Wisconsin Administrative Code
Department of Natural Resources
NR 600-699 - Environmental Protection - Hazardous Waste Management
Chapter NR 665 - Interim License Hazardous Waste Treatment, Storage And Disposal Facility Standards
Subchapter H - Financial Requirements
Section NR 665.0143 - Financial assurance for closure
Universal Citation: WI Admin Code ยง NR 665.0143
Current through August 26, 2024
By June 1, 1984, an owner or operator of each facility shall establish financial assurance for closure of the facility. The owner or operator shall choose from the options as specified in subs. (1) to (7).
(1) CLOSURE TRUST FUND.
(a) An owner or operator may satisfy the
requirements of this section by establishing a closure trust fund which
conforms to the requirements of this subsection and submitting an originally
signed duplicate of the trust agreement to the department. The trustee shall 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.
(b) The wording of the trust agreement shall
be identical to the wording on the department form specified in s.
NR 664.0151(1)
(a) and the trust agreement shall be
accompanied by a formal certification of acknowledgment as specified in s.
NR 664.0151(1)
(b). Schedule A of the trust agreement shall
be updated within 60 days after a change in the amount of the current closure
cost estimate covered by the agreement.
(c) Payments into the trust fund shall be
made annually by the owner or operator over the 20 years beginning on June 1,
1984 or over the remaining operating life of the facility as estimated in the
closure plan, whichever period is shorter. For the purposes of this section,
this period is referred to as the "pay-in period." The payments into the
closure trust fund shall be made as follows:
1. The first payment shall be made by June 1,
1984, except as provided in par. (e). The first payment shall be at least equal
to the current closure cost estimate, except as provided in sub. (8), divided
by the number of years in the pay-in period.
2. Subsequent payments shall be made no later
than 30 days after each anniversary date of the first payment. The amount of
each subsequent payment shall be determined by this formula:
where CE is the current closure cost estimate, CV is the current value of the trust fund and Y is the number of years remaining in the pay-in period.
(d)
The owner or operator may accelerate payments into the trust fund or may
deposit the full amount of the current closure cost estimate at the time the
fund is established. However, the owner or operator shall maintain the value of
the fund at no less than the value that the fund would have if annual payments
were made as specified in par. (c).
(e) If the owner or operator establishes a
closure trust fund after having used one or more alternate mechanisms specified
in this section, the first payment shall be in at least the amount that the
fund would contain if the trust fund were established initially and annual
payments made as specified in par. (c).
(f) After the pay-in period is completed,
whenever the current closure cost estimate changes, the owner or operator shall
compare the new estimate with the trustee's most recent annual valuation of the
trust fund. If the value of the fund is less than the amount of the new
estimate, the owner or operator, within 60 days after the change in the cost
estimate, shall either deposit an amount into the fund so that its value after
this deposit at least equals the amount of the current closure cost estimate,
or obtain other financial assurance as specified in this section to cover the
difference.
(g) If the value of the
trust fund is greater than the total amount of the current closure cost
estimate, the owner or operator may submit a written request to the department
for release of the amount in excess of the current closure cost
estimate.
(h) If an owner or
operator substitutes other financial assurance as specified in this section for
all or part of the trust fund, the owner or operator may submit a written
request to the department for release of the amount in excess of the current
closure cost estimate covered by the trust fund.
(i) Within 60 days after receiving a request
from the owner or operator for release of funds as specified in par. (g) or
(h), the department will instruct the trustee to release to the owner or
operator funds as the department specifies in writing.
(j) After beginning partial or final closure,
an owner or operator or another person authorized to conduct partial or final
closure may request reimbursements for partial or final closure expenditures by
submitting itemized bills to the department. The owner or operator may request
reimbursements for partial closure only if sufficient funds are remaining in
the trust fund to cover the maximum costs of closing the facility over its
remaining operating life. No later than 60 days after receiving bills for
partial or final closure activities, the department will instruct the trustee
to make reimbursements in those amounts as the department specifies in writing,
if the department determines that the partial or final closure expenditures are
in accordance with the approved closure plan, or otherwise justified. If the
department has reason to believe that the maximum cost of closure over the
remaining life of the facility will be significantly greater than the value of
the trust fund, the department may withhold reimbursements of amounts as the
department deems prudent until the department determines, in accordance with
sub. (10) that the owner or operator is no longer required to maintain
financial assurance for final closure of the facility. If the department does
not instruct the trustee to make the reimbursements, the department will
provide to the owner or operator a detailed written statement of
reasons.
