Current through Bulletin 2024-06, March 15, 2024
(1) The terms used in Section R315-309-8 are
defined as follows.
(a) "Total revenues"
means the revenues from all taxes and fees but does not include the proceeds
from borrowing or asset sales, excluding revenue form funds managed by local
government on behalf of a specific third party.
(b) "Total expenditures" means all
expenditures excluding capital outlays and debt repayments.
(c) "Cash plus marketable securities" means
all the cash plus marketable securities held by the local government on the
last day of a fiscal year, excluding cash and marketable securities designated
to satisfy past obligations such as pensions.
(d) "Debt service" means the amount of
principal and interest due on a loan in a given time period, typically the
current year.
(2) A
local government owner or operator of a solid waste facility may demonstrate
financial assurance up to the current cost estimate as required by Subsection
R315-309-2(3)
for closure and post-closure care and the cost estimate as required by
Subsection
R315-309-2(5)
for corrective action, if required, or up to the amount specified in Subsection
R315-309-8(6), which ever is less, by meeting the following requirements.
(a) If the local government has outstanding,
rated general obligation bonds that are not secured by insurance, a letter of
credit, or other collateral or other guarantee, it must have a current rating
of Aaa, Aa, A, or Baa, as issued by Moody's or AAA, AA, A, or BBB, as issued by
Standard and Poor's on such general obligation bonds.
(b) If the local government has no
outstanding general obligation bonds, the local government shall satisfy each
of the following financial ratios based on the local government's most recent
audited annual financial statement:
(i) a
ratio of cash plus marketable securities to total expenditures greater than or
equal to 0.05; and
(ii) a ratio of
annual debt service to total expenditures less than or equal to 0.20.
(c) The local government must
prepare its financial statements in conformity with Generally Accepted
Accounting Principles for governments and have its financial statements audited
by an independent certified public accountant.
(d) The local government must place a
reference to the closure and post-closure care costs assured through the
financial test into the next comprehensive annual financial report and in every
subsequent comprehensive annual financial report during the time in which
closure and post-closure care costs are assured through the financial test. A
reference to corrective action costs must be placed in the comprehensive annual
financial report not later than 120 days after the corrective action remedy has
been selected. The reference to the closure and post-closure care costs shall
contain:
(i) the nature and source of the
closure and post-closure care requirements;
(ii) the reported liability at the balance
sheet date;
(iii) the estimated
total closure and post-closure care costs remaining to be recognized;
(iv) the percentage of landfill capacity used
to date; and
(v) the estimated
landfill life in years.
(3) A local government is not eligible to
assure closure, post-closure care, or corrective action costs at its solid
waste disposal facility through the financial test if it:
(a) is currently in default on any
outstanding general obligation bonds, or
(b) has any outstanding general obligation
bonds rated lower than Baa as issued by Moody's or BBB as issued by Standard
and Poor's; or
(c) has operated at
a deficit equal to 5%, or more, of the total annual revenue in each of the past
two fiscal years; or
(d) receives
an adverse opinion, disclaimer of opinion, or other qualified opinion from the
independent certified public accountant, or appropriate state agency auditing
its financial statement. The Director may evaluate qualified opinions on a
case-by-case basis and allow use of the financial test in cases where the
Director deems the qualification insufficient to warrant disallowance of use of
the test.
(4) The local
government owner or operator must submit the following items to the Director
for approval and place a copy of these items in the operating record of the
facility:
(a) a letter signed by the local
government's chief financial officer that:
(i) lists all current cost estimates covered
by a financial test; and
(ii)
provides evidence and certifies that the local government meets the
requirements of Subsections R315-309-8(2) and R315-309-8(6);
(b) the local government's
independently audited year-end financial statements for the latest fiscal year
including the unqualified opinion of the auditor, who must be an independent
certified public accountant;
(c) a
report to the local government from the local government's independent
certified public accountant stating the procedures performed and the findings
relative to:
(i) the requirements of
Subsections R315-309-8(2)(c) and R315-309-8(3)(c) and (d); and
(ii) the financial ratios required by
Subsection R315-309-8(2)(b), if applicable; and
(d) a copy of the comprehensive annual
financial report used to comply with Subsection R315-309-8(2)(d).
