(3)
Financial
assurance for closure. The owner or operator of a CCR landfill must
establish financial assurance for closure in accordance with the criteria in
this rule. The owner or operator must provide continuous coverage for closure
until released from this requirement by demonstrating compliance with subrule
103.1(5). Proof of compliance pursuant to paragraphs 103.3(3)
"a" to
"e" must be submitted by the owner or
operator yearly by April 1 and approved by the department.
a. The owner or operator shall submit the
current version of department Form 542-8090, Sanitary Landfill Financial
Assurance Report Form, which contains, but is not limited to, the amount of the
financial assurance, the annual financial statement required by Iowa Code
sections
455B306(9)."e" and 455B.306(7)"c," and the current
balances ofthe closure and postclosure accounts at the time of submittal as
required by Iowa Code section
455B306(9)."b."
b. The owner
or operator shall submit a copy of the financial assurance instruments or the
documents establishing the financial assurance instruments in an amount equal
to or greater than the amount specified in subrule 103.3(8). Documentation for
the mechanism(s) used to demonstrate financial assurance shall contain, at a
minimum, the items required to be submitted as specified in paragraphs
103.3(6)"a" to"i."
c. The owner or operator shall submit a
detailed written estimate, in current dollars, certified by an Iowa-licensed
professional engineer, of the cost of hiring a third party to close the CCR
landfill in accordance with the closure/postclosure plan as required by subrule
103.1(5). Such estimate must be available at any time during the active life of
the landfill.
(1) The cost estimate must equal
the cost of closing the CCR landfill at any time during the permitted life of
the facility when the extent and manner of its operation would make closure the
most expensive.
(2) The costs
contained in the third-party estimate for closure must be accurate and
reasonable when compared to the cost estimates used by other similarly situated
landfills in Iowa.
(3) During the
active life ofthe CCR landfill, the owner or operator must annually adjust the
closure cost estimate for inflation.
(4) The owner or operator must, annually or
at the time of application for a permit amendment that increases closure costs,
whichever occurs first, increase the closure cost estimate and the amount of
financial assurance provided if changes to the closure plan or CCR landfill
conditions increase the maximum cost of closure at any time during the
remaining active life of the facility.
(5) The owner or operator may reduce the
amount of financial assurance for closure if the most recent estimate of the
maximum cost of closure at any time during the active life of the facility is
less than the amount of financial assurance currently provided. Prior to the
reduction, the owner or operator must submit to the department the
justification for the reduction of the closure cost estimate and the updated
documentation required by paragraphs 103.3(3)"a" to
"e" and receive department approval for the reduction.
Approval or denial shall be issued within 30 days of receipt ofthe reduction
request.
(6) The third-party
estimate submitted to the department must include the site area subject to
closure and account for at least the following factors determined by the
department to be minimal necessary costs for closure:
1. Closure and postclosure plan document
revisions;
2. Site preparation,
earthwork and final grading;
3.
Drainage control culverts, piping and structures;
4. Erosion control structures, sediment ponds
and terraces;
5. Final cap
construction;
6. Cap vegetation
soil placement;
7. Cap seeding,
mulching and fertilizing;
8.
Monitoring well and piezometer modifications;
9. Leachate system cleanout and extraction
well modifications;
10. Monitoring
well installations and abandonments;
11. Facility modifications to effect closed
status;
12. Engineering and
technical services;
13. Legal,
financial and administrative services; and
14. Closure compliance certifications and
documentation.
d. For CCR landfills owned by local
governments, the owner or operator shall submit to the department a copy of the
owner's or operator's most recent annual audit report in the form prescribed by
the office of the auditor of the state of Iowa.
e. Privately held CCR landfills shall submit
an affidavit from the owner or operator indicating that a yearly review has
been performed by a certified public accountant to determine whether the
privately owned landfill is in compliance with this rule. The affidavit shall
state the name of the certified public accountant, the dates and conclusions of
the review, and the steps taken to rectify any deficiencies identified by the
accountant.
(4)
Financial assurance for postclosure. The owner or operator of
a CCR landfill must establish financial assurance for the costs of postclosure
in accordance with the criteria in this rule. The owner or operator must
provide continuous coverage for postclosure until released from this
requirement by demonstrating compliance with the closure/postclosure plan and
the closure permit. Proof of compliance pursuant to paragraphs
103.3(4)
"a" to
"e" must be submitted by the
owner or operator yearly by April 1 and approved by the department.
a. The owner or operator shall submit the
current version of department Form 542-8090, Sanitary Landfill Financial
Assurance Report Form, which contains, but is not limited to, the amount of the
financial assurance, the annual financial statement required by Iowa Code
sections
455B306(9)."e" and 455B.306(7)"c," and the current
balances of the closure and postclosure accounts required by Iowa Code section
455B306(9)."b."
b. The owner
or operator shall submit a copy of the documents establishing a financial
assurance instrument in an amount equal to or greater than the amount specified
in subrule 103.3 (8). Documentation for the mechanism(s) used to demonstrate
financial assurance shall contain, at a minimum, the items required to be
submitted as specified in paragraphs 103.3(6) "a"
to"i."
c. The
owner or operator shall submit a detailed written estimate, in current dollars,
certified by an Iowa-licensed professional engineer, of the cost of hiring a
third party to conduct postclosure for the CCR landfill in compliance with the
closure/postclosure plan developed pursuant to subrule 103.1(5). The cost
estimate must account for the total cost of conducting postclosure, as
described in the plan, for the entire postclosure period.
