40 CFR Part 264 -- STANDARDS FOR
OWNERS AND OPERATORS OF HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL FACILITIES
§264.145 Financial assurance for post-closure care.
The owner or operator of a hazardous waste management unit subject to the requirements of
§264.144 must establish financial assurance for post-closure care in accordance with the
approved post-closure plan for the facility 60 days prior to the initial receipt of
hazardous waste or the effective date of the regulation, whichever is later. He must
choose from the following options:
(a) Post-closure trust fund. (1) An owner or operator may satisfy the requirements of this
section by establishing a post-closure trust fund which conforms to the requirements of
this paragraph and submitting an originally signed duplicate of the trust agreement to the
Regional Administrator. An owner or operator of a new facility must submit the originally
signed duplicate of the trust agreement to the Regional Administrator at least 60 days
before the date on which hazardous waste is first received for disposal. 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.
(2) The wording of the trust agreement must be identical to the wording specified in
§264.151(a)(1), and the trust agreement must be accompanied by a formal certification of
acknowledgment (for example, see §264.151(a)(2)). Schedule A of the trust agreement must
be updated within 60 days after a change in the amount of the current post-closure cost
estimate covered by the agreement.
(3) Payments into the trust fund must be made annually by the owner or operator over the
term of the initial RCRA 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 post-closure trust fund
must be made as follows:
(i) For a new facility, the first payment must be made before the initial receipt of
hazardous waste for disposal. A receipt from the trustee for this payment must be
submitted by the owner or operator to the Regional Administrator before this initial
receipt of hazardous waste. The first payment must be at least equal to the current
post-closure cost estimate, except as provided in §264.145(g), 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:
TABLE/GRAPH OMITTED
where CE is the current post-closure cost estimate, CV is the current value of the trust
fund, and Y is the number of years remaining in the pay-in period.
(ii) If an owner or operator establishes a trust fund as specified in §265.145(a) of this
chapter, and the value of that trust fund is less than the current post-closure cost
estimate when a permit is awarded for the facility, the amount of the current post-closure
cost estimate still to be paid into the fund must be paid in over the pay-in period as
defined in paragraph (a)(3) of this section. Payments must continue to be made no later
than 30 days after each anniversary date of the first payment made pursuant to Part 265 of
this chapter. The amount of each payment must be determined by this formula:
TABLE/GRAPH OMITTED
where CE is the current post-closure cost estimate, CV is the current value of the trust
fund, and Y is the number of years remaining in the pay-in period.
(4) The owner or operator may accelerate payments into the trust fund or he may deposit
the full amount of the current 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 paragraph (a)(3) of
this section.
(5) If the owner or operator establishes a post-closure trust fund after having used one
or more alternate mechanisms specified in this section or in §265.145 of this chapter,
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 paragraph and §265.145(a) of this chapter, as applicable.
(6) After the pay-in period is completed, whenever the current post-closure cost estimate
changes during the operating life of the facility, the owner or operator must compare the
new estimate with the 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 post-closure cost
estimate, or obtain other financial assurance as specified in this section to cover the
difference.
(7) During the operating life of the facility, if the value of the trust fund is greater
than the total amount of the current post-closure cost estimate, the owner or operator may
submit a written request to the Regional Administrator for release of the amount in excess
of the current post-closure cost estimate.
(8) If an owner or operator substitutes other financial assurance as specified in this
section for all or part of the trust fund, he may submit a written request to the Regional
Administrator for release of the amount in excess of the current post-closure cost
estimate covered by the trust fund.
(9) Within 60 days after receiving a request from the owner or operator for release of
funds as specified in paragraph (a) (7) or (8) of this section, the Regional Administrator
will instruct the trustee to release to the owner or operator such funds as the Regional
Administrator specifies in writing.
(10) During the period of post-closure care, the Regional Administrator may approve a
release of funds if the owner or operator demonstrates to the Regional Administrator that
the value of the trust fund exceeds the remaining cost of post-closure care.
(11) An owner or operator or any other person authorized to conduct post-closure care may
request reimbursements for post-closure care expenditures by submitting itemized bills to
the Regional Administrator. Within 60 days after receiving bills for post-closure care
activities, the Regional Administrator will instruct the trustee to make reimbursements in
those amounts as the Regional Administrator specifies in writing, if the Regional
Administrator determines that the post-closure care expenditures are in accordance with
the approved plan or otherwise justified. If the Regional Administrator does not instruct
the trustee to make such reimbursements, he will provide the owner or operator with a
detailed written statement of reasons.
