(4) Per
335-14-2-.01(4)(a)24.(vi)(VI), an owner or operator of a reclamation or intermediate facility must have financial assurance as a condition of the exclusion as required
335-14-2-.01(4)(a)24. He must choose from the options as specified in paragraphs (a) through (e) of this section.
(a) Trust fund
1. An owner or operator may satisfy the requirements of 335-14-2-.08(4) by establishing a trust fund which conforms to the requirements of 335-14-2-.08(4)(a) and submitting an originally signed duplicate of the trust agreement to the Department. 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 335-14-2-.08(12)(a)1, and the trust agreement must be accompanied by a formal certification of acknowledgment (for example, see 335-14-2-.08(12)(a)2. Schedule A of the trust agreement must be updated within 60 days after a change in the amount of the current cost estimate covered by the agreement.
3. The trust fund must be funded for the full amount of the current cost estimate before it may be relied upon to satisfy the requirements of this section.
4. Whenever the current cost estimate changes, 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 cost estimate, or obtain other financial assurance as specified in 335-14-2-.08(4) to cover the difference.
5. If the value of the trust fund is greater than the total amount of the current cost estimate, the owner or operator may submit a written request to the Department for release of the amount in excess of the current cost estimate.
6. If an owner or operator substitutes other financial assurance as specified in 335-14-2-.08(4) for all or part of the trust fund, he may submit a written request to the Department for release of the amount in excess of the current cost estimate covered by the trust fund.
7. Within 60 days after receiving a request from the owner or operator for release of funds as specified 335-14-2-.08(4)(a)5. or 6., the Department will instruct the trustee to release to the owner or operator such funds as the Department specifies in writing. If the owner or operator begins final closure under subpart
335-14-5-.07 or
335-14-6-.07, an owner or operator may request reimbursements for partial or final closure expenditures by submitting itemized bills to the Department. The owner or operator may request reimbursements for partial closure only if sufficient funds are remaining in the trust fund to cover the maximum costs of closing the facility over its remaining operating life. No later than 60 days after receiving bills for partial or final closure activities, the Department will instruct the trustee to make reimbursements in those amounts as the Department specifies in writing, if the Department determines that the partial or final closure expenditures are in accordance with the approved closure plan, or otherwise justified. If the Department has reason to believe that the maximum cost of closure over the remaining life of the facility will be significantly greater than the value of the trust fund, he may withhold reimbursements of such amounts as he deems prudent until he determines, in accordance with 335-14-2-.08(4)(i) that the owner or operator is no longer required to maintain financial assurance for final closure of the facility. If the Department does not instruct the trustee to make such reimbursements, he will provide to the owner or operator a detailed written statement of reasons.
8. The Department will agree to termination of the trust when:
(i) An owner or operator substitutes alternate financial assurance as specified in 335-14-2-.08(4); or
(ii) The Department releases the owner or operator from the requirements of this section in accordance with paragraph 335-14-2-.08(4) (i).
(b) Surety bond guaranteeing payment into a trust fund.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(4) by obtaining a surety bond which conforms to the requirements of this 335-14-2-.08(4)(b) and submitting the bond to the Department. 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 335-14-2-.08(12)(b).
3. The owner or operator who uses a surety bond to satisfy the requirements of 335-14-2-.08(4) 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 Department. This standby trust fund must meet the requirements specified in 335-14-2-.08(4)(a), except that:
(i) An originally signed duplicate of the trust agreement must be submitted to the Department with the surety bond; and
(ii) Until the standby trust fund is funded pursuant to the requirements of 335-14-2-.08(4), the following are not required by these regulations:
(I) Payments into the trust fund as specified in 335-14-2-.08(4)(a);
(II) Updating of Schedule A of the trust agreement (see 335-14-2-.08(12)(a) ) to show current cost estimates;
(III) Annual valuations as required by the trust agreement; and
(IV) 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 loss of the exclusion under
335-14-2-.01(4)(a)24; or
(ii) Fund the standby trust fund in an amount equal to the penal sum within 15 days after an administrative order to begin closure issued by the Department becomes final, or within 15 days after an order to begin closure is issued by a U.S. district court or other court of competent jurisdiction; or
(iii) Provide alternate financial assurance as specified in 335-14-2-.08(4), and obtain the Department's written approval of the assurance provided, within 90 days after receipt by both the owner or operator and the Department 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 cost estimate, except as provided in 335-14-2-.08(4)(f).
7. Whenever the current 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 cost estimate and submit evidence of such increase to the Department, or obtain other financial assurance as specified in 335-14-2-.08(4) to cover the increase. Whenever the current cost estimate decreases, the penal sum may be reduced to the amount of the current cost estimate following written approval by the Department.
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 Department. 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 Department, as evidenced by the return receipts.
9. The owner or operator may cancel the bond if the Department has given prior written consent based on his receipt of evidence of alternate financial assurance as specified in 335-14-2-.08(4).
(c) Letter of credit.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(4) by obtaining an irrevocable standby letter of credit which conforms to the requirements of 335-14-2-.08(4) (c) and submitting the letter to the Department. 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 335-14-2-.08(12) (c).
3. An owner or operator who uses a letter of credit to satisfy the requirements of 335-14-2-.08(4) must also establish a standby trust fund. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the Department will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the Department. This standby trust fund must meet the requirements of the trust fund specified in 335-14-2-.08(4) (a) of this section, except that:
(i) An originally signed duplicate of the trust agreement must be submitted to the Department with the letter of credit; and
(ii) Unless the standby trust fund is funded pursuant to the requirements of 335-14-2-.08(4), the following are not required by these regulations:
(I) Payments into the trust fund as specified in 335-14-2-.08(4)(a);
(II) Updating of Schedule A of the trust agreement (see 335-14-2-.08(12)(a) ) to show current cost estimates;
(III) Annual valuations as required by the trust agreement; and
(IV) 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 institution, and date, and providing the following information: The EPA Identification Number (if any issued), name, and address of the facility, and the amount of funds assured for 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 Department 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 Department 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 cost estimate, except as provided in 335-14-2-.08(4)(f).
7. Whenever the current cost estimate increases to an amount greater than the amount of the credit, 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 cost estimate and submit evidence of such increase to the Department, or obtain other financial assurance as specified in 335-14-2-.08(4) to cover the increase. Whenever the current cost estimate decreases, the amount of the credit may be reduced to the amount of the current cost estimate following written approval by the Department.
8. Following a determination by the Department that the hazardous secondary materials do not meet the conditions of the exclusion under
335-14-2-.01(4)(a)24., the Department may draw on the letter of credit.
9. If the owner or operator does not establish alternate financial assurance as specified in 335-14-2-.08(4) and obtain written approval of such alternate assurance from the Department within 90 days after receipt by both the owner or operator and the Department of a notice from the issuing institution that it has decided not to extend the letter of credit beyond the current expiration date, the Department will draw on the letter of credit. The Department may delay the drawing if the issuing institution grants an extension of the term of the credit. During the last 3 0 days of any such extension the Department will draw on the letter of credit if the owner or operator has failed to provide alternate financial assurance as specified in 335-14-2-.08(4) and obtain written approval of such assurance from the Department.
10. The Department 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 335-14-2-.08(4); or
(ii) The Department releases the owner or operator from the requirements of this section in accordance with paragraph 335-14-2-.08(4) (i).
(d) Insurance.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(4) by obtaining insurance which conforms to the requirements of this 335-14-2-.08(4)(d) and submitting a certificate of such insurance to the Department. 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 335-14-2-.08(12) (d).
3. The insurance policy must be issued for a face amount at least equal to the current cost estimate, except as provided in paragraph 335-14-2-.08(4)(f) of this section. 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 insurance policy must guarantee that funds will be available whenever needed to pay the cost of removal of all hazardous secondary materials from the unit, to pay the cost of decontamination of the unit, to pay the costs of the performance of activities required under
335-14-5-.07 or
335-14-6-.07, as applicable, for the facilities covered by this policy. The policy must also guarantee that once funds are needed, 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 Department, to such party or parties as the Department specifies.
5. After beginning partial or final closure under 335-14-5 or 335-14-6, as applicable, an owner or operator or any other authorized person may request reimbursements for closure expenditures by submitting itemized bills to the Department.
The owner or operator may request reimbursements only if the remaining value of the policy is sufficient to cover the maximum costs of closing the facility over its remaining operating life. Within 60 days after receiving bills for closure activities, the Department will instruct the insurer to make reimbursements in such amounts as the Department specifies in writing if the Department determines that the expenditures are in accordance with the approved plan or otherwise justified. If the Department has reason to believe that the maximum cost over the remaining life of the facility will be significantly greater than the face amount of the policy, he may withhold reimbursement of such amounts as he deems prudent until he determines, in accordance with 335-14-2-.08(4)(h), that the owner or operator is no longer required to maintain financial assurance for the particular facility. If the Department does not instruct the insurer to make such reimbursements, he will provide to the owner or operator a detailed written statement of reasons.
6. The owner or operator must maintain the policy in full force and effect until the Department consents to termination of the policy by the owner or operator as specified in 335-14-2-.08(4)(i)10. of this section. Failure to pay the premium, without substitution of alternate financial assurance as specified in 335-14-2-.08(4), will constitute a significant violation of these regulations warranting such remedy as the Department deems necessary. Such violation will be deemed to begin upon receipt by the Department 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 Department. 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 Department 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 Department deems the facility abandoned; or
(ii) Conditional exclusion or interim status is lost, terminated, or revoked; or
(iii) Closure is ordered by the Department or a U.S. district court or other court of competent jurisdiction; or
(iv) The owner or operator is named as a 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 cost estimate increases to an amount greater than the face amount of the policy, 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 cost estimate and submit evidence of such increase to the Department, or obtain other financial assurance as specified in 335-14-2-.08(4) to cover the increase. Whenever the current cost estimate decreases, the face amount may be reduced to the amount of the current cost estimate following written approval by the Department.
10. The Department 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 335-14-2-.08(4); or
(ii) The Department releases the owner or operator from the requirements of 335-14-2-.08(4) in accordance with 335-14-2-.08(4)(i).
(e) Financial test and corporate guarantee.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(4) by demonstrating that he passes a financial test as specified in 335-14-2-.08(4) (e). To pass this test the owner or operator must meet the criteria of either paragraph 335-14-2-.08(4) (e)1. (i) or (ii):
(i) The owner or operator must have:
(I) 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
(II) Net working capital and tangible net worth each at least six times the sum of the current cost estimates and the current plugging and abandonment cost estimates; and
(III) Tangible net worth of at least $10 million; and
(IV) 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 cost estimates and the current plugging and abandonment cost estimates.
(ii) The owner or operator must have:
(I) 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
(II) Tangible net worth at least six times the sum of the current cost estimates and the current plugging and abandonment cost estimates; and
(III) Tangible net worth of at least $10 million; and
(IV) 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 cost estimates and the current plugging and abandonment cost estimates.
2. The phrase "current cost estimates" as used in 335-14-2-.08(4)(e)1. 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 (335-14-2-.08(12)(e) ). The phrase "current plugging and abandonment cost estimates" as used in 335-14-2-.08(4)(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 (§ 40 CFR
144.70(f) ).
3. To demonstrate that he meets this test, the owner or operator must submit the following items to the Department:
(i) A letter signed by the owner's or operator's chief financial officer and worded as specified in 335-14-2-.08(12)(e); 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) If the chief financial officer's letter providing evidence of financial assurance includes financial data showing that the owner or operator satisfies 335-14-2-.08(4) (e)1.(i) that are different from the data in the audited financial statements referred to in 335-14-2-.08(4)(e)3.(ii) or any other audited financial statement or data filed with the SEC, then a special report from the owner's or operator's independent certified public accountant to the owner or operator is required. The special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, year end financial statements for the latest fiscal year with the amounts in such financial statements, the findings of the comparison, and the reasons for any differences.
