Tenn. Comp. R. & Regs. 1200-01-07-.03 - REQUIREMENTS FOR FINANCIAL ASSURANCE
(1) General
(a) Purpose/Scope - The purpose of this rule
is to establish requirements for establishing and maintaining acceptable
financial assurance for the proper operation, closure and post-closure care of
certain solid waste disposal facilities in Tennessee. These financial assurance
requirements are intended to ensure that adequate financial resources are
available to the Commissioner to insure proper operation, closure and
post-closure care. This rule also establishes criteria and procedures to be
used by the Commissioner in setting the amount of financial assurance required
and in use and release of these funds.
(b) Applicability
1. The requirements of this rule apply to
disposal facilities in operation on March 18, 1990 or thereafter.
2. The requirements of paragraph (3) of this
rule do not apply if the operator is the State of Tennessee or Federal
Government.
(2) Closure/Post-Closure Care Plan
(a) General Requirements - Operators of
facilities must submit a closure/post-closure care plan to the Department,
obtain approval of the plan, and amend the plan when necessary, as set forth in
this paragraph.
(b) Contents of
Plan
1. The closure/post-closure plan must
identify the steps necessary to completely or partially close the facility at
any point during its intended operating life and to completely close the
facility at the end of its intended operating life, and must identify the
activities which will be carried on after closure and the frequency of these
activities. For facilities being developed or to be developed according to a
phased development plan, the closure/post-closure care plan must address each
parcel separately as well as the whole.
2. The closure/post-closure plan must
include, at a minimum:
(i) A description of
how and when the facility will be partially closed, if applicable, and finally
closed. If minimum closure areas are used, they must be delineated in the
engineering plans. The description must identify how the applicable closure
standards of rule 1200-01-07-.04(8) will be met. It must also include an
estimate of the expected year of closure and a schedule for completing the
steps of final closure;
(ii) A
description of the planned ground and surface water monitoring and other
monitoring and maintenance activities and frequencies at which they will be
performed. The description must identify how the applicable post-closure care
standards of rule 1200-01-07-.04(8) and the applicable Ground Water
Protection/Monitoring Standards of rule 1200-01-07-.04(7) will be met;
and
(iii) The name, address, and
phone number of the person or office to contact about the facility during the
post-closure care period. This person or office must keep an updated
closure/post-closure plan during the post-closure care period.
(iv) An itemized estimate in current dollars
of the cost based on hiring a third party to perform the closure and
post-closure care activities.
(v) A
description of the planned uses of the property during the post-closure care
period.
3. In the
closure portion of his plan, the operator must address the closure of active
portions and future active portions of the facility. In the post-closure care
portion of his plan, the operator must address the post-closure care of closed
portions, active portions, and future active portions of the facility. If a
facility which was in operation on March 18, 1990 closes prior to the date the
closure/post-closure care plan is to be submitted, the plan need address only
the post-closure care of closed portions of the facility provided that the
closure is in accordance with applicable rules.
(c) Amendment of Plan - The approved
closure/post-closure care plan may be amended at any time during the active
life of the facility or during the post-closure care period as set forth in
this subparagraph.
1. The operator may
request to amend the plan to alter the closure requirements, to alter the
post-closure care requirements, or to extend or reduce the post-closure care
period based on cause. The request must include evidence demonstrating to the
satisfaction of the Commissioner that:
(i)
The nature of the facility makes the closure or post-closure care
requirement(s) unnecessary; or
(ii)
The nature of the facility supports reduction of the post- closure care period;
or
(iii) The requested extension in
the post-closure care period or alteration of closure or post-closure care
requirements is necessary to prevent threats to human health and the
environment.
2. Such
plan amendments shall be processed as modifications to the permit. However, the
Commissioner may decide to modify the plan if he deems it necessary to prevent
threats to human health and the environment. He may extend or reduce the
post-closure care period based on cause or alter the closure or post-closure
care requirements based on cause. However, no such modifications shall be
initiated until the operator has been notified of such proposed action and
provided the opportunity to be heard on the matter.
3. The cost estimate of the approved
closure/post closure care plan must be adjusted annually for inflation. Such
inflation adjustment shall not be considered an amendment of the
plan.
(3)
Financial Assurance Requirements
(a) General
Requirement - Operators of facilities must file and maintain financial
assurance with the Commissioner as set forth in this paragraph. As used in this
paragraph operator includes, but is not limited to, parent corporations and any
other person who owns a controlling interest in a corporation.
(b) Amount of Financial Assurance Required
1. The amount of financial assurance required
of the operator shall be established by the Commissioner based upon the
estimated cost of operating the facility for a thirty (30) day period plus the
estimated closure and post-closure care costs included in the approved
closure/post-closure care plan established in paragraph (2) of this rule. This
required amount may be adjusted as the plan is amended. The operator shall be
notified of the required amount as set forth in subparagraph (c) of this
paragraph. In no case, however, shall the amount of financial assurance be less
than 1,000 dollars per acre, or fraction thereof, affected by the facility
operation.
