La. Admin. Code tit. 33 § V-4411

Current through Register Vol. 50, No. 6, June 20, 2024

Section V-4411 - Liability Requirements

A. Coverage for Sudden Accidental Occurrences. An owner or operator of a hazardous waste treatment, storage, or disposal facility, or a group of such facilities, must demonstrate financial responsibility for bodily injury and property damage to third parties caused by sudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator must have and maintain liability coverage for sudden accidental occurrences in the amount of at least $1 million per occurrence with an annual aggregate of at least $2 million, exclusive of legal defense costs. This liability coverage may be demonstrated as specified in LAC 33:V.4411.A.1-6.

1. An owner or operator may demonstrate the required liability coverage by having liability insurance as specified in this Paragraph.

a. Each insurance policy must be amended by attachment of the hazardous waste facility liability endorsement or evidenced by a certificate of liability insurance. The wording of the endorsement must be identical to the wording specified in LAC 33:V.3719.I. The wording of the certificate of insurance must be identical to the wording specified in LAC 33:V.3719.J. The owner or operator must submit a signed duplicate original of the endorsement or the certificate of insurance to the Office of Environmental Services . If requested by the administrative authority, the owner or operator must provide a signed duplicate original of the insurance policy.

b. Each insurance policy must be issued by an insurer which, at a minimum, is authorized to transact business in Louisiana and in one or more states and is licensed to transact the business of insurance or is eligible to provide insurance as an excess or surplus lines insurer, in one or more states, and authorized to transact business in Louisiana.

2. An owner or operator may meet the requirements of this Section by passing a financial test or using the guarantee for liability coverage as specified in LAC 33:V.4411.F-G.

3. An owner or operator may meet the requirements of this Section by obtaining a letter of credit for liability coverage as specified in LAC 33:V.4411.H.

4. An owner or operator may meet the requirements of this Section by obtaining a surety bond for liability coverage as specified in LAC 33:V.4411.I.

5. An owner or operator may meet the requirements of this Section by obtaining a trust fund for liability coverage as specified in LAC 33:V.4411.J.

6. An owner or operator may demonstrate the required liability coverage through the use of combinations of financial test, insurance, guarantee, letter of credit, surety bond, and trust fund, except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amounts required by this Section. If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under this Paragraph, the owner or operator shall specify at least one such assurance as "primary" coverage and shall specify other assurance as "excess" coverage.

7. An owner or operator shall notify the Office of Environmental Services in writing within 30 days whenever:

a. a claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in LAC 33:V.4411.A.1-6; or

b. a Certification of Valid Claim for bodily injury or property damages caused by a sudden or non-sudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is entered between the owner or operator and third-party claimant for liability coverage under LAC 33:V.4411.A.1-6; or

c. a final court order establishing a judgment for bodily injury or property damage caused by a sudden or non-sudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under LAC 33:V.4411.A.1-6.

B. Coverage for Non-Sudden Accidental Occurrences. An owner or operator of a surface impoundment, landfill, or land treatment facility which is used to manage hazardous waste, or a group of such facilities, must demonstrate financial responsibility for bodily injury and property damage to third parties caused by non-sudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator must have and maintain liability coverage for non-sudden accidental occurrences in the amount of at least $3 million per occurrence with an annual aggregate of at least $6 million, exclusive of legal defense costs. An owner or operator who must meet the requirements of this Section may combine the required per-occurrence coverage levels for sudden and non-sudden accidental occurrences into a single per-occurrence level, and combine the required annual aggregate coverage levels for sudden and non-sudden accidental occurrences into a single annual aggregate level. Owners or operators who combine coverage levels for sudden and non-sudden accidental occurrences must maintain liability coverage in the amount of at least $4 million per occurrence and $8 million annual aggregate. This liability coverage may be demonstrated as specified in LAC 33:V.4411.B.1-6.

1. An owner or operator may demonstrate the required liability coverage by having liability insurance as specified in this Paragraph.

b. Each insurance policy must be issued by an insurer which, at a minimum, is licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer in one or more states, and authorized to transact business in Louisiana.