4. The owner or operator may obtain an extension of the time allowed for submission of the documents specified in 335-14-2-.08(4)(e)3. 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 Department. 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 (if any issued), name, address, and current cost estimates to be covered by the test;
(iv) Specify the date ending the owner's or operator's last complete fiscal year before the effective date of these regulations in this subpart;
(v) Specify the date, no later than 90 days after the end of such fiscal year, when he will submit the documents specified in 335-14-2-.08(4)(e)3; 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 335-14-2-.08(4)(e)3, the owner or operator must send updated information to the Department within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified 335-14-2-.08(4) (e)3.
6. If the owner or operator no longer meets the requirements of 335-14-2-.08(4)(e)1, he must send notice to the Department of intent to establish alternate financial assurance as specified in 335-14-2-.08(4). 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 Department may, based on a reasonable belief that the owner or operator may no longer meet the requirements of 335-14-2-.08(4)(e)1, require reports of financial condition at any time from the owner or operator in addition to those specified in 335-14-2-.08(4)(e)3. If the Department, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of 335-14-2-.08(4)(e)1., the owner or operator must provide alternate financial assurance as specified in 335-14-2-.08(4) within 30 days after notification of such a finding.
8 The Department 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 335-14-2-.08(4)(e)3(ii) ). An adverse opinion or a disclaimer of opinion will be cause for disallowance. The Department will evaluate other qualifications on an individual basis. The owner or operator must provide alternate financial assurance as specified in 335-14-2-.08(4) within 30 days after notification of the disallowance.
9. The owner or operator is no longer required to submit the items specified in 335-14-2-.08(4)(e)3. when:
(i) An owner or operator substitutes alternate financial assurance as specified in 335-14-2-.08(4); or
(ii) The Department releases the owner or operator from the requirements of 335-14-2-.08(4) in accordance with 335-14-2-.08(4)(i).
10. An owner or operator may meet the requirements of 335-14-2-.08(4) by obtaining a written 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 335-14-2-.08(4)(e)1. through 8. and must comply with the terms of the guarantee. The wording of the guarantee must be identical to the wording specified in 335-14-2-.08(12)(g)1. A certified copy of the guarantee must accompany the items sent to the Department as specified in 335-14-2-.08(4)(e)3. 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, the 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. The terms of the guarantee must provide that:
(i) Following a determination by the Department that the hazardous secondary materials at the owner or operator's facility covered by this guarantee do not meet the conditions of the exclusion under
335-14-2-.01(4)(a)24, the guarantor will dispose of any hazardous secondary material as hazardous waste and close the facility in accordance with closure requirements found in 335-14-5 or 335-14-6, as applicable, or establish a trust fund as specified in 335-14-2-.08(4)(a) in the name of the owner or operator in the amount of the current cost estimate.
(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 Department. 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 Department, as evidenced by the return receipts.
(iii) If the owner or operator fails to provide alternate financial assurance as specified in 335-14-2-.08(4) and obtain the written approval of such alternate assurance from the Department within 90 days after receipt by both the owner or operator and the Department 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 335-14-2-.08(4) 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 335-14-2-.08(4)(a) through (d), 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 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 Department may use any or all of the mechanisms to provide for the facility.
(g) Use of a financial mechanism for multiple facilities. An owner or operator may use a financial assurance mechanism specified in 335-14-2-.08(4) to meet the requirements for more than one facility. Evidence of financial assurance submitted to the Department must include a list showing, for each facility, the EPA Identification Number (if any issued), name, address, and the amount of funds assured by the mechanism. 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 any of the facilities covered by the mechanism, the Department 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) Removal and Decontamination Plan for Release.
1. An owner or operator of a reclamation facility or an intermediate facility who wishes to be released from his financial assurance obligations under
335-14-2-.01(4)(a)24.(vi)(VI) must submit a plan for removing all hazardous secondary material residues to the Department at least 180 days prior to the date on which he expects to cease to operate under the exclusion.
2. The plan must include, at least:
(i) For each hazardous secondary materials storage unit subject to financial assurance requirements under
335-14-2-.01(4)(a)24.(vi)(VI), a description of how all excluded hazardous secondary materials will be recycled or sent for recycling, and how all residues, contaminated containment systems (liners, etc.), contaminated soils, subsoils, structures, and equipment will be removed or decontaminated as necessary to protect human health and the environment, and
(ii) A detailed description of the steps necessary to remove or decontaminate all hazardous secondary material residues and contaminated containment system components, equipment, structures, and soils including, but not limited to, procedures for cleaning equipment and removing contaminated soils, methods for sampling and testing surrounding soils, and criteria for determining the extent of decontamination necessary to protect human health and the environment; and
(iii) A detailed description of any other activities necessary to protect human health and the environment during this timeframe, including, but not limited to, leachate collection, run-on and run-off control, etc.; and
(iv) A schedule for conducting the activities described which, at a minimum, includes the total time required to remove all excluded hazardous secondary materials for recycling and decontaminate all units subject to financial assurance under
335-14-2-.01(4)(a)24.(vi)(VI) and the time required for intervening activities which will allow tracking of the progress of decontamination.
3. The Department will provide the owner or operator and the public, through a newspaper notice, the opportunity to submit written comments on the plan and request modifications to the plan no later than 30 days from the date of the notice. He will also, in response to a request or at his discretion, hold a public hearing whenever such a hearing might clarify one or more issues concerning the plan. The Department will give public notice of the hearing at least 30 days before it occurs. (Public notice of the hearing may be given at the same time as notice of the opportunity for the public to submit written comments, and the two notices may be combined.) The Department will approve, modify, or disapprove the plan within 90 days of its receipt. If the Department does not approve the plan, he shall provide the owner or operator with a detailed written statement of reasons for the refusal and the owner or operator must modify the plan or submit a new plan for approval within 3 0 days after receiving such written statement. The Department will approve or modify this plan in writing within 60 days. If the Department modifies the plan, this modified plan becomes the approved plan. The Department must assure that the approved plan is consistent with 335-14-2-.08(4)(h). A copy of the modified plan with a detailed statement of reasons for the modifications must be mailed to the owner or operator.
4. Within 60 days of completion of the activities described for each hazardous secondary materials management unit, the owner or operator must submit to the Department, by registered mail, a certification that all hazardous secondary materials have been removed from the unit and the unit has been decontaminated in accordance with the specifications in the approved plan. The certification must be signed by the owner or operator and by a qualified Professional Engineer. Documentation supporting the Professional Engineer's certification must be furnished to the Department, upon request, until he releases the owner or operator from the financial assurance requirements for
335-14-2-.01(4)(a)24.(vi)(VI).
(i) Release of the owner or operator from the requirements of 335-14-2-.08(4). Within 60 days after receiving certifications from the owner or operator and a qualified Professional Engineer that all hazardous secondary materials have been removed from the facility or a unit at the facility and the facility or a unit has been decontaminated in accordance with the approved plan per 335-14-2-.08(4)(h), the Department will notify the owner or operator in writing that he is no longer required under
335-14-2-.01(4)(a)24(vi)(VI) to maintain financial assurance for that facility or a unit at the facility, unless the Department has reason to believe that all hazardous secondary materials have not been removed from the facility or unit at a facility or that the facility or unit has not been decontaminated in accordance with the approved plan. The Department shall provide the owner or operator a detailed written statement of any such reason to believe that all hazardous secondary materials have not been removed from the unit or that the unit has not been decontaminated in accordance with the approved plan.
(8) Liability requirements. (a) Coverage for sudden accidental occurrences. An owner or operator of a hazardous secondary material reclamation facility or an intermediate facility subject to financial assurance requirements under
335-14-2-.01(4)(a)24(vi)(VI), or a group of such facilities, must demonstrate financial responsibility for bodily injury and property damage to third parties caused by sudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator must have and maintain liability coverage for sudden accidental occurrences in the amount of at least $1 million per occurrence with an annual aggregate of at least $2 million, exclusive of legal defense costs. This liability coverage may be demonstrated as specified in 335-14-2-.08(8) (a)1, 2, 3, 4, 5, or 6:
1. An owner or operator may demonstrate the required liability coverage by having liability insurance as specified in 335-14-2-.08(8) (a).
(i) Each insurance policy must be amended by attachment of the Hazardous Secondary Material Facility Liability Endorsement, or evidenced by a Certificate of Liability Insurance. The wording of the endorsement must be identical to the wording specified in 335-14-2-.08(12)(h). The wording of the certificate of insurance must be identical to the wording specified in 335-14-2-.08(12)(i). The owner or operator must submit a signed duplicate original of the endorsement or the certificate of insurance to the Department. If requested by a Department, the owner or operator must provide a signed duplicate original of the insurance policy.
(ii) Each insurance policy must be issued by an insurer which, at a minimum, is 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. An owner or operator may meet the requirements of 335-14-2-.08(8) by passing a financial test or using the guarantee for liability coverage as specified in 335-14-2-.08(8) (f) and (g) .
3. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a letter of credit for liability coverage as specified in 335-14-2-.08(8) (h).
4. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a surety bond for liability coverage as specified in 335-14-2-.08(8) (i).
5. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a trust fund for liability coverage as specified in 335-14-2-.08(8) (j ).
6. An owner or operator may demonstrate the required liability coverage through the use of combinations of insurance, financial test, guarantee, letter of credit, surety bond, and trust fund, except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amounts required by 335-14-2-.08(8). If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under this 335-14-2-.08(8)(a), the owner or operator shall specify at least one such assurance as "primary" coverage and shall specify other assurance as "excess" coverage.
7. An owner or operator shall notify the Department in writing within 3 0 days whenever:
(i) A claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in 335-14-2-.08(8)(a)1. through 6; or
(ii) A Certification of Valid Claim for bodily injury or property damages caused by a sudden or non-sudden accidental occurrence arising from the operation of a hazardous secondary material reclamation facility or intermediate facility is entered between the owner or operator and third-party claimant for liability coverage under 335-14-2-.08(8)(a)1. through 6.; or
(iii) A final court order establishing a judgment for bodily injury or property damage caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous secondary material reclamation facility or intermediate facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under 335-14-2-.08(8) (a)1. through 6.
(b) Coverage for nonsudden accidental occurrences. An owner or operator of a hazardous secondary material reclamation facility or intermediate facility with land-based units, as defined in
335-14-1-.02(1), which are used to manage hazardous secondary materials excluded under
335-14-2-.01(4)(a)24. or a group of such facilities, must demonstrate financial responsibility for bodily injury and property damage to third parties caused by nonsudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator must have and maintain liability coverage for nonsudden accidental occurrences in the amount of at least $3 million per occurrence with an annual aggregate of at least $6 million, exclusive of legal defense costs. An owner or operator who must meet the requirements of this section may combine the required peroccurrence coverage levels for sudden and nonsudden accidental occurrences into a single per-occurrence level, and combine the required annual aggregate coverage levels for sudden and nonsudden accidental occurrences into a single annual aggregate level. Owners or operators who combine coverage levels for sudden and nonsudden accidental occurrences must maintain liability coverage in the amount of at least $4 million per occurrence and $8 million annual aggregate. This liability coverage may be demonstrated as specified in 335-14-2-.08(8) (b)1., 2., 3., 4., 5., or 6.:
1. An owner or operator may demonstrate the required liability coverage by having liability insurance as specified in 335-14-2-.08(8) (b).
(i) Each insurance policy must be amended by attachment of the Hazardous Secondary Material Facility Liability Endorsement or evidenced by a Certificate of Liability Insurance. The wording of the endorsement must be identical to the wording specified in 335-14-2-.08(12)(h). The wording of the certificate of insurance must be identical to the wording specified in 335-14-2-.08(12)(i). The owner or operator must submit a signed duplicate original of the endorsement or the certificate of insurance to the Department. If requested by the Department, the owner or operator must provide a signed duplicate original of the insurance policy.