(k) The department will
agree to termination of the trust when one of the following applies:
1. An owner or operator substitutes alternate
financial assurance as specified in this section.
2. The department releases the owner or
operator from the requirements of this section in accordance with sub.
(10).
(2) SURETY BOND GUARANTEEING PAYMENT INTO A CLOSURE TRUST FUND .
(a) An owner or operator may satisfy the
requirements of this section by obtaining a surety bond which conforms to the
requirements of this subsection and submitting the bond to the department. 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.
(b) The wording of
the surety bond shall be identical to the wording on the department form
specified in s.
NR 664.0151(2).
(c) The owner or operator who uses a surety
bond to satisfy the requirements of this section shall also establish a standby
trust fund. Under the terms of the bond, all payments made shall be deposited
by the surety directly into the standby trust fund in accordance with
instructions from the department. This standby trust fund must meet the
requirements specified in sub. (1) except for all of the following:
1. An originally signed duplicate of the
trust agreement must be submitted to the department with the surety
bond.
2. Until the standby trust
fund is funded pursuant to the requirements of this section, all of the
following are not required:
a. Payments into
the trust fund as specified in sub. (1).
b. Updating of Schedule A of the trust
agreement (see Form 4430-022) to show current closure cost estimates.
c. Annual valuations as required by the trust
agreement.
d. Notices of nonpayment
as required by the trust agreement.
(d) The bond must guarantee that the owner or
operator shall do any of the following:
1.
Fund the standby trust fund in an amount equal to the penal sum of the bond
before the beginning of final closure of the facility.
2. Fund the standby trust fund in an amount
equal to the penal sum within 15 days after an administrative order to begin
final closure issued by the department becomes final, or within 15 days after
an order to begin final closure is issued.
3. Provide alternate financial assurance as
specified in this section, and obtain the department's written approval of the
assurance provided, within 90 days after receipt by both the owner or operator
and the department of a notice of cancellation of the bond from the
surety.
(e) Under the
terms of the bond, the surety will become liable on the bond obligation when
the owner or operator fails to perform as guaranteed by the bond.
(f) The penal sum of the bond shall be in an
amount at least equal to the current closure cost estimate, except as provided
in sub. (8).
(g) Whenever the
current closure cost estimate increases to an amount greater than the penal
sum, the owner or operator, within 60 days after the increase, shall either
cause the penal sum to be increased to an amount at least equal to the current
closure cost estimate and submit evidence of the increase to the department, or
obtain other financial assurance as specified in this section to cover the
increase. Whenever the current closure cost estimate decreases, the penal sum
may be reduced to the amount of the current closure cost estimate following
written approval by the department.
(h) Under the terms of the bond, the surety
may cancel the bond by sending notice of cancellation by certified mail to the
owner or operator and to the department. Cancellation may not occur, however,
during the 120 days beginning on the date of receipt of the notice of
cancellation by both the owner or operator and the department, as evidenced by
the return receipts. Not less than 30 days prior to the expiration of the
120-day notice period, the owner shall deliver to the department a replacement
bond or other proof of financial responsibility under this section, in the
absence of which all storage, treatment or disposal operations shall
immediately cease and the bond shall remain in effect as long as any obligation
of the owner remains for closure.
(i) The owner or operator may cancel the bond
if the department has given prior written consent based on the receipt of
evidence of alternate financial assurance as specified in this
section.
(3) CLOSURE LETTER OF CREDIT.
