(3)
Financial assurance for
closure. The owner or operator of a CND landfill must establish
financial assurance for closure in accordance with the criteria in this rule.
The owner or operator must provide continuous coverage for closure until
released from this requirement by demonstrating compliance with subrules
114.26(13) and 114.13(10). Proof of compliance pursuant to paragraphs
114.31(3)
"a" to
"e" must be submitted by the
owner or operator yearly by April 1 and approved by the department.
a. The owner or operator shall submit the
current version of department Form 542-8090, Sanitary Landfill Financial
Assurance Report Form, which contains, but is not limited to, the amount of the
financial assurance, the annual financial statement required by Iowa Code
sections
455B306(9)."e " and 455B.306(7)"c, " and the current
balances ofthe closure and postclosure accounts atthetime of submittal as
required by Iowa Code section
455B306(9)."b. "
b. The
owner or operator shall submit a copy of the financial assurance instruments or
the documents establishing the financial assurance instruments in an amount
equal to or greater than the amount specified in subrule 114.31(9).
Documentation for the mechanism(s) used to demonstrate financial assurance
shall contain, at a minimum, the items required to be submitted as specified in
paragraphs 114.31(6)"a" to"i. "
c. The owner or operator shall submit a
detailed written estimate, in current dollars, certified by an Iowa-licensed
professional engineer, of the cost of hiring a third party to close the CND
landfill in accordance with the closure plan as required by subrules 114.26(13)
and 114.13(10). Such estimate must be available at any time during the active
life of the landfill.
(1) The cost estimate
must equal the cost of closing the CND landfill at any time during the
permitted life of the facility when the extent and manner of its operation
would make closure the most expensive.
(2) The costs contained in the third-party
estimate for closure must be accurate and reasonable when compared to the cost
estimates used by other similarly situated landfills in Iowa.
(3) During the active life ofthe landfill,
the owner or operator must annually adjust the closure cost estimate for
inflation.
(4) The owner or
operator must, annually or at the time of application for a permit amendment
that increases closure costs, whichever occurs first, increase the closure cost
estimate and the amount of financial assurance provided if changes to the
closure plan or CND landfill conditions increase the maximum cost of closure at
any time during the remaining active life of the facility.
(5) The owner or operator may reduce the
amount of financial assurance for closure if the most recent estimate of the
maximum cost of closure at any time during the active life of the facility is
less than the amount of financial assurance currently provided. Prior to the
reduction, the owner or operator must submit to the department the
justification for the reduction of the closure cost estimate and the updated
documentation required by paragraphs 114.31(3) "a"
to"e" and receive department approval for the reduction.
Approval or denial shall be issued within 30 days of receipt ofthe reduction
request.
(6) The third-party
estimate submitted to the department must include the site area subject to
closure and must account for at least the following factors determined by the
department to be minimal necessary costs for closure:
1. Closure and postclosure plan document
revisions;
2. Site preparation,
earthwork and final grading;
3.
Drainage control culverts, piping and structures;
4. Erosion control structures, sediment ponds
and terraces;
5. Final cap
construction;
6. Cap vegetation
soil placement;
7. Cap seeding,
mulching and fertilizing;
8.
Monitoring well, piezometer and gas control modifications;
9. Leachate system cleanout and extraction
well modifications;
10. Monitoring
well installations and abandonments;
11. Facility modifications to effect closed
status;
12. Engineering and
technical services;
13. Legal,
financial and administrative services; and
14. Closure compliance certifications and
documentation.
d. For publicly owned CND landfills, the
owner or operator shall submit to the department a copy of the owner's or
operator's most recent annual audit report in the form prescribed by the office
of the auditor of the state of Iowa.
e. Privately held CND landfills shall submit
an affidavit from the owner or operator indicating that a yearly review has
been performed by a certified public accountant to determine whether the
privately owned landfill is in compliance with this rule. The affidavit shall
state the name of the certified public accountant, the dates and conclusions of
the review, and the steps taken to rectify any deficiencies identified by the
accountant.
(4)
Financial assurance for postclosure. The owner or operator of
a CND landfill must establish financial assurance for the costs of postclosure
in accordance with the criteria in this rule. The owner or operator must
provide continuous coverage for postclosure until released from this
requirement by demonstrating compliance with the postclosure plan and the
closure permit. Proof of compliance pursuant to paragraphs
114.31(4)
"a" to
"e" must be submitted by the
owner or operator yearly by April 1 and approved by the department.
a. The owner or operator shall submit the
current version of department Form 542-8090, Sanitary Landfill Financial
Assurance Report Form, which contains, but is not limited to, the amount of the
financial assurance, the annual financial statement required by Iowa Code
sections
455B306(9)."e " and 455B.306(7)"c, " and the current
balances of the closure and postclosure accounts required by Iowa Code section
455B306(9)."b."
b. The owner
or operator shall submit a copy of the documents establishing a financial
assurance instrument in an amount equal to or greater than the amount specified
in subrule 114.31(9). Documentation for the mechanism(s) used to demonstrate
financial assurance shall contain, at a minimum, the items required to be
submitted as specified in paragraphs 114.31(6)"a"
to"i. "
c. The
owner or operator shall submit a detailed written estimate, in current dollars,
certified by an Iowa-licensed professional engineer, of the cost of hiring a
third party to conduct postclosure for the CND landfill in compliance with the
postclosure plan developed pursuant to subrules 114.26(14) and 114.13(10). The
cost estimate must account for the total cost of conducting postclosure, as
described in the plan, for the entire postclosure period.
