N.Y. Comp. Codes R. & Regs. Tit. 6 §§ 373-3.8

Current through Register Vol. 46, No. 45, November 2, 2024

Section 373-3.8 - Financial requirements

(a)Applicability.

(1) The requirements of subdivisions (c), (d), (h) and (i) of this section and section 373-2.8(j) of this Part apply to owners and operators of all hazardous waste facilities, except as provided otherwise in this section or in section 373-3.1 of this Subpart.

(2) The requirements of subdivisions (e) and (f) of this section apply only to owners and operators of:

(i) disposal facilities;

(ii) tank systems that are required under section 373-3.10(h) of this Subpart to meet the requirements for landfills; and

(iii) containment buildings that are required under section 373-3.30(c) of this Subpart to meet the requirements for landfills.

(3) States and the Federal government are exempt from the requirements of this section.

(4) The department may replace all or part of the requirements of this section applying to a regulated unit with alternative requirements for financial assurance set out in the permit or in an enforceable document (as defined in section 373-1.2[e][3] of this Part), where the department:

(i) prescribes alternative requirements for the regulated unit under sections 373-3.6 and/or 373-3.7(a)(4) of this Subpart; and

(ii) determines that it is not necessary to apply the requirements of this section because the alternative financial assurance requirements will protect human health and the environment.

(b)Definitions of terms as used in this section.

(1)Closure plan means the plan for closure prepared in accordance with the requirements of section 373-3.7(c) of this Subpart.

(2)Current closure cost estimate means the most recent of the estimates prepared in accordance with paragraphs (c)(1), (2) and (3) of this section.

(3)Current post-closure cost estimate means the most recent of the estimates prepared in accordance with paragraphs (e)(1), (2) and (3) of this section.

(4)Parent corporation means a corporation which directly owns at least 50 percent of the voting stock of the corporation which is the facility owner or operator; the latter corporation is deemed a subsidiary of the parent corporation.

(5)Post-closure plan means the plan for post-closure care prepared in accordance with the requirements of section 373-3.7(g)-(j) of this Subpart.

(6)Revenue-oriented, or revenue-oriented hazardous waste management facility, means any facility (as defined in section 27-0917[7] of the ECL or 6 NYCRR 370.2[b]) for which a majority of both its operating revenues and profits after tax at that facility for the prior three years and for the current and next year have been and are expected to be attributable to the transportation, storing, handling, disposal, treatment or management of solid and hazardous wastes or related activities or to the ownership of or leasehold or other interest in any persons, facilities or other assets engaged in or used for such activities. In making such calculations under this provision, all sources of operating revenues and profits (both before and after tax) shall be included. The commissioner may request any person to show to the satisfaction of the commissioner, that the facility is not a revenue-oriented hazardous waste management facility by this definition. The commissioner may require a person to present its statements of account, independently audited by a certified public accountant, and other records to make this showing.

(7) The following terms are used in the specifications for the financial tests for closure, post-closure care and liability coverage. The definitions are intended to assist in the understanding of these regulations and are not intended to limit the meanings of terms in a way that conflicts with generally accepted accounting practices.

(i)Assets means all existing and all probable future economic benefits obtained or controlled by a particular entity.

(ii)Current assets means cash or other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.

(iii)Current liabilities means obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets or the creation of other current liabilities.

(iv)Current plugging and abandonment cost estimate means the most recent of the estimates prepared in accordance with 40 CFR 144.62 (see section 370.1[e] of this Title).

(v)Independently audited refers to an audit performed by an independent certified public accountant in accordance with generally accepted auditing standards.

(vi)Liabilities means probable future sacrifices of economic benefits arising from present obligations to transfer assets or provide services to other entities in the future as a result of past transactions or events.

(vii)Net working capital means current assets minus current liabilities.

(viii)Net worth means total assets minus total liabilities and is equivalent to owner's equity.

(ix)Tangible net worth means the tangible assets that remain after deducting liabilities; such assets would not include intangibles such as good will and rights to patents or royalties.

(8) In the liability insurance requirements the terms bodily injury and property damage shall have the meanings given these terms by applicable State law. However, these terms do not include those liabilities which, consistent with standard industry practices, are excluded from coverage in liability policies for bodily injury and property damage. The department intends the meanings of other terms used in the liability insurance requirements to be consistent with their common meanings within the insurance industry. The definitions given below of several of the terms are intended to assist in the understanding of these regulations and are not intended to limit their meanings in a way that conflicts with general insurance industry usage.

(i)Accidental occurrence means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

(ii)Legal defense costs means any expenses that an insurer incurs in defending against claims of third parties brought under the terms and conditions of an insurance policy.

(iii)Nonsudden accidental occurrence means an occurrence which takes place over time and involves continuous or repeated exposure.

(iv)Sudden accidental occurrence means an occurrence which is not continuous or repeated in nature.

(9)Substantial business relationship means the extent of a business relationship necessary under applicable State law to make a guarantee contract issued incident to that relationship valid and enforceable. A substantial business relationship must arise from a pattern of recent or ongoing business transactions, in addition to the guarantee itself, such that a currently existing business relationship between the guarantor and the owner or operator is demonstrated to the satisfaction of the commissioner.

(c)Cost estimates for facility closure.

(1) The owner or operator must have a detailed written estimate, in current dollars, of the cost of closing the facility in accordance with the requirements in section 373-3.7(b)-(f) and applicable closure requirements in sections 373-3.9(i), 373-3.10(e), 373-3.11(f), 373-3.12(g), 373-3.13(g), 373-3.14(d), 373-3.15(e), 373-3.16(e), 373-3.17(e) and 373-3.30(c) of this Subpart.

(i) The estimate must equal the cost of final closure at the point in the facility's active life when the extent and manner of its operation would make closure the most expensive, as indicated by its closure plan (see section 373-3.7[c] [2] of this Subpart).

(ii) The closure cost estimate must be based on the costs to the owner or operator of hiring a third party to close the facility. A third party is a party who is neither a parent nor a subsidiary of the owner or operator. (See definition of parent corporation in subdivision [b] of this section.) The owner or operator may use costs for onsite disposal if the owner or operator can demonstrate that onsite disposal capacity will exist at all times over the life of the facility.

(iii) The closure cost estimate may not incorporate any salvage value that may be realized with the sale of hazardous wastes, or nonhazardous wastes if applicable under section 373-3.7(d)(4) of this Subpart, facility structures or equipment, land or other assets associated with the facility at the time of partial or final closure.

(iv) The owner or operator may not incorporate a zero cost for hazardous wastes, or nonhazardous wastes if applicable under section 373-3.7(d)(4) of this Subpart, that might have economic value.

