[Federal Register Volume 60, Number 67 (Friday, April 7, 1995)]
[Rules and Regulations]
[Pages 17649-17652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8605]



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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 258

[FRL-5186-1]
RIN 2050-AE27


Financial Assurance Effective Date for Owners and Operators of 
Municipal Solid Waste Landfill Facilities

AGENCY: Environmental Protection Agency [EPA].

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency is amending the criteria 
for Municipal Solid Waste Landfills (MSWLFs) under subtitle D of the 
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6921 et seq., 
by delaying the effective date of the Financial Assurance Criteria set 
out at 40 CFR part 258, subpart G, until April 9, 1997. The extension 
applies to any size MSWLF, including remote, very small landfills as 
defined at 40 CFR 258.1(f)(1), and delays the compliance date for 
MSWLFs by two years, from April 9, 1995 until April 9, 1997 (for 
remote, very small landfills by 18 months, from October 9, 1995 until 
April 9, 1997).

EFFECTIVE DATE: The amendments in this final rule are effective March 
31, 1995. The effective date of subpart G of part 258 (Secs. 258.70 
through 258.74) which was added at 56 FR 51016 is delayed until April 
9, 1997.

ADDRESSES: The docket for this rulemaking is available for public 
inspection at Room M-2616, U.S. EPA, 401 M Street SW., Washington, DC 
20460 from 9 a.m. to 4 p.m., Monday through Friday, excluding holidays. 
The docket number is F-95-FADF-FFFFF. Call (202) 260-9327 to make an 
appointment with the docket clerk. As provided in 40 CFR Part 2, a 
reasonable fee may be charged for copying services.

FOR FURTHER INFORMATION CONTACT: The RCRA Hotline toll free at (800) 
424-9346 or in Washington, D.C. at (703) 412-9810, from 8:30 a.m. to 
7:30 p.m. EST, Monday through Friday, excluding holidays; or Nancy 
Hunt, Office of Solid Waste (5303W), U.S. Environmental Protection 
Agency, 401 M Street SW, Washington, DC 20460 at (703) 308-8762.

SUPPLEMENTARY INFORMATION:

Preamble Outline

I. Authority.
II. Background.
III. Response to Comments and Analysis of Issues.
    A. Support for Extension.
    B. Opposition to Extension.
    C. Local Governments.
    D. Remote/Very Small Landfills.
    E. Unfunded Mandate.
IV. Effective Date.
V. Economic and Regulatory Impacts.
    A. Executive Order 12866.
    B. Regulatory Flexibility Act.
    C. Paperwork Reduction Act.

I. Authority

    These amendments to Title 40, part 258, of the Code of Federal 
Regulations are promulgated under the authority of sections 1008(a)(3), 
2002(a), 4004(a), and 4010(c) of the Resource Conservation and Recovery 
Act (RCRA), as amended, 42 U.S.C. 6907(a)(3), 6912(a), 6944(a), and 
6949a(c).

II. Background

    The Agency proposed revised criteria for municipal solid waste 
landfills (MSWLFs), including financial assurance requirements, on 
August 30, 1988 (see 53 FR 33314). The purpose of the financial 
assurance requirements is to assure that adequate funds will be readily 
available to cover the costs of closure, post-closure care, and 
corrective action associated with MSWLFs.
    In the August 30, 1988 proposal, rather than proposing specific 
financial assurance mechanisms, the Agency proposed a financial 
assurance performance standard. The Agency solicited public comment on 
this performance standard approach and, at the same time, requested 
comment on whether the Agency should develop financial test mechanisms 
for use by local governments and corporations.
    In response to comment, the Agency promulgated several specific 
financial mechanisms in the October 9, 1991 final rule on MSWLF 
criteria (56 FR 50978), in addition to the financial assurance 
performance standard of section 258.74, which allows approved States to 
use any State-approved mechanism that meets that performance standard. 
Commenters on the August 30, 1988 proposal also supported the 
development of financial tests for local governments and for 
corporations to demonstrate that they can satisfy the goals of 
financial assurance on their own, without the need to produce a third-
party instrument to assure that the obligations associated with their 
landfill will be met. The Agency agreed with commenters and in the 
October 9, 1991 preamble, announced its intention to develop both a 
local government and corporate financial test in advance of the 
effective date of the financial assurance provisions.
    The Agency has delayed the effective date of the financial 
responsibility provisions until April 9, 1995 (see 58 FR 51536) in 
order to provide adequate time to promulgate a financial test for local 
governments and another for corporations before the effective date of 
the financial assurance provisions. The delayed effective date also was 
intended to provide owners and operators sufficient time to determine 
whether they satisfy the applicable financial test criteria for all of 
the obligations associated with their facilities, and to obtain a 
guarantor or an alternate instrument, if necessary. The Agency also 
recognized that local governments, in particular, require notice of the 
requirements in order to plan their budgets for the upcoming year.
    The Agency proposed a local government financial test and a 
corporate financial test on December 27, 1993 (see 58 FR 68353) and 
October 12, [[Page 17650]] 1994 (see 59 FR 51523), respectively. The 
Agency expects to promulgate the local government test in the fall of 
1995 and the corporate test in the spring of 1996. The Agency, 
therefore, proposed an additional extension on October 18, 1994 to 
delay the current April 9, 1995 effective date for subtitle D financial 
assurance requirements by one year until April 9, 1996 (see 59 FR 
52498) to allow MSWLF owners and operators that qualify to demonstrate 
financial assurance for their closure, post-closure, and corrective 
action obligations through the use of a financial test. Owners and 
operators who meet the requirements of the financial tests will not be 
required to obtain a third-party financial assurance instrument<SUP>1 
for these obligations.