(1) The cost estimate for postclosure must be
based on the most expensive costs during the entire postclosure
period.
(2) The costs contained in
the third-party estimate for postclosure must be accurate and reasonable when
compared to the cost estimates used by other similarly situated landfills in
Iowa.
(3) During the active life of
the CND landfill and during the postclosure period, the owner or operator must
annually adjust the postclosure cost estimate for inflation.
(4) The owner or operator must, annually or
at the time of application for a permit amendment that increases postclosure
costs, whichever occurs first, increase the estimate and the amount of
financial assurance provided if changes in the postclosure plan or CND landfill
conditions increase the maximum cost of postclosure.
(5) The owner or operator may reduce the
amount of financial assurance for postclosure if the most recent estimate of
the maximum cost of postclosure beginning at any time during the active life of
the facility is less than the amount of financial assurance currently provided.
Prior to the reduction, the owner or operator must submit to the department the
justification for the reduction of the postclosure cost estimate and the
updated documentation required by paragraphs 114.31(4)"a"
to"e" and must receive department approval for the reduction.
Approval or denial shall be issued within 30 days of receipt of the reduction
request.
(6) The third-party
estimate submitted to the department must include the site area subject to
postclosure and must account for at least the following factors determined by
the department to be minimal necessary costs for postclosure:
1. General site facilities, access roads and
fencing maintenance;
2. Cap and
vegetative cover maintenance;
3.
Drainage and erosion control systems maintenance;
4. Groundwater to waste separation systems
maintenance;
5. Gas control systems
maintenance;
6. Gas control systems
monitoring and reports;
7.
Groundwater and surface water monitoring systems maintenance;
8. Groundwater and surface water quality
monitoring and reports;
9.
Groundwater monitoring systems performance evaluations and reports;
10. Leachate control systems
maintenance;
11. Leachate
management, transportation and disposal;
12. Leachate control systems performance
evaluations and reports;
13.
Facility inspections and reports;
14. Engineering and technical
services;
15. Legal, financial and
administrative services; and
16.
Financial assurance, accounting, audits and reports.
d. For publicly owned CND
landfills, the owner or operator shall submit to the department a copy of the
owner's or operator's most recent annual audit report in the form prescribed by
the office of the auditor of the state of Iowa.
e. Privately held CND landfills shall submit
an affidavit from the owner or operator indicating that a yearly review has
been performed by a certified public accountant to determine whether the
privately owned landfill is in compliance with this rule. The affidavit shall
state the name of the certified public accountant, the dates and conclusions of
the review, and the steps taken to rectify any deficiencies identified by the
accountant.
(6)
Allowable financial assurance mechanisms. The mechanisms used
to demonstrate financial assurance as required by Iowa Code section
455B306(9).
"a" must ensure that the funds necessary to meet the costs of
closure, postclosure, and corrective action for known releases will be
available whenever the funds are needed. Owners or operators must choose from
options in paragraphs 114.31(6)
"a" to
"i."
a.
Trust fund.
(1) An owner or operator may demonstrate
financial assurance for closure, postclosure, or corrective action, whichever
is applicable, by establishing a trust fund which conforms to the requirements
of this subrule. 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. A copy of the trust agreement must be submitted pursuant to
subrules 114.31(3), 114.31(4), and 114.31(5) and placed in the facility's
official files.
(2) Payments into
the trust fund must be made annually by the owner or operator over ten years or
over the remaining life of the CND landfill, whichever is shorter, in the case
of a trust fund for closure or postclosure; or over one-half of the estimated
length of the corrective action plan in the case of a response to a known
release. This period is referred to as the pay-in period.
(3) For a trust fund used to demonstrate
financial assurance for closure and postclosure, the first payment into the
fund must be at least equal to the amount specified in subrule 114.31(9) for
closure or postclosure divided by the number of years in the pay-in period as
defined in subparagraph 114.31(6)
"a "(2). The amount of
subsequent payments must be determined by the following formula:
Payment = CE - CB / Y
where CE is the amount specified in subrule 114.31(9) for
closure or postclosure (updated for inflation or other changes), CB is the
current balance of the trust fund, and Y is the number of years remaining in
the pay-in period.
(4) For
a trust fund used to demonstrate financial assurance for corrective action, the
first payment into the trust fund must be at least equal to one-half of the
current cost estimate for corrective action divided by the number of years in
the corrective action pay-in period as defined in subparagraph
114.31(6)
"a "(2). The amount of subsequent payments must be
determined by the following formula:
Payment = RB - CV / Y
where RB is the most recent estimate of the required trust
fund balance for corrective action, which is the total cost that will be
incurred during the second half of the corrective action period, CV is the
current value of the trust fund, and Y is the number of years remaining in the
pay-in period.
(5) The
initial payment into the trust fund must be made before the initial receipt of
waste or within 3 0 days of close of the first fiscal year that begins after
October 31, 2007, in the case of existing facilities; before the cancellation
of an alternative financial assurance mechanism in the case of closure and
postclosure; or no later than 120 days after the corrective action remedy has
been approved by the department.
