Current through Register Vol. 48, No. 9, September 27, 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) of this section: (amended 11/90)
(1) An
owner or operator may demonstrate the required liability coverage by having
liability insurance as specified in this paragraph.
(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 264.151(i). The wording of the
certificate of insurance must be identical to the wording specified in
264.151(j). The owner or operator must submit a signed duplicate original of
the endorsement or the certificate of insurance to the Department. The owner or
operator must provide a signed duplicate original of the insurance policy,
application, and any agreements which may affect the 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 Department 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. (amended
6/89)
(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 paragraphs (f) and (g) of this section.
(amended 11/90)
(3) An owner or
operator may meet the requirements for this section by obtaining a letter of
credit for liability coverage as specified in paragraph (h) of this
section.
(4) An owner or operator
may meet the requirements of this section by obtaining a surety bond for
liability coverage as specified in paragraph (i) of this section.
(5) An owner or operator may meet the
requirements of this section by obtaining a trust fund for liability coverage
as specified in paragraph (j) of this section.
(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 paragraph, 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 Department 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. (amended
11/90)
(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: (amended
11/90, 12/92)
(1) An owner or operator may
demonstrate the required liability coverage by having liability insurance as
specified in this paragraph.
(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
Section264.151(j)(i). The wording of the certificate of insurance must be
identical to the wording specified in Section264.151(i)(j). The owner or
operator must submit a signed duplicate original of the endorsement or the
certificate of insurance to the Department. If requested by the Department, 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 Department 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.
(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 paragraphs (f) and (g) of this
section.
(3) An owner or operator
may meet the requirements of this section by obtaining a letter of credit for
liability coverage as specified in paragraph (h) of this section.
(4) An owner or operator may meet the
requirements of this section by obtaining a surety bond for liability coverage
as specified in paragraph (I) of this section.
(5) An owner or operator may meet the
requirements of this section by obtaining a trust fund for liability coverage
as specified in paragraph (j) of this section.
(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 paragraph, 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 Department in writing within 30 days
whenever:
(i) A claim results in the 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 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. (amended 11/90)
(c) Request for
variance. If an owner or operator can demonstrate to the satisfaction of the
Department that the levels of financial responsibility required by paragraphs
(a) or (b) of this section 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 Department.
The request for a variance must be submitted to the Department as part of the
application under R.61-79.270.14 for a facility that does not have a permit, or
pursuant to the procedures for permit modification under R.61-79.124.5 for a
facility that has a permit under these regulations. If granted, the variance
will take the form of an adjusted level of required liability coverage, such
level to be based on the Department's assessment of the degree and duration of
risk associated with the ownership or operation of the facility or group of
facilities. The Department may require an owner or operator who requests a
variance to provide such technical and engineering information as is deemed
necessary by the Department to determine a level of financial responsibility
other than that required by paragraphs (a) or (b) of this section. Any request
for a variance for a permitted facility will be treated as a request for a
permit modification under R.61-79.270.41(a)(5)(a)(5) and
R.61-79.124.5.
(d) Adjustments by
the Department. If the Department determines that the levels of financial
responsibility required by paragraph (a) or (b) of this section are not
consistent with the degree and duration of risk associated with treatment,
storage, or disposal at the facility or group of facilities, the Department may
adjust the level of financial responsibility required under paragraph (a) or
(b) of this section as may be necessary to protect human health and the
environment. This adjusted level will be based on the Department'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 Department
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
paragraph (b) of this section. An owner or operator must furnish to the
Department, within a reasonable time, any information which the Department
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
R.61-79.270.41(a)(5)(a)(5) and R.61-79.124.5.
(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 Department 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 Department 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 paragraph. To pass this test the owner or operator must
meet the criteria of paragraph (f)(1)(i) or (f)(1)(ii) below:
(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 $10 million; and,
(C) Assets in the United States amounting to
either: (1) at least 90 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 $10
million; 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 90 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) of this section refers to the annual aggregate
amounts for which coverage is required under paragraphs (a) and (b) of this
section.
(3) To demonstrate that he
meets this test, the owner or operator must submit the following three items to
the Department:
(i) A letter signed by the
owner's or operator's chief financial officer and worded as specified in
Section264.151(g)(g). If an owner or operator is using the financial test to
demonstrate both assurance for closure or post-closure care, as specified by
Sections264.143(f)(f), 264.145(f), 265.143(e), and 265.145(e), and liability
coverage, he must submit the letter specified in Section264.151(g)(g) to cover
both forms of financial responsibility; a separate letter as specified in
Section264.151(f)(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) of this section to the
Department 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 paragraph (f)(3) of this section, the owner or operator must send
updated information to the Department within 90 days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in paragraph (f)(3) of this section.
(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 Department 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 Department 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 paragraph (f)(3)(ii) of this section). An
adverse opinion or a disclaimer of opinion will be cause for disallowance. The
Department 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 30 days after
notification of disallowance.
(g) Guarantee for liability coverage.
(1) Subject to paragraph (g)(2) of this
section, 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 (6) of this section. The wording of the
guarantee must be identical to the wording specified in
Section264.151(h)(2)(h)(2) of this part. A certified copy of the guarantee must
accompany the items sent to the Department as specified in paragraph (f)(3) of
this section. 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 judgement 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) each State in which a
facility covered by the guarantee is located have submitted a written statement
to the Department that a guarantee executed as described in this section and
Section264.151(h)(2)(h)(2) is a legally valid and enforceable obligation in
that State.
(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 each State in which
a facility covered by the guarantee is located and in the State in which it has
its principal place of business, and (B) the Attorney General or Insurance
Commissioner of each State in which a facility covered by the guarantee is
located and the State in which the guarantor corporation has its principal
place of business, has submitted a written statement to the Department that a
guarantee executed as described in this section and Section264.151(h)(2)(h)(2)
is a legally valid and enforceable obligation in that State.
(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
paragraph and submitting a copy of the letter of credit the
Department.
(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 Section264.151(k)(k) of this
part.
(4) An owner or operator who
uses a letter of credit to satisfy the requirements of this section must 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 a Federal or State agency.
(5) The wording of the standby trust fund
must be identical to the wording specified in 264.151(n).
(i) Surety bond for liability coverage.
(amended 11/90)
(1) An owner or operator may
satisfy the requirements of this section by obtaining a surety bond that
conforms to the requirements of this paragraph and submitting a copy of the
bond to the Department.
(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
Section264.151(l)(l) of this part.
(4) A surety bond may be used to satisfy the
requirements of this section only if the Attorneys General or Insurance
Commissioners of the State in which the surety is incorporated, and each State
in which a facility covered by the surety bond is located have submitted a
written statement to the Department that a surety bond executed as described in
this section and 264.151(1) of this part is legally valid and enforceable
obligation in that State.
(j) Trust fund for liability coverage.
(amended 11/90)
(1) An owner or operator may
satisfy the requirements of this section by establishing a trust fund that
conforms to the requirements of this paragraph and submitting an originally
signed duplicate of the trust agreement to the Department.
(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 a Federal or State agency.
(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 paragraph, "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 the 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 Section264.151(m)(m) of this
part.
(k)
Notwithstanding any other provision of this part, an owner or operator using
liability insurance to satisfy the requirements of this section may use, until
October 16, 1982, a Hazardous Waste Facility Liability Endorsement or
Certificate of Liability Insurance that does not certify that the insurer is
licensed to transact the business of insurance, or eligible as an excess or
surplus lines insurer, in one or more States.