For facilities being developed or to be developed according to a phased development plan, the Commissioner may establish the amount of financial assurance required on a parcel-by-parcel basis.
2. The operator may appeal the Commissioner's
decision in part 1 of this subparagraph as set forth in Section 68-211-113 of
the act.
3. The operator must file
with the Commissioner a financial assurance instrument chosen from subparagraph
(d) of this paragraph in the amount determined by the Commissioner. The
original of the instrument must be received and approved by the Commissioner
prior to construction/operation of the solid waste management
facility.
4. During the active life
of the solid waste management facility, the operator must annually adjust the
closure/post-closure cost estimate and the financial assurance instrument for
inflation by no later than the anniversary date of the establishment of the
financial assurance instrument(s) used to comply with subparagraph (b) of this
paragraph. For operators using the financial test or corporate guarantee, the
closure/post-closure cost estimate and the financial assurance instrument must
be adjusted for inflation by no later than 90 days after the close of the
firm's fiscal year and concurrent with the submission of the updated financial
information to the Division Director as specified in subparagraph (d)4(v) of
this paragraph. The adjustment may be made by recalculating the maximum cost of
closure/post-closure in current dollars, or by using an inflation factor
derived from the most recent Implicit Price Deflator for Gross National Product
published by the U.S. Department of Commerce in its Survey of Current Business.
The inflation factor is the result of dividing the latest published annual
Deflator by the Deflator for the previous year.
(i) The first adjustment is made by
multiplying the closure/post-closure cost estimate by the inflation factor. The
result is the adjusted closure/post-closure cost estimate.
(ii) Subsequent adjustments are made by
multiplying the latest adjusted closure/post-closure cost estimate by the
latest inflation factor.
5. During the post-closure care period of the
solid waste management facility, the cost estimate for post-closure care may be
reduced annually by the estimated cost of post-closure work performed the
previous year according to the approved post-closure plan. The work must be
performed to the satisfaction of the Division Director. The estimated remaining
cost of post-closure care and the post-closure financial assurance instrument
must be adjusted annually for inflation by no later than the anniversary date
of the issuance of the instrument. The inflation adjustment may be made by
recalculating the maximum cost of post-closure care for the remaining years in
current dollars or by using an inflation factor derived from the most recent
Implicit Price Deflator for Gross National Product or Gross Domestic Product
published by the U.S. Department of Commerce in its Survey of Current Business.
The inflation factor is the result of dividing the latest published annual
Deflator by the Deflator for the previous year.
(i) The first adjustment is made by
multiplying the post-closure cost estimate by the inflation factor. The result
is the adjusted post-closure cost estimate.
(ii) Subsequent annual inflation adjustments
to post-closure care cost estimates and financial assurance instruments are
made by multiplying the estimated remaining cost of post-closure by the latest
inflation factor.
(c) Filing of Financial Assurance
1. Permits - After his final decision to
issue a permit for a facility, the Commissioner will notify the operator in
writing of the amount of financial assurance required (as established per
subparagraph (b) of this paragraph). The operator must, before the permit can
be effective, file with the Commissioner financial assurance meeting the
requirements of this paragraph in at least that amount, except as provided in
part 3 of this subparagraph. The Commissioner will evaluate the financial
assurance filed for compliance with the requirements of this paragraph and
notify the operator of his findings in writing within 30 days of the filing
date.
2. Facilities Permitted
Before March 18, 1990.
(i) In his notice to
the operator initially approving the closure/post-closure care plan, the
Commissioner will specify the amount of financial assurance required (as
established per subparagraph (b) of this paragraph). The operator must, within
60 days of receipt of that notice, file with the Commissioner financial
assurance meeting the requirements of this paragraph in at least that amount,
except as provided in part 3 of this subparagraph.
(ii) After his final decision to issue a
modified permit incorporating amendments to the closure/post-closure care plan,
the Commissioner will notify the operator in writing of any changes in the
amount of financial assurance required (as established per subparagraph (b) of
this paragraph). The operator must, within 60 days of receipt of that notice,
file with the Commissioner any required additional financial assurance, subject
to the provisions of part 3 of this subparagraph. Such additional financial
assurance filed must also meet the requirements of this paragraph.
3. Partial Filing
(i) For facilities which are in operation and
being developed according to a phased development plan, the operator may
initially file financial assurance covering only closure and post-closure care
of the parcel currently in operation and post-closure care of closed parcels.
For facilities which are not yet in operation and are to be developed according
to a phased development plan, the operator may initially file financial
assurance covering only closure and post-closure care of the initial parcel to
be operated.
(ii) For facilities
being developed according to a phased development plan whose operators
initially filed only partial financial assurance as provided in subpart (i) of
this part, the operator must, at least 30 days prior to beginning operation of
a parcel not covered by financial assurance on file with the Commissioner, file
the required financial assurance for that parcel with the
Commissioner.
