Section 0400-11-01-.03 - REQUIREMENTS FOR FINANCIAL ASSURANCE(1) General (a) Purpose/Scope - The purpose of this rule is to establish requirements for establishing and maintaining acceptable financial assurance for the proper operation, closure and post-closure care of certain solid waste disposal facilities in Tennessee. These financial assurance requirements are intended to ensure that adequate financial resources are available to the Commissioner to insure proper operation, closure and post-closure care. This rule also establishes criteria and procedures to be used by the Commissioner in setting the amount of financial assurance required and in use and release of these funds.(b) Applicability 1. The requirements of this rule apply to: (i) Disposal facilities in operation on March 18, 1990 or thereafter;(ii) Recovered materials processing facilities to the extent required by item (1)(b)3(xxii)(VII) of Rule 0400-11-01-.02; and(iii) Solid waste processing facilities to the extent required by item (2)(b)1(i)(XVIII) of Rule 0400-11-01-.02.2. The requirements of paragraph (3) of this rule do not apply if the operator is the State of Tennessee or Federal Government.(2) Closure/Post-Closure Care Plan (a) General Requirements - Operators of facilities must submit a closure/post-closure care plan to the Department, obtain approval of the plan, and amend the plan when necessary, as set forth in this paragraph.(b) Contents of Plan1. The closure/post-closure plan must identify the steps necessary to completely or partially close the facility at any point during its intended operating life and to completely close the facility at the end of its intended operating life, and must identify the activities which will be carried on after closure and the frequency of these activities. For facilities being developed or to be developed according to a phased development plan, the closure/post-closure care plan must address each parcel separately as well as the whole.2. The closure/post-closure plan must include, at a minimum:(i) A description of how and when the facility will be partially closed, if applicable, and finally closed. If minimum closure areas are used, they must be delineated in the engineering plans. The description must identify how the applicable closure standards of paragraph (8) of Rule 0400-11-01-.04 will be met. It must also include an estimate of the expected year of closure and a schedule for completing the steps of final closure;(ii) A description of the planned ground and surface water monitoring and other monitoring and maintenance activities and frequencies at which they will be performed. The description must identify how the applicable post-closure care standards of paragraph (8) of Rule 0400-11-01-.04 and the applicable Ground Water Protection/Monitoring Standards of paragraph (7) of Rule 0400-11-01-.04 will be met; and(iii) The name, address, and phone number of the person or office to contact about the facility during the post-closure care period. This person or office must keep an updated closure/post-closure plan during the post-closure care period.(iv) An itemized estimate in current dollars of the cost based on hiring a third party to perform the closure and post-closure care activities.(v) A description of the planned uses of the property during the post-closure care period.(vi) For Class I and Class II facilities, a description of recommended inspection, monitoring, maintenance activities for long-term custodial care, during the 50-year period beginning upon certification of completion of post-closure to ensure the continued protection of human health and the environment. Facilities which utilize synthetic components in the final cover system must include an analysis of the life cycle of such components.3. In the closure portion of his plan, the operator must address the closure of active portions and future active portions of the facility. In the post-closure care portion of his plan, the operator must address the post-closure care of closed portions, active portions, and future active portions of the facility. If a facility which was in operation on March 18, 1990 closes prior to the date the closure/post-closure care plan is to be submitted, the plan need address only the post-closure care of closed portions of the facility provided that the closure is in accordance with applicable rules.(c) Resubmittal of Plan - All Class I and Class II facilities must submit a new closure/post-closure care plan every 10 years from the date of the original permit or the date of approval of the most recent permit modification for an expansion. The resubmittal of a plan will be processed as a minor modification to the facility and must comply with subparagraph (b) of this paragraph. At a minimum:1. Itemized closure/post-closure cost estimates must be adjusted by recalculating the maximum closure/post-closure amounts in current dollars and taking into account any design changes, new monitoring points, and changes in materials.2. The phased development plan must be updated and reconciled with the closure/post-closure cost estimate.3. Minimum closure areas must be revised or added to reflect planned partial closure of the facility.4. The new plan must include a separate itemized cost estimate for long-term custodial care activities. This cost estimate is not to be included in the financial assurance amount for the facility.(d) Amendment of Plan - The approved closure/post-closure care plan may be amended at any time during the active life of the facility or during the post-closure care period as set forth in this subparagraph.1. The operator may request to amend the plan to alter the closure requirements, to alter the post-closure care requirements, or to extend or reduce the post-closure care period based on cause. The request must include evidence demonstrating to the satisfaction of the Commissioner that: (i) The nature of the facility makes the closure or post-closure care requirement(s) unnecessary; or(ii) The nature of the facility supports reduction of the post- closure care period; or(iii) The requested extension in the post-closure care period or alteration of closure or post-closure care requirements is necessary to prevent threats to human health and the environment.2. Such plan amendments shall be processed as modifications to the permit. However, the Commissioner may decide to modify the plan if he deems it necessary to prevent threats to human health and the environment. He may extend or reduce the post-closure care period based on cause or alter the closure or post-closure care requirements based on cause. However, no such modifications shall be initiated until the operator has been notified of such proposed action and provided the opportunity to be heard on the matter.3. The cost estimate of the approved closure/post closure care plan must be adjusted annually for inflation. Such inflation adjustment shall not be considered an amendment of the plan.