(1) The cost estimate for postclosure must be
based on the most expensive costs of postclosure during the entire postclosure
period.
(2) The costs contained in
the third-party estimate for postclosure must be accurate and reasonable when
compared to the cost estimates used by other similarly situated landfills in
Iowa.
(3) During the active life of
the CCR landfill and during the postclosure period, the owner or operator must
annually adjust the postclosure cost estimate for inflation.
(4) The owner or operator must, annually or
at the time of application for a permit amendment that increases postclosure
costs, whichever occurs first, increase the estimate and the amount of
financial assurance provided if changes in the postclosure plan or CCR landfill
conditions increase the maximum cost of postclosure.
(5) The owner or operator may reduce the
amount of financial assurance for postclosure if the most recent estimate of
the maximum cost of postclosure beginning at any time during the active life of
the facility is less than the amount of financial assurance currently provided.
Prior to the reduction, the owner or operator must submit to the department the
justification for the reduction of the postclosure cost estimate and the
updated documentation required by paragraphs 103.3(4)"a"
to"e" and must receive department approval for the reduction.
Approval or denial shall be issued within 30 days of receipt of the reduction
request.
(6) The third-party
estimate submitted to the department must include the site area subject to
postclosure and account for at least the following factors determined by the
department to be minimal necessary costs for postclosure:
1. General site facilities, access roads and
fencing maintenance;
2. Cap and
vegetative cover maintenance;
3.
Drainage and erosion control systems maintenance;
4. Groundwater to waste separation systems
maintenance;
5. Groundwater and
surface water monitoring systems maintenance;
6. Groundwater and surface water quality
monitoring and reports;
7.
Groundwater monitoring systems performance evaluations and reports;
8. Leachate control systems
maintenance;
9. Leachate
management, transportation and disposal;
10. Leachate control systems performance
evaluations and reports;
11.
Facility inspections and reports;
12. Engineering and technical
services;
13. Legal, financial and
administrative services; and
14.
Financial assurance, accounting, audits and reports.
d. For CCR landfills owned by
local governments, the owner or operator shall submit to the department a copy
of the owner's or operator's most recent annual audit report in the form
prescribed by the office of the auditor of the state of Iowa.
e. Privately held CCR landfills shall submit
an affidavit from the owner or operator indicating that a yearly review has
been performed by a certified public accountant to determine whether the
privately owned landfill is in compliance with this rule. The affidavit shall
state the name of the certified public accountant, the dates and conclusions of
the review, and the steps taken to rectify any deficiencies identified by the
accountant.
(6)
Allowable financial assurance mechanisms. The mechanisms used
to demonstrate financial assurance as required by Iowa Code section
455B306(9).
"a" must ensure that the funds necessary to meet the costs of
closure, postclosure, and corrective action for known releases will be
available whenever the funds are needed. Owners or operators must choose from
options in paragraphs 103.3 (6)
"a" to
"i."
a.
Trust fund.
(1) An owner or operator may demonstrate
financial assurance for closure, postclosure, or corrective action, whichever
is applicable, by establishing a trust fund which conforms to the requirements
of this subrule. 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. A copy of the trust agreement must be submitted pursuant to
subrules 103.3(3), 103.3(4), and 103.3(5) and placed in the facility's official
files.
(2) Payments into the trust
fund must be made annually by the owner or operator over ten years or over the
remaining life of the CCR landfill, whichever is shorter, in the case of a
trust fund for closure or postclosure; or over one-half of the estimated length
of the corrective action plan in the case of a response to a known release.
This period is referred to as the pay-in period.
(3) For a trust fund used to demonstrate
financial assurance for closure and postclosure, the first payment into the
fund must be at least equal to the amount specified in subrule 103.3(8) for
closure or postclosure divided by the number of years in the pay-in period as
defined in subparagraph 103.3(6)
"a "(2). The amount of
subsequent payments must be determined by the following formula:
Payment = CE - CB / Y
where CE is the amount specified in 103.3(8) for closure or
postclosure (updated for inflation or other changes), CB is the current balance
of the trust fund, and Y is the number of years remaining in the pay-in
period.
(4) For a trust
fund used to demonstrate financial assurance for corrective action, the first
payment into the trust fund must be at least equal to one-half of the current
cost estimate for corrective action divided by the number of years in the
corrective action pay-in period as defined in subparagraph
103.3(6)
"a"(2). The amount of subsequent payments must be
determined by the following formula:
Payment = KB - CV / Y
where RB is the most recent estimate of the required trust
fund balance for corrective action, which is the total cost that will be
incurred during the second half of the corrective action period, CV is the
current value of the trust fund, and Y is the number of years remaining in the
pay-in period.
(5) The
initial payment into the trust fund must be made before the initial receipt of
waste or within 3 0 days of close of the first fiscal year that begins after
October 31, 2007, in the case of existing facilities; before the cancellation
of an alternative financial assurance mechanism in the case of closure and
postclosure; or no later than 120 days after the corrective action remedy has
been approved by the department.