(d) Mechanisms of Financial Assurance -
Following are acceptable financial assurance mechanisms:
1. Surety Bond - An operator may satisfy the
requirements of subparagraph (c) of this paragraph by obtaining and filing a
surety bond which conforms to the requirements of this part.
(i) The surety company issuing the bond must
be licensed to do business as a surety in Tennessee and must be among those
listed as acceptable by the Commissioner.
(ii) The wording of the surety bond must be
identical to the wording specified in part (l)1 of this paragraph.
(iii) Under the terms of the bond, the surety
will become liable on the bond obligation when the operator fails to perform as
guaranteed by the bond. Following a determination by the Commissioner that the
operator has failed to so perform, under the terms of the bond the surety will
perform final closure and post-closure care as guaranteed by the bond or will
forfeit the amount of the penal sum, as provided in subparagraph (j) of this
paragraph.
(iv) The penal sum of
the bond must be in an amount at least equal to the amount of financial
assurance required per subparagraph (b) of this paragraph.
(v) Under the terms of the bond, the surety
may cancel the bond by sending notice of cancellation by certified mail to the
operator and to the Commissioner. Cancellation may not occur, however, during
the 120 days beginning on the date of receipt of the notice of cancellation by
both the operator and the Commissioner, as evidenced by the return
receipts.
(vi) The surety will not
be liable for deficiencies in the performance of operation or closure and
post-closure care by the operator after the Commissioner releases the operator
from the financial assurance requirements as provided in subparagraph (i) of
this paragraph.
2.
Personal Bond Supported by Securities - An operator may satisfy the
requirements of subparagraphs (c) of this paragraph by filing his personal
performance guarantee accompanied by collateral in the form of securities. He
must guarantee to properly operate and perform final closure/post-closure in
accordance with the closure/post-closure care plan, other requirements of the
permit, the cct and the rules whenever required to do so. The securities
supporting this guarantee must be fully registered as to principal and to also
identify that person filing such collateral. These securities must have a
current market value at least equal to the amount of financial assurance
required per subparagraph (b) of this paragraph, and must be included among the
following types:
(i) Negotiable certificates
of deposit assigned irrevocably to the state.
(I) Such certificates of deposit must be
automatically renewable and must be assigned to the state in writing and
recorded as such in the records of the financial institution issuing such
certificate.
(II) Such certificates
of deposit must also include a statement signed by an officer of the issuing
financial institution which waives all rights of lien which the institution has
or might have against the certificate.
(ii) Negotiable U.S. Treasury securities
assigned irrevocably to the state.
(iii) Negotiable general obligation municipal
or corporate bonds which have at least an "A" rating by Moody's and/or Standard
and Poor's rating services and which are assigned irrevocably to the
state.
3. Personal Bond
Supported by Cash - An operator may satisfy the requirements of subparagraph
(c) of this paragraph by filing his personal performance guarantee accompanied
by cash in an amount at least equal to the amount of financial assurance
required per subparagraph (b) of this paragraph. He must guarantee to perform
final closure/post-closure in accordance with the closure/post-closure care
plan, other requirements of the permit, the act and the rules whenever required
to do so.
4. Financial Test and
Corporate Guarantee for Closure and/or Post-closure - An owner or operator may
satisfy the requirements of subparagraph (c) of this paragraph by demonstrating
that he passes a financial test as specified in this part. The same document
(with appropriate wording modifications) may be used by a company, with prior
approval by the Commissioner to demonstrate financial assurance for a solid
waste unit and a hazardous waste unit, both of which are owned/operated by the
company.
(i) To pass this test the owner or
operator must meet the criteria of either item (I) or item (II) of this
subpart.
(I) The owner or operator must have:
I. Two of the following three ratios: a ratio
of total liabilities to net worth less than a 2.0; a ratio of the sum of net
income plus depreciation, depletion and amortization to total liabilities
greater than 0.1; and a ratio of current assets to current liabilities greater
than 1.5; and
II. Net working
capital and tangible net worth each at least six times the sum of the current
closure and post-closure cost estimates and current plugging and abandonment
cost estimates; and
III. Tangible
net worth of at least $10 million; and
IV. Assets located in the United States
amounting to at least 90 percent of total assets or at least six times the sum
of the current closure and post-closure cost estimates and the current plugging
and abandonment cost estimates.
(II) The owner or operator must have:
I. A current rating for his most recent bond
issuance of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A
or Baa as issued by Moody's; and
II. Tangible net worth at least six times the
sum of the current closure and post-closure cost estimates and the current
plugging and abandonment cost estimates; and
III. Tangible net worth of at least $10
million; and
IV. Assets located in
the United States amounting to at least 90 percent of total assets or at least
six times the sum of the current closure and post-closure cost estimates and
the current plugging and abandonment cost estimates.
(ii) The phrase "current closure
and post-closure cost estimates" as used in this part refers to the cost
estimates required to be shown in the letter from the owner's or operator's
chief financial officer worded as required at subparagraph (l) of this
paragraph.
