Utah Administrative Code
Topic - Environmental Quality
Title R315 - Waste Management and Radiation Control, Waste Management
Rule R315-15 - Standards for the Management of Used Oil
Section R315-15-12 - Financial Assurance
Universal Citation: UT Admin Code R 315-15-12
Current through Bulletin 2024-06, March 15, 2024
12.1 DEFINITIONS
For the purposes of R315-15-12, the following definitions apply:
(a) "Existing used oil
facility" means any used oil transfer facility, off-specification burner, or
used oil processing/re-refining facility in operation on July 1, 1993 under a
used oil operating permit issued by the Division of Oil, Gas and Mining and in
effect on or before June 30, 1993. An existing used oil facility is also
required to obtain a permit from the Director in accordance with
R315-15-13.
(b) "New used oil facility" means any used
oil transfer, off-specification burner, or used oil processing/re-refining
facility that was not in operation as a used oil facility on July 1, 1993, and
received an operating permit in accordance with
R315-15-13
from the Director after July 1, 1993.
(c) "Financial assurance mechanism" means
"reclamation surety" as used in Utah Code Annotated
19-6-709
and
19-6-710
of the Used Oil Management Act.
12.2 APPLICABILITY
(a) The owner or operator of an existing or
new used oil facility requiring a permit under
R315-15-13
shall establish a financial assurance mechanism as evidence of financial
responsibility under
R315-15-10
sufficient to assure cleanup and closure of the facility in conformance with
R315-15-11.1 with one or more of the financial assurance mechanisms of
R315-15-12.3 prior to receiving a permit from the Director.
(b) Any increase in capacity to store or
process used oil at a used oil facility permitted by the Director, above the
storage or processing capacity identified in the permit application approved by
the Director, shall require the owner or operator of the permitted used oil
facility to increase the amount or face value of the financial assurance
mechanism to meet the additional capacity. The additional amount or increase in
face value of financial assurance mechanism shall be in place and effective
before operation of the increased storage or processing capacity and shall meet
the requirements of R315-15-12.3 and R315-15-12.4.
(c) DIYer used oil collection centers,
generator used oil collection centers, and used oil aggregation points are not
required to post a financial assurance mechanism, but are subject to the
cleanup and closure requirements of
R315-15-10
and
R315-15-11
unless they have received a waiver in writing from the Director as identified
in
R315-15-10(e).
12.3 FINANCIAL ASSURANCE MECHANISMS
(a) Any financial
assurance mechanism used to show financial responsibility under
R315-15-10
and 11 for an existing or new used oil facility shall:
(1) be legally valid, binding, and
enforceable under Utah and federal law;
(2) be approved by the Director;
(3) ensure that funds will be available in a
timely fashion for:
(i) completing all
cleanup and closure activities indicated in the closure plan of the permit
approved by the Director; and
(ii)
environmental pollution legal liability for third party damages for bodily
injury and property damage resulting from a sudden or non-sudden accidental
release of used oil from or arising from permitted operations; and
(4) require a written notice sent
by certified mail to the Director 120 days prior to cancellation or termination
of the financial mechanism.
(5) be
updated each year to adjust for inflation, using either:
(i) the gross domestic product implicit price
deflator ratio of the increase of the current calendar year to the past
calendar year or
(ii) a new
estimated cleanup and closure cost estimate recalculated to account for all
changes in scope and nature of the permitted operation.
(b) The owner or operator of an
existing or new used oil facility shall establish a financial assurance
mechanism for cleanup and closure by one of the following mechanisms and shall
submit a signed original or an original signed duplicate of the financial
assurance mechanism to the Director for approval as part of the permit
application:
(1) Trust Fund.
(i) The trustee shall be an entity that has
the authority to act as a trustee and whose operations are regulated and
examined by a federal or state agency.
(ii) A signed original or an original signed
duplicate of the trust agreement and accompanied by a formal certification of
acknowledgement shall be submitted to the Director.