(ii) Each insurance policy must be issued by an insurer which, at a minimum, is 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. An owner or operator may meet the requirements of 335-14-2-.08(8) by passing a financial test or using the guarantee for liability coverage as specified in 335-14-2-.08(12)(f) and (g).
3. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a letter of credit for liability coverage as specified in 335-14-2-.08(8)(h).
4. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a surety bond for liability coverage as specified in 335-14-2-.08(8)(i).
5. An owner or operator may meet the requirements of 335-14-2-.08(8) by obtaining a trust fund for liability coverage as specified in 335-14-2-.08(8)(j).
6. An owner or operator may demonstrate the required liability coverage through the use of combinations of insurance, financial test, guarantee, letter of credit, surety bond, and trust fund, except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amounts required by 335-14-2-.08(8). If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under 335-14-2-.08(8)(b), the owner or operator shall specify at least one such assurance as "primary" coverage and shall specify other assurance as "excess" coverage.
7. An owner or operator shall notify the Department in writing within 3 0 days whenever:
(i) A claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in 335-14-2-.08(8) (b)1. through 6.; or
(ii) A Certification of Valid Claim for bodily injury or property damages caused by a sudden or non-sudden accidental occurrence arising from the operation of a hazardous secondary material treatment and/or storage facility is entered between the owner or operator and third-party claimant for liability coverage under 335-14-2-.08(8)(b)1. through 6.; or
(iii) A final court order establishing a judgment for bodily injury or property damage caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous secondary material treatment and/or storage facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under 335-14-2-.08(8)(b)1. through 6.
(c) Request for variance. If an owner or operator can demonstrate to the satisfaction of the Department that the levels of financial responsibility required by 335-14-2-.08(8)(a) or (b) are not consistent with the degree and duration of risk associated with treatment and/or storage at the facility or group of facilities, the owner or operator may obtain a variance from the Department. The request for a variance must be submitted in writing to the Department. If granted, the variance will take the form of an adjusted level of required liability coverage, such level to be based on the Department's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. The Department may require an owner or operator who requests a variance to provide such technical and engineering information as is deemed necessary by the Department to determine a level of financial responsibility other than that required by 335-14-2-.08(8)(a) or (b).
(d) Adjustments by the Department. If the Department determines that the levels of financial responsibility required by 335-14-2-.08(8)(a) or (b) are not consistent with the degree and duration of risk associated with treatment and/or storage at the facility or group of facilities, the Department may adjust the level of financial responsibility required under 335-14-2-.08(8)(a) or (b) as may be necessary to protect human health and the environment. This adjusted level will be based on the Department's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. In addition, if the Department determines that there is a significant risk to human health and the environment from nonsudden accidental occurrences resulting from the operations of a facility that is not a surface impoundment, pile, or land treatment facility, he may require that an owner or operator of the facility comply with 335-14-2-.08(8)(b). An owner or operator must furnish to the Department, within a reasonable time, any information which the Department requests to determine whether cause exists for such adjustments of level or type of coverage.
(e) Period of coverage. Within 60 days after receiving certifications from the owner or operator and a qualified Professional Engineer that all hazardous secondary materials have been removed from the facility or a unit at the facility and the facility or a unit has been decontaminated in accordance with the approved plan per 335-14-2-.08(4)(h), the Department will notify the owner or operator in writing that he is no longer required under
335-14-2-.01(4)(a)24.(vi)(VI) to maintain liability coverage for that facility or a unit at the facility, unless the Department has reason to believe that that all hazardous secondary materials have not been removed from the facility or unit at a facility or that the facility or unit has not been decontaminated in accordance with the approved plan.
(f) Financial test for liability coverage.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(8) by demonstrating that he passes a financial test as specified in 335-14-2-.08(8)(f). To pass this test the owner or operator must meet the criteria of 335-14-2-.08(8) (f)1. (i) or (ii):
(i) The owner or operator must have:
(I) Net working capital and tangible net worth each at least six times the amount of liability coverage to be demonstrated by this test; and
(II) Tangible net worth of at least $10 million; and
(III) Assets in the United States amounting to either:
I. At least 90 percent of his total assets; or
II. At least six times the amount of liability coverage to be demonstrated by this test.
(ii) The owner or operator must have:
(I) 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
(II) Tangible net worth of at least $10 million; and
(III) Tangible net worth at least six times the amount of liability coverage to be demonstrated by this test; and
(IV) Assets in the United States amounting to either:
I. At least 90 percent of his total assets; or
II. At least six times the amount of liability coverage to be demonstrated by this test.
2. The phrase "amount of liability coverage" as used in 335-14-2-.08(8)(f)1. refers to the annual aggregate amounts for which coverage is required under 335-14-2-.08(8)(a) and (b) and the annual aggregate amounts for which coverage is required under
335-14-5-.08(8)(a) and (b) and
335-14-6-.08(8)(a) and (b).
3. To demonstrate that he meets this test, the owner or operator must submit the following three items to the Department:
(i) A letter signed by the owner's or operator's chief financial officer and worded as specified in 335-14-2-.08(12)(f). If an owner or operator is using the financial test to demonstrate both assurance as specified by 335-14-2-.08(4)(e), and liability coverage, he must submit the letter specified in 335-14-2-.08(12)(f) to cover both forms of financial responsibility; a separate letter as specified in 335-14-2-.08(12)(e) is not required.
(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.
(iii) If the chief financial officer's letter providing evidence of financial assurance includes financial data showing that the owner or operator satisfies 335-14-2-.08(8) (f)1. (i) that are different from the data in the audited financial statements referred to in 335-14-2-.08(8)(f)3.(ii) or any other audited financial statement or data filed with the SEC, then a special report from the owner's or operator's independent certified public accountant to the owner or operator is required. The special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, yearend financial statements for the latest fiscal year with the amounts in such financial statements, the findings of the comparison, and the reasons for any difference.
4. The owner or operator may obtain a one-time extension of the time allowed for submission of the documents specified in 335-14-2-.08(8)(f)3. 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 Department. 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, the amount of liability coverage and, when applicable, current closure and post-closure cost estimates to be covered by the test;
(iv) Specify the date ending the owner's or operator's last 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 335-14-2-.08(8)(f)3; 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 335-14-2-.08(8)(f)3., the owner or operator must send updated information to the within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in 335-14-2-.08(8) (f)3.
6. If the owner or operator no longer meets the requirements of 335-14-2-.08(8)(f)1, he must obtain insurance, a letter of credit, a surety bond, a trust fund, or a guarantee for the entire amount of required liability coverage as specified in 335-14-2-.08(8). Evidence of liability coverage must be submitted to the Department 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 test requirements.
7. The Department 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 335-14-2-.08(8)(f)3.(ii). An adverse opinion or a disclaimer of opinion will be cause for disallowance. The Department will evaluate other qualifications on an individual basis. The owner or operator must provide evidence of insurance for the entire amount of required liability coverage as specified in 335-14-2-.08(8) within 30 days after notification of disallowance.
(g) Guarantee for liability coverage.
1. Subject to 335-14-2-.08(8)(g)2., an owner or operator may meet the requirements of 335-14-2-.08(8) 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 335-14-2-.08(8) (f)1. through 6. The wording of the guarantee must be identical to the wording specified in 335-14-2-.08(12)(g)2. A certified copy of the guarantee must accompany the items sent to the Department as specified in 335-14-2-.08(8)(f)3. 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 335-14-2-.08(8) only if the Attorneys General or Insurance Commissioners of:
(I) The State in which the guarantor is incorporated; and
(II) 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 335-14-2-.08(8) and 335-14-2-.08(12)(g)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 335-14-2-.08(8) only if:
(I) 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 if
(II) 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 335-14-2-.08(8) and 335-14-2-.08(12)(g)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 335-14-2-.08(8) by obtaining an irrevocable standby letter of credit that conforms to the requirements of 335-14-2-.08(8)(h) and submitting a copy of the letter of credit to the Department.
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 335-14-2-.08(12) (j).
4. An owner or operator who uses a letter of credit to satisfy the requirements of 335-14-2-.08(8) may also establish a standby trust fund. Under the terms of such a letter of credit, all amounts paid pursuant to a draft by the trustee of the standby trust will be deposited by the issuing institution into the standby trust in accordance with instructions from the trustee. The trustee of the standby trust fund 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.
5. The wording of the standby trust fund must be identical to the wording specified in 335-14-2-.08(12) (m).
(i) Surety bond for liability coverage.
1. An owner or operator may satisfy the requirements of 335-14-2-.08(8) by obtaining a surety bond that conforms to the requirements of 335-14-2-.08(8)(i) and submitting a copy of the bond to the Department.
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 335-14-2-.08(12) (k).
4. A surety bond may be used to satisfy the requirements of 335-14-2-.08(8) 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 335-14-2-.08(8) and 335-14-2-.08(12)(k) 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 335-14-2-.08(8) by establishing a trust fund that conforms to the requirements of 335-14-2-.08(8)(j) and submitting an originally signed duplicate of the trust agreement to the Department.
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 335-14-2-.08(8). 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 335-14-2-.08(8) 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 335-14-2-.08(8), 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 ADEM Admin. Code r. 335-14-2-.08(12) (1).
(12) Wording of the instruments.
(a) 1. A trust agreement for a trust fund, as specified in ADEM Admin. Code r. 335-14-2-.08(4)(a) 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 "corporation," "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 Alabama Department of Environmental Management, "the Department," an agency of the State of Alabama, has established certain regulations applicable to the Grantor, requiring that an owner or operator of a facility regulated under ADEM Admin. Code r. 335-14-5, or 335-14-6, or satisfying the conditions of the exclusion under ADEM Admin. Code r. 335-14-2-.01(4)(a)24. shall provide assurance that funds will be available if needed for care of the facility under ADEM Admin. Code r. 335-14-5-.07 or 335-14-6-.07, as applicable,
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 (if available), name, address, and the current 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 the Department in the event that the hazardous secondary materials of the grantor no longer meet the conditions of the exclusion under ADEM Admin. Code r.
335-14-2-.01(4) (a)24. 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 the Department.
Section 4. Payments from the Fund. The Trustee shall make payments from the Fund as the Department shall direct, in writing, to provide for the payment of the costs of the performance of activities required under ADEM Admin. Code r.
335-14-5-.07 or
335-14-6-.07 for the facilities covered by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the Department from the Fund for expenditures for such activities in such amounts as the beneficiary shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as the Department 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 one 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 securities 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 Department 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 Department 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 Department, 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 Department to the Trustee shall be in writing, signed by the Department, or his 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 the Department 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 the Department, except as provided for herein.
Section 15. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the appropriate Department, or by the Trustee and the appropriate Department if the Grantor ceases to exist.
Section 16. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 15, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Department, or by the Trustee and the Department, 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 17. 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 Department, 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 18. Choice of Law. This Agreement shall be administered, construed, and enforced according to the laws of the State of Alabama.
Section 19. 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 ADEM Admin. Code r. 335-14-2-.08(12)(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 ADEM Admin. Code r. 335-14-2-.08(4) (a).