(6) The owner or operator or another person
authorized to conduct closure, postclosure, or corrective action activities may
request reimbursement from the trustee for these expenditures, including
partial closure, as the expenditures are incurred. Requests for reimbursement
will be granted by the trustee only if sufficient funds are remaining in the
trust fund to cover the remaining costs of closure, postclosure, or corrective
action and if justification and documentation of the costs are placed in the
operating record. The owner or operator must submit to the department
documentation of the justification for reimbursement and verification that
reimbursement has been received.
(7) The trust fund may be terminated by the
owner or operator only if the owner or operator substitutes alternative
financial assurance as specified in this rule or if the owner or operator is no
longer required to demonstrate financial responsibility in accordance with this
rule.
(8) After the pay-in period
has been completed, the trust fund shall be adjusted annually to correct any
deficiency of the fund with respect to the adjusted cost estimate and may be
adjusted annually should the balance in the fund exceed the adjusted cost
estimate.
b.
Surety bond guaranteeing payment or performance.
(1) An owner or operator may demonstrate
financial assurance for closure or postclosure by obtaining a payment or
performance surety bond which conforms to the requirements of this subrule. An
owner or operator may demonstrate financial assurance for corrective action by
obtaining a performance bond which conforms to the requirements of this
subrule. The bond must be effective before the initial receipt of waste or
before the cancellation of an alternative financial assurance mechanism, in the
case of closure and postclosure; or no later than 120 days after the corrective
action remedy has been approved by the department. The owner or operator must
submit a copy of the bond to the department and keep a copy in the facility's
official files. The surety company issuing the bond must, at a minimum, be
among those listed as acceptable sureties on federal bonds in Circular 570 of
the U.S. Department of the Treasury. The state shall not be considered a party
to the surety bond.
(2) The penal
sum of the bond must be in an amount at least equal to the amount specified in
subrule 114.31(9) for closure and postclosure or corrective action, whichever
is applicable.
(3) 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 and also upon
notice from the department pursuant to subparagraph
114.31(6)"b "(6).
(4) The owner or operator must establish a
standby trust fund. The standby trust fund must meet the requirements of
paragraph 114.31(6)"a" except the requirements for initial
payment and subsequent annual payments specified in subparagraphs
114.31(6)"a" (2) to (5).
(5) Payments made under the terms of the bond
will be deposited by the surety directly into the standby trust fund. Payments
from the trust fund must be approved by the trustee and the
department.
(6) 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 120 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 from the surety of withdrawal of the cancellation,
or proof of a deposit into the standby trust fund of a sum equal to the amount
of the bond. If the owner or operator has not complied with this subparagraph
within the 60-day time period, this shall constitute a failure to perform, and
the department shall notify the surety, prior to the expiration of the 120-day
notice period, that such a failure has occurred.
(7) The bond must be conditioned upon
faithful performance by the owner or operator of all closure, postclosure, or
corrective action requirements of the Code of Iowa and this rule. A failure to
comply with subparagraph 114.31(6)"b "(6) shall also
constitute a failure to perform under the terms of the bond.
(8) Liability under the bond shall be for the
duration of the operation and the closure and postclosure periods.
(9) The owner or operator may cancel the bond
only if alternative financial assurance is substituted prior to cancellation or
if the owner or operator is no longer required to demonstrate financial
responsibility in accordance with this rule.
c.
Letter of credit.
(1) An owner or operator may demonstrate
financial assurance for closure, postclosure, or corrective action, whichever
is applicable, by obtaining an irrevocable standby letter of credit which
conforms to the requirements of this paragraph. The letter of credit must be
effective before the initial receipt of waste or before the cancellation of an
alternative financial assurance mechanism, in the case of closure and
postclosure; or no later than 120 days after the corrective action plan is
approved by the department. 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. 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.
(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 in an amount at least equal to the amount specified in subrule
114.31(9) for closure, postclosure, or corrective action, whichever is
applicable. 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 120 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 the closure
and postclosure accounts established pursuant to Iowa Code section
455B306(9)."b. " If the owner or operator has not complied with this
subparagraph 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
closure and postclosure accounts established by the owner or operator pursuant
to Iowa Code section
455B306(9). "Z>. "
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.
(4) The owner or
operator may cancel the letter of credit only if alternative financial
assurance is substituted prior to cancellation or if the owner or operator is
no longer required to demonstrate financial responsibility in accordance with
this rule.
d.
Insurance.
(1) An owner or operator
may demonstrate financial assurance for closure, postclosure, or corrective
action by obtaining insurance which conforms to the requirements of this
paragraph. The insurance must be effective before the initial receipt of waste
or prior to cancellation of an alternative financial assurance, in the case of
closure and postclosure; or no later than 120 days after the corrective action
plan has been approved by the department. At a minimum, the insurer must be
licensed to transact the business of insurance or be eligible to provide
insurance as an excess or surplus lines insurer in one or more states. The
owner or operator must submit to the department a copy of the insurance policy
and retain a copy in the facility's official files.
