Utah Admin. Code R315-265-147 - Financial Requirements - 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, shall 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 shall 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
Subsections R315-265-147(a)(1), (2), (3), (4), (5), or (6):
(1) An owner or operator may demonstrate the
required liability coverage by having liability insurance as specified in
Subsection R315-265-147(a)(1).
(i) Each
insurance policy shall be amended by attachment of the Hazardous Waste Facility
Liability Endorsement, or evidenced by a Certificate of Liability Insurance.
The wording of the endorsement shall be identical to the wording specified in
Subsection
R315-264-151(i).
The wording of the certificate of insurance shall be identical to the wording
specified in Subsection
R315-264-151(j).
The owner or operator shall 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 shall provide a signed duplicate original
of the insurance policy.
(ii) Each
insurance policy shall be issued by an insurer which, at a minimum, is licensed
to transact the business of insurance, or eligible to provide insurance as an
excess or surplus lines insurer, in one or more States.
(2) An owner or operator may meet the
requirements of Section R315-265-147 by passing a financial test or using the
guarantee for liability coverage as specified in Subsections R315-265-147(f)
and (g).
(3) An owner or operator
may meet the requirements of Section R315-265-147 by obtaining a letter of
credit for liability coverage as specified in Subsection
R315-265-147(h).
(4) An owner or
operator may meet the requirements of Section R315-265-147 by obtaining a
surety bond for liability coverage as specified in Subsection
R315-265-147(i).
(5) An owner or
operator may meet the requirements of Section R315-265-147 by obtaining a trust
fund for liability coverage as specified in Subsection
R315-265-147(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 shall total at least the minimum amounts required by
Section R315-265-147. If the owner or operator demonstrates the required
coverage through the use of a combination of financial assurances under
Subsection R315-265-147(a)(6), 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 SubSections R315-265-147(a)(1) through (a)(6);
or
(ii) A Certification of Valid
Claim for bodily injury or property damages caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under Subsections
R315-265-147(a)(1) through (a)(6); 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 Subsections R315-265-147(a)(1) through (a) (6).
(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, shall 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 shall 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 Section R315-265-147 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 shall 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 Subsections R315-265-147(b)(1),
(2), (3), (4), (5), or (6):
(1) An owner or
operator may demonstrate the required liability coverage by having liability
insurance as specified in Subsection R315-265-147(b)(1).
(i) Each insurance policy shall be amended by
attachment of the Hazardous Waste Facility Liability Endorsement or evidenced
by a Certificate of Liability Insurance. The wording of the endorsement shall
be identical to the wording specified in Subsection
R315-264-151(i).
The wording of the certificate of insurance shall be identical to the wording
specified in Subsection
R315-264-151(j).
The owner or operator shall 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 shall be issued by an insurer which, at a minimum, is licensed
to transact the business of insurance, or eligible to provide insurance as an
excess or surplus lines insurer, in one or more States.
(2) An owner or operator may meet the
requirements of Section R315-265-147 by passing a financial test or using the
guarantee for liability coverage as specified in Subsections R315-265-147(f)
and (g).
(3) An owner or operator
may meet the requirements of Section R315-265-147 by obtaining a letter of
credit for liability coverage as specified in Subsection
R315-265-147(h).
(4) An owner or
operator may meet the requirements of Section R315-265-147 by obtaining a
surety bond for liability coverage as specified in Subsection
R315-265-147(i).
(5) An owner or
operator may meet the requirements of Section R315-265-147 by obtaining a trust
fund for liability coverage as specified in Subsection
R315-265-147(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 shall total at least the minimum amounts required by
Section R315-265-147. If the owner or operator demonstrates the required
coverage through the use of a combination of financial assurances under
Subsection R315-265-147(b), the owner or operator shall specify at least one
such assurance as "primary" coverage and shall specify other assurance as
"excess" coverage.
(7) An owner or
operator shall notify the 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 Subsections R315-265-147(b)(1) through (b)(6);
or
(ii) A Certification of Valid
Claim for bodily injury or property damages caused by a sudden or non-sudden
accidental occurrence arising from the operation of a hazardous waste
treatment, storage, or disposal facility is entered between the owner or
operator and third-party claimant for liability coverage under Subsections
R315-265-147(b)(1) through (b)(6); 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 Subsections R315-265-147(b)(1) through (b) (6).
(c) Request for an
exception. If an owner or operator can demonstrate to the satisfaction of the
Director that the levels of financial responsibility required by Subsections
R315-265-147(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 an exception from the Director .
The request for an exception must be submitted in writing to the Director . If
granted, the exception 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 an exception 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 Subsections R315-265-147(a) or (b).
The Director will process an exception request as if it were a permit
modification request under Subsection
R315-270-41(a)(5)
and subject to the procedures of Section
R315-124-5.
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 an exception.
(d) Adjustments
by the Director . If the Director determines that the levels of financial
responsibility required by Subsections R315-265-147(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
R315-265-147(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
R315-265-147(b). An owner or operator shall 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 Subsection
R315-270-41(a)(5)
and subject to the procedures of Section
R315-124-5.
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 60 days after
receiving certifications from the owner or operator and a qualified
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 Section R315-265-147 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 Section R315-265-147 by demonstrating that he
passes a financial test as specified in this Subsection R315-265-147(f). To
pass this test the owner or operator shall meet the criteria of Subsections
R315-265-147(f)(1)(i) or (ii):
(i) The owner
or operator shall 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 90 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 shall
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 90
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 Subsection R315-265-147(f)(1) refers to the annual aggregate amounts
for which coverage is required under Subsections R315-265-147(a) and
(b).