(3) Financial Assurance Requirements(a) General Requirement - Operators of facilities must file and maintain financial assurance with the Commissioner as set forth in this paragraph. As used in this paragraph operator includes, but is not limited to, parent corporations and any other person who owns a controlling interest in a corporation.(b) Amount of Financial Assurance Required 1. The amount of financial assurance required of the operator shall be established by the Commissioner based upon the estimated cost of operating the facility for a thirty (30) day period plus the estimated closure and post-closure care costs included in the approved closure/post-closure care plan established in paragraph (2) of this rule. This required amount may be adjusted as the plan is amended. The operator shall be notified of the required amount as set forth in subparagraph (c) of this paragraph. In no case, however, shall the amount of financial assurance be less than 1,000 dollars per acre, or fraction thereof, affected by the facility operation. For facilities being developed or to be developed according to a phased development plan, the Commissioner may establish the amount of financial assurance required on a parcel-by-parcel basis.
2. The operator may appeal the Commissioner's decision in part 1 of this subparagraph as set forth in T.C.A. § 68-211-113.3. The operator must file with the Commissioner a financial assurance instrument chosen from subparagraph (d) of this paragraph in the amount determined by the Commissioner. The original of the instrument must be received and approved by the Commissioner prior to construction/operation of the solid waste management facility.4. During the active life of the solid waste management facility, the operator must annually adjust the closure/post-closure cost estimate and the financial assurance instrument for inflation by no later than the anniversary date of the establishment of the financial assurance instrument(s) used to comply with subparagraph (b) of this paragraph. For operators using the financial test or corporate guarantee, the closure/post-closure cost estimate and the financial assurance instrument must be adjusted for inflation by no later than 90 days after the close of the firm's fiscal year and concurrent with the submission of the updated financial information to the Division Director as specified in subpart (d)4(v) of this paragraph. The adjustment may be made by recalculating the maximum cost of closure/post-closure in current dollars, or by using an inflation factor derived from the most recent Implicit Price Deflator for Gross National Product published by the U.S. Department of Commerce in its Survey of Current Business. The inflation factor is the result of dividing the latest published annual Deflator by the Deflator for the previous year. (i) The first adjustment is made by multiplying the closure/post-closure cost estimate by the inflation factor. The result is the adjusted closure/post-closure cost estimate.(ii) Subsequent adjustments are made by multiplying the latest adjusted closure/post-closure cost estimate by the latest inflation factor.5. During the post-closure care period of the solid waste management facility, the cost estimate for post-closure care may be reduced annually by the estimated cost of post-closure work performed the previous year according to the approved post-closure plan. The work must be performed to the satisfaction of the Division Director. The estimated remaining cost of post-closure care and the post-closure financial assurance instrument must be adjusted annually for inflation by no later than the anniversary date of the issuance of the instrument. The inflation adjustment may be made by recalculating the maximum cost of post-closure care for the remaining years in current dollars or by using an inflation factor derived from the most recent Implicit Price Deflator for Gross National Product or Gross Domestic Product published by the U.S. Department of Commerce in its Survey of Current Business. The inflation factor is the result of dividing the latest published annual Deflator by the Deflator for the previous year. (i) The first adjustment is made by multiplying the post-closure cost estimate by the inflation factor. The result is the adjusted post-closure cost estimate.(ii) Subsequent annual inflation adjustments to post-closure care cost estimates and financial assurance instruments are made by multiplying the estimated remaining cost of post-closure by the latest inflation factor.(c) Filing of Financial Assurance 1. Permits - After his final decision to issue a permit for a facility, the Commissioner will notify the operator in writing of the amount of financial assurance required (as established per subparagraph (b) of this paragraph). The operator must, before the permit can be effective, file with the Commissioner financial assurance meeting the requirements of this paragraph in at least that amount, except as provided in part 3 of this subparagraph. The Commissioner will evaluate the financial assurance filed for compliance with the requirements of this paragraph and notify the operator of his findings in writing within 30 days of the filing date.2. Facilities Permitted Before March 18, 1990.(i) In his notice to the operator initially approving the closure/post-closure care plan, the Commissioner will specify the amount of financial assurance required (as established per subparagraph (b) of this paragraph). The operator must, within 60 days of receipt of that notice, file with the Commissioner financial assurance meeting the requirements of this paragraph in at least that amount, except as provided in part 3. of this subparagraph.