40 CFR Part 264 -- STANDARDS FOR
OWNERS AND OPERATORS OF HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL FACILITIES
§264.147 Liability requirements.
(g) Guarantee for liability coverage. (1) Subject to paragraph (g)(2) of this section, 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 paragraphs (f)(1) through (f)(6) of this
section. The wording of the guarantee must be identical to the wording specified in
§264.151(h)(2) of this part. A certified copy of the guarantee must accompany the items
sent to the Regional Administrator as specified in (f)(3) of this section. 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.
(i) If the owner or operator fails to satisfy a judgment based on a determination of
liability for bodily injury or property damage to third parties caused by sudden or
nonsudden accidental occurrences (or both as the case may be), arising from the operation
of facilities covered by this 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.
(ii) (Reserved)
(2)(i) 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 (A) the State in which the guarantor is incorporated, and (B)
each State in which a facility covered by the guarantee is located have submitted a
written statement to EPA that a guarantee executed as described in this section and
§264.151(h)(2) is a legally valid and enforceable obligation in that State.
(ii) 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-U.S. 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 EPA
that a guarantee executed as described in this section and §264.151(h)(2) is a legally
valid and enforceable obligation in that State.
(h) Letter of credit for liability coverage. (1) An owner or operator may satisfy the
requirements of this section by obtaining an irrevocable standby letter or credit that
conforms to the requirements of this paragraph and submitting a copy of the letter of
credit to the Regional Administrator.
(2) The financial institution issuing the letter of credit must be an entity that has the
authority to issue letters of credit and whose letter of credit operations are regulated
and examined by a Federal or State agency.
(3) The wording of the letter of credit must be identical to the wording specified in
§264.151(k) of this part.
(i) Surety bond for liability coverage. (1) An owner or operator may satisfy the
requirements of this section by obtaining a surety bond that conforms to the requirements
of this paragraph and submitting a copy of the bond to the Regional Administrator.
(2) The surety company issuing the bond must be among those listed as acceptable sureties
on Federal bonds in the most recent Circular 570 of the U.S. Department of the Treasury.
(3) The wording of the surety bond must be identical to the wording specified in
§264.151(l) of this part.
(4) A surety bond may be used to satisfy the requirements of this section only if the
Attorneys General or Insurance Commissioners of (i) the State in which the surety is
incorporated, and (ii) each State in which a facility covered by the surety bond is
located have submitted a written statement to EPA that a surety bond executed as described
in this section and §264.151(l) of this part is a legally valid and enforceable
obligation in that State.
(j) Trust fund for liability coverage. (1) An owner or operator may satisfy the
requirements of this section by establishing a trust fund that conforms to the
requirements of this paragraph and submitting an originally signed duplicate of the trust
agreement to the Regional Administrator.
(2) 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.
(3) The trust fund for liability coverage must be funded for the full amount of the
liability coverage to be provided by the trust fund before it may be relied upon to
satisfy the requirements of this section. If at any time after the trust fund is created
the amount of funds in the trust fund is reduced below the full amount of the liability
coverage to be provided, the owner or operator, by the anniversary date of the
establishment of the fund, must either add sufficient funds to the trust fund to cause its
value to equal the full amount of liability coverage to be provided, or obtain other
financial assurance as specified in this section to cover the difference. For purposes of
this paragraph, "the full amount of the liability coverage to be provided'' means the
amount of coverage for sudden and/or nonsudden occurrences required to be provided by the
owner or operator by this section, less the amount of financial assurance for liability
coverage that is being provided by other financial assurance mechanisms being used to
demonstrate financial assurance by the owner or operator.
(4) The wording of the trust fund must be identical to the wording specified in
§264.151(m) of this part.
(k) Notwithstanding any other provision of this part, an owner or operator using liability
insurance to satisfy the requirements of this may use, until October 16, 1982, a Hazardous
Waste Facility Liability Endorsement or Certificate of Liability Insurance that does not
certify that the insurer is licensed to transact the business of insurance, or eligible as
an excess or surplus lines insurer, in one or more States.
