Ohio Administrative Code
Title 3745 - Ohio Environmental Protection Agency
Chapter 3745-503 - Financial Assurance
Section 3745-503-05 - Financial assurance for closure

(1) The owner or operator shall execute and fund a financial assurance instrument in an amount not less than the current closure cost estimate and meeting the requirements of paragraph (E) of this rule.

(2) Financial assurance for closure shall be maintained and may be released only in accordance with paragraph (O) of this rule.

(1) The owner or operator may satisfy the requirements of this rule by establishing a closure trust fund which conforms to the requirements of this paragraph, by sending an originally signed duplicate of the trust agreement to the director prior to license issuance, and by submitting a copy of the trust agreement into the operating record, if applicable. The trustee shall be an entity that has the authority to act as a trustee and which trust operations are regulated and examined by a federal or state agency.

(2) The wording of the trust agreement shall be identical to the wording specified in paragraph (A)(1) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director, and the trust agreement shall be accompanied by a formal certification of acknowledgment. "Schedule A" of the trust agreement shall be updated not later than sixty days after a change in the amount of the current closure cost estimate provided for in the agreement.

(3) A closure trust fund shall be established to secure an amount at least equal to the current closure cost estimate, except as provided in paragraph (M) of this rule. Except for payments made in accordance with paragraphs (F)(3)(d) and (F)(4) of this rule, payments to the trust fund shall be made annually by the owner or operator during the pay-in period. The pay-in period shall be the anticipated life of the sanitary landfill facility as calculated using the authorized maximum daily waste receipt and the approved volume of the sanitary landfill facility as shown in the approved permit. The first payment into the closure trust fund shall be made in accordance with paragraph (B) of this rule. Subsequent payments to the closure trust fund shall be made as follows:

(4) The owner or operator may accelerate payments into the trust fund, or the owner or operator may deposit the full amount of the current closure cost estimate at the time the fund is established. However, the owner or operator shall maintain the value of the fund at no less than the value the fund would have if annual payments were made as specified in paragraph (F)(3) of this rule.

(5) If the owner or operator establishes a closure trust fund after having begun funding closure under any mechanism specified in this rule, the closure trust fund shall be established by depositing the total value of all prior mechanisms into the newly established trust fund. The subsequent annual payments shall be made as specified in paragraph (F)(3) of this rule.

(6) After the pay-in period of a trust fund has ended and the current closure cost estimate changes, the owner or operator shall compare the revised estimate to the trustee's most recent annual valuation of the trust fund. If the value of the trust fund is less than the amount of the revised estimate, the owner or operator shall, not later than sixty days after the change in the cost estimate, either deposit a sufficient amount into the trust fund so that its value after payment at least equals the amount of the current closure cost estimate, or obtain alternate financial assurance as specified in this rule to compensate for the difference.

(7) The director shall instruct the trustee to release to the owner or operator such funds as the director specifies in writing, after receiving one of the following requests from the owner or operator for a release of funds:

(8) Reimbursement for closure at solid waste facilities.

After beginning closure, the owner or operator, or any other person authorized by the owner, operator, or director to perform closure, may request reimbursement for closure expenditures by submitting itemized bills to the director. After receiving itemized bills for closure activities, the director shall determine whether the closure expenditures are in accordance with the closure or post-closure plan, permit or registration requirements, or applicable rules, or are otherwise justified, and if so, will instruct the trustee to make reimbursement in such amounts as the director specifies in writing. If the director determines that the cost of closure will be greater than the value of the trust fund, the director may withhold reimbursement of such amounts as deemed prudent until the director determines, in accordance with paragraph (O) of this rule, that the owner or operator is no longer required to maintain financial assurance for closure of the facility.

(9) The director will agree to termination of the trust fund when one of the following occurs:

(1) The owner or operator may satisfy the requirements of this rule by obtaining a surety bond that conforms to the requirements of this paragraph and by delivering the originally signed bond to the director by certified mail or any other form of mail accompanied by a receipt prior to license issuance and by submitting a copy of the bond into the operating record, if applicable. The surety company issuing the bond shall at a minimum be among those listed as acceptable sureties on federal bonds in the most recent listing of approved sureties as published by the U.S. department of the treasury.

(2) The wording of the surety bond shall be identical to the wording specified in paragraph (B) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director.