(ii) After his final decision to issue a modified permit incorporating amendments to the closure/post-closure care plan, the Commissioner will notify the operator in writing of any changes in the amount of financial assurance required (as established per subparagraph (b) of this paragraph). The operator must, within 60 days of receipt of that notice, file with the Commissioner any required additional financial assurance, subject to the provisions of part 3. of this subparagraph. Such additional financial assurance filed must also meet the requirements of this paragraph.3. Partial Filing (i) For facilities which are in operation and being developed according to a phased development plan, the operator may initially file financial assurance covering only closure and post-closure care of the parcel currently in operation and post-closure care of closed parcels. For facilities which are not yet in operation and are to be developed according to a phased development plan, the operator may initially file financial assurance covering only closure and post-closure care of the initial parcel to be operated.(ii) For facilities being developed according to a phased development plan whose operators initially filed only partial financial assurance as provided in subpart (i) of this part, the operator must, at least 30 days prior to beginning operation of a parcel not covered by financial assurance on file with the Commissioner, file the required financial assurance for that parcel with the Commissioner.(d) Mechanisms of Financial Assurance - Following are acceptable financial assurance mechanisms: 1. Surety Bond - An operator may satisfy the requirements of subparagraph (c) of this paragraph by obtaining and filing a surety bond which conforms to the requirements of this part. (i) The surety company issuing the bond must be licensed to do business as a surety in Tennessee and must be among those listed as acceptable by the Commissioner.(ii) The wording of the surety bond must be identical to the wording specified in part (l)1. of this paragraph.(iii) Under the terms of the bond, the surety will become liable on the bond obligation when the operator fails to perform as guaranteed by the bond. Following a determination by the Commissioner that the operator has failed to so perform, under the terms of the bond the surety will perform final closure and post-closure care as guaranteed by the bond or will forfeit the amount of the penal sum, as provided in subparagraph (j) of this paragraph.(iv) The penal sum of the bond must be in an amount at least equal to the amount of financial assurance required per subparagraph (b) of this paragraph.(v) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the operator and to the Commissioner. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by both the operator and the Commissioner, as evidenced by the return receipts.(vi) The surety will not be liable for deficiencies in the performance of operation or closure and post-closure care by the operator after the Commissioner releases the operator from the financial assurance requirements as provided in subparagraph (i) of this paragraph.2. Personal Bond Supported by Securities - An operator may satisfy the requirements of subparagraphs (c) of this paragraph by filing his personal performance guarantee accompanied by collateral in the form of securities. He must guarantee to properly operate and perform final closure/post-closure in accordance with the closure/post-closure care plan, other requirements of the permit, the act and the rules whenever required to do so. The securities supporting this guarantee must be fully registered as to principal and to also identify that person filing such collateral. These securities must have a current market value at least equal to the amount of financial assurance required per subparagraph (b) of this paragraph, and must be included among the following types:(i) Negotiable certificates of deposit assigned irrevocably to the state. (I) Such certificates of deposit must be automatically renewable and must be assigned to the state in writing and recorded as such in the records of the financial institution issuing such certificate.(II) Such certificates of deposit must also include a statement signed by an officer of the issuing financial institution which waives all rights of lien which the institution has or might have against the certificate.(ii) Negotiable U.S. Treasury securities assigned irrevocably to the state.(iii) Negotiable general obligation municipal or corporate bonds which have at least an "A" rating by Moody's and/or Standard and Poor's rating services and which are assigned irrevocably to the state.3. Personal Bond Supported by Cash - An operator may satisfy the requirements of subparagraph (c) of this paragraph by filing his personal performance guarantee accompanied by cash in an amount at least equal to the amount of financial assurance required per subparagraph (b) of this paragraph. He must guarantee to perform final closure/post-closure in accordance with the closure/post-closure care plan, other requirements of the permit, the act and the rules whenever required to do so.4. Financial Test and Corporate Guarantee for Closure and/or Post-closure - An owner or operator may satisfy the requirements of subparagraph (c) of this paragraph by demonstrating that he passes a financial test as specified in this part. The same document (with appropriate wording modifications) may be used by a company, with prior approval by the Commissioner to demonstrate financial assurance for a solid waste unit and a hazardous waste unit, both of which are owned/operated by the company.(i) To pass this test the owner or operator must meet the criteria of either item (I) or item (II) of this subpart.(I) The owner or operator must have: I. Two of the following three ratios: a ratio of total liabilities to net worth less than a 2.0; a ratio of the sum of net income plus depreciation, depletion and amortization to total liabilities greater than 0.1; and a ratio of current assets to current liabilities greater than 1.5; andII. Net working capital and tangible net worth each at least six times the sum of the current closure and post-closure cost estimates and current plugging and abandonment cost estimates; andIII. Tangible net worth of at least $10 million; andIV. Assets located in the United States amounting to at least 90 percent of total assets or at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment cost estimates.(II) The owner or operator must have: I. A current rating for his most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A or Baa as issued by Moody's; andII. 