(iii) For trust funds that are fully funded
at the time of permit approval, an annual trust valuation shall be certified
and submitted to the Director. The permittee shall provide evidence annually,
upon the anniversary of the trust agreement, that the trust remains fully
funded.
(iv) For trust funds not
fully funded at the time of permit approval by the Director, incremental
payments into the trust fund shall be made annually by the owner or operator to
fully fund the trust within five years of the Director's approval of the permit
as follows:
(A) initial payment value shall
be the initial cleanup and closure cost estimate value divided by the pay-in
period, not to exceed five years, and
(B) next payment value shall be the
difference of the approved current cleanup and closure cost estimate less the
trust fund value, all divided by the remaining number of years in the pay-in
period, and
(C) subsequent next
payments shall be made into the trust fund annually on or before the
anniversary date of the initial payment made into the trust fund and reported
in accordance with the approved trust agreement, and
(D) no later than 30 days after the last
incremental payment to fully fund the trust, the permittee shall provide proof
to the Director that the trust fund has been fully funded according to the
current permitted cleanup and closure cost estimate.
(E) The facility shall submit an annual
valuation of the trust to the Director on or before the anniversary date of the
trust.
(v) For a new
used oil facility, the payment into the trust fund shall be made before the
initial receipt of used oil.
(vi)
The owner or operator, or other person authorized to conduct cleanup and
closure activities may request reimbursement from the trustee for cleanup and
closure completed when approved in writing by the Director.
(vii) The request for reimbursement may be
granted by the trustee as follows:
(A) only
if sufficient funds exist to cover the reimbursement request; and
(B) if justification and documentation of the
cleanup and closure expenditures are submitted to and approved by the Director
in writing prior to the trustee granting reimbursement.
(viii) The Director may cancel the
incremental trust funding option at any time and require the permittee to
provide either a fully funded trust or other cleanup and closure financial
mechanism as provided in R315-15-12 under the following conditions:
(A) upon the insolvency of the permittee,
or
(B) when a violation of
R315-15-10,
11 or 12 has been determined.
(ix) The trust agreement shall follow the
wording provided by the Director as identified in R315-15-17.2.
(2) Surety Bond Guaranteeing
Payment.
(i) The bond shall be effective
before the initial receipt of used oil.
(ii) The surety company issuing the bond
shall, at a minimum, be among those listed as acceptable sureties on Federal
bonds in Circular 570 of the U.S. Department of the Treasury and the owner or
operator shall notify the Director that a copy of the bond has been placed in
the operating record.
(iii) The
penal sum of the bond shall be in an amount at least equal to the cleanup and
closure cost estimate developed under R315-15-11.2.
(iv) 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.
(v) The owner or operator shall establish a
standby trust agreement at the time the bond is established.
(A) The standby trust agreement shall meet
the requirements of R315-15-12.3(b)(1), except for R315-15-12.3(b)(1) (iii),
(viii), and (ix) and the standby trust agreement shall follow the wording
provided by the Director as identified in R315-15-17.14.
(B) Payment made under the terms of the bond
shall be deposited by the surety directly into the standby trust agreement and
payments from the standby trust fund shall be approved by the trustee with the
written concurrence of the Director.
(vi) The surety bond shall automatically be
renewed on the expiration date unless cancelled by the surety company 120 days
in advance by sending both the bond applicant and the Director a written
cancellation notice by certified mail.
(vii) The bond applicant may terminate the
bond for nonpayment of fee by providing written notice, by certified mail, to
the Director 120 days prior to termination.
(viii) Any change to the form or content of
the surety bond shall be submitted to the Director for approval and
acceptance.
(ix) The surety bond
shall follow the language provided by the Director found in
R315-15-17.3.
(3) Letter
of Credit
(i) The letter of credit shall be
effective before the initial receipt of used oil
(ii) The financial institution issuing the
letter of credit shall be an entity that has the authority to issue letters of
credit and whose letter of credit operations are regulated and examined by a
state or federal agency.
(iii) The
letter of credit shall be issued in an amount at least equal to the cleanup and
closure cost estimate developed under R315-15-11.2.