(12) The Regional Administrator will agree to termination of the trust when:
(i) An owner or operator substitutes alternate financial assurance as specified in this
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §264.145(i).
(b) Surety bond guaranteeing payment into a post-closure trust fund. (1) An owner or
operator may satisfy the requirements of this section by obtaining a surety bond which
conforms to the requirements of this paragraph and submitting the bond to the Regional
Administrator. An owner or operator of a new facility must submit the bond to the Regional
Administrator at least 60 days before the date on which hazardous waste is first received
for disposal. The bond must be effective before this initial receipt of hazardous waste.
The surety company issuing the bond must, at a minimum, be among those listed as
acceptable sureties on Federal bonds in Circular 570 of the U.S. Department of the
Treasury.
(2) The wording of the surety bond must be identical to the wording specified in
§264.151(b).
(3) The owner or operator who uses a surety bond to satisfy the requirements of this
section must also establish a standby trust fund. Under the terms of the bond, all
payments made thereunder will be deposited by the surety directly into the standby trust
fund in accordance with instructions from the Regional Administrator. This standby trust
fund must meet the requirements specified in §264.145(a), except that:
(i) An originally signed duplicate of the trust agreement must be submitted to the
Regional Administrator with the surety bond; and
(ii) Until the standby trust fund is funded pursuant to the requirements of this section,
the following are not required by these regulations:
(A) Payments into the trust fund as specified in §264.145(a);
(B) Updating of Schedule A of the trust agreement (see §264.151(a)) to show current
post-closure cost estimates;
(C) Annual valuations as required by the trust agreement; and
(D) Notices of nonpayment as required by the trust agreement.
(4) The bond must guarantee that the owner or operator will:
(i) Fund the standby trust fund in an amount equal to the penal sum of the bond before the
beginning of final closure of the facility; or
(ii) Fund the standby trust fund in an amount equal to the penal sum within 15 days after
an administrative order to begin final closure issued by the Regional Administrator
becomes final, or within 15 days after an order to begin final closure is issued by a U.S.
district court or other court of competent jurisdiction; or
(iii) Provide alternate financial assurance as specified in this section, and obtain the
Regional Administrator's written approval of the assurance provided, within 90 days after
receipt by both the owner or operator and the Regional Administrator of a notice of
cancellation of the bond from the surety.
(5) Under the terms of the bond, the surety will become liable on the bond obligation when
the owner or operator fails to perform as guaranteed by the bond.
(6) The penal sum of the bond must be in an amount at least equal to the current
post-closure cost estimate, except as provided in §264.145(g).
(7) Whenever the current post-closure cost estimate increases to an amount greater than
the penal sum, the owner or operator, within 60 after the increase, must either cause the
penal sum to be increased to an amount at least equal to the current post-closure cost
estimate and submit evidence of such increase to the Regional Administrator, or obtain
other financial assurance as specified in this section to cover the increase. Whenever the
current post-closure cost estimate decreases, the penal sum may be reduced to the amount
of the current post-closure cost estimate following written approval by the Regional
Administrator.
(8) Under the terms of the bond, the surety may cancel the bond by sending 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.
(9) The owner or operator may cancel the bond if the Regional Administrator has given
prior written consent based on his receipt of evidence of alternate financial assurance as
specified in this section.
(c) Surety bond guaranteeing performance of post-closure care. (1) An owner or operator
may satisfy the requirements of this section by obtaining a surety bond which conforms to
the requirements of this paragraph and submitting the bond to the Regional Administrator.
An owner or operator of a new facility must submit the bond to the Regional Administrator
at least 60 days before the date on which hazardous waste is first received for disposal.
The bond must be effective before this initial receipt of hazardous waste. The surety
company issuing the bond must, at a minimum, be among those listed as acceptable sureties
on Federal bonds in Circular 570 of the U.S. Department of the Treasury.
(2) The wording of the surety bond must be identical to the wording specified in
§264.151(c).
(3) The owner or operator who uses a surety bond to satisfy the requirements of this
section must also establish a standby trust fund. Under the terms of the bond, all
payments made thereunder will be deposited by the surety directly into the standby trust
fund in accordance with instructions from the Regional Administrator. This standby trust
fund must meet the requirements specified in §264.145(a), except that:
(i) An originally signed duplicate of the trust agreement must be submitted to the
Regional Administrator with the surety bond; and
(ii) Unless the standby trust fund is funded pursuant to the requirements of this section,
the following are not required by these regulations:
(A) Payments into the trust fund as specified in §264.145(a);
(B) Updating of Schedule A of the trust agreement (see §264.151(a)) to show current
post-closure cost estimates;
(C) Annual valuations as required by the trust agreement; and
(D) Notices of nonpayment as required by the trust agreement.