(2) The closure or postclosure insurance
policy must guarantee that funds will be available to close the CND landfill
whenever final closure occurs or to provide postclosure for the CND landfill
whenever the postclosure period begins, whichever is applicable. The policy
must also guarantee that once closure or postclosure begins, the insurer will
be responsible for the paying out of funds to the owner or operator or another
person authorized to conduct closure or postclosure, up to an amount equal to
the face amount of the policy.
(3)
The insurance policy must be issued for a face amount at least equal to the
amount specified in subrule 114.31(9) for closure, postclosure, or corrective
action, whichever is applicable. 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.
(4) An owner or operator or another person
authorized to conduct closure or postclosure may receive reimbursements for
closure or postclosure expenditures, including partial closure, as applicable.
Requests for reimbursement will be granted by the insurer only if the remaining
value of the policy is sufficient to cover the remaining costs of closure or
postclosure, and if justification and documentation of the cost are placed in
the operating record. The owner or operator must submit to the department
documentation of the justification for reimbursement and verification that the
reimbursement has been received.
(5) Each policy must contain a provision
allowing assignment of the policy to a successor owner or operator. Such
assignment may be conditional upon consent of the insurer, provided that such
consent is not unreasonably refused.
(6) The insurance policy must provide that
the insurer may not cancel, terminate or fail to renew the policy except for
failure to pay the premium. The automatic renewal of the policy must, at a
minimum, provide the insured with the option of renewal at the face amount of
the expiring policy. If there is a failure to pay the premium, the insurer may
cancel the policy by sending notice of cancellation by certified mail to the
owner or operator and to the department 120 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 from the insurer of withdrawal of cancellation, or proof of a deposit of
a sum equal to the amount of the insurance coverage into the closure and
postclosure accounts established pursuant to Iowa Code section
455B306(9)."b. " If the owner or operator has not complied with this
subparagraph within the 60-day time period, this shall constitute a failure to
perform and shall be a covered event pursuant to the terms of the insurance
policy. A failure by the owner or operator to comply with this subparagraph
within the 60-day period shall make the insurer liable for the closure and
postclosure costs of the covered facility up to the amount of the policy
limits, which shall be equal to the most recently submitted cost
estimates.
(7) For insurance
policies providing coverage for postclosure, 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. Such increase must
be equivalent to the face amount 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. Department
of the Treasury for 26-week treasury securities.
(8) The owner or operator may cancel the
insurance only if alternative financial assurance is substituted prior to
cancellation or if the owner or operator is no longer required to demonstrate
financial responsibility in accordance with this rule.
e.
Corporate financial
test. An owner or operator that satisfies the requirements of this
paragraph may demonstrate financial assurance up to the amount specified below:
(1) Financial component. The owner or
operator must satisfy the requirements of numbered paragraphs 114.31(6)
"e"(1)"1," "2," and "3" to meet the financial component of the
corporate financial test.
1. The owner or
operator must satisfy one of the following three conditions:
* 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
* A ratio of less than 1.5 comparing total liabilities to net
worth (net worth calculations may not include future permitted capacity of the
subject landfill as an asset); or
* 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, excluding future permitted capacity of the subject
landfill, of the owner or operator must be greater than:
* The sum of the current closure, postclosure, and corrective
action cost estimates and any other environmental obligations, including
guarantees, covered by this financial test plus $10 million except as provided
in the second bulleted paragraph of numbered paragraph
114.31(6)"e "(1)"2"; or
* Net worth of $10 million, excluding future permitted
capacity of the subject landfill, plus the amount of any guarantees that have
not been recognized as liabilities on the financial statements, provided that
all of the current closure, postclosure, and corrective action costs and any
other environmental obligations 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; and
3. The owner or operator must have, located
in the United States, assets, excluding future permitted capacity of the
subject landfill, amounting to at least the sum of current closure,
postclosure, and corrective action cost estimates and any other environmental
obligations covered by a financial test as described in subparagraph
114.31(6)"e"(5).
(2) Record-keeping and reporting
requirements. The owner or operator must submit the following records to the
department and place a copy in the facility's official files prior to the
initial receipt of solid waste or cancellation of an alternative financial
assurance instrument, in the case of closure and postclosure; or no later than
120 days after the corrective action plan has been approved by the department:
1. A letter signed by a certified public
accountant and based upon a certified audit that:
* Lists all the current cost estimates covered by a financial
test including, but not limited to, cost estimates required by subrules
114.31(3) to 114.31(5); 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 owner or operator
meets the conditions of subparagraph 114.31(6)"e" (1).
2. 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 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 mechanism. 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 financial test, the owner or operator must provide alternative
financial assurance that meets the requirements of this rule.
3. If the certified public accountant's
letter providing evidence of financial assurance includes financial data which
shows that the owner or operator satisfies subparagraph 114.31(6) "e "(1) but
which differs from data in the audited financial statements referred to in
numbered paragraph 114.31(6) "e"(2)"2," 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 certified public accountant'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.
4. If
the certified public accountant's letter provides a demonstration that the
owner or operator has assured for environmental obligations as provided in the
second bulleted paragraph of numbered paragraph 114.31 (6)"e
"(2)"1," 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 and that documents how these obligations have been
measured and reported and verifies that the tangible net worth of the owner or
operator is at least $10 million plus the amount of any guarantees
provided.