(2) During the active life of the facility, the owner or operator must adjust the closure cost estimate for inflation within 60 days prior to the anniversary date of the establishment of the financial instruments used to comply with subdivision (d) of this section. For owners and operators using the financial test or guarantee, the closure cost estimate must be updated for inflation within 30 days after the close of the firm's fiscal year and before submission of updated information to the commissioner as specified in section 373-3.8(d)(5)(iii) of this Subpart. The adjustment may be made by recalculating the maximum costs of 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, as specified in subparagraphs (i) and (ii) of this paragraph. 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 cost estimate by the inflation factor. The result is the adjusted closure cost estimate.

(ii) Subsequent adjustments are made by multiplying the latest adjusted closure cost estimate by the latest inflation factor.

(3) During the active life of the facility, the owner or operator must revise the closure cost estimate no later than 30 days after a revision has been made to the closure plan which increases the cost of closure. If the owner or operator has an approved closure plan, the closure cost estimate must be revised no later than 30 days after the commissioner has approved the request to modify the closure plan, if the change in the closure plan increases the cost of closure. The revised closure cost estimate must be adjusted for inflation as specified in paragraph (2) of this subdivision.

(4) The owner or operator must keep the following at the facility during the operating life of the facility: the latest closure cost estimate prepared in accordance with paragraphs (1) and (3) of this subdivision and, when this estimate has been adjusted in accordance with paragraph (2) of this subdivision, the latest adjusted closure cost estimate.

(d)Financial assurance for facility closure.

An owner or operator of each facility must establish financial assurance for closure of the facility. The owner or operator must choose from the options as specified in paragraphs (1) through (5) of this subdivision. An owner or operator may also use a combination of the options specified in paragraphs (1) through (5) to provide the total amount of financial assurance for the closure of the facility.

(1) Closure trust fund.

(i) An owner or operator may satisfy the requirements of this subdivision by establishing a closure trust fund which conforms to the requirements of this paragraph and submitting an originally signed duplicate of the trust agreement to the commissioner. 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.

(ii) The wording of the trust agreement must be identical to the wording specified in section 373-2.8(j)(1) of this Part, and the trust agreement must be accompanied by a formal certification of acknowledgment (for example, see section 373-2.8[j][1]). Schedule A of the trust agreement must be updated within 60 days after a change in the amount of the current closure cost estimate covered by the agreement.

(iii) Payments into the trust fund must be made annually by the owner or operator over the first five years of operation or over the remaining operating life of the facility as estimated in the closure plan, whichever period is shorter; this period is hereinafter referred to as the "pay-in period." The payments into the closure trust fund must be made as follows:

(a) For a new or revenue-oriented facility, the first payment must be equal to the total closure cost estimate, or an alternative mechanism must be provided which, when combined with the trust fund, provides financial assurance for an amount at least equal to the current closure cost estimate. For a revenue-oriented facility, the first payment is due 90 days after the date that these regulations are promulgated. For a new facility, this payment will be made before the initial receipt of hazardous waste for treatment, storage or disposal.

(b) For an existing facility which is not revenue-oriented, the first payment must be at least equal to the current closure cost estimate, except as provided in paragraph (2) of this subdivision, divided by the number of years in the pay-in period.

(c) 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:

Next payment =CE-CV/Y

Where CE is the current closure cost estimate, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period.

(iv) The owner or operator may accelerate payments into the trust fund or may deposit the full amount of the current closure cost estimate at the time the fund is established. However, the owner or operator 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 subparagraph (iii) of this paragraph.

(v) If the owner or operator established a closure trust fund after having used one or more alternate mechanisms specified in this subdivision, the 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 as specified in subparagraph (iii) of this paragraph.

(vi) After the pay-in period is completed or whenever the current 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 cost estimate, or obtain other financial assurance as specified in this subdivision to cover the difference.

(vii) If the value of the trust fund is greater than the total amount of the current closure cost estimate, the owner or operator may submit a written request to the commissioner for release of the amount in excess of the current closure cost estimate.

(viii) If an owner or operator substitutes other financial assurance as specified in this subdivision for all or part of the trust fund, the owner or operator may submit a written request to the commissioner for release of the amount in excess of the current closure cost estimate covered by the trust fund.

(ix) Within 60 days after receiving a request from the owner or operator for release of funds as specified in subparagraph (vii) or (viii) of this paragraph, the commissioner will instruct the trustee to release to the owner or operator such funds as the commissioner specifies in writing.

(x) After beginning partial or final closure, an owner or operator or another person authorized to conduct partial or final closure 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 costs 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, the commissioner may withhold reimbursements of such amounts as he or she deems prudent until the commisioner determines, in accordance with paragraph (8) of this subdivision, that the owner or operator is no longer required to maintain financial assurance for final closure of the facility. If the commissioner does not instruct the trustee to make such reimbursements, the commissioner will provide the owner or operator with a detailed written statement of reasons.

(xi) The commissioner will agree to termination of the trust when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this subdivision in accordance with paragraph (8) of this subdivision.

(2) Surety bond.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining a surety bond which conforms to the requirements of this paragraph and submitting the bond to the commissioner. The surety company issuing the bond must, at a minimum, be among those listed as acceptable sureties on Federal bonds in Circular 570 of the U.S. Department of the Treasury.

(ii) The wording of the surety bond must be identical to the wording specified in section 373-2.8(j)(2) of this Part.

(iii) The owner or operator who uses a surety bond to satisfy the requirements of this subdivision must also establish a standby trust fund. Under the terms of the bond, all payments made thereunder will be deposited by the surety directly into the standby trust fund in accordance with instructions from the commissioner. The standby trust fund must meet the requirements specified in paragraph (1) of this subdivision, except that:

(a) an originally signed duplicate of the trust agreement must be submitted to the commissioner with the surety bond; and

(b) until the standby trust fund is funded pursuant to the requirements of this subdivision, the following are not required by these regulations:

(1) payments into the trust fund as specified in paragraph (1) of this subdivision;

(2) updating of Schedule A of the trust agreement (see section 373-2.8[j][1] of this Part) to show current closure cost estimates;

(3) annual valuations as required by the trust agreement; and

(4) notices of nonpayment as required by the trust agreement.

(iv) The bond must guarantee that the owner or operator will:

(a) fund the standby trust fund in an amount equal to the penal sum of the bond before the beginning of final closure of the facility; or

(b) fund the standby trust fund in an amount equal to the penal sum within 15 days after an order to begin final closure is issued by the commissioner or a United States district court or other court of competent jurisdiction; or

(c) provide alternate financial assurance as specified in this subdivision, and obtain the commissioner's written approval of the assurance provided, within 90 days after receipt by both the owner or operator and the commissioner of a notice of cancellation of the bond from the surety.

(v) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.

(vi) The penal sum of the bond must be in an amount at least equal to the current closure cost estimate, except as provided in paragraph (6) of this subdivision.

(vii) Whenever the current closure cost estimate increases to an amount greater than the penal sum, the owner or operator, within 60 days after the increase, must either cause the penal sum to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current closure cost estimate decreases, the penal sum may be reduced to the amount of the current closure cost estimate following written approval by the commissioner.