(3) The owner or operator who uses a surety bond to satisfy the requirements of this rule shall also establish a standby trust fund not later than when the bond is obtained. Under the terms of the surety bond, all payments made thereunder will be deposited by the surety directly into the standby trust fund in accordance with instructions from the director. This standby trust fund shall meet the requirements specified in paragraph (F) of this rule, except that:

(4) The bond shall guarantee that the surety will become liable on the bond obligation unless the owner or operator does one of the following, as applicable:

(5) Under the terms of the bond, the surety shall become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.

(6) The penal sum of the bond shall be in an amount at least equal to the current closure cost estimate except as provided in paragraph (M) of this rule.

(7) Whenever the current closure cost estimate increases to an amount greater than the penal sum of the bond, the owner or operator shall, not later than sixty days after the increase in the estimate, either cause the penal sum of the bond to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the director, and into the operating record, if applicable, or obtain alternate financial assurance, as specified in this rule, to compensate for the increase. Whenever the current closure cost estimate decreases, the penal sum may be reduced to the amount of the current closure cost estimate following written approval by the director. Notice of an increase or a proposed decrease in the penal sum shall be sent to the director not later than sixty days after the change.

(8) Under the terms of the bond, the bond shall remain in force unless the surety sends written notice of cancellation by certified mail or any other form of mail accompanied by a receipt to the owner or operator and to the director. Cancellation cannot occur, however, during the one hundred twenty day period beginning on the first day that both the owner or operator and the director have received the notice of cancellation, as evidenced by the return receipts.

(9) The owner or operator may cancel the bond if the director has given prior written consent. The director will provide such written consent to the surety bond company when one of the following occurs:

(1) The owner or operator may satisfy the requirements of this rule by obtaining a surety bond which conforms to the requirements of this paragraph and by delivering the originally signed bond to the director prior to license issuance and by submitting a copy of the surety bond into the operating record of the facility, if applicable. The surety company issuing the bond shall at a minimum be among those listed as acceptable sureties on federal bonds in the most recent listing of approved sureties as published by the U.S. department of the treasury.

(2) The wording of the surety bond shall be identical to the wording specified in paragraph (C) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director.

(3) The owner or operator who uses a surety bond to satisfy the requirements of this rule shall also establish a standby trust fund. Under the terms of the surety bond, all payments made thereunder will be deposited by the surety directly into the standby trust fund in accordance with instructions from the director. This standby trust fund shall meet the requirements specified in paragraph (F) of this rule except that:

(4) The bond shall guarantee that the surety will become liable on the bond obligation unless the owner or operator does one of the following, as applicable:

(5) Performing activities.

Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond. Following a determination by the director that the owner or operator of the solid waste facility has failed to perform closure activities in accordance with the closure/post-closure care plan, permit or registration requirements, and applicable rules, the surety shall perform closure in accordance with the closure/post-closure care plan, permit or registration requirements, and applicable rules, or will deposit the amount of the penal sum into the standby trust fund.

(6) The penal sum of the bond shall be in an amount at least equal to the current closure cost estimate.

(7) Whenever the current closure cost estimate increases to an amount greater than the penal sum of the bond, the owner or operator shall, not later than sixty days after the increase in the estimate or prior to waste acceptance in accordance with paragraph (B)(2) of this rule, either cause the penal sum of the bond to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the director, and into the operating record, if applicable, or obtain alternate financial assurance, as specified in this rule, to compensate for the increase. Whenever the current closure cost estimate decreases, the penal sum may be reduced to the amount of the current closure cost estimate following written approval by the director. Notice of an increase or a proposed decrease in the penal sum shall be sent to the director by certified mail or any other form of mail accompanied by a receipt not later than sixty days after the change.

(8) Under the terms of the bond, the bond shall remain in force unless the surety sends written notice of cancellation by certified mail or any other form of mail accompanied by a receipt to the owner or operator and to the director. Cancellation cannot occur, however, during the one hundred twenty day period beginning on the first day that both the owner or operator and the director have received the notice of cancellation as evidenced by the return receipts.

(9) The owner or operator may cancel the bond if the director has given prior written consent. The director will provide such written consent to the surety bond company when one of the following occurs:

(10) The surety shall not be liable for deficiencies in the completion of closure of a facility by the owner or operator after the owner or operator has been notified by the director, in accordance with this rule, that the owner or operator is no longer required to maintain financial assurance for closure of a facility.