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]
(b) A surety bond guaranteeing payment into a trust fund, as specified in ADEM Admin. Code r. 335-14-2-.08(4)(b), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Financial Guarantee Bond
Date bond executed: ____________________________________________
Effective date: _________________________________________________
Principal: _________________________________________________
[legal name and business address of owner or operator]
Type of Organization: ___________________________________________
[insert "individual," "joint venture," "partnership," or "corporation"]
State of incorporation: _________________________________________
Surety(ies): _________________________________________________
[name(s) and business address(es)]
EPA Identification Number, name, address and amount(s) for each facility guaranteed by this bond: ____________________________
Total penal sum of bond: $_______________________________________
Surety's bond number: __________________________________________ Know All Persons By These Presents, That we, the Principal and Surety(ies) are firmly bound to the Alabama Department of Environmental Management in the event that the hazardous secondary materials at the reclamation or intermediate facility listed below no longer meet the conditions of the exclusion under ADEM Admin. Code r. 335-14-2-.01(4)(a)24, in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as cosureties, we, the Sureties, bind ourselves in such sum "jointly and severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum.
Whereas said Principal is required, under the Alabama Hazardous Wastes Management and Minimization Act of 1978 (AHWMMA), as amended, to have a permit or interim status in order to own or operate each facility identified above, or to meet conditions under ADEM Admin. Code r. 335-14-2-.01(4)(a)24., and Whereas said Principal is required to provide financial assurance as a condition of permit or interim status or as a condition of an exclusion under ADEM Admin. Code r. 335-14-2-.01(4)(a)24., and Whereas said Principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance;
Now, Therefore, the conditions of the obligation are such that if the Principal shall faithfully, before the beginning of final closure of each facility identified above, fund the standby trust fund in the amount(s) identified above for the facility,
Or, if the Principal shall satisfy all the conditions established for exclusion of hazardous secondary materials from coverage as solid waste under ADEM Admin. Code r. 335-14-2-.01(4) (a)24.,
Or, if the Principal shall fund the standby trust fund in such amount(s) within 15 days after a final order to begin closure is issued by the Department or a U.S. district court or other court of competent jurisdiction,
Or, if the Principal shall provide alternate financial assurance, as specified in ADEM Admin. Code r. 335-14-2-.08, as applicable, and obtain the Department's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the Principal and the Department from the Surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect.
The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by the Department that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) shall place funds in the amount guaranteed for the facility(ies) into the standby trust fund as directed by the Department.
The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum.
The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the Department, provided, however, that cancellation shall not occur during the 12 0 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Department, as evidenced by the return receipts.
The Principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Department.
[The following paragraph is an optional rider that may be included but is not required.]
Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new amount, provided that the penal sum does not increase by more than 2 0 percent in any one year, and no decrease in the penal sum takes place without the written permission of the Department.
In Witness Whereof, the Principal and Surety(ies) have executed this Financial Guarantee Bond and have affixed their seals on the date set forth above.
The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(b) as such regulations were constituted on the date this bond was executed.
Principal
[Signature(s) ] ____________________________________________
[Name(s)] ____________________________________________
[Title(s)] ____________________________________________
[Corporate seal] ____________________________________________
Corporate Surety(ies)
[Name and address]
State of incorporation:
Liability limit: $_______________________
[Signature(s)]
[Name(s) and title(s)]
[Corporate seal]
[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.]
Bond premium: $______________________
(c) A letter of credit, as specified in ADEM Admin. Code r. 335-14-2-.08(4)(c), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Irrevocable Standby Letter of Credit
Director
Alabama Department of Environmental Management Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No._________ in your favor, in the event that the hazardous secondary materials at the covered reclamation or intermediary facility(ies) no longer meet the conditions of the exclusion under ADEM Admin. Code r. 335-14-2-.01(4)(a)24., at the request and for the account of [owner's or operator's name and address] up to the aggregate amount of [in words] U.S. dollars $_________, available upon presentation of
(1) your sight draft, bearing reference to this letter of credit No._________, and
(2) your signed statement reading as follows: "I certify that the amount of the draft is payable pursuant to regulations issued under authority of the Alabama Hazardous Wastes Management Act of 1978, as amended."
This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each successive expiration date, unless, at least 12 0 days before the current expiration date, we notify both you and [owner's or operator's name] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event you are so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by both you and [owner's or operator's name], as shown on the signed return receipts.
Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the amount of the draft directly into the standby trust fund of [owner's or operator's name] in accordance with your instructions.
We certify that the wording of this letter of credit is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(c) as such regulations were constituted on the date shown immediately below.
[Signature(s) and title(s) of official(s) of issuing institution] [Date]
This credit is subject to [insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published and copyrighted by the International Chamber of Commerce," or "the Uniform Commercial Code"].
(d) A certificate of insurance, as specified in ADEM Admin. Code r. 335-14-2-.08(4)(e), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Certificate of Insurance
Name and Address of Insurer (herein called the "Insurer"):____________________
Name and Address of Insured (herein called the "Insured"):___________________
Facilities Covered: [List for each facility: The EPA Identification Number (if any issued), name, address, and the amount of insurance for all facilities covered, which must total the face amount shown below.]
Face Amount: __________________________________________________
Policy Number: __________________________________________________
Effective Date: __________________________________________________
The Insurer hereby certifies that it has issued to the Insured the policy of insurance identified above to provide financial assurance so that in accordance with applicable regulations all hazardous secondary materials can be removed from the facility or any unit at the facility and the facility or any unit at the facility can be decontaminated at the facilities identified above. The Insurer further warrants that such policy conforms in all respects with the requirements of ADEM Admin. Code r. 335-14-2-.08(4)(d) as applicable and as such regulations were constituted on the date shown immediately below. It is agreed that any provision of the policy inconsistent with such regulations is hereby amended to eliminate such inconsistency.
Whenever requested by the Department, the Insurer agrees to furnish to the Department a duplicate original of the policy listed above, including all endorsements thereon.
I hereby certify that the wording of this certificate is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(d) such regulations were constituted on the date shown immediately below.
[Authorized signature for Insurer]
[Name of person signing]
[Title of person signing]
Signature of witness or notary: _________________________________
[Date]
(e) A letter from the chief financial officer, as specified in ADEM Admin. Code r. 335-14-2-.08(4)(e), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Letter From Chief Financial Officer
[Address to the Department in which facilities for which financial responsibility is to be demonstrated through the financial test are located].
I am the chief financial officer of [name and address of firm]. This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in ADEM Admin. Code r. 335-14-2-.08.
[Fill out the following nine paragraphs regarding facilities and associated cost estimates. If your firm has no facilities that belong in a particular paragraph, write "None" in the space indicated. For each facility, include its EPA Identification Number (if any issued), name, address, and current cost estimates.]
1. This firm is the owner or operator of the following facilities for which financial assurance is demonstrated through the financial test specified in ADEM Admin. Code r. 335-14-2-.08. The current cost estimates covered by the test are shown for each facility: ___________.
2. This firm guarantees, through the guarantee specified in ADEM Admin. Code r. 335-14-2-.08, the following facilities owned or operated by the guaranteed party. The current cost estimates so guaranteed are shown for each facility: ___________.
The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee ___________, or
(3) engaged in the following substantial business relationship with the owner or operator __________, and receiving the following value in consideration of this guarantee ___________]. [Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter].
3. In States outside of Alabama, where EPA or some designated authority is administering the financial requirements of ADEM Admin. Code r. 335-14-2-.08, this firm, as owner or operator or guarantor, is demonstrating financial assurance for the following facilities through the use of a test equivalent or substantially equivalent to the financial test specified in ADEM Admin. Code r. 335-14-2-.08. The current cost estimates covered by such a test are shown for each facility: _____________.
4. This firm is the owner or operator of the following hazardous secondary materials management facilities for which financial assurance is not demonstrated either to the state through the financial test or any other financial assurance mechanism specified in ADEM Admin. Code r. 335-14-2-.08 or equivalent or substantially equivalent State mechanisms. The current cost estimates not covered by such financial assurance are shown for each facility: ____________.
5. This firm is the owner or operator of the following UIC facilities for which financial assurance for plugging and abandonment is required under part 144. The current closure cost estimates as required by 40 CFR
144.62 are shown for each facility: ___________.
6. This firm is the owner or operator of the following facilities for which financial assurance for closure or post-closure care is demonstrated through the financial test specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08. The current closure and/or post-closure cost estimates covered by the test are shown for each facility: ______________.
7. This firm guarantees, through the guarantee specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08, the closure or post-closure care of the following facilities owned or operated by the guaranteed party. The current cost estimates for the closure or post-closure care so guaranteed are shown for each facility: __________. The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee __________; or
(3) engaged in the following substantial business relationship with the owner or operator ________________, and receiving the following value in consideration of this guarantee __________]. [Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter].
8. In States where EPA is not administering the financial requirements of ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08, this firm, as owner or operator or guarantor, is demonstrating financial assurance for the closure or post-closure care of the following facilities through the use of a test equivalent or substantially equivalent to the financial test specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08. The current closure and/or post-closure cost estimates covered by such a test are shown for each facility:
9. This firm is the owner or operator of the following hazardous waste management facilities for which financial assurance for closure or, if a disposal facility, post-closure care, is not demonstrated either to the Departmente through the financial test or any other financial assurance mechanism specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08 or equivalent or substantially equivalent State mechanisms. The current closure and/or post-closure cost estimates not covered by such financial assurance are shown for each facility: _________.
This firm [insert "is required" or "is not required"] to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal year.
The fiscal year of this firm ends on [month, day]. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year end financial statements for the latest completed fiscal year, ended [date].
[Fill in Alternative I if the criteria of 335-14-2-.08(4)(e)1.(i). Fill in Alternative II if the criteria of 335-14-2-.08(4) (e) l. (ii) are used.]
ALTERNATIVE I
| 1. | Sum of current cost estimates [total of all cost estimates shown in the nine paragraphs above] | $ | _____ |
| 2. | Total liabilities [if any portion of the cost estimates is included in total liabilities, you may deduct the amount of that portion from this line and add that amount to lines 3 and 4] | $ | _____ |
| 3. | Tangible net worth | $ | _____ |
| 4. | Net worth | $ | _____ |
| 5. | Current asset | $ | _____ |
| 6. | Current liabilities | $ | _____ |
| 7. | Net working capital [line 5 minus line 6] | $ | _____ |
| 8. | The sum of net income plus depreciation, depletion, and amortization | $ | _____ |
| 9. | Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.) | $ | _____ |
| 10. | Is line 3 at least $10 million? | Yes | No |
| 11. | Is line 3 at least 6 times line 1? | Yes | No |
| 12. | Is line 7 at least 6 times line 1? | Yes | No |
| 13. | Are at least 90% of firm's assets located in the U.S.? If not, complete line 14. | Yes | No |
| 14. | Is line 9 at least 6 times line 1? | Yes | No |
| 15. | Tangible net worth [if any portion of the cost stimates is included in "total liabilities" on your firm's financial statements, you may add the amount of that portion to this line] | Yes | No |
| 16. | Is line 8 divided by line 2 greater than 0.1? | Yes | No |
| 17. | Is line 5 divided by line 6 greater than 1.5? | Yes | No |
ALTERNATIVE II
| 1. | Sum of current cost estimates [total of all cost estimates shown in the eight paragraphs above] | $ | ____ |
| 2. | Current bond rating of most recent issuance of this firm and name of rating service | $ | ____ |
| 3. | Date of issuance of bond | $ | ____ |
| 4. | Date of maturity of bond | $ |
| 5. | Tangible net worth [if any portion of the cost estimates is included in "total liabilities" on your firm's financial statements, you may add the amount of that portion to this line] | $ | ____ |
| 6. | Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.) | $ | ____ |
| 7. | Is line 5 at least $10 million? | Yes | No |
| 8. | Is line 5 at least 6 times line 1? | Yes | No |
| 9. | Are at least 90% of the firm's assets located in the U.S.? If not, complete line 10. | Yes | No |
| 10. | Is line 6 at least 6 times line 1? | Yes | No |
I hereby certify that the wording of this letter is identical to the wording specified in ADEM Admin. Code 335-14-2-.08(12)(e) as such regulations were constituted on the date shown immediately below.