2. An owner or operator may meet the requirements of LAC 33:V.4411.B by passing a financial test or using the corporate guarantee for liability coverage as specified in LAC 33:V.4411.F and G.

3. An owner or operator may meet the requirements of this Section by obtaining a letter of credit for liability coverage as specified in LAC 33:V.4411.H.

4. An owner or operator may meet the requirements of this Section by obtaining a surety bond for liability coverage as specified in LAC 33:4411.I.

5. An owner or operator may meet the requirements of this Section by obtaining a trust fund for liability coverage as specified in LAC 33:V.4411.J.

6. An owner or operator may demonstrate the required liability coverage through use of combinations of the financial test, insurance, guarantee, letter of credit, surety bond, and trust fund, except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amounts required by this Section. If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under this Paragraph, the owner or operator shall specify at least one such assurance as "primary" coverage and shall specify other assurance as "excess" coverage.

7. An owner or operator shall notify the Office of Environmental Services in writing within 30 days whenever:

a. a claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in LAC 33:V.4411.B.1-6; or

C. Request for Variance. If an owner or operator can demonstrate to the satisfaction of the administrative authority that the levels of financial responsibility required by LAC 33:V.4411.A or B are not consistent with the degree and duration of risk associated with treatment, storage, or disposal at the facility or group of facilities, the owner or operator may obtain a variance from the administrative authority. The request for a variance must be submitted in writing to the administrative authority. If granted, the variance will take the form of an adjusted level of required liability coverage, such level to be based on the administrative authority's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. The administrative authority may require an owner or operator who requests a variance to provide such technical and engineering information as is deemed necessary by the administrative authority to determine a level of financial responsibility other than that required by LAC 33:V.4411.A or B. The administrative authority will process a variance request as if it were a permit modification request. Notwithstanding any other provision, the administrative authority may hold a public hearing at his discretion or whenever he finds, on the basis of requests for a public hearing, a significant degree of public interest in a tentative decision to grant a variance.

D. Adjustments by the Administrative Authority. If the administrative authority determines that the levels of financial responsibility required by LAC 33:V.4411.A or B are not consistent with the degree and duration of risk associated with treatment, storage, or disposal at the facility or group of facilities, the administrative authority may adjust the level of financial responsibility required by LAC 33:V.4411.A or B as may be necessary to protect human health and the environment. This adjusted level will be based on the administrative authority's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. In addition, if the administrative authority determines that there is a significant risk to human health and the environment from nonsudden accidental occurrences resulting from the operations of a facility that is not a surface impoundment, landfill, or land treatment facility, he may require that an owner or operator of the facility comply with LAC 33:V.4411.B. An owner or operator must furnish to the administrative authority, within a reasonable time, any information which the administrative authority requests to determine whether cause exists for such adjustments of level or type of coverage. The administrative authority will process an adjustment of the level of required coverage as if it were a permit modification. Notwithstanding any other provision, the administrative authority may hold a public hearing at his discretion or whenever he finds, on the basis of requests for a public hearing, a significant degree of public interest in a tentative decision to adjust the level or type of required coverage.

E. Period of Coverage. Within 60 days after receiving certifications from the owner or operator and an independent, qualified professional engineer that final closure has been completed in accordance with the approved closure plan, the administrative authority will notify the owner or operator in writing that he is no longer required by this Section to maintain liability coverage for that facility, unless the administrative authority has reason to believe that closure has not been in accordance with the approved closure plan.

F. Financial Test for Liability Coverage

1. An owner or operator may satisfy the requirements of this Section by demonstrating that he passes a financial test as specified in LAC 33:V.4411.F. To pass this test the owner or operator must meet the criteria of LAC 33:V.4411.F.1.a or b.

a. The owner or operator must have:

i. net working capital and tangible net worth at least six times the amount of liability coverage to be demonstrated by this test; and

ii. tangible net worth of at least $10 million; and

iii. assets located in the United States amounting to either at least 90 percent of his total assets or at least six times the amount of liability coverage to be demonstrated by this test.

b. 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 of at least $10 million; and

iii. tangible net worth at least six times the amount of liability coverage to be demonstrated by this test ; and

iv. assets located in the United States amounting to either at least 90 percent of his total assets or at least six times the amount of liability coverage to be demonstrated by this test.