(iv) The owner or operator shall establish a
standby trust agreement at the time the letter of credit is established.
(A) The standby trust agreement shall meet
the requirements of R315-15-12.3(b)(1), except for Subsections
R315-15-12.3(b)(1)(iii), (viii), and (ix) and the standby trust agreement shall
follow the language incorporated by reference in R315-15-17.14.
(B) Payment made under the terms of the
letter of credit shall be deposited by the surety directly into the standby
trust and payments from the standby trust fund shall be approved by the trustee
with the written concurrence of the Director.
(v) The letter of credit shall follow the
wording provided by the Director as identified in R315-15-17.4.
(4) Insurance.
(i) The insurance shall be effective before
the initial receipt of used oil.
(A)
Insurance coverage period shall be the earliest date of permit issuance or a
retroactive date established by the earliest period of coverage for any
financial assurance mechanism.
(ii) 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.
(iii) The insurance policy
shall guarantee that funds will be available to perform the cleanup and closure
activities approved by the Director.
(iv) The policy shall guarantee that the
insurer will be responsible for the paying out of funds to the owner or
operator or person authorized to conduct the cleanup and closure activities, as
approved by the Director, up to an amount equal to the face amount of the
policy. Payment of any funds by the insurer shall be made with the written
concurrence of the Director.
(A) The Insurer
shall establish at a standby trust agreement for only the benefit of the
Director when the Director notifies the Insurer that the Director is making a
claim, as provided for in R315-15, for cleanup and closure of a permitted used
oil transfer, processor, re-refiner, or off-specification burner
facility.
(B) The Insurer shall
place the face value of the applicable coverage in the trust within 30 days of
establishing the standby trust agreement.
(C) The standby trust agreement shall meet
the requirements of R315-15-12.3(b)(1), except for R315-15-12.3(b)(1) (iii),
(iv), (v), (viii), and (xi), and the standby trust agreement shall follow the
language provided by the Director incorporated by reference in
R315-15-17.14.
(v) The
insurance policy shall be issued for a face amount at least equal to the
cleanup and closure cost estimate developed under R315-15-11.2.
(vi) An owner or operator, or other person
authorized by the Director, may receive reimbursements for cleanup and closure
activities completed if:
(A) the value of the
policy is sufficient to cover the reimbursement request; and
(B) justification and documentation of the
cleanup and closure expenditures are submitted to and approved by the Director,
prior to receiving reimbursement.
(vii) Each policy shall contain a provision
allowing assignment of the policy to a successor owner or operator.
(viii) The insurance policy shall provide
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 cancel the policy by sending notice of cancellation by certified
mail to the owner or operator and the Director 120 days in advance of
cancellation. If the insurer cancels the policy, the owner or operator shall
obtain an alternate financial assurance mechanism meeting the requirements for
financial responsibility under
R315-15-10
and of this subsection within 60 days of notice of cancellation of the
policy.
(ix) The policy coverage
amount for cleanup and closure is exclusive of legal and defense
costs.
(x) Bankruptcy or insolvency
of the Insured shall not relieve the Insurer of its obligations under the
policy.
(xi) The Insurer as
first-payer is liable for the payment of amounts within any deductible,
retention, self-insured retention (SIR), or reserve applicable to the policy,
with a right of reimbursement by the Insured for any such payment made by the
Insurer. This provision does not apply with respect to that amount of any
deductible, retention, self-insured retention, or reserve for which coverage is
otherwise demonstrated as specified in R315-15-12.
(xii) Whenever requested by the Director, the
Insurer agrees to furnish to the Director a signed duplicate original of the
policy and all endorsements.
(xiii)
Cancellation of the policy, whether by the Insurer, the Insured, a parent
corporation providing insurance coverage for its subsidiary, or by a firm
having an insurable interest in and obtaining liability insurance on behalf of
the owner or operator of the used oil management facility, will be effective
only upon written notice and only after the expiration of 120 days after a copy
of such written notice is received by the Director for those facilities that
are located in Utah.