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; andIII. Tangible net worth of at least $10 million; andIV. Assets located in the United States amounting to at least 90 percent of total assets or at least six times the sum of the current closure and post-closure cost estimates and the current plugging and abandonment cost estimates.(ii) The phrase "current closure and post-closure cost estimates" as used in this part refers to the cost estimates required to be shown in the letter from the owner's or operator's chief financial officer worded as required at subparagraph (l) of this paragraph.(iii) To demonstrate that he meets this test, the owner or operator must submit the following items to the Commissioner:(I) A letter signed by the owner's or operator's chief financial officer and worded as required in subparagraph (l) of this paragraph; and(II) A copy of the independent certified public accountant's report on examination of the owner's or operator's financial statements for the latest completed fiscal year; and(III) A special report from the owner's or operator's independent certified public accountant to the owner or operator stating that:I. He has compared the data which the letter from the chief financial officer specifies as having been derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements; andII. In connection with the procedure, no matters came to his attention which caused him to believe that the specified data should be adjusted.(iv) An owner or operator of a new facility must submit the items specified in subparts (i), (ii), and (iii) of this part to the Commissioner.(v) After the initial submission of items specified in subparts (i), (ii), and (iii) of this part, the owner or operator must send updated information to the Commissioner within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in subpart (iv) of this part.(vi) If the owner or operator no longer meets the requirements of subpart (i), (ii), and (iii) of this part, he must sent notice to the Commissioner of intent to establish alternate financial assurance as specified in the subparagraph. The notice must be sent by certified mail within 90 days after the end of the fiscal year for which the year-end financial data show that the owner or operator no longer meets the requirements. The owner or operator must provide the alternate financial assurance within 120 days after the end of such fiscal year.(vii) The Commissioner may, based on a reasonable belief that the owner or operator may no longer meet the requirements of this part, require reports of financial condition at any time from the owner or operator in addition to those specified in subpart (i) of this part. If the Commissioner finds, on the basis of such reports or other information, that the owner or operator no longer meets these requirements, the owner or operator must provide alternate financial assurance as specified in this subparagraph within 30 days after notification of such a finding.(viii) The Commissioner may disallow use of this test on the basis of qualifications in the opinion expressed by the independent certified public accountant in his report on examination of the owner's or operator's financial statements. An adverse opinion or a disclaimer of opinion will be cause for disallowance. The Commissioner will evaluate other qualifications on an individual basis. The owner or operator must provide alternate financial assurance as specified in this subparagraph within 30 days after notification of the disallowance.(ix) The owner or operator is no longer required to submit the items specified in subparts (i), (ii), and (iii) of this part, when:(I) An owner or operator substitutes alternate financial assurance; or(II) The Commissioner releases the owner or operator from the requirements of this part.(x) An owner or operator may meet the requirements of this part by obtaining a written guarantee. The guarantor must be the direct or higher-tier parent corporation of the owner or operator, a firm whose parent corporation is also the parent corporation of the owner or operator, or a firm with a "substantial business relationship" with the owner or operator. The guarantor must meet the requirements for the owner or operators in subparts (i), (ii), and (iii) of this part and must comply with the terms of the guarantee. The wording of the guarantee must be identical to the working specified in subparagraph (l) of this paragraph. The certified copy of the guarantee must accompany the items sent to the Commissioner. One of these items must be the letter from the guarantor's chief financial officer. If the guarantor's parent corporation is also the parent corporation of the owner or operator, the letter must describe the value received in consideration of the guarantee. If the guarantor is a firm with a "substantial business relationship" with the owner or operator, this letter must describe this "substantial business relationship" and the value received in consideration of the guarantee. The terms of the guarantee must provide that: (I) If the owner or operator fails to perform final closure and/or post-closure of a facility covered by the corporate guarantee in accordance with the closure/post-closure plan and other permit requirements whenever required to do so, the guarantor will do so or establish a trust fund worded as required in subparagraph (l) of this paragraph in the name of the owner or operator.(II) The corporate guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail to the owner or operator and to the Commissioner. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by both the owner or operator and the Commissioner, as evidenced by the return receipts.