(iii) To demonstrate
that he meets this test, the owner or operator must submit the following items
to the Commissioner:
(I) A letter signed by
the owner's or operator's chief financial officer and worded as required in
subparagraph (l) of this paragraph; and
(II) A copy of the independent certified
public accountant's report on examination of the owner's or operator's
financial statements for the latest completed fiscal year; and
(III) A special report from the owner's or
operator's independent certified public accountant to the owner or operator
stating that:
I. He has compared the data
which the letter from the chief financial officer specifies as having been
derived from the independently audited, year-end financial statements for the
latest fiscal year with the amounts in such financial statements; and
II. In connection with the procedure, no
matters came to his attention which caused him to believe that the specified
data should be adjusted.
(iv) An owner or operator of a new facility
must submit the items specified in subparts (i), (ii), and (iii) of this part
to the Commissioner.
(v) After the
initial submission of items specified in subparts (i), (ii), and (iii) of this
part, the owner or operator must send updated information to the Commissioner
within 90 days after the close of each succeeding fiscal year. This information
must consist of all three items specified in subpart (iv) of this
part.
(vi) If the owner or operator
no longer meets the requirements of subpart (i), (ii), and (iii) of this part,
he must sent notice to the Commissioner of intent to establish alternate
financial assurance as specified in the subparagraph. The notice must be sent
by certified mail 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
requirements. The owner or operator must provide the alternate financial
assurance within 120 days after the end of such fiscal year.
(vii) The Commissioner may, based on a
reasonable belief that the owner or operator may no longer meet the
requirements of this part, require reports of financial condition at any time
from the owner or operator in addition to those specified in subpart (i) of
this part. If the Commissioner finds, on the basis of such reports or other
information, that the owner or operator no longer meets these requirements, the
owner or operator must provide alternate financial assurance as specified in
this subparagraph within 30 days after notification of such a
finding.
(viii) The Commissioner
may disallow use of this test on the basis of qualifications in the opinion
expressed by the independent certified public accountant in his report on
examination of the owner's or operator's financial statements. An adverse
opinion or a disclaimer of opinion will be cause for disallowance. The
Commissioner will evaluate other qualifications on an individual basis. The
owner or operator must provide alternate financial assurance as specified in
this subparagraph within 30 days after notification of the
disallowance.
(ix) The owner or
operator is no longer required to submit the items specified in subparts (i),
(ii), and (iii) of this part, when:
(I) An
owner or operator substitutes alternate financial assurance; or
(II) The Commissioner releases the owner or
operator from the requirements of this part.
(x) An owner or operator may meet the
requirements of this part by obtaining a written guarantee. The guarantor must
be the direct or higher-tier parent corporation of the owner or operator, a
firm whose parent corporation is also the parent corporation of the owner or
operator, or a firm with a "substantial business relationship" with the owner
or operator. The guarantor must meet the requirements for the owner or
operators in subparts (i), (ii), and (iii) of this part and must comply with
the terms of the guarantee. The wording of the guarantee must be identical to
the working specified in subparagraph (l) of this paragraph. The certified copy
of the guarantee must accompany the items sent to the Commissioner. One of
these items must be the letter from the guarantor's chief financial officer. If
the guarantor's parent corporation is also the parent corporation of the owner
or operator, the letter must describe the value received in consideration of
the guarantee. If the guarantor is a firm 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. The terms of the guarantee must provide that:
(I) If the owner or operator fails to perform
final closure and/or post-closure of a facility covered by the corporate
guarantee in accordance with the closure/post-closure plan and other permit
requirements whenever required to do so, the guarantor will do so or establish
a trust fund worded as required in subparagraph(l) of this paragraph in the
name of the owner or operator.
(II)
The corporate guarantee will remain in force unless the guarantor sends notice
of cancellation by certified mail to the owner or operator and to the
Commissioner. 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 Commissioner, as evidenced by the return
receipts.
(III) If the owner or
operator fails to provide alternate financial assurance as specified in this
subparagraph and obtain the written approval of such alternate assurance from
the Commissioner within 90 days after receipt by both the owner or operator and
the Commissioner of a notice of cancellation of the corporate guarantee from
the guarantor, the guarantor will provide such alternate financial assurance in
the name of the owner or operator.
5. Municipality or County Contract of
Obligation - A municipality or county may execute a contract of obligation with
the Commissioner. Such contract of obligation shall be a binding agreement on
the municipality or county, allowing the Commissioner to collect the required
amount from any funds being disbursed or to be disbursed from the State to the
municipality or county. The contract shall be filed with the State Commissioner
of Environment and Conservation and with the State Commissioner of Finance and
Administration.
6.
Closure/post-closure trust fund - An owner or operator may satisfy the
requirements of subparagraph (c) of this paragraph by establishing a closure
and/or post-closure trust fund which conforms to the requirements of this part
and filing an originally signed duplicate of the trust agreement. 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.