(Approved by the Office of Management and Budget under control number 2000-0445, for
paragraphs (a)(1)(i), (b)(1)(i), (c), (d), and (f)(3) through (6))
(47 FR 16554, Apr. 16, 1982, as amended at 47 FR 28627, July 1, 1982; 47 FR 30447, July
13, 1982; 48 FR 30115, June 30, 1983; 51 FR 16450, May 2, 1986; 51 FR 25354, July 11,
1986; 52 FR 44320, Nov. 18, 1987; 52 FR 46964, Dec. 10, 1987; 53 FR 33950, Sept. 1, 1988;
56 FR 30200, July 1, 1991)
§264.148 Incapacity of owners or operators, guarantors, or financial institutions.
(a) An owner or operator must notify the Regional Administrator by mail of the
commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S.
Code, naming the owner or operator as debtor, within 10 days after commencement of the
proceeding. A guarantor of a corporate guarantee as specified in §264.143(f) and
§264.145(f) must make such a notification if he is named as debtor, as required under the
terms of the corporate guarantee (§264.151(h)).
(b) An owner or operator who fulfills the requirements of §§264.143, 264.145, or 264.147
by obtaining a trust fund, surety bond, letter of credit, or insurance policy will be
deemed to be without the required financial assurance or liability coverage in the event
of bankruptcy of the trustee or issuing institution, or a suspension or revocation of the
authority of the trustee institution to act as trustee or of the institution issuing the
surety bond, letter of credit, or insurance policy to issue such instruments. The owner or
operator must establish other financial assurance or liability coverage within 60 days
after such an event.
§264.149 Use of State-required mechanisms.
(a) For a facility located in a State where EPA is administering the requirements of this
subpart but where the State has hazardous waste regulations that include requirements for
financial assurance of closure or post-closure care or liability coverage, an owner or
operator may use State-required financial mechanisms to meet the requirements of
§§264.143, 264.145, or 264.147, if the Regional Administrator determines that the State
mechanisms are at least equivalent to the financial mechanism specified in this subpart.
The Regional Administrator will evaluate the equivalency of the mechanisms principally in
terms of (1) certainty of the availability of funds for the required closure or
post-closure care activities or liability coverage and (2) the amount of funds that will
be made available. The Administrator may also consider other factors as he deems
appropriate. The owner or operator must submit to the Regional Administrator evidence of
the establishment of the mechanism together with a letter requesting that the
State-required mechanism be considered acceptable for meeting the requirements of this
subpart. The submission must include the following information: The facility's EPA
Identification Number, name, and address, and the amount of funds for closure or
post-closure care or liability coverage assured by the mechanism. The Regional
Administrator will notify the owner or operator of his determination regarding the
mechanism's acceptability in lieu of financial mechanisms specified in this subpart. The
Regional Administrator may require the owner or operator to submit additional information
as is deemed necessary to make this determination. Pending this determination, the owner
or operator will be deemed to be in compliance with the requirements of §264.143,
264.145, or 264.147, as applicable.
(b) If a State-required mechanism is found acceptable as specified in paragraph (a) of
this section except for the amount of funds available, the owner or operator may satisfy
the requirements of this subpart by increasing the funds available through the
State-required mechanism or using additional financial mechanisms as specified in this
subpart. The amount of funds available through the State and Federal mechanisms must at
least equal the amount required by this subpart.
§264.150 State assumption of responsibility.
(a) If a State either assumes legal responsibility for an owner's or operator's compliance
with the closure, post-closure care, or liability requirements of this part or assures
that funds will be available from State sources to cover those requirements, the owner or
operator will be in compliance with the requirements of §§264.143, 264.145, or 264.147
if the Regional Administrator determines that the State's assumption of responsibility is
at least equivalent to the financial mechanisms specified in this subpart. The Regional
Administrator will evaluate the equivalency of State guarantees principally in terms of
(1) certainty of the availability of funds for the required closure or post-closure care
activities or liability coverage and (2) the amount of funds that will be made available.
The Administrator may also consider other factors as he deems appropriate. The owner or
operator must submit to the Regional Administrator a letter from the State describing the
nature of the State's assumption of responsibility together with a letter from the owner
or operator requesting that the State's assumption of responsibility be considered
acceptable for meeting the requirements of this subpart. The letter from the State must
include, or have attached to it, the following information: the facility's EPA
Identification Number, name, and address, and the amount of funds for closure or
post-closure care or liability coverage that are guaranteed by the State. The Regional
Administrator will notify the owner or operator of his determination regarding the
acceptability of the State's guarantee in lieu of financial mechanisms specified in this
subpart. The Regional Administrator may require the owner or operator to submit additional
information as is deemed necessary to make this determination. Pending this determination,
the owner or operator will be deemed to be in compliance with the requirements of
§§264.143, 264.145, or 264.147, as applicable.
