Section NR 667.0143 - Financial assurance for closure The owner or operator shall establish financial assurance for closure of each storage or treatment unit owned or operated. In establishing financial assurance for closure, the owner or operator shall choose from the financial assurance mechanisms in subs. (1) to (7). The owner or operator may also use a combination of mechanisms for a single facility if they meet the requirement in sub. (8), or may use a single mechanism for multiple facilities as in sub. (9). The department shall release the owner or operator from the requirements of this section after the owner or operator meets the criteria under sub. (10).
(1) CLOSURE TRUST FUND. Owners and operators can use the closure trust fund that is specified in s. NR 664.0143(1) (a) and (b) and (f) to (k). The following provisions also apply: (a) Payments into the trust fund for a new facility shall be made annually by the owner or operator over the remaining operating life of the facility as estimated in the closure plan, or over 3 years, whichever period is shorter. This period of time is hereafter referred to as the pay-in period.(b) For a new facility, the first payment into the closure trust fund shall be made before the facility may accept the initial storage. A receipt from the trustee shall be submitted by the owner or operator to the department before this initial storage of waste. The first payment shall be at least equal to the current closure cost estimate, divided by the number of years in the pay-in period, except as provided in sub. (8) for multiple mechanisms. Subsequent payments shall be made no later than 30 days after each anniversary date of the first payment. The owner or operator determines the amount of each subsequent payment by subtracting the current value of the trust fund from the current closure cost estimate and dividing this difference by the number of years remaining in the pay-in period. Mathematically, the formula is Next Payment = (Current Closure Estimate - Current Value of the Trust Fund) Divided by Years Remaining in the Pay- in Period.(c) The owner or operator of a facility existing on August 1, 2017, may establish a trust fund to meet the financial assurance requirements in this section. If the value of the trust fund is less than the current closure cost estimate when a final approval of the license is granted for the facility, the owner or operator shall pay the difference into the trust fund within 60 days.(d) The owner or operator may accelerate payments into the trust fund or deposit the full amount of the closure cost estimate when establishing the trust fund. However, the owner or operator shall 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 par. (b) or (c).(e) The owner or operator shall submit a trust agreement with the wording specified in s. NR 664.0151(1) (a).(2) SURETY BOND GUARANTEEING PAYMENT INTO A CLOSURE TRUST FUND. Owners and operators can use the surety bond guaranteeing payment into a closure trust fund, as specified in s. NR 664.0143(2), including the use of the surety bond instrument specified in s. NR 664.0151(2) and the standby trust specified in s. NR 664.0143(2) (c).(3) SURETY BOND GUARANTEEING PERFORMANCE OF CLOSURE. Owners and operators can use the surety bond guaranteeing performance of closure, as specified in s. NR 664.0143(3), the submission and use of the surety bond instrument specified in s. NR 664.0151(3).(4) CLOSURE LETTER OF CREDIT. Owners and operators can use the closure letter of credit specified in s. NR 664.0143(4) and the submission and use of the irrevocable letter of credit instrument specified in s. NR 664.0151(4).(5) CLOSURE INSURANCE. Owners and operators can use closure insurance, as specified in s. NR 664.0143(5), utilizing the certificate of insurance for closure specified s. NR 664.0151(5).(6) CORPORATE FINANCIAL TEST. An owner or operator that satisfies the requirements of this section may demonstrate financial assurance up to the amount specified in this subsection: (a)Financial component.1. The owner or operator shall satisfy one of the following three conditions:a. A current rating for its senior unsecured debt of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's Investors Services.b. A ratio of less than 1.5 comparing total liabilities to net worth.c. A ratio of greater than 0.10 comparing the sum of net income plus depreciation, depletion and amortization, minus $10 million, to total liabilities.2. The tangible net worth of the owner or operator shall be greater than:a. The sum of the current environmental obligations (see par. (b) 1. a.), including guarantees, covered by a financial test plus $10 million, except as provided in subd. 2.b. $10 million in tangible net worth plus the amount of any guarantees that have not been recognized as liabilities on the financial statements provided all of the environmental obligations (see par. (b) 1. a.) covered by a financial test are recognized as liabilities on the owner's or operator's audited financial statements and subject to the approval of the department.3. The owner or operator shall have assets located in the United States amounting to at least the sum of environmental obligations covered by a financial test as described in par. (b) 1. a.(b)Recordkeeping and reporting requirements.1. The owner or operator shall submit the following items to the department:a. A letter signed by the owner's or operator's chief financial officer that lists all the applicable current types, amounts and sums of environmental obligations covered by a financial test. These obligations include liability, closure, post-closure, and corrective action cost estimates required for hazardous waste treatment, storage and disposal facilities under ss. NR 664.0101, 664.0142, 664.0144, 664.0147, 665.0142, 665.0144, and 665.0147. The letter shall also provide evidence demonstrating that the firm meets the conditions of either par. (a) 1. a. or b. or (a) 1. c. and 2. and 3.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 shall 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 disallowing the test. If the department does not allow use of the test, the owner or operator shall provide alternate financial assurance that meets the requirements of this section within 30 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 par. (a) 1. b. or c. that are different from data in the audited financial statements referred to in subd. 1. b. or any other audited financial statement or data filed with the SEC, 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.d. If the chief financial officer's letter provides a demonstration that the firm has assured for environmental obligations as provided in par. (a) 2. b., then the letter shall include a report from the independent certified public accountant that verifies that all of the environmental obligations covered by a financial test have been recognized as liabilities on the audited financial statements, how these obligations have been measured and reported and that the tangible net worth of the firm is at least $10 million plus the amount of any guarantees provided.2. The owner or operator of a new facility shall submit the items specified in subd.1. to the department at