(III) If the owner or operator fails to provide alternate financial assurance as specified in this subparagraph and obtain the written approval of such alternate assurance from the Commissioner within 90 days after receipt by both the owner or operator and the Commissioner of a notice of cancellation of the corporate guarantee from the guarantor, the guarantor will provide such alternate financial assurance in the name of the owner or operator.5. Municipality or County Contract of Obligation - A municipality or county may execute a contract of obligation with the Commissioner. Such contract of obligation shall be a binding agreement on the municipality or county, allowing the Commissioner to collect the required amount from any funds being disbursed or to be disbursed from the State to the municipality or county. The contract shall be filed with the State Commissioner of Environment and Conservation and with the State Commissioner of Finance and Administration.6. Closure/post-closure trust fund - An owner or operator may satisfy the requirements of subparagraph (c) of this paragraph by establishing a closure and/or post-closure trust fund which conforms to the requirements of this part and filing an originally signed duplicate of the trust agreement. The trustee must be an entity which has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency. (i) The wording of the trust agreement must be worded as required at subparagraph (l) of this paragraph and the trust agreement must be accompanied by a formal certification of acknowledgment worded as required at subparagraph (l) of this paragraph. Schedule A of the trust agreement must be updated within 60 days after a change in the amount of the current closure and/or post-closure cost estimate covered by the agreement as specified in subpart (c)2.(ii) of this paragraph.(ii) Payments into the trust fund must be made annually by the owner or operator over the term of the initial permit or over the remaining operating life of the facility as estimated in the closure plan, whichever period is shorter; this period is hereafter referred to as the "pay-in-period." The payments into the closure and/or post-closure trust fund must be made as follows:(I) For a new facility, the first payment must be made before the initial operation is begun. A receipt from the trustee for this payment must be filed by the owner or operator before the operation begins. The first payment must be at least equal to the current closure cost estimate, divided by the number of years in the pay-in-period. Subsequent payments must be made no later than 30 days after each anniversary date of the first payment. The amount of each subsequent payment must be determined by this formula: Click to view Image
In this formula, CE is the current closure and/or post-closure cost estimate; CV is the current value of the trust fund; Y is the number of years remaining in the pay-in period.
(II) The owner or operator may accelerate payments into the trust fund or he may deposit the full amount of the current closure and/or post-closure cost estimate at the time the fund is established. However, he must maintain the value of the fund at no less than the value that the fund would have if annual payments were made as specified in item (I) of this subpart.(III) If the owner or operator establishes a closure and/or post-closure trust fund after having used on or more alternate mechanisms specified in this subparagraph, his first payment must be in at least the amount that the fund would contain if the trust fund were established initially and annual payments made according to specifications of this part.(iii) After the pay-in-period is completed, whenever the current closure and/or post-closure cost estimate changes, the owner or operator must compare the new estimate with the trustee's most recent annual valuation of the trust fund. If the value of the fund is less than the amount of the new estimate, the owner or operator, within 60 days after the change in the cost estimate, must either deposit an amount into the fund so that its value after this deposit at least equals the amount of the current closure and/or post-closure cost estimate, or obtain other financial assurance as specified in this subparagraph to cover the difference.(iv) If the value of the trust fund is greater that the total amount of the current closure and/or post-closure cost estimate, the owner or operator may submit a written request for release of the amount in excess of the current cost estimate.(v) If an owner or operator substitutes other financial assurance as specified in this subparagraph for all or part of the trust fund, he may submit a written request for release of the amount in excess of the current cost estimate covered by the trust fund.(vi) Within 60 days after receiving a request from the owner or operator for release of funds as specified in subparts (iv) and (v) of this part, the Commissioner will instruct the trustee to release to the owner or operator such funds as the Commissioner specifies in writing.(vii) After beginning partial or final closure of a facility, an owner or operator may request reimbursements for partial or final closure expenditures by submitting itemized bills to the Commissioner. The owner or operator may request reimbursements for partial closure only if sufficient funds are remaining in the trust fund to cover the maximum cost of closing the facility over its remaining operating life. Within 60 days after receiving bills for partial or final closure activities, the Commissioner will instruct the trustee to make reimbursements in those amounts as the Commissioner specifies in writing, if the Commissioner determines that the partial or final closure expenditures are in accordance with the approved closure plan, or otherwise justified. If the Commissioner has reason to believe that the maximum cost of closure over the remaining life of the facility will be significantly greater than the value of the trust fund, he may withhold reimbursements of such amounts as he deems prudent until he determines, that the owner or operator is no longer required to maintain financial assurance for the final closure of the facility. If the Commissioner does not instruct the trustee to make such reimbursements, he will provide the owner of operator with a detailed written statement of reasons.(viii) Within 60 days after receiving bills for post-closure activities, the Commissioner will instruct the trustee to make reimbursements in those amounts as the Commissioner specifies in writing, if the Commissioner determines that the post-closure expenditures are in accordance with the approved closure plan, or otherwise justified. If the Commissioner has reason to believe that the maximum cost of post-closure over the remaining life of the facility will be significantly greater than the value of the trust fund, he may withhold reimbursements of such amounts as he deems prudent until he determines, that the owner or operator is no longer required to maintain financial assurance for post-closure of the facility. If the Commissioner does not instruct the trustee to make such reimbursements, he will provide the owner or operator with a detailed written statement of reason.