Mich. Admin. Code R. 299.9710 - Liability requirements for treatment, storage, and disposal facilities
Rule 710.
(1) An
owner or operator of a hazardous waste treatment, storage, or disposal
facility, or a group of such facilities, shall demonstrate financial
responsibility for bodily injury and property damage to third parties caused by
sudden and accidental occurrences arising from operations of the facility or
group of facilities. The owner or operator shall have and maintain liability
coverage for sudden and accidental occurrences in an amount not less than
$1,000,000.00 per occurrence with an annual aggregate of not less than
$2,000,000.00, exclusive of legal defense costs.
(2) An owner or operator of a surface
impoundment, landfill, land treatment facility, or disposal miscellaneous unit
which is used to manage hazardous waste, or a group of such facilities, shall
demonstrate financial responsibility for bodily injury and property damage to
third parties caused by nonsudden accidental occurrences arising from
operations of the facility or group of facilities. The owner or operator shall
have and maintain liability coverage for nonsudden accidental occurrences in an
amount not less than $3,000,000.00 per occurrence with an annual aggregate of
not less than $6,000,000.00, exclusive of legal defense costs.
(3) An owner or operator shall demonstrate
the existence of the required liability coverage through any of the following:
(a) Insurance as specified in subrule (6) of
this rule.
(b) The financial test
specified in subrule (7) of this rule.
(c) The financial test specified in subrule
(8) of this rule.
(d) The corporate
guarantee specified in subrule (9) of rule.
(e) The letter of credit specified in subrule
(10) of this rule.
(f) The trust
fund specified in subrule (11) of this rule.
(4) An owner or operator may demonstrate the
existence of the required liability coverage through a combination of the
financial mechanisms specified in subrule (3) of this rule, except that any
combination shall not include more than 1 of the financial tests specified and
shall not include both a financial test and corporate guarantee. The amounts of
coverage shall total at least the minimum amounts required by this
rule.
(5) If more than 1 financial
mechanism is used to demonstrate the existence of the required liability
coverage, then the owner or operator shall specify at least 1 financial
mechanism as primary coverage and shall specify the other financial mechanisms
as excess coverage.
(6) An owner or
operator may satisfy the liability requirements of this rule by obtaining an
insurance policy as follows:
(a) Each
insurance policy shall be issued by an insurer which, at a minimum, is licensed
to transact the business of insurance, or which is eligible to provide
insurance as an excess or surplus lines insurer, in the state of
Michigan.
(b) Each insurance policy
shall be amended by attaching an endorsement on a form provided by the
director. The owner or operator shall submit, to the director, a signed
duplicate original of the endorsement, and, if requested by the director, a
signed duplicate of the insurance policy.
(c) Each policy that is obtained to meet the
requirements of this rule shall provide that cancellation, termination, or a
material change to the policy that affects the coverages required by this rule
shall not occur unless and until not less than 30 days' written notice of the
cancellation, termination, or material change is first provided to the
director. The notice shall be given no matter which party initiates the
cancellation, termination, or material change and whether or not nonpayment of
premium is involved.
(d) If the
underlying policies required by subrules (1) and (2) of this rule do not
provide sufficient limits of liability, the policy shall be amended by
attaching an excess insurance endorsement on a form approved by the
director.
(7) An owner
or operator may satisfy the liability requirements of this rule by complying
with the financial test requirements specified in the provisions of 40 C.F.R.
§264.147(f). To demonstrate that he or she passes this test, the owner or
operator shall submit all of the information required in 40 C.F.R.
§264.147(f)(3) to the director. The words "regional administrator" in the
provisions of 40 C.F.R. §264.151(g) shall be replaced with the word
"director."
(8) An owner or
operator may satisfy the liability requirements of this rule by complying with
the financial test requirements specified in the provisions of R 299.9709 and
both of the following provisions:
(a) The
financial test criteria of R 299.9709 shall be modified as follows:
(i) In the provisions of R
299.9709(1)(a)(ii), net working capital and tangible net worth shall each be
not less than 6 times the sum of the current closure and postclosure cost
estimates, any other obligations covered by a financial test, and the amount of
annual aggregate liability coverage.
(ii) In the provisions of R
299.9709(1)(a)(iv), assets in the United States shall be not less than 90% of
the owner's or operator's total assets or not less than 6 times the sum of the
current closure and postclosure cost estimates, any other obligations covered
by a financial test, and the amount of annual aggregate liability
coverage.