(xiv) Any
other termination of the policy will be effective only upon written notice and
only after the expiration of 120 days after a copy of such written notice is
received by the Director for those facilities that are located in
Utah.
(xv) All policy provisions
related to R315-15 shall be construed in accordance with the laws of the State
of Utah. In the event of the failure of the Insurer to pay any amount claimed
to be due hereunder, the Insurer and the Insured will submit to the
jurisdiction of the appropriate court of the State of Utah, and will comply
with all the requirements necessary to give such court jurisdiction. All
matters arising hereunder, including questions related to the interpretation,
performance and enforcement of this policy, shall be determined in accordance
with the law and practice of the State of Utah (notwithstanding Utah conflicts
of law rules).
(xvi) Endorsement(s)
added to, or removed from the policy that have the effect of affecting the
environmental pollution liability language, directly or indirectly, shall be
approved in writing by the Director before said endorsement(s) become
effective.
(xvii) Neither the
Insurer nor the Insured shall contest the state of Utah's use of the drafting
history of the insurance policy in a judicial interpretation of the policy or
endorsement(s) to said policy.
(xviii) The Insurer shall establish a standby
trust fund for the benefit of the Director at the time the Director first makes
a claim against the insurance policy.
(A) The
standby trust fund shall meet the requirements of R315-15-12.3(b)(1), except
for item R315-15-12.3(b)(1)(iii), (iv), (v), (viii), and (ix) and the standby
trust agreement shall follow the wording found in R315-15-17.14.
(B) Payment made under the terms of the
insurance policy shall be deposited by the Insurer as grantor directly into the
standby trust fund and payments from the trust fund shall be approved by the
trustee with the written concurrence of the Director.
(5) The owner or operator of an
existing or new used oil facility may establish a financial assurance mechanism
by a combination of the above mechanisms as approved by the Director.
(c) The owner or operator of an
existing or new used oil facility or operation shall establish a financial
assurance mechanism for bodily injury and property damage to third parties
resulting from sudden and/or non-sudden accidental releases of used oil from a
permitted used oil facility or operation as follows:
(1) An owner or operator that is a used oil
processor, transfer facility, or off-specification burner, or a group of such
facilities regulated under R315-15 shall demonstrate financial responsibility
for bodily injury and property damage to third parties caused by sudden and/or
non-sudden accidental release of used oil arising from operations or operations
of the facility or group of facilities shall have and maintain liability
coverage in the amount as specified in
R315-15-10(b).
This liability coverage shall be demonstrated by one or more of the financial
mechanisms in R315-15-12.3(c)(3).
(2) An owner or operator that is a used oil
transporter regulated under R315-15, must demonstrate financial responsibility
for bodily injury and property damage to third-parties resulting from sudden
release of used oil arising from transit, loading and unloading, to or from
facilities within Utah. The owner or operator shall maintain liability coverage
for sudden accidental occurrences in the amount specified in
R315-15-10(c).
This liability coverage shall be demonstrated by one or more of the financial
mechanisms in R315-15-12.3(c)(3).
(3) The owner or operator shall demonstrate
compliance with
R315-15-10(b) or
(c) by using one or more of the following
financial assurance mechanisms:
(i)
Insurance. The owner or operator shall follow the wording provided by the
Director identified in R315-15-17.5 through R315-15-17.9, as may be
applicable.
(ii) Trust. The owner
or operator shall follow the wording provided by the Director identified in
R315-15-17.12.
(iii) Surety Bond.
The owner or operator shall follow the wording provided by the Director
identified in R315-15-17.11.
(iv)
Letter of Credit. The owner or operator shall follow the wording provided by
the Director identified in R315-15-17.10.