(i) The wording of the trust agreement must
be worded as required at subparagraph (l) of this paragraph and the trust
agreement must be accompanied by a formal certification of acknowledgment
worded as required at subparagraph (l) of this paragraph. Schedule A of the
trust agreement must be updated within 60 days after a change in the amount of
the current closure and/or post-closure cost estimate covered by the agreement
as specified in subparagraph (c)2(ii) of this paragraph.
(ii) Payments into the trust fund must be
made annually by the owner or operator over the term of the initial permit or
over the remaining operating life of the facility as estimated in the closure
plan, whichever period is shorter; this period is hereafter referred to as the
"pay-in-period." The payments into the closure and/or post-closure trust fund
must be made as follows:
(I) For a new
facility, the first payment must be made before the initial operation is begun.
A receipt from the trustee for this payment must be filed by the owner or
operator before the operation begins. The first payment must be at least equal
to the current closure cost estimate, divided by the number of years in the
pay-in-period. Subsequent payments must be made no later than 30 days after
each anniversary date of the first payment. The amount of each subsequent
payment must be determined by this formula:
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In this formula, CE is the current closure and/or post-closure cost estimate; CV is the current value of the trust fund; Y is the number of years remaining in the pay-in period.
(II) The owner or operator may accelerate
payments into the trust fund or he may deposit the full amount of the current
closure and/or post-closure cost estimate at the time the fund is established.
However, he must maintain the value of the fund at no less than the value that
the fund would have if annual payments were made as specified in item (I) of
this subpart.
(III) If the owner or
operator establishes a closure and/or post-closure trust fund after having used
on or more alternate mechanisms specified in this subparagraph, his first
payment must be in at least the amount that the fund would contain if the trust
fund were established initially and annual payments made according to
specifications of this part.
(iii) After the pay-in-period is completed,
whenever the current closure and/or post-closure cost estimate changes, the
owner or operator must compare the new estimate with the trustee's most recent
annual valuation of the trust fund. If the value of the fund is less than the
amount of the new estimate, the owner or operator, within 60 days after the
change in the cost estimate, must either deposit an amount into the fund so
that its value after this deposit at least equals the amount of the current
closure and/or post-closure cost estimate, or obtain other financial assurance
as specified in this subparagraph to cover the difference.
(iv) If the value of the trust fund is
greater that the total amount of the current closure and/or post-closure cost
estimate, the owner or operator may submit a written request for release of the
amount in excess of the current cost estimate.
(v) If an owner or operator substitutes other
financial assurance as specified in this subparagraph for all or part of the
trust fund, he may submit a written request for release of the amount in excess
of the current cost estimate covered by the trust fund.
(vi) Within 60 days after receiving a request
from the owner or operator for release of funds as specified in subparts (iv)
and (v) of this part, the Commissioner will instruct the trustee to release to
the owner or operator such funds as the Commissioner specifies in
writing.
(vii) After beginning
partial or final closure of a facility, an owner or operator may request
reimbursements for partial or final closure expenditures by submitting itemized
bills to the Commissioner. The owner or operator may request reimbursements for
partial closure only if sufficient funds are remaining in the trust fund to
cover the maximum cost of closing the facility over its remaining operating
life. Within 60 days after receiving bills for partial or final closure
activities, the Commissioner will instruct the trustee to make reimbursements
in those amounts as the Commissioner specifies in writing, if the Commissioner
determines that the partial or final closure expenditures are in accordance
with the approved closure plan, or otherwise justified. If the Commissioner has
reason to believe that the maximum cost of closure over the remaining life of
the facility will be significantly greater than the value of the trust fund, he
may withhold reimbursements of such amounts as he deems prudent until he
determines, that the owner or operator is no longer required to maintain
financial assurance for the final closure of the facility. If the Commissioner
does not instruct the trustee to make such reimbursements, he will provide the
owner of operator with a detailed written statement of reasons.
(viii) Within 60 days after receiving bills
for post-closure activities, the Commissioner will instruct the trustee to make
reimbursements in those amounts as the Commissioner specifies in writing, if
the Commissioner determines that the post-closure expenditures are in
accordance with the approved closure plan, or otherwise justified. If the
Commissioner has reason to believe that the maximum cost of post-closure over
the remaining life of the facility will be significantly greater than the value
of the trust fund, he may withhold reimbursements of such amounts as he deems
prudent until he determines, that the owner or operator is no longer required
to maintain financial assurance for post-closure of the facility. If the
Commissioner does not instruct the trustee to make such reimbursements, he will
provide the owner or operator with a detailed written statement of
reason.
(ix) The Commissioner will
agree to termination of the trust when:
(I) An
owner or operator substitutes alternate financial assurance as specified in
this subparagraph.
(II) The
Commissioner releases the owner or operator from the requirements of this
paragraph.
7.
Closure and/or post-closure letter of credit. An owner or operator may satisfy
the requirements of subparagraph (c) of this paragraph by obtaining and filing
an irrevocable standby letter of credit which conforms to the requirements of
this part. 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.
(i) The
wording of the letter of credit must be worded according to the wording
provided by the Department through subparagraph (l) of this
paragraph.