(viii) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail, return receipt requested 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.

(ix) The owner or operator may cancel the bond if the commissioner has given prior written consent based on the receipt of evidence of alternate financial assurance as specified in this subdivision.

(3) Closure letter of credit.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining an irrevocable letter of credit which conforms to the requirements of this paragraph and submitting the letter to the commissioner. 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.

(ii) The wording of the letter of credit must be identical to the wording specified in section 373-2.8(j)(3) of this Part.

(iii) An owner or operator who uses a letter of credit to satisfy the requirements of this subdivision must also establish a standby trust fund. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the commissioner will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the commissioner. This standby trust fund must meet the requirements of the trust fund specified in paragraph (1) of this subdivision, except that:

(a) an originally signed duplicate of the trust agreement must be submitted to the commissioner with the letter of credit; and

(b) unless the standby trust fund is funded pursuant to the requirements of this subdivision, the following are not required by these regulations:

(1) payments into the trust fund as specified in paragraph (1) of this subdivision;

(2) updating of Schedule A of the trust agreement (see section 373-2.8[j][1] of this Part) to show current closure cost estimates;

(3) annual valuations as required by the trust agreement; and

(4) notices of nonpayment as required by the trust agreement.

(iv) 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 EPA identification number, name and address of the facility, and the amount of funds assured for closure of the facility by the letter of credit.

(v) The letter of credit must be irrevocable and issued for a period of at least one year. The letter of credit must provide that the expiration date will be automatically extended for a period of at least one 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, return receipt requested, 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.

(vi) The letter of credit must be issued in an amount at least equal to the current closure cost estimate, except as provided in paragraph (6) of this subdivision.

(vii) Whenever the current closure cost estimate increases to an amount greater than the amount of the credit, the owner or operator, within 60 days after the increase, must either cause the amount of the credit to be increased so that it at least equals the current closure cost estimate, and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current closure cost estimate decreases, the amount of the credit may be reduced to the amount of the current closure cost estimate following written approval by the commissioner.

(viii) Following a determination, pursuant to section 373-3.7 of this Subpart, that the owner or operator has failed to perform final closure in accordance with the closure plan and other interim status requirements when required to do so, the commissioner may draw on the letter of credit.

(ix) If the owner or operator does not establish alternate financial assurance, as specified in this subdivision, 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 the issuing institution that it has decided not to 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 subdivision and obtain written approval of such assurance from the commissioner.

(x) The commissioner will return the letter of credit to the issuing institution for termination when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this section in accordance with paragraph (8) of this subdivision.

(4) Closure insurance.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining closure insurance which conforms to the requirements of this paragraph and submitting a certificate of such insurance to the department. The owner or operator must submit to the department a letter from an insurer stating that the insurer is considering issuance of closure insurance conforming to the requirements of this paragraph to the owner or operator. Within 90 days after the effective date of these regulations, the owner or operator must submit the certificate of insurance to the department or establish other financial assurance as specified in this section. At a minimum, the insurer must be authorized by the Superintendent of the New York State Department of Financial Services to conduct the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in New York State.

(ii) The wording of the certificate of insurance must be identical to the wording specified in section 373-2.8(j)(4) of this Part.

(iii) The closure insurance policy must be issued for a limit of liability at least equal to the current closure cost estimate, except as provided in paragraph (6) of this subdivision. The term limits of liability means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the limits of liability, although the insurer's future liability will be lowered by the amount of the payments.

(iv) The closure insurance policy must guarantee that funds will be available to close the facility whenever final closure occurs. The policy must also guarantee that once final closure begins, the insurer will be responsible for paying out funds, up to an amount equal to the limits of liability of the policy, upon the direction of the commissioner, to such party or parties as the commissioner specifies.

(v) After beginning partial or final closure, an owner or operator or any other person authorized to conduct closure may request reimbursements for closure expenditures by submitting itemized bills to the commissioner. The owner or operator may request reimbursements for partial closure only if the remaining value of the policy is sufficient to cover the maximum costs of closing the facility over its remaining operating life. 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 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 face amount of the policy, the commissioner may withhold reimbursements of such amounts as he or she deems prudent until the commissioner determines, in accordance with paragraph (8) of this subdivision, that the owner or operator is no longer required to maintain financial assurance for final closure of the particular facility. If the commissioner does not instruct the insurer to make such reimbursements, the commissioner will provide the owner or operator with a detailed written statement of reasons.

(vi) 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 as specified in subparagraph (x) of this paragraph. Failure to pay the premium, without substitution of alternate financial assurance as specified in this subdivision, 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.

(vii) 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.

(viii) 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 limits of liability 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, return receipt requested, 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:

(a) the commissioner deems the facility abandoned; or

(b) interim status is terminated or revoked; or

(c) closure is ordered by the commissioner or a United States district court or other court of competent jurisdiction; or

(d) the owner or operator is named as debtor in a voluntary or involuntary proceeding under 11 USCA (Bankruptcy); or

(e) the premium due is paid.

(ix) Whenever the current closure cost estimate increases to an amount greater than the limits of liability of the policy, the owner or operator, within 60 days after the increase, must either cause the limits of liability face amount to be increased to an amount at least equal to the current closure cost estimate and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current closure cost estimate decreases, the limits of liability may be reduced to the amount of the current closure cost estimate following written approval by the commissioner.

(x) The commissioner will give written consent to the owner or operator that the insurance policy may be terminated when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this section in accordance with paragraph (8) of this subdivision.

(5) Financial test and guarantee for closure.

(i) An owner or operator of a facility which is not a revenue-oriented facility may satisfy the requirements of this section by demonstrating that the owner or operator passes a financial test as specified in this paragraph. No revenue-oriented facilities will be allowed to use this financial assurance mechanism. To pass this test, the owner or operator must meet the criteria of either clause (a) or (b) of this subparagraph.

(a) The owner or operator must have:

(1) two of the following three ratios: a ratio of total liabilities to net worth less than 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;

(2) net working capital and tangible net worth each at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment cost estimates;

(3) tangible net worth of at least $10 million; and

(4) assets in the United States amounting to at least 90 percent of the 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.

(b) The owner or operator must have:

(1) a current rating for their 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;

(2) tangible net worth at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment costs;

(3) tangible net worth of at least $10 million; and

(4) assets located in the United States amounting to at least 90 percent of the total assets or at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment costs.

(ii) The phrases "current closure and post-closure cost estimates" and "current plugging and abandonment cost estimates," as used in subparagraph (i) of this paragraph, refer to the cost estimates required to be shown in paragraphs 1-3 of the letter from the owner's or operator's chief financial officer.

