Current through Reg. 50, No. 13; March 28, 2025
An owner or operator may satisfy the requirements of
financial assurance for closure, post closure, or corrective action by
obtaining a corporate financial test or a corporate financial test and
corporate guarantee, which conforms to the requirements of this section, in
addition to the requirements specified in Subchapters A and B of this chapter
(relating to General Financial Assurance Requirements and Financial Assurance
Requirements for Closure, Post Closure, and Corrective Action).
(1) To pass this test, the owner or operator
must satisfy one of the following three conditions:
(A) the owner or operator must have a current
bond rating for its senior unsecured debt of AAA, AA, A, or BBB as issued by
Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's;
(B) a ratio of total liabilities to net worth
less than 1.5; or
(C) a ratio of
the sum of net income plus depreciation, depletion, and amortization, minus $10
million, to total liabilities greater than 0.10.
(2) The tangible net worth of the owner or
operator must be greater than:
(A) the sum of
the current cost estimates, and any other environmental obligations under the
Texas Commission on Environmental Quality (TCEQ) or other federal or state
environmental regulations, including guarantees, covered by a financial test,
plus $10 million, except as provided in subparagraph (B) of this paragraph;
or
(B) $10 million in tangible net
worth plus the amount of any guarantees that have not been recognized as
liabilities on the financial statements provided all of the current cost
estimates and any other environmental obligations covered by a financial test
are recognized as liabilities on the owner's or operator's audited financial
statements and subject to the approval of the executive director.
(3) The owner or operator must
have assets located in the United States amounting to at least the sum of the
current cost estimates, and any other environmental obligations covered by a
financial test as described in paragraph (8) of this section.
(4) To demonstrate that the requirements of
the test are being met, the owner or operator shall submit the following items
to the executive director:
(A) a letter signed
by the owner's or operator's chief financial officer worded identically to the
wording specified in §
37.8071 of this title (relating to
Wording of Financial Assurance Mechanisms) that:
(i) lists all the current cost estimates
covered by a financial test, including, but not limited to, cost estimates
required for municipal solid waste management facilities under Chapter 330 of
this title (relating to Municipal Solid Waste) and 40 Code of Federal
Regulations (CFR) Part 258; cost estimates required for underground injection
control (UIC) facilities under Chapter 331 of this title (relating to
Underground Injection Control) and 40 CFR Part 144 ; cost estimates required
for petroleum underground storage tank facilities under Chapter 334 of this
title (relating to Underground and Aboveground Storage Tanks) and 40 CFR Part
280 ; cost estimates required for polychlorinated biphenyl (PCB) storage
facilities under 40 CFR Part 761 ; and cost estimates required for hazardous
waste treatment, storage, and disposal facilities under Chapter 335 of this
title (relating to Industrial Solid Waste and Municipal Hazardous Waste) and 40
CFR Parts 264 and 265; and
(ii)
provides evidence demonstrating that the firm meets the conditions of either
paragraph (1)(A) or (B) or (C) of this section and paragraphs (2) and (3) of
this section;
(B) a copy
of the independent certified public accountant's unqualified opinion of the
owner's or operator's financial statements for the latest completed fiscal
year. To be eligible to use the financial test, the owner's or operator's
financial statements must receive an unqualified opinion from the independent
certified public accountant. An adverse opinion, disclaimer of opinion, or
other qualified opinion will be cause for disallowance by the executive
director. The executive director may evaluate qualified opinions on a
case-by-case basis and allow use of the financial test in cases where the
executive director deems that the matters which form the basis for the
qualification are insufficient to warrant disallowance of the test. If the
executive director does not allow use of the test, the owner or operator must
provide alternate financial assurance that meets the requirements of this
section; and
(C) a special report
which is based upon an agreed procedures engagement in accordance with
professional auditing standards which:
(i)
describes the procedures performed in comparing the data in the chief financial
officer's letter derived from the independently audited year-end financial
statements for the latest fiscal year with the amounts in such financial
statements;
(ii) states the
findings of that comparison and the reasons for any differences; and
(iii) includes a report from the independent
certified public accountant verifying that all of the environmental obligations
covered by a financial test have been recognized as liabilities on the audited
financial statements, verifying how these obligations have been measured and
reported, and verifying that the tangible net worth of the firm is at least $10
million plus the amount of any guarantees provided. This report is required if
the chief financial officer's letter has assured for environmental obligations
as provided in paragraph (2)(B) of this section.
(5) After the initial submission
of items specified in paragraph (4) of this section, the owner or operator must
annually send updated information to the executive director within 90 days
following the close of the owner's or operator's fiscal year. This information
shall consist of all items specified in paragraph (4) of this section. An
additional 45 days may be provided to an owner or operator who can demonstrate
that 90 days is insufficient time to acquire audited financial
statements.
(6) If the owner or
operator no longer meets the requirements of paragraphs (1) - (3) of this
section, the owner or operator shall send notice to the executive director of
intent to establish alternate financial assurance as specified in this
subchapter and provide the alternate financial assurance mechanism within 120
days following the close of the owner's or operator's fiscal year.
(7) The executive director may, based on a
reasonable belief that the owner or operator may no longer meet the
requirements of paragraphs (1) - (3) of this section, require at any time the
owner or operator to provide reports of its financial condition in addition to
or including current financial test documentation as specified in paragraph (4)
of this section. If the executive director finds, on the basis of such reports
or other information, that the owner or operator no longer meets the
requirements of paragraphs (1) - (3) of this section, the owner or operator
must provide alternate financial assurance as specified in this subchapter
within 30 days after notification of such a finding.
(8) When calculating the current cost
estimates for closure, post closure, or corrective action, or the sum of the
combination of such costs to be covered, and any other environmental
obligations assured by a financial test referred to in this section, the owner
or operator must include cost estimates required for municipal solid waste
management facilities under Chapter 330 of this title and 40 CFR Part 258 . The
owner or operator must also include current cost estimates required for the
following environmental obligations, if the owner or operator assures them
through a financial test: obligations including, but not limited to, UIC
facilities under Chapter 331 of this title and 40 CFR Part 144 ; petroleum
underground storage tank facilities under Chapter 334 of this title and 40 CFR
Part 280 ; PCB storage facilities under 40 CFR Part 761 ; and hazardous waste
treatment, storage, and disposal facilities under Chapter 335 of this title and
40 CFR Parts 264 and 265.