(3) The owner
or operator may cease the submission of the information required by paragraph
114.31(6)"e " only if alternative financial assurance is
substituted prior to cancellation or if the owner or operator is no longer
required to demonstrate financial responsibility in accordance with this
rule.
(4) The department may, based
on a reasonable belief that the owner or operator may no longer meet the
requirements of subparagraph 114.31 (6)"e "(1), require the
owner or operator to provide reports of its financial condition in addition to
or including current financial test documentation as specified in subparagraph
114.31(6)"e"(2). If the department finds that the owner or
operator no longer meets the requirements of subparagraph
114.31(6)"e "(1), the owner or operator must provide
alternative financial assurance that meets the requirements of this
rule.
(5) calculation of costs to
be assured. When ca1culating the current cost estimates for closure,
postclosure, corrective action, or the sum of the combination of such costs to
be covered, and any other environmental obligations assured by a financial test
referred to in paragraph 114.31 (6) "e," the owner or operator must include
cost estimates required for subrules 114.31(3) to 114.31(5); cost estimates for
municipal solid waste management facilities pursuant to 40 CFR Section
258.74;
and cost estimates required for the following environmental obligations, if the
owner or operator assures those environmental obligations through a financial
test: obligations associated with UIC facilities under 40 CFR Part
144,
petroleum underground storage tank facilities under 40 CFR Part
280, PCB
storage facilities under 40 CFR Part
761, and hazardous waste treatment,
storage, and disposal facilities under 40 CFR Parts
264 and
265.
f.
Local government
financial test. An owner or operator that satisfies the requirements
of this paragraph may demonstrate financial assurance up to the amount
specified below:
(1) Financial component.
1. The owner or operator must satisfy one of
the following requirements:
* If the owner or operator has outstanding, rated, general
obligation bonds that are not secured by insurance, a letter of credit, or
other collateral or guarantee, the owner or operator 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
* The owner or operator must satisfy both of the following
financial ratios based on the owner's or operator'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.
2. The owner or operator 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.
3. A local government is not eligible to
assure its obligations in paragraph 114.31(6)
"f" if it:
* Is currently in default on any outstanding general
obligation bonds; or
* Has any outstanding general obligation bonds rated lower
than Baa as issued by Moody's or BBB as issued by Standard & Poor's;
or
* Operated at a deficit equal to 5 percent or more of total
annual revenue in each of the past two fiscal years; or
* 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 as required under numbered
paragraph 114.31(6)"f"(1)"2." 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.
4. The following terms used in this paragraph
are defined as follows:
"Cash plus marketable securities " means all
the cash plus marketable securities held by the local government on the last
day of a fiscal year, excluding cash and marketable securities designated to
satisfy past obligations such as pensions.
"Debt service " means the amount of
principal and interest due on a loan in a given time period, typically the
current year.
"Deficit" means total annual revenues minus
total annual expenditures.
"Total expenditures " means all
expenditures, excluding capital outlays and debt repayment.
"Total revenues " means revenues from all
taxes and fees excluding revenue from funds managed by local government on
behalf of a specific third party and does not include the proceeds from
borrowing or asset sales.
(2) Public notice component. The local
government owner or operator must include disclosure of the closure and
postclosure costs assured through the financial test 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 mechanism, whichever is
later. A reference to corrective action costs must be placed in the next annual
audit report after the corrective action plan is approved by the department.
For the first year the financial test is used to assure costs at a particular
facility, the reference may instead be placed in the facility'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 and postclosure costs, conformance with
Governmental Accounting Standards Board Statement 18 ensures compliance with
this public notice component.
(3)
Record-keeping and reporting requirements.
1.
The local government owner or operator must submit to the department the
following items:
* A letter signed by the local government's chief financial
officer that lists all the current cost estimates covered by a financial test,
as described in subparagraph 114.31(6)"f"(4); that provides
evidence and certifies that the local government meets the conditions of
numbered paragraphs 114.31(6) "f "(1)"1," "2," and "3"; and
that certifies that the local government meets the conditions of subparagraphs
114.31(6)"f" (2) and (4); and
* The local government's annual financial report indicating
compliance with the financial ratios required by numbered paragraph 114.31(6)
"f"(1)"1," second bulleted paragraph, if applicable, and the
requirements of numbered paragraph 114.31(6)"f"(1)"2" and the
third and fourth bulleted paragraphs of numbered paragraph
114.31(6)"f"(1)"3," and also indicating that the requirements
of Governmental Accounting Standards Board Statement 18 have been met.
2. The items required in numbered
paragraph 114.31(6)"f"(3)"1" must be submitted to the
department and placed in the facility's official files prior to the receipt of
waste or prior to the cancellation of an alternative financial assurance
mechanism, in the case of closure and postclosure; or, in the case of
corrective action, not later than 120 days after the corrective action plan is
approved by the department
3. After
the initial submission of the required items and their placement in the
facility's official files, the local government owner or operator must update
the information and place the updated information in the facility's official
files within 180 days following the close of the owner's or operator's fiscal
year.
4. The owner or operator may
cease the submission of the information required by paragraph
114.31(6)"f"only if alternative financial assurance is
substituted prior to cancellation or if the owner or operator is no longer
required to demonstrate financial responsibility in accordance with this
rule.