(ii) The letter of
credit must be accompanied by a letter from the owner or operator referring to
the letter of credit by number, issuing institution, and date, and providing
the following information: the permit identification Number, name, and address
of the facility, and the amount of funds assured for closure and/or
post-closure of the facility by the letter of credit.
(iii) The letter of credit must be
irrevocable and issued for a period of at least 1 year. The letter of credit
must provide that the expiration date will be automatically extended each year
for a period of at least 1 year unless, at least 120 days before the current
expiration date, the issuing institution notifies both the owner or operator
and the Commissioner by certified mail of a decision not to extend the
expiration date. Under the terms of the letter of credit, the 120 days will
begin on the date when both the owner or operator and the Commissioner have
received the notice, as evidenced by the return receipts.
(iv) The letter of credit must be issued in
an amount at least equal to the current closure and/or post-closure cost
estimate, except as provided in subparagraph (e) of this paragraph.
(v) Whenever the current closure and/or
post-closure cost estimate increases to an amount greater than the amount of
the letter of credit, the owner or operator, within 60 days after the increase,
must either cause the amount of the letter of credit to be increased so that it
at least equals the current cost estimate and submit evidence of such increase
to the Commissioner, or obtain other financial assurance as specified in this
subparagraph to cover the increase. Whenever the current closure and/or
post-closure cost estimate decreases, the amount of the letter of credit may be
reduced to the amount of the current cost estimate following written approval
by the Commissioner.
(vi) Following
a final administrative determination that the owner or operator has failed to
perform final closure and/or post-closure activities in accordance with the
closure and/or post-closure plan and other permit requirements when required to
do so, the Commissioner may draw on the letter of credit.
(vii) If the owner or operator does not
establish alternate financial assurance as specified in this subparagraph and
obtain written approval of such alternate assurance from the Commissioner
within 90 days after receipt by both the owner or operator and the Commissioner
of a notice from issuing institution that it has decided not extend the letter
of credit beyond the current expiration date, the Commissioner will draw on the
letter of credit. The Commissioner may delay the drawing if the issuing
institution grants an extension of the term of the credit. During the last 30
days of any such extension the Commissioner will draw on the letter of credit
if the owner or operator has failed to provide alternate financial assurance as
specified in this part and obtain written approval of such assurance from the
Commissioner.
(viii) The
Commissioner will return the letter of credit to the issuing institution for
termination when:
(I) An owner or operator
substitutes alternate financial assurance as specified in this subparagraph;
or
(II) The Commissioner releases
the owner or operator from the requirements of this paragraph.
8. Closure and/or
post-closure insurance. An owner or operator may satisfy the requirements of
subparagraph (c) of this paragraph by obtaining insurance which conforms to the
requirements of this part and filing a certificate of such insurance. At a
minimum, the insurer must be licensed to transact the business of insurance, or
eligible to provide insurance as an excess or surplus lines insurer in the
State of Tennessee and have an A. M. Best rating of at least A or A- or have
special approval from the Commissioner.
(i)
The wording of the certificate of insurance must be worded as required at
subparagraph (l) of this paragraph. The wording of the policy itself is subject
to the review and approval of the Commissioner prior to acceptance as a
financial assurance mechanism.
(ii)
The insurance policy must be issued for a face amount at least equal to the
current closure and/or post-closure cost estimate, except as provided in
subparagraph (e) of this subparagraph. 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.
(iii) The insurance policy must guarantee
that funds will be available to close the facility whenever final closure
occurs and to provide post-closure care requirements. The policy must also
guarantee that during the period of final closure and post-closure, the insurer
will be responsible for paying out funds, up to an amount equal to the face
amount of the policy, upon the direction of the Commissioner, to such party or
parties as the Commissioner specifies.
(iv) After beginning partial or final closure
and during post-closure, an owner or operator may request reimbursements for
closure expenditures by submitting itemized bills to the Commissioner. The
owner or operator may request reimbursement for partial closure only if the
remaining value of the policy is sufficient to cover the maximum cost of
closing the facility over its remaining operating life and to cover the cost of
post-closure care requirements. Within 60 days after receiving bills for
closure activities, the Commissioner will instruct the insurer to make
reimbursements in such amounts as the Commissioner specifies in writing, if the
Commissioner determines that the partial or final closure expenditures are in
accordance with the approved closure and/or post-closure plan or otherwise
justified. If the Commissioner has reason to believe that the maximum cost of
closure over the remaining life of the facility and the cost of post-closure
will be significantly greater than the face amount of the policy, he may
withhold reimbursements of such amounts as he deems prudent until he determines
that the owner or operator is no longer required to maintain financial
assurance for final closure and/or post-closure care of the facility. If the
Commissioner does not instruct the insurer to make such reimbursements , he
will provide the owner or operator with a detailed written statement of
reasons.
