40 CFR Part 265 -- INTERIM STATUS
STANDARDS FOR OWNERS AND OPERATORS OF HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL
FACILITIES
§265.144 Cost estimate for post-closure care.
(e) Financial test and corporate guarantee for post-closure care. (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 either of paragraph (e)(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 in the United States amounting to at least 90 percent of his 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 his 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 (e)(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 (e)(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) The owner or operator may obtain an extension of the time allowed for submission of
the documents specified in paragraph (e)(3) of this section if the fiscal year of the
owner or operator ends during the 90 days prior to the effective date of these regulations
and if the year-end financial statements for that fiscal year will be audited by an
independent certified public accountant. The extension will end no later than 90 days
after the end of the owner's or operator's fiscal year. To obtain the extension, the
owner's or operator's chief financial officer must send, by the effective date of these
regulations, a letter to the Regional Administrator of each Region in which the owner's or
operator's facilities to be covered by the financial test are located. This letter from
the chief financial officer must:
(i) Request the extension;
(ii) Certify that he has grounds to believe that the owner or operator meets the criteria
of the financial test;
(iii) Specify for each facility to be covered by the test the EPA Identification Number,
name, address, and the current closure and post-closure cost estimates to be covered by
the test;
(iv) Specify the date ending the owner's or operator's latest complete fiscal year before
the effective date of these regulations;
(v) Specify the date, no later than 90 days after the end of such fiscal year, when he
will submit the documents specified in paragraph (e)(3) of this section; and
(vi) Certify that the year-end financial statements of the owner or operator for such
fiscal year will be audited by an independent certified public accountant.
(5) After the initial submission of items specified in paragraph (e)(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 (e)(3) of this section.
(6) If the owner or operator no longer meets the requirements of paragraph (e)(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 (e)(1) of this section, require
reports of financial condition at any time from the owner or operator in addition to those
specified in paragraph (e)(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 (e)(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
(e)(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) During the period of post-closure care, the Regional Administrator may approve a
decrease in the current post-closure cost estimate for which this test demonstrates
financial assurance if the owner or operator demonstrates to the Regional Administrator
that the amount of the cost estimate exceeds the remaining cost of post-closure care.
(10) The owner or operator is no longer required to submit the items specified in
paragraph (e)(3) of this section 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).
(11) 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 (e)(1) through (9) 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 (e)(3) of this
section. The terms of the corporate guarantee must provide that:
(i) If the owner or operator fails to perform post-closure care of a facility covered by
the corporate guarantee in accordance with the post-closure plan and other interim status
requirements whenever required to do so, the guarantor will do so or establish a trust
fund as specified in §265.145(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 alternate financial assurance in the name of
the owner or operator.
(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 post-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 post-closure care of the facility.
(g) 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 post-closure care
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 post-closure care 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 the post-closure care period has been completed in accordance
with the approved post-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 post-closure care of that unit, unless the Regional Administrator has reason
to believe that post-closure care has not been in accordance with the approved
post-closure plan. The Regional Administrator will provide the owner or operator a
detailed written statement of any such reason to believe that post-closure care has not
been in accordance with the approved post-closure plan.
(47 FR 15064, Apr. 7, 1982, as amended at 51 FR 16457, May 2, 1986)