(e) The items required by Subsection
R315-309-8(4) are to be submitted to the Director and copies placed in the
facility's operating record as follows:
(i)
in the case of closure and post-closure care, for a new facility or a lateral
expansion of an existing facility, before the initial receipt of
waste;
(ii) in the case of closure
and post-closure care, for an existing facility, in accordance with the
effective dates specified in Subsection
R315-309-1(3)(a);
and
(iii) in the case of corrective
action, in accordance with the schedule specified in Subsection
R315-309-1(3)(b).
(5) A local government
must satisfy the requirements of the financial test at the close of each fiscal
year.
(a) The items required in Subsection
R315-309-8(4) shall be submitted as part of the facility's annual report
required by Subsection
R315-302-2(4).
(b) If the local government no longer meets
the requirements of the local government financial test it shall, within 210
days following the close of the local government's fiscal year:
(i) obtain alternative financial assurance
that meets the requirements of
R315-309-1(1);
and
(ii) submit documentation of
the alternative financial assurance to the Director and place copies of the
documentation in the facility's operating record.
(c) The Director, based on a reasonable
belief that the local government may no longer meet the requirements of the
local government financial test, may require additional reports of financial
condition from the local government at any time. If the Director finds that the
local government no longer meets the requirements of the local government
financial test, the local government shall be required to provide alternative
financial assurance on a schedule established by the Director.
(6) The portion of the closure,
post-closure, and corrective action costs for which a local government owner or
operator may assume under the local government financial test is determined as
follows:
(a) If the local government does not
assure other environmental obligations through a financial test, it may assure
closure, post-closure, and corrective action costs that equal up to 43% of the
local government's total annual revenue.
(b) If the local government assures any other
environmental obligation through a financial test, it must add those costs to
the closure, post-closure, and corrective action costs it seeks to assure by
local government financial test. The total that may be assured must not exceed
43% of the local government's total annual revenue.
(c) The local government shall obtain an
alternate financial assurance mechanism for those costs that exceed 43% of the
local government's total annual revenue.
(7) Local Government Guarantee.
(a) An owner or operator of a solid waste
facility may demonstrate financial assurance for closure, post-closure, and
corrective action by obtaining a written guarantee provided by a local
government. The local government providing the guarantee shall meet the
requirements of the local government financial test in Section R315-309-8 and
shall comply with the terms of the written guarantee as specified in
Subsections R315-309-8(7)(b) and (c).
(b) The guarantee must be effective for
closure and post-closure care:
(i) for a new
facility or a lateral expansion of an existing facility, before the initial
receipt of waste;
(ii) for an
existing facility, in accordance with the effective dates specified in
Subsection
R315-309-1(3)(a);
and
(iii) for corrective action, in
accordance with the schedule specified in Subsection
R315-309-1(3)(b).
(c) The guarantee shall provide
that if the owner or operator fails to perform closure, post-closure care, or
corrective action of a facility covered by the guarantee, the guarantor will:
(i) perform, or pay a third party to perform,
closure, post-closure, or corrective action as required; or
(ii) establish a fully funded trust fund as
specified in Section
R315-309-4 in the name
of the owner or operator.
(d) The guarantee will remain in force unless
the guarantor sends notice of cancellation by certified mail to the owner or
operator and to the Director. Cancellation may not occur until 120 days after
the date the notice is received by the Director.
(e) If the guarantee is canceled, the owner
or operator shall, within 90 days following the receipt of the cancellation
notice:
(i) obtain alternate financial
assurance that meets the requirements of Subsection
R315-309-1(1);
(ii) submit documentation of the alternate
financial assurance to the Director; and
(iii) place copies of the documentation of
the alternate financial assurance in the facility's operating record.
(iv) If the owner or operator fails to
provide alternate financial assurance within the 90 day period, the guarantor
must provide the alternate financial assurance within 120 days following the
guarantor's notice of cancellation, submit documentation of the alternate
financial assurance to the Director for review and approval, and place copies
of the documentation in the facility's operating record.