(b) If a State's assumption of responsibility is found acceptable as specified in
paragraph (a) of this section except for the amount of funds available, the owner or
operator may satisfy the requirements of this subpart by use of both the State's assurance
and additional financial mechanisms as specified in this subpart. The amount of funds
available through the State and Federal mechanisms must at least equal the amount required
by this subpart.
§264.151 Wording of the instruments.
(a)(1) A trust agreement for a trust fund, as specified in §264.143(a) or §264.145(a) or
§265.143(a) or §265.145(a) of this chapter, must be worded as follows, except that
instructions in brackets are to be replaced with the relevant information and the brackets
deleted:
Trust Agreement
Trust Agreement, the "Agreement,'' entered into as of (date) by and between (name of
the owner or operator), a (name of State) (insert "partnership,''
"association,'' or "proprietorship''), the "Grantor,'' and (name of
corporate trustee), (insert "incorporated in the State of ---- '' or "a national
bank''), the "Trustee.''
Whereas, the United States Environmental Protection Agency, "EPA,'' an agency of the
United States Government, has established certain regulations applicable to the Grantor,
requiring that an owner or operator of a hazardous waste management facility shall provide
assurance that funds will be available when needed for closure and/or post-closure care of
the facility,
Whereas, the Grantor has elected to establish a trust to provide all or part of such
financial assurance for the facilities identified herein,
Whereas, the Grantor, acting through its duly authorized officers, has selected the
Trustee to be the trustee under this agreement, and the Trustee is willing to act as
trustee,
Now, Therefore, the Grantor and the Trustee agree as follows:
Section 1. Definitions. As used in this Agreement:
(a) The term "Grantor'' means the owner or operator who enters into this Agreement
and any successors or assigns of the Grantor.
(b) The term "Trustee'' means the Trustee who enters into this Agreement and any
successor Trustee.
Section 2. Identification of Facilities and Cost Estimates. This Agreement pertains to the
facilities and cost estimates identified on attached Schedule A (on Schedule A, for each
facility list the EPA Identification Number, name, address, and the current closure and/or
post-closure cost estimates, or portions thereof, for which financial assurance is
demonstrated by this Agreement).
Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust
fund, the "Fund,'' for the benefit of EPA. The Grantor and the Trustee intend that no
third party have access to the Fund except as herein provided. The Fund is established
initially as consisting of the property, which is acceptable to the Trustee, described in
Schedule B attached hereto. Such property and any other property subsequently transferred
to the Trustee is referred to as the Fund, together with all earnings and profits thereon,
less any payments or distributions made by the Trustee pursuant to this Agreement. The
Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall
not be responsible nor shall it undertake any responsibility for the amount or adequacy
of, nor any duty to collect from the Grantor, any payments necessary to discharge any
liabilities of the Grantor established by EPA.
Section 4. Payment for Closure and Post-Closure Care. The Trustee shall make payments from
the Fund as the EPA Regional Administrator shall direct, in writing, to provide for the
payment of the costs of closure and/or post-closure care of the facilities covered by this
Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the
EPA Regional Administrator from the Fund for closure and post-closure expenditures in such
amounts as the EPA Regional Administrator shall direct in writing. In addition, the
Trustee shall refund to the Grantor such amounts as the EPA Regional Administrator
specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund
as defined herein.
Section 5. Payments Comprising the Fund. Payments made to the Trustee for the Fund shall
consist of cash or securities acceptable to the Trustee.