    \1\For a description of the third-party instruments available to 
MSWLF owners and operators see 56 FR 50978.
III. Response to Comments and Analysis of Issues

    This section summarizes and addresses the major comments out of a 
total of 139 comments received on the October 18, 1994 proposal. A 
discussion of, and response to, all comments can be found in the docket 
for this rulemaking.

A. Support for Extension

    Most commenters support the proposal to extend the effective date 
of the financial assurance requirements. Many commenters, however, 
expressed concern that the proposed one-year extension until April 9, 
1996 would not be enough time for MSWLF owners and operators to meet 
the financial assurance requirements by using the local government and 
corporate financial tests. Not only have the financial tests not been 
promulgated yet, but States will need time to incorporate the financial 
tests into their regulations and MSWLF owners and operators will then 
need time to comply with the recordkeeping and reporting requirements 
of the financial test (or with the requirements of an alternate 
financial assurance instrument).
    The Agency agrees that one year may not be enough time to take 
advantage of a financial test and, accordingly, has decided to extend 
the effective date of the financial assurance requirements for MSWLF 
owners and operators by two years from April 9, 1995 until April 9, 
1997 (for landfill owners and operators of remote, very small landfills 
by 18 months, from October 9, 1995 until April 9, 1997). Although the 
Agency would like to implement the financial assurance requirements as 
soon as possible, the Agency must also balance the goals of ensuring 
protection of human health and the environment and minimizing the costs 
of regulatory compliance to owners and operators of MSWLFs. The Agency 
believes that the potential cost savings to MSWLF owners and operators 
of complying with financial assurance requirements through the use of a 
financial test outweigh the risks of delaying their implementation. The 
Agency does not believe that delaying the effective date of the 
financial assurance requirements by a temporary extension will result 
in a significant threat to human health and the environment. The 
purpose of the financial assurance requirements is to ensure that funds 
will be available to cover the costs of closure and post-closure care 
if the owner or operator is unable to cover these costs when they 
occur. The delay in implementing the financial assurance requirements, 
however, does not in any way affect the owner or operator's existing 
obligation to conduct closure and post-closure care at the facility 
when required in a manner consistent with the Subtitle D criteria, and 
to pay the costs incurred in conducting those activities. Like other 
future business expenses, the Agency anticipates that most owners and 
operators have prepared or are currently preparing to meet these 
expenses. Thus, it is unlikely that a delay in implementing the 
financial responsibility requirements will result in significant 
numbers of unfunded closure and post-closure care activities.
    The Agency believes that the two-year extension adopted in this 
rule can be fairly characterized as the logical outgrowth of the 
October 18, 1994 proposal. Although the proposed rule contemplated a 
one-year extension, the point was to provide notice of the need for 
additional time for MSWLF owners and operators to meet the financial 
assurance requirements through the use of a financial test. In light of 
the comments received, the Agency is now persuaded that a two-year, not 
a one-year, extension is necessary for MSWLF owners and operators to 
meet the financial assurance requirements through the use of a 
financial test.