(iii) In the provisions
of R 299.9709(1)(b)(ii), tangible net worth shall be not less than 6 times the
sum of the current closure and postclosure cost estimates, any other
obligations covered by a financial test, and the amount of annual aggregate
liability coverage.
(iv) In the
provisions of R 299.9709(1)(b)(iv), assets in the United States shall be not
less than 90% of the owner's or operator's total assets or not less than 6
times the sum of the current closure and postclosure cost estimates, any other
obligations covered by a financial test, and the amount of annual aggregate
liability coverage.
(b)
To demonstrate that the owner or operator passes the financial test
requirements of this subrule, the owner or operator shall submit all of the
information required by the provisions of R 299.9709(3) to the
director.
(c) If the owner or
operator no longer meets the requirements of this subrule, then he or she shall
obtain alternate liability coverage as specified in this rule. Evidence of
alternate liability coverage shall be submitted to the director within 90 days
after the end of the fiscal year for which the year-end financial data show
that the owner or operator no longer meets the financial test requirements of
this subrule.
(9) An
owner or operator may satisfy the liability requirements of this rule by
obtaining a written guarantee for liability coverage, hereafter referred to as
"corporate guarantee," as follows:
(a) The
guarantor shall be the parent corporation of the owner or operator.The
guarantor shall meet the requirements for owners or operators specified in
subrule (7) or (8) of this rule and shall comply with the terms of the
corporate guarantee.
(b) The
corporate guarantee shall provide for all of the following:
(i) If the owner or operator fails to satisfy
a judgment based on a determination of liability for bodily injury or property
damage to third parties caused by sudden or nonsudden, or both, accidental
occurrences arising from the operation of facilities covered by the corporate
guarantee, or fails to pay an amount agreed to in settlement of claims arising
from, or alleged to have arisen from, such injury or damage, then the guarantor
will satisfy the judgment or pay the settlement amount up to the limits of
coverage.
(ii) The guarantor shall
make payment of third-party liability awards and settlements upon presentation
of a certification of a valid claim or a valid final court order that
establishes a judgment against the owner or operator for bodily injury or
property damage caused by sudden or nonsudden accidental occurrences arising
from the operation of the facilities covered by the corporate
guarantee.
(iii) The liability
coverage shall not apply to the exclusions specified in the provisions of
subrule (12) of this rule.
(iv) The
corporate guarantee shall remain in force unless the guarantor sends a notice
of cancellation, by certified mail, to the owner or operator and to the
director. Cancellation shall 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 director, as evidenced by the return receipts.
(v) The corporate guarantee shall not be
terminated unless the owner or operator obtains, and the director approves,
alternate liability coverage as specified in this rule.
(vi) The guarantor shall obtain alternate
liability coverage as specified in this rule in the name of the owner or
operator, unless the owner or operator has done so, within 30 days after being
notified by the director that the guarantor no longer meets the financial test
criteria or that the guarantor is disallowed from continuing as guarantor, and
within 120 days after the end of any fiscal year before termination of the
guarantee in which the guarantor fails to meet the financial test
criteria.
(c) The
wording of the corporate guarantee shall be identical to the wording specified
by the director.
(d) The corporate
guarantee shall accompany the items sent to the director as specified in
subrule (7) or (8) of this rule.
(e) If a corporation is incorporated outside
of Michigan, then a guarantee may be used to satisfy the requirements of this
rule only if the non-Michigan corporation has identified a registered agent for
service of process in Michigan.
(f)
The director shall agree to termination of the guarantee if either of the
following occurs:
(i) The owner or operator
or guarantor substitutes alternate financial assurance as specified in this
rule.
(ii) The director releases
the owner or operator from the liability requirements in accordance with the
provisions of subrule (16) of this rule.
(10) An owner or operator may satisfy the
liability requirements of this rule by obtaining an irrevocable letter of
credit for liability coverage as follows:
(a)
The issuing institution shall be a bank or financial institution which has the
authority to issue letters of credit and which has its letter of credit
operations regulated and examined by a federal or state agency.
(b) The letter of credit shall provide for
both of the following:
(i) The financial
institution shall deposit amounts designated by the trustee, up to the amount
of the letter of credit, into a standby trust fund upon presentation of a sight
draft.