(ix) The Commissioner will agree to termination of the trust when:(I) An owner or operator substitutes alternate financial assurance as specified in this subparagraph.(II) The Commissioner releases the owner or operator from the requirements of this paragraph.7. Closure and/or post-closure letter of credit. An owner or operator may satisfy the requirements of subparagraph (c) of this paragraph by obtaining and filing an irrevocable standby letter of credit which conforms to the requirements of this part. The issuing institution must be an entity which has the authority to issue letters of credit and whose letter-of-credit operations are regulated and examined by a Federal or State agency.(i) The wording of the letter of credit must be worded according to the wording provided by the Department through subparagraph (l) of this paragraph.(ii) The letter of credit must be accompanied by a letter from the owner or operator referring to the letter of credit by number, issuing institution, and date, and providing the following information: the permit identification Number, name, and address of the facility, and the amount of funds assured for closure and/or post-closure of the facility by the letter of credit.(iii) The letter of credit must be irrevocable and issued for a period of at least 1 year. The letter of credit must provide that the expiration date will be automatically extended each year for a period of at least 1 year unless, at least 120 days before the current expiration date, the issuing institution notifies both the owner or operator and the Commissioner by certified mail of a decision not to extend the expiration date. Under the terms of the letter of credit, the 120 days will begin on the date when both the owner or operator and the Commissioner have received the notice, as evidenced by the return receipts.(iv) The letter of credit must be issued in an amount at least equal to the current closure and/or post-closure cost estimate, except as provided in subparagraph (e) of this paragraph.(v) Whenever the current closure and/or post-closure cost estimate increases to an amount greater than the amount of the letter of credit, the owner or operator, within 60 days after the increase, must either cause the amount of the letter of credit to be increased so that it at least equals the current cost estimate and submit evidence of such increase to the Commissioner, or obtain other financial assurance as specified in this subparagraph to cover the increase. Whenever the current closure and/or post-closure cost estimate decreases, the amount of the letter of credit may be reduced to the amount of the current cost estimate following written approval by the Commissioner.(vi) Following a final administrative determination that the owner or operator has failed to perform final closure and/or post-closure activities in accordance with the closure and/or post-closure plan and other permit requirements when required to do so, the Commissioner may draw on the letter of credit.(vii) If the owner or operator does not establish alternate financial assurance as specified in this subparagraph and obtain written approval of such alternate assurance from the Commissioner within 90 days after receipt by both the owner or operator and the Commissioner of a notice from issuing institution that it has decided not extend the letter of credit beyond the current expiration date, the Commissioner will draw on the letter of credit. The Commissioner may delay the drawing if the issuing institution grants an extension of the term of the credit. During the last 30 days of any such extension the Commissioner will draw on the letter of credit if the owner or operator has failed to provide alternate financial assurance as specified in this part and obtain written approval of such assurance from the Commissioner.(viii) The Commissioner will return the letter of credit to the issuing institution for termination when:(I) An owner or operator substitutes alternate financial assurance as specified in this subparagraph; or(II) The Commissioner releases the owner or operator from the requirements of this paragraph.8. Closure and/or post-closure insurance. An owner or operator may satisfy the requirements of subparagraph (c) of this paragraph by obtaining insurance which conforms to the requirements of this part and filing a certificate of such insurance. At a minimum, the insurer must be licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer in the State of Tennessee and have an A. M. Best rating of at least A or A- or have special approval from the Commissioner.(i) The wording of the certificate of insurance must be worded as required at subparagraph (l) of this paragraph. The wording of the policy itself is subject to the review and approval of the Commissioner prior to acceptance as a financial assurance mechanism.(ii) The insurance policy must be issued for a face amount at least equal to the current closure and/or post-closure cost estimate, except as provided in subparagraph (e) of this subparagraph. The term "face amount" means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the face amount, although the insurer's future liability will be lowered by the amount of the payments.(iii) The insurance policy must guarantee that funds will be available to close the facility whenever final closure occurs and to provide post-closure care requirements. The policy must also guarantee that during the period of final closure and post-closure, the insurer will be responsible for paying out funds, up to an amount equal to the face amount of the policy, upon the direction of the Commissioner, to such party or parties as the Commissioner specifies.