(v) The owner or operator
must maintain the policy in full force and effect until the Commissioner
consents to termination of the policy by the owner or operator. Failure to pay
the premium, without substitution of alternate financial assurance will
constitute a significant violation of these regulations, warranting such remedy
as the Commissioner deems necessary. Such violation will be deemed to begin
upon receipt by the Commissioner of a notice of future cancellation,
termination, or failure to renew due to nonpayment of the premium, rather than
upon the date of expiration.
(vi)
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 such consent is not unreasonably refused.
(vii) The 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
elect to cancel, terminate, or fail to renew the policy by sending notice by
certified mail to the owner or operator and the Commissioner. Cancellation,
termination, or failure to renew may not occur, however, during the 120 days
beginning with the date of receipt of the notice by both the Commissioner and
the owner or operator, as evidenced by the return receipts. Cancellation,
termination, or failure to renew may not occur and the policy will remain in
full force and effect in the event that on or before the date of expiration:
(I) The Commissioner deems the facility
abandoned; or
(II) The permit is
terminated or revoked or a new permit is denied; or
(III) Closure is ordered by the Commissioner
or a U.S. District court of competent jurisdiction; or
(IV) The owner or operator is named as debtor
in a voluntary or involuntary or involuntary proceeding under Title 11
(Bankruptcy), U.S. Code; or
(V) The
premium due is paid.
(viii) Whenever the current closure and/or
post-closure cost estimate increases to an amount greater than the face amount
of the policy, the owner or operator, within 60 days after the increase, must
either cause the face amount to be increased to an amount at least equal to the
current closure and/or post-closure cost estimate and submit evidence of such
increase to the Commissioner, or obtain other financial assurance as specified
in this subparagraph to cover the increase. Whenever the current closure and/or
post-closure cost estimate decreases, the face amount may be reduced to the
amount of the current cost estimate following written approval by the
Commissioner.
(ix) The Commissioner
will give written consent to the owner or operator that he may terminate the
insurance policy when:
(I) An owner or
operator substitutes alternate financial assurance as specified in this
subparagraph.
(II) The Commissioner
releases the owner or operator from the requirements of this
paragraph.
9.
Other financial Assurance Mechanisms - An operator may satisfy the requirements
of subparagraph (c) by use of financial assurance instruments other than those
specified in parts 1-8 if such mechanisms are as authorized by and in
accordance with criteria required by
40 CFR
258.74 (Solid Waste Disposal Facility
Criteria Final Rules, October 9, 1991, Allowable Mechanism(s) and a variance is
applied for and granted in accordance with procedure specified in Rule
1200-01-07-.01(5).
(e)
Use of Multiple Financial Mechanisms - In meeting the requirements of
subparagraph (c) of this paragraph, an operator may utilize more than one
financial assurance mechanism per facility.
(f) Use of a Financial Mechanism for Multiple
Facilities - An operator may use a financial assurance mechanism allowed in
subparagraph (d) of this paragraph to meet the requirements of subparagraph (c)
of this paragraph for more than one facility he operates in Tennessee. If so,
the mechanism submitted to the Commissioner must include a list showing, for
each facility, the permit number, name, address, and amount of funds for
closure and post-closure care assured by the mechanism. The amount of funds
available through the mechanism must be no less than the sum of funds that
would be available if a separate mechanism had been filed and maintained for
each facility. In a financial assurance forfeiture action taken under
subparagraph (j) of this paragraph for closure and post-closure care of any of
the facilities covered by the mechanism, the Commissioner may order forfeiture
of only the amount of funds designated for that facility, unless the operator
agrees to the use of additional funds available under the mechanism.
(g) Substituting Alternate Financial
Assurance - In meeting the requirements of subparagraph (c) of this paragraph,
an operator may substitute alternate financial assurance meeting the
requirements of this paragraph for the financial assurance already filed with
the Commissioner for the facility. However, the existing financial assurance
shall not be released by the Commissioner until the substitute financial
assurance has been received and approved by him.
(h) Incapacity of Operator or Financial
Institutions
1. An operator must notify the
Commissioner by certified mail of the commencement of a voluntary or
involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming the
operator as debtor, within 10 days after commencement of the
proceeding.
2. In the event of the
bankruptcy of the institution issuing a financial assurance instrument, or a
suspension or revocation of the authority of the institution to issue such
instruments, the operator must establish other financial assurance within 60
days after such an event.
(i) Maintenance/Release of Financial
Assurance - The financial assurance must be maintained until the Commissioner
releases it as specified in this subparagraph, or until the Commissioner orders
forfeiture of the financial assurance as provided in subparagraph (j) of this
paragraph.
1. If the closure/post-closure
care plan is amended and the amendments result in a reduction in the amount of
financial assurance required under that currently filed with the Commissioner,
the Commissioner shall, upon the operator's request, cause to be released to
the operator (or issuing institution, if appropriate) the excess financial
assurance.
2. In his notice to the
operator that closure of the facility or facility parcel is approved (refer to
rule 1200-01-07-.04(8)(c) 9), the Commissioner will also notify the operator
that he is no longer required by this paragraph to maintain financial assurance
for such closure. At such time the Commissioner shall cause to be released to
the operator (or issuing institution, if appropriate) the financial assurance
filed to provide for such closure.