(iii) To demonstrate that he or she meets this test, the owner or operator must submit the following items to the commissioner:

(a) a letter signed by the owner's or operator's chief financial officer and worded as specified in section 373-2.8(j)(5) of this Part;

(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; and

(c) a special report from the owner's or operator's independent certified public accountant to the owner or operator stating that:

(1) the accountant 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

(2) in connection with that procedure, no matters came to the accountant's attention which caused the accountant to believe that the specified data should be adjusted.

(iv) After the initial submission of items specified in subparagraph (iii) of this paragraph, 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 subparagraph (iii) of this paragraph.

(v) If the owner or operator no longer meets the requirements of subparagraph (i) of this paragraph, the owner or operator must send notice to the commissioner of intent to establish alternate financial assurance as specified in this subdivision. The notice must be sent by certified mail, return receipt requested, 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.

(vi) The commissioner may, based on a reasonable belief that the owner or operator may no longer meet the requirements of subparagraph (i) of this paragraph, require reports of financial condition at any time from the owner or operator in addition to those specified in subparagraph (iii) of this paragraph. If the commissioner finds, on the basis of such report or other information, that the owner or operator no longer meets the requirements of subparagraph (i) of this paragraph, the owner or operator must provide alternate financial assurance as specified in this subdivision within 30 days after notification of such a finding.

(vii) 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 or her report on examination of the owner's or operator's financial statements (see clause [iii][b] of this paragraph). 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 subdivision within 30 days after notification of the disallowance.

(viii) The owner or operator is no longer required to submit the items specified in subparagraph (iii) of this paragraph when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this section in accordance with paragraph (8) of this subdivision.

(ix) An owner or operator of a facility which is not a revenue-oriented facility may meet the requirements of this subdivision by obtaining a written guarantee, hereinafter referred to as "guarantee." If the firm which is providing the guarantee does not meet the definition of "revenue-oriented" in section 373-2.8 or 373-3.8 of this Part, it may provide the guarantee on behalf of the owner or operator even if the owner or operator is a "revenue-oriented" facility. For a revenue-oriented facility, the financial statement of the owner or operator cannot be consolidated with the financial statement of the guarantor. 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 subparagraphs (i) through (vii) of this paragraph and must comply with the terms of the guarantee. The wording of the guarantee must be identical to the wording specified in section 373-2.8(j)(6) of this Part. A certified copy of the guarantee must accompany the items sent to the commissioner as specified in subparagraph (iii) of this paragraph. 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:

(a) If the owner or operator fails to perform final closure of a facility covered by the guarantee in accordance with the closure plan and other interim status requirements whenever required to do so, the guarantor will do so or make payment as the commissioner shall direct, in writing.

(b) The guarantee will remain in force unless the guarantor sends notice of cancellation, by certified mail, return receipt requested, 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.

(c) If the owner or operator fails to provide alternate financial assurance as specified in this subdivision 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 guarantee from the guarantor, the guarantor will provide such alternate financial assurance in the name of the owner or operator.

(6) Use of multiple financial mechanisms. An owner or operator may satisfy the requirements of this subdivision by establishing more than one financial mechanism per facility. These mechanisms are limited to trust funds, surety bonds, letters of credit, and insurance. The mechanisms must be as specified in paragraphs (1) through (4), respectively, of this subdivision, except that it is the combination of mechanisms, rather than the single mechanisms, which must provide financial assurance for an amount at least equal to the current closure cost estimate. If an owner or operator uses a trust fund in combination with a surety bond or a letter of credit, the trust fund may be used as the standby trust fund for the other two mechanisms. A single standby trust fund, if required, may be established for two or more mechanisms. The commissioner may use any or all of the mechanisms to provide for closure of the facility.

(7) Use of a financial mechanism for multiple facilities. An owner or operator may use a financial assurance mechanism specified in this subdivision to meet the requirements of this subdivision for more than one facility. Evidence of financial assurance submitted to the commissioner must include a list showing, for each facility, the EPA identification number, name, address, and the amount of funds for closure 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 established and maintained for each facility. In directing funds available through the mechanism for closure of any of the facilities covered by the mechanism, the commissioner may direct only the amount of funds designated for that facility, unless the owner or operator agrees to the use of additional funds available under the mechanism.

(8) Release of the owner or operator from the requirements of this subdivision. Within 60 days after receiving certifications from the owner or operator and an independent professional engineer registered in New York that final closure has been completed in accordance with the approved closure plan, the commissioner will notify the owner or operator, in writing, that the owner or operator is no longer required by this subdivision to maintain financial assurance for final closure of the facility, unless the commissioner has reason to believe that final closure has not been in accordance with the approved closure plan. The commissioner shall provide the owner or operator a detailed written statement of the reason to believe that closure has not been in accordance with the approved closure plan.

(e)Cost estimate for post-closure care.

(1) The owner or operator of a hazardous waste disposal unit must have a detailed written estimate, in current dollars, of the annual cost of post- closure monitoring and maintenance of the facility in accordance with the applicable post- closure regulations in subdivisions (g) through (j) of this section and sections 373-3.11(e), 373-3.12(g), 373-3.13(g) and 373-3.14(d) of this Subpart.

(i) The post-closure cost estimate must be based on the costs to the owner or operator of hiring a third party to conduct post-closure care activities. A third party is a party who is neither a parent nor a subsidiary of the owner or operator. (See definition of parent corporation in subdivision [b] of this section.)

(ii) The post-closure cost estimate is calculated by multiplying the annual post-closure cost estimate by the number of years of post-closure care required under section 373-2.7(g) of this Part.

(2) During the active life of the facility, the owner or operator must adjust the post-closure cost estimate for inflation within 60 days prior to the anniversary date of the establishment of the financial instruments used to comply with subdivision (f) of this section. For owners and operators using the financial test or guarantee, the post-closure care cost estimate must be updated for inflation within 30 days after the close of the firm's fiscal year and before submission of updated information to the commissioner as specified in section 373-3.8(f)(5)(v) of this Subpart. The adjustment may be made by recalculating the post-closure cost estimate 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, as specified in subparagraphs (i) and (ii) of this paragraph. 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 closure cost estimate.

(ii) Subsequent adjustments are made by multiplying the latest adjusted post-closure cost estimate by the latest inflation factor.

(3) During the active life of the facility, the owner or operator must revise the post-closure cost estimate no later than 30 days after a revision to the post-closure plan which increases the cost of post-closure care. If the owner or operator has an approved post-closure plan, the post- closure cost estimate must be revised no later than 30 days after the commissioner has approved the request to modify the plan, if the change in the post-closure plan increases the cost of post- closure care. The revised post-closure cost estimate must be adjusted for inflation as specified in paragraph (2) of this subdivision.

(4) The owner or operator must keep the following at the facility during the operating life of the facility: the latest post-closure cost estimate prepared in accordance with paragraphs (1) and (3) of this subdivision and, when this estimate has been adjusted in accordance with paragraph (2) of this subdivision, the latest adjusted post-closure cost estimate.

(f)Financial assurance for post-closure care.