(3) To demonstrate that he
meets this test , the owner or operator shall 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
R315-264-151(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
R315-264-143(f),
R315-264-145(f),
R315-265-143(e), and R315-265-145(e), and liability coverage, he shall submit
the letter specified in Subsection
R315-264-151(g)
to cover both forms of financial responsibility; a separate letter as specified
in Subsection
R315-264-151(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 Subsection R315-265-147(f)(3) if the fiscal year of the owner or
operator ends during the 90 days prior to the effective date of these
regulations and if the year -end financial statements for that fiscal year will
be audited by an independent certified public accountant. The extension will
end no later than 90 days after the end of the owner's or operator's fiscal
year . To obtain the extension, the owner's or operator's chief financial
officer shall send, by the effective date of these regulations, a letter to the
Director . This letter from the chief financial officer shall:
(i) Request the extension;
(ii) Certify that he has grounds to believe
that the owner or operator meets the criteria of the financial test ;
(iii) Specify for each facility to be covered
by the test the EPA Identification Number, name, address, the amount of
liability coverage and, when applicable, current closure and post-closure cost
estimates to be covered by the test ;
(iv) Specify the date ending the owner's or
operator's last complete fiscal year before the effective date of these
regulations;
(v) Specify the date,
no later than 90 days after the end of such fiscal year , when he will submit
the documents specified in Subsection R315-265-147(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 Subsection R315-265-147(f)(3), the owner or operator shall send
updated information to the Director within 90 days after the close of each
succeeding fiscal year . This information must consist of all three items
specified in Subsection R315-265-147(f)(3).
(6) If the owner or operator no longer meets
the requirements of Subsection R315-265-147(f)(1), he shall 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 Section R315-265-147.
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 Subsection R315-265-147(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 shall provide evidence of insurance for the entire amount of
required liability coverage as specified in Section R315-265-147 within 30 days
after notification of disallowance.
(g) Guarantee for liability coverage.
(1) Subject to Subsection R315-265-147(g)(2),
an owner or operator may meet the requirements of Section R315-265-147 by
obtaining a written guarantee, hereinafter referred to as "guarantee." The
guarantor shall 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 shall meet the requirements for owners or
operators in Subsections R315-265-147(f)(1) through (f)(6). The wording of the
guarantee must be identical to the wording specified in Subsection
R315-264-151(h)(2).
A certified copy of the guarantee shall accompany the items sent to the
Director as specified in Subsection R315-265-147(f)(3). One of these items
shall 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 shall 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 shall 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.
(2)
(i) In the case of corporations incorporated
in the United States, a guarantee may be used to satisfy the requirements of
Section R315-265-147 only if the Attorneys General or Insurance Commissioners
of (A) the State in which the guarantor is incorporated, and (B) Utah have
submitted a written statement to the Director that a guarantee executed as
described in Section R315-265-147 and Subsection
R315-264-151(h)(2)
is a legally valid and enforceable obligation in Utah.
(ii) In the case of corporations incorporated
outside the United States, a guarantee may be used to satisfy the requirements
of Section R315-265-147 only if (A) the non-U.S. corporation has identified a
registered agent for service of process in each Utah and in the State in which
it has its principal place of business, and if (B) the Attorney General or
Insurance Commissioner of each Utah and the State in which the guarantor
corporation has its principal place of business, has submitted a written
statement to the Director that a guarantee executed as described in Section
R315-265-147 and Subsection
R315-264-151(h)(2)
is a legally valid and enforceable obligation in that
Utah.
(h)
Letter of credit for liability coverage.
(1)
An owner or operator may satisfy the requirements of Section R315-265-147 by
obtaining an irrevocable standby letter of credit that conforms to the
requirements of Subsection R315-265-147(h) and submitting a copy of the letter
of credit to the Director .
(2) The
financial institution issuing the letter of credit shall 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 Utah agency.
(3) The wording of the letter of credit must
be identical to the wording specified in Subsection
R315-264-151(k).
(4) An owner or operator who uses a letter of
credit to satisfy the requirements of Section R315-265-147 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 shall be
an entity which has the authority to act as a trustee and whose trust
operations are regulated and examined by a Federal or Utah agency.
(5) The wording of the standby trust fund
shall be identical to the wording specified in Subsection
R315-264-151(n).
(i) Surety bond for liability coverage.
(1) An owner or operator may satisfy the
requirements of Section R315-265-147 by obtaining a surety bond that conforms
to the requirements of Subsection R315-265-147(i) 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
R315-264-151(l).
(4) A surety bond may be used to satisfy the
requirements of Section R315-265-147 only if the Attorneys General or Insurance
Commissioners of (i) the State in which the surety is incorporated, and (ii)
Utah have submitted a written statement to the Director that a surety bond
executed as described in Section R315-265-147 and Subsection
R315-264-151(l)
is a legally valid and enforceable obligation in Utah.
(j) Trust fund for liability coverage.
(1) An owner or operator may satisfy the
requirements of Section R315-265-147 by establishing a trust fund that conforms
to the requirements of Subsection R315-265-147(j) and submitting an originally
signed duplicate of the trust agreement to the Director .
(2) The trustee shall be an entity which has
the authority to act as a trustee and whose trust operations are regulated and
examined by a Federal or Utah agency.
(3) The trust fund for liability coverage
shall 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
Section R315-265-147. 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, shall 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 Section
R315-265-147 to cover the difference. For purposes of Subsection
R315-265-147(j), "the full amount of the liability coverage to be provided"
means the amount of coverage for sudden occurrences, nonsudden occurrences, or
both required to be provided by the owner or operator by Section R315-265-147,
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
R315-264-151(m).
Notes
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