B. Opposition to Extension

    Four commenters out of a total of 139 commenters oppose extending 
the time for MSWLFs to comply with financial assurance requirements.
    One commenter argues that MSWLF owners and operators could comply 
at this time using currently available financial assurance mechanisms, 
such as a trust fund, letter of credit or surety bond, and that an 
extension would only serve to delay closure of MSWLFs that could not 
meet financial assurance requirements. A related comment argues that 
repeated delays undermine the credibility of the financial assurance 
program; that the use of a trust fund is preferable to a financial 
test; and that any additional delay in implementing the financial 
assurance requirements for local governments should be no more than 
eight months after the April 1995 effective date.
    Although many MSWLF owners and operators could comply with 
financial assurance requirements using currently available 
alternatives, the Agency is committed to developing a local government 
and corporate financial test as an alternative to third party financial 
mechanisms for the reasons discussed above. The Agency, therefore, 
believes that MSWLF owners and operators should not have to select a 
financial assurance mechanism until all the financial assurance 
alternatives are available, including the financial tests, so that 
MSWLF owners and operators can assess all the alternatives to determine 
which one will best serve their needs.
    The Agency disagrees that delaying the effective date will only 
serve to delay closure of facilities than cannot meet the financial 
assurance criteria. MSWLFs are already subject to design and operating 
requirements that are more extensive, and significantly more expensive, 
than the financial assurance criteria. MSWLFs that were unable to meet 
Federal minimum design and operating requirements have already closed.
    The State of Missouri argues that a delay in implementing Federal 
financial assurance requirements would place MSWLF owners and operators 
in States that already require financial assurance at a competitive 
disadvantage with MSWLF owners and operators in States that do not 
currently require financial assurance, as well as place States with 
existing or planned financial assurance programs in the position of 
having to spend valuable time and effort to delay their own programs.
    The Agency does not believe that an additional two years to comply 
with Federal financial assurance requirements would create a 
competitive disadvantage between MSWLF owners and operators in States 
with different financial assurance requirements. The available evidence 
suggests that the costs of transporting waste--even between adjacent 
States--will more than offset the additional costs of disposing of 
waste in a State with financial assurance requirements. Further, since 
waste disposal contracts are generally written to cover several 
[[Page 17651]] years, the Agency believes it is unlikely waste 
generators will shift disposal to a different MSWLF during a temporary 
extension period.
    Furthermore, in the absence of a significant competitive 
disadvantage among States as a result of the delay there is, arguably, 
no need for States with existing or planned financial assurance 
programs to change their own requirements. States can adopt 
requirements under State law that are more stringent than the Federal 
requirements and, therefore, do not need to delay implementing their 
own financial assurance requirements. Indeed, States that adopt 
responsible financial assurance requirements over the next two years 
will be better able to cover unanticipated MSWLF closure or post-
closure costs. If, however, a State chose to delay its own financial 
assurance requirements, the commenter has not shown that it would be 
prohibitively expensive or difficult to implement such an extension.
    A commenter from the insurance and surety industry argues that 
delaying the effective date of the financial assurance requirements to 
allow the use of a financial test would ultimately undermine the 
purpose of the financial assurance requirements and force States to 
incur the costs of closing, and remediating releases from, MSWLFs that 
cannot meet financial assurance requirements. The argument is that the 
use of a financial test would mean that only the least financially able 
MSWLF owners and operators would purchase third-party financial 
assurance instruments, which would discourage the continued development 
of alternate financial assurance instruments in the insurance and 
surety industry, thereby, making it more expensive and more difficult 
to obtain third-party financial assurance instruments. Financially 
weaker MSWLF owners and operators would, therefore, be unable to meet 
financial assurance requirements and would seek to further reduce the 
requirements necessary to meet a financial test. Inevitably, States 
would be burdened with the closure and response costs of financially 
weak MSWLF owners and operators that are either unable to obtain third-
party financial assurance instruments or that are allowed to continue 
to operate as a result of a devalued financial test.
    This comment is more appropriately addressed to the proposed 
financial tests themselves, rather than to a delay in implementing the 
financial assurance requirements. At this time it is difficult, if not 
impossible, to predict how many MSWLFs will or will not be able to meet 
a financial test, because the local government and corporate financial 
tests have not yet been promulgated or otherwise finalized. 
Accordingly, the Agency will address this issue more fully in the 
financial test rulemakings. Even if, however, insurance and surety 
mechanisms become expensive and difficult to obtain due to underwriting 
considerations, owners and operators still have the option of obtaining 
a guarantee, a letter of credit, or of establishing a trust fund to 
comply with financial assurance obligations. Trust funds, in 
particular, are available to all owners and operators regardless of 
corporate affiliation or prevailing market conditions, because creating 
a trust fund does not present a financial risk.
    In any event, the Agency does not believe that a temporary delay in 
implementing the Subtitle D financial assurance requirements in 
anticipation of the development of a financial test will cause 
financial services firms to abandon the market for, or otherwise limit 
their development of, third-party financial assurance instruments. 
First, it is the Agency's understanding that providers of financial 
assurance mechanisms make decisions regarding potential markets and the 
desirability of entering those markets based on evaluations of long-
term market demand; arguably, a two-year delay should not have a 
significant effect on this long term decision-making. Second, an 
extensive market for financial assurance mechanisms, which is 
sufficient to maintain the infrastructure of the market for such 
mechanisms, already exists independent of the RCRA Subtitle D financial 
assurance requirements. For example, owners and operators of hazardous 
waste treatment, storage and disposal facilities (TSDFs), underground 
storage tanks, and PCB commercial storage facilities must meet 
financial assurance requirements, which include third-party mechanisms 
that are essentially the same as those provided for in the Subtitle D 
criteria.

