40 CFR Part 264 -- STANDARDS FOR
OWNERS AND OPERATORS OF HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL FACILITIES
§264.143 Financial assurance for closure.
(f) Financial test and corporate guarantee for closure. (1) An owner or operator may
satisfy the requirements of this section by demonstrating that he passes a financial test
as specified in this paragraph. To pass this test the owner or operator must meet the
criteria of either paragraph (f)(1)(i) or (ii) of this section:
(i) The owner or operator must have:
(A) Two of the following three ratios: a ratio of total liabilities to net worth less than
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; and
(B) Net working capital and tangible net worth each at least six times the sum of the
current closure and post-closure cost estimates and the current plugging and abandonment
cost estimates; and
(C) Tangible net worth of at least $10 million; and
(D) 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:
(A) 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; and
(B) 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; and
(C) Tangible net worth of at least $10 million; and
(D) 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.
(2) The phrase "current closure and post-closure cost estimates'' as used in
paragraph (f)(1) of this section refers to the cost estimates required to be shown in
paragraphs 1-4 of the letter from the owner's or operator's chief financial officer
(§264.151(f)). The phrase "current plugging and abandonment cost estimates'' as used
in paragraph (f)(1) of this section refers to the cost estimates required to be shown in
paragraphs 1-4 of the letter from the owner's or operator's chief financial officer
(144.70(f) of this title).
(3) To demonstrate that he meets this test, the owner or operator must submit the
following items to the Regional Administrator:
(i) A letter signed by the owner's or operator's chief financial officer and worded as
specified in §264.151(f); 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:
(A) 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; and
(B) In connection with that procedure, no matters came to his attention which caused him
to believe that the specified data should be adjusted.
(4) An owner or operator of a new facility must submit the items specified in paragraph
(f)(3) of this section to the Regional Administrator at least 60 days before the date on
which hazardous waste is first received for treatment, storage, or disposal.
(5) After the initial submission of items specified in paragraph (f)(3) of this section,
the owner or operator must send updated information to the Regional Administrator within
90 days after the close of each succeeding fiscal year. This information must consist of
all three items specified in paragraph (f)(3) of this section.
(6) If the owner or operator no longer meets the requirements of paragraph (f)(1) of this
section, he must send notice to the Regional Administrator of intent to establish
alternate financial assurance as specified in this section. 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.
(7) The Regional Administrator may, based on a reasonable belief that the owner or
operator may no longer meet the requirements of paragraph (f)(1) of this section, require
reports of financial condition at any time from the owner or operator in addition to those
specified in paragraph (f)(3) of this section. If the Regional Administrator finds, on the
basis of such reports or other information, that the owner or operator no longer meets the
requirements of paragraph (f)(1) of this section, the owner or operator must provide
alternate financial assurance as specified in this section within 30 days after
notification of such a finding.
(8) The Regional Administrator 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 (see paragraph
(f)(3)(ii) of this section). An adverse opinion or a disclaimer of opinion will be cause
for disallowance. The Regional Administrator will evaluate other qualifications on an
individual basis. The owner or operator must provide alternate financial assurance as
specified in this section within 30 days after notification of the disallowance.
(9) The owner or operator is no longer required to submit the items specified in paragraph
(f)(3) of this section when:
(i) An owner or operator substitutes alternate financial assurance specified in this
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §264.143(i).
(10) An owner or operator may meet the requirements of this section by obtaining a written
guarantee, hereafter referred to as "corporate guarantee.'' The guarantor must be the
parent corporation of the owner or operator. The guarantor must meet the requirements for
owners or operators in paragraphs (f)(1) through (8) of this section and must comply with
the terms of the corporate guarantee. The wording of the corporate guarantee must be
identical to the wording specified in §264.151(h). The corporate guarantee must accompany
the items sent to the Regional Administrator as specified in paragraph (f)(3) of this
section. The terms of the corporate guarantee must provide that:
(i) If the owner or operator fails to perform final closure of a facility covered by the
corporate guarantee in accordance with the closure plan and other permit requirements
whenever required to do so, the guarantor will do so or establish a trust fund as
specified in §264.143(a) 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 Regional Administrator.
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 Regional
Administrator, as evidenced by the return receipts.
(iii) If the owner or operator fails to provide alternate financial assurance as specified
in this section and obtain the written approval of such alternate assurance from the
Regional Administrator within 90 days after receipt by both the owner or operator and the
Regional Administrator of a notice of cancellation of the corporate guarantee from the
guarantor, the guarantor will provide such alternative financial assurance in the name of
the owner or operator.
