Current through August 26, 2024
The owner or operator shall establish financial assurance
for closure of each storage or treatment unit owned or operated. In
establishing financial assurance for closure, the owner or operator shall
choose from the financial assurance mechanisms in subs. (1) to (7). The owner
or operator may also use a combination of mechanisms for a single facility if
they meet the requirement in sub. (8), or may use a single mechanism for
multiple facilities as in sub. (9). The department shall release the owner or
operator from the requirements of this section after the owner or operator
meets the criteria under sub. (10).
(1) CLOSURE TRUST FUND. Owners and operators
can use the closure trust fund that is specified in s.
NR 664.0143(1) (a)
and (b) and (f) to (k). The following
provisions also apply:
(a) Payments into the
trust fund for a new facility shall be made annually by the owner or operator
over the remaining operating life of the facility as estimated in the closure
plan, or over 3 years, whichever period is shorter. This period of time is
hereafter referred to as the pay-in period.
(b) For a new facility, the first payment
into the closure trust fund shall be made before the facility may accept the
initial storage. A receipt from the trustee shall be submitted by the owner or
operator to the department before this initial storage of waste. The first
payment shall be at least equal to the current closure cost estimate, divided
by the number of years in the pay-in period, except as provided in sub. (8) for
multiple mechanisms. Subsequent payments shall be made no later than 30 days
after each anniversary date of the first payment. The owner or operator
determines the amount of each subsequent payment by subtracting the current
value of the trust fund from the current closure cost estimate and dividing
this difference by the number of years remaining in the pay-in period.
Mathematically, the formula is Next Payment = (Current Closure Estimate -
Current Value of the Trust Fund) Divided by Years Remaining in the Pay- in
Period.
(c) The owner or operator
of a facility existing on August 1, 2017, may establish a trust fund to meet
the financial assurance requirements in this section. If the value of the trust
fund is less than the current closure cost estimate when a final approval of
the license is granted for the facility, the owner or operator shall pay the
difference into the trust fund within 60 days.
(d) The owner or operator may accelerate
payments into the trust fund or deposit the full amount of the closure cost
estimate when establishing the trust fund. 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. (b) or (c).
(e) The owner or operator shall submit a
trust agreement with the wording specified in s.
NR 664.0151(1)
(a).
(2) SURETY BOND GUARANTEEING PAYMENT INTO A
CLOSURE TRUST FUND. Owners and operators can use the surety bond guaranteeing
payment into a closure trust fund, as specified in s.
NR 664.0143(2), including the use of the
surety bond instrument specified in s.
NR 664.0151(2) and the standby trust specified in s.
NR 664.0143(2)
(c).
(3) SURETY BOND GUARANTEEING PERFORMANCE OF
CLOSURE. Owners and operators can use the surety bond guaranteeing performance
of closure, as specified in s.
NR 664.0143(3), the submission and use
of the surety bond instrument specified in s.
NR 664.0151(3).
(4) CLOSURE LETTER OF CREDIT. Owners and
operators can use the closure letter of credit specified in s.
NR 664.0143(4) and the submission and use of the
irrevocable letter of credit instrument specified in s.
NR 664.0151(4).
(5) CLOSURE INSURANCE. Owners and operators
can use closure insurance, as specified in s.
NR 664.0143(5), utilizing the
certificate of insurance for closure specified s.
NR 664.0151(5).
(6) CORPORATE FINANCIAL TEST. An owner or
operator that satisfies the requirements of this section may demonstrate
financial assurance up to the amount specified in this subsection:
(a)
Financial component.
1. The owner or operator shall satisfy one of
the following three conditions:
a. A current
rating for its senior unsecured 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 Investors
Services.
b. A ratio of less than
1.5 comparing total liabilities to net worth.
c. A ratio of greater than 0.10 comparing the
sum of net income plus depreciation, depletion and amortization, minus $10
million, to total liabilities.