(ii) The letter of credit
shall be irrevocable and issued for a period of at least 1 year. The expiration
date shall be automatically extended for a period of at least 1 year unless,
not less than 120 days before the current expiration date, the issuing
institution notifies both the owner or operator and the director, by certified
mail, of a decision not to extend the expiration date. The 120 days shall begin
on the date when both the owner or operator and the director receive the
notice, as evidenced by the return receipts.
(c) The wording of the letter of credit shall
be identical to the wording specified by the director.
(d) The director shall agree to termination
of the letter of credit when either of the following occurs:
(i) The owner or operator substitutes
alternate financial assurance as specified in this rule.
(ii) The director releases the owner or
operator from the liability requirements in accordance with the provisions of
subrule (16) of this rule.
(e) An owner or operator who uses a letter of
credit to satisfy the requirements of this rule shall establish a standby trust
fund in accordance with both of the following provisions:
(i) The trustee shall be a bank or other
financial institution which has the authority to act as trustee and which has
its trust operations regulated and examined by a state or federal
agency.
(ii) The trust fund shall
provide for all of the following:
(A) The
trustee shall satisfy third-party liability claims by drawing on the letter of
credit and by making payments from the fund upon presentation of a
certification of a valid claim or a valid final court order that establishes a
judgment against the owner or operator for bodily injury or property damage
caused by sudden or nonsudden accidental occurrences arising from the operation
of the facilities covered by the trust fund.
(B) The liability coverage shall not apply to
the exclusions specified in the provisions of subrule (12) of this
rule.
(C) The trust shall be
irrevocable and shall continue until terminated pursuant to the written
agreement of the owner or operator, the trustee, and the director or until
terminated by the trustee and the director if the owner or operator ceases to
exist.
(D) The wording of the trust
agreement shall be identical to the wording specified by the
director.
(f)
The director shall agree to termination of the standby trust if either of the
following occurs:
(i) The owner or operator
substitutes alternate financial assurance as specified in this rule.
(ii) The director releases the owner or
operator from the liability requirements in accordance with the provisions of
subrule (16) of this rule.
(g) The owner or operator shall submit a copy
of the letter of credit and a signed duplicate original of the standby trust
agreement to the director.
(h) If
the owner or operator does not establish alternate liability coverage as
specified in this rule and obtain written approval of the alternate coverage
from the director within 90 days after receipt, by both the owner or operator
and the director, of a notice from the issuing institution that it has decided
not to extend the letter of credit beyond the current expiration date, then the
director shall notify the trustee and the trustee shall draw on the letter of
credit and deposit the proceeds of the letter of credit into the standby trust
fund.
(11) An owner or
operator may satisfy the liability requirements of this rule by obtaining a
trust fund for liability coverage as specified in the following provisions and
submitting a signed duplicate original of the trust agreement to the director:
(a) The trustee shall be a bank or other
financial institution which has the authority to act as trustee and which has
its trust operations regulated and examined by a state or federal
agency.
(b) The trust fund shall be
funded for the full amount of liability coverage to be provided by the trust
fund. After the trust fund is established, if the trust fund amount is reduced
below the full amount of liability coverage to be provided by the trust fund,
then the owner or operator shall make payment to the trustee to cause the value
of the trust fund to at least equal the full amount of liability coverage to be
provided by the trust fund. The payments shall be made before the anniversary
date of the establishment of the fund.
(c) The trust fund shall provide for all of
the following:
(i) The trustee shall make
payment of third-party liability awards and settlements, up to the value of the
fund, upon presentation of a certification of a valid claim or a valid final
court order that establishes a judgment against the owner or operator for
bodily injury or property damage caused by sudden or nonsudden accidental
occurrences arising from the operation of the facilities covered by the trust
fund.
(ii) The liability coverage
shall not apply to the exclusions specified in the provisions of subrule (12)
of this rule.
(iii) The trust shall
be irrevocable and shall continue until terminated pursuant to the written
agreement of the owner or operator, the trustee, and the director or until
terminated by the trustee and the director if the owner or operator ceases to
exist.
(d) The wording
of the trust agreement shall be identical to the wording specified by the
director.
(e) The director shall
agree to termination of the trust if either of the following occurs:
(i) The owner or operator substitutes
alternate financial assurance as specified in this rule.
(ii) The director releases the owner or
operator from the liability requirements in accordance with the provisions of
subrule (16) of this rule.