An owner or operator of a facility with a hazardous waste disposal unit must establish financial assurance for post-closure care of the disposal units.

(1) Post-closure trust fund.

(i) An owner or operator may satisfy the requirements of this subdivision by establishing a post-closure trust fund which conforms to the requirements of this paragraph and submitting an originally signed duplicate of the trust agreement to the commissioner. The trustee must be an entity which has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency.

(a) For a new or revenue-oriented facility, the first payment must be equal to the total post-closure cost estimate, or an alternative mechanism must be provided, which when combined with the trust fund, provides financial assurance for an amount at least equal to the current post-closure cost estimate. For a revenue oriented facility the first payment is due 90 days after the date these regulations are promulgated. For all other facilities, the first payment must be at least equal to the current post-closure cost estimate, except as provided in paragraph (6) of this subdivision, divided by the number of years in the pay-in period.

(b) 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:

Next payment =CE-CV/Y

where CE is the current post-closure cost estimate, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period.

(iv) The owner or operator may accelerate payments into the trust fund or may deposit the full amount of the current post-closure cost estimate at the time the fund is established. However, the owner or operator 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 subparagraph (iii) of this paragraph.

(v) If the owner or operator establishes a post-closure trust fund after having used one or more alternate mechanisms specified in this subdivision, the 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 as specified in subparagraph (iii) of this paragraph.

(vi) After the pay-in period is completed, whenever the current post-closure cost estimate changes during the operating life of the facility, 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 post-closure cost estimate, or obtain other financial assurance as specified in this subdivision to cover the difference.

(vii) During the operating life of the facility, if the value of the trust fund is greater than the total amount of the current post-closure cost estimate, the owner or operator may submit a written request to the commissioner for release of the amount in excess of the current post-closure cost estimate.

(x) During the period of post-closure care, the commissioner may approve a release of funds if the owner or operator demonstrates to the commissioner that the value of the trust fund exceeds the remaining cost of post-closure care.

(xi) An owner or operator or any other person authorized to conduct post-closure care may request reimbursements for post-closure expenditures by submitting itemized bills to the commissioner. Within 60 days after receiving bills for post-closure care 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 post-closure plan, or otherwise justified. If the commissioner does not instruct the trustee to make such reimbursements, the commissioner will provide the owner or operator with a detailed written statement of reasons.

(xii) The commissioner will agree to termination of the trust when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this subdivision in accordance with this paragraph.

(2) Surety bond.

(ii) The wording of the surety bond must be identical to the wording specified in section 373-2.8(j)(2) of this Part.

(iii) The owner or operator who uses a surety bond to satisfy the requirements of this subdivision must also establish a standby trust fund. Under the terms of the bond, all payments made thereunder will be deposited by the surety into the standby trust fund in accordance with instructions from the commissioner. This standby trust fund must meet the requirements specified in paragraph (1) of this subdivision, except that:

(a) an originally signed duplicate of the trust agreement must be submitted to the commissioner with the surety bond; and

(b) until the standby trust fund is funded pursuant to the requirements of this subdivision, the following are not required by these regulations:

(1) payments into the trust fund as specified in paragraph (1) of this subdivision;

(2) updating of Schedule A of the trust agreement (see section 373-2.8[j][1] of this Part) to show current post-closure cost estimates;

(3) annual valuations as required by the trust agreement; and

(4) notices of nonpayment as required by the trust agreement.

(iv) The bond must guarantee that the owner or operator will:

(a) fund the standby trust fund in an amount equal to the penal sum of the bond before the beginning of final closure of the facility;

(v) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.

(vi) The penal sum of the bond must be in an amount at least equal to the current post-closure cost estimate, except as provided in paragraph (6) of this subdivision.

(vii) Whenever the current post-closure cost estimate increases to an amount greater than the penal sum, the owner or operator, within 60 days after the increase, must either cause the penal sum to be increased to an amount at least equal to the current post-closure cost estimate and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current post-closure cost estimate decreases, the penal sum may be reduced to the amount of the current post-closure cost estimate, following written approval by the commissioner.

(viii) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation, by certified mail, return receipt requested, 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.

(3) Post-closure letter of credit.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining an irrevocable standby letter of credit which conforms to the requirements of this paragraph and submitting the letter to the commissioner. 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.

(ii) The wording of the letter of credit must be identical to the wording specified in section 373-2.8(j)(3) of this Part.

(a) an originally signed duplicate of the trust agreement must be submitted to the commissioner with the letter of credit; and

(b) unless the standby trust fund is funded pursuant to the requirements of this subdivision, the following are not required by these regulations:

(1) payments into the trust fund as specified in paragraph (1) of this subdivision;

(2) updating of Schedule A of the trust agreement (see section 373-2.8[j][1] of this Part), to show current post-closure cost estimates;

(3) annual valuations as required by the trust agreement; and

(4) notices of nonpayment as required by the trust agreement.

(iv) 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 EPA identification number, name and address of the facility, and the amount of funds assured for post-closure care of the facility by letter of credit.

(vi) The letter of credit must be issued in an amount at least equal to the current post- closure cost estimate, except as provided in paragraph (6) of this subdivision.

(vii) Whenever the current post-closure cost estimate increases to an amount greater than the amount of the credit during the operating life of the facility, the owner or operator, within 60 days after the increase, must either cause the amount of the credit to be increased so that it at least equals the current post-closure cost estimate and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current post-closure cost estimate decreases during the operating life of the facility, the amount of the credit may be reduced to the amount of the current post-closure cost estimate following written approval by the commissioner.

(viii) During the period of post-closure care, the commissioner may approve a decrease in the amount of the letter of credit if the owner or operator demonstrates to the commissioner that the amount exceeds the remaining cost of post-closure care.

(ix) Following a determination, pursuant to section 373-3.7 of this Subpart, that the owner or operator has failed to perform post-closure care in accordance with the post-closure plan and other permit requirements, the commissioner may draw on the letter of credit.

(x) If the owner or operator does not establish alternate financial assurance as specified in this subdivision 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 the issuing institution that it has decided not to extend the letter of credit beyond the current expiration date, the commissioner will draw on the letter of credit. The commissioner may delay the drawings 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 subdivision and obtain written approval of such assurance from the commissioner.

(xi) The commissioner will return the letter of credit to the issuing institution for termination when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this subdivision in accordance with paragraph (8).

(4) Post-closure insurance.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining post-closure insurance which conforms to the requirements of this paragraph and submitting a certificate of such insurance to the commissioner. At a minimum, the insurer must be authorized by the superintendent of the New York State Insurance Department to conduct the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in New York State.

(ii) The wording of the certificate of insurance must be identical to the wording specified in section 373-2.8(j)(4) of this Part.

(iii) The post-closure insurance policy must be issued for a limit of liability at least equal to the current post-closure cost estimate, except as provided in paragraph (d)(6) of this section. The term limits of liability means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the limits of liability, although the insurer's future liability will be lowered by the amount of the payments.