5. A local government must
satisfy the requirements of the financial test at the close of each fiscal
year. If the local government owner or operator no longer meets the
requirements of the local government financial test, the local government must,
within 180 days following the close of the owner's or operator's fiscal year,
obtain alternative financial assurance that meets the requirements of this
rule, place the required submissions for that assurance in the operating
record, and notify the department that the owner or operator no longer meets
the criteria of the financial test and that alternative financial assurance has
been obtained.
6. The department,
based on a reasonable belief that the local government owner or operator may no
longer meet the requirements of the local government financial test, may
require additional reports of financial conditions from the local government.
If the department finds, on the basis of such reports or other information,
that the owner or operator no longer meets the requirements of the local
government financial test, the local government must provide alternative
financial assurance in accordance with this rule.
(4) calculation of costs to be assured. The
portion of the closure, postclosure, and corrective action costs which an owner
or operator may assure under this paragraph is determined as follows:
1. If the local government owner or operator
does not assure other environmental obligations through a financial test, the
owner or operator may assure closure, postclosure, and corrective action costs
that equal up to 43 percent of the local government's total annual
revenue.
2. If the local government
assures other environmental obligations through a financial test, including
those associated with UIC facilities under 40 CFR Section
144.62, petroleum
underground storage tank facilities under 40 CFR Part
280, PCB storage
facilities under 40 CFR Part
761, and hazardous waste treatment, storage, and
disposal facilities under 40 CFR Parts
264 and
265, the owner or operator must
add those costs to the closure, postclosure, and corrective action costs it
seeks to assure under this paragraph. The total that may be assured must not
exceed 43 percent of the local government's total annual revenue.
3. The owner or operator must obtain an
alternative financial assurance instrument for those costs that exceed the
limits set in numbered paragraphs 114.31(6) "f"(4)"1" and
"2."
g.
Corporate guarantee.
(1) An
owner or operator may meet the requirements of this paragraph 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. The guarantor must meet the requirements for owners or operators in
paragraph 114.31(6)"e" and must comply with the terms of the
guarantee. A certified copy of the guarantee must be placed in the facility's
operating record along with copies of the letter from a certified public
accountant and the accountant's opinions. If the guarantor's parent corporation
is also the parent corporation of the owner or operator, the letter from the
certified public accountant must describe the value received in consideration
of the guarantee. If the guarantor is an owner or operator with a "substantial
business relationship" with the owner or operator, this letter must describe
this "substantial business relationship" and the value received in
consideration of the guarantee.
(2)
The guarantee must be effective and all required submissions made to the
department prior to the initial receipt of waste or before cancellation of an
alternative financial mechanism, in the case of closure and postclosure; or, in
the case of corrective action, no later than 120 days after the corrective
action plan has been approved by the department.
(3) The terms of the guarantee must provide
that:
1. If the owner or operator fails to
perform closure, postclosure, or corrective action of a facility covered by the
guarantee, or fails to obtain alternative financial assurance within 90 days of
notice of intent to cancel pursuant to numbered paragraphs 114.31(6)
"g"(3)"2" and "3," the guarantor will:
* Perform, or pay a third party to perform, closure,
postclosure, or corrective action as required (performance guarantee);
or
* Establish a fully funded trust fund as specified in
paragraph 114.31(6) "a" in the name of the owner or operator
(payment guarantee); or
* Obtain alternative financial assurance as required by
subparagraph 114.31(6)"g "(3)"3."
2. The guarantee will remain in force for as
long as the owner or operator must comply with the applicable financial
assurance requirements of this rule 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 must, within 90 days following receipt of the cancellation
notice by the owner or operator and the department, provide to the department
adequate proof of alternative financial assurance, notice from the guarantor of
withdrawal of the cancellation, or proof of the establishment of a fully funded
trust fund pursuant to paragraph 114.31(6)"a. " If the owner
or operator fails to comply with the provisions of this numbered paragraph
within the 90-day period, the guarantor must provide that alternative financial
assurance prior to cancellation of the corporate guarantee.
(4) If a corporate guarantor no
longer meets the requirements of paragraph 114.31(6)"e,"the
owner or operator must, within 90 days, obtain alternative financial assurance
and submit proof of alternative financial assurance to the department. If the
owner or operator fails to provide alternative financial assurance within the
90-day period, the guarantor must provide that alternative financial assurance
within the next 30 days.
(5) The
owner or operator is no longer required to meet the requirements of paragraph
114.31(6) "g " upon the submission to the department of proof of the
substitution of alternative financial assurance or if the owner or operator is
no longer required to demonstrate financial responsibility in accordance with
this rule.
h.
Local government guarantee. An owner or operator may demonstrate
financial assurance for closure, postclosure, or corrective action 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. The
guarantor must meet the requirements of the local government financial test in
paragraph 114.31(6)
"f" and must comply with the terms of a
written guarantee.
(1) Terms of the written
guarantee. The guarantee must be effective before the initial receipt of waste
or before the cancellation of alternative financial assurance, in the case of
closure and postclosure; or no later than 120 days after the corrective action
plan is approved by the department. The guarantee must provide that:
1. If the owner or operator fails to perform
closure, postclosure, or corrective action of a facility covered by the
guarantee or fails to obtain alternative financial assurance within 90 days of
notice of intent to cancel pursuant to numbered paragraphs
114.31(6)
"h "(1)"2" and "3," the guarantor will:
* Perform, or pay a third party to perform, closure,
postclosure, or corrective action as required; or
* Establish a fully funded trust fund as specified in
paragraph 114.31(6) "a" in the name of the owner or operator;
or
* Obtain alternative financial assurance as required by
numbered paragraph 114.31(6)"h "(1)"3."