(a) An owner or operator
may satisfy the requirements of this section by obtaining an irrevocable letter
of credit which conforms to the requirements of this subsection and submitting
the letter to the department. The issuing institution shall be an entity which
has the authority to issue letters of credit and whose letter-of-credit
operations are regulated and examined by a federal or state agency.
(b) The wording of the letter of credit shall
be identical to the wording on the department form specified in s.
NR 664.0151(4).
(d) The letter of credit shall be accompanied
by a letter from the owner or operator referring to the letter of credit by
number, issuing institution and date, and providing the following information:
The EPA identification number, name and address of the facility, and the amount
of funds assured for closure of the facility by the letter of credit.
(e) The letter of credit shall be irrevocable
and issued for a period of at least one year. The letter of credit shall
provide that the expiration date will be automatically extended for a period of
at least one year unless, at least 120 days before the current expiration date,
the issuing institution notifies both the owner or operator and the department
by certified mail of a decision not to extend the expiration date. Under the
terms of the letter of credit, the 120 days will begin on the date when both
the owner or operator and the department have received the notice, as evidenced
by the return receipts.
(f) The
letter of credit shall be issued in an amount at least equal to the current
closure cost estimate, except as provided in sub. (8).
(g) Whenever the current closure cost
estimate increases to an amount greater than the amount of the credit, the
owner or operator, within 60 days after the increase, shall either cause the
amount of the credit to be increased so that it at least equals the current
closure cost estimate and submit evidence of the increase to the department, or
obtain other financial assurance as specified in this section to cover the
increase. Whenever the current closure cost estimate decreases, the amount of
the credit may be reduced to the amount of the current closure cost estimate
following written approval by the department.
(h) Following a final administrative
determination by the department or EPA pursuant to
42 USC 6928
that the owner or operator has failed to perform final closure in accordance
with the approved closure plan when required to do so, the department or EPA
regional administrator may draw on the letter of credit.
(i) If the owner or operator does not
establish alternate financial assurance as specified in this section and obtain
written approval of the alternate assurance from the department within 90 days
after receipt by both the owner or operator and the department of a notice from
the issuing institution that it has decided not to extend the letter of credit
beyond the current expiration date, the department will draw on the letter of
credit. The department may delay the drawing if the issuing institution grants
an extension of the term of the credit. During the last 30 days of any
extension the department will draw on the letter of credit if the owner or
operator has failed to provide alternate financial assurance as specified in
this section and obtain written approval of the assurance from the
department.
(j) The department will
authorize the release of the letter of credit when any of the following apply:
1. An owner or operator substitutes alternate
financial assurance as specified in this section.
2. The department releases the owner or
operator from the requirements of this section in accordance with sub.
(10).
(4) CLOSURE INSURANCE.
(a) An owner or operator
may satisfy the requirements of this section by obtaining closure insurance
which conforms to the requirements of this subsection and submitting a
certificate of the insurance to the department. By June 1, 1984 the owner or
operator shall submit to the department a letter from an insurer stating that
the insurer is considering issuance of closure insurance conforming to the
requirements of this subsection to the owner or operator. By August 30, 1984,
the owner or operator shall submit the certificate of insurance to the
department or establish other financial assurance as specified in this section.
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. The department, after conferring with the
Wisconsin insurance commissioner, shall determine the acceptability of a
surplus lines or captive insurance company to provide coverage for proof of
financial responsibility. The department shall ask the insurance commissioner
to provide a financial analysis of the insurer including a recommendation as to
the insurer's ability to provide the required coverage. The department may
require a periodic review of the acceptability of a surplus lines or captive
insurance company.
(b) The wording
of the certificate of insurance shall be identical to the wording on the
department form specified in s.
NR 664.0151(5).
(c) The closure insurance policy shall be
issued for a face amount at least equal to the current closure cost estimate,
except as provided in sub. (8). The term "face amount" means the total amount
the insurer is obligated to pay under the policy. Actual payments by the
insurer will not change the face amount, although the insurer's future
liability will be lowered by the amount of the payments.
(d) The closure insurance policy shall
guarantee that funds will be available to close the facility whenever final
closure occurs. The policy shall also guarantee that once final closure begins,
the insurer will be responsible for paying out funds, up to an amount equal to
the face amount of the policy, upon the direction of the department, to the
party or parties as the department specifies.
