Section 33-24-05-1067 - Liability requirements1. Coverage for sudden accidental occurrences. An owner or operator of a hazardous waste treatment or storage 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 one million dollars per occurrence with an annual aggregate of at least two million dollars, exclusive of legal defense costs. This liability coverage may be demonstrated as specified in subdivisions a through g: a. Trust fund for liability coverage. An owner or operator may meet the requirements of this section by obtaining a trust fund for liability coverage as specified in subsection 10 of section 33-24-05-79.b. Surety bond for liability coverage. An owner or operator may meet the requirements of this section by obtaining a surety bond for liability coverage as specified in subsection 9 of section 33-24-05-79.c. Letter of credit for liability coverage. An owner or operator may meet the requirements of this section by obtaining a letter of credit for liability coverage as specified in subsection 8 of section 33-24-05-79.d. Insurance for liability coverage. An owner or operator may meet the requirements of this section by obtaining liability insurance as specified in subdivision a of subsection 1 of section 33-24-05-79.e. Financial test for liability coverage. An owner or operator may meet the requirements of this section by passing a financial test as specified in subsection 6.f. Guarantee for liability coverage. An owner or operator may meet the requirements of this section by obtaining a guarantee as specified in subsection 7.g. Combination of mechanisms. An owner or operator may demonstrate the required liability coverage through the use of combinations of mechanisms as allowed by subdivision f of subsection 1 of section 33-24-05-79.h. An owner or operator shall notify the department in writing within thirty days whenever: (1) A claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in subdivisions a through g;(2) A certification of valid claim for bodily injury or property damages caused by a sudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is entered between the owner or operator and third-party claimant for liability coverage under subdivisions a through g; or(3) A final court order establishing a judgment for bodily injury or property damage caused by a sudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under subdivisions a through g.5. Period of coverage. Within sixty days after receiving certifications from the owner or operator and a qualified professional engineer that final closure has been completed in accordance with the approved closure plan, the department will notify the owner or operator in writing that the owner or operator is no longer required by this section to maintain liability coverage from that facility, unless the department 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 that satisfies the requirements of this subsection may demonstrate financial assurance for liability up to the amount specified in this subsection:a. Financial component. (1) If using the financial test for only liability coverage, the owner or operator must have tangible net worth greater than the sum of the liability coverage to be demonstrated by this test plus ten million dollars.(2) The owner or operator must have assets located in the United States amounting to at least the amount of liability covered by this financial test.(3) An owner or operator who is demonstrating coverage for liability and any other environmental obligations, including closure under subsection 6 of section 33-24-05-1063, through a financial test must meet the requirements of subsection 6 of section 33-24-05-1063.b. Recordkeeping and reporting requirements. (1) The owner or operator must submit the following items to the department:(a) A letter signed by the owner's or operator's chief financial officer that provides evidence demonstrating that the firm meets the conditions of paragraphs 1 and 2 of subdivision a. If the firm is providing only liability coverage through a financial test for a facility or facilities with a permit under sections 33-24-05-950 through 33-24-05-1149, the letter should use the wording in subsection 2 of section 33-24-05-1071. If the firm is providing only liability coverage through a financial test for facilities regulated under sections 33-24-05-950 through 33-24-05-1149 and also sections 33-24-05-01 through 33-24-05-190, 33-24-05-300 through 33-24-05-524, 33-24-05-550 through 33-24-05-559, and 33-24-05-800 through 33-24-05-819 or subsection 5 of section 33-24-06-16, the firm should use the letter in subsection 7 of section 33-24-05-81. If the firm is providing liability coverage through a financial test for a facility or facilities with a permit under sections 33-24-05-950 through 33-24-05-1149, and the firm assures closure costs or any other environmental obligations through a financial test, the firm must use the letter in subsection 1 of section 33-24-05-1071 for the facilities issued a permit under sections 33-24-05-950 through 33-24-05-1149. (b) A copy of the independent certified public accountant's unqualified opinion of the owner's or operator's financial statements for the latest completed fiscal year. To be eligible to use the financial test, the owner's or operator's financial statements must receive an unqualified opinion from the independent certified public accountant. An adverse opinion, disclaimer of opinion, or other qualified opinion will be cause for disallowance, with the potential exception for qualified opinions provided in the next sentence. The department may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the department deems that the matters which form the basis for the qualification are insufficient to warrant disallowance of the test. If the department does not allow use of the test, the owner or operator must provide alternate financial assurance that meets the requirements of this section within thirty days after the notification of disallowance.