Wis. Admin. Code Department of Natural Resources § NR 756.06 - Methods of providing proof of financial responsibility
A
Note: The reference to s. NR 756.15 is an error
and will be corrected in future rulemaking by the
(1) PERFORMANCE OR FORFEITURE BOND.
(a) A person required to submit proof may
submit a performance or forfeiture bond. The performance or forfeiture bond
shall be in the amount determined under s. NR 756.08 and conditioned upon
faithful performance by the person required to submit proof and any successor
in interest of all requirements of the approved plan and compliance schedule or
subsequent remedial actions required by the department . A bond shall be
delivered to the department for approval. A bond shall be established using a
form supplied by the department .
(b) A bond shall be issued by a surety
company among those listed as acceptable sureties for federal bonds in Circular
570 of the U.S. department of the treasury. At the option of the owner, a
performance bond or a forfeiture bond may be filed. The department shall be the
obligee of the bond. Surety companies may have the opportunity to complete the
respective requirements of the plan and compliance schedule in lieu of cash
payment to the department if the person required to submit proof, or any
successor in interest, fails to carry out the respective requirements of the
approved plan and compliance schedule. The department shall mail notification
of the department 's intent to use the funds for that purpose to the last known
address of the person required to submit proof.
Note: Copies of Circular 570, "Companies Holding
Certificates of Authority as Acceptable Sureties on Federal Bonds and as
Acceptable Reinsuring Companies" can be obtained from surety bond branch,
financial management service,
(c) Each bond shall provide that, as long as
any respective obligation of the plan and compliance schedule remains, the bond
may not be canceled by the surety, unless a replacement bond or other proof of
financial responsibility under this section is provided to the department by
the person required to submit proof. If the surety proposes to cancel a bond,
the surety shall provide notice to the department and to the owner in writing
by registered or certified mail not less than 90 days prior to the proposed
cancellation date. Not less than 30 days prior to the expiration of the 90-day
notice period, the owner shall deliver to the department a replacement bond or
other proof of financial responsibility under this section, and the bond or
other proof of financial responsibility shall remain in effect as long as any
respective obligation of the person required to submit proof remains under the
plan and compliance schedule. The surety may discharge its obligation under the
bond at any time by paying the unused portion of the bond to the
department .
(d) If the surety
company becomes bankrupt or insolvent or if its authorization to do business is
revoked or suspended, the person required to submit proof shall, within 30 days
after receiving written notice of the bankruptcy, insolvency, revocation, or
suspension, deliver to the department a replacement bond or other proof of
financial responsibility under this section, and the replacement bond or other
proof of financial responsibility shall remain in effect as long as any
respective obligation of the person required to submit proof remains under the
plan and compliance schedule.
(2) DEPOSIT WITH THE DEPARTMENT . A person
required to submit proof may make a deposit with the department in the form of
cash, certificates of deposit, or U.S. government securities. The amount of the
deposit shall be determined under s. NR 756.08 and deposits shall be submitted
to the department for approval. Cash deposits placed with the department shall
be segregated and invested in an interest-bearing account. All interest
payments shall be accumulated in the account. The department may use part or
all of the funds to carry out the respective requirements in the plan and
compliance schedule if the owner fails to do so. The department shall mail
notification of its intent to use funds for that purpose to the last known
address of the person required to submit proof.
(3) ESCROW ACCOUNT.
(a) A person required to submit proof may
establish an escrow account. An established escrow account may include