(iv) The post-closure insurance policy must guarantee that funds will be available to provide post-closure care of the facility whenever the post-closure period begins. The policy must also guarantee that once post-closure care begins, the insurer will be responsible for paying out funds, up to an amount equal to the limits of liability of the policy, upon the direction of the commissioner, to such party or parties as the commissioner specifies.

(v) An owner or operator or any other person authorized to perform post-closure care may request reimbursements for post-closure expenditures by submitting itemized bills to the commissioner. Within 60 days after receiving bills for post-closure care activities, the commissioner will instruct the insurer 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 post-closure plan, or otherwise justified. If the commissioner does not instruct the insurer to make such reimbursements, the commissioner will provide the owner or operator with a detailed written statement of reasons.

(vi)

(a) 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 as specified in subparagraph (xi) of this paragraph.

(b) Failure to pay the premium, without substitution of alternate financial assurance as specified in this subdivision, 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.

(viii) 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 limits of liability 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, return receipt requested, 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:

(a) the commissioner deems the facility abandoned;

(b) interim status is terminated or revoked;

(c) closure is ordered by the commissioner or a United States district court or other court of competent jurisdiction;

(d) the owner or operator is named as debtor in a voluntary or involuntary proceeding under 11 USCA (Bankruptcy); or

(e) the premium due is paid.

(ix) Whenever the current post-closure cost estimate increases to an amount greater than the limits of liability of the policy during the operating life of the facility, the owner or operator, within 60 days after the increase, must either cause the limits of liability to be increased to an amount at least equal to the current post-closure cost estimate and submit evidence of such increase to the commissioner, or obtain other financial assurance as specified in this subdivision to cover the increase. Whenever the current post-closure cost estimate decreases during the operating life of the facility, the limits of liability may be reduced to the amount of the current post-closure cost estimate following written approval by the commissioner.

(x) Commencing on the date that liability to make payments pursuant to the policy accrues, the insurer will thereafter annually increase the limits of liability of the policy. Such increase must be equivalent to the limits of liability of the policy, less any payments made, multiplied by an amount equivalent to 85 percent of the most recent investment rate or of the equivalent coupon-issue yield announced by the United States Treasury for 26-week Treasury securities.

(xi) The commissioner will give written consent to the owner or operator that the insurance policy may be terminated when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this subdivision in accordance with paragraph (8).

(5) Financial test and guarantee for post-closure care.

(i) An owner or operator of a facility which is not a revenue-oriented facility may satisfy the requirements of this subdivision by demonstrating that the owner or operator passes a financial test as specified in this paragraph. No revenue-oriented facilities will be allowed to use this financial assurance mechanism. To pass this test, the owner or operator must meet the criteria of either clause (a) or (b) of this subparagraph:

(a) The owner or operator must have:

(2) net working capital and tangible net worth each at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment cost estimates;

(3) tangible net worth of at least $10 million; and

(4) assets 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.

(b) The owner or operator must have:

(1) a current rating for their 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;

(2) 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;

(3) tangible net worth of at least $10 million; and

(iii) To demonstrate that he or she meets this test, the owner or operator must submit the following items to the commissioner:

(a) a letter signed by the owner's or operator's chief financial officer and worded as specified in section 373-2.8(j)(5) of this Part;

(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; and

(c) a special report from the owner's or operator's independent certified public accountant to the owner or operator, stating that:

(2) in connection with that procedure, no matters came to the acountant's attention which caused the accountant to believe that the specified data should be adjusted.

(vi) The commissioner may, based on a reasonable belief that the owner or operator may no longer meet the requirements of subparagraph (i) of this paragraph, require reports of financial condition at any time from the owner or operator in addition to those specified in subparagraph (iii) of this paragraph. If the commissioner finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of subparagraph (i) of this paragraph, the owner or operator must provide alternate financial assurance as specified in this subdivision within 30 days after notification of such a finding.

(vii) 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 or her report on examination of the owner's or operator's financial statements (see clause [iii][ b] of this paragraph). 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 subdivision within 30 days after notification of the disallowance.

(viii) During the period of post-closure care, the commissioner may approve a decrease in the current post-closure cost estimate for which this test demonstrates financial assurance if the owner or operator demonstrates to the commissioner that the amount of the cost estimate exceeds the remaining cost of post-closure care.

(ix) The owner or operator is no longer required to submit the items specified in subparagraph (iii) of this paragraph when:

(a) an owner or operator substitutes alternate financial assurance as specified in this subdivision; or

(b) the commissioner releases the owner or operator from the requirements of this subdivision in accordance with paragraph (8) of this subdivision.

(x) An owner or operator of a facility which is not a revenue-oriented facility may meet the requirements of this subdivision by obtaining a written guarantee, hereinafter referred to as "guarantee." If the firm which is providing the guarantee does not meet the definition of revenue-oriented in section 373-2.8 or 373-3.8 of this Part, it may provide the guarantee on behalf of the owner or operator even if the owner or operator is a revenue-oriented facility. For a revenue-oriented facility, the financial statement of the owner or operator cannot be consolidated with the financial statement of the guarantor. The guarantor must be the director 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 subparagraphs (i) through (viii) of this paragraph and must comply with the terms of the guarantee. The wording of the guarantee must be identical to the wording specified in section 373-2.8(j)(6) of this Part. A certified copy of the guarantee must accompany the items sent to the commissioner as specified in subparagraph (iii) of this paragraph. 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:

(a) If the owner or operator fails to perform post-closure care of a facility covered by the guarantee in accordance with the post-closure plan and other interim status permit requirements whenever required to do so, the guarantor will do so, or make payment as the commissioner shall direct, in writing.

(b) The guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail, return receipt requested, 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.

(c) If the owner or operator fails to provide alternate financial assurance as specified in this subdivision 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 guarantee from the guarantor, the guarantor will provide such alternate financial assurance in the name of the owner or operator.

(6) Use of multiple financial mechanisms.

An owner or operator may satisfy the requirements of this subdivision by establishing more than one financial mechanism per facility. These mechanisms are limited to trust funds, surety bonds, letters of credit, and insurance. The mechanisms must be as specified in paragraphs (1), (2), (3) and (4), respectively, of this subdivision, except that it is the combination of mechanisms, rather than the single mechanism, which must provide financial assurance for an amount at least equal to the current post-closure cost estimate. If an owner or operator uses a trust fund in combination with a surety bond or a letter of credit, the trust fund may be used as the standby trust fund for the other mechanisms. A single standby trust fund, if required, may be established for two or more mechanisms. The commissioner may use any or all of the mechanisms to provide for post-closure care of the facility.

(7) Use of a financial mechanism for multiple facilities.