[Signature] ____________________
[Name] ________________________
(Title] ________________________
[Date] ________________________
(f) A letter from the chief financial officer, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(f), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted.
Letter From Chief Financial Officer
[Address to the Director, Alabama Department of Environmental Management, P.O. Box 301463, Montgomery, Alabama 36130-1463].
I am the chief financial officer of [firm's name and address]. This letter is in support of the use of the financial test to demonstrate financial responsibility for liability coverage under ADEM Admin. Code r. 335-14-2-.08(8) [insert "and costs assured ADEM Admin. Code r. 335-14-2-.08(4)(e) " if applicable] as specified in ADEM Admin. Code r. 335-14-2-.08.
[Fill out the following paragraphs regarding facilities and liability coverage. If there are no facilities that belong in a particular paragraph, write "None" in the space indicated. For each facility, include its EPA Identification Number (if any issued), name, and address].
The firm identified above is the owner or operator of the following facilities for which liability coverage for [insert "sudden" or "nonsudden" or "both sudden and nonsudden"] accidental occurrences is being demonstrated through the financial test specified in ADEM Admin. Code r. 335-14-2-.08:
The firm identified above guarantees, through the guarantee specified in ADEM Admin. Code r. 335-14-2-.08, liability coverage for [insert "sudden" or "nonsudden" or "both sudden and nonsudden"] accidental occurrences at the following facilities owned or operated by the following: _____________.
The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee ____________; or
(3) engaged in the following substantial business relationship with the owner or operator ____________, and receiving the following value in consideration of this guarantee
____________]. [Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter.]
The firm identified above is the owner or operator of the following facilities for which liability coverage for [insert "sudden" or "nonsudden" or "both sudden and nonsudden"] accidental occurrences is being demonstrated through the financial test specified ADEM Admin. Code r. 335-14-5-.08 and 335-14-6-.08: __________
The firm identified above guarantees, through the guarantee specified in ADEM Admin. Code r. 335-14-5-.08 and 335-14-6-.08, liability coverage for [insert "sudden" or "nonsudden" or "both sudden and nonsudden"] accidental occurrences at the following facilities owned or operated by the following: __________. The firm identified above is [insert one or more:
(1) The direct or higher tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee ___________; or
(3) engaged in the following substantial business relationship with the owner or operator ___________, and receiving the following value in consideration of this guarantee ___________]. [Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter.]
[If you are using the financial test to demonstrate coverage of both liability and costs assured under ADEM Admin. Code r. 335-14-2-.08(4)(e) or closure or post-closure care costs under ADEM Admin. Code r. 335-14-5-.08(4), 335-14-5-.08(6), 335-14-6-.08(4) or 335-14-6-.08(6), fill in the following nine paragraphs regarding facilities and associated cost estimates. If there are no facilities that belong in a particular paragraph, write "None" in the space indicated. For each facility, include its EPA identification number (if any issued), name, address, and current cost estimates.]
1. This firm is the owner or operator of the following facilities for which financial assurance is demonstrated through the financial test specified in ADEM Admin. Code r. 335-14-2-.08. The current cost estimates covered by the test are shown for each facility: __________.
2. This firm guarantees, through the guarantee specified in ADEM Admin. Code r. 335-14-2-.08, the following facilities owned or operated by the guaranteed party. The current cost estimates so guaranteed are shown for each facility: __________. The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee ___________, or
(3) engaged in the following substantial business relationship with the owner or operator ___________, and receiving the following value in consideration of this guarantee ____________]. [Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter].
3. In States outside of Alabama, where the U.S. EPA or some designated authority is administering the financial requirements, this firm, as owner or operator or guarantor, is demonstrating financial assurance for the following facilities through the use of a test equivalent or substantially equivalent to the financial test specified in ADEM Admin. Code r. 335-14-2-.08. The current cost estimates covered by such a test are shown for each facility: ____________.
4. This firm is the owner or operator of the following hazardous secondary materials management facilities for which financial assurance is not demonstrated to the Department through the financial test or any other financial assurance mechanism specified in ADEM Admin. Code r. 335-14-2-.08. The current cost estimates not covered by such financial assurance are shown for each facility: ____________.
5. This firm is the owner or operator of the following UIC facilities for which financial assurance for plugging and abandonment is required under part 144. The current closure cost estimates as required by 40 CFR
144.62 are shown for each facility: _____________.
6. This firm is the owner or operator of the following facilities for which financial assurance for closure or post-closure care is demonstrated through the financial test specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08. The current closure and/or post-closure cost estimates covered by the test are shown for each facility: _____________.
7. This firm guarantees, through the guarantee specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08, the closure or post-closure care of the following facilities owned or operated by the guaranteed party. The current cost estimates for the closure or post-closure care so guaranteed are shown for each facility: ___________. The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or operator;
(2) owned by the same parent corporation as the parent corporation of the owner or operator, and receiving the following value in consideration of this guarantee __________; or
(3) engaged in the following substantial business relationship with the owner or operator ___________, and receiving the following value in consideration of this guarantee ___________].
[Attach a written description of the business relationship or a copy of the contract establishing such relationship to this letter].
8. In States outside of Alabama, where the U.S. EPA or some designated authority is administering the financial requirements, this firm, as owner or operator or guarantor, is demonstrating financial assurance for the closure or post-closure care of the following facilities through the use of a test equivalent or substantially equivalent to the financial test specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08. The current closure and/or post-closure cost estimates covered by such a test are shown for each facility:_____
9. This firm is the owner or operator of the following hazardous waste management facilities for which financial assurance for closure or, if a disposal facility, post-closure care, is not demonstrated to the Department through the financial test or any other financial assurance mechanism specified in ADEM Admin. Code r.
335-14-5-.08 and
335-14-6-.08 or equivalent. The current closure and/or post-closure cost estimates not covered by such financial assurance are shown for each facility: ___________.
This firm [insert "is required" or "is not required"] to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal year.
The fiscal year of this firm ends on [month, day]. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year end financial statements for the latest completed fiscal year, ended [date].
Part A. Liability Coverage for Accidental Occurrences
[Fill in Alternative I if the criteria specified in 335-14-2-.08(8)(f)1.(i) are used. Fill in Alternative II if the criteria specified in 335-14-2-.08(8)(f)1.(ii) are used.]
ALTERNATIVE I
| 1. | Amount of annual aggregate liability coverage to be demonstrated | $ | ____ |
| 2. | Current assets | $ | ____ |
| 3. | Current liabilities | $ | ____ |
| 4. | Net working capital [line 2 minus line 3] | $ | ____ |
| 5. | Tangible net worth | $ | ____ |
| 6. | If less than 90% of assets are located in the U.S. give total U.S. assets. | $ | ____ |
| 7. | Is line 5 at least $10 million? | ____ Yes | ____ No |
| 8. | Is line 4 at least 6 times line 1? | ____ Yes | ____ No |
| 9. | Is line 5 at least 6 times line 1? | ____ Yes | ____ No |
| 10. | Are at least 90% of firm's assets located in the U.S.? If not, complete line 11. | ____ Yes | ____ No |
| 11. | Is line 6 at least 6 times line 1? | ____ Yes | ____ No |
ALTERNATIVE II
| 1. | Amount of annual aggregate liability coverage to be demonstrated | $ | ____ |
| 2. | Current bond rating of most recent issuance of this firm and name of rating service | $ | ____ |
| 3. | Date of issuance of bond | ____ |
| 4. | Date of maturity of bond | ____ |
| 5. | Tangible net worth | $ |
| 6. | Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.) | $ | ____ ____ |
| 7. | Is line 5 at least $10 million? | ____ Yes | ____ No |
| 8. | Is line 5 at least 6 times line 1? | ____ Yes | ____ No |
| 9. | Are at least 90% of the firm's assets located in the U.S.? If not, complete line 10. | ____ Yes | ____ No |
| 10. | Is line 6 at least 6 times line 1? | ____ Yes | ____ No |
[Fill in part B if you are using the financial test to demonstrate assurance of both liability coverage and costs assured under 335-14-2-.08(4)(e) or closure or post-closure care costs under ADEM Admin. Code r. 335-14-5-.08(4), 335-14-5-.08(6), 335-14-6-.08(4) or 335-14-6-.08(6).]
Part B. Facility Care and Liability Coverage
[Fill in Alternative I if the criteria of 335-14-2-.08(4)(e)1.(i) and 335-14-2-.08(8) (f)1. (i) are used. Fill in Alternative II if the criteria of 335-14-2-.08(4)(e)1.(ii) and 335-14-2-.08(8)(f)1.(ii) are used.]
ALTERNATIVE I
| 1. | Sum of current cost estimates [total of all cost estimates listed above] | $ | ____ |
| 2. | Amount of annual aggregate liability coverage to be demonstrated | $ | ____ |
| 3. | Sum of line 1 and 2 | $ | ____ |
| 4. | Total liabilities (if any portion of your estimates is included in your total liabilities, you may deduct that portion from this line and add that amount to lines 5 and 6) | $ | ____ |
| 5. | Tangible net worth | $ | ____ |
| 6. | Net worth | $ | ____ |
| 7. | Current assets | $ | ____ |
| 8. | Current liabilities | $ | ____ |
| 9. | Net working capital [line 7 minus line 8] | $ | ____ |
| 10. | The sum of net income plus depreciation, depletion, and amortization Total assets in the U.S. (required only if less | $ | ____ |
| 11. | than 90% of firm's assets are located in the U.S.) | ____ |
| 12. | Is line 5 at least $10 million? | ____ Yes | ____ No |
| 13. | Is line 5 at least 6 times line 3? | ____ Ye____ | ____ No |
| 14. | Is line 9 at least 6 times line 3? | Yes | ____ No |
| 15. | Are at least 90% of firms assets located in the U.S.? If not, complete line 16. | ____ Yes | ____ No |
| 16. | Is line 11 at least 6 times line 3? | ____ Yes | ____ No |
| 17. | Is line 4 divided by line 6 less than 2.0? | ____ Yes | ____ No |
| 18. | Is line 10 divided by line 4 greater than 0.1? | ____ Yes | ____ No |
| 19. | Is line 7 divided by line 8 greater than 1.5 | ____ Yes | ____ No |
ALTERNATIVE II
| 1. | Sum of current cost estimates [total of all cost estimates listed above] | $ | ____ |
| 2. | Amount of annual aggregate liability coverage to be demonstrated | $ | ____ |
| 3. | Sum of lines 1 and 2 | ____ |
| 4. | Current bond rating of most recent issuance and name of rating service | ____ |
| 5. | Date of issuance bond | ____ |
| 6. | Date of maturity bond | ____ |
| 7. | Tangible net worth (if any portion of the cost estimates is included in "total liabilities" on your financial statements you may add that portion to this line) | $ | ____ |
| 8. | Total assets in the U.S. (required only if less than 90% of firm's assets are located in the U.S.) | ____ |
| 9. | Is line 7 at least $10 million? | ____ Yes | ____ No |
| 10. | Is line 7 at least 6 times line 3? Are at least 90% of the firm's assets located in the | ____ Yes | ____ No |
| 11. | U.S.? If not, complete line 12. | ____ Yes | ____ No |
| 12. | Is line 8 at least 6 times line 3? | ____ Yes | ____ No |
I hereby certify that the wording of this letter is identical to the wording specified in ADEM Admin. Code 335-14-2-.08(12)(f) as such rules were constituted on the date shown immediately below.