2. The guarantee will remain in force for as
long as the owner or operator must comply with the applicable financial
assurance requirements unless the guarantor sends 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 must, within 90 days following receipt of the cancellation
notice by the owner or operator and the department, provide to the department
adequate proof of alternative financial assurance, notice from the guarantor of
withdrawal of the cancellation, or proof of the establishment of a fully funded
trust fund pursuant to paragraph 114.31(6)"a. " If the owner
or operator fails to comply with the provisions of this numbered paragraph
within the 90-day period, the guarantor must provide that alternative financial
assurance prior to cancellation of the guarantee.
(2) Record-keeping and reporting
requirements.
1. The owner or operator must
submit to the department a certified copy of the guarantee along with the items
required under subparagraph 114.31 (6)"f"(3) and place a copy
in the facility's official files before the initial receipt of waste or before
cancellation of alternative financial assurance, whichever is later, in the
case of closure and postclosure; or no later than 120 days after the corrective
action plan has been approved by the department.
2. The owner or operator shall no longer be
required to submit the items specified in numbered paragraph
114.31(6)"h "(2)"1" when proof of alternative financial
assurance has been submitted to the department or the owner or operator is no
longer required to provide financial assurance pursuant to this rule.
3. If a local government guarantor no longer
meets the requirements of paragraph 114.31(6)"f" the owner or
operator must, within 90 days, submit to the department proof of alternative
financial assurance. If the owner or operator fails to obtain alternative
financial assurance within the 90-day period, the guarantor must provide that
alternative financial assurance within the next 30 days.
i.
Local government
dedicated fund. The owner or operator of a publicly owned CND landfill
or a local government serving as a guarantor may demonstrate financial
assurance for closure, postclosure, or corrective action, whichever is
applicable, by establishing a dedicated fund or account that conforms to the
requirements of this paragraph. A dedicated fund will be considered eligible if
it complies with subparagraph 114.31(6)
"i"(1) or (2) and all
other provisions of this paragraph, and documentation of this compliance has
been submitted to the department.
(1) The fund
shall be dedicated by state constitutional provision or local government
statute, charter, ordinance, or order to pay for closure, postclosure, or
corrective action costs that arise from the operation of the CND landfill and
shall be funded for the full amount of coverage or funded for part of the
required amount of coverage and used in combination with another mechanism(s)
that provides the remaining coverage.
(2) The fund shall be dedicated by state
constitutional provision or local government statute, charter, ordinance, or
order as a reserve fund and shall be funded for no less than the full amount of
coverage or funded for part of the required amount of coverage and used in
combination with another mechanism(s) that provides the remaining
coverage.
(3) Payments into the
dedicated fund must be made annually by the owner or operator for ten years or
over the permitted life of the CND landfill, whichever is shorter, in the case
of a dedicated fund for closure or postclosure; or over one-half of the
estimated length of an approved corrective action plan in the case of a
response to a known release. This is referred to as the pay-in period. The
initial payment into the dedicated fund must be made before the initial receipt
of waste in the case of closure and postclosure or no later than 120 days after
the corrective action plan has been approved by the department.
(4) For a dedicated fund used to demonstrate
financial assurance for closure and postclosure, the first payment into the
dedicated fund must be at least equal to the amount specified in subrule
114.31(9), divided by the number of years in the pay-in period as defined in
paragraph 114.31 (6)
"i. " The amount of subsequent payments
must be determined by the following formula:
Payment = CE - CB / Y
where CE is the total required financial assurance for the
owner or operator, CB is the current balance of the fund, and Y is the number
of years remaining in the pay-in period.
(5) For a dedicated fund used to demonstrate
financial assurance for corrective action, the first payment into the dedicated
fund must be at least one-half of the current cost estimate, divided by the
number of years in the corrective action pay-in period as defined in paragraph
114.31 (6)
"i. " The amount of subsequent payments must be
determined by the following formula:
Payment = RB - CF / Y
where RB is the most recent estimate of the required
dedicated fund balance, which is the total cost that will be incurred during
the second half of the corrective action period, CF is the current amount in
the dedicated fund, and Y is the number of years remaining in the pay-in
period.
(6) The initial
payment into the dedicated fund must be made before the initial receipt of
waste or within 3 0 days of close of the first fiscal year that begins after
October 31, 2007, in the case of existing facilities; before the cancellation
of an alternative financial assurance mechanism in the case of closure and
postclosure; or no later than 120 days after the corrective action remedy has
been approved by the department.
(7) After the pay-in period has been
completed, the dedicated fund shall be adjusted annually to correct any
deficiency of the fund with respect to the adjusted cost estimate and may be
adjusted annually should the balance in the fund exceed the adjusted cost
estimate.
