Current through Register Vol. 63, No. 3, March 1, 2024
(1) The financial assurance mechanism shall
restrict the use of the financial assurance so that the financial resources may
be used only to guarantee that closure, post-closure or corrective action
activities will be performed, or that the financial resources can be used only
to finance closure, post-closure or corrective action activities.
(2) The financial assurance mechanism shall
provide that the Department or a party approved by the Department is the
beneficiary of the financial assurance.
(3) A permittee may use one financial
assurance mechanism for closure, post-closure and corrective action activities,
but the amount of funds assured for each activity must be specified.
(4) A permittee may demonstrate financial
assurance for closure, post-closure and corrective action by establishing more
than one mechanism per facility, except that mechanisms guaranteeing
performance rather than payment may not be combined with other
instruments.
(5) The financial
assurance mechanism shall be worded as specified by the Department, unless a
permittee uses an alternative financial assurance mechanism pursuant to
subsection (6)(i) of this rule. The Department retains the authority to approve
the wording of an alternative financial assurance mechanism.
(6) Allowable Financial Assurance Mechanisms.
A permittee shall provide only the following forms of financial assurance for
closure and post-closure activities:
(a) A
trust fund established with an entity which has the authority to act as a
trustee and whose trust operations are regulated and examined by a federal or
state agency and meeting criteria in40 CFR § 258.74(a). The
purpose of the trust fund is to receive and manage any funds that may be paid
by the permittee and to disburse those funds only for closure, post-closure
maintenance or corrective action activities which are authorized by the
Department. The permittee shall notify the Department, in writing, before any
expenditure of trust fund moneys is made, describing and justifying the
activities for which the expenditure is to be made. If the Department does not
respond to the trustee within 30 days after receiving such notification, the
expenditure is deemed authorized and the trustee may make the requested
reimbursements;
(b) A surety bond
guaranteeing payment into a standby closure or post-closure trust fund issued
by a surety company listed as acceptable in Circular 570 of the U.S. Department
of the Treasury. The standby closure or post-closure trust fund must be
established by the permittee. The purpose of the standby trust fund is to
receive any funds that may be paid by the permittee or surety company. The
penal sum of the bond must be in an amount at least equal to the current
closure or post-closure care cost estimate, as applicable. The bond must
guarantee that the permittee will either fund the standby trust fund in an
amount equal to the penal sum of the bond before the site stops receiving waste
or within 15 days after an order to begin closure is issued by the Department
or by a court of competent jurisdiction; or that the permittee will provide
alternate financial assurance acceptable to the Department within 90 days after
receipt of a notice of cancellation of the bond from the surety. The surety
shall become liable on the bond obligation if the permittee fails to perform as
guaranteed by the bond. The surety may not cancel the bond until at least 120
days after the notice of cancellation has been received by both the permittee
and the Department. If the permittee has not provided alternate financial
assurance acceptable to the Department within 90 days of the cancellation
notice, the surety must pay the amount of the bond into the standby trust
account;
(c) A surety bond
guaranteeing performance of closure, post-closure or corrective action
activities issued by a surety company listed as acceptable in Circular 570 of
the U.S. Department of the Treasury. A standby trust fund must also be
established by the permittee. The purpose of the standby trust fund is to
receive any funds that may be paid by the surety company. The bond must
guarantee that the permittee will either perform final closure, post-closure
maintenance or corrective action activities, as applicable, or provide
alternate financial assurance acceptable to the Department within 90 days after
receipt of a notice of cancellation of the bond from the surety. The surety
shall become liable on the bond obligation if the permittee fails to perform as
guaranteed by the bond. The surety may not cancel the bond until at least 120
days after the notice of cancellation has been received by both the permittee
and the Department. If the permittee has not provided alternate financial
assurance acceptable to the Department within 90 days of the cancellation
notice, the surety must pay the amount of the bond into the standby trust
account;
(d) An irrevocable letter
of credit issued by 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. A standby trust fund must also be established by the
permittee. The purpose of the standby trust fund is to receive any funds
deposited by the issuing institution resulting from a draw on the letter of
credit. The letter of credit must be irrevocable and issued for a period of at
least one year and shall be automatically extended for at least one year on
each successive expiration date unless the issuing institution notifies both
the permittee and the Department at least 120 days before the current
expiration date. If the permittee fails to perform closure and post-closure
activities according to the closure plan and permit requirements, or to perform
the selected remedy described in the corrective action report, of if the
permittee fails to provide alternate financial assurance acceptable to the
Department within 90 days after notification that the letter of credit will not
be extended, the Department may draw on the letter of credit;
(e) A closure or post-closure insurance
policy issued by an insurer who is licensed to transact the business of
insurance or is eligible as an excess or surplus lines insurer in one or more
states. The insurance policy must guarantee that funds will be available to
complete final closure and post-closure maintenance of the site. The policy
must also guarantee that the insurer will be responsible for paying out funds
for reimbursement of closure and post-closure expenditures that are in
accordance with the closure or post-closure plan or otherwise justified. The
permittee shall notify the Department, in writing, before any expenditure of
insurance policy moneys is made, describing and justifying the activities for
which the expenditure is to be made. If the Department does not respond to the
insurer within 30 days after receiving such notification, the expenditure is
deemed authorized and the insurer may make the requested reimbursements. The
policy must provide that the insurance is automatically renewable and that the
insurer may not cancel, terminate or fail to renew the policy except for
failure to pay the premium. If there is a failure to pay the premium, the
insurer may not terminate the policy until at least 120 days after the notice
of cancellation has been received by both the permittee and the Department.