(iv) After beginning partial or final closure and during post-closure, an owner or operator may request reimbursements for closure expenditures by submitting itemized bills to the Commissioner. The owner or operator may request reimbursement for partial closure only if the remaining value of the policy is sufficient to cover the maximum cost of closing the facility over its remaining operating life and to cover the cost of post-closure care requirements. Within 60 days after receiving bills for closure activities, the Commissioner will instruct the insurer to make reimbursements in such amounts as the Commissioner specifies in writing, if the Commissioner determines that the partial or final closure expenditures are in accordance with the approved closure and/or post-closure plan or otherwise justified. If the Commissioner has reason to believe that the maximum cost of closure over the remaining life of the facility and the cost of post-closure will be significantly greater than the face amount of the policy, he may withhold reimbursements of such amounts as he deems prudent until he determines that the owner or operator is no longer required to maintain financial assurance for final closure and/or post-closure care of the facility. If the Commissioner does not instruct the insurer to make such reimbursements, he will provide the owner or operator with a detailed written statement of reasons.(v) The owner or operator must maintain the policy in full force and effect until the Commissioner consents to termination of the policy by the owner or operator. Failure to pay the premium, without substitution of alternate financial assurance will constitute a significant violation of these regulations, warranting such remedy as the Commissioner deems necessary. Such violation will be deemed to begin upon receipt by the Commissioner of a notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration.(vi) Each policy must contain a provision allowing assignment of the policy to a successor owner or operator. Such assignment may be conditional upon consent of the insurer, provided such consent is not unreasonably refused.(vii) The policy must provide that the insurer may not cancel, terminate, or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy must, at a minimum, provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may elect to cancel, terminate, or fail to renew the policy by sending notice by certified mail to the owner or operator and the Commissioner. Cancellation, termination, or failure to renew may not occur, however, during the 120 days beginning with the date of receipt of the notice by both the Commissioner and the owner or operator, as evidenced by the return receipts. Cancellation, termination, or failure to renew may not occur and the policy will remain in full force and effect in the event that on or before the date of expiration: (I) The Commissioner deems the facility abandoned; or(II) The permit is terminated or revoked or a new permit is denied; or(III) Closure is ordered by the Commissioner or a U.S. District court of competent jurisdiction; or(IV) The owner or operator is named as debtor in a voluntary or involuntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code; or(V) The premium due is paid.(viii) Whenever the current closure and/or post-closure cost estimate increases to an amount greater than the face amount of the policy, the owner or operator, within 60 days after the increase, must either cause the face amount to be increased to an amount at least equal to the current closure and/or post-closure cost estimate and submit evidence of such increase to the Commissioner, or obtain other financial assurance as specified in this subparagraph to cover the increase. Whenever the current closure and/or post-closure cost estimate decreases, the face amount may be reduced to the amount of the current cost estimate following written approval by the Commissioner.(ix) The Commissioner will give written consent to the owner or operator that he may terminate the insurance policy when:(I) An owner or operator substitutes alternate financial assurance as specified in this subparagraph.(II) The Commissioner releases the owner or operator from the requirements of this paragraph.9. Other financial Assurance Mechanisms - An operator may satisfy the requirements of subparagraph (c) by use of financial assurance instruments other than those specified in parts 1. through 8. if such mechanisms are as authorized by and in accordance with criteria required by 40 CFR 258.74 (Solid Waste Disposal Facility Criteria Final Rules, October 9, 1991, Allowable Mechanism(s) and a variance is applied for and granted in accordance with procedure specified in paragraph (5) of Rule 0400-11-01-.01.(e) Use of Multiple Financial Mechanisms - In meeting the requirements of subparagraph (c) of this paragraph, an operator may utilize more than one financial assurance mechanism per facility.(f) Use of a Financial Mechanism for Multiple Facilities - An operator may use a financial assurance mechanism allowed in subparagraph (d) of this paragraph to meet the requirements of subparagraph (c) of this paragraph for more than one facility he operates in Tennessee. If so, the mechanism submitted to the Commissioner must include a list showing, for each facility, the permit number, name, address, and amount of funds for closure and post-closure care assured by the mechanism. The amount of funds available through the mechanism must be no less than the sum of funds that would be available if a separate mechanism had been filed and maintained for each facility. In a financial assurance forfeiture action taken under subparagraph (j) of this paragraph for closure and post-closure care of any of the facilities covered by the mechanism, the Commissioner may order forfeiture of only the amount of funds designated for that facility, unless the operator agrees to the use of additional funds available under the mechanism.(g) Substituting Alternate Financial Assurance - In meeting the requirements of subparagraph (c) of this paragraph, an operator may substitute alternate financial assurance meeting the requirements of this paragraph for the financial assurance already filed with the Commissioner for the facility. However, the existing financial assurance shall not be released by the Commissioner until the substitute financial assurance has been received and approved by him.(h) Incapacity of Operator or Financial Institutions1. An operator must notify the Commissioner by certified mail of the commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming the operator as debtor, within 10 days after commencement of the proceeding.2. In the event of the bankruptcy of the institution issuing a financial assurance instrument, or a suspension or revocation of the authority of the institution to issue such instruments, the operator must establish other financial assurance within 60 days after such an event.