a) An owner or operator may satisfy the
financial assurance requirement by obtaining a surety bond that conforms to the
requirements of this Section and submitting the bond to the Agency. An owner or
operator of a new facility must submit the bond to the Agency with the permit
application or for approval to operate under rule. The bond must be effective
before injection of hazardous waste is started. 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.
BOARD NOTE: The U.S. Department of the Treasury updates
Circular 570, "Companies Holding Certificates of Authority as Acceptable
Sureties on Federal Bonds and as Acceptable Reinsuring Companies", on an annual
basis pursuant to
31 CFR
223.16. Circular 570 is available on the
Internet from the following website:
http://www.fms.treas.gov/c570/.
b) The wording of the surety bond must be as
specified in Section
704.240.
c) The owner or operator who uses a surety
bond to satisfy the financial assurance requirement must also establish a
standby trust fund. All payments made under the terms of the bond must be
deposited by the surety directly into the standby trust fund in accordance with
instructions from the Agency. This standby trust fund must meet the
requirements specified in Section
704.214, except that
the following limitations apply:
1) An
original, signed duplicate of the trust agreement must be submitted to the
Agency with the surety bond; and
2)
Until the standby trust fund is funded pursuant to this Section, the following
are not required:
A) Payments into the trust
fund as specified in Section 704.214;
B) Updating of Schedule A of the trust
agreement to show current cost estimates;
C) Annual valuations as required by the trust
agreement; and
D) Notices of
non-payment as required by the trust agreement.
d) The bond must guarantee that the owner or
operator will fulfill the following requirements:
1) It will perform plugging and abandonment
in accordance with the plan and other requirements of the permit for the
injection well whenever required to do so; or
2) It will provide alternate financial
assurance, and obtain the Agency's written approval of the assurance provided,
within 90 days after receipt by both the owner or operator and the Agency of a
notice of cancellation of the bond from the surety.
e) Under the terms of the bond, the surety
will become liable on the bond obligation when the owner or operator fails to
perform as guaranteed by the bond. Following a determination that the owner or
operator has failed to perform plugging and abandonment in accordance with the
plan and other permit requirements when required to do so, under terms of the
bond the surety must perform plugging and abandonment as guaranteed by the bond
or must deposit the amount of the penal sum into the standby trust
fund.
f) The penal sum of the bond
must be in an amount at least equal to the current cost estimate.
g) 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 Agency, or obtain other financial assurance.
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
Agency.
h) 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 Agency. Cancellation may not
occur, however, during 120 days beginning on the date of the receipt of the
notice of cancellation by both owner or operator and the Agency as evidenced by
the returned receipts.
i) The owner
or operator may cancel the bond if the Agency has given prior written consent.
The Agency must provide such written content when either of the following
occurs:
1) An owner or operator substitute
alternate financial assurance; or
2) The Agency releases the owner or operator
in accordance with Section
704.222.
j) The surety will not be liable for
deficiencies in the performance of plugging and abandonment by the owner or
operator after the Agency releases the owner or operator in accordance with
Section 704.222.