(6) The owner or operator or another person
authorized to conduct closure, postclosure, or corrective action activities may
request reimbursement from the trustee for these expenditures, including
partial closure, as the expenditures are incurred. Requests for reimbursement
will be granted by the trustee only if sufficient funds are remaining in the
trust fund to cover the remaining costs of closure, postclosure, or corrective
action and if justification and documentation of the costs are placed in the
operating record. The owner or operator must submit to the department
documentation of the justification for reimbursement and verification that
reimbursement has been received.
(7) The trust fund may be terminated by the
owner or operator only if the owner or operator substitutes alternative
financial assurance as specified in this rule or if the owner or operator is no
longer required to demonstrate financial responsibility in accordance with this
rule.
(8) After the pay-in period
has been completed, the trust fund shall be adjusted annually to correct any
deficiency of the fund with respect to the adjusted cost estimate and may be
adjusted annually should the balance in the fund exceed the adjusted cost
estimate.
b.
Surety bond guaranteeing payment or performance.
(1) An owner or operator may demonstrate
financial assurance for closure or postclosure by obtaining a payment or
performance surety bond which conforms to the requirements of this subrule. An
owner or operator may demonstrate financial assurance for corrective action by
obtaining a performance bond which conforms to the requirements of this
subrule. The bond must be effective before the initial receipt of waste or
before the cancellation of an alternative financial assurance mechanism, in the
case of closure and postclosure; or no later than 120 days after the corrective
action remedy has been approved by the department. The owner or operator must
submit a copy of the bond to the department and keep a copy in the facility's
official files. 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. The state shall not be considered a party
to the surety bond.
(2) The penal
sum of the bond must be in an amount at least equal to the amount specified in
subrule 103.3(9) for closure and postclosure or corrective action, whichever is
applicable.
(3) 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 and also upon notice
from the department pursuant to subparagraph 103.3(6)
"b"(6).
(4) The
owner or operator must establish a standby trust fund. The standby trust fund
must meet the requirements of paragraph 103.3(6)"a" except the
requirements for initial payment and subsequent annual payments specified in
subparagraphs 103.3(6)"a"(2) to (5).
(5) Payments made under the terms of the bond
will be deposited by the surety directly into the standby trust fund. Payments
from the trust fund must be approved by the trustee and the
department.
(6) 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 120 days in
advance of cancellation. When such notice is provided, the owner or operator
shall, within 60 days, provide to the department adequate proof of alternative
financial assurance, notice from the surety of withdrawal of the cancellation,
or proof of a deposit into the standby trust fund of a sum equal to the amount
of the bond. If the owner or operator has not complied with this subparagraph
within the 60-day time period, this shall constitute a failure to perform, and
the department shall notify the surety, prior to the expiration of the 120-day
notice period, that such a failure has occurred.
(7) The bond must be conditioned upon
faithful performance by the owner or operator of all closure, postclosure, or
corrective action requirements of the Code of Iowa and this rule. A failure to
comply with subparagraph 103.3(6)"b"(6) shall also constitute
a failure to perform under the terms of the bond.
(8) Liability under the bond shall be for the
duration of the operation and the closure and postclosure periods.
(9) The owner or operator may cancel the bond
only if alternative financial assurance is substituted prior to cancellation or
if the owner or operator is no longer required to demonstrate financial
responsibility in accordance with this rule.
c.
Letter of credit.
(1) An owner or operator may demonstrate
financial assurance for closure, postclosure, or corrective action, whichever
is applicable, by obtaining an irrevocable standby letter of credit which
conforms to the requirements of this paragraph. The letter of credit must be
effective before the initial receipt of waste or before the cancellation of an
alternative financial assurance mechanism, in the case of closure and
postclosure; or no later than 120 days after the corrective action plan is
approved by the department. The owner or operator must submit to the department
a copy of the letter of credit and place a copy in the facility's official
files. 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) A letter from the owner or operator
referring to the letter of credit by number, issuing institution, and date, and
providing the name and address of the facility and the amount of funds assured,
must be included with the letter of credit submitted to the department and
placed in the facility's files.
(3)
The letter of credit must be irrevocable and must be issued for a period of at
least one year in an amount at least equal to the amount specified in subrule
103.3(8) for closure, postclosure, or corrective action, whichever is
applicable. The letter of credit must provide that the expiration date will be
automatically extended for a period of at least one year unless the issuing
institution has canceled the letter of credit by sending notice of cancellation
by certified mail to the owner or operator and to the department 120 days in
advance of cancellation. When such notice is provided, the owner or operator
shall, within 60 days, provide to the department adequate proof of alternative
financial assurance, notice of withdrawal of cancellation, or proof of a
deposit of a sum equal to the amount of the letter of credit into a standby
trust fund established pursuant to paragraph 103.3(6)"a." If
the owner or operator has not complied with this subrule within the 60-day time
period, the issuer of the letter of credit shall deposit a sum equal to the
amount of the letter of credit into the standby trust fund established by the
owner or operator. The provision of funds by the issuer of the letter of credit
shall be considered an issuance of a loan to the owner or operator, and the
terms of that loan shall be governed by the letter of credit or subsequent
agreement between those parties. The state shall not be considered a party to
this credit transaction.
(4) The
owner or operator may cancel the letter of credit only if alternative financial
assurance is substituted prior to cancellation or if the owner or operator is
no longer required to demonstrate financial responsibility in accordance with
this rule.
d.
Insurance.
