial statements (see
subsection (f)(3)(B)). An adverse opinion or a disclaimer of opinion will be
cause for disallowance. The Agency must 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 30 days after notification of disallowance.
g) Guarantee for Liability Coverage
1) Subject to subsection (g)(2), an owner or
operator may meet the requirements of this Section by obtaining a written
guarantee, referred to as a "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 and operators in subsections
(f)(1) through (f)(6). The wording of the guarantee must be that specified in
Section 724.251. A certified copy of the guarantee must accompany the items
sent to the Agency, as specified in subsection (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. The
terms of the guarantee must provide for the following:
A) 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 guarantee, or if the owner or operator fails to pay an amount agreed to
in settlement of claims arising from or alleged to arise from such injury or
damage, that the guarantor will do so up to the limits of coverage.
B) That the guarantee will remain in force
unless the guarantor sends notice of cancellation by certified mail to the
owner or operator and to the Agency. The guarantee must not be terminated
unless and until the Agency approves alternative liability coverage complying
with Section 724.247 or 35 Ill. Adm. Code
725.247.
2) The guarantor must execute the guarantee
in Illinois. The guarantee must be accompanied by a letter signed by the
guarantor that states as follows:
A) The
guarantee was signed in Illinois by an authorized agent of the
guarantor;
B) The guarantee is
governed by Illinois law; and
C)
The name and address of the guarantor's registered agent for service of
process.
3) The guarantor
must have a registered agent pursuant to Section 5.05 of the Business
Corporation Act of 1983 [
805 ILCS
5/5.05] or Section 105.05 of the General
Not-for-Profit Corporation Act of 1986 [
805 ILCS
105/105.05] .
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 of
credit that conforms to the requirements of this subsection (h), and submitting
a copy of the letter of credit to the Agency.
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 the
Illinois Commissioner of Banks and Trust Companies.
3) The wording of the letter of credit must
be that specified in Section 724.251.
4) An owner or operator who uses a letter of
credit to satisfy the requirements of this Section may also establish a 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 in accordance with instructions
from the trustee. The trustee of the standby trust fund must be an entity that
has the authority to act as a trustee and whose trust operations are regulated
and examined by the Illinois Commissioner of Banks and Trust Companies, or who
complies with the Corporate Fiduciary Act [ 205 ILCS 620 ].
5) The wording of the standby trust fund must
be identical to that specified in Section
724.251(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 (i) and submitting a copy of the bond to the
Agency.
2) The surety company
issuing the bond must be licensed by the Illinois Department of
Insurance.
3) The wording of the
surety bond must be that specified in Section 724.251.
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 (j) and submitting a signed, duplicate original
of the trust agreement to the Agency.
2) The trustee must be an entity that has the
authority to act as a trustee and whose trust operations are regulated and
examined by the Illinois Commissioner of Banks and Trust Companies, or who
complies with the Corporate Fiduciary Act [ 205 ILCS 620 ].
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 liability coverage to be
provided, the owner or operator, by the anniversary of the date of
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 (j), "the full amount of
the liability coverage to be provided" means the amount of coverage for sudden
and non-sudden accidental 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 that
specified in Section 724.251.