(7)
General requirements.
a. Use
of multiple financial mechanisms. An owner or operator may satisfy the
requirements of this rule by establishing more than one financial mechanism per
facility. The mechanisms must be a combination of those mechanisms outlined in
this rule and must provide financial assurance for an amount at least equal to
the current cost estimate for closure, postclosure, or corrective action,
whichever is applicable. The financial test and a guarantee provided by a
corporate parent, sibling or grandparent may not be combined if the financial
statements of the two entities are consolidated.
b. Use of one mechanism for multiple
facilities. An owner or operator may satisfy the requirements of this rule for
multiple CND landfills by the use of one mechanism if the owner or operator
ensures that the mechanism provides financial assurance for an amount at least
equal to the current cost estimates for closure, postclosure, or corrective
action, whichever is applicable, for all CND landfills covered.
c. Criteria. The language of the financial
assurance mechanisms listed in this rule must ensure that the instruments
satisfy the following criteria:
(1) The
financial assurance mechanisms must ensure that the amount of funds assured is
sufficient to cover the costs of closure, postclosure, or corrective action for
known releases, whichever is applicable;
(2) The financial assurance mechanisms must
ensure that funds will be available in a timely fashion when needed;
(3) The financial assurance mechanisms must
be obtained by the owner or operator prior to the initial receipt of solid
waste and no later than 120 days after the corrective action remedy has been
approved by the department until the owner or operator is released from the
financial assurance requirements; and
(4) The financial assurance mechanisms must
be legally valid, binding, and enforceable under Iowa law.
d. No permit shall be issued by the
department pursuant to Iowa Code section
455B305.
unless the applicant has demonstrated compliance with rule
114.31(455B).
(8)
Closure and postclosure accounts. The holder of a permit for a
CND landfill shall maintain a separate account for closure and postclosure as
required by Iowa Code section
455B306(9).
"b. " The account shall be specific to a particular facility.
a. Definitions. For the purpose of this
subrule, the following definitions shall apply:
"Account" means a formal separate set of
records.
"Current balance " means cash in an account
established pursuant to this subrule plus the current value of investments of
moneys collected pursuant to subrule 114.31(8) and used to purchase one or more
of the investments listed in Iowa Code section 12B.10(5).
"Current cost estimate " means the closure
cost estimate prepared and submitted to the department pursuant to subrule
114.31(3) and the postclosure cost estimate prepared and submitted pursuant to
subrule 114.31(4).
b.
Moneys in the accounts shall not be assigned for the benefit of creditors
except the state of Iowa.
c. Moneys
in the accounts 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.
d.
Withdrawal of funds. Except as provided in paragraph
114.31(8)"e," moneys in the accounts may be withdrawn without
department approval only for the purpose of funding closure, including partial
closure, or postclosure activities that are in conformance with a
closure/postclosure plan which has been submitted pursuant to subrule
114.13(10). Withdrawals for activities not in conformance with a
closure/postclosure plan must receive prior written approval from the
department. Permit holders using a trust fund established pursuant to paragraph
114.31(6)"a" to satisfy the requirements of this rule must
comply with the requirements of subparagraph 114.31(6)"a" (6)
prior to withdrawal.
e. Excess
funds. If the balance of a closure or postclosure account exceeds the current
cost estimate for closure or postclosure at any time, the permit holder may
withdraw the excess funds so long as the withdrawal does not cause the balance
to be reduced below the amount of the current cost estimate.
f.Initial proof of establishment of account.
A permit holder shall submit a statement of account, signed by the permit
holder, to the department by April 1, 2008, that indicates that accounts have
been established pursuant to this subrule. Permit holders for new CND landfills
permitted after April 1, 2008, shall submit to the department, prior to the
landfill's initial receipt of waste, a statement of account that is signed by
the permit holder.
g. An account
established pursuant to paragraph 114.31(6)
"a" for trust funds
or paragraph 114.31(6)
"i" for local government dedicated funds
also satisfies the requirements of this subrule, and the permit holder shall
not be required to establish closure and postclosure accounts in addition to
said financial assurance accounts.
Accounts established pursuant to paragraphs 114.31(6)
"a" or 114.31(6)"i," which are intended to
satisfy the requirements of this subrule, must comply with Iowa Code section
455B.306(9) "b."
h. Yearly deposits. Deposits into the closure
and postclosure accounts shall be made at least yearly in the amounts specified
in this subrule beginning with the close of the facility's first fiscal year
that begins after October 31, 2007. The deposits shall be made within 30 days
of the close of each fiscal year. The minimum yearly deposit to the closure and
postclosure accounts shall be determined using the following formula:
CE - CB
------------------- x TR - yearly deposit to account
RPC
Where:
"CE" means the current cost estimate of closure and
postclosure costs.
"CB" means the current balance of the closure or postclosure
accounts.
"RPC" means the remaining permitted capacity, in tons, of the
landfill as of the start of the permit holder's fiscal year.
"TR" is the number of tons of solid waste disposed of at the
facility in the prior year.
i. Closure and postclosure accounts may be
commingled with other accounts so long as the amounts credited to each account
balance are reported separately pursuant to paragraphs
114.31(3)"a" and 114.31(4)"a"
j. The department shall have full rights of
access to all funds existing in a facility's closure or postclosure account, at
the sole discretion of the department, if the permit holder fails to undertake
closure or postclosure activities after being directed to do so by a final
agency action of the department. These funds shall be used only for the
purposes of funding closure and postclosure activities at the site.