(1) An owner or operator
may demonstrate financial assurance for closure, postclosure, or corrective
action by obtaining insurance which conforms to the requirements of this
paragraph. The insurance must be effective before the initial receipt of waste
or prior to cancellation of an alternative financial assurance, in the case of
closure and postclosure; or no later than 120 days after the corrective action
plan has been approved by the department. At a minimum, the insurer must be
licensed to transact the business of insurance or be eligible to provide
insurance as an excess or surplus lines insurer in one or more states. The
owner or operator must submit to the department a copy of the insurance policy
and retain a copy in the facility's official files.
(2) The closure or postclosure insurance
policy must guarantee that funds will be available to close the CCR landfill
whenever final closure occurs or to provide postclosure for the CCR landfill
whenever the postclosure period begins, whichever is applicable. The policy
must also guarantee that once closure or postclosure begins, the insurer will
be responsible for the paying out of funds to the owner or operator or other
person authorized to conduct closure or postclosure, up to an amount equal to
the face amount of the policy.
(3)
The insurance policy must be issued for a face amount at least equal to the
amount specified in subrule 103.3(8) for closure, postclosure, or corrective
action, whichever is applicable. 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) An owner or operator or another person
authorized to conduct closure or postclosure may receive reimbursements for
closure or postclosure expenditures, including partial closure, as applicable.
Requests for reimbursement will be granted by the insurer only if the remaining
value of the policy is sufficient to cover the remaining costs of closure or
postclosure, and if justification and documentation of the cost are placed in
the operating record. The owner or operator must submit to the department
documentation of the justification for reimbursement and verification that the
reimbursement has been received.
(5) 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 that such
consent is not unreasonably refused.
(6) The insurance 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
cancel the policy by sending notice of cancellation by certified mail to the
owner or operator and to the department 120 days in advance of cancellation.
When such notice is provided, the owner or operator shall, within 60 days,
provide to the department adequate proof of alternative financial assurance,
notice from the insurer of withdrawal of cancellation, or proof of a deposit of
a sum equal to the amount of the insurance coverage into a standby trust fund
established pursuant to paragraph 103.3(6)"a." If the owner or
operator has not complied with this subrule within the 60-day time period, this
shall constitute a failure to perform and shall be a covered event pursuant to
the terms of the insurance policy. A failure by the owner or operator to comply
with this subrule within the 60-day period shall make the insurer liable for
the closure and postclosure of the covered facility up to the amount of the
policy limits, which shall be equal to the most recently submitted cost
estimates.
(7) For insurance
policies providing coverage for postclosure, commencing on the date that
liability to make payments pursuant to the policy accrues, the insurer will
thereafter annually increase the face amount of the policy. Such increase must
be equivalent to the face amount of the policy, less any payments made,
multiplied by an amount equivalent to 85 percent of the most recent investment
rate or of the equivalent coupon-issue yield announced by the U.S. Department
of the Treasury for 26-week treasury securities.
(8) The owner or operator may cancel the
insurance only if alternative financial assurance is substituted prior to
cancellation or if the owner or operator is no longer required to demonstrate
financial responsibility in accordance with this rule.
e.
Corporate financial
test. An owner or operator that satisfies the requirements of this
paragraph may demonstrate financial assurance up to the amount specified below:
(1) Financial component. The owner or
operator must satisfy the requirements of numbered paragraphs 103.3(6)
"e"(1)"1," "2" and "3" to meet the financial component of the
corporate financial test.
1. The owner or
operator must satisfy one of the following three conditions:
* A current rating for its senior unsubordinated debt of AAA,
AA, A, or BBB as issued by Standard & Poor's or Aaa, Aa, A, or Baa as
issued by Moody's; or
* A ratio of less than 1.5 comparing total liabilities to net
worth (net worth calculations may not include future permitted capacity of the
subject landfill as an asset); or
* A ratio of greater than 0.10 comparing the sum of net
income plus depreciation, depletion and amortization, minus $10 million, to
total liabilities;
2. The
tangible net worth, excluding future permitted capacity of the subject
landfill, of the owner or operator must be greater than:
* The sum of the current closure, postclosure, and corrective
action cost estimates and any other environmental obligations, including
guarantees, covered by this financial test plus $10 million except as provided
in the second bulleted paragraph of numbered paragraph
103.3(6)"e"(1)"2"; or
* Net worth of $10 million, excluding future permitted
capacity of the subject landfill, plus the amount of any guarantees that have
not been recognized as liabilities on the financial statements, provided that
all of the current closure, postclosure, and corrective action costs and any
other environmental obligations covered by a financial test are recognized as
liabilities on the owner's or operator's audited financial statements, and are
subject to the approval of the department; and
3. The owner or operator must have, located
in the United States, assets, excluding future permitted capacity of the
subject landfill, amounting to at least the sum of current closure,
postclosure, and corrective action cost estimates and any other environmental
obligations covered by a financial test as described in subparagraph
103.3(6)"e"(5).