2. The phrase amount of liability coverage as used in LAC 33:V.4411.F.1 refers to the annual aggregate amounts for which coverage is required under LAC 33:V.4411.A and B.

3. To demonstrate that he meets this test, the owner or operator must submit the following three items to the Office of Environmental Services .

a. A letter signed by the owner's or operator's chief financial officer and worded as specified in LAC 33:V.3719.G. If an owner or operator is using the financial test to demonstrate both assurance for closure or post-closure care, as specified by LAC 33:V.3707.F, 3711.F, 4403.E, and 4407.E, and liability coverage, he must submit the letter specified in LAC 33:V.3719.G to cover both forms of financial responsibility; a separate letter as specified in LAC 33:V.3719.F is not required.

b. 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.

c. 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 that procedure, no matters came to his attention which caused him to believe that the specified data should be adjusted.

4. The owner or operator may obtain a one-time extension of the time allowed for submission of the documents specified in Paragraph F.3 of this Section if the fiscal year of the owner or operator ends during the 90 days prior to the effective date of these regulations and if the year-end financial statements for that fiscal year will be audited by an independent certified public accountant. The extension will end no later than 90 days after the end of the owner's or operator's fiscal year. To obtain the extension, the chief financial officer for the owner or operator must send a letter to the Office of Environmental Services . This letter from the chief financial officer must:

a. request the extension;

b. certify that he has grounds to believe that the owner or operator meets the criteria of the financial test;

c. specify for each facility to be covered by the test the EPA identification number, name, address, the amount of liability coverage and, when applicable, current closure and post-closure cost estimates to be covered by the test;

d. specify the date ending the owner's or operator's last complete fiscal year before the effective date of these regulations;

e. specify the date, no later than 90 days after the end of such fiscal year, when he will submit the documents specified in LAC 33:V.4411.F.3; and

f. certify that the year-end financial statement of the owner or operator for such fiscal year will be audited by an independent certified public accountant.

5. After the initial submission of items specified in Paragraph F.3 of this Section, the owner or operator must send updated information to the Office of Environmental Services within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in Paragraph F.3 of this Section.

6. If the owner or operator no longer meets the requirements of Paragraph F.1 of this Section, he must obtain insurance, a letter of credit, a surety bond, a trust fund, or a guarantee for the entire amount of required liability coverage as specified in this Section. Evidence of liability coverage must be submitted to the Office of Environmental Services 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 test requirements.

7. The administrative authority 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 (see LAC 33:V.4411.F.3). An adverse opinion or a disclaimer of opinion will be cause for disallowance. The administrative authority will evaluate other qualifications on an individual basis. The owner or operator must provide evidence of insurance for the entire amount of required liability coverage as specified in LAC 33:V.4411 within 30 days after notification of disallowance.

G. Guarantee for Liability Coverage

1. Subject to LAC 33:V.4411.G.2, an owner or operator may meet the requirements of this Section 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 owners or operators in LAC 33:V.4411.F.1-6. The wording of the guarantee must be identical to the wording specified in LAC 33:V.3719.H.2. A certified copy of the guarantee must accompany the items sent to the administrative authority as specified in LAC 33:V.4411.F.3. 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, this 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.

a. 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 non-sudden accidental occurrences or both, arising from the operation of facilities covered by this corporate guarantee or fails to pay an amount agreed upon in settlement of claims arising from or alleged to arise from such injury or damage, the guarantor will do so up to the limits of coverage.

b. Reserved.

2. In the case of corporations incorporated in the United States, a guarantee may be used to satisfy the requirements of this Section only if the attorney general or insurance commissioner of the state in which the guarantor is incorporated and the attorney general or insurance commissioner of Louisiana have submitted written statements to the department that a guarantee executed as described in this Section and LAC 33:V.3719.H.2 is a legally valid and enforceable obligation in that state.

3. In the case of corporations incorporated outside the United States, a guarantee may be used to satisfy the requirements of this Section only if the non-U.S. corporation has identified a registered agent for service of process in Louisiana and in the state in which it has its principal place of business, and if the attorney general or insurance commissioner of Louisiana and the state in which the guarantor corporation has its principal place of business have submitted written statements to the department that a guarantee executed as described in this Section and LAC 33:V.3719.H.2 is a legally valid and enforceable obligation in that state.

