Section R. 299.9710 - Liability requirements for treatment, storage, and disposal facilitiesRule 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.Mich. Admin. Code R. 299.9710
1985 AACS; 1988 AACS; 1991 AACS; 1994 AACS; 2000 AACS;