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)(g) 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. 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, or 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 under Title 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 purposes 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 provides the information necessary to
document that the permittee passes the financial test; that 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;
that 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; that 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; that 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 under Title 11 (Bankruptcy), U.S. Code; and that
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) Alternative Financial Assurance.
Alternative forms of financial assurance 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 (f) of this section and that the criteria
of OAR 340-095-0090(4)(e) and sections (1) through (4) of this rule are met.
Submittal of an alternative financial assurance mechanism to the Department for
review and approval shall include third-party certification as specified in OAR
340-095-0090(7).
(7)
Allowable Financial Assurance Mechanisms 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, or alternative
forms of financial assurance, pursuant to subsections (6)(a), (c), (d), (f) or
(g) of this rule, respectively. Unless specifically required by a mutual
agreement and order pursuant to ORS
465.325,
the surcharge provisions of ORS
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 340-095-0095(5) may be obtained from
the Department.
Referenced documents are available from the
agency.