H. Letter of Credit for Liability Coverage

1. An owner or operator may satisfy the requirements of this Section by obtaining an irrevocable standby letter of credit that conforms to the requirements of this Subsection and submitting a copy of the letter of credit to the Office of Environmental Services.

2. The financial institution issuing the letter of credit must be an entity that has the authority to issue letters of credit and whose letter of credit operations are regulated and examined by a federal or state agency.

3. The wording of the letter of credit must be identical to the wording specified in LAC 33:V.3719.K.

4. An owner or operator who uses a letter of credit to satisfy the requirements of this Section may also establish a standby trust fund. Under the terms of such a letter of credit, all amounts paid pursuant to a draft by the trustee of the standby trust will be deposited by the issuing institution into the standby trust in accordance with instructions from the trustee. The trustee of the standby trust fund must be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.

5. The wording of the standby trust fund must be identical to the wording specified in LAC 33:V.3719.N.

I. Surety Bond for Liability Coverage

1. An owner or operator may satisfy the requirements of this Section by obtaining a surety bond that conforms to the requirements of this Subsection and submitting a copy of the bond to the Office of Environmental Services.

2. The surety company issuing the bond must be among those listed as acceptable sureties on federal bonds in the most recent Circular 570 of the U.S. Department of the Treasury.

3. The wording of the surety bond must be identical to the wording specified in LAC 33:V.3719.L.

4. A surety bond may be used to satisfy the requirements of this Section only if the attorney general or insurance commissioners of the state in which the surety is incorporated and the attorney general or insurance commissioner of Louisiana have submitted written statements to the department that a surety bond executed as described in this Section and LAC 33:V.3719.L is a legally valid and enforceable obligation in that state.

J. Trust Fund for Liability Coverage

1. An owner or operator may satisfy the requirements of this Section by establishing a trust fund that conforms to the requirements of this Subsection and submitting an originally signed duplicate of the trust agreement to the Office of Environmental Services.

2. 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.

3. The trust fund for liability coverage must be funded for the full amount of the liability coverage to be provided by the trust fund before it may be relied upon to satisfy the requirements of this Section. If at any time after the trust fund is created the amount of funds in the trust fund is reduced below the full amount of the liability coverage to be provided, the owner or operator, by the anniversary date of the establishment of the fund, must either add sufficient funds to the trust fund to cause its value to equal the full amount of liability coverage to be provided, or obtain other financial assurance as specified in this Section to cover the difference. For purposes of this Paragraph, the full amount of the liability coverage to be provided means the amount of coverage for sudden and/or non-sudden occurrences required to be provided by the owner or operator by this Section, less the amount of financial assurance for liability coverage that is being provided by other financial assurance mechanisms being used to demonstrate financial assurance by the owner or operator.

4. The wording of the trust fund must be identical to the wording specified in LAC 33:V.3719.M.

K. Notwithstanding any other provision of LAC 33:V.Chapter 43, an owner or operator using liability insurance to satisfy the requirements of this Section may use, until October 16, 1982, a Hazardous Waste Facility Liability Endorsement or Certificate of Liability Insurance that does not certify that the insurer is licensed to transact the business of insurance, or eligible as an excess or surplus lines insurer, in one or more states.

La. Admin. Code tit. 33, § V-4411

Promulgated by the Department of Environmental Quality, Office of Solid and Hazardous Waste, Hazardous Waste Division, LR 10:200 (March 1984), amended LR 13:433 (August 1987), LR 16:399 (May 1990), LR 18:723 (July 1992), repromulgated LR 19:627 (May 1993), amended by the Office of Waste Services, Hazardous Waste Division, LR 23:1521 (November 1997), amended by the Office of Environmental Assessment, Environmental Planning Division, LR 26:2506 (November 2000), amended by the Office of the Secretary, Legal Affairs Division, LR 31:2481 (October 2005), LR 33:2133 (October 2007), LR 34:1004 (June 2008).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:2180 et seq.