(e) After beginning partial or final closure,
an owner or operator or any other person authorized to conduct closure may
request reimbursements for closure expenditures by submitting itemized bills to
the department. The owner or operator may request reimbursements for partial
closure only if the remaining value of the policy is sufficient to cover the
maximum costs of closing the facility over its remaining operating life. Within
60 days after receiving bills for closure activities, the department will
instruct the insurer to make reimbursements in the amounts as the department
specifies in writing if the department determines that the partial or final
closure expenditures are in accordance with the approved closure plan or
otherwise justified. If the department has reason to believe that the maximum
cost of closure over the remaining life of the facility will be significantly
greater than the face amount of the policy, the department may withhold
reimbursement of the amounts as the department deems prudent until the
department determines, in accordance with sub. (10), that the owner or operator
is no longer required to maintain financial assurance for final closure of the
particular facility. If the department does not instruct the insurer to make
the reimbursements, the department will provide to the owner or operator a
detailed written statement of reasons.
(f) The owner or operator shall maintain the
policy in full force and effect until the department consents to termination of
the policy by the owner or operator as specified in par. (j). Failure to pay
the premium, without substitution of alternate financial assurance as specified
in this section, will constitute a significant violation of this chapter,
warranting a remedy as the department deems necessary. The violation will be
deemed to begin upon receipt by the department of a notice of future
cancellation, termination or failure to renew due to nonpayment of the premium,
rather than upon the date of expiration.
(g) Each policy shall contain a provision
allowing assignment of the policy to a successor owner or operator. The
assignment may be conditional upon consent of the insurer, provided the consent
is not unreasonably refused.
(h)
The policy shall provide that the insurer may not cancel, terminate or fail to
renew the policy unless a replacement insurance policy or other proof of
financial responsibility under this section is provided to the department by
the owner or operator. The automatic renewal of the policy shall, at a minimum,
provide the insured with the option of renewal at the face amount of the
expiring policy. If the insurer elects to cancel, terminate or fail to renew
the policy, the insurer shall provide notice by certified mail to the owner or
operator and the department not less than 120 days prior to the proposed
cancellation date. Cancellation, termination or failure to renew may not occur,
however, during the 120 days beginning with the date of receipt of the notice
by both the department and the owner or operator, as evidenced by the return
receipts. Cancellation, termination or failure to renew may not occur and the
policy will remain in full force and effect in the event that on or before the
date of expiration any of the following apply:
1. The department deems the facility
abandoned.
2. An interim license is
denied, suspended or revoked.
3.
Closure is ordered by the department or a U.S. district court or other court of
competent jurisdiction.
4. The
owner or operator is named as debtor in a voluntary or involuntary bankruptcy
proceeding under 11 USC.
5. The
premium due is paid.
(i)
Whenever the current closure cost estimate increases to an amount greater than
the face amount of the policy, the owner or operator, within 60 days after the
increase, shall either cause the face amount to be increased to an amount at
least equal to the current closure cost estimate and submit evidence of the
increase to the department, or obtain other financial assurance as specified in
this section to cover the increase. Whenever the current closure cost estimate
decreases, the face amount may be reduced to the amount of the current closure
cost estimate following written approval by the department.
(j) The department will give written consent
to the owner or operator that the owner or operator may terminate the insurance
policy when any of the following apply:
1. An
owner or operator substitutes alternate financial assurance as specified in
this section.
2. The department
releases the owner or operator from the requirements of this section in
accordance with sub. (10).
(5) NET WORTH TEST FOR CLOSURE.
(a) An owner or operator of a disposal
facility may use the net worth test to provide financial responsibility if all
of the following are met:
1. Only a company
that meets the definition in s.
289.41(1) (b), Stats., may use the net worth method of
providing proof of financial responsibility.
2. The owner or operator shall comply with
the net worth test requirements of s.
289.41(4), (6), and (7), Stats., and the minimum security
requirements of s.
