(1) The terms
used specifically in Section R315-309-9 are defined as follows.
(a) "Assets" means all existing and probable
future economic benefits obtained or controlled by a particular
entity.
(b) "Current assets" means
cash or other assets or resources commonly identified as those which are
reasonably expected to be realized in cash or sold or consumed during the
normal operating cycle of the business.
(c) "Current liabilities" means obligations
whose liquidation is reasonably expected to require the use of existing
resources properly classifiable as current assets or the creation of other
current liabilities.
(d) "Current
plugging and abandonment cost estimate" means the most recent of the estimates
prepared in accordance with
40 CFR
144.62(a), (b), and (c)
(2001) which is adopted and incorporated by
reference.
(e) "Independently
audited" means an audit performed by and independent certified public
accountant in accordance with generally accepted auditing standards.
(f) "Liabilities" means probable future
sacrifices of economic benefits arising from present obligations to transfer
assets or provide services to other entities in the future as a result of past
transactions or events.
(g) "Net
working capital" means current assets minus current liabilities.
(h) "Net worth" means total assets minus
total liabilities and is equivalent to owner's equity.
(i) "Tangible net worth" means the tangible
assets that remain after deducting liabilities; such assets would not include
intangibles such as goodwill and rights to patents or royalties.
(2) A corporate 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 required by Subsection
R315-309-2(5)
for corrective action, if required, by meeting the following requirements.
(a) The owner or operator must satisfy one of
the following three conditions:
(i) a current
rating for its senior unsubordinated 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; or
(ii) a ratio of less than 1.5 comparing total
liabilities to net worth: or
(iii)
a ratio of greater than 0.10 comparing the sum of net income plus depreciation,
depletion and amortization, minus $10 million, to total liabilities.
(b) The tangible net worth of the
owner or operator must be greater than:
(i)
the sum of the current closure, post-closure care, and corrective action cost
estimates and any other environmental obligation, including guarantees, covered
by a financial test plus $10 million except as provided in Subsection
R315-309-9(2)(b)(ii);
(ii) $10
million in net worth plus the amount of any guarantees that have not been
recognized as liabilities on the financial statements provided all of the
current closure, post-closure care, and corrective action costs 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 Director.
(c) The owner or operator must have assets
located in the United States amounting to at least the sum of current closure,
post-closure care, corrective action cost estimates and any other environmental
obligations covered by a financial test.
(3) The owner or operator must place the
following items into the facility's operating record and submit a copy of these
items to the Director for approval:
(a) a
letter signed by the owner's or operator's chief financial officer that:
(i) lists all current cost estimates for
closure, post-closure care, corrective action, and any other environmental
obligations covered by a financial test; and
(ii) provides evidence demonstrating that the
firm meets the conditions of Subsection R315-309-9(2)(a)(i), or (a)(ii), or
(a)(iii) and Subsections R315-309-9(2)(b) and (c); and
(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.
(i) 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.
(ii) The Director may evaluate qualified
opinions on a case-by-case basis and allow use of the financial test where the
Director deems the matters which form the basis for the qualification are
insufficient to warrant disallowance of the test.
(c) If the chief financial officer's letter
providing evidence of financial assurance includes financial data showing that
the owner or operator satisfies Subsection R315-309-9(2)(a)(i) or (ii) that are
different from data in the audited financial statements or data filed with the
Securities and Exchange Commission, then a special report from the owner's or
operator's independent certified public accountant is required. The special
report shall:
(i) be based upon an agreed
upon procedures engagement in accordance with professional auditing
standards;
(ii) describe the
procedures performed in comparing the data in the chief financial officer's
letter derived from the independently audited, year-end financial
statements;
(iii) describe the
findings of that comparison; and
(iv) explain the reasons for any
differences.
(d) If the
chief financial officer's letter provides a demonstration that the firm has
assured environmental obligations as provided in Subsection
R315-309-9(2)(b)(ii), then the letter shall include a report from the
independent certified public accountant that:
(i) verifies that all of the environmental
obligations covered by a financial test have been recognized as liabilities on
the audited financial statements;
(ii) explains how these obligations have been
measured and reported; and
(iii)
certifies that the tangible net worth of the firm is at least $10 million plus
the amount of all guarantees provided.
(e) The items required by Subsection
R315-309-9(3) 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).
(4) A firm must satisfy
the requirements of the financial test at the close of each fiscal year by
submitting the items required in Subsection R315-309-9(3) as part of the
facility's annual report required by Subsection
R315-302-2(4).
(5) If the firm no longer meets the
requirements of the corporate financial test it shall, within 120 days
following the close of the firm's fiscal year:
(a) obtain alternative financial assurance
that meets the requirements of
R315-309-1(1);
and
(b) 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 firm may no longer meet the requirements of the corporate
financial test, may require additional reports of financial condition from the
firm at any time. If the Director finds that the firm no longer meets the
requirements of the corporate financial test, firm shall be required to provide
alternative financial assurance on a schedule established by the
Director.
(6) Corporate
Guarantee.
(a) A corporate owner or operator
of a solid waste facility may demonstrate financial assurance for closure,
post-closure care, and corrective action by obtaining a written guarantee
provided by a corporation.
(i) 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.
(ii) The firm shall meet
the requirements of the corporate financial test in Section R315-309-9 and
shall comply with the terms of the written guarantee as specified in
Subsections
R315-309-3(6)(b)
and (c).
(A) A certified copy of the guarantee along
with copies of the letter from the guarantor's chief financial officer and
accountant's opinions must be submitted to the Director and placed in the
facility's operating record.
(B) If
the guarantor's parent corporation is also the parent corporation of the owner
or operator, the letter from the guarantor's chief financial officer must
describe the value received in consideration of the guarantee.
(C) If the guarantor is a firm with a
substantial business relationship with the owner or operator, the letter from
the chief financial officer must describe this substantial business
relationship and the value received in consideration of the
guarantee.
(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.
(f) If a corporate guarantor no longer meets
the requirements of the corporate financial test as specified in Section
R315-309-9:
(i) the owner or operator must,
within 90 days, obtain alternate financial assurance; and
(ii) submit documentation of the alternate
financial assurance to the Director and place copies of this documentation in
the facility's operating record.
(iii) If the owner or operator fails to
provide alternate financial assurance within the 90-day period, the guarantor
must provide that alternate assurance within the next 30 days.