(2) Record-keeping and reporting
requirements. The owner or operator must submit the following records to the
department and place a copy in the facility's official files prior to the
initial receipt of solid waste or cancellation of an alternative financial
assurance instrument, in the case of closure and postclosure; or no later than
120 days after the corrective action plan has been approved by the department:
1. A letter signed by a certified public
accountant and based upon a certified audit that:
* Lists all the current cost estimates covered by a financial
test including, but not limited to, cost estimates required by subrules
103.3(3) to 103.3(5); cost estimates required for municipal solid waste
management facilities pursuant to 40 CFR Part 258; cost estimates required for
UIC facilities under 40 CFR Part 144, if applicable; cost estimates required
for petroleum underground storage tank facilities under 40 CFR Part 280, if
applicable; cost estimates required for PCB storage facilities under 40 CFR
Part 761, if applicable; and cost estimates required for hazardous waste
treatment, storage, and disposal facilities under 40 CFR Parts 264 and 265, if
applicable; and
* Provides evidence demonstrating that the owner or operator
meets the conditions of subparagraph 103.3(6)"e".(1).
2. A copy of the independent
certified public accountant's unqualified opinion of the owner's or operator's
financial statements for the latest completed fiscal year. To be eligible to
use the financial test, the owner's or operator's financial statements must
receive an unqualified opinion from the independent certified public
accountant. An adverse opinion or disclaimer of opinion shall be cause for
disallowance of this mechanism. A qualified opinion related to the
demonstration of financial assurance may, at the discretion of the department,
be cause for disallowance. If the department does not allow use of the
corporate financial test, the owner or operator must provide alternative
financial assurance that meets the requirements of this rule.
3. If the certified public accountant's
letter providing evidence of financial assurance includes financial data which
shows that the owner or operator satisfies subparagraph
103.3(6)"e"(1) but which differs from data in the audited
financial statements referred to in numbered paragraph
103.3(6)"e"(2)"2," 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 certified public
accountant'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 that comparison, and the reasons for any
differences.
4. If the certified
public accountant's letter provides a demonstration that the owner or operator
has assured for environmental obligations as provided in the second bulleted
paragraph of numbered paragraph 103.3(6)"e"(2)"1," then the
letter shall include a report from the independent certified public accountant
that verifies that all of the environmental obligations covered by a financial
test have been recognized as liabilities on the audited financial statements
and that documents how these obligations have been measured and reported and
verifies that the tangible net worth of the owner or operator is at least $10
million plus the amount of any guarantees provided.
(3) The owner or operator may cease the
submission of the information required by paragraph
103.3(6)"e" only if alternative financial assurance is
substituted prior to cancellation or if the owner or operator is no longer
required to demonstrate financial responsibility in accordance with this
rule.
(4) The department may, based
on a reasonable belief that the owner or operator may no longer meet the
requirements of subparagraph 103.3(6)"e"(1), require the owner
or operator to provide reports of its financial condition in addition to or
including current financial test documentation as specified in subparagraph
103.3(6)"e".(2) If the department finds that the owner or
operator no longer meets the requirements of subparagraph
103.3(6)"e"(1), the owner or operator must provide alternative
financial assurance that meets the requirements of this rule.
(5) calculation of costs to be assured. When
ca1culating the current cost estimates for closure, postclosure, corrective
action, or the sum of the combination of such costs to be covered, and any
other environmental obligations assured by a financial test referred to in
paragraph 103.3(6)
"e," the owner or operator must include cost
estimates required for subrules 103.3(3) to 103.3(5); cost estimates for
municipal solid waste management facilities pursuant to 40 CFR Section
258.74;
and cost estimates required for the following environmental obligations, if the
owner or operator assures those environmental obligations through a financial
test: obligations associated with UIC facilities under 40 CFR Part
144,
petroleum underground storage tank facilities under 40 CFR Part
280, PCB
storage facilities under 40 CFR Part
761, and hazardous waste treatment,
storage, and disposal facilities under 40 CFR Parts
264 and
265.
f.Local government
financial test. An owner or operator that satisfies the requirements
of this paragraph may demonstrate financial assurance up to the amount
specified below:
(1) Financial component.
1. The owner or operator must satisfy one of
the following requirements:
* If the owner or operator has outstanding, rated, general
obligation bonds that are not secured by insurance, a letter of credit, or
other collateral or guarantee, the owner or operator must have a current rating
of Aaa, Aa, A, or Baa, as issued by Moody's, or AAA, AA, A, or BBB, as issued
by Standard & Poor's, on all such general obligation bonds; or
* The owner or operator must satisfy both of the following
financial ratios based on the owner's or operator's most recent audited annual
financial statement: a ratio of cash plus marketable securities to total
expenditures greater than or equal to 0.05, and a ratio of annual debt service
to total expenditures less than or equal to 0.20.
2. The owner or operator must prepare its
financial statements in conformity with generally accepted accounting
principles or other comprehensive basis of accounting and have its financial
statements audited by an independent certified public accountant or the office
of the auditor of the state of Iowa. The financial statement shall be in the
form prescribed by the office of the auditor of the state of Iowa
3. A local government is not eligible to
assure its obligations in paragraph 103.3(6)
"f" if it:
* Is currently in default on any outstanding general
obligation bonds; or
* Has any outstanding general obligation bonds rated lower
than Baa as issued by Moody's or BBB as issued by Standard & Poor's;
or
* Operated at a deficit equal to 5 percent or more of total
annual revenue in each of the past two fiscal years; or
* Receives an adverse opinion or disclaimer of opinion from
the independent certified public accountant or office of the auditor of the
state of Iowa auditing its financial statement as required under numbered
paragraph 103.3(6) "f"(1)"2." A qualified opinion that is
related to the demonstration of financial assurance may, at the discretion of
the department, be cause for disallowance of this mechanism.
