Iowa Admin. Code r. 567-118.16 - Appliance demanufacturing facility financial assurance requirements
Unless a
(1) Exemptions. An appliance demanufacturing
facility owned and operated in conjunction with a sanitary landfill already
required to have financial assurance shall not be required to obtain additional
financial assurance in compliance with this chapter.
(2) No permit without financial assurance.
The department shall not issue or renew a permit to an owner or operator of an
appliance demanufacturing facility until a financial assurance instrument has
been submitted to and approved by the department .
(3) Proof of compliance. Proof of the
establishment of the financial assurance instrument and compliance with this
rule, including a current closure cost estimate, shall be submitted to the
department by July 1, 2008, or at the time of application for a permit for a
new appliance demanufacturing facility . The owner or operator must provide
continuous coverage for closure and submit proof of compliance, including an
updated closure cost estimate, with each permit renewal thereafter until
released from this requirement by the department .
(4) Use of one financial assurance instrument
for multiple permitted activities. Appliance demanufacturing facilities
required to maintain financial assurance pursuant to any other provisions of
567-Chapters 100 to 123 may satisfy the requirements of this rule by the use of
one financial assurance instrument if the permit holder ensures that the
instrument provides financial assurance for an amount at least equal to the
current cost estimates for closure of all sanitary disposal project activities
covered.
(5) The estimate submitted
to the department must be certified by a professional engineer and account for
at least the following factors determined by the department to be minimal
necessary costs for closure pursuant to rule 118.14(455B,455D):
a. Third-party labor and transportation costs
and disposal fees to properly manage any appliances , refrigerant, PCBs , mercury
and any other hazardous materials associated with appliance demanufacturing
equal to the maximum storage capacity of the facility . If materials are
temporarily stored on site in transportation vehicles, waste receptacles or
drums, then this estimate shall include disposal costs for the maximum number
of transportation vehicles, waste receptacles and drums that can be on site at
any one time.
b. The cost of hiring
a third party to properly clean and decontaminate all equipment, storage
facilities, holding areas and drainage collection systems. This estimate shall
include the cost of properly disposing of a one-week volume of washwater from
the facility . If the facility utilizes washwater storage tanks, then this
estimate shall assume that the storage tanks are full and add that volume to
the one-week volume.
c. The costs
for maintaining financial assurance pursuant to any other provisions of
567-Chapters 100 to 123, if any, in accordance with subrule
118.16(4).
(6)
Acceptable financial assurance instruments. The financial assurance instrument
shall be established in an amount equal to the cost estimate prepared in
accordance with subrule 118.16(5) and shall not be canceled, revoked,
disbursed, released, or allowed to terminate without the approval of the
department . Financial assurance may be provided by cash in the form of a
secured trust fund or local government dedicated fund, surety bond, letter of
credit, or corporate or local government guarantee as follows:
a.
Secured trust fund. The
owner or operator of an appliance demanufacturing facility or an entity serving
as a guarantor may demonstrate financial assurance for closure by establishing
a secured trust fund that conforms to the requirements of this paragraph.
(1) 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. The fund shall be restricted for the
sole purpose of funding closure activities at the facility , and a copy of the
trust agreement must be submitted to the department and placed in the
facility 's official files.
(2) A
secured trust fund shall name the department of natural resources as the entity
authorized to draw funds from the trust, subject to proper notification to the
trust officer of failure by the permittee to properly close the site within 30
days of permit suspension, termination, revocation, or expiration.
(3) Moneys in the fund shall not be assigned
for the benefit of creditors with the exception of the state.
(4) Moneys in the fund shall not be used to
pay any final judgment against a permit holder arising out of the ownership or
operation of the site during its active life or after closure.
(5) The owner or operator or another person
authorized to conduct closure activities may request reimbursement from the
trustee for closure expenditures as they are incurred. Requests for
reimbursement shall be granted by the trustee only if sufficient funds are
remaining in the trust fund to cover the remaining costs of closure and if
documentation of the justification for reimbursement has been submitted to the
department for prior approval.