[Signature] _______________________________________
[Name] ___________________________________________
(Title] __________________________________________
[Date] ___________________________________________
(g) 1. A corporate guarantee, as specified in 335-14-2-.08(4)(e), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Corporate Guarantee for Facility Care
Guarantee made this [date] by [name of guaranteeing entity], a business corporation organized under the laws of the State of [insert name of State], herein referred to as guarantor. This guarantee is made on behalf of the [owner or operator] of [business address], which is [one of the following: "our subsidiary"; "a subsidiary of [name and address of common parent corporation], of which guarantor is a subsidiary"; or "an entity with which guarantor has a substantial business relationship, as defined in ADEM Admin. Code r. 335-14-5-.08(2)(h) and 335-14-6-.08(2)(h) " to the Alabama Department of Environmental Management.
Recitals
1. Guarantor meets or exceeds the financial test criteria and agrees to comply with the reporting requirements for guarantors as specified in ADEM Admin. Code r. 335-14-2-.08(4)(e).
2. [Owner or operator] owns or operates the following facility(ies) covered by this guarantee: [List for each facility: EPA Identification Number (if any issued), name, and address].
3. "Closure plans" as used below refer to the plans maintained as required by ADEM Admin. Code r. 335-14-2-.08 for the care of facilities as identified above.
4. For value received from [owner or operator], guarantor guarantees that in the event of a determination by the Department that the hazardous secondary materials at the owner or operator's facility covered by this guarantee do not meet the conditions of the exclusion under ADEM Admin. Code r.
335-14-2-.01(4)(a)24, the guarantor will dispose of any hazardous secondary material as hazardous waste, and close the facility in accordance with closure requirements found in ADEM Admin. Code r.335-14-5 or 335-14-6, as applicable, or establish a trust fund as specified in ADEM Admin. Code r.335-14-2-.08(4)(a) in the name of the owner or operator in the amount of the current cost estimate.
5. Guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor shall send within 90 days, by certified mail, notice to the Department and to [owner or operator] that he intends to provide alternate financial assurance as specified in ADEM Admin. Code r. 335-14-2-.08, as applicable, in the name of [owner or operator]. Within 120 days after the end of such fiscal year, the guarantor shall establish such financial assurance unless [owner or operator] has done so.
6. The guarantor agrees to notify the Department by certified mail, of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days after commencement of the proceeding.
7. Guarantor agrees that within 3 0 days after being notified by the Department of a determination that guarantor no longer meets the financial test criteria or that he is disallowed from continuing as a guarantor, he shall establish alternate financial assurance as specified in of ADEM Admin. Code r. 335-14-5, 335-14-6, or 335-14-2-.08, as applicable, in the name of [owner or operator] unless [owner or operator] has done so.
8. Guarantor agrees to remain bound under this guarantee notwithstanding any or all of the following: amendment or modification of the closure plan, the extension or reduction of the time of performance, or any other modification or alteration of an obligation of the owner or operator pursuant to ADEM Admin. Code r. 335-14-5, 335-14-6, or 335-14-2-.08.
9. Guarantor agrees to remain bound under this guarantee for as long as [owner or operator] must comply with the applicable financial assurance requirements of ADEM Admin. Code r. 335-14-5 and 335-14-6 or the financial assurance condition of ADEM Admin. Code r.
335-14-2-.01(4)(a)24.(vi) for the above-listed facilities, except as provided in paragraph 10 of this agreement.
10. [Insert the following language if the guarantor is (a) a direct or higher-tier corporate parent, or (b) a firm whose parent corporation is also the parent corporation of the owner or operator]:
Guarantor may terminate this guarantee by sending notice by certified mail to the Department and to [owner or operator], provided that this guarantee may not be terminated unless and until [the owner or operator] obtains, and the Department approves, alternate coverage complying with ADEM Admin. Code r.335-14-2-.08(4).
[Insert the following language if the guarantor is a firm qualifying as a guarantor due to its "substantial business relationship" with the owner or operator]
Guarantor may terminate this guarantee 12 0 days following the receipt of notification, through certified mail, by the Department and by [the owner or operator].
11. Guarantor agrees that if [owner or operator] fails to provide alternate financial assurance as specified in ADEM Admin. Code r. 335-14-5, 335-14-6, or 335-14-2-.08, as applicable, and obtain written approval of such assurance from the Department within 90 days after a notice of cancellation by the guarantor is received by the Department from guarantor, guarantor shall provide such alternate financial assurance in the name of [owner or operator].
12. Guarantor expressly waives notice of acceptance of this guarantee by the Department or by [owner or operator]. Guarantor also expressly waives notice of amendments or modifications of the closure plan and of amendments or modifications of the applicable requirements of ADEM Admin. Code r. 335-14-5, 335-14-6, or 335-14-2-.08.
I hereby certify that the wording of this guarantee is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(g)1. as such regulations were constituted on the date first above written.
Effective date: ________________________________________
[Name of guarantor] _____________________________________
[Authorized signature for guarantor] _____________________
[Name of person signing] ________________________________
[Title of person signing] _______________________________ Signature of witness or notary: __________________________
2. A guarantee, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(g), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Guarantee for Liability Coverage
Guarantee made this [date] by [name of guaranteeing entity], a business corporation organized under the laws of [if incorporated within the United States insert "the State of
_____________" and insert name of State; if incorporated outside the United States insert the name of the country in which incorporated, the principal place of business within the United States, and the name and address of the registered agent in the State of the principal place of business], herein referred to as guarantor. This guarantee is made on behalf of [owner or operator] of [business address], which is one of the following: "our subsidiary;" "a subsidiary of [name and address of common parent corporation], of which guarantor is a subsidiary;" or "an entity with which guarantor has a substantial business relationship, as defined in ADEM Admin. Code r. 335-14-1-.02 ", to any and all third parties who have sustained or may sustain bodily injury or property damage caused by [sudden and/or nonsudden] accidental occurrences arising from operation of the facility(ies) covered by this guarantee.
Recitals
1. Guarantor meets or exceeds the financial test criteria and agrees to comply with the reporting requirements for guarantors as specified in ADEM Admin. Code r. 335-14-2-.08(8) (g).
2. [Owner or operator] owns or operates the following facility(ies) covered by this guarantee: [List for each facility: EPA identification number (if any issued), name, and address; and if guarantor is incorporated outside the United States list the name and address of the guarantor's registered agent in each State.] This corporate guarantee satisfies RCRA third-party liability requirements for [insert "sudden" or "nonsudden" or "both sudden and nonsudden"] accidental occurrences in above-named owner or operator facilities for coverage in the amount of [insert dollar amount] for each occurrence and [insert dollar amount] annual aggregate.
3. For value received from [owner or operator], guarantor guarantees to any and all third parties who have sustained or may sustain bodily injury or property damage caused by [sudden and/or nonsudden] accidental occurrences arising from operations of the facility(ies) covered by this guarantee that in the event that [owner or operator] fails to satisfy a judgment or award based on a determination of liability for bodily injury or property damage to third parties caused by
[sudden and/or nonsudden] accidental occurrences, arising from the operation of the above-named facilities, or fails to pay an amount agreed to in settlement of a claim arising from or alleged to arise from such injury or damage, the guarantor will satisfy such judgment(s), award(s) or settlement agreement(s) up to the limits of coverage identified above.
4. Such obligation does not apply to any of the following:
(a) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that [insert owner or operator] would be obligated to pay in the absence of the contract or agreement.
(b) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or any similar law.
(c) Bodily injury to:
(1) An employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator]; or
(2) The spouse, child, parent, brother, or sister of that employee as a consequence of, or arising from, and in the course of employment by [insert owner or operator]. This exclusion applies:
(A) Whether [insert owner or operator] may be liable as an employer or in any other capacity; and
(B) To any obligation to share damages with or repay another person who must pay damages because of the injury to persons identified in paragraphs (1) and (2).
(d) Bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle or watercraft.
(e) Property damage to:
(1) Any property owned, rented, or occupied by [insert owner or operator];
(2) Premises that are sold, given away or abandoned by [insert owner or operator] if the property damage arises out of any part of those premises;
(3) Property loaned to [insert owner or operator];
(4) Personal property in the care, custody or control of [insert owner or operator];
(5) That particular part of real property on which [insert owner or operator] or any contractors or subcontractors working directly or indirectly on behalf of [insert owner or operator] are performing operations, if the property damage arises out of these operations.
5. Guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor shall send within 90 days, by certified mail, notice to the Department and to [owner or operator] that he intends to provide alternate liability coverage as specified in ADEM Admin. Code r. 335-14-2-.08(8), as applicable, in the name of [owner or operator]. Within 120 days after the end of such fiscal year, the guarantor shall establish such liability coverage unless [owner or operator] has done so.
6. The guarantor agrees to notify the Department by certified mail of a voluntary or involuntary proceeding under title 11 (Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days after commencement of the proceeding. Guarantor agrees that within 30 days after being notified by the Department of a determination that guarantor no longer meets the financial test criteria or that he is disallowed from continuing as a guarantor, he shall establish alternate liability coverage as specified in ADEM Admin. Code r. 335-14-2-.08(8) in the name of [owner or operator], unless [owner or operator] has done so.
7. Guarantor reserves the right to modify this agreement to take into account amendment or modification of the liability requirements set by ADEM Admin. Code r. 335-14-2-.08(8), provided that such modification shall become effective only if the Department does not disapprove the modification within 30 days of receipt of notification of the modification.
8. Guarantor agrees to remain bound under this guarantee for so long as [owner or operator] must comply with the applicable requirements of ADEM Admin. Code r. 335-14-2-.08(8) for the above-listed facility(ies), except as provided in paragraph 10 of this agreement.
9. [Insert the following language if the guarantor is (a) a direct or higher-tier corporate parent, or (b) a firm whose parent corporation is also the parent corporation of the owner or operator]:
10. Guarantor may terminate this guarantee by sending notice by certified mail to the Department and to [owner or operator], provided that this guarantee may not be terminated unless and until [the owner or operator] obtains, and the Department approves, alternate liability coverage complying with 335-14-2-.08(8).
[Insert the following language if the guarantor is a firm qualifying as a guarantor due to its "substantial business relationship" with the owner or operator]:
Guarantor may terminate this guarantee 12 0 days following receipt of notification, through certified mail, by the Department and by [the owner or operator].
11. Guarantor hereby expressly waives notice of acceptance of this guarantee by any party.
12. Guarantor agrees that this guarantee is in addition to and does not affect any other responsibility or liability of the guarantor with respect to the covered facilities.
13. The Guarantor shall satisfy a third party liability claim only on receipt of one of the following documents:
(a) Certification from the Principal and the third-party claimant(s) that the liability claim should be paid. The certification must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Certification of Valid Claim
The undersigned, as parties [insert Principal] and [insert name and address of third-party claimant(s)], hereby certify that the claim of bodily injury and/or property damage caused by a [sudden or nonsudden] accidental occurrence arising from operating [Principal's] facility should be paid in the amount of $_______.
[Signatures] ______________________________________________
Principal _________________________________________________
(Notary) Date _____________________________________________
[Signatures] ______________________________________________
Claimant(s) _______________________________________________
(Notary) Date _____________________________________________
(b) A valid final court order establishing a judgment against the Principal for bodily injury or property damage caused by sudden or nonsudden accidental occurrences arising from the operation of the Principal's facility or group of facilities.
14. In the event of combination of this guarantee with another mechanism to meet liability requirements, this guarantee will be considered [insert "primary" or "excess"] coverage.
I hereby certify that the wording of the guarantee is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(g)2. as such regulations were constituted on the date shown immediately below.