C. Local Governments

    Some commenters argue that local governments as a class should be 
exempt from meeting financial assurance requirements for MSWLFs, 
because unlike private MSWLFs owners and operators, local governments 
do not go out of business or otherwise disappear. Today's rule and the 
October 18, 1994 proposal, however, only address the issue of extending 
the effective date for meeting the financial assurance requirements for 
MSWLFs; they do not raise the issue of whether certain classes of MSWLF 
owners and operators, such as local governments, should be exempt from 
the financial assurance requirements. The Agency previously addressed 
this issue in the October 9, 1991 rule that revised the minimum Federal 
standards, including financial assurance criteria, for MSWLFs (see 56 
FR 50978). At that time, the Agency determined that local governments 
should not be exempt from financial assurance requirements because 
local governments may be unable to obtain the immediate funds necessary 
to meet closure and/or corrective action obligations at MSWLFs so as to 
ensure protection of human health and the environment. Local 
governments, for example, often have relatively limited resources, 
limited flexibility in their annual budgets and a limited ability to 
quickly obtain traditional sources of financing or revenues, such as 
bond issues, taxes and intergovernmental transfers.
D. Remote/Very Small Landfills

    Today's rule extends the effective date of the financial assurance 
requirements for all MSWLF owners and operators, including remote, very 
small (less than 20 tons per day) landfills as defined at 40 CFR 
Sec. 258.1(f)(1), until April 9, 1997. Although the proposed rule 
contemplated extending the effective date of the financial assurance 
requirements for all MSWLFs, this was apparently unclear to several 
commenters who suggested that the Agency extend the deadline for the 
remote, very small landfills as well as for the general class of 
MSWLFs. Remote/very-small landfills had been subject to different 
deadlines for meeting the MSWLF criteria than the general class of 
MSWLFs; until today's rule the effective date of the financial 
assurance requirements for owners and operators of remote, very small 
landfills was October 9, 1995 (see 58 FR 51536).

E. Unfunded Mandate

    A few commenters assert that the financial assurance requirements 
contained in the October 9, 1991 final rule on MSWLF Criteria (56 FR 
50978) constitute a Federal unfunded mandate on local governments. 
Today's rule, however, provides regulatory relief by extending for two 
years the effective date by which MSWLF owners and operators (including 
local government owners and operators) must meet those financial 
assurance requirements. Moreover, the purpose of the extension provided 
by this rule is to allow the Agency sufficient time to promulgate a 
rule to give MSWLF owners and operators additional flexibility to meet 
the financial assurance requirements. That rule will allow owners and 
[[Page 17652]] operators to use a financial test instead of a more 
expensive third-party instrument to assure that adequate funds will be 
readily available to cover the costs of closure, post-closure care, and 
corrective action associated with MSWLFs.

IV. Effective Date

    Today's rule is effective immediately. Section 3010(b) of RCRA 
provides that regulations respecting requirements applicable to the 
treatment, storage, or disposal of hazardous waste shall take effect 
six months after the date of promulgation. However, section 3010(b)(1) 
of RCRA allows the Agency to set a shorter effective date if the Agency 
finds that the regulated community does not need six months to come 
into compliance with the new regulation.
    The regulated community does not need six months to come into 
compliance with today's rule, because the provisions of this rule 
delays the regulatory requirements of financial responsibility and 
allows the Agency time to develop additional, more flexible, methods 
for MSWLF owners and operators to comply with the regulations. Today's 
rule, therefore, is immediately effective under section 553(d) of the 
Administrative Procedure Act.