3. During the period of post-closure care,
the Commissioner may reduce the amount of financial assurance required for the
facility if the operator demonstrates to the Commissioner that the amount
currently filed exceeds the remaining cost of post-closure care. Upon such
occurrence, the Commissioner shall cause to be released to the operator the
excess financial assurance on file.
4. When an operator has completed, to the
satisfaction of the Commissioner, all post-closure care requirements in
accordance with the approved closure/post-closure care plan the Commissioner
will, at the request of the operator, notify him in writing that he is no
longer required by this paragraph to maintain financial assurance for such
post-closure care. At such time the Commissioner shall also cause to be
released to the operator (or issuing institution, if appropriate) the financial
assurance filed to provide for such post-closure care.
5. Financial assurance will normally be
released in the form(s) it was submitted. However, where such release involves
an amount equal to only a portion of the funds assured by a financial assurance
mechanism (see subparagraphs (e) and (f) of this paragraph), the Commissioner
shall, as appropriate considering the type of mechanism involved, either cause
to be released to the operator cash or collateral equal to that amount or allow
the owner or operator to substitute for the mechanism(s) on file a new
mechanism(s) reduced by that amount.
(j) Forfeiture of Financial Assurance - The
Commissioner may order that any financial assurance filed by an operator
pursuant to this paragraph be forfeited if the Commissioner determines that the
operator has failed to comply with the act, rules and regulations adopted
pursuant thereto, or orders of the Commissioner, or to perform closure and/or
post-closure care when required to do so, or to perform closure and/or
post-closure care in accordance with the closure/post-closure care plan and
other permit requirements. Any such forfeiture action shall follow the
procedures provided in this subparagraph.
1.
Upon his determination that the operator has failed to comply with the act,
rules and regulations adopted pursuant thereto, or orders of the Commissioner,
or to perform closure and/or post-closure care when required to do so, or to
perform closure and/or post-closure care in accordance with the
closure/post-closure care plan and/or other permit requirements, the
Commissioner shall cause a notice of non compliance to be served upon the
operator. Such notice shall be hand delivered or served by certified mail. The
notice of non compliance shall specify in what respects the operator has failed
to perform as required, and shall establish a schedule of compliance.
2. If the Commissioner determines that the
operator has failed to perform as specified in the notice of non compliance, or
as specified in any subsequent compliance agreement which may have been reached
by the operator and the Commissioner, the Commissioner may order forfeiture of
the financial assurance filed to guarantee such performance and may revoke the
facility's permits.
3. Upon
issuance, a copy of the order shall be hand delivered or forwarded by certified
mail to the operator. Any such order issued by the Commissioner shall become
final 30 days after receipt by the operator unless it is appealed to the Board
as provided in section 68-211-113 of the act.
4. If necessary, upon the effective date of
the order of forfeiture, the Commissioner shall give notice to the State
Attorney General who shall collect the forfeiture.
5. All forfeited funds shall be deposited in
a special departmental account known as the "solid waste disposal site
restoration fund" for use by the Commissioner as set forth in T.C.A.
§68-211-116.
(k)
Effect on Transfer of Permits - No permit may be transferred until the proposed
new operator has filed, in accordance with the requirements of this paragraph,
the required financial assurance. When such is done, the Commissioner shall
cause to be released to the former operator (or the issuing institution, if
appropriate) the financial assurance that operator had filed.
(l) Wording of the Instruments
1. The financial mechanisms and supporting
documents guaranteeing proper operation and performance of closure and/or post
closure care, as specified in subparagraph (d) of this paragraph, must utilize
the wording required by the Department.
2. Copies of approved financial mechanisms
and supporting documents may be obtained by contacting the financial assurance
office of the Division of Solid Waste Management. Approved financial mechanisms
include at least the following:
(i) Surety
Bond
(ii) Personal Bond Supported
By Securities
(iii) Personal Bond
Supported By Cash
(iv) Financial
Test and Corporate Guarantee
(v)
Municipality and/or County Contract of Obligation
(vi) Closure/Post-Closure Trust
Fund
(vii) Closure/Post-Closures
Letter of Credit
(viii)
Closure/Post-Closure Insurance
(ix)
Combined Hazardous and Solid Waste Financial Test
(I) Letter From Chief Financial Officer
(Closure and/or Post-Closure)
(II)
Letter From Chief Financial Officer (Liability Coverage or Liability Coverage
and Closure/Post-Closure)
(III)
Corporate Guarantee for Closure or Post-Closure Care
Notes
Authority: T.C.A. §§ 4-5-201, et seq., 68-203-103(b)(3), 68-211-102(a), 68-211-105(b), 68-211-105(c), 68-211-106(a)(1), 68-211-107(a), 68-211-111(d)(1), 68-211-111(d)(2), 68-211-116, 68-211-851(a), 68-211-852, 68-211-853, and 68-211-861.
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