(4) The bond must guarantee that the owner or operator will:
(i) Perform post-closure care in accordance with the post-closure plan and other
requirements of the permit for the facility; or
(ii) Provide alternate financial assurance as specified in this section, and obtain the
Regional Administrator's written approval of the assurance provided, within 90 days of
receipt by both the owner or operator and the Regional Administrator of a notice of
cancellation of the bond from the surety.
(5) Under the terms of the bond, the surety will become liable on the bond obligation when
the owner or operator fails to perform as guaranteed by the bond. Following a final
administrative determination pursuant to section 3008 of RCRA that the owner or operator
has failed to perform post-closure care in accordance with the approved post-closure plan
and other permit requirements, under the terms of the bond the surety will perform
post-closure care in accordance with the post-closure plan and other permit requirements
or will deposit the amount of the penal sum into the standby trust fund.
(6) The penal sum of the bond must be in an amount at least equal to the current
post-closure cost estimate.
(7) Whenever the current post-closure cost estimate increases to an amount greater than
the penal sum during the operating life of the facility, the owner or operator, within 60
days after the increase, must either cause the penal sum to be increased to an amount at
least equal to the current post-closure cost estimate and submit evidence of such increase
to the Regional Administrator, or obtain other financial assurance as specified in this
section. Whenever the current post-closure cost estimate decreases during the operating
life of the facility, the penal sum may be reduced to the amount of the current
post-closure cost estimate following written approval by the Regional Administrator.
(8) During the period of post-closure care, the Regional Administrator may approve a
decrease in the penal sum if the owner or operator demonstrates to the Regional
Administrator that the amount exceeds the remaining cost of post-closure care.
(9) Under the terms of the bond, the surety may cancel the bond by sending 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.
(10) The owner or operator may cancel the bond if the Regional Administrator has given
prior written consent. The Regional Administrator will provide such written consent when:
(i) An owner or operator substitutes alternate financial assurance as specified in this
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §264.145(i).
(11) The surety will not be liable for deficiencies in the performance of post-closure
care by the owner or operator after the Regional Administrator releases the owner or
operator from the requirements of this section in accordance with §264.145(i).
(d) Post-closure letter of credit. (1) An owner or operator may satisfy the requirements
of this section by obtaining an irrevocable standby letter of credit which conforms to the
requirements of this paragraph and submitting the letter to the Regional Administrator. An
owner or operator of a new facility must submit the letter of credit to the Regional
Administrator at least 60 days before the date on which hazardous waste is first received
for disposal. The letter of credit must be effective before this initial receipt of
hazardous waste. 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.
(2) The wording of the letter of credit must be identical to the wording specified in
§264.151(d).
(3) An owner or operator who uses a letter of credit to satisfy the requirements of this
section must also establish a standby trust fund. Under the terms of the letter of credit,
all amounts paid pursuant to a draft by the Regional Administrator will be deposited by
the issuing institution directly into the standby trust fund in accordance with
instructions from the Regional Administrator. This standby trust fund must meet the
requirements of the trust fund specified in §264.145(a), except that:
(i) An originally signed duplicate of the trust agreement must be submitted to the
Regional Administrator with the letter of credit; and
(ii) Unless the standby trust fund is funded pursuant to the requirements of this section,
the following are not required by these regulations:
(A) Payments into the trust fund as specified in §264.145(a);
(B) Updating of Schedule A of the trust agreement (see §264.151(a)) to show current
post-closure cost estimates;
(C) Annual valuations as required by the trust agreement; and
(D) Notices of nonpayment as required by the trust agreement.
(4) The letter of credit must be accompanied by a letter from the owner or operator
referring to the letter of credit by number, issuing and date, and providing the following
information: the EPA Identification Number, name, and address of the facility, and the
amount of funds assured for post-closure care of the facility by the letter of credit.
(5) 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
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 Regional
Administrator 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 Regional Administrator have received the notice, as evidenced by the
return receipts.
(6) The letter of credit must be issued in a amount at least equal to the current
post-closure cost estimate, except as provided in §264.145(g).