289.41(9),
Stats., whichever are applicable. The updated net worth test information
required under s.
289.41(4),
Stats., shall be submitted annually to the department within 90 days after the
close of the company's fiscal year.
(b) For companies with more than one
facility, the total cost of compliance for all facilities shall be used to
determine the net worth to closure and long-term care cost ratio.
(6) CLOSURE DEPOSIT WITH THE DEPARTMENT. An owner may deposit cash, certificates of deposit or U.S. government securities with the department. The deposit must be accompanied by a signed duplicate original of Form 4430-028 as specified in s. NR 664.0151(14). The amount of the deposit shall be determined according to s. NR 665.0142 and shall be submitted as part of the interim license application. Cash deposits placed with the department shall be segregated and invested in an interest bearing account. All interest payments shall be accumulated in the account. The department shall have the right to use part or all of the funds to carry out the closure requirements of the written closure plan or the applicable requirements in s. NR 665.0112 if the owner fails to do so.
(7) CLOSURE ESCROW ACCOUNT.
(a) An owner or operator may satisfy the
requirements of this section by establishing a closure escrow account which
conforms to the requirements of this subsection and submitting an originally
signed duplicate of the escrow agreement to the department. An owner or
operator of a new facility shall submit the originally signed duplicate of the
escrow agreement to the department at least 60 days before the date on which
hazardous waste is first received for treatment, storage or disposal. The
escrow agent shall be an entity which has the authority to act as an escrow
agent, and the escrow account shall be established with a bank or financial
institution which is examined and regulated by the state or a federal
agency.
(b) The wording of the
escrow agreement shall be identical to the wording on the department form
specified in s.
NR 664.0151(6)
(a), and the escrow agreement shall be
accompanied by a formal certification of acknowledgment as specified in s.
NR 664.0151(6)
(b). Schedule A of the escrow agreement shall
be updated within 60 days after a change in the amount of the current closure
cost estimate covered by the agreement.
(c) Payments into the escrow account shall be
made annually by the owner or operator over the term of the interim license and
over the remaining operating life of the facility as estimated in the closure
plan. For the purposes of this section, this period is referred to as the
"pay-in period." The payments into the closure escrow account shall be made as
follows:
1. For a new facility, the first
payment shall be made before the initial receipt of hazardous waste for
treatment, storage or disposal. A receipt from the escrow agent for this
payment shall be submitted by the owner or operator to the department before
this initial receipt of hazardous waste. The first payment shall be at least
equal to the current closure cost estimate, except as provided in sub. (8),
divided by the number of years in the pay-in period. Subsequent payments shall
be made no later than 30 days after each anniversary date of the first payment.
The amount of each subsequent payment shall be determined by this formula:
where CE is the current closure cost estimate, CV is the current value of the escrow account and Y is the number of years remaining in the pay-in period.
2. If an
owner or operator establishes a escrow account as specified in this subsection,
and the value of that escrow account is less than the current closure cost
estimate when a license is awarded for the facility, the amount of the current
closure cost estimate still to be paid into the escrow account shall be paid in
over the pay-in period as defined in the introduction to this paragraph.
Payments shall continue to be made no later than 30 days after each anniversary
date of the first payment. The amount of each payment shall be determined by
this formula:
where CE is the current closure cost estimate, CV is the current value of the escrow account and Y is the number of years remaining in the pay-in period.
(d) The owner or operator may accelerate
payments into the escrow account or may deposit the full amount of the current
closure cost estimate at the time the account is established. However, the
owner or operator shall maintain the value of the account at no less than the
value that the account would have if annual payments were made as specified in
par. (c).
(e) If the owner or
operator establishes a closure escrow account after having used one or more
alternate mechanisms specified in this section, the first payment shall be in
at least the amount that the account would contain if the escrow account were
established initially and annual payments were made as specified in par.
(c).