Section 6. Trustee Management. The Trustee shall invest and reinvest the principal and
income of the Fund and keep the Fund invested as a single fund, without distinction
between principal and income, in accordance with general investment policies and
guidelines which the Grantor may communicate in writing to the Trustee from time to time,
subject, however, to the provisions of this section. In investing, reinvesting,
exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with
respect to the trust fund solely in the interest of the beneficiary and with the care,
skill, prudence, and diligence under the circumstances then prevailing which persons of
prudence, acting in a like capacity and familiar with such matters, would use in the
conduct of an enterprise of a like character and with like aims; except that:
(i) Securities or other obligations of the Grantor, or any other owner or operator of the
facilities, or any of their affiliates as defined in the Investment Company Act of 1940,
as amended, 15 U.S.C. 80a-2.(a), shall not be acquired or held, unless they are securities
or other obligations of the Federal or a State government;
(ii) The Trustee is authorized to invest the Fund in time or demand deposits of the
Trustee, to the extent insured by an agency of the Federal or State government; and
(iii) The Trustee is authorized to hold cash awaiting investment or distribution
uninvested for a reasonable time and without liability for the payment of interest
thereon.
Section 7. Commingling and Investment. The Trustee is expressly authorized in its
discretion:
(a) To transfer from time to time any or all of the assets of the Fund to any common,
commingled, or collective trust fund created by the Trustee in which the Fund is eligible
to participate, subject to all of the provisions thereof, to be commingled with the assets
of other trusts participating therein; and
(b) To purchase shares in any investment company registered under the Investment Company
Act of 1940, 15 U.S.C. 80a-1 et seq., including which may be created, managed,
underwritten, or to which investment advice is rendered or the shares of which are sold by
the Trustee. The Trustee may vote such shares in its discretion.
Section 8. Express Powers of Trustee. Without in any way limiting the powers and
discretions conferred upon the Trustee by the other provisions of this Agreement or by
law, the Trustee is expressly authorized and empowered:
(a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it,
by public or private sale. No person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity or expediency of any
such sale or other disposition;
(b) To make, execute, acknowledge, and deliver any and all documents of transfer and
conveyance and any and all other instruments that may be necessary or appropriate to carry
out the powers herein granted;
(c) To register any securities held in the Fund in its own name or in the name of a
nominee and to hold any security in bearer form or in book entry, or to combine
certificates representing such securities with certificates of the same issue held by the
Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such in
a qualified central depositary even though, when so deposited, such securities may be
merged and held in bulk in the name of the nominee of such depositary with other
securities deposited therein by another person, or to deposit or arrange for the deposit
of any securities issued by the United States Government, or any agency or instrumentality
thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at
all times show that all such securities are part of the Fund;
(d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings
certificates issued by the Trustee, in its separate corporate capacity, or in any other
banking institution affiliated with the Trustee, to the extent insured by an agency of the
Federal or State government; and
(e) To compromise or otherwise adjust all claims in favor of or against the Fund.
Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied
against or in respect of the Fund and all brokerage commissions incurred by the Fund shall
be paid from the Fund. All other expenses incurred by the Trustee in connection with the
administration of this Trust, including fees for legal services rendered to the Trustee,
the compensation of the Trustee to the extent not paid directly by the Grantor, and all
other proper charges and disbursements of the Trustee shall be paid from the Fund.
Section 10. Annual Valuation. The Trustee shall annually, at least 30 days prior to the
anniversary date of establishment of the Fund, furnish to the Grantor and to the
appropriate EPA Regional Administrator a statement confirming the value of the Trust. Any
securities in the Fund shall be valued at market value as of no more than 60 days prior to
the anniversary date of establishment of the Fund. The failure of the Grantor to object in
writing to the Trustee within 90 days after the statement has been furnished to the
Grantor and the EPA Regional Administrator shall constitute a conclusively binding assent
by the Grantor, barring the Grantor from asserting any claim or liability against the
Trustee with respect to matters disclosed in the statement.
Section 11. Advice of Counsel. The Trustee may from time to time consult with counsel, who
may be counsel to the Grantor, with respect to any question arising as to the construction
of this Agreement or any action to be taken hereunder. The Trustee shall be fully
protected, to the extent permitted by law, in acting upon the advice of counsel.
Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation
for its services as agreed upon in writing from time to time with the Grantor.
Section 13. Successor Trustee. The Trustee may resign or the Grantor may replace the
Trustee, but such resignation or replacement shall not be effective until the Grantor has
appointed a successor trustee and this successor accepts the appointment. The successor
trustee shall have the same powers and duties as those conferred upon the Trustee
hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall
assign, transfer, and pay over to the successor trustee the funds and properties then
constituting the Fund. If for any reason the Grantor cannot or does not act in the event
of the resignation of the Trustee, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor trustee or for instructions. The successor
trustee shall specify the date on which it assumes administration of the trust in a
writing sent to the Grantor, the EPA Regional Administrator, and the present Trustee by
certified mail 10 days before such change becomes effective. Any expenses incurred by the
Trustee as a result of any of the acts contemplated by this Section shall be paid as
provided in Section 9.