Effective date: ____________________________________________
[Name of guarantor] ________________________________________
[Authorized signature for guarantor] _________________________
[Name of person signing] ____________________________________
[Title of person signing] ___________________________________
Signature of witness or notary: _____________________________
(h) A hazardous waste facility liability endorsement as required by ADEM Admin. Code r. 335-14-2-.08(8) must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Hazardous Secondary Material Reclamation/Intermediate Facility Liability Endorsement
1. This endorsement certifies that the policy to which the endorsement is attached provides liability insurance covering bodily injury and property damage in connection with the insured's obligation to demonstrate financial responsibility under ADEM Admin. Code r. 335-14-2-.08(8). The coverage applies at [list EPA Identification Number (if any issued), name, and address for each facility] for [insert "sudden accidental occurrences," "nonsudden accidental occurrences," or "sudden and nonsudden accidental occurrences"; if coverage is for multiple facilities and the coverage is different for different facilities, indicate which facilities are insured for sudden accidental occurrences, which are insured for nonsudden accidental occurrences, and which are insured for both]. The limits of liability are [insert the dollar amount of the "each occurrence" and "annual aggregate" limits of the Insurer's liability], exclusive of legal defense costs.
2. The insurance afforded with respect to such occurrences is subject to all of the terms and conditions of the policy; provided, however, that any provisions of the policy inconsistent with subsections (a) through (e) of this Paragraph 2 are hereby amended to conform with subsections (a) through (e):
(a) Bankruptcy or insolvency of the insured shall not relieve the Insurer of its obligations under the policy to which this endorsement is attached.
(b) The Insurer is liable for the payment of amounts within any deductible applicable to the policy, with a right of reimbursement by the insured for any such payment made by the Insurer. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated as specified in ADEM Admin. Code r. 335-14-2-.08(8)(f).
(c) Whenever requested by the Department, the Insurer agrees to furnish to the Department a signed duplicate original of the policy and all endorsements.
(d) Cancellation of this endorsement, whether by the Insurer, the insured, a parent corporation providing insurance coverage for its subsidiary, or by a firm having an insurable interest in and obtaining liability insurance on behalf of the owner or operator of the facility, will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the Department.
(e) Any other termination of this endorsement will be effective only upon written notice and only after the expiration of thirty (30) days after a copy of such written notice is received by the Department. Attached to and forming part of policy No. - issued by [name of Insurer], herein called the Insurer, of [address of Insurer] to [name of insured] of [address] this __________ day of _________, 20__. The effective date of said policy is _________ day of ________, 20__.
I hereby certify that the wording of this endorsement is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(h) as such regulation was constituted on the date first above written, and that the Insurer is licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more States.
[Signature of Authorized Representative of Insurer]
[Type name]
[Title], Authorized Representative of [name of Insurer]
[Address of Representative]
(i) A certificate of liability insurance as required in ADEM Admin. Code r. 335-14-2-.08(8) must be worded as follows, except that the instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Hazardous Secondary Material Reclamation/ Intermediate Facility Certificate of Liability Insurance
1. [Name of Insurer], (the "Insurer"), of [address of Insurer] hereby certifies that it has issued liability insurance covering bodily injury and property damage to [name of insured], (the "insured"), of [address of insured] in connection with the insured's obligation to demonstrate financial responsibility under ADEM Admin. Code r. 335-14-5, 335-14-6, and the financial assurance condition of ADEM Admin. Code r.
335-14-2-.01(4)(a)24.(vi)(VI). The coverage applies at [list EPA Identification Number (if any issued), name, and address for each facility] for [insert "sudden accidental occurrences," "nonsudden accidental occurrences," or "sudden and nonsudden accidental occurrences"; if coverage is for multiple facilities and the coverage is different for different facilities, indicate which facilities are insured for sudden accidental occurrences, which are insured for nonsudden accidental occurrences, and which are insured for both]. The limits of liability are [insert the dollar amount of the "each occurrence" and "annual aggregate" limits of the Insurer's liability], exclusive of legal defense costs. The coverage is provided under policy number, issued on [date]. The effective date of said policy is [date].
2. The Insurer further certifies the following with respect to the insurance described in Paragraph 1:
(a) Bankruptcy or insolvency of the insured shall not relieve the Insurer of its obligations under the policy.
(b) The Insurer is liable for the payment of amounts within any deductible applicable to the policy, with a right of reimbursement by the insured for any such payment made by the Insurer. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated as specified in ADEM Admin. Code r. 335-14-2-.08(8).
(c) Whenever requested by the Department, the Insurer agrees to furnish to the Department a signed duplicate original of the policy and all endorsements.
(d) Cancellation of the insurance, whether by the insurer, the insured, a parent corporation providing insurance coverage for its subsidiary, or by a firm having an insurable interest in and obtaining liability insurance on behalf of the owner or operator of the hazardous waste management facility, will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the Department.
(e) Any other termination of the insurance will be effective only upon written notice and only after the expiration of thirty (30) days after a copy of such written notice is received by the Department.
I hereby certify that the wording of this instrument is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(i) as such regulation was constituted on the date first above written, and that the Insurer is licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more States.
[Signature of authorized representative of Insurer]
[Type name]
[Title], Authorized Representative of [name of Insurer]
[Address of Representative]
(j) A letter of credit, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(h), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Irrevocable Standby Letter of Credit
Name and Address of Issuing Institution ____________________________
Regional Administrator(s) ________________________________________
Region(s) _______________________________________________________
U.S. Environmental Protection Agency ______________________________
Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No. _____________ in the favor of ["any and all third-party liability claimants" or insert name of trustee of the standby trust fund], at the request and for the account of
[owner or operator's name and address] for third-party liability awards or settlements up to [in words] U.S. dollars $____________ per occurrence and the annual aggregate amount of [in words] U.S. dollars $__________, for sudden accidental occurrences and/or for third-party liability awards or settlements up to the amount of [in words] U.S. dollars $____________ per occurrence, and the annual aggregate amount of [in words] U.S. dollars $___________, for nonsudden accidental occurrences available upon presentation of a sight draft bearing reference to this letter of credit No. ____________, and [insert the following language if the letter of credit is being used without a standby trust fund:
(1) a signed certificate reading as follows:
Certificate of Valid Claim
The undersigned, as parties [insert principal] and [insert name and address of third party claimant(s)], hereby certify that the claim of bodily injury and/or property damage caused by a [sudden or nonsudden] accidental occurrence arising from operations of [principal's] facility should be paid in the amount of $[ ]. We hereby certify that the claim does not apply to any of the following:
(a) Bodily injury or property damage for which [insert principal] is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that [insert principal] would be obligated to pay in the absence of the contract or agreement.
(b) Any obligation of [insert principal] under a workers' compensation, disability benefits, or unemployment compensation law or any similar law.
(c) Bodily injury to:
(1) An employee of [insert principal] arising from, and in the course of, employment by [insert principal]; or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of, or arising from, and in the course of employment by [insert principal].
This exclusion applies:
(A) Whether [insert principal] may be liable as an employer or in any other capacity; and
(B) To any obligation to share damages with or repay another person who must pay damages because of the injury to persons identified in paragraphs (1) and (2).
(d) Bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle or watercraft.
(e) Property damage to:
(1) Any property owned, rented, or occupied by [insert principal];
(2) Premises that are sold, given away or abandoned by [insert principal] if the property damage arises out of any part of those premises;
(3) Property loaned to [insert principal];
(4) Personal property in the care, custody or control of [insert principal];
(5) That particular part of real property on which [insert principal] or any contractors or subcontractors working directly or indirectly on behalf of [insert principal] are performing operations, if the property damage arises out of these operations.
[Signatures] ________________________________________
Grantor _________________________________________
[Signatures] _____________________________________
Claimant(s) ______________________________________
or (2) a valid final court order establishing a judgment against the Grantor for bodily injury or property damage caused by sudden or nonsudden accidental occurrences arising from the operation of the Grantor's facility or group of facilities.]
This letter of credit is effective as of [date] and shall expire on [date at least one year later], but such expiration date shall be automatically extended for a period of [at least one year] on [date and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify you, the Alabama Department of Environmental Management, and [owner's or operator's name] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date.
Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us.
[Insert the following language if a standby trust fund is not being used: "In the event that this letter of credit is used in combination with another mechanism for liability coverage, this letter of credit shall be considered [insert "primary" or "excess" coverage]."
We certify that the wording of this letter of credit is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(j) as such regulations were constituted on the date shown immediately below.
[Signature(s) and title(s) of official(s) of issuing institution]
[Date].
This credit is subject to [insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published and copyrighted by the International Chamber of Commerce," or "the Uniform Commercial Code"].
(k) A surety bond, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(i), must be worded as follows: except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Payment Bond
Surety Bond No. [Insert number]
Parties [Insert name and address of owner or operator], Principal, incorporated in [Insert State of incorporation] of [Insert city and State of principal place of business] and [Insert name and address of surety company(ies)], Surety Company(ies), of [Insert surety(ies) place of business].
EPA Identification Number (if any issued), name, and address for each facility guaranteed by this bond:
| Sudden accidental occurrences | Nonsudden accidental |
| Penal Sum per Occurrence | [insert amount] | [insert amount] |
| Annual Aggregate | [insert amount] | [insert amount] |
Purpose: This is an agreement between the Surety(ies) and the Principal under which the Surety(ies), its (their) successors and assignees, agree to be responsible for the payment of claims against the Principal for bodily injury and/or property damage to third parties caused by ["sudden" and/or "nonsudden"] accidental occurrences arising from operations of the facility or group of facilities in the sums prescribed herein; subject to the governing provisions and the following conditions.
Governing Provisions:
(1) Section 22-30-16 of the Alabama Hazardous Waste Management and Minimization Act of 1978, as amended.
(2) Rules and regulations of the Alabama Department of Environmental Management Administrative Code, particularly
335-14-5-.08,
335-14-6-.08, and 335-14-2-.08 (if applicable).
Conditions:
(1) The Principal is subject to the applicable governing provisions that require the Principal to have and maintain liability coverage for bodily injury and property damage to third parties caused by ["sudden" and/or "nonsudden"] accidental occurrences arising from operations of the facility or group of facilities. Such obligation does not apply to any of the following:
(a) Bodily injury or property damage for which [insert Principal] is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that [insert Principal] would be obligated to pay in the absence of the contract or agreement.
(b) Any obligation of [insert Principal] under a workers' compensation, disability benefits, or unemployment compensation law or similar law.
(c) Bodily injury to:
(1) An employee of [insert Principal] arising from, and in the course of, employment by [insert principal]; or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of, or arising from, and in the course of employment by [insert Principal]. This exclusion applies:
(A) Whether [insert Principal] may be liable as an employer or in any other capacity; and
(B) To any obligation to share damages with or repay another person who must pay damages because of the injury to persons identified in paragraphs (1) and (2).
(d) Bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle or watercraft.
(e) Property damage to:
(1) Any property owned, rented, or occupied by [insert Principal];
(2) Premises that are sold, given away or abandoned by [insert Principal] if the property damage arises out of any part of those premises;
(3) Property loaned to [insert Principal];
(4) Personal property in the care, custody or control of [insert Principal];
(5) That particular part of real property on which [insert Principal] or any contractors or subcontractors working directly or indirectly on behalf of [insert Principal] are performing operations, if the property damage arises out of these operations.
(2) This bond assures that the Principal will satisfy valid third party liability claims, as described in condition 1.
(3) If the Principal fails to satisfy a valid third party liability claim, as described above, the Surety(ies) becomes liable on this bond obligation.
(4) The Surety(ies) shall satisfy a third party liability claim only upon the receipt of one of the following documents:
(a) Certification from the Principal and the third party claimant(s) that the liability claim should be paid. The certification must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Certification of Valid Claim
The undersigned, as parties [insert name of Principal] and [insert name and address of third party claimant(s)], hereby certify that the claim of bodily injury and/or property damage caused by a [sudden or nonsudden] accidental occurrence arising from operating [Principal's] facility should be paid in the amount of $ [_________].
[Signature] Principal
[Notary] Date
[Signature(s)]
Claimant(s)
[Notary] Date
(b) A valid final court order establishing a judgment against the Principal for bodily injury or property damage caused by sudden or nonsudden accidental occurrences arising from the operation of the Principal's facility or group of facilities.