4. The following terms used in this paragraph
are defined as follows:
"Cash plus marketable securities" means all
the cash plus marketable securities held by the local government on the last
day of a fiscal year, excluding cash and marketable securities designated to
satisfy past obligations such as pensions.
"Debt service" means the amount of principal
and interest due on a loan in a given time period, typically the current
year.
"Deficit" means total annual revenues minus
total annual expenditures.
"Total expenditures" means all expenditures,
excluding capital outlays and debt repayment.
"Total revenues" means revenues from all
taxes and fees, excluding revenue from funds managed by local government on
behalf of a specific third party, and does not include the proceeds from
borrowing or asset sales.
(2) Public notice component. The local
government owner or operator must include disclosure of the closure and
postclosure costs assured through the financial test in its next annual audit
report prior to the initial receipt of waste at the facility or prior to
cancellation of an alternative financial assurance mechanism, whichever is
later. A reference to corrective action costs must be placed in the next annual
audit report after the corrective action plan is approved by the department.
For the first year the financial test is used to assure costs at a particular
facility, the reference may instead be placed in the facility's official files
until issuance of the next available annual audit report if timing does not
permit the reference to be incorporated into the most recently issued annual
audit report or budget. For closure and postclosure costs, conformance with
Governmental Accounting Standards Board Statement 18 ensures compliance with
this public notice component.
(3)
Record-keeping and reporting requirements.
1.
The local government owner or operator must submit to the department the
following items:
* A letter signed by the local government's chief financial
officer that lists all the current cost estimates covered by a financial test,
as described in subparagraph 103.3(6)"f"(4) that provides
evidence and certifies that the local government meets the conditions of
numbered paragraphs 103.3(6)"f"(1)"1," "2," and "3"; and that
certifies that the local government meets the conditions of subparagraphs
103.3(6)"f"(2)and (4); and
* The local government's annual financial report indicating
compliance with the financial ratios required by numbered paragraph
103.3(6)"f"(1)"1," second bulleted paragraph, if applicable,
and the requirements of numbered paragraph 103.3(6) "f"(1)"2"
and the third and fourth bulleted paragraphs of numbered paragraph 103.3(6)
"f"(1)"3" and also indicating that the requirements of
Governmental Accounting Standards Board Statement 18 have been met.
2. The items required in numbered
paragraph 103.3(6) "f"(3)"1" must be submitted to the
department and placed in the facility's official files prior to the receipt of
waste or prior to the cancellation of an alternative financial assurance
mechanism, in the case of closure and postclosure; or, in the case of
corrective action, not later than 120 days after the corrective action plan is
approved by the department.
3.
After the initial submission of the required items and their placement in the
facility's official files, the local government owner or operator must update
the information and place the updated information in the facility's official
files within 180 days following the close of the owner's or operator's fiscal
year.
4. The owner or operator may
cease the submission of the information required by paragraph
103.3(6)"f" only if alternative financial assurance is
substituted prior to cancellation or if the owner or operator is no longer
required to demonstrate financial responsibility in accordance with this
rule.
5. A local government must
satisfy the requirements of the financial test at the close of each fiscal
year. If the local government owner or operator no longer meets the
requirements of the local government financial test, the local government must,
within 180 days following the close of the owner's or operator's fiscal year,
obtain alternative financial assurance that meets the requirements of this
rule, place the required submissions for that assurance in the operating
record, and notify the department that the owner or operator no longer meets
the criteria of the financial test and that alternative financial assurance has
been obtained.
6. The department,
based on a reasonable belief that the local government owner or operator may no
longer meet the requirements of the local government financial test, may
require additional reports of financial conditions from the local government.
If the department finds, on the basis of such reports or other information,
that the owner or operator no longer meets the requirements of the local
government financial test, the local government must provide alternative
financial assurance in accordance with this rule
(4) calculation of costs to be assured. The
portion of the closure, postclosure, and corrective action costs which an owner
or operator may assure under this paragraph is determined as follows:
1. If the local government owner or operator
does not assure other environmental obligations through a financial test, the
owner or operator may assure closure, postclosure, and corrective action costs
that equal up to 43 percent of the local government's total annual
revenue.
2. If the local government
assures other environmental obligations through a financial test, including
those associated with UIC facilities under 40 CFR Section
144.62, petroleum
underground storage tank facilities under 40 CFR Part
280, PCB storage
facilities under 40 CFR Part
761, and hazardous waste treatment, storage, and
disposal facilities under 40 CFR Parts
264 and
265, the owner or operator must
add those costs to the closure, postclosure, and corrective action costs it
seeks to assure under this paragraph. The total that may be assured must not
exceed 43 percent of the local government's total annual revenue.
3. The owner or operator must obtain an
alternative financial assurance instrument for those costs that exceed the
limits set in numbered paragraphs 103.3(6) "f"(4)"1" and
"2."
g.
Corporate guarantee.
(1) An
owner or operator may meet the requirements of this paragraph by obtaining a
written guarantee. The guarantor must be the direct or higher-tier parent
corporation of the owner or operator, an owner or operator whose parent
corporation is also the parent corporation of the owner or operator, or an
owner or operator with a "substantial business relationship" with the owner or
operator. The guarantor must meet the requirements for owners or operators in
paragraph 103.3(6)"e" and must comply with the terms of the
guarantee. A certified copy of the guarantee must be placed in the facility's
operating record along with copies of the letter from a certified public
accountant and the accountant's opinions. If the guarantor's parent corporation
is also the parent corporation of the owner or operator, the letter from the
certified public accountant must describe the value received in consideration
of the guarantee. If the guarantor is an owner or operator 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.
