Oregon Administrative Rules › Chapter 340 - DEPARTMENT OF ENVIRONMENTAL QUALITY › Division 95 - SOLID WASTE: LAND DISPOSAL SITES OTHER THAN MUNICIPAL SOLID WASTE LANDFILLS › Section 340-095-0095 - Form of Financial Assurance

Current through Register Vol. 63, No. 7, July 1, 2024
(1)
			 The financial assurance mechanism shall restrict the use of the financial
			 assurance so that the financial resources may be used only to guarantee that
			 closure, post-closure or corrective action activities will be performed, or
			 that the financial resources can be used only to finance closure, post-closure
			 or corrective action activities.
(2) The financial assurance mechanism shall
			 provide that the Department or a party approved by the Department is the
			 beneficiary of the financial assurance.
(3) A permittee may use one financial
			 assurance mechanism for closure, post-closure and corrective action activities,
			 but the amount of funds assured for each activity must be specified.
(4) A permittee may demonstrate financial
			 assurance for closure, post-closure and corrective action by establishing more
			 than one mechanism per facility, except that mechanisms guaranteeing
			 performance rather than payment may not be combined with other
			 instruments.
(5) The financial
			 assurance mechanism shall be worded as specified by the Department, unless a
			 permittee uses an alternative financial assurance mechanism pursuant to
			 subsection (6)(g) of this rule. The Department retains the authority to approve
			 the wording of an alternative financial assurance mechanism.
(6) Allowable Financial Assurance Mechanisms.
			 A permittee shall provide only the following forms of financial assurance for
			 closure and post-closure activities:
(a) A
			 trust fund established with 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. The purpose of the trust fund is to receive and manage any funds
			 that may be paid by the permittee and to disburse those funds only for closure,
			 post-closure maintenance or corrective action activities which are authorized
			 by the Department. The permittee shall notify the Department, in writing,
			 before any expenditure of trust fund moneys is made, describing and justifying
			 the activities for which the expenditure is to be made. If the Department does
			 not respond to the trustee within 30 days after receiving such notification,
			 the expenditure is deemed authorized and the trustee may make the requested
			 reimbursements;
(b) A surety bond
			 guaranteeing payment into a standby closure or post-closure trust fund issued
			 by a surety company listed as acceptable in Circular 570 of the U.S. Department
			 of the Treasury. The standby closure or post-closure trust fund must be
			 established by the permittee. The purpose of the standby trust fund is to
			 receive any funds that may be paid by the permittee or surety company. The
			 penal sum of the bond must be in an amount at least equal to the current
			 closure or post-closure care cost estimate, as applicable. The bond must
			 guarantee that the permittee will either fund the standby trust fund in an
			 amount equal to the penal sum of the bond before the site stops receiving waste
			 or within 15 days after an order to begin closure is issued by the Department
			 or by a court of competent jurisdiction; or that the permittee will provide
			 alternate financial assurance acceptable to the Department within 90 days after
			 receipt of a notice of cancellation of the bond from the surety. The surety
			 shall become liable on the bond obligation if the permittee fails to perform as
			 guaranteed by the bond. The surety may not cancel the bond until at least 120
			 days after the notice of cancellation has been received by both the permittee
			 and the Department. If the permittee has not provided alternate financial
			 assurance acceptable to the Department within 90 days of the cancellation
			 notice, the surety must pay the amount of the bond into the standby trust
			 account;
(c) A surety bond
			 guaranteeing performance of closure, post-closure or corrective action
			 activities issued by a surety company listed as acceptable in Circular 570 of
			 the U.S. Department of the Treasury. A standby trust fund must also be
			 established by the permittee. The purpose of the standby trust fund is to
			 receive any funds that may be paid by the surety company. The bond must
			 guarantee that the permittee will either perform final closure, post-closure
			 maintenance or corrective action activities, as applicable, or provide
			 alternate financial assurance acceptable to the Department within 90 days after
			 receipt of a notice of cancellation of the bond from the surety. The surety
			 shall become liable on the bond obligation if the permittee fails to perform as
			 guaranteed by the bond. The surety may not cancel the bond until at least 120
			 days after the notice of cancellation has been received by both the permittee
			 and the Department. If the permittee has not provided alternate financial
			 assurance acceptable to the Department within 90 days of the cancellation
			 notice, the surety must pay the amount of the bond into the standby trust
			 account;
(d) An irrevocable letter
			 of credit issued by 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. A standby trust fund must also be established by the
			 permittee. The purpose of the standby trust fund is to receive any funds
			 deposited by the issuing institution resulting from a draw on the letter of
			 credit. The letter of credit must be irrevocable and issued for a period of at
			 least one year and shall be automatically extended for at least one year on
			 each successive expiration date unless the issuing institution notifies both
			 the permittee and the Department at least 120 days before the current
			 expiration date. If the permittee fails to perform closure and post-closure
			 activities according to the closure plan and permit requirements, or to perform
			 the selected remedy described in the corrective action report, or if the
			 permittee fails to provide alternate financial assurance acceptable to the
			 Department within 90 days after notification that the letter of credit will not
			 be extended, the Department may draw on the letter of credit;
(e) A closure or post-closure insurance
			 policy issued by an insurer who is licensed to transact the business of
			 insurance or is eligible as an excess or surplus lines insurer in one or more
			 states. The insurance policy must guarantee that funds will be available to
			 complete final closure and post-closure maintenance of the site. The policy
			 must also guarantee that the insurer will be responsible for paying out funds
			 for reimbursement of closure and post-closure expenditures that are in
			 accordance with the closure or post-closure plan or otherwise justified. The
			 permittee shall notify the Department, in writing, before any expenditure of
			 insurance policy moneys is made, describing and justifying the activities for
			 which the expenditure is to be made. If the Department does not respond to the
			 insurer within 30 days after receiving such notification, the expenditure is
			 deemed authorized and the insurer may make the requested reimbursements. The
			 policy must provide that the insurance is automatically renewable and that the
			 insurer may not cancel, terminate or fail to renew the policy except for
			 failure to pay the premium. If there is a failure to pay the premium, the
			 insurer may not terminate the policy until at least 120 days after the notice
			 of cancellation has been received by both the permittee and the Department.
			 Termination of the policy may not occur and the policy must remain in full
			 force and effect if: the Department determines that the land disposal site has
			 been abandoned; or the Department has commenced a proceeding to modify the
			 permit to require immediate closure; or closure has been ordered by the
			 Department, Commission or a court of competent jurisdiction; or the permittee
			 is named as debtor in a voluntary or involuntary proceeding under Title 11
			 (Bankruptcy), U.S. Code; or the premium due is paid. The permittee is required
			 to maintain the policy in full force and effect until the Department consents
			 to termination of the policy when alternative financial assurance is provided
			 or when the permit is terminated;
(f) Corporate guarantee. A private
			 corporation meeting the financial test may provide a corporate guarantee that
			 funds are available for closure, post-closure or corrective action activities,
			 and that those activities will be completed according to the closure or
			 post-closure plan, permit requirements or selected remedy described in the
			 corrective action report, as applicable. A qualifying private corporation may
			 guarantee its own obligations, the obligations of a corporate parent, sibling
			 or subsidiary, and the obligations of a firm with which it has a substantial
			 business relationship. A corporation guaranteeing the obligations of a firm
			 with which it has a substantial business relationship must certify that it
			 possesses such relationship and that it is issuing the guarantee as an act
			 incident to that relationship, and must specify any compensation received for
			 its issuance of such guarantee. To qualify, a private corporation must meet the
			 criteria of either paragraph (A) or (B) of this subsection:
(A) Financial Test. To pass the financial
			 test, the permittee must have:
(i) Two of the
			 following three ratios: A ratio of total liabilities to tangible net worth less
			 than 1.5; a ratio of the [(sum of net income plus depreciation, depletion, and
			 amortization) minus $10 million] to total liabilities greater than 0.1; or a
			 ratio of current assets to current liabilities greater than 1.5;
(ii) Net working capital equal to at least
			 four times and tangible net worth equal to at least six times the sum of the
			 current cost estimates covered by the test;
(iii) Tangible net worth of at least $10
			 million exclusive of the costs being guaranteed; and
(iv) Assets in the United States amounting to
			 at least the sum of the current closure, post-closure and corrective action
			 cost estimates covered by the test, plus any other environmental obligations
			 guaranteed by permittee.
(B) Alternative Financial Test. To pass the
			 alternative financial test, the permittee must have:
(i) Tangible net worth of at least $10
			 million exclusive of the costs being guaranteed; and
(ii) Two of the following three ratios:
(I) Times Interest Earned ([earnings before
			 interest and taxes] divided by interest) of 2.0 or higher;
(II) Beaver's Ratio of 0.2 or higher
			 ([internally generated cash] divided by [total liabilities]). Internally
			 generated cash is obtained from taxable income before net operating loss, plus
			 credits for fuel tax and investment in regulated investment companies, plus
			 depreciation plus amortization plus depletion, plus any income on the books not
			 required to be reported for tax purposes if it is likely to be recurring, minus
			 income tax expenses. Total liabilities includes all long- and short-term debt;
			 or
(III) Altman's Z-Score of 2.9 or
			 higher.
(C)
			 The permittee shall demonstrate that it passes the financial test at the time
			 the financial assurance plan is filed and reconfirm that annually 90 days after
			 the end of the corporation's fiscal year by submitting the following items to
			 the Department:
(i) A letter signed by the
			 permittee's chief financial officer that provides the information necessary to
			 document that the permittee passes the financial test; that guarantees that the
			 funds are available to finance closure, post-closure or corrective action
			 activities according to the closure or post-closure plan, permit requirements
			 or selected remedy described in the corrective action report, as applicable;
			 that guarantees that the closure, post-closure or corrective action activities
			 will be completed according to the closure or post-closure plan, permit
			 requirements or selected remedy described in the corrective action report, as
			 applicable; that guarantees that a substitute financial mechanism acceptable to
			 the Department will be fully funded within 30 days after either service of a
			 Final Order assessing a civil penalty from the Department for failure to
			 adequately perform closure or post-closure activities according to the closure
			 or post-closure plan and permit, or the selected remedy described in the
			 corrective action report, as applicable, or service of a written notice from
			 the Department that the permittee no longer meets the criteria of the financial
			 test; that guarantees that the permittee's chief financial officer will notify
			 the Department within 15 days any time that the permittee no longer meets the
			 criteria of the financial test or is named as debtor is a voluntary or
			 involuntary proceeding under Title 11 (Bankruptcy), U.S. Code; and that
			 acknowledges that the corporate guarantee is a binding obligation on the
			 corporation and that the chief financial officer has the authority to bind the
			 corporation to the guarantee;
(ii)
			 A copy of the independent certified public accountant's (CPA) report on
			 examination of the permittee's financial statements for the latest completed
			 fiscal year;
(iii) An agreed-upon
			 procedures letter prepared in accordance with standards established by the
			 American Institute of Certified Public Accountants from the permittee's
			 independent CPA in which the CPA either specifies that the figures used in
			 determining that the corporation meets the requirements of the corporate
			 financial test are the same as the figures in the corporation's independently
			 audited year-end financial statements for the latest fiscal year or explains
			 any deviation therein to the satisfaction of the Department;
(iv) A list of any facilities in Oregon or
			 elsewhere for which the permittee is using a similar financial means test to
			 demonstrate financial assurance.
(D) The Department may, based on a reasonable
			 belief that the permittee no longer meets the criteria of the financial test,
			 require reports of the financial condition at any time from the permittee in
			 addition to the annual report. If the Department finds, on the basis of such
			 reports or other information, that the permittee no longer meets the criteria
			 of the financial test, the permittee shall fully fund a substitute financial
			 assurance mechanism acceptable to the Department within 30 days after
			 notification by the Department.
(g) Alternative Financial Assurance.
			 Alternative forms of financial assurance may be proposed by the permittee,
			 subject to the review and approval of the Director. The applicant must be able
			 to prove to the satisfaction of the Department that the level of security is
			 equivalent to subsections (a) through (f) of this section and that the criteria
			 of OAR 340-095-0090(4)(e)  and sections (1) through (4) of this rule are met.
			 Submittal of an alternative financial assurance mechanism to the Department for
			 review and approval shall include third-party certification as specified in OAR
			 340-095-0090(7).