(1) The owner or operator may satisfy the requirements of this rule by obtaining an irrevocable standby letter of credit ("letter of credit") which conforms to the requirements of this paragraph and by having the originally signed letter of credit delivered to the director by certified mail or any other form of mail accompanied by a receipt prior to license issuance and by submitting a copy of the letter of credit into the operating record of the facility, if applicable. The issuing institution shall be an entity which has the authority to issue letters of credit and whose letter of credit operations are regulated and examined by a federal or state agency.

(2) The wording of the letter of credit shall be identical to the wording specified in paragraph (D) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director.

(3) An owner or operator who uses a letter of credit to satisfy the requirements of this rule shall also establish a standby trust fund. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the director shall be deposited promptly and directly by the issuing institution into the standby trust fund in accordance with instructions from the director. The standby trust fund shall meet the requirements of the trust fund specified in paragraph (F) of this rule, except that:

(4) The letter of credit shall be accompanied by a letter from the owner or operator referring to the letter of credit by number, issuing institution, and date, and providing the following information: the names and addresses of the solid waste facility and the owner and the operator and the amount of funds assured for closure of the facility by the letter of credit.

(5) The letter of credit shall be irrevocable and issued for a period of at least one year.

The letter of credit shall provide that the expiration date will be automatically extended for a period of at least one year unless, not later than one hundred twenty days prior to the current expiration date, the issuing institution notifies both the owner and operator and the director by certified mail or any other form of mail accompanied by a receipt of a decision not to extend the expiration date. Under the terms of the letter of credit, the one hundred twenty day period shall begin on the day when both the owner or operator and the director have received the notice, as evidenced by the return receipts.

(6) The letter of credit shall be issued in an amount at least equal to the current closure cost estimate except as provided in paragraph (M) of this rule.

(7) Whenever the current closure cost estimate increases to an amount greater than the amount of the credit, the owner or operator shall, not later than sixty days after the increase, either cause the amount of the credit to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the director, and into the operating record, if applicable, or obtain alternate financial assurance, as specified in this rule, to compensate for the increase. Whenever the current closure cost estimate decreases, the letter of credit may be reduced to the amount of the current closure cost estimate following written approval by the director. Notice of an increase or a proposed decrease in the amount of the letter of credit shall be sent to the director by certified mail or any other form of mail accompanied by a receipt not later than sixty days after the change.

(8) Under the terms of the letter of credit, the director may draw on the letter of credit following a determination that the owner or operator has failed to do the following:

(9) The director shall return the original letter of credit to the issuing institution for termination when either of the following occur:

(1) The owner or operator may satisfy the requirements of this rule by obtaining closure insurance which conforms to the requirements of this paragraph and by submitting an originally signed certificate of such insurance to the director by certified mail or any other form of mail accompanied by a receipt prior to license issuance, and by submitting a copy of the certificate of insurance into the operating record, if applicable. At a minimum, the insurer shall be 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) The owner or operator using insurance as a financial assurance mechanism shall submit documentation stating whether the insurer is a subsidiary or has a corporate, legal, or financial affiliation with the owner or operator. If the closure insurance is issued by a subsidiary or affiliate, the owner or operator shall include a detailed written description of the relationship between the insurer and the owner and the operator.

(3) An insurer issuing an insurance policy in satisfaction of this rule shall be licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more states. The owner or operator shall submit to the director the following information regarding the insurer's qualifications:

(4) The director may disallow use of the insurer by the owner or operator on the basis of one or more of the following:

(5) The wording of the certificate of insurance shall be identical to the wording specified in paragraph (E) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director.

(6) The closure insurance policy shall be issued for a face amount at least equal to the current closure cost estimate cost estimate, except as provided in paragraph (M) of this rule. Actual payments by the insurer will not change the face amount, although the insurer's future liability will be lowered by the amount of the payments.

(7) Guaranteeing of funds. The closure insurance policy shall guarantee that funds will be available to close the facility whenever closure is mandated. The policy shall also guarantee that once closure begins, the insurer will be responsible for paying out funds, up to an amount equal to the face amount of the policy, upon the direction of the director, to such party or parties as the director specifies

(8) Reimbursement for closure.

The owner or operator, or any other person authorized by the owner, operator, or director to perform closure, may request reimbursement for closure expenditures by submitting itemized bills to the director. After receiving itemized bills for closure activities, the director shall determine whether the closure expenditures are in accordance with the closure/post-closure care plan, permit or registration requirements, and applicable rules, or are otherwise justified, and if so, shall instruct the insurer to make reimbursement in such amounts as the director specifies in writing. If the director has reason to believe that the cost of closure will be greater than the face amount of the policy, the director may withhold reimbursement of such amounts as deemed prudent until the director determines, in accordance with paragraph (O) of this rule that the owner or operator is no longer required to maintain financial assurance for closure of the facility.

