Section NR 520.06 - Methods of providing proof of financial responsibilityFinancial assurances for closure, long-term care and remedial actions where required, shall be established separately. The owner shall specify, as part of the plan of operation submittal, which method of providing proof of financial responsibility will be used for closure and for long-term care. To provide proof of financial responsibility, the applicant shall use only one of the following methods for each account:
(1) PERFORMANCE OR FORFEITURE BOND. (a) If the owner chooses to submit a bond, it shall be in the amount determined according to s. NR 520.08(1) (b), (2) (b) or (3) (b), if required, conditioned upon faithful performance by the owner and any successor in interest, of all closure or long-term care requirements of the approved plan of operation or subsequent remedial actions required by the department. Bonds for closure or long-term care shall be delivered to the department as part of the initial operating license application. All bonds shall be established using forms supplied by the department.(b) Bonds shall be issued by a surety company among those listed as acceptable sureties for federal bonds in Circular 570 of the U.S. department of the treasury. At the option of the owner, a performance bond or a forfeiture bond may be filed. The department shall be the obligee of the bond. Surety companies may have the opportunity to complete the closure or long-term care of the facility in lieu of cash payment to the department if the owner or any successor in interest fails to carry out the closure or long-term care requirements of the approved plan of operation. The department shall mail notification of its intent to use the funds for that purpose to the last known address of the owner. If the owner submits a written request for a hearing to the secretary of the department within 20 days after the mailing of the notification, the department shall, prior to using the funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out. Note: Copies of Circular 570, "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies" can be obtained from surety bond branch, financial management service, department of the treasury, Washington D.C. 20227, phone (202) 874-6850. Copies are available for inspection at the offices of the department of natural resources, the secretary of state, and the legislative reference bureau.
(c) Each bond shall provide that, as long as any obligation of the owner for closure or long-term care remains, the bond may not be canceled by the surety, unless a replacement bond or other proof of financial responsibility under this section is provided to the department by the owner. If the surety proposes to cancel such a bond, the surety shall provide notice to the department and to the owner in writing by registered or certified mail not less than 90 days prior to the proposed cancellation date. Not less than 30 days prior to the expiration of the 90-day notice period, the owner shall deliver to the department a replacement bond or other proof of financial responsibility under this section, in the absence of which all disposal operations shall immediately cease and the bond shall remain in effect as long as any obligation of the owner remains for closure or long-term care. The surety may discharge its obligation under the bond at anytime by paying the unused portion of the bond to the department.(d) If the surety company becomes bankrupt or insolvent or if its authorization to do business is revoked or suspended, the owner shall, within 30 days after receiving written notice, deliver to the department a replacement bond or other proof of financial responsibility under this section, in the absence of which all disposal operations shall immediately cease and the bond shall remain in effect as long as any obligation of the owner remains for closure or long-term care.(2) DEPOSIT WITH THE DEPARTMENT. If the owner chooses to deposit cash, certificates of deposit or U.S. government securities with the department, the amount of the deposit shall be determined according to s. NR 520.08(1) (a), (2) (a) or (3) (a), if required, and deposits for closure or long-term care shall be submitted as part of the initial license application. Cash deposits placed with the department shall be segregated and invested in an interest bearing account. All interest payments shall be accumulated in the account. The department shall have the right to use part or all of the funds to carry out the closure or long-term care requirements of the approved plan of operation if the owner fails to do so. The department shall mail notification of its intent to use funds for that purpose to the last known address of the owner. If the owner submits a written request for a hearing to the secretary of the department within 20 days after the mailing of notification, the department shall, prior to using the funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out.(3) ESCROW ACCOUNT. If the owner establishes an escrow account, the amount shall be determined according to s. NR 520.08(1) (a), (2) (a) or (3) (a), if required, and the account shall be with a bank or financial institution located within the state of Wisconsin which is examined and regulated by the state or a federal agency. The assets in the escrow account shall consist of cash, certificates of deposit, or U.S. government securities. A total of no more than $100,000 in cash and certificates of deposit may be placed into escrow accounts or trust accounts established by the owner in the same bank or financial institution for the purposes of providing financial assurance to the department. U.S. government securities shall be used in these escrow or trust accounts for amounts in excess of $100,000. All interest or coupon payments shall accumulate in the account. A duplicate original of the escrow agreement for closure or long-term care, with original signatures shall be submitted to the department as part of the initial operating license application. Escrow account forms shall be supplied by the department. The department shall be a party to the escrow agreement, which shall provide that there shall be no withdrawals from the escrow account except as authorized in writing by the department. The escrow agreement shall further provide that the department shall have the right to withdraw and use part or all of the funds in the escrow account to carry out the closure or long-term care requirements of the approved plan of operation if the owner fails to do so. The department shall mail notification of its intent to use funds for that purpose to the last known address of the owner. If the owner submits a written request for a hearing to the secretary of the department within 20 days after the mailing of the notification, the department shall, prior to using the funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out.