(12) The liability coverages provided by the
corporate guarantee, letter of credit, and trust fund pursuant to the
provisions of this rule shall not apply to any of the following categories of
damages or obligations:
(a) Bodily injury or
property damage for which the owner or operator is obligated to pay damages by
reason of the assumption of liability in a contract or agreement. This
exclusion does not apply to liability for damages which the owner or operator
would be obligated to pay in the absence of the contract or
agreement.
(b) Any obligation of
the owner or operator pursuant to a worker's compensation, disability benefits,
or unemployment compensation law or similar law.
(c) Bodily injury to an employee of the owner
or operator arising from, and in the course of, employment by the owner or
operator, or bodily injury to the spouse, child, parent, brother, or sister of
that employee as a consequence of, or arising from, and in the course of,
employment by the owner or operator. This exclusion applies whether the owner
or operator may be liable as an employer or in any other capacity and applies
to any obligation to share damages with or repay another person who must pay
damages because of injury to the employee or the spouse, child, parent,
brother, or sister of the employee.
(d) Bodily injury or property damage arising
out of the ownership, maintenance, use, or entrustment to others of any
aircraft, motor vehicle, or watercraft.
(e) Property damage to any of the following:
(i) Any property that is owned, rented, or
occupied by the owner or operator.
(ii) Premises that are sold, given away, or
abandoned by the owner or operator if the property damage arises out of any
part of the premises.
(iii)
Property that is loaned to the owner or operator.
(iv) Personal property in the care, custody,
or control of the owner or operator.
(v) The part of real property on which the
owner, operator, or any contractor or subcontractor who is working directly or
indirectly on behalf of the owner or operator are performing operations, if the
property damage arises out of these operations.
(13) An owner or operator shall notify the
director, in writing, within 30 days, if any of the following conditions occur:
(a) A claim results in a reduction in the
amount of financial responsibility for liability coverage provided by a
financial mechanism authorized in subrule (3) of this rule.
(b) A certification of valid claim for bodily
injury or property damages caused by a sudden or nonsudden accidental
occurrence arising from the operation of a hazardous waste treatment, storage,
or disposal facility is entered between the owner or operator and a third-party
claimant for liability coverage pursuant to the provisions of this
rule.
(c) A final court order that
establishes a judgment for bodily injury or property damage caused by a sudden
or nonsudden accidental occurrence arising from the operation of a hazardous
waste treatment, storage, or disposal facility is issued against the owner or
operator or a financial mechanism for liability coverage pursuant to the
provisions of this rule.
(14) An owner or operator shall continuously
provide liability coverage for a facility as required by this rule until
certifications of closure of the facility as specified in the provisions of R
299.9613(3) are received by the director and the director notifies the owner or
operator that the owner or operator is no longer required to maintain financial
assurance for closure pursuant to the provisions of R 299.9703(5).
(15) The director may adjust the levels of
financial responsibility required by this rule for the reasons specified in the
provisions of 40 C.F.R.§264.147(c) and (d). Any adjustment to the level or
type of coverage for a facility that has an operating license shall be treated
as an operating license modification pursuant to the provisions of R
299.9519.
(16) Within 60 days after
receiving certifications from the owner or operator and an independent
registered professional engineer that final closure has been completed in
accordance with the approved closure plan, the director shall notify the owner
or operator, in writing, that the owner or operator is no longer required by
this rule to maintain liability coverage for that facility, unless the director
has reason to believe that closure has not been in accordance with the approved
closure plan.
(17) If all other
hazardous waste management units at the facility which are subject to a
liability coverage requirement under this rule are closed, or if the closure
process under part 6 of these rules has been initiated for all other hazardous
waste management units that are subject to a liability coverage requirement,
then the director may replace all or part of that liability coverage
requirement for a hazardous waste management unit with alternative requirements
under R 299.9713 if the director does all of the following:
(a) Prescribes alternative requirements for
the hazardous waste management unit under 40 C.F.R. §§264.90(f) or
264.110(c).
(b) Determines that it
is not necessary to apply the requirements of this rule because the alternative
financial assurance requirements will protect human health and the
environment.
(c) Specifies the
alternative requirements in an operating license or enforceable
document.
(18) The
provisions of 40 C.F.R. §§264.90(f), 264.110(d), 264.147(c), (d), and
(f) and 264.151(g) are adopted by reference in R 299.11003.
Notes
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