Termination of the policy may not occur and the policy must remain in full
force and effect if: the Department determines that the land disposal site has
been abandoned; or the Department has commenced a proceeding to modify the
permit to require immediate closure; or closure has been ordered by the
Department, Commission or a court of competent jurisdiction; or the permittee
is named as debtor in a voluntary or involuntary proceeding underTitle 11
(Bankruptcy), U.S. Code; or the premium due is paid. The permittee is
required to maintain the policy in full force and effect until the Department
consents to termination of the policy when alternative financial assurance is
provided or when the permit is terminated;
(f) Corporate guarantee. A private
corporation meeting the financial test may provide a corporate guarantee that
funds are available for closure, post-closure or corrective action activities,
and that those activities will be completed according to the closure or
post-closure plan, permit requirements or selected remedy described in the
corrective action report, as applicable. A qualifying private corporation may
guarantee its own obligations, the obligations of a corporate parent, sibling
or subsidiary, and the obligations of a firm with which it has a substantial
business relationship. A corporation guaranteeing the obligations of a firm
with which it has a substantial business relationship must certify that it
possesses such relationship and that it is issuing the guarantee as an act
incident to that relationship, and must specify any compensation received for
its issuance of such guarantee. To qualify, a private corporation must meet the
criteria of either paragraph (A) or (B) of this subsection:
(A) Financial Test. To pass the financial
test, the permittee must have:
(i) Two of the
following three ratios: A ratio of total liabilities to tangible net worth less
than 1.5; a ratio of the [(sum of net income plus depreciation, depletion, and
amortization) minus $10 million] to total liabilities greater than 0.1; or a
ratio of current assets to current liabilities greater than 1.5;
(ii) Net working capital equal to at least
four times and tangible net worth equal to at least six times the sum of the
current cost estimates covered by the test;
(iii) Tangible net worth of at least $10
million exclusive of the costs being guaranteed; and
(iv) Assets in the United States amounting to
at least the sum of the current closure, post-closure and corrective action
cost estimates covered by the test, plus any other environmental obligations
guaranteed by permittee.
(B) Alternative Financial Test. To pass the
alternative financial test, the permittee must have:
(i) Tangible net worth of at least $10
million exclusive of the costs being guaranteed; and
(ii) Two of the following three ratios:
(I) Times Interest Earned ([earnings before
interest and taxes] divided by interest) of 2.0 or higher;
(II) Beaver's Ratio of 0.2 or higher
([internally generated cash] divided by [total liabilities]). Internally
generated cash is obtained from taxable income before net operating loss, plus
credits for fuel tax and investment in regulated investment companies, plus
depreciation plus amortization plus depletion, plus any income on the books not
required to be reported for tax purposed if it is likely to be recurring, minus
income tax expenses. Total liabilities includes all long- and short-term debt;
or
(III) Altman's Z-Score of 2.9 or
higher.