(4) IRREVOCABLE TRUST. If the owner creates an irrevocable trust, it shall be exclusively for the purpose of ensuring that the owner or any successor in interest will comply with the closure or long-term care requirements of the approved plan of operation. The trust agreement shall designate the department as sole beneficiary. The trustee shall be a bank or other financial institution located within the state of Wisconsin which has the authority to act as a trustee and whose trust operations are regulated and examined by the state or a federal agency. The trust corpus shall consist of cash, certificates of deposit, or U.S. government securities in the amount determined according to s. NR 520.08(1) (a), (2) (a) or (3) (a), if required. A total of no more than $100,000 in cash and certificates of deposit may be placed into escrow accounts or trust accounts established by the owner in the same bank or financial institution for the purposes of providing financial assurance to the department. U.S. government securities shall be used in these escrow or trust accounts for amounts in excess of $100,000. All interest or coupon payments shall accumulate in the account. A duplicate original of the trust agreement for closure or long-term care, with original signatures shall be submitted to the department for approval as part of the initial operating license application. Trust forms shall be supplied by the department. The trust agreement shall provide that there shall be no withdrawal from the trust fund except as authorized in writing by the department. The trust agreement shall further provide that sufficient monies shall be paid from the trust fund to the beneficiary in the event that the owner or any successor in interest fails to complete the closure or long-term care requirements of the approved plan of operation. The department shall mail notification of its intent to use funds for that purpose to the last known address of the owner. If the owner submits a written request for a hearing to the secretary of the department within 20 days after the mailing of the notification, the department shall, prior to using the funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out.(5) LETTER OF CREDIT. (a) If the owner chooses to submit a letter of credit, it shall be in the amount determined according to s. NR 520.08(1) (b), (2) (b) or (3) (b), if required, and available exclusively for the purpose of assuring that all closure or long-term care requirements of the approved plan of operation will be complied with. The original letter of credit for closure or long-term care shall be delivered to the department as part of the initial operating license application. Letter of credit forms shall be supplied by the department.(b) Letters of credit shall be issued by a bank or financial institution which has the authority to issue letters of credit and whose letter of credit operations are examined and regulated by a federal agency, or in the case of a bank or financial institution located within the state of Wisconsin, which is examined and regulated by the state or a federal agency. The department shall be the beneficiary of the letter of credit.(c) The letter of credit shall provide either that the unused portion of the letter of credit shall be payable in full to the department upon the expiration of the letter of credit or that as long as any obligation of the owner for closure or long-term care remains, the letter of credit may not be canceled by the bank or financial institution, unless a replacement letter of credit or other proof of financial responsibility under this section is provided to the department by the owner. If the bank or financial institution proposes to cancel a letter of credit, the bank or financial institution shall provide notice to the department and the owner in writing by registered or certified mail not less than 90 days prior to the proposed cancellation date. Not less than 30 days prior to the expiration date of the 90-day notice period, the owner shall deliver to the department a replacement letter of credit or other proof of financial responsibility under this section, in the absence of which all disposal operations shall immediately cease and either the letter of credit shall remain in effect as long as any obligation of the owner remains for closure or long-term care or the unused portion of the letter of credit shall be payable in full to the department.(d) If the bank or financial institution becomes bankrupt or insolvent or if its authorization to do business is revoked or suspended, the owner shall, within 30 days after receiving written notice, deliver to the department a replacement letter of credit or other proof of financial responsibility under this section, in the absence of which all disposal operations shall immediately cease and the letter of credit shall either remain in effect as long as any obligation of the owner remains for closure or long-term care or be payable in full to the department.