(7) Whenever the current post-closure cost estimate increases to an amount greater than
the amount of the credit during the operating life of the facility, the owner or operator,
within 60 days after the increase, must either cause the amount of the credit to be
increased so that it at least equals the current post-closure cost estimate and submit
evidence of such increase to the Regional Administrator, or obtain other financial
assurance as specified in this section to cover the increase. Whenever the current
post-closure cost estimate decreases during the operating life of the facility, the amount
of the credit may be reduced to the amount of the current post-closure cost estimate
following written approval by the Regional Administrator.
(8) During the period of post-closure care, the Regional Administrator may approve a
decrease in the amount of the letter of credit if the owner or operator demonstrates to
the Regional Administrator that the amount exceeds the remaining cost of post-closure
care.
(9) Following a final administrative determination pursuant to section 3008 of RCRA that
the owner or operator has failed to perform post-closure care in accordance with the
approved post-closure plan and other permit requirements, the Regional Administrator may
draw on the letter of credit.
(10) If the owner or operator does not establish alternate financial assurance as
specified in this section and obtain 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 from the issuing institution that it has decided not to
extend the letter of credit beyond the current expiration date, the Regional Administrator
will draw on the letter of credit. The Regional Administrator 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 Regional Administrator will draw on the letter of credit if the
owner or operator has failed to provide alternate financial assurance as specified in this
section and obtain written approval of such assurance from the Regional Administrator.
(11) The Regional Administrator 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
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §264.145(i).
(e) Post-closure insurance. (1) An owner or operator may satisfy the requirements of this
section by obtaining post-closure insurance which conforms to the requirements of this
paragraph and submitting a certificate of such insurance to the Regional Administrator. An
owner or operator of a new facility must submit the certificate of insurance to the
Regional Administrator at least 60 days before the date on which hazardous waste is first
received for disposal. The insurance must be effective before this initial receipt of
hazardous waste. 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 one
or more States.
(2) The wording of the certificate of insurance must be identical to the wording specified
in §264.151(e).
(3) The post-closure insurance policy must be issued for a face amount at least equal to
the current post-closure cost estimate, except as provided in §264.145(g). 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.
(4) The post-closure insurance policy must guarantee that funds will be available to
provide post-closure care of the facility whenever the post-closure period begins. The
policy must also guarantee that once post-closure care begins, 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 Regional Administrator, to such party or parties as the Regional
Administrator specifies.
(5) An owner or operator or any other person authorized to conduct post-closure care may
request reimbursements for post-closure care expenditures by submitting itemized bills to
the Regional Administrator. Within 60 days after receiving bills for post-closure care
activities, the Regional Administrator will instruct the insurer to make reimbursements in
those amounts as the Regional Administrator specifies in writing, if the Regional
Administrator determines that the post-closure care expenditures are in accordance with
the approved post-closure plan or otherwise justified. If the Regional Administrator does
not instruct the insurer to make such reimbursements, he will provide the owner or
operator with a detailed written statement of reasons.
(6) The owner or operator must maintain the policy in full force and effect until the
Regional Administrator consents to termination of the policy by the owner or operator as
specified in paragraph (e)(11) of this section. Failure to pay the premium, without
substitution of alternate financial assurance as specified in this section, will
constitute a significant violation of these regulations, warranting such remedy as the
Regional Administrator deems necessary. Such violation will be deemed to begin upon
receipt by the Regional Administrator of a notice of future cancellation, termination, or
failure to renew due to nonpayment of the premium, rather than upon the date of
expiration.
(7) 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.
(8) 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 Regional Administrator. 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 Regional Administrator 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 Regional Administrator 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 Regional Administrator or a U.S. district court or other
court of competent jurisdiction; or
(iv) The owner or operator is named as debtor in a voluntary or involuntary proceeding
under Title 11 (Bankruptcy), U.S. Code; or
(v) The premium due is paid.
(9) Whenever the current post-closure cost estimate increases to an amount greater than
the face amount of the policy during the operating life of the facility, 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 post-closure cost estimate and submit
evidence of such increase to the Regional Administrator, or obtain other financial
assurance as specified in this section to cover the increase. Whenever the current
post-closure cost estimate decreases during the operating life of the facility, the face
amount may be reduced to the amount of the current post-closure cost estimate following
written approval by the Regional Administrator.
(10) Commencing on the date that liability to make payments pursuant to the policy
accrues, the insurer will thereafter annually increase the face amount of the policy. Such
increase must be equivalent to the face amount of the policy, less any payments made,
multiplied by an amount equivalent to 85 percent of the most recent investment rate or of
the equivalent coupon-issue yield announced by the U.S. Treasury for 26-week Treasury
securities.
(11) The Regional Administrator 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 specified in this
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §264.145(i).