(2)
The guarantee must be effective and all required submissions made to the
department prior to the initial receipt of waste or before cancellation of an
alternative financial mechanism, in the case of closure and postclosure; or, in
the case of corrective action, no later than 120 days after the corrective
action plan has been approved by the department.
(3) The terms of the guarantee must provide
that:
1. If the owner or operator fails to
perform closure, postclosure, or corrective action of a facility covered by the
guarantee, or fails to obtain alternative financial assurance within 90 days of
notice of intent to cancel pursuant to numbered paragraphs 103.3(6)
"g"(3)"2" and "3," the guarantor will:
* Perform, or pay a third party to perform, closure,
postclosure, or corrective action as required (performance guarantee);
or
* Establish a fully funded trust fund as specified in
paragraph 103.3(6) "a" in the name of the owner or operator (payment
guarantee); or
* Obtain alternative financial assurance as required by
numbered paragraph 103.3(6) "g"(3)"3."
2. The guarantee will remain in force for as
long as the owner or operator must comply with the applicable financial
assurance requirements of this rule unless the guarantor sends prior 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
3. If notice of cancellation is given, the
owner or operator must, within 90 days following receipt of the cancellation
notice by the owner or operator and the department, provide to the department
adequate proof of alternative financial assurance, notice from the guarantor of
withdrawal of the cancellation, or proof of the establishment of a fully funded
trust fund pursuant to paragraph 103.3(6)"a." If the owner or
operator fails to comply with the provisions of this numbered paragraph within
the 90-day period, the guarantor must provide that alternative financial
assurance prior to cancellation of the corporate guarantee.
(4) If a corporate guarantor no
longer meets the requirements of paragraph 103.3(6)"e,"
theowner or operator must, within 90 days, obtain alternative financial
assurance and submit proof of alternative financial assurance to the
department. If the owner or operator fails to provide alternative financial
assurance within the 90-day period, the guarantor must provide that alternative
financial assurance within the next 30 days.
(5) The owner or operator is no longer
required to meet the requirements of paragraph 103.3(6)"g"
upon the submission to the department of proof of the substitution of
alternative financial assurance or if the owner or operator is no longer
required to demonstrate financial responsibility in accordance with this
rule.
h.
Local
government guarantee. An owner or operator may demonstrate financial
assurance for closure, postclosure, or corrective action by obtaining a written
guarantee provided by a local government or jointly provided by the members of
an agency established pursuant to Iowa Code chapter 28E. The guarantor must
meet the requirements of the local government financial test in paragraph
103.3(6)
"f" and must comply with the terms of a written
guarantee.
(1) Terms of the written guarantee.
The guarantee must be effective before the initial receipt of waste or before
the cancellation of alternative financial assurance, in the case of closure and
postclosure; or no later than 120 days after the corrective action plan is
approved by the department. The guarantee must provide that:
1. If the owner or operator fails to perform
closure, postclosure, or corrective action of a facility covered by the
guarantee or fails to obtain alternative financial assurance within 90 days of
notice of intent to cancel pursuant to numbered paragraphs
103.3(6)
"h"(1)"2" and "3," the guarantor will:
* Perform, or pay a third party to perform, closure,
postclosure, or corrective action as required; or
* Establish a fully funded trust fund as specified in
paragraph 103.3(6) "a" in the name of the owner or operator;
or
* Obtain alternative financial assurance as required by
numbered paragraph 103.3(6)"h"(1)"3."
2. The guarantee will remain in force for as
long as the owner or operator must comply with the applicable financial
assurance requirements of this rule 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.
3. If notice of cancellation is given, the
owner or operator must, within 90 days following receipt of the cancellation
notice by the owner or operator and the department, provide to the department
adequate proof of alternative financial assurance, notice from the guarantor of
withdrawal of the cancellation, or proof of the establishment of a fully funded
trust fund pursuant to paragraph 103.3(6)"a." If the owner or
operator fails to comply with the provisions of this numbered paragraph within
the 90-day period, the guarantor must provide that alternative financial
assurance prior to cancellation of the guarantee.
(2) Record-keeping and reporting
requirements.
1. The owner or operator must
submit to the department a certified copy of the guarantee along with the items
required under subparagraph 103.3(6)"f"(3) and place a copy in
the facility's official files before the initial receipt of waste or before
cancellation of alternative financial assurance, whichever is later, in the
case of closure and postclosure; or no later than 120 days after the corrective
action plan has been approved by the department.
2. The owner or operator shall no longer be
required to submit the items specified in numbered paragraph
103.3(6)"h"(2)"1" when proof of alternative financial
assurance has been submitted to the department or the owner or operator is no
longer required to provide financial assurance pursuant to this rule.
3. If a local government guarantor no longer
meets the requirements of paragraph 103.3(6)"f," the owner or
operator must, within the 90-day period, submit to the department proof of
alternative financial assurance. If the owner or operator fails to obtain
alternative financial assurance within the 90-day period, the guarantor must
provide that alternative financial assurance within the next 30 days.
i.