(9) The owner or operator shall maintain the policy in full force and effect until the director consents to termination of the policy by the owner or operator as specified in paragraph (J)(13) of this rule. Failure to pay the premium, without substitution of alternate financial assurance as specified in this rule, will constitute a violation of these rules, warranting such remedy as the director deems necessary. Such violation shall be deemed to begin upon receipt by the director of a notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration.

(10) Each policy shall contain a provision allowing assignment of the policy to a successor owner or operator. Such assignment may be conditional upon consent of the insurer, provided such consent is not unreasonably refused.

(11) The policy shall provide that the insurer may not cancel, terminate, or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy shall, at a minimum, provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may elect to cancel, terminate, or fail to renew the policy by sending notice by certified mail or any other form of mail accompanied by a receipt to the owner or operator and to the director not later than one hundred twenty days prior to the date of cancellation. The one hundred and twenty days shall begin with the date of receipt of the cancellation notice by both the director and the owner or operator, as evidenced by the return receipts.

(12) Whenever the current closure cost estimate increases to an amount greater than the face amount of the policy, the owner or operator shall, not later than sixty days after the increase, either cause the face amount to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the director, and into the operating record, if applicable, or obtain alternate financial assurance as specified in this rule to compensate for the increase. Whenever the current closure cost estimate decreases, the face amount may be reduced to the amount of the current closure cost estimate following written approval by the director.

(13) The director may give written consent to the owner or operator to terminate the insurance policy when either of the following occurs:

(1) The owner or operator may satisfy the requirements of this rule by demonstrating that the owner or operator passes a financial test as specified in this paragraph. The owner or operator who uses this test shall be operating for a minimum of five years. To pass this test the owner or operator shall demonstrate that less than fifty per cent of the parent corporation's gross revenues are derived from solid waste disposal facility operations, or if there is no parent corporation, the owner or operator shall demonstrate that less than fifty per cent of its gross revenues are derived from solid waste disposal facility operations and shall satisfy the requirements of paragraph (K)(1)(a) or (K)(1)(b) of this rule.

(2) Current closure and current post-closure care cost estimates, any current corrective actions cost estimates, and any other obligations assured by a financial test as used in paragraph (K)(1) of this rule refers to the cost estimates required to be shown in the letter from the owner's or operator's chief financial officer.

(3) To demonstrate that requirements of this test are met, the owner or operator shall submit the following items to the director, and into the operating record, if applicable:

(4) After the initial submission of the items specified in paragraph (K)(3) of this rule, the owner or operator shall send updated information to the director, and submit updated information into the operating record, if applicable, not later than ninety days after the close of each succeeding fiscal year. This information shall include all three items specified in paragraph (K)(3) of this rule.

(5) If the owner or operator no longer meets the requirements of paragraph (K)(1) of this rule, notice shall be sent to the director of the intent to establish alternate financial assurance as specified in this rule. The notice shall be sent by certified mail or any other form of mail accompanied by a receipt not later than ninety 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 requirements. A copy of the notice shall also be placed in the operating record, if applicable. The owner or operator shall provide alternate financial assurance not later than one hundred twenty days after the end of such fiscal year.

(6) The director may, based on a reasonable belief that the owner or operator no longer meets the requirements of paragraph (K)(1) of this rule, require reports of financial condition at any time from the owner or operator in addition to those specified in paragraph (K)(3) of this rule. If the director finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of paragraph (K)(1) of this rule, the owner or operator shall provide alternate financial assurance as specified in this rule not later than thirty days after notification of such a finding.

(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 the report on examination of the owner's or operator's financial statements. An adverse opinion or disclaimer of opinion will be cause for disallowance. The director shall evaluate other qualifications on an individual basis. The owner or operator shall provide alternate financial assurance as specified in this rule not later than thirty days after notification of the disallowance.