Section 14. Instructions to the Trustee. All orders, requests, and instructions by the
Grantor to the Trustee shall be in writing, signed by such persons as are designated in
the attached Exhibit A or such other designees as the Grantor may designate by amendment
to Exhibit A. The Trustee shall be fully protected in acting without inquiry in accordance
with the Grantor's orders, requests, and instructions. All orders, requests, and
instructions by the EPA Regional Administrator to the Trustee shall be in writing, signed
by the EPA Regional Administrators of the Regions in which the facilities are located, or
their designees, and the Trustee shall act and shall be fully protected in acting in
accordance with such orders, requests, and instructions. The Trustee shall have the right
to assume, in the absence of written notice to the contrary, that no event constituting a
change or a termination of the authority of any person to act on behalf of the Grantor or
EPA hereunder has occurred. The Trustee shall have no duty to act in the absence of such
orders, requests, and instructions from the Grantor and/or EPA, except as provided for
herein.
Section 15. Notice of Nonpayment. The Trustee shall notify the Grantor and the appropriate
EPA Regional Administrator, by certified mail within 10 days following the expiration of
the 30-day period after the anniversary of the establishment of the Trust, if no payment
is received from the Grantor during that period. After the pay-in period is completed, the
Trustee shall not be required to send a notice of nonpayment.
Section 16. Amendment of Agreement. This Agreement may be amended by an instrument in
writing executed by the Grantor, the Trustee, and the appropriate EPA Regional
Administrator, or by the Trustee and the appropriate EPA Regional Administrator if the
Grantor ceases to exist.
Section 17. Irrevocability and Termination. Subject to the right of the parties to amend
this Agreement as provided in Section 16, this Trust shall be irrevocable and shall
continue until terminated at the written agreement of the Grantor, the Trustee, and the
EPA Regional Administrator, or by the Trustee and the EPA Regional Administrator, if the
Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less
final trust administration expenses, shall be delivered to the Grantor.
Section 18. Immunity and Indemnification. The Trustee shall not incur personal liability
of any nature in connection with any act or omission, made in good faith, in the
administration of this Trust, or in carrying out any directions by the Grantor or the EPA
Regional Administrator issued in accordance with this Agreement. The Trustee shall be
indemnified and saved harmless by the Grantor or from the Trust Fund, or both, from and
against any personal liability to which the Trustee may be subjected by reason of any act
or conduct in its official capacity, including all expenses reasonably incurred in its
defense in the event the Grantor fails to provide such defense.
Section 19. Choice of Law. This Agreement shall be administered, construed, and enforced
according to the laws of the State of (insert name of State).
Section 20. Interpretation. As used in this Agreement, words in the singular include the
plural and words in the plural include the singular. The descriptive headings for each
Section of this Agreement shall not affect the interpretation or the legal efficacy of
this Agreement.
In Witness Whereof the parties have caused this Agreement to be executed by their
respective officers duly authorized and their corporate seals to be hereunto affixed and
attested as of the date first above written: The parties below certify that the wording of
this Agreement is identical to the wording specified in 40 CFR §264.151(a)(1) as such
regulations were constituted on the date first above written.
(Signature of Grantor)
(Title)
Attest:
(Title)
(Seal)
(Signature of Trustee)
Attest:
(Title)
(Seal)
(2) The following is an example of the certification of acknowledgment which must
accompany the trust agreement for a trust fund as specified in §§264.143(a) and
264.145(a) or §265.143(a) or §265.145(a) of this chapter. State requirements may differ
on the proper content of this acknowledgment.
State of
County of
On this (date), before me personally came (owner or operator) to me known, who, being by
me duly sworn, did depose and say that she/he resides at (address), that she/he is (title)
of (corporation), the corporation described in and which executed the above instrument;
that she/he knows the seal of said corporation; that the seal affixed to such instrument
is such corporate seal; that it was so affixed by order of the Board of Directors of said
corporation, and that she/he signed her/his name thereto by like order.
(Signature of Notary Public)