Local
government dedicated fund. The owner or operator of a publicly owned
CCR landfill or a local government serving as a guarantor may demonstrate
financial assurance for closure, postclosure, or corrective action, whichever
is applicable, by establishing a dedicated fund or account that conforms to the
requirements of this paragraph. A dedicated fund will be considered eligible if
it complies with subparagraph 103.3(6)
"i"(1) or (2) below,
and all other provisions of this paragraph, and if documentation of this
compliance has been submitted to the department.
(1) The fund shall be dedicated by state
constitutional provision or local government statute, charter, ordinance, or
order to pay for closure, postclosure, or corrective action costs that arise
from the operation of the CCR landfill and shall be funded for the full amount
of coverage or funded for part of the required amount of coverage and used in
combination with another mechanism(s) that provides the remaining
coverage.
(2) The fund shall be
dedicated by state constitutional provision or local government statute,
charter, ordinance, or order as a reserve fund and shall be funded for no less
than the full amount of coverage or funded for part of the required amount of
coverage and used in combination with another mechanism(s) that provides the
remaining coverage.
(3) Payments
into the dedicated fund must be made annually by the owner or operator for ten
years or over the permitted life of the CCR landfill, whichever is shorter, in
the case of a dedicated fund for closure or postclosure; or over one-half of
the estimated length of an approved corrective action plan in the case of a
response to a known release. This is referred to as the pay-in period. The
initial payment into the dedicated fund must be made before the initial receipt
of waste in the case of closure and postclosure or no later than 120 days after
the corrective action plan has been approved by the department.
(4) For a dedicated fund used to demonstrate
financial assurance for closure and postclosure, the first payment into the
dedicated fund must be at least equal to the amount specified in subrule
103.3(8), divided by the number of years in the pay-in period as defined in
paragraph 103.3(6)
"i." The amount of subsequent payments must
be determined by the following formula:
Payment = CE - CB / Y
where CE is the total required financial assurance for the
owner or operator, CB is the current balance of the fund, and Y is the number
of years remaining in the pay-in period.
(5) For a dedicated fund used to demonstrate
financial assurance for corrective action, the first payment into the dedicated
fund must be at least one-half of the current cost estimate, divided by the
number of years in the corrective action pay-in period as defined in paragraph
103.3(6)
"i." The amount of subsequent payments must be
determined by the following formula:
Payment = RB - CF / Y
where RB is the most recent estimate of the required
dedicated fund balance, which is the total cost that will be incurred during
the second half of the corrective action period, CF is the current amount in
the dedicated fund, and Y is the number of years remaining in the pay-in
period.
(6) The initial
payment into the dedicated fund must be made before the initial receipt of
waste or within 3 0 days of close of the first fiscal year that begins after
October 31, 2007, in the case of existing facilities; before the cancellation
of an alternative financial assurance mechanism in the case of closure and
postclosure; or no later than 120 days after the corrective action remedy has
been approved by the department.
(7) After the pay-in period has been
completed, the dedicated fund shall be adjusted annually to correct any
deficiency of the fund with respect to the adjusted cost estimate and may be
adjusted annually should the balance in the fund exceed the adjusted cost
estimate.
(7)
General
requirements.
a. Use of multiple
financial mechanisms. An owner or operator may satisfy the requirements of this
rule by establishing more than one financial mechanism per facility. The
mechanisms must be a combination of those mechanisms outlined in this rule and
must provide financial assurance for an amount at least equal to the current
cost estimate for closure, postclosure, or corrective action, whichever is
applicable. The financial test and a guarantee provided by a corporate parent,
sibling or grandparent shall not be combined if the financial statements of the
two entities are consolidated.
b.
Use of one mechanism for multiple facilities. An owner or operator may satisfy
the requirements of this rule for multiple CCR landfills by the use of one
mechanism if the owner or operator ensures that the mechanism provides
financial assurance for an amount at least equal to the current cost estimates
for closure, postclosure, or corrective action, whichever is applicable, for
all CCR landfills covered.
c.
Criteria. The language of the financial assurance mechanisms listed in this
rule must ensure that the instruments satisfy the following criteria:
(1) The financial assurance mechanisms must
ensure that the amount of funds assured is sufficient to cover the costs of
closure, postclosure, or corrective action for known releases, whichever is
applicable;
(2) The financial
assurance mechanisms must ensure that funds will be available in a timely
fashion when needed;
(3) The
financial assurance mechanisms must be obtained by the owner or operator prior
to the initial receipt of solid waste and no later than 120 days after the
corrective action remedy has been approved by the department until the owner or
operator is released from the financial assurance requirements; and
(4) The financial assurance mechanisms must
be legally valid, binding, and enforceable under Iowa law.
d. No permit shall be issued by the
department pursuant to Iowa Code section
455B305.
unless the applicant has demonstrated compliance with rule
103.3(455B).
(8)
Amount of required financial assurance. A financial assurance
mechanism established pursuant to subrule 103.3(6) shall be in the amount of
the third-party cost estimates required by subrules 103.3(3), 103.3(4), and
103.3(5) except that the amount of the financial assurance may be reduced by
the sum of the cash balance in a trust fund or local government dedicated fund
plus the current value of investments held by said trust fund or local
government dedicated fund if invested in one or more of the investments listed
in Iowa Code section
12B10(5)..