2. The tangible net worth of the owner or
operator shall be greater than:
a. The sum of
the current environmental obligations (see par. (b) 1. a.), including
guarantees, covered by a financial test plus $10 million, except as provided in
subd. 2.
b. $10 million in tangible
net worth plus the amount of any guarantees that have not been recognized as
liabilities on the financial statements provided all of the environmental
obligations (see par. (b) 1. a.) 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 department.
3. The owner or operator shall have assets
located in the United States amounting to at least the sum of environmental
obligations covered by a financial test as described in par. (b) 1.
a.
(b)
Recordkeeping and reporting requirements.
1. The owner or operator shall submit the
following items to the department:
a. A letter
signed by the owner's or operator's chief financial officer that lists all the
applicable current types, amounts and sums of environmental obligations covered
by a financial test. These obligations include liability, closure,
post-closure, and corrective action cost estimates required for hazardous waste
treatment, storage and disposal facilities under ss.
NR 664.0101, 664.0142, 664.0144, 664.0147, 665.0142,
665.0144, and 665.0147. The letter shall also provide evidence demonstrating
that the firm meets the conditions of either par. (a) 1. a. or b. or (a) 1. c.
and 2. and 3.
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. To be
eligible to use the financial test, the owner's or operator's financial
statements shall receive an unqualified opinion from the independent certified
public accountant. An adverse opinion, disclaimer of opinion or other qualified
opinion will be cause for disallowance, with the potential exception for
qualified opinions provided in the next sentence. The department may evaluate
qualified opinions on a case-by-case basis and allow use of the financial test
in cases where the department deems that the matters which form the basis for
the qualification are insufficient to warrant disallowing the test. If the
department does not allow use of the test, the owner or operator shall provide
alternate financial assurance that meets the requirements of this section
within 30 days after the notification of disallowance.
c. If the chief financial officer's letter
providing evidence of financial assurance includes financial data showing that
the owner or operator satisfies par. (a) 1. b. or c. that are different from
data in the audited financial statements referred to in subd. 1. b. or any
other audited financial statement or data filed with the SEC, then a special
report from the owner's or operator's independent certified public accountant
to the owner or operator is required. The special report shall be based upon an
agreed upon procedures engagement in accordance with professional auditing
standards and shall describe the procedures performed in comparing the data in
the chief financial officer's letter derived from the independently audited,
year-end financial statements for the latest fiscal year with the amounts in
such financial statements, the findings of that comparison and the reasons for
any differences.
d. If the chief
financial officer's letter provides a demonstration that the firm has assured
for environmental obligations as provided in par. (a) 2. b., then the letter
shall include a report from the independent certified public accountant that
verifies that all of the environmental obligations covered by a financial test
have been recognized as liabilities on the audited financial statements, how
these obligations have been measured and reported and that the tangible net
worth of the firm is at least $10 million plus the amount of any guarantees
provided.
2. The owner
or operator of a new facility shall submit the items specified in subd.1. to
the department at least 60 days before placing waste in the facility.
3. After the initial submission of items
specified in subd. 1., the owner or operator shall send updated information to
the department within 90 days following the close of the owner or operator's
fiscal year. The department may provide up to an additional 45 days for an
owner or operator who can demonstrate that 90 days is insufficient time to
acquire audited financial statements. The updated information shall consist of
all items specified in subd.1.
4.
The owner or operator is no longer required to submit the items specified in
this paragraph or comply with the requirements of this section if either:
a. The owner or operator substitutes
alternate financial assurance as specified in this section that is not subject
to these recordkeeping and reporting requirements.
b. The department releases the owner or
operator from the requirements of this section, according to sub.
(10).
5. An owner or
operator who no longer meets the requirements of par. (a) may not use the
financial test to demonstrate financial assurance. Instead an owner or operator
who no longer meets the requirements of par. (a), shall:
a. Send notice to the department of intent to
establish alternate financial assurance as specified in this section. The owner
or operator shall send this notice by certified mail within 90 days following
the close the owner or operator's fiscal year for which the year-end financial
data show that the owner or operator no longer meets the requirements of this
section.
b. Provide alternative
financial assurance within 120 days after the end of such fiscal
year.