(6)
If the balance of the trust fund exceeds the current cost estimate for closure
at any time, the owner or operator may request withdrawal of the excess funds
from the trustee so long as the withdrawal does not cause the balance to be
reduced below the amount of the current cost estimate.
b.
Local government dedicated
fund. The owner or operator of a publicly owned appliance
demanufacturing facility or a local government serving as a guarantor may
demonstrate financial assurance for closure by establishing a dedicated fund
that conforms to the requirements of this paragraph.
(1) The fund shall be dedicated by state
constitutional provision or local government statute, charter, ordinance,
resolution or order as a restricted fund to pay for closure costs arising from
the operation of the facility .
(2)
A copy of the document establishing the dedicated fund must be submitted to the
department and placed in the facility 's official files.
(3) If the balance of the dedicated fund
exceeds the current cost estimate for closure at any time, the owner or
operator may withdraw excess funds so long as the withdrawal does not cause the
balance to be reduced below the amount of the current cost estimate.
c.
Surety bond. A
surety bond must be written by a company authorized by the commissioner of
insurance to do business in the state, and the surety bond shall comply with
the following:
(1) The bond shall be in a form
approved by the commissioner of insurance and shall be payable to the
department of natural resources.
(2) The bond shall be specific to a
particular facility for the purpose of properly disposing of any appliances ,
refrigerant, PCBs , mercury and any other hazardous materials associated with
appliance demanufacturing that may remain on site due to the owner's or
operator 's failure to properly close the site within 30 days of permit
suspension, termination, revocation, or expiration.
(3) The owner or operator shall provide the
department with a statement from the surety with each permit application
renewal, noting that the bond is paid and current for the permit period for
which the owner or operator has applied for renewal.
d.
Letter of credit. 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.
(1) 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.
(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. 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 90 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 secured
trust fund that meets the requirements of paragraph
118.16(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
secured 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.
e.
Corporate guarantee. An
owner or operator may meet the requirements of this rule 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 .
(1) The terms of the written guarantee must
provide that within 30 days of the owner's or operator 's failure to perform
closure of a facility covered by the guarantee, the guarantor will:
1. Perform closure or pay a third party to
perform closure as required (performance guarantee);
2. Establish a fully funded secured trust
fund as specified in paragraph 118.16(6)"a" in the name of the
owner or operator (payment guarantee); or
3. Establish an alternative financial
assurance instrument in the name of the owner or operator as required by this
rule.
(2) The guarantor
must satisfy one of the following three conditions:
1. 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
2. A ratio of less than 1.5 comparing total
liabilities to net worth; or
3. A
ratio of greater than 0.10 comparing the sum of net income plus depreciation,
depletion and amortization, minus $10 million, to total liabilities.
(3) The tangible net worth of the
guarantor must be greater than the sum of the current closure cost estimate and
any other environmental obligations, including other financial assurance
guarantees.
(4) The guarantor must
have assets amounting to at least the sum of the current closure cost estimate
and any other environmental obligations, including other financial assurance
guarantees.
(5) Record-keeping and
reporting requirements. The guarantor must submit the following records to the
department and place a copy in the facility 's official files:
1. A copy of the written guarantee between
the owner or operator and the guarantor.
2. A letter signed by a certified public
accountant and based upon a certified audit that:
* Lists all the current cost estimates covered by a guarantee
including, but not limited to, cost estimates required by subrule 118.16(5);
cost estimates required for municipal
* Provides evidence demonstrating that the guarantor meets the conditions of subparagraphs 118.16(6)"e"(2), (3) and (4).
3. A copy of the
independent certified public accountant's unqualified opinion of the
guarantor's financial statements for the latest completed fiscal year . In order
for the guarantor to be eligible to use the guarantee, the guarantor'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 instrument. 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 guarantee, the owner or operator must provide alternative
financial assurance that meets the requirements of this rule.
f.
Local
government guarantee. An owner or operator may demonstrate financial
assurance for closure 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.
(1) The terms of the
written guarantee must provide that within 30 days of the owner's or operator 's
failure to perform closure of a facility covered by the guarantee, the
guarantor will:
1. Perform closure or pay a
third party to perform closure as required (performance guarantee);
2. Establish a fully funded secured trust
fund as specified in paragraph 118.16(6)"a " in the name of
the owner or operator (payment guarantee); or
3. Establish an alternative financial
assurance instrument in the name of the owner or operator as required by this
rule.