(5) In the event of combination of this bond with another mechanism for liability coverage, this bond will be considered [insert "primary" or "excess"] coverage.
(6) The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond. In no event shall the obligation of the Surety(ies) hereunder exceed the amount of said annual aggregate penal sum, provided that the Surety(ies) furnish(es) notice to the Department forthwith of all claims filed and payments made by the Surety(ies) under this bond.
(7) The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and the Alabama Department of Environmental Management, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by the Principal and the Department, as evidenced by the return receipt.
(8) The Principal may terminate this bond by sending written notice to the Surety(ies) and to the Alabama Department of Environmental Management.
(9) The Surety(ies) hereby waive(s) notification of amendments to applicable laws, statutes, rules and regulations and agree(s) that no such amendment shall in any way alleviate its (their) obligation on this bond.
(10) This bond is effective from [insert date] (12:01 a.m., standard time, at the address of the Principal as stated herein) and shall continue in force until terminated as described above.
In Witness Whereof, the Principal and Surety(ies) have executed this Bond and have affixed their seals on the date set forth above.
The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in ADEM Admin. Code r. 335-14-2-.08(12)(k), as such regulations were constituted on the date this bond was executed.
PRINCIPAL
[Signature(s) ]
[Name(s) ]
[Title(s) ]
[Corporate Seal]
CORPORATE SURETY[IES]
[Name and address]
State of incorporation:
______________________________________
Liability Limit: $ ___________________________________________
[Signature(s) ]
[Name(s) and title (s)]
[Corporate seal]
[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.]
Bond premium: $______________________________________________
(l) A trust agreement, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(j), 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 "corporation," "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 Alabama Department of Environmental Management (the 'Department") has established certain regulations applicable to the Grantor, requiring that an owner or operator must demonstrate financial responsibility for bodily injury and property damage to third parties caused by sudden accidental and/or nonsudden accidental occurrences arising from operations of the facility or group of facilities.
Whereas, the Grantor has elected to establish a trust to assure all or part of such financial responsibility 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. This agreement pertains to the facilities identified on attached schedule A [on schedule A, for each facility list the EPA Identification Number (if any issued), name, and address of the facility(ies) and the amount of liability coverage, or portions thereof, if more than one instrument affords combined coverage as demonstrated by this Agreement].
Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund, hereinafter the "Fund," for the benefit of any and all third parties injured or damaged by [sudden and/or nonsudden] accidental occurrences arising from operation of the facility(ies) covered by this guarantee, in the amounts of __________ [up to $1 million] per occurrence and ___________ [up to $2 million] annual aggregate for sudden accidental occurrences and ___________ [up to $3 million] per occurrence and ____________ [up to $6 million] annual aggregate for nonsudden occurrences, except that the Fund is not established for the benefit of third parties for the following:
(a) Bodily injury or property damage for which [insert Grantor] is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that [insert Grantor] would be obligated to pay in the absence of the contract or agreement.
(b) Any obligation of [insert Grantor] under a workers' compensation, disability benefits, or unemployment compensation law or any similar law.
(c) Bodily injury to:
(1) An employee of [insert Grantor] arising from, and in the course of, employment by [insert Grantor]; or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of, or arising from, and in the course of employment by [insert Grantor]. This exclusion applies:
(A) Whether [insert Grantor] may be liable as an employer or in any other capacity; and
(B) To any obligation to share damages with or repay another person who must pay damages because of the injury to persons identified in paragraphs (1) and (2).
(d) Bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle or watercraft.
(e) Property damage to:
(1) Any property owned, rented, or occupied by [insert Grantor];
(2) Premises that are sold, given away or abandoned by [insert Grantor] if the property damage arises out of any part of those premises;
(3) Property loaned to [insert Grantor];
(4) Personal property in the care, custody or control of [insert Grantor];
(5) That particular part of real property on which [insert Grantor] or any contractors or subcontractors working directly or indirectly on behalf of [insert Grantor] are performing operations, if the property damage arises out of these operations.
In the event of combination with another mechanism for liability coverage, the Fund shall be considered [insert "primary" or "excess"] coverage.
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 the Department.
Section 4. Payment for Bodily Injury or Property Damage. The Trustee shall satisfy a third party liability claim by making payments from the Fund only upon receipt of one of the following documents;
(a) Certification from the Grantor and the third party claimant(s) that the liability claim should be paid. The certification must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Certification of Valid Claim
The undersigned, as parties [insert Grantor] and [insert name and address of third party claimant(s)], hereby certify that the claim of bodily injury and/or property damage caused by a [sudden or nonsudden] accidental occurrence arising from operating [Grantor's] facility or group of facilities should be paid in the amount of $ [____________].
[Signatures]
Grantor
[Signatures]
Claimant(s)
(b) A valid final court order establishing a judgment against the Grantor for bodily injury or property damage caused by sudden or nonsudden accidental occurrences arising from the operation of the Grantor's facility or group of facilities.
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, 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 circumstance 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. 81a -l et seq., including one 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 securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository 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 Valuations. The Trustee shall annually, at least 3 0 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the Department 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 Department 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 Department, 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 amendments 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 Department to the Trustee shall be in writing, signed by the Department, 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 the Department 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 the Department, except as provided for herein.
Section 15. Notice of Nonpayment. If a payment for bodily injury or property damage is made under Section 4 of this trust, the Trustee shall notify the Grantor of such payment and the amount(s) thereof within five (5) working days. The Grantor shall, on or before the anniversary date of the establishment of the Fund following such notice, either make payments to the Trustee in amounts sufficient to cause the trust to return to its value immediately prior to the payment of claims under Section 4, or shall provide written proof to the Trustee that other financial assurance for liability coverage has been obtained equaling the amount necessary to return the trust to its value prior to the payment of claims. If the Grantor does not either make payments to the Trustee or provide the Trustee with such proof, the Trustee shall within 10 working days after the anniversary date of the establishment of the Fund provide a written notice of nonpayment to the Department.
Section 16. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the Department, or by the Trustee and the Department 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 Department, or by the Trustee and the Department, 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. The Department will agree to termination of the Trust when the owner or operator substitutes alternate financial assurance as specified in this section.
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 Department 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 [enter 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 ADEM Admin. Code r. 335-14-2-.08(12)(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 acknowledgement which must accompany the trust agreement for a trust fund as specified in ADEM Admin. Code r. 335-14-2-.08(8) (j).
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]
(m) 1. A standby trust agreement, as specified in ADEM Admin. Code r. 335-14-2-.08(8)(h), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Standby Trust Agreement
Trust Agreement, the "Agreement," entered into as of [date] by and between [name of the owner or operator] a [name of a State] [insert "corporation," "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 Alabama Department of Environmental Management (the "Department," has established certain regulations applicable to the Grantor, requiring that an owner or operator must demonstrate financial responsibility for bodily injury and property damage to third parties caused by sudden accidental and/or nonsudden accidental occurrences arising from operations of the facility or group of facilities.
Whereas, the Grantor has elected to establish a standby trust into which the proceeds from a letter of credit may be deposited to assure all or part of such financial responsibility 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. This Agreement pertains to the facilities identified on attached schedule A [on schedule A, for each facility list the EPA Identification Number (if any issued), name, and address of the facility(ies) and the amount of liability coverage, or portions thereof, if more than one instrument affords combined coverage as demonstrated by this Agreement].
Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a standby trust fund, hereafter the "Fund," for the benefit of any and all third parties injured or damaged by [sudden and/or nonsudden] accidental occurrences arising from operation of the facility(ies) covered by this guarantee, in the amounts of __________ [up to $1 million] per occurrence and __________ [up to $2 million] annual aggregate for sudden accidental occurrences and __________ [up to $3 million] per occurrence and __________ [up to $6 million] annual aggregate for nonsudden occurrences, except that the Fund is not established for the benefit of third parties for the following:
(a) Bodily injury or property damage for which [insert Grantor] is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that [insert Grantor] would be obligated to pay in the absence of the contract or agreement.
(b) Any obligation of [insert Grantor] under a workers' compensation, disability benefits, or unemployment compensation law or any similar law.
(c) Bodily injury to:
(1) An employee of [insert Grantor] arising from, and in the course of, employment by [insert Grantor]; or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of, or arising from, and in the course of employment by [insert Grantor].
This exclusion applies:
(A) Whether [insert Grantor] may be liable as an employer or in any other capacity; and
(B) To any obligation to share damages with or repay another person who must pay damages because of the injury to persons identified in paragraphs (1) and (2).
(d) Bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle or watercraft.
(e) Property damage to:
(1) Any property owned, rented, or occupied by [insert Grantor];
(2) Premises that are sold, given away or abandoned by [insert Grantor] if the property damage arises out of any part of those premises;
(3) Property loaned by [insert Grantor];
(4) Personal property in the care, custody or control of [insert Grantor];
(5) That particular part of real property on which [insert Grantor] or any contractors or subcontractors working directly or indirectly on behalf of [insert Grantor] are performing operations, if the property damage arises out of these operations.
In the event of combination with another mechanism for liability coverage, the Fund shall be considered [insert "primary" or "excess"] coverage.
The Fund is established initially as consisting of the proceeds of the letter of credit deposited into the Fund. Such proceeds 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 the Department.
Section 4. Payment for Bodily Injury or Property Damage. The Trustee shall satisfy a third party liability claim by drawing on the letter of credit described in Schedule B and by making payments from the Fund only upon receipt of one of the following documents:
(a) Certification from the Grantor and the third party claimant(s) that the liability claim should be paid. The certification must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
Certification of Valid Claim
The undersigned, as parties [insert Grantor] and [insert name and address of third party claimant(s)], hereby certify that the claim of bodily injury and/or property damage caused by a [sudden or nonsudden] accidental occurrence arising from operating [Grantor's] facility should be paid in the amount of $ [________]
[Signature] ___________________________________________________
Grantor _______________________________________________________
[Signatures] __________________________________________________
Claimant(s) ___________________________________________________
(b) A valid final court order establishing a judgment against the Grantor for bodily injury or property damage caused by sudden or nonsudden accidental occurrences arising from the operation of the Grantor's facility or group of facilities.
Section 5. Payments Comprising the Fund. Payments made to the Trustee for the Fund shall consist of the proceeds from the letter of credit drawn upon by the Trustee in accordance with the requirements of ADEM Admin. Code r. 335-14-2-.08(12)(k) and Section 4 of this Agreement.
Section 6. Trustee Management. The Trustee shall invest and reinvest the 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 a 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 -l et seq., including one 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 securities 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 to the Trustee shall be paid from the Fund.
Section 10. 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 11. 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 12. 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 Department 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 13. Instructions to the Trustee. All orders, requests, certifications of valid claims, and instructions 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 amendments to Exhibit A. The Trustee shall be fully protected in acting without inquiry in accordance with the Grantor's 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 the Department 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 the Department, except as provided for herein.
Section 14. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the Department, or by the Trustee and the Department if the Grantor ceases to exist.
Section 15. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 14, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Department, or by the Trustee and the Department, if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be paid to the Grantor. The Department will agree to termination of the Trust when the owner or operator substitutes alternative financial assurance as specified in this section.
Section 16. 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 and the Department 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 17. Choice of Law. This Agreement shall be administered, construed, and enforced according to the laws of the State of Alabama.
Section 18. 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 of 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 ADEM Admin. Code r. 335-14-2-.08(12)(m) 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 acknowledgement which must accompany the trust agreement for a standby trust fund as specified in ADEM Admin. Code r. 335-14-2-.08(8)(h). State requirements may differ on the proper content of this acknowledgement.
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 thent A. Watsonreto by like order.
______________
[Signature of Notary Public]