(8) The owner or operator is no longer required to submit the items specified in paragraph (K)(3) of this rule when either of the following occur:

(9) The owner or operator may meet the requirements of this rule by obtaining a written guarantee, hereafter referred to as a corporate guarantee. The guarantor shall be the parent corporation of the owner or operator. The guarantor shall meet the requirements for an owner or operator in paragraphs (K)(1) to (K)(7) of this rule and shall comply with the terms of the corporate guarantee. The wording of the corporate guarantee shall be identical to the wording specified in paragraph (G) of rule 3745-503-20 of the Administrative Code on forms prescribed by the director. The corporate guarantee shall accompany the items sent to the director as specified in paragraph (K)(3) of this rule. The terms of the corporate guarantee shall provide that:

(1) In order to satisfy the requirements of this rule, a local government shall, by resolution, establish a restricted "Local Government Financial Test" (LGFT) fund specifically for funding the estimated cost of closure of the solid waste facility. The LGFT fund shall be established to accumulate an amount at least equal to the current estimate of the cost of closure. The LGFT fund shall be maintained throughout the operating life of the solid waste facility. For a new facility, the first payment into the LGFT fund shall be calculated using the average daily waste receipt and the approved volume of the solid waste facility provided in the permit to install, registration, or license, as applicable. For existing facilities, annual payments to the LGFT fund shall be calculated based on the amount of waste that was accepted for disposal at the facility as listed on the annual report for the previous operating year, unless an alternative calculation or amount is authorized by Ohio EPA. Payments shall be made annually not later than thirty days after the anniversary date of the initial deposit as follows:

(CE-CV)/R

Where CE is the current closure cost estimate, CV is the current value of the fund, and R is the number of years remaining in the operating life of the solid waste facility based on the amount of waste that was accepted for disposal at the facility as listed on the annual report for the previous operating year. To maintain compliance with this rule, a local government shall annually submit to Ohio EPA an affidavit affirming the continued existence of the LGFT fund and the balance in the LGFT fund as of the end of the fiscal year. A copy of the current estimate of the cost of closure and the calculated amount of the annual payment shall also be provided to Ohio EPA.

(2) A local government shall satisfy the requirements of this rule by demonstrating that the local government passes a financial test as specified in this paragraph. This test consists of a financial component, a public notice component, and a record-keeping and reporting component. In order to satisfy the financial component of the test, a local government shall meet the following criteria:

(3) A local government shall satisfy the requirements of paragraph (L)(3)(a) or (L)(3)(b) of this rule.

(4) In order to satisfy the public notice component of the test, a local government shall in each year that the test is used, identify the current cost estimates in either its budget or its comprehensive annual financial report. The facility covered, the categories of expenditures, including closure, post-closure care, corrective actions, the corresponding cost estimate for each expenditure, and the anticipated year of the required activity shall be recorded. If the financial assurance obligation is to be included in the budget, it should either be listed as an approved budgeted line item, if the obligation will arise during the budget period, or in an appropriate supplementary data section, if the obligation will not arise during the budget period. If the information is to be included in the comprehensive annual financial report, it is to be included in the financial section as a footnote to the annual financial statements.

(5) To demonstrate that the local government meets the requirements of this test, the following three items shall be provided to the director, and submitted into the operating record, if applicable:

(6) After the initial submission of the items specified in this rule, a local government shall send updated information to the director on forms prescribed by the director, and submit updated information into the operating record, if applicable, not later than one hundred eighty days after the close of each succeeding fiscal year. This information shall include all items specified in this rule.

(7) If a local government no longer meets the requirements of this rule, notice shall be sent to the director of the intent to establish alternate financial assurance as specified in this rule. The notice shall be sent by certified mail or any other form of mail accompanied by a receipt not later than one hundred fifty days after the end of the fiscal year for which the year-end financial data show that the local government no longer meets the requirements. A copy of the notice shall also be placed in the operating record, if applicable. The local government shall provide alternate financial assurance not later than one hundred eighty days after the end of such fiscal year.

(8) The director may, based on a reasonable belief that the local government no longer meets the requirements of this rule, require reports of financial condition at any time from the local government in addition to those specified in this rule. If the director finds, on the basis of such reports or other information, that the local government no longer meets the requirements of this rule, the local government shall provide alternate financial assurance as specified in this rule not later than thirty days after notification of such a finding.

(9) The director may disallow use of this test on the basis of qualifications in the opinion expressed by the independent certified public accountant or auditor of state in the report on examination of the local government's financial statements. An adverse opinion or disclaimer of opinion will be cause for disallowance. The director shall evaluate other qualifications on an individual basis. The local government shall provide alternate financial assurance as specified in this rule not later than thirty days after notification of the disallowance.

(10) A local government is no longer required to submit the items specified in this rule when one of the following occur: