Permitted solid waste citizen convenience centers and
transfer stations must obtain and submit a financial assurance instrument to
the department for solid waste storage in accordance with this rule. The
financial assurance instrument shall provide monetary funds to properly dispose
of any solid waste that may remain at a facility due to the owner's or
operator's failure to properly close the site within 30 days of permit
suspension, termination, revocation, or expiration.
(4)
Financial
assurance amounts required. The estimate submitted to the department
must be certified by an Iowa-licensed professional engineer and must account
for at least the following factors determined by the department to be minimal
necessary costs for closure pursuant to rule 106.7(455B) for citizen
convenience centers and rule 106.17(455B) for transfer stations, as applicable:
a. Third-party labor and transportation costs
and total tip fees to properly dispose of all solid waste and litter at the
facility equal to twice the maximum storage capacity of the facility. If
materials are temporarily stored on site in transportation vehicles or waste
receptacles, then this estimate shall include disposal costs for the maximum
number of transportation vehicles and waste receptacles that can be on site at
any one time.
b. The cost of hiring
a third party to properly clean and decontaminate all equipment, storage
facilities, holding areas and drainage collection systems. This estimate shall
include the cost of properly disposing of a one-week volume of washwater from
the facility. If the facility utilizes washwater storage tanks, then this
estimate shall assume that the storage tanks are full and add that volume to
the one-week volume.
c. The costs
for maintaining financial assurance pursuant to any other provisions of
567-Chapters 100 to 123, if any, in accordance with subrule
106.18(3).
(5)
Acceptable financial assurance instruments. The financial
assurance instrument shall be established in an amount equal to the cost
estimate prepared in accordance with subrule 106.18(4) and shall not be
canceled, revoked, disbursed, released, or allowed to terminate without the
approval of the department. Financial assurance may be provided by cash in the
form of a secured trust fund or local government dedicated fund, surety bond,
letter of credit, or corporate or local government guarantee as follows:
a.
Secured trust fund. The
owner or operator of a citizen convenience center or transfer station or entity
serving as a guarantor may demonstrate financial assurance for closure by
establishing a secured trust fund that conforms to the requirements of this
paragraph.
(1) The trustee must 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. The fund shall be
restricted for the sole purpose of funding closure activities at the facility,
and a copy of the trust agreement must be submitted to the department and
placed in the facility's official files.
(2) A secured trust fund shall name the
department of natural resources as the entity authorized to draw funds from the
trust, subject to the provision of proper notification to the trust officer of
failure by the permittee to properly close the site within 30 days of permit
suspension, termination, revocation, or expiration.
(3) Moneys in the fund shall not be assigned
for the benefit of creditors with the exception of the state.
(4) Moneys in the fund shall not be used to
pay any final judgment against a permit holder arising out of the ownership or
operation of the site during its active life or after closure.
(5) The owner or operator or another person
authorized to conduct closure activities may request reimbursement from the
trustee for closure expenditures as they are incurred. Requests for
reimbursement shall be granted by the trustee only if sufficient funds are
remaining in the trust fund to cover the remaining costs of closure and if
documentation of the justification for reimbursement has been submitted to the
department for prior approval.
(6)
If the balance of the trust fund exceeds the current cost estimate for closure
at any time, the owner or operator may request withdrawal of the excess funds
from the trustee so long as the withdrawal does not cause the balance to be
reduced below the amount of the current cost estimate.
b.
Local government dedicated
fund. The owner or operator of a publicly owned citizen convenience
center or transfer station or a local government serving as a guarantor may
demonstrate financial assurance for closure by establishing a dedicated fund
that conforms to the requirements of this paragraph.
(1) The fund shall be dedicated by state
constitutional provision or local government statute, charter, ordinance,
resolution or order as a restricted fund to pay for closure costs arising from
the operation of the facility.
(2)
A copy of the document establishing the dedicated fund must be submitted to the
department and placed in the facility's official files.
(3) If the balance of the dedicated fund
exceeds the current cost estimate for closure at any time, the owner or
operator may withdraw excess funds so long as the withdrawal does not cause the
balance to be reduced below the amount of the current cost estimate.
c.
Surety bond. A
surety bond must be written by a company authorized by the commissioner of
insurance to do business in the state. The surety bond shall comply with the
following:
(1) The bond shall be in a form
approved by the commissioner of insurance and shall be payable to the
department of natural resources.
(2) The bond shall be specific to a
particular facility for the purpose of properly disposing of any solid waste
that may remain on site due to the owner's or operator's failure to properly
close the site within 30 days of permit suspension, termination, revocation, or
expiration.
(3) The owner or
operator shall provide the department with a statement from the surety with
each permit application renewal, noting that the bond is paid and current for
the permit period for which the owner or operator has applied for
renewal.
d.
Letter of credit. The issuing institution must 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.
(1) The owner or operator must submit to the
department a copy of the letter of credit and place a copy in the facility's
official files.
(2) A letter from
the owner or operator referring to the letter of credit by number, issuing
institution, and date, and providing the name and address of the facility and
the amount of funds assured, must be included with the letter of credit
submitted to the department and placed in the facility's files.
(3) The letter of credit must be irrevocable
and must be issued for a period of at least one year. The letter of credit must
provide that the expiration date will be automatically extended for a period of
at least one year unless the issuing institution has canceled the letter of
credit by sending notice of cancellation by certified mail to the owner or
operator and to the department 90 days in advance of cancellation. When such
notice is provided, the owner or operator shall, within 60 days, provide to the
department adequate proof of alternative financial assurance, notice of
withdrawal of cancellation, or proof of a deposit of a sum equal to the amount
of the letter of credit into a secured trust fund that meets the requirements
of paragraph 106.18(5)"a." If the owner or operator has not
complied with this subrule within the 60-day time period, the issuer of the
letter of credit shall deposit a sum equal to the amount of the letter of
credit into the secured trust fund established by the owner or operator. The
provision of funds by the issuer of the letter of credit shall be considered an
issuance of a loan to the owner or operator, and the terms of that loan shall
be governed by the letter of credit or subsequent agreement between those
parties. The state shall not be considered a party to this credit
transaction.
e.
Corporate guarantee. An owner or operator may meet the requirements of
this rule by obtaining a written guarantee. The guarantor must be the direct or
higher-tier parent corporation of the owner or operator, an owner or operator
whose parent corporation is also the parent corporation of the owner or
operator, or an owner or operator with a "substantial business relationship"
with the owner or operator.
(1) The terms of
the written guarantee must provide that within 30 days of the owner's or
operator's failure to perform closure of a facility covered by the guarantee,
the guarantor will:
1. Perform closure or pay
a third party to perform closure as required (performance guarantee);
2. Establish a fully funded secured trust
fund as specified in paragraph 106.18(5) "a" in the name of
the owner or operator (payment guarantee); or
3. Establish an alternative financial
assurance instrument in the name of the owner or operator as required by this
rule.
(2) The guarantor
must satisfy one of the following three conditions:
1. A current rating for its senior
unsubordinated debt of AAA, AA, A, or BBB as issued by Standard & Poor's or
Aaa, Aa, A, or Baa as issued by Moody's; or
2. A ratio of less than 1.5 comparing total
liabilities to net worth; or
3. A
ratio of greater than 0.10 comparing the sum of net income plus depreciation,
depletion and amortization, minus $10 million, to total liabilities.
(3) The tangible net worth of the
guarantor must be greater than the sum of the current closure cost estimate and
any other environmental obligations, including other financial assurance
guarantees.
(4) The guarantor must
have assets amounting to at least the sum of the current closure cost estimate
and any other environmental obligations, including other financial assurance
guarantees.
(5) Record-keeping and
reporting requirements. The guarantor must submit the following records to the
department and place a copy in the facility's official files:
1. A copy of the written guarantee between
the owner or operator and the guarantor.
2. A letter signed by a certified public
accountant and based upon a certified audit that:
* Lists all the current cost estimates covered by a guarantee
including, but not limited to, cost estimates required by subrule 106.18(4);
cost estimates required for municipal solid waste management facilities
pursuant to 40 CFR Part 258; cost estimates required for UIC facilities under
40 CFR Part 144, if applicable; cost estimates required for petroleum
underground storage tank facilities under 40 CFR Part 280, if applicable; cost
estimates required for PCB storage facilities under 40 CFR Part 761, if
applicable; and cost estimates required for hazardous waste treatment, storage,
and disposal facilities under 40 CFR Parts 264 and 265, if applicable;
and
* Provides evidence demonstrating that the guarantor meets
the conditions of subparagraphs 106.18(5)"e"(2), (3) and
(4).
3. A copy of the
independent certified public accountant's unqualified opinion of the
guarantor's financial statements for the latest completed fiscal year. In order
for the guarantor to be eligible to use the guarantee, the guarantor's
financial statements must receive an unqualified opinion from the independent
certified public accountant. An adverse opinion or disclaimer of opinion shall
be cause for disallowance of this instrument. A qualified opinion related to
the demonstration of financial assurance may, at the discretion of the
department, be cause for disallowance. If the department does not allow use of
the corporate guarantee, the owner or operator must provide alternative
financial assurance that meets the requirements of this rule.
f.Local
government guarantee. An owner or operator may demonstrate financial
assurance for closure by obtaining a written guarantee provided by a local
government or jointly provided by the members of an agency established pursuant
to Iowa Code chapter 28E.
(1) The terms of the
written guarantee must provide that within 30 days of the owner's or operator's
failure to perform closure of a facility covered by the guarantee, the
guarantor will:
1. Perform closure or pay a
third party to perform closure as required (performance guarantee);
2. Establish a fully funded secured trust
fund as specified in paragraph 106.18(5)"a" in the name of the
owner or operator (payment guarantee); or
3. Establish an alternative financial
assurance instrument in the name of the owner or operator as required by this
rule.
(2) The guarantor
must satisfy one of the following requirements:
1. If the guarantor has outstanding, rated,
general obligation bonds that are not secured by insurance, a letter of credit,
or other collateral or guarantee, the guarantor must have a current rating of
Aaa, Aa, A, or Baa, as issued by Moody's, or AAA, AA, A, or BBB, as issued by
Standard & Poor's, on all such general obligation bonds; or
2. The guarantor must satisfy each of the
following financial ratios based on the guarantor's most recent audited annual
financial statement: a ratio of cash plus marketable securities to total
expenditures greater than or equal to 0.05, and a ratio of annual debt service
to total expenditures less than or equal to 0.20.
(3) The guarantor must prepare its financial
statements in conformity with generally accepted accounting principles or other
comprehensive basis of accounting and have its financial statements audited by
an independent certified public accountant or the office of the auditor of the
state of Iowa. The financial statement shall be in the form prescribed by the
office of the auditor of the state of Iowa.
(4) A guarantor is not eligible to assure its
obligations if:
1. The guarantor is currently
in default on any outstanding general obligation bonds; or
2. The guarantor has any outstanding general
obligation bonds rated lower than Baa as issued by Moody's or BBB as issued by
Standard & Poor's; or
3. The
guarantor operated at a deficit equal to 5 percent or more of total annual
revenue in each of the past two fiscal years; or
4. The guarantor receives an adverse opinion
or disclaimer of opinion from the independent certified public accountant or
office of the auditor of the state of Iowa auditing its financial statement. A
qualified opinion that is related to the demonstration of financial assurance
may, at the discretion of the department, be cause for disallowance of this
mechanism; or
5. The closure costs
to be assured are greater than 43 percent of the guarantor's total annual
revenue.
(5) The local
government guarantor must include disclosure of the closure costs assured
through the guarantee in its next annual audit report prior to the initial
receipt of waste at the facility or prior to cancellation of an alternative
financial assurance instrument, whichever is later. For the first year the
guarantee is used to assure costs at a particular facility, the reference may
instead be placed in the guarantor's official files until issuance of the next
available annual audit report if timing does not permit the reference to be
incorporated into the most recently issued annual audit report or budget. For
closure costs, conformance with Governmental Accounting Standards Board
Statement 18 ensures compliance with this public notice component.
(6) The local government owner or operator
must submit to the department the following items:
1. A copy of the written guarantee between
the owner or operator and the local government serving as guarantor for the
closure costs at the facility.
2. A
copy of the guarantor's most recent annual financial audit report indicating
compliance with the financial ratios required by numbered paragraph
106.18(5)"f"(2)"2," if applicable, and the requirements of
subparagraphs 106.18(5)"f"(3) and (4).
3. A letter signed by the local government's
chief financial officer that lists all the current cost estimates covered by
the guarantor, as described in subrule 106.18(4); and that provides evidence
and certifies that the local government meets the conditions of subparagraphs
106.18(5)"f"(2), (3), (4) and (5).
(6)
Financial assurance cancellation
and permit suspension.
a. A
financial assurance instrument may be terminated by the owner or operator only
if the owner or operator substitutes alternate financial assurance prior to
cancellation, as specified in this rule, or if the owner or operator is no
longer required to demonstrate financial responsibility in accordance with this
rule.
b. A financial assurance
instrument shall be continuous in nature until canceled by the financial
assurance provider or until the department gives written notification to the
owner, operator, and financial assurance provider that the covered site has
been properly closed. The financial assurance provider shall give at least 90
days' notice in writing to the owner or operator and the department in the
event of any intent to cancel the instrument.
c. Within 60 days of receipt of a written
notice of cancellation of financial assurance by the financial assurance
provider, the owner or operator must provide the department an alternative
financial assurance instrument. If a means of continued financial assurance is
not provided within that 60 days, the department shall suspend the
permit.
d. The owner or operator
shall perform proper closure within 30 days of the permit suspension. For the
purpose of this rule, "proper closure" means completion of all items pursuant
to rule 106.7(455B) or 106.17(455B), as applicable, and subrule
106.18(4).
e. If the owner or
operator does not properly close the site within the 30-day period allowed, the
department shall file a claim with the financial assurance instrument provider
to collect the amount of funds necessary to properly close the site.
f. An owner or operator who elects to
terminate a permitted activity, whose renewal application has been denied, or
whose permit has been suspended or revoked for cause must submit within 30 days
of the termination of the permit a schedule for completing proper closure of
the terminated activity. Closure completion cannot exceed 60 days from the date
of termination of the permit.
g.
The director may also request payment from any financial assurance provider for
the purpose of completing closure when the following circumstances exist:
(1) The owner or operator is more than 15
days late in providing a schedule for closure or for meeting any date in the
schedule for closure.
(2) The owner
or operator declares an economic inability to comply with this rule, either by
sending written notification to the director or through an action such as, but
not limited to, filing for bankruptcy.