Haw. Code R. § 11-265-147 - Liability requirements
(a) Coverage for
sudden accidental occurrences. An owner or operator of a hazardous waste
treatment, storage, or disposal facility, 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 paragraph (a)(1), (a)(2), (a)(3), (a) (4), (a)
(5), or (a) (6):
(1) An owner or operator may
demonstrate the required liability coverage by having liability insurance as
specified in this subsection.
(i) Each
insurance policy must be amended by attachment of the Hazardous Waste Facility
Liability Endorsement, or evidenced by a Certificate of Liability Insurance.
The wording of the endorsement must be identical to the wording specified in
subsection 11-264-151(i). The wording of the certificate of insurance must be
identical to the wording specified in subsection 11-264-151(j). The owner or
operator must submit a signed duplicate original of the endorsement or the
certificate of insurance to the director. If requested by the director, 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 eligble 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 this section by passing a financial test or using the guarantee
for liability coverage as specified in subsections (f) and (g).
(3) An owner or operator may meet the
requirements of this section by obtaining a letter of credit for liability
coverage as specified in subsection (h).
(4) An owner or operator may meet the
requirements of this section by obtaining a surety bond for liability coverage
as specified in subsection (i).
(5)
An owner or operator may meet the requirements of this section by obtaining a
trust fund for liability coverage as specified in subsection (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 this section. If the owner or
operator demonstrates the required coverage through the use of a combination of
financial assurances under this subsection, 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 director in writing within 30 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 paragraphs (a)(1) through (a)(6) of this
section; 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
waste treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under paragraphs
(a)(1) through (a)(6) of this section; or
(iii) A final court order establishing a
judgment for bodily injury or property damage caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is issued against the owner or
operator or an instrument that is providing financial assurance for liability
coverage under paragraphs (a)(1) through (a)(6) of this section.
(b) Coverage for
nonsudden accidental occurrences. An owner or operator of a surface
impoundment, landfill, or land treatment facility which is used to manage
hazardous waste, 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 per-occurrence 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 paragraph (b)(1), (b) (2), (b)
(3), (b) (4), (b) (5), or (b) (6):
(1) An
owner or operator may demonstrate the required liability coverage by having
liability insurance as specified in this subsection.
(2) An owner or operator may meet the
requirements of this section by passing a financial test or using the guarantee
for liability coverage as specified in subsections (f) and (g).
(3) An owner or operator may meet the
requirements of this section by obtaining a letter of credit for liability
coverage as specified in subsection (h).
(4) An owner or operator may meet the
requirements of this section by obtaining a surety bond for liability coverage
as specified in subsection (i).
(5)
An owner or operator may meet the requirements of this section by obtaining a
trust fund for liability coverage as specified in subsection (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 this section. If the owner or
operator demonstrates the required coverage through the use of a combination of
financial assurances under this subsection, 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 director in writing within 30 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 paragraphs (b)(1) through (b)(6) of this
section; 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
waste treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under paragraphs
(b)(1) through (b)(6) of this section; or
(iii) A final court order establishing a
judgment for bodily injury or property damage caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is issued against the owner or
operator or an instrument that is providing financial assurance for liability
coverage under paragraphs (b)(1) through (b)(6) of this section.
(c) Request for
variance. If an owner or operator can demonstrate to the satisfaction of the
director that the levels of financial responsibility required by subsection (a)
or (b) are not consistent with the degree and duration of risk associated with
treatment, storage, or disposal at the facility or group of facilities, the
owner or operator may obtain a variance from the director. The request for a
variance must be submitted in writing to the director. If granted, the variance
will take the form of an adjusted level of required liability coverage, such
level to be based on the director's assessment of the degree and duration of
risk associated with the ownership or operation of the facility or group of
facilities. The director may require an owner or operator who requests a
variance to provide such technical and engineering information as is deemed
necessary by the director to determine a level of financial responsibility
other than that required by subsection (a) or (b). The director will process a
variance request as if it were a permit modification request under paragraph
11-270-41(a)(5) and subject to the procedures of section 11-271-5.
Notwithstanding any other provision, the director may hold a public hearing at
his discretion or whenever he finds, on the basis of requests for a public
hearing, a significant degree of public interest in a tentative decision to
grant a variance.
(d) Adjustments
by the director. If the director determines that the levels of financial
responsibility required by subsection (a) or (b) are not consistent with the
degree and duration of risk associated with treatment, storage, or disposal at
the facility or group of facilities, the director may adjust the level of
financial responsibility required under subsection (a) or (b) as may be
necessary to protect human health and the environment. This adjusted level will
be based on the director'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 director 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,
landfill, or land treatment facility, he may require that an owner or operator
of the facility comply with subsection (b). An owner or operator must furnish
to the director, within a reasonable time, any information which the director
requests to determine whether cause exists for such adjustments of level or
type of coverage. The director will process an adjustment of the level of
required coverage as if it were a permit modification under paragraph
11-270-41(a)(5) and subject to the procedures of section 11-271-5.
Notwithstanding any other provision, the director may hold a public hearing at
his discretion or whenever he finds, on the basis of requests for a public
hearing, a significant degree of public interest in a tentative decision to
adjust the level or type of required coverage.
(e) Period of coverage. Within sixty days
after receiving certifications from the owner or operator and an independent
registered professional engineer that final closure has been completed in
accordance with the approved closure plan, the director will notify the owner
or operator in writing that he is no longer required by this section to
maintain liability coverage for that facility, unless the director has reason
to believe that closure has not been in accordance with the approved closure
plan.
(f) Financial test for
liability coverage.