(c) If the chief financial officer's letter providing evidence of financial assurance includes financial data showing that the owner or operator satisfies paragraphs 1 and 2 of subdivision a that are different from data in the audited financial statements referred to in subparagraph b or any other audited financial statement or data filed with the securities and exchange commission, then a special report from the owner's or operator's independent certified public accountant to the owner or operator is required. The special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements, the findings of that comparison, and the reasons for any differences.(2) The owner or operator of a new facility must submit the items specified in paragraph 1 to the department at least sixty days before placing waste in the facility.(3) After the initial submission of items specified in paragraph 1, the owner or operator must send updated information to the department within ninety days following the close of the owner or operator's fiscal year. The department may provide up to an additional forty-five days for an owner or operator who can demonstrate that ninety days is insufficient time to acquire audited financial statements. The updated information must consist of all items specified in paragraph 1.(4) The owner or operator is no longer required to submit the items specified in this subdivision or comply with the requirements of this subsection when: (a) The owner or operator substitutes alternate financial assurance as specified in this section that is not subject to these recordkeeping and reporting requirements; or(b) The department releases the owner or operator from the requirements of this subsection in accordance with subsection 5.(5) An owner or operator who no longer meets the requirements of subdivision a cannot use the financial test to demonstrate financial assurance. An owner or operator who no longer meets the requirements of subdivision a, must: (a) Send notice to the department of intent to establish alternate financial assurance as specified in this section. The owner or operator must send this notice by certified mail within ninety days following the close of the owner or operator's fiscal year for which the year-end financial data show that the owner or operator no longer meets the requirements of this subsection.(b) Provide alternative financial assurance within one hundred twenty days after the end of such fiscal year.(6) The department may, based on a reasonable belief that the owner or operator may no longer meet the requirements of subdivision a, require at any time the owner or operator to provide reports of its financial condition in addition to or including current financial test documentation as specified in subdivision b. If the department finds that the owner or operator no longer meets the requirements of subdivision a, the owner or operator must provide alternate financial assurance that meets the requirements of this section.7. Guarantee for liability coverage. a. Subject to subdivision b, an owner or operator may meet the requirements of this section by obtaining a written guarantee, hereinafter referred to as "guarantee". The guarantor must be the direct or higher-tier parent corporation of the owner or operator, a firm whose parent corporation is also the parent corporation of the owner or operator, or a firm with a "substantial business relationship" with the owner or operator. The guarantor must meet the requirements for owners or operators in subdivisions a and b of subsection 6. The wording of the guarantee must be identical to the wording specified in subdivision b of subsection 8 of section 33-24-05-81. A certified copy of the guarantee must accompany the items sent to the department as specified in subdivision b of subsection 6. One of these items must be the letter from the guarantor's chief financial officer. If the guarantor's parent corporation is also the parent corporation of the owner or operator, this letter must describe the value received in consideration of the guarantee. If the guarantor is a firm with a "substantial business relationship" with the owner or operator, this letter must describe this "substantial business relationship" and the value received in consideration of the guarantee. (1) 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 accidental occurrences arising from the operation of facilities covered by this corporate 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.b. The following applies: (1) In the case of corporations incorporated in the United States, a guarantee may be used to satisfy the requirements of this section only if the attorneys general or insurance commissioners of the state in which the guarantor is incorporated, and each state in which a facility covered by the guarantee is located, have submitted a written statement to the department that a guarantee executed as described in this section and subdivision b of subsection 8 of section 33-24-05-81 is a legally valid and enforceable obligation in that state. (2) In the case of corporations incorporated outside the United States, a guarantee may be used to satisfy the requirements of this section only if: (a) The non-United States corporation has identified a registered agent for service of process in each state in which a facility covered by the guarantee is located and in the state in which it has its principal place of business; and(b) The attorney general or insurance commissioner of each state in which a facility covered by the guarantee is located and the state in which the guarantor corporation has its principal place of business, has submitted a written statement to the department that a guarantee executed as described in this section and subdivision b of subsection 8 of section 33-24-05-81 is a legally valid and enforceable obligation in that state.N.D. Admin Code 33-24-05-1067
Adopted by Administrative Rules Supplement 2016-359, January 2016, effective 1/1/2016.General Authority: NDCC 23-20.3-03
Law Implemented: NDCC 23-20.3-03, 23-20.3-04, 23-20.3-05