6. The department
may, based on a reasonable belief that the owner or operator may no longer meet
the requirements of par. (a), require at any time the owner or operator to
provide reports of its financial condition in addition to or including current
financial test documentation as specified in this paragraph. If the department
finds that the owner or operator no longer meets the requirements of par. (a),
the owner or operator shall provide alternate financial assurance that meets
the requirements of this section.
(7) CORPORATE GUARANTEE.
(a) An owner or operator may meet the
requirements of this section by obtaining a written guarantee. The guarantor
shall 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. The guarantor shall meet the requirements for owners or operators in
sub. (6) and shall comply with the terms of the guarantee. The wording of the
guarantee shall be identical to the wording in s.
NR 664.0151(8). The certified copy of
the guarantee shall accompany the letter from the guarantor's chief financial
officer and accountants' opinions. 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 shall describe the value received in
consideration of the guarantee. If the guarantor is a firm with a substantial
business relationship with the owner or operator, this letter shall describe
this substantial business relationship and the value received in consideration
of the guarantee.
(b) For a new
facility, the guarantee shall be effective and the guarantor shall submit the
items in par. (a) and the items specified in sub. (6) (b) 1. to the department
at least 60 days before the owner or operator places waste in the
facility.
(c) The terms of the
guarantee shall provide that:
1. If the owner
or operator fails to perform closure at a facility covered by the guarantee,
the guarantor shall either:
a. Perform or pay
a third party to perform closure (performance guarantee).
b. Establish a fully funded trust fund as
specified in sub. (1) (a) in the name of the owner or operator (payment
guarantee)
2. The
guarantee shall remain in force for as long as the owner or operator is
required to comply with the applicable financial assurance requirements of this
subchapter unless the guarantor sends prior 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.
3. If notice of cancellation is given, the
owner or operator shall, within 90 days following receipt of the cancellation
notice by the owner or operator and the department, obtain alternate financial
assurance and submit documentation for that alternate financial assurance to
the department. If the owner or operator fails to provide alternate financial
assurance and obtain the written approval of such alternative assurance from
the department within the 90-day period, the guarantor shall provide that
alternate assurance in the name of the owner or operator and submit the
necessary documentation for the alternative assurance to the department within
120 days of the cancellation notice.
4. If a corporate guarantor no longer meets
the requirements of sub. (6) (a), the owner or operator shall, within 90 days,
obtain alternative assurance and submit the assurance to the department for
approval. If the owner or operator fails to provide alternate financial
assurance within the 90-day period, the guarantor shall provide that alternate
assurance within the next 30 days and submit it to the department for
approval.
5. The guarantor is no
longer required to meet the requirements of this section when either:
a. The owner or operator substitutes
alternate financial assurance as specified in this section.
b. The owner or operator is released from the
requirements of this section according to sub. (10).
(8) USE OF MULTIPLE
FINANCIAL MECHANISMS. An owner or operator may use more than one mechanism at a
particular facility to satisfy the requirements of this section. The acceptable
mechanisms are trust funds, surety bonds guaranteeing payment into a trust
fund, letters of credit, insurance, the financial test, and the guarantee,
except owners or operators cannot combine the financial test with the
guarantee. The mechanisms shall be as specified in subs. (1), (2), (4), (5),
(6), and (7) respectively, except it is the combination of mechanisms rather
than a single mechanism that shall provide assurance for an amount at least
equal to the cost estimate. If an owner or operator uses a trust fund in
combination with a surety bond or letter of credit, the owner or operator may
use the trust fund as the standby trust for the other mechanisms. A single
trust fund may be established for 2 or more mechanisms. 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 mechanism for multiple
facilities, as specified in s.
NR 664.0143(8).
(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 an independent registered professional engineer
that final closure has been completed in accordance with the approved closure
plan, the department shall 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 completed in accordance with the
approved closure plan. The department shall provide the owner or operator with
a detailed written statement of any such reasons to believe that closure has
not been conducted in accordance with the approved closure plan.