(e) The letter of credit shall further provide that the department has the right to withdraw and use part or all of the funds to carry out the closure or long-term care requirements of the plan of operation if the owner fails to do so. The department shall mail notification of its intent to use the funds for that purpose to the last known address of the owner. If the owner submits a written request for a hearing to the secretary of the department, within 20 days after the mailing of the notification, the department shall, prior to using the funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out.(6) NET WORTH TEST.(a) Only a company that meets the definition in s. 289.41(1) (b), Stats., may use the net worth method of providing proof of financial responsibility.(b) The company shall comply with the net worth test requirements of s. 289.41(4) and (6) or (7), Stats., and the minimum security requirements of s. 289.41(9), Stats., whichever is applicable.(c) A company using the net worth test to provide proof of financial responsibility for more than one facility shall use the total cost of compliance for all facilities in determining the net worth to closure and long-term care cost ratio.(d) The department determinations under the net worth test shall be done in accordance with s. 289.41(5), Stats.(7) INSURANCE. (a) If the owner chooses to submit an insurance policy for closure or long-term care, it shall be issued for the maximum risk limit determined according to s. NR 520.08(1) (b), (2) (b) or (3) (b), if required. A certificate of insurance for closure or long-term care shall be delivered to the department as part of the initial operating license application. Certificate of insurance forms shall be supplied by the department.(b) Except for captive insurance companies, the insurer shall be licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in one or more states. The department, after conferring with the Wisconsin insurance commissioner, shall determine the acceptability of a surplus lines or captive insurance company to provide coverage for proof of financial responsibility. The department shall ask the insurance commissioner to provide a financial analysis of the insurer including a recommendation as to the insurer's ability to provide the required coverage. The department shall be the beneficiary of the insurance policy. The department may require a periodic review of the acceptability of a surplus lines or captive insurance company.(c) The insurance policy shall provide either that the unused proceeds of the policy shall be payable in full to the department upon expiration of the policy or that, as long as any obligation of the owner for closure or long-term care remains, the insurance policy may not be canceled by the insurer unless a replacement insurance policy or other proof of financial responsibility under this section is provided to the department by the owner. If the insurer proposes to cancel an insurance policy, the insurer shall provide notice to the department and to the owner in writing by registered or certified mail not less than 90 days prior to the proposed cancellation date. Not less than 30 days prior to the expiration of the 90-day notice period, the owner shall deliver to the department a replacement insurance policy or other proof of financial responsibility under this section, in the absence of which all disposal operations shall immediately cease and either the policy shall remain in effect as long as any obligation of the owner remains for closure or long-term care or the proceeds of the policy shall be payable in full to the department.(d) If the insurance company becomes bankrupt or insolvent or if the company receives an unfavorable evaluation under s. 618.41(6) (d), Stats., the owner shall, within 30 days after receiving written notice, deliver to the department a replacement insurance policy or other proof of financial responsibility under this section in the absence of which all disposal operations shall immediately cease and the policy shall either remain in effect as long as any obligation of the owner remains for closure or long-term care or be payable in full to the department.(e) The insurance policy shall further provide that funds, up to an amount equal to the maximum risk limit of the policy, will be available to the department to carry out the closure and long-term care requirements of the approved plan of operation if the owner fails to do so. The department shall mail notification of its intent to use the funds for that purpose to the last known address of the owner. If the insurer or owner submits a written request for a hearing to the secretary of the department within 20 days after the mailing of the notification, the department shall, prior to using funds, hold a hearing for the purpose of determining whether or not the closure or long-term care requirements of the approved plan of operation have been carried out.(f) Each insurance policy shall contain a provision allowing assignment of the policy to a successor owner or operator. Assignment may be conditioned upon the consent of the insurer, provided consent is not unreasonably refused. Note: These forms may be obtained from the Department of Natural Resources, Bureau of Waste Management, P.O. Box 7921, Madison, WI 53707 or any DNR region office.
(8) OTHER METHODS. The department shall consider other financial commitments made payable to or established for the benefit of the department to ensure the owner or operator will comply with the closure and long-term care requirements of the approved plan of operation. The department shall review the request of any owner or operator to establish proof of financial responsibility to determine whether the proposed method provides a degree of assurance that is comparable to that provided by the methods listed in this section. The owner shall submit the request and all supporting information as part of the plan of operation.Wis. Admin. Code Department of Natural Resources § NR 520.06
Cr. Register, January, 1988, No. 385, eff. 2-6-88; am. (intro.), (1) (a), (b), (2) to (4), (5) (a), (b), (7) (a), (b), Register, June, 1996, No. 486, eff. 7-1-96; correction in (6) (b) was made under s. 13.93(2m) (b) 7, Stats., Register March 2003 No. 567.