40 CFR Part 265 -- INTERIM STATUS
STANDARDS FOR OWNERS AND OPERATORS OF HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL
FACILITIES
§265.143 Financial assurance for closure.
(f) 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, letters of credit,
and insurance. The mechanisms must be as specified in paragraphs (a) through (d),
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.
(g) Use of a financial mechanism for multiple facilities. An owner or operator may use a
financial assurance mechanism specified in 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.
(h) 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 15064, Apr. 7, 1982, as amended at 51 FR 16456, May 2, 1986)
§265.144 Cost estimate for post-closure care.
(a) The owner or operator of a hazardous waste disposal unit 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
§§265.117 through 265.120, 265.228, 265.258, 265.280, and 265.310.
(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 subsidiary of the owner or operator. (See definition of parent
corporation in §265.141(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 §265.117.
(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 §265.145. For owners
or operators using the financial test or corporate guarantee, the post-closure care cost
estimate must be updated for inflation no later than 30 days after the close of the firm's
fiscal year and before submission of updated information to the Regional Administrator as
specified in §265.145(d)(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 §265.145 (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 no later than 30 days after a revision to the post-closure plan
which increases the cost of post-closure care. If the owner or operator has an approved
post-closure plan, the post-closure cost estimate must be revised no later than 30 days
after the Regional Administrator has approved the request to modify the 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 §265.144(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
§265.144 (a) and (c) and, when this estimate has been adjusted in accordance with
§265.144(b), the latest adjusted post-closure cost estimate.
(Approved by the Office of Management and Budget under control number 2050-0036)
(47 FR 15064, Apr. 7, 1982, as amended at 50 FR 4514, Jan. 31, 1985; 51 FR 16457, May 2,
1986)
§265.145 Financial assurance for post-closure care.
By the effective date of these regulations, an owner or operator of a facility with a
hazardous waste disposal unit must establish financial assurance for post-closure care of
the disposal unit(s).
(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. 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
20 years beginning with the effective date of these regulations 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) The first payment must be made by the effective date of these regulations, except as
provided in paragraph (a)(5) of this section. The first payment must be at least equal to
the current post-closure cost estimate, except as provided in §265.145(f), divided by the
number of years in the pay-in period.
(ii) 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.
(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, 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 as specified in paragraph (a)(3) of this section.
(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 trustee's 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 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 expenditures are in accordance with the
approved post-closure 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 §265.145(h).
(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. 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 §265.145(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 §265.145(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 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 §265.145(f).
(7) Whenever the current post-closure cost estimate increases to an amount greater than
the penal sum, 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
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) 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.
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
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 §265.145(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 §265.145(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 an amount at least equal to the current
post-closure cost estimate, except as provided in §265.145(f).
(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 §265.145(h).
(d) 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. By
the effective date of these regulations the owner or operator must submit to the Regional
Administrator a letter from an insurer stating that the insurer is considering issuance of
post-closure insurance conforming to the requirements of this paragraph to the owner or
operator. Within 90 days after the effective date of these regulations, the owner or
operator must submit the certificate of insurance to the Regional Administrator or
establish other financial assurance as specified in this section. At a minimum, the
insurer must be licensed to transact the business of insurance, or eligible to 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 §265.145(f). 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 perform post-closure care may
request reimbursement 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 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 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 (d)(11) of this section. Failure to pay the premium, without
substitution of alternate financial assurance as specified in the 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 most 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) Interim status is terminated or revoked; 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 amounts 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 as specified in this
section; or
(ii) The Regional Administrator releases the owner or operator from the requirements of
this section in accordance with §265.145(h).