An owner or operator may use a financial assurance mechanism specified in this subdivision to meet the requirements of this subdivision for more than one facility. Evidence of financial assurance submitted to the commissioner must include a list showing, for each facility, the EPA identification number, name, address, and the amount of funds for 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 established and maintained for each facility. In directing funds available through the mechanism for post-closure care of any of the facilities covered by the mechanism, the commissioner may direct only the amount of funds designated for that facility, unless the owner or operator agrees to the use of additional funds available under the mechanism.

(8) Release of the owner or operator from the requirements of this subdivision. Within 60 days after receiving certifications from the owner or operator and an independent registered professional engineer that the post-closure care period has been completed in accordance with the approved post-closure plan, the commissioner will notify the owner or operator in writing that the owner or operator is no longer required by this subdivision to maintain financial assurance for post-closure care of that unit, unless the commissioner has reason to believe that post-closure care has not been in accordance with the approved post-closure plan. The commissioner will provide the owner or operator with a detailed written statement of any reason to believe that post-closure care has not been in accordance with the approved post-closure plan.

Note:

The notice releases the owner or operator only from the requirements for financial assurance for post-closure care of the facility; it does not release the owner or operator from legal responsibility for meeting the post-closure standards.

(g)Use of a mechanism for financial assurance of both closure and post-closure care.

An owner or operator may satisfy the requirements for financial assurance for both closure and post- closure care for one or more facilities by using a trust fund, surety bond, letter of credit, insurance, financial test or guarantee that meets the specifications for the mechanism in both subdivisions (d) and (f) of this section. 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 established and maintained for financial assurance of closure and post-closure care.

(h)Liability requirements.

(1) 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 subparagraph (i), (ii) (iii), (iv), (v) or (vi) of this paragraph.

(i) 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 section 373-2.8(j)(7) of this Part. The wording of the certificate of insurance must be identical to the wording specified in paragraph (j)(8) of such section. The owner or operator must submit a signed duplicate original of the endorsement or the certificate of insurance to the commissioner. If requested by the commissioner, 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 licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, within New York State by the Superintendent of the New York State Department of Financial Services.

(ii) An owner or operator of a facility which is not a revenue-oriented facility may meet the requirements of this paragraph by passing a financial test or using the guarantee for liability coverage as specified in paragraphs (6) and (7) of this subdivision. If the firm which is providing the guarantee does not meet the definition of revenue-oriented in section 373-2.8 or 373-3.8 of this Part, it may provide the guarantee on behalf of the owner or operator even if the owner or operator is a revenue-oriented facility. For a revenue-oriented facility, the financial statement of the owner or operator cannot be consolidated with the financial statement of the guarantor.

(iii) An owner or operator may meet the requirements of this paragraph by obtaining a letter of credit for liability coverage as specified in paragraph (8) of this subdivision.

(iv) An owner or operator may meet the requirements of this paragraph by obtaining a surety bond for liability coverage as specified in paragraph (9) of this subdivision.

(v) An owner or operator may meet the requirements of this paragraph by obtaining a trust fund for liability coverage as specified in paragraph (10) of this subdivision.

(vi) An owner or operator may demonstrate the required liability coverage through the use of combinations of insurance, financial test, 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 paragraph. 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 assurances as excess coverage. An owner or operator of a revenue-oriented facility may use all of the above- mentioned financial mechanisms except the financial test and/or guarantee.

(vii) An owner or operator shall notify the commissioner 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 subparagraphs (i) through (vi) of this paragraph; or

(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 and third-party claimant for liability coverage under subparagraphs (i) through (vi) of this paragraph; or

(c) a final court order establishing 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 an instrument that is providing financial assurance for liability coverage under subparagraphs (i) through (vi) of this paragraph.

(2) Coverage for nonsudden 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 nonsudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator must have and maintain liability coverage for nonsudden accidental occurrences in the amount of at least $4.5 million per occurrence, with an annual aggregate of at least $9 million, exclusive of legal defense costs, for each separate facility in New York State. An owner or operator who must meet the requirements of this paragraph may combine the required per-occurrence coverage levels for sudden and nonsudden accidental occurrences into a single per-occurrence level, and combine the required annual aggregate coverage levels for sudden and nonsudden accidental occurrences into a single annual aggregate level. Owners or operators who combine coverage levels for sudden and nonsudden accidental occurrences must maintain liability coverage in the amount of at least $5.5 million per occurrence and $11 million annual aggregate. This liability coverage may be demonstrated as specified in subparagraph (i), (ii), (iii), (iv), (v) or (vi) of this paragraph.

(i) 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 authorized to provide insurance as an excess or surplus lines insurer, within New York State by the Superintendent of the New York State Insurance Department.

(iii) An owner or operator may meet the requirements of this paragraph by obtaining a letter of credit for liability coverage as specified in paragraph (8) of this subdivision.

(iv) An owner or operator may meet the requirements of this paragraph by obtaining a surety bond for liability coverage as specified in paragraph (9) of this subdivision.

(v) An owner or operator may meet the requirements of this paragraph by obtaining a trust fund for liability coverage as specified in paragraph (10) of this subdivision.

(vii) An owner or operator shall notify the commissioner in writing within 30 days whenever:

(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 third-party claimant for liability coverage under subparagraphs (i) through (vi) of this paragraph; or

(c) a final court order establishing a judgement 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 an instrument that is providing financial assurance for liability coverage under subparagraphs (i) through (vi) of this paragraph.

(3) Request for variance. If an owner or operator can demonstrate, to the satisfaction of the commissioner, that the levels of financial responsibility required by paragraph (1) or (2) of this subdivision 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 commissioner. The request for a variance must be submitted in writing to the commissioner. If granted, the variance will take the form of an adjusted level of required liability coverage, such level to be based on the commissioner' s assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. The commissioner may require an owner or operator who requests a variance to provide such technical and engineering information as is deemed necessary by the commissioner to determine a level of financial responsibility other than that required by paragraph (1) or (2) of this subdivision. The commissioner will process a variance request as if it were a permit modification request under section 373-1.7 of this Part, and subject to the procedures of Part 621 of this Title. Notwithstanding any other provision, the commissioner may hold a public hearing at his or her discretion or whenever the commissioner finds, on the basis of requests for a public hearing, a significant degree of public interest in a tentative decision to grant a variance.

(4) Adjustments by the commissioner. If the commissioner determines that the levels of financial responsibility required by paragraph (1) or (2) of this subdivision are not consistent with the degree and duration of risk associated with treatment, storage or disposal at the facility or group of facilities, the commissioner may adjust the level of financial responsibility required under paragraph (1) or (2) of this subdivision as may be necessary to protect human health and the environment. This adjusted level will be based on the commissioner' 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 commissioner 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, the commissioner may require that an owner or operator of the facility comply with paragraph (2) of this subdivision. An owner or operator must furnish to the commissioner, within a reasonable time, any information which the commissioner requests to determine whether cause exists for such adjustments of level or type of coverage. The commissioner will process an adjustment of the level of required coverage as if it were a permit modification under section 373-1.7 of this Part, and subject to the procedures of Part 621 of this Title. Notwithstanding any other provision, the commissioner may hold a public hearing at his or her discretion or whenever the commissioner 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.