(g) Use of multiple financial mechanisms. An owner or operator may satisfy the
requirements of this section by establishing more than one financial mechanism per
facility. These mechanisms are limited to trust funds, surety bonds guaranteeing payment
into a trust fund, letters of credit, and insurance. The mechanisms must be as specified
in paragraphs (a), (b), (d), and (e), respectively, of this section, except that it is the
combination of mechanisms, rather than the single mechanism, which must provide financial
assurance for an amount at least equal to the current closure cost estimate. If an owner
or operator uses a trust fund in combination with a surety bond or a letter of credit, he
may use the trust fund as the standby trust fund for the other mechanisms. A single
standby trust fund may be established for two or more mechanisms. The Regional
Administrator may use any or all of the mechanisms to provide for closure of the facility.
(h) Use of a financial mechanism for multiple facilities. An owner or operator may use a
financial assurance mechanism specified in this section to meet the requirements of this
section for more than one facility. Evidence of financial assurance submitted to the
Regional Administrator must include a list showing, for each facility, the EPA
Identification Number, name, address, and the amount of funds for closure assured by the
mechanism. If the facilities covered by the mechanism are in more than one Region,
identical evidence of financial assurance must be submitted to and maintained with the
Regional Administrators of all such Regions. 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 established and maintained for each facility. In directing funds
available through the mechanism for closure of any of the facilities covered by the
mechanism, the Regional Administrator may direct only the amount of funds designated for
that facility, unless the owner or operator agrees to the use of additional funds
available under the mechanism.
(i) 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 Regional Administrator will notify the owner or operator in
writing that he is no longer required by this section to maintain financial assurance for
final closure of the facility, unless the Regional Administrator has reason to believe
that final closure has not been in accordance with the approved closure plan. The Regional
Administrator shall provide the owner or operator a detailed written statement of any such
reason to believe that closure has not been in accordance with the approved closure plan.
(47 FR 15047, Apr. 7, 1982, as amended at 51 FR 16448, May 2, 1986)
§264.144 Cost estimate for post-closure care.
(a) The owner or operator of a disposal surface impoundment, disposal miscellaneous unit,
land treatment unit, or landfill unit, or of a surface impoundment or waste pile required
under §§264.228 and 264.258 to prepare a contingent closure and post-closure plan, must
have a detailed written estimate, in current dollars, of the annual cost of post-closure
monitoring and maintenance of the facility in accordance with the applicable post-closure
regulations in §§264.117 through 264.120, 264.228, 264.258, 264.280, 264.310, and
264.603.
(1) The post-closure cost estimate must be based on the costs to the owner or operator of
hiring a third party to conduct post-closure care activities. A third party is a party who
is neither a parent nor a subsidiary of the owner or operator. (See definition of parent
corporation in §264.141(d).)
(2) The post-closure cost estimate is calculated by multiplying the annual post-closure
cost estimate by the number of years of post-closure care required under §264.117.
(b) During the active life of the facility, the owner or operator must adjust the
post-closure cost estimate for inflation within 60 days prior to the anniversary date of
the establishment of the financial instrument(s) used to comply with §264.145. For owners
or operators using the financial test or corporate guarantee, the post-closure cost
estimate must be updated for inflation within 30 days after the close of the firm's fiscal
year and before the submission of updated information to the Regional Administrator as
specified in §264.145(f)(5). The adjustment may be made by recalculating the post-closure
cost estimate 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 as specified in §264.145(b)(1) and (2). The
inflation factor is the result of dividing the latest published annual Deflator by the
Deflator for the previous year.
(1) 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.
(2) Subsequent adjustments are made by multiplying the latest adjusted post-closure cost
estimate by the latest inflation factor.
(c) During the active life of the facility, the owner or operator must revise the
post-closure cost estimate within 30 days after the Regional Administrator has approved
the request to modify the post-closure plan, if the change in the post-closure plan
increases the cost of post-closure care. The revised post-closure cost estimate must be
adjusted for inflation as specified in §264.144(b).
(d) The owner or operator must keep the following at the facility during the operating
life of the facility: The latest post-closure cost estimate prepared in accordance with
§264.144 (a) and (c) and, when this estimate has been adjusted in accordance with
§264.144(b), the latest adjusted post-closure cost estimate.
(Approved by the Office of Management and Budget under control number 2050-0036)
(47 FR 15047, Apr. 7, 1982, as amended at 47 FR 32357, July 26, 1982; 50 FR 4514, Jan. 31,
1985; 51 FR 16449, May 2, 1986; 52 FR 46964, Dec. 10, 1987)