(i) Maintenance/Release of Financial Assurance - The financial assurance must be maintained until the Commissioner releases it as specified in this subparagraph, or until the Commissioner orders forfeiture of the financial assurance as provided in subparagraph (j) of this paragraph.1. If the closure/post-closure care plan is amended and the amendments result in a reduction in the amount of financial assurance required under that currently filed with the Commissioner, the Commissioner shall, upon the operator's request, cause to be released to the operator (or issuing institution, if appropriate) the excess financial assurance.2. In his notice to the operator that closure of the facility or facility parcel is approved (refer to part (8)(c)9. of Rule 0400-11-01-.04, the Commissioner will also notify the operator that he is no longer required by this paragraph to maintain financial assurance for such closure. At such time the Commissioner shall cause to be released to the operator (or issuing institution, if appropriate) the financial assurance filed to provide for such closure.3. During the period of post-closure care, the Commissioner may reduce the amount of financial assurance required for the facility if the operator demonstrates to the Commissioner that the amount currently filed exceeds the remaining cost of post-closure care. Upon such occurrence, the Commissioner shall cause to be released to the operator the excess financial assurance on file.4. When an operator has completed, to the satisfaction of the Commissioner, all post-closure care requirements in accordance with the approved closure/post-closure care plan the Commissioner will, at the request of the operator, notify him in writing that he is no longer required by this paragraph to maintain financial assurance for such post-closure care. At such time the Commissioner shall also cause to be released to the operator (or issuing institution, if appropriate) the financial assurance filed to provide for such post-closure care.5. Financial assurance will normally be released in the form(s) it was submitted. However, where such release involves an amount equal to only a portion of the funds assured by a financial assurance mechanism (see subparagraphs (e) and (f) of this paragraph), the Commissioner shall, as appropriate considering the type of mechanism involved, either cause to be released to the operator cash or collateral equal to that amount or allow the owner or operator to substitute for the mechanism(s) on file a new mechanism(s) reduced by that amount.(j) Forfeiture of Financial Assurance - The Commissioner may order that any financial assurance filed by an operator pursuant to this paragraph be forfeited if the Commissioner determines that the operator has failed to comply with the act, rules and regulations adopted pursuant thereto, or orders of the Commissioner, or to perform closure and/or post-closure care when required to do so, or to perform closure and/or post-closure care in accordance with the closure/post-closure care plan and other permit requirements. Any such forfeiture action shall follow the procedures provided in this subparagraph.1. Upon his determination that the operator has failed to comply with the act, rules and regulations adopted pursuant thereto, or orders of the Commissioner, or to perform closure and/or post-closure care when required to do so, or to perform closure and/or post-closure care in accordance with the closure/post-closure care plan and/or other permit requirements, the Commissioner shall cause a notice of non compliance to be served upon the operator. Such notice shall be hand delivered or served by certified mail. The notice of non compliance shall specify in what respects the operator has failed to perform as required, and shall establish a schedule of compliance.2. If the Commissioner determines that the operator has failed to perform as specified in the notice of non compliance, or as specified in any subsequent compliance agreement which may have been reached by the operator and the Commissioner, the Commissioner may order forfeiture of the financial assurance filed to guarantee such performance and may revoke the facility's permits.3. Upon issuance, a copy of the order shall be hand delivered or forwarded by certified mail to the operator. Any such order issued by the Commissioner shall become final 30 days after receipt by the operator unless it is appealed to the Board as provided in T.C.A. § 68-211-113.4. If necessary, upon the effective date of the order of forfeiture, the Commissioner shall give notice to the State Attorney General who shall collect the forfeiture.5. All forfeited funds shall be deposited in a special departmental account known as the "solid waste disposal site restoration fund" for use by the Commissioner as set forth in T.C.A. § 68-211-116.(k) Effect on Transfer of Permits - No permit may be transferred until the proposed new operator has filed, in accordance with the requirements of this paragraph, the required financial assurance. When such is done, the Commissioner shall cause to be released to the former operator (or the issuing institution, if appropriate) the financial assurance that operator had filed.(l) Wording of the Instruments 1. The financial mechanisms and supporting documents guaranteeing proper operation and performance of closure and/or post closure care, as specified in subparagraph (d) of this paragraph, must utilize the wording required by the Department.2. Copies of approved financial mechanisms and supporting documents may be obtained by contacting the financial assurance office of the Division of Solid Waste Management. Approved financial mechanisms include at least the following: (ii) Personal Bond Supported By Securities(iii) Personal Bond Supported By Cash(iv) Financial Test and Corporate Guarantee(v) Municipality and/or County Contract of Obligation(vi) Closure/Post-Closure Trust Fund(vii) Closure/Post-Closures Letter of Credit(viii) Closure/Post-Closure Insurance(ix) Combined Hazardous and Solid Waste Financial Test (I) Letter From Chief Financial Officer (Closure and/or Post-Closure)(II) Letter From Chief Financial Officer (Liability Coverage or Liability Coverage and Closure/Post-Closure)(III) Corporate Guarantee for Closure or Post-Closure CareTenn. Comp. R. & Regs. 0400-11-01-.03
Original rule filed June 19, 2012; effective September 17, 2012. Amendments filed October 1, 2019; effective 12/30/2019.Authority: T.C.A. §§ 4-5-201, et seq.; 68-211-101, et seq.; and 68-211-801, et seq.