(2) The guarantor
must satisfy one of the following requirements:
1. If the guarantor has outstanding, rated,
general obligation bonds that are not secured by insurance, a letter of credit,
or other collateral or guarantee, the guarantor 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
2. The guarantor must satisfy each of the
following financial ratios based on the guarantor'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.
(3) The guarantor 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.
(4) A guarantor is not eligible to assure its
obligations if:
1. The guarantor is currently
in default on any outstanding general obligation bonds; or
2. The guarantor has any outstanding general
obligation bonds rated lower than Baa as issued by Moody's or BBB as issued by
Standard & Poor's; or
3. The
guarantor operated at a deficit equal to 5 percent or more of total annual
revenue in each of the past two fiscal years; or
4. The guarantor 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. 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; or
5. The closure costs
to be assured are greater than 43 percent of the guarantor's total annual
revenue.
(5) The local
government guarantor must include disclosure of the closure costs assured
through the guarantee in its next annual audit report prior to the initial
receipt of appliances at the facility or prior to cancellation of an
alternative financial assurance instrument, whichever is later. For the first
year the guarantee is used to assure costs at a particular facility , the
reference may instead be placed in the guarantor'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 costs, conformance with Governmental Accounting
Standards Board Statement 18 ensures compliance with this public notice
component.
(6) The local government
owner or operator must submit to the department the following items:
1. A copy of the written guarantee between
the owner or operator and the local government serving as guarantor for the
closure costs at the facility .
2. A
copy of the guarantor's most recent annual financial audit report indicating
compliance with the financial ratios required by numbered paragraph
118.16(6)"f"(2)"2," if applicable, and the requirements of
subparagraphs 118.16(6)"f'(3) and (4).
3. A letter signed by the local government's
chief financial officer that lists all the current cost estimates covered by
the guarantor, as described in subrule 118.16(5); and that provides evidence
and certifies that the local government meets the conditions of subparagraphs
118.16(6)"f" (2), (3), (4) and (5).
(7) Financial assurance cancellation and
permit suspension.
a. A financial assurance
instrument may be terminated by the owner or operator only if the owner or
operator substitutes alternate financial assurance prior to cancellation, as
specified in this rule, or if the owner or operator is no longer required to
demonstrate financial responsibility in accordance with this rule.
b. A financial assurance instrument shall be
continuous in nature until canceled by the financial assurance provider or
until the department gives written notification to the owner, operator , and
financial assurance provider that the covered site has been properly closed.
The financial assurance provider shall give at least 90 days' notice in writing
to the owner or operator and the department in the event of any intent to
cancel the instrument.
c. Within 60
days of receipt of a written notice of cancellation of financial assurance by
the financial assurance provider, the owner or operator must provide the
department an alternative financial assurance instrument. If a means of
continued financial assurance is not provided within that 60 days, the
department shall suspend the permit.
d. The owner or operator shall perform proper
closure within 30 days of the permit suspension. For the purpose of this rule,
"proper closure" means completion of all items pursuant to rule
118.14(455B,455D) and subrule 118.16(5).
e. If the owner or operator does not properly
close the site within the 30-day period allowed, the department shall file a
claim with the financial assurance instrument provider to collect the amount of
funds necessary to properly close the site .
f. An owner or operator who elects to
terminate a permitted activity, whose renewal application has been denied, or
whose permit has been suspended or revoked for cause must submit within 30 days
of the termination of the permit a schedule for completing proper closure of
the terminated activity. Closure completion cannot exceed 60 days from the date
of termination of the permit.
g.
The director may also request payment from any financial assurance provider for
the purpose of completing closure when the following circumstances exist:
(1) The owner or operator is more than 15
days late in providing a schedule for closure or for meeting any date in the
schedule for closure.
(2) The owner
or operator declares an economic inability to comply with this rule, either by
sending written notification to the director or through an action such as, but
not limited to, filing for bankruptcy.
Notes
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