(d) Adjustments by the Director. If the
Director determines that the levels of financial responsibility required by
R315-15-10(b) or
(c), as applicable are not consistent with
the degree and duration of risk associated with used oil operations or
facilities, the Director may adjust the level of financial responsibility
required under
R315-15-10(b) or
(c), as applicable, as may be necessary to
protect human health and the environment. This adjusted level will be based on
the Director's assessment of the degree and duration of risk associated with
the used oil operations or facilities. In addition, if the Director determines
that there is a significant risk to human health and the environment from
non-sudden release of used oil resulting from the used oil operations or
facilities, the Director may require that an owner or operator of the used oil
facility or operation comply with
R315-15-10(b) and
(c), as applicable. An owner or operator must
furnish, within a reasonable time to the Director when requested in writing,
any information the Director requests to determine whether cause exists for an
adjustment to the financial responsibility under
R315-15-10(b) or
(c) with the used oil operations or
facilities. Failure to provide the requested information as and when requested
under this section may result in the Director revoking the owner's or
operator's used oil permit(s). Any adjustment of the level or type of coverage
for a facility that has a permit will be treated as a permit
modification.
(e) When the owner or
operator of a permitted used oil facility or operation believes that its
responsibility for cleanup and closure or for environmental pollution liability
as described in
R315-15-10(d)
has changed, it may submit a written request to the Director to modify its
permit to reflect the changed responsibility.
(f) The Director may release the requirement
for cleanup and closure financial assurance after the owner or operator has
clean-closed the facility according to
R315-15-11.
(g) The owner or operator of a permitted used
oil facility or operation may request the Director to modify its permit to
change its financial assurance mechanism or mechanisms as described in
R315-15-12.
(h) The Director may
modify the permit to change financial assurance mechanism or mechanisms after
the owner or operator has established a replacement financial assurance
mechanism or mechanisms acceptable to the Director.
(i) Incapacity of owners or operators,
guarantor, or financial institution. An owner or operator of a permitted used
oil facility or operation shall notify the Director by certified mail within
ten days of the commencement of a bankruptcy proceeding naming the owner or
operator as debtor.
(1) An owner or operator
who fulfills the financial responsibility requirements by obtaining a trust
fund, surety bond, letter of credit, or insurance policy will be considered to
be without the required financial responsibility or liability coverage in the
event of:
(i) bankruptcy of the trustee or
issuing institution; or
(ii) a
suspension or revocation of the authority of the trustee institution to act as
trustee; or
(iii) a suspension or
revocation of the authority of the institution to issue a surety bond, a letter
of credit, or an insurance policy.
(2) The owner or operator of a permitted used
oil facility or operation must establish other financial responsibility or
liability coverage within 60 days after such an event.
12.4 ANNUAL UPDATE OF CLOSURE COST ESTIMATE AND FINANCIAL ASSURANCE MECHANISM
(a) The financial responsibility information
required by
R315-15-10,
11, and 12 and submitted to the Director with the initial permit application
for a used oil facility or operation, or information provided as part of
subsequent modifications to the permit made thereafter, shall be updated
annually.
(b) The following annual
updated financial responsibility information for the previous calendar year
shall be submitted to the Director by March 1 of each year for each permitted
facility or operation:
(1) The cleanup and
closure cost estimate shall be based on a third party performing cleanup and
closure of the facility to a post-operational land use in accordance with
R315-15-11.1.
(2) The financial
assurance mechanism shall be adjusted to reflect the new cleanup and closure
cost estimate.
(3) The type of
financial assurance mechanism, its current face value, and corresponding
financial institution's instrument control number shall be provided.
(4) The type of environmental pollution
liability financial responsibility for third-party damage mechanism shall be
provided, including:
(i) policy number or
other mechanism control number,
(ii) effective date of policy or other
mechanism, and
(iii) coverage
types and amounts.
(5)
The type of general liability insurance information shall be provided,
including:
(i) policy number,
(ii) date of policy, effective date of
policy, retroactive date of coverage, if applicable, and
(iii) coverage types and amounts.
(c) Other type of
information deemed necessary to evaluate compliance with a permitted used oil
facilities or operations and
R315-15-10,
11, and 12, shall be provided upon request by the Director.
Disclaimer: These regulations may not be the most recent version. Utah may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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