V. Economic and Regulatory Impacts

A. Executive Order 12866

    Under Executive Order 12866, which was published in the Federal 
Register on October 4, 1993 (see 58 FR 51735), the Agency must 
determine whether a regulatory action is ``significant'' and, 
therefore, subject to OMB review and the requirements of the Executive 
Order. The Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The Agency believes that this final rule does not meet the 
definition of a major regulation. Thus, the Agency is not conducting a 
Regulatory Impact Analysis, and today's final rule is not subject to 
review by the Office of Management and Budget (OMB) based upon 
Executive Order 12886.

B. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act [5 U.S.C. 601 et seq.] at the 
time an Agency publishes a proposed or final rule, it generally must 
prepare a Regulatory Flexibility Analysis that describes the impact of 
the rule on small entities (i.e., small businesses, small 
organizations, and small governmental jurisdictions), unless the 
Administrator certifies that the rule will not have a significant 
economic impact on a substantial number of small entities. The effect 
of this final rule is to provide small entities with additional time to 
meet the financial assurance requirements of subtitle D regarding 
closure and post-closure costs. Therefore, pursuant to 5 U.S.C. 605b, 
the Agency believes that this final rule will not have a significant 
impact on a substantial number of small entities.

C. Paperwork Reduction Act

    The Agency has determined that there are no new reporting, 
notification, or recordkeeping provisions associated with today's final 
rule.

List of Subjects in 40 CFR Part 258

    Environmental protection, Reporting and recordkeeping requirements, 
Waste treatment and disposal.

    Dated: March 31, 1995.

Carol M. Browner,

Administrator.

    For the reasons set out in the preamble, title 40 chapter I, of the 
Code of Federal Regulations is amended as follows:

PART 258--CRITERIA FOR MUNICIPAL SOLID WASTE LANDFILLS

    1. The authority citation for part 258 continues to read as 
follows:

    Authority: 42 U.S.C. 6907(a)(3), 6912(a), 6944(a), and 6949a(c); 
33 U.S.C. 1345(d) and 1345(e).

    2. Sec. 258.70 is amended by revising paragraph (b) to read as 
follows:

Sec. 258.70  Applicability and effective date.

* * * * *

    (b) The requirements of this section are effective April 9, 1997.

    3. Sec. 258.74 is amended by revising paragraph (a)(5) to read as 
follows:

Sec. 258.74  Allowable mechanisms.

* * * * *

    (a) * * *

    (5) The initial payment into the trust fund must be made before the 
initial receipt of waste or before the effective date of the 
requirements of this section (April 9, 1997), whichever is later, in 
the case of closure and post-closure care, or no later than 120 days 
after the corrective action remedy has been selected in accordance with 
the requirements of Sec. 258.58.

* * * * *

    4. Sec. 258.74 is amended by revising the third sentence of 
paragraph (b)(1); by revising the second sentence of paragraph (c)(1); 
and by revising the second sentence of paragraph (d)(1) to read as 
follows:

Sec. 258.74  Allowable mechanisms.

* * * * *

    (b) * * *

    (1) * * * The bond must be effective before the initial receipt of 
waste or before the effective date of the requirements of this section 
(April 9, 1997), whichever is later, in the case of closure and post-
closure care, or no later than 120 days after the corrective action 
remedy has been selected in accordance with the requirements of 
Sec. 258.58.* * *

* * * * *

    (c) * * *

    (1) * * * The letter of credit must be effective before the initial 
receipt of waste or before the effective date of the requirements of 
this section (April 9, 1997), whichever is later, in the case of 
closure and post-closure care, or no later than 120 days after the 
corrective action remedy has been selected in accordance with the 
requirements of Sec. 258.58. * * *

* * * * *

    (d) * * *

    (1) * * * The insurance must be effective before the initial 
receipt of waste or before the effective date of the requirements of 
this section (April 9, 1997), whichever is later, in the case of 
closure and post-closure care, or no later than 120 days after the 
corrective action remedy has been selected in accordance with the 
requirements of Sec. 258.58.* * *

* * * * *

[FR Doc. 95-8605 Filed 4-6-95; 8:45 am]

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