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 665.0145 - Financial assurance for long-term care
Universal Citation: WI Admin Code ยง NR 665.0145
Current through August 26, 2024
By June 1, 1984, an owner or operator of a facility with a hazardous waste disposal unit shall establish financial assurance for long-term care of the disposal unit or units.
(1) LONG-TERM CARE TRUST FUND.
(a) An owner or operator may satisfy the
requirements of this section by establishing a long-term care 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 long-term
care 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
long-term care 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 long-term care 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 long-term care 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 the owner or operator may deposit the full
amount of the current long-term care 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 long-term care 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 long-term care cost estimate changes
during the operating life of the facility, 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 long-term care cost estimate, or obtain
other financial assurance as specified in this section to cover the
difference.
(g) During the
operating life of the facility, if the value of the trust fund is greater than
the total amount of the current long-term care cost estimate, the owner or
operator may submit a written request to the department for release of the
amount in excess of the current long-term care 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 long-term care 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 the funds as the department
specifies in writing.
(j) During
the period of long-term care, the department may approve a release of funds if
the owner or operator demonstrates to the department that the value of the
trust fund exceeds the remaining cost of long-term care.
(k) An owner or operator or any other person
authorized to conduct long-term care may request reimbursements for long-term
care expenditures by submitting itemized bills to the department. Within 60
days after receiving bills for long-term care 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 long-term care
expenditures are in accordance with the approved long-term care plan or
otherwise justified. If the department does not instruct the trustee to make
the reimbursements, the department will provide the owner or operator with a
detailed written statement of reasons.
(l) 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 LONG TERM CARE 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 will 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 long-term care cost estimate, except as
provided in sub. (8).
(g) Whenever
the current long-term care 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 long-term care 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 long-term care cost estimate
decreases, the penal sum may be reduced to the amount of the current long-term
care 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 long-term care
(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) LONG-TERM CARE 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 long-term care 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 long-term care cost estimate, except as
provided in sub. (8).
(g) Whenever
the current long-term care cost estimate increases to an amount greater than
the amount of the credit during the operating life of the facility, 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 long-term
care 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 long-term care cost estimate decreases during
the operating life of the facility, the amount of the credit may be reduced to
the amount of the current long-term care cost estimate following written
approval by the department.
(h)
During the period of long-term care, the department may approve a decrease in
the amount of the letter of credit if the owner or operator demonstrates to the
department that the amount exceeds the remaining cost of long-term
care.
(i) Following a determination
by the department that the owner or operator has failed to perform long-term
care in accordance with the approved long-term care plan and other license
requirements, the department may draw on the letter of credit.
(j) 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.
(l) 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) LONG-TERM CARE INSURANCE.
(a) An owner or
operator may satisfy the requirements of this section by obtaining long-term
care 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 long-term care 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 long-term care insurance policy shall
be issued for a face amount at least equal to the current long-term care 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 long-term care insurance policy shall
guarantee that funds will be available to provide long-term care of the
facility whenever the long-term care period begins. The policy shall also
guarantee that once long-term care 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) An owner or operator
or any other person authorized to perform long-term care may request
reimbursement for long-term care expenditures by submitting itemized bills to
the department. Within 60 days after receiving bills for long-term care
activities, the department will instruct the insurer to make reimbursements in
those amounts as the department specifies in writing, if the department
determines that the long-term care expenditures are in accordance with the
approved long-term care plan or otherwise justified. If the department does not
instruct the insurer to make the reimbursements, the department will provide 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. (k). Failure to pay
the premium, without substitution of alternate financial assurance as specified
in the 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. 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 long-term care cost estimate increases to an amount
greater than the face amount of the policy during the operating life of the
facility, 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 long-term care 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 long-term care cost estimate decreases
during the operating life of the facility, the face amount may be reduced to
the amount of the current long-term care cost estimate following written
approval by the department.
(j)
Commencing on the date that liability to make payments pursuant to the policy
accrues, the insurer will thereafter annually increase the face amount of the
policy. The increase shall be equivalent to the face amounts of the policy,
less any payments made, multiplied by an amount equivalent to 85 percent of the
most recent investment rate or of the equivalent coupon-issue yield announced
by the U.S. treasury for 26-week treasury securities.
(k) The department will give written consent
to the owner or operator that the department 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 LONG-TERM CARE.
(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 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) LONG TERM CARE 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 665.0144 and shall be submitted as part of an 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 long-term care requirements of the written long-term care plan or the applicable requirements in s. NR 665.0118 if the owner fails to do so.
(7) ESCROW ACCOUNT.
(a) An owner or operator may satisfy the
requirements of this section by establishing a long-term care 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 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
regulated and examined by a federal or state 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 long-term
care 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 long-term care 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
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
long-term care 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 long-term care 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
long-term care cost estimate when an interim license is awarded for the
facility, the amount of the current long-term care cost estimate still to be
paid into the 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 long-term care 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
long-term care 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 long-term care 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 made as specified in par.
(c)
(f) After the pay-in period is
completed, whenever the current long-term care cost estimate changes during the
operating life of the facility, 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 long-term care
cost estimate, or obtain other financial assurance as specified in this section
to cover the difference.
(g) During
the operating life of the facility, if the value of the escrow account is
greater than the total amount of the current long-term care cost estimate, the
owner or operator may submit a written request to the department for release of
the amount in excess of the current long-term care 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 long-term care 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) During
the period of long-term care, the department may approve a release of funds if
the owner or operator demonstrates to the department that the value of the
escrow account exceeds the remaining cost of long-term care.
(k) An owner or operator or any other person
authorized to conduct long-term care may request reimbursements for long-term
care expenditures by submitting itemized bills to the department. Within 60
days after receiving bills for long-term care 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
long-term care expenditures are in accordance with the approved long-term care
plan or otherwise justified. 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.
(l) 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 long-term care cost estimate. The department may use any or all of the mechanisms to provide for long-term care 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 long-term care 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 EPA regional administrator if the facilities are 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 long-term care 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 the long-term care period has been completed in accordance with the approved long-term care 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 long-term care of that unit, unless the department has reason to believe that long-term care has not been in accordance with the approved long-term care plan. The department will provide the owner or operator a detailed written statement of any reason to believe that long-term care has not been in accordance with the approved long-term care plan.
The department may consider other financial commitments as allowed by s. 289.41(3) (a)5, Stats.
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