(C) The
permittee shall demonstrate that it passes the financial test at the time the
financial assurance plan is filed and reconfirm that annually 90 days after the
end of the corporation's fiscal year by submitting the following items to the
Department:
(i) A letter signed by the
permittee's chief financial officer that:
(I)
Provides the information necessary to document that the permittee passes the
financial test;
(II) Guarantees
that the funds are available to finance closure, post-closure or corrective
action activities according to the closure or post-closure plan, permit
requirements or selected remedy described in the corrective action report, as
applicable;
(III) Guarantees that
the closure, post-closure or corrective action activities will be completed
according to the closure or post-closure plan, permit requirements or selected
remedy described in the corrective action report, as applicable;
(IV) Guarantees that a substitute financial
mechanism acceptable to the Department will be fully funded within 30 days
after either service of a Final Order assessing a civil penalty from the
Department for failure to adequately perform closure or post-closure activities
according to the closure or post-closure plan and permit, or the selected
remedy described in the corrective action report, as applicable, or service of
a written notice from the Department that the permittee no longer meets the
criteria of the financial test;
(V)
Guarantees that the permittee's chief financial officer will notify the
Department within 15 days any time that the permittee no longer meets the
criteria of the financial test or is named as debtor is a voluntary or
involuntary proceeding underTitle 11 (Bankruptcy), U.S. Code;
and
(VI) Acknowledges that the
corporate guarantee is a binding obligation on the corporation and that the
chief financial officer has the authority to bind the corporation to the
guarantee.
(ii) A copy of
the independent certified public accountant's (CPA) report on examination of
the permittee's financial statements for the latest completed fiscal
year;
(iii) An agreed-upon
procedures letter prepared in accordance with standards established by the
American Institute of Certified Public Accountants from the permittee's
independent CPA in which the CPA either specifies that the figures used in
determining that the corporation meets the requirements of the corporate
financial test are the same as the figures in the corporation's independently
audited year end financial statements for the latest fiscal year or explains
any deviation therein to the satisfaction of the Department;
(iv) A list of any facilities in Oregon or
elsewhere for which the permittee is using a similar financial means test to
demonstrate financial assurance.
(D) The Department may, based on a reasonable
belief that the permittee no longer meets the criteria of the financial test,
require reports of the financial condition at any time from the permittee in
addition to the annual report. If the Department finds, on the basis of such
reports or other information, that the permittee no longer meets the criteria
of the financial test, the permittee shall fully fund a substitute financial
assurance mechanism acceptable to the Department within 30 days after
notification by the Department.
(g) Local Government Financial Test. A local
government permittee that satisfies the requirements of40 CFR, §
258.74(f)(1)through(3)may demonstrate financial assurance
up to the amount specified in40 CFR, § 258.74(f)(4): The
provisions of40 CFR, § 258.74(f)(1)(i)and40 CFR, §
258.74(f)(1)(i)(A) are deleted.
(h) Local Government Guarantee. A permittee
that satisfies the requirements of40 CFR, §
258.74(h)(1)and(2)may demonstrate financial assurance for
closure, post-closure, and corrective action by obtaining a written guarantee
provided by a local government: The local government guarantee mechanism is
allowed only to the extent permitted by the Oregon Constitution.
(i) Alternative Financial Assurance.
Alternative forms of financial assurance, such as state-approved trust fund or
a pledge of revenue, may be proposed by the permittee, subject to the review
and approval of the Director. The applicant must be able to prove to the
satisfaction of the Department that the level of security is equivalent to
subsections (a) through (h) of this section, that the criteria of OAR
340-094-0140(4)(e)
and sections (1) through (4) of this rule and the performance standards
in40 CFR, § 258.74(1)are met, except that the pay-in period
of a state-approved trust fund for closure or post-closure care may be over the
remaining life of the municipal solid waste landfill unit. Submittal of an
alternative financial assurance mechanism to the Department for review and
approval shall include third-party certification as specified in OAR
340-094-0140(7).
(7) Allowable Financial Assurance Mechanism
for Corrective Action. A permittee shall provide one of the following forms of
financial assurance for corrective action: a trust fund, a surety bond
guaranteeing performance of corrective action, an irrevocable letter of credit,
a corporate guarantee, local government financial test, local government
guarantee, or alternative forms of financial assurance, pursuant to subsections
(6)(a), (c), (d), (f), (g), (h), or (i) of this rule, respectively. Unless
specifically required by a mutual agreement and order pursuant toORS 465.325,
the surcharge provisions ofORS 459.311 shall not be used to meet the financial
assurance requirements of this rule for financial assurance for corrective
action.
Formats containing the standard wording for financial
assurance mechanisms as required by OAR
340-094-0145(4)
may be obtained from the Department.
Publications: The publication(s) referred to or incorporated
by reference in this rule are available from the
agency.
Stat. Auth.:ORS 459.045,ORS 459.046 &ORS 459.020
Stats. Implemented:ORS 459.248,ORS 459.272 &ORS
459.273