(5) Period of coverage.

Within 60 days after receiving certifications from the owner or operator and an independent professional engineer registered in New York that final closure has been completed in accordance with the approved closure plan, the commissioner will notify the owner or operator in writing that the owner or operator is no longer required by this subdivision to maintain liability coverage for that facility, unless the commissioner has reason to believe that closure has not been in accordance with the approved closure plan.

(6) Financial test for liability coverage.

An owner or operator of a facility which is not a revenue-oriented facility may satisfy the requirements of this subdivision by demonstrating that the owner or operator passes a financial test as specified in this paragraph. To pass this test, the owner or operator must meet the criteria of subparagraph (i) or (ii) of this paragraph:

(i) The owner or operator must have:

(a) net working capital and tangible net worth each at least six times the amount of liability coverage to be demonstrated by this test;

(b) tangible net worth of at least $10 million; and

(c) assets in the United States amounting to either:

(1) at least 90 percent of the total assets; or

(2) at least six times the amount of liability coverage to be demonstrated by this test.

(ii) The owner or operator must have:

(a) a current rating for their 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;

(b) tangible net worth of at least $10 million;

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

(d) assets in the United States amounting to either:

(1) at least 90 percent of the total assets; or

(2) at least six times the amount of liability coverage to be demonstrated by this test.

(iii) The phrase amount of liability coverage, as used in subparagraphs (i) and (ii) of this paragraph, refers to the annual aggregate amounts for which coverage is required under paragraphs (1) and (2) of this subdivision.

(iv) To demonstrate that he or she meets this test, the owner or operator must submit the following three items to the commissioner:

(a) a letter signed by the owner's or operator's chief financial officer and worded as specified in section 373-2.8(j)(9) of this Part. If an owner or operator is using the financial test to demonstrate both assurance for closure or post-closure care, as specified by sections 373-2.8(d)(5) and (f)(5), paragraphs (d)(5) and (f)(5) of this section, and liability coverage, the letter specified in section 373-2.8(j)(9) must be submitted to cover both forms of financial responsibility; a separate letter as specified in section 373-2.8(j)(5) 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; and

(c) a special report from the owner's or operator's independent certified public accountant to the owner or operator, stating that:

(1) the accountant 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

(2) in connection with that procedure, no matters came to the accountant's attention which caused the acountant to believe that the specified data should be adjusted.

(v) After the initial submission of items specified in subparagraph (iii) of this paragraph, 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 subparagraph (iii) of this paragraph.

(vi) If the owner or operator no longer meets the requirements of subparagraph (i) or (ii) of this paragraph, the owner or operator 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 subdivision. Evidence of liability coverage must be submitted to the commissioner 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.

(vii) 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 or her report on examination of the owner's or operator's financial statements (see clause [iv][b] of this paragraph). 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 evidence of insurance for the entire amount of required liability coverage as specified in this subdivision within 30 days after notification of disallowance.

(7) Guarantee for liability coverage.

(i) An owner or operator may meet the requirements of this subdivision by obtaining a written guarantee, hereinafter referred to as "guarantee." If the firm which is providing the guarantee does not meet the definition of revenue- oriented in section 373-2.8 or 373-3.8 of this Part, it may provide the guarantee on behalf of the owner or operator even if the owner or operator is a revenue-oriented facility. However, the financial statement of the owner or operator cannot be consolidated with the financial statement of the guarantor. 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 paragraph (6) of this subdivision. The wording of the guarantee must be identical to the wording specified in section 373-2.8(j)(6)(ii) of this Part. A certified copy of the guarantee must accompany the items sent to the commissioner as specified in subparagraph (6)(iv) of this subdivision. 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 the substantial business relationship and the value received in consideration of the guarantee. The terms of the guarantee must provide that:

(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 nonsudden accidental occurrences (or both, as the case may be), arising from the operation of facilities covered by this guarantee, or fails to pay an amount agreed to 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; and

(b) the guarantee will remain in force unless the guarantor sends notice of cancellation by "certified mail, return receipt requested" to the owner or operator and to the commissioner. This guarantee may not be terminated unless and until the commissioner approves alternate liability coverage complying with this subdivision.

(8) Letter of credit for liability coverage.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining an irrevocable standby letter of credit that conforms to the requirements of this paragraph and submitting a copy of the letter of credit to the commissioner.

(ii) The financial institution issuing the letter or 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.

(iii) The wording of the letter of credit must be identical to the wording specified in section 373-2.8(j)(10) of this part.

(iv) An owner or operator who uses a letter of credit to satisfy the requirements of this subdivision 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 which has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency.

(v) The wording of the standby trust fund must be identical to the wording specified in section 373-2.8(j)(13) of this part.

(9) Surety bond for liability coverage.

(i) An owner or operator may satisfy the requirements of this subdivision by obtaining a surety bond that conforms to the requirements of this paragraph and submitting a copy of the bond to the commissioner.

(ii) 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.

(iii) The wording of the surety bond must be identical to the wording specified in section 373-2.8(j)(11) of this Part.

(10) Trust fund for liability coverage.

(i) An owner or operator may satisfy the requirements of this subdivision by establishing a trust fund that conforms to the requirements of this paragraph and submitting an originally signed duplicate of the trust agreement to the commissioner.

(ii) 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.

(iii) 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 subdivision. 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 subdivision 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 nonsudden occurrences required to be provided by the owner or operator by this subdivision, 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.

(iv) The wording of the trust fund must be identical to the wording specified in section 373-2.8(j)(12) of this Part.

(i)Incapacity of owners or operators, guarantors or financial institutions.

(1) An owner or operator must notify the commissioner, by certified mail, return receipt requested, of the commencement of a voluntary or involuntary proceeding under 11 USCA (Bankruptcy), naming the owner or operator as debtor, within 10 days after commencement of the proceeding. A guarantor of a guarantee as specified in paragraphs (d)(5) and (f)(5) of this section must make such a notification if the guarantor is named as debtor, as required under the terms of the guarantee (see section 373-2.8[j][6] of this Part).

(2) An owner or operator who fulfills the requirements of subdivision (d), (f) or (h) of this section by obtaining a trust fund, surety bond, letter of credit or insurance policy will be deemed to be without the required financial assurance or liability coverage in the event of bankruptcy of the trustee or issuing institution, or a suspension or revocation of the authority of the trustee institution to act as trustee or of the institution issuing the surety bond, letter of credit or insurance policy to issue such instruments. The owner or operator must establish other financial assurance or liability coverage within 60 days after such an event.

N.Y. Comp. Codes R. & Regs. Tit. 6 §§ 373-3.8

Amended New York State Register March 4, 2020/Volume XLII, Issue 09, eff. 4/18/2020