(f) After the pay-in period is
completed, whenever the current closure cost estimate changes, the owner or
operator shall compare the new estimate with the escrow agent's most recent
annual valuation of the escrow account. If the value of the account is less
than the amount of the new estimate, the owner or operator, within 60 days
after the change in the cost estimate, shall either deposit an amount into the
account so that its value after this deposit at least equals the amount of the
current closure cost estimate, or obtain other financial assurance as specified
in this section to cover the difference.
(g) If the value of the escrow account is
greater than the total amount of the current closure cost estimate, the owner
or operator may submit a written request to the department for release of the
amount in excess of the current closure cost estimate.
(h) If an owner or operator substitutes other
financial assurance as specified in this section for all or part of the escrow
account, the owner or operator may submit a written request to the department
for release of the amount in excess of the current closure cost estimate
covered by the escrow account
(i)
Within 60 days after receiving a request from the owner or operator for release
of funds as specified in par. (g) or (h), the department will instruct the
escrow agent to release to the owner or operator funds as the department
specifies in writing.
(j) After
beginning partial or final closure, an owner or operator or another person
authorized to conduct partial or final closure may request reimbursements for
partial or final closure expenditures by submitting itemized bills to the
department. The owner or operator may request reimbursements for partial
closure only if sufficient funds are remaining in the escrow account to cover
the maximum costs of closing the facility over its remaining operating life.
Within 60 days after receiving bills for partial or final closure activities,
the department will instruct the escrow agent to make reimbursements in those
amounts as the department specifies in writing, if the department determines
that the partial or final closure expenditures are in accordance with the
approved closure plan, or otherwise justified. If the department has reason to
believe that the maximum cost of closure over the remaining life of the
facility will be significantly greater than the value of the escrow account,
the department may withhold reimbursements of amounts as the department deems
prudent until the department determines, in accordance with sub. (10) that the
owner or operator is no longer required to maintain financial assurance for
final closure of the facility. If the department does not instruct the escrow
agent to make the reimbursements, the department will provide the owner or
operator with a detailed written statement of reasons.
(k) The department will agree to termination
of the escrow account when one of the following applies:
1. An owner or operator substitutes alternate
financial assurance as specified in this section.
2. The department releases the owner or
operator from the requirements of this section in accordance with sub.
(10).
(8) USE OF MULTIPLE FINANCIAL MECHANISMS. An owner or operator may satisfy the requirements of this section by establishing more than one financial mechanism per facility. These mechanisms are limited to trust funds, surety bonds guaranteeing payment, deposits with the department, escrow accounts, letters of credit and insurance. The mechanisms shall be as specified in subs. (1) to (4), (6) and (7), except that it is the combination of mechanisms, rather than the single mechanism, which shall provide financial assurance for an amount at least equal to the current closure cost estimate. The department may use any or all of the mechanisms to provide for closure of the facility.
(9) USE OF A FINANCIAL MECHANISM FOR MULTIPLE FACILITIES. An owner or operator may use a financial assurance mechanism specified in this section to meet the requirements of this section for more than one facility. Evidence of financial assurance submitted to the department shall include a list showing, for each facility, the EPA identification number, name, address and the amount of funds for closure assured by the mechanism. If the facilities covered by the mechanism are in more than one state, identical evidence of financial assurance shall be submitted to and maintained with the state agency regulating hazardous waste or with the appropriate U.S. EPA regional administrator if the facility is located in unauthorized states. The amount of funds available through the mechanism shall be no less than the sum of funds that would be available if a separate mechanism had been established and maintained for each facility. In directing funds available through the mechanism for closure of any of the facilities covered by the mechanism, the department may direct only the amount of funds designated for that facility, unless the owner or operator agrees to the use of additional funds available under the mechanism.
(10) RELEASE OF THE OWNER OR OPERATOR FROM THE REQUIREMENTS OF THIS SECTION. 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 the owner or operator is no longer required by this section to maintain financial assurance for final closure of the facility, unless the department has reason to believe that final closure has not been in accordance with the approved closure plan. The department shall provide the owner or operator a detailed written statement of any reason to believe that closure has not been in accordance with the approved closure plan.
The department may consider other financial commitments as allowed by s. 289.41(3) (a)5, Stats.
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