(1) An owner or operator
may satisfy the requirements of this section by demonstrating that he passes a
financial test as specified in this subsection. To pass this test the owner or
operator must meet the criteria of subparagraph (f)(1)(i) or (f)(1)(ii):
(i) The owner or operator must have:
(A) Net working capital and tangible net
worth each at least six times the amount of liability coverage to be
demonstrated by this test; and
(B)
Tangible net worth of at least $10 million; and
(C) Assets in the United States amounting to
either:
(1) At least ninety percent of his
total assets; or
(2) At least six
times the amount of liability coverage to be demonstrated by this
test.
(ii)
The owner or operator must have:
(A) A
current rating for his most recent bond issuance of AAA, AA, A, or BBB as
issued by Standard and Poor's, or Aaa, Aa, A, or Baa as issued by Moody's;
and
(B) Tangible net worth of at
least $10 million; and
(C) Tangible
net worth at least six times the amount of liability coverage to be
demonstrated by this test; and
(D)
Assets in the United States amounting to either:
(1) At least ninety percent of his total
assets; or
(2) 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 paragraph (f)(1) refers to the
annual aggregate amounts for which coverage is required under subsections (a)
and (b).
(3) To demonstrate that he
meets this test, the owner or operator must submit the following three items to
the director:
(i) A letter signed by the
owner's or operator's chief financial officer and worded as specified in
subsection 11-264-151(g). If an owner or operator is using the financial test
to demonstrate both assurance for closure or post-closure care, as specified by
subsections 11-264-143(f), 11-264-145(f), 11-265-143(e), and 11-265-145(e), and
liability coverage, he must submit the letter specified in subsection
11-264-151(g) to cover both forms of financial responsibility; a separate
letter as specified in subsection 11-264-151(f) 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) A special report from the owner's or
operator's independent certified public accountant to the owner or operator
stating that:
(A) He has compared the data
which the letter from the chief financial officer specifies as having been
derived from the independently audited, year-end financial statements for the
latest fiscal year with the amounts in such financial statements; and
(B) In connection with that procedure, no
matters came to his attention which caused him to believe that the specified
data should be adjusted.
(4) The owner or operator may obtain a
one-time extension of the time allowed for submission of the documents
specified in paragraph (f)(3) if the fiscal year of the owner or operator ends
during the ninety days prior to the effective date of these rules 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
ninety 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 rules, a letter to the director. 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
rules;
(v) Specify the date, no
later than ninety days after the end of such fiscal year, when he will submit
the documents specified in paragraph (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 paragraph (f)(3), the owner or operator must send updated
information to the director within ninety days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in paragraph (f)(3).
(6)
If the owner or operator no longer meets the requirements of paragraph (f)(1)
of this section, 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 this section. Evidence of liability coverage must be submitted
to the director 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 director
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 subparagraph
(f)(3)(ii)). An adverse opinion or a disclaimer of opinion will be cause for
disallowance. The director 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 this section within
thirty days after notification of disallowance.
(g) Guarantee for liability coverage.
(1) Subject to paragraph (g)(2), an owner or
operator may meet the requirements of this section 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 paragraphs
(f)(1) through (f)(6). The wording of the guarantee must be identical to the
wording specified in paragraph 11-264-151(h)(2). A certified copy of the
guarantee must accompany the items sent to the director as specified in
paragraph (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 this section only if the Attorneys General
or Insurance Commissioners of:
(A) the state
in which the guarantor is incorporated, and
(B) the State of Hawaii have submitted
written statements to the director that a guarantee executed as described in
this section and paragraph 11-264-151(h)(2) is a legally valid and enforceable
obligation in the state in which the guarantor is incorporated and in the State
of Hawaii, respectively.
(ii) In the case of corporations incorporated
outside the United States, a guarantee may be used to satisfy the requirements
of this section only if:
(A) the non-U.S.
corporation has identified a registered agent for service of process in the
State of Hawaii and in the state in which it has its principal place of
business, and if:
(B) the Attorneys
General or Insurance Commissioners of the State of Hawaii and the state in
which the guarantor corporation has its principal place of business, have
submitted written statements to the director that a guarantee executed as
described in this section and paragraph 11-264-151(h)(2) is a legally valid and
enforceable obligation in the State of Hawaii and in the state in which the
guarantor corporation has its principal place of business,
respectively.
(h) Letter of credit for liability coverage.
(1) An owner or operator may satisfy the
requirements of this section by obtaining an irrevocable standby letter of
credit that conforms to the requirements of this subsection and submitting a
copy of the letter of credit to the director.
(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
subsection 11-264-151(k).
(4) An
owner or operator who uses a letter of credit to satisfy the requirements of
this section 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 the
State.
(5) The wording of the
standby trust fund must be identical to the wording specified in subsection
11-264-151(n).
(i)
Surety bond for liability coverage.
(1) An
owner or operator may satisfy the requirements of this section by obtaining a
surety bond that conforms to the requirements of this subsection and submitting
a copy of the bond to the director.
(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 subsection 11-264-151(1).
(4) A surety bond may be used to satisfy the
requirements of this section only if the Attorneys General or Insurance
Commissioners of:
(i) The state in which the
surety is incorporated; and
(ii)
the State of Hawaii have submitted written statements to the director that a
surety bond executed as described in this section and subsection 11-264-151(1)
is a legally valid and enforceable obligation in the state in which the surety
is incorporated and in the State of Hawaii, respectively.
(j) Trust fund for liability
coverage.
(1) An owner or operator may
satisfy the requirements of this section by establishing a trust fund that
conforms to the requirements of this subsection and submitting an originally
signed duplicate of the trust agreement to the director.
(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 the State.
(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 this section. 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 this section 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 this section, 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
subsection 11-264-151(m).
(k) [Reserved]
Notes
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