least 60 days before placing waste in the facility.3. After the initial submission of items specified in subd. 1., the owner or operator shall send updated information to the department within 90 days following the close of the owner or operator's fiscal year. The department may provide up to an additional 45 days for an owner or operator who can demonstrate that 90 days is insufficient time to acquire audited financial statements. The updated information shall consist of all items specified in subd.1.4. The owner or operator is no longer required to submit the items specified in this paragraph or comply with the requirements of this section if either: a. The owner or operator substitutes alternate financial assurance as specified in this section that is not subject to these recordkeeping and reporting requirements.b. The department releases the owner or operator from the requirements of this section, according to sub. (10).5. An owner or operator who no longer meets the requirements of par. (a) may not use the financial test to demonstrate financial assurance. Instead an owner or operator who no longer meets the requirements of par. (a), shall: a. Send notice to the department of intent to establish alternate financial assurance as specified in this section. The owner or operator shall send this notice by certified mail within 90 days following the close 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 section.b. Provide alternative financial assurance within 120 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 par. (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 this paragraph. If the department finds that the owner or operator no longer meets the requirements of par. (a), the owner or operator shall provide alternate financial assurance that meets the requirements of this section.(7) CORPORATE GUARANTEE. (a) An owner or operator may meet the requirements of this section by obtaining a written guarantee. The guarantor shall 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 shall meet the requirements for owners or operators in sub. (6) and shall comply with the terms of the guarantee. The wording of the guarantee shall be identical to the wording in s. NR 664.0151(8). The certified copy of the guarantee shall accompany the letter from the guarantor's chief financial officer and accountants' opinions. If the guarantor's parent corporation is also the parent corporation of the owner or operator, the letter from the guarantor's chief financial officer shall 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 shall describe this substantial business relationship and the value received in consideration of the guarantee.(b) For a new facility, the guarantee shall be effective and the guarantor shall submit the items in par. (a) and the items specified in sub. (6) (b) 1. to the department at least 60 days before the owner or operator places waste in the facility.(c) The terms of the guarantee shall provide that:1. If the owner or operator fails to perform closure at a facility covered by the guarantee, the guarantor shall either:a. Perform or pay a third party to perform closure (performance guarantee).b. Establish a fully funded trust fund as specified in sub. (1) (a) in the name of the owner or operator (payment guarantee)2. The guarantee shall remain in force for as long as the owner or operator is required to comply with the applicable financial assurance requirements of this subchapter unless the guarantor sends prior notice of cancellation by certified mail to the owner or operator and to the department. 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 department as evidenced by the return receipts.3. If notice of cancellation is given, the owner or operator shall, within 90 days following receipt of the cancellation notice by the owner or operator and the department, obtain alternate financial assurance and submit documentation for that alternate financial assurance to the department. If the owner or operator fails to provide alternate financial assurance and obtain the written approval of such alternative assurance from the department within the 90-day period, the guarantor shall provide that alternate assurance in the name of the owner or operator and submit the necessary documentation for the alternative assurance to the department within 120 days of the cancellation notice.4. If a corporate guarantor no longer meets the requirements of sub. (6) (a), the owner or operator shall, within 90 days, obtain alternative assurance and submit the assurance to the department for approval. If the owner or operator fails to provide alternate financial assurance within the 90-day period, the guarantor shall provide that alternate assurance within the next 30 days and submit it to the department for approval.5. The guarantor is no longer required to meet the requirements of this section when either: a. The owner or operator substitutes alternate financial assurance as specified in this section.b. The owner or operator is released from the requirements of this section according to sub. (10).(8) USE OF MULTIPLE FINANCIAL MECHANISMS. An owner or operator may use more than one mechanism at a particular facility to satisfy the requirements of this section. The acceptable mechanisms are trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, insurance, the financial test, and the guarantee, except owners or operators cannot combine the financial test with the guarantee. The mechanisms shall be as specified in subs. (1), (2), (4), (5), (6), and (7) respectively, except it is the combination of mechanisms rather than a single mechanism that shall provide assurance for an amount at least equal to the cost estimate. If an owner or operator uses a trust fund in combination with a surety bond or letter of credit, the owner or operator may use the trust fund as the standby trust for the other mechanisms. A single trust fund may be established for 2 or more mechanisms. The department may use any or all of the mechanisms to provide for closure of the facility.(9) USE OF A FINANCIAL MECHANISM FOR MULTIPLE FACILITIES. An owner or operator may use a financial mechanism for multiple facilities, as specified in s. NR 664.0143(8).(10) RELEASE OF THE OWNER OR OPERATOR FROM THE REQUIREMENTS OF THIS SECTION. Within 60 days after receiving certifications from the owner or operator and an independent registered professional engineer that final closure has been completed in accordance with the approved closure plan, the department shall notify the owner or operator in writing that the owner or operator is no longer required by this section to maintain financial assurance for final closure of the facility, unless the department has reason to believe that final closure has not been completed in accordance with the approved closure plan. The department shall provide the owner or operator with a detailed written statement of any such reasons to believe that closure has not been conducted in accordance with the approved closure plan.Wis. Admin. Code Department of Natural Resources NR 667.0143
Adopted by, CR 16-007: cr. Register July 2017 No. 739, eff. 8-1-17; correction in (7) (c) 5. b. made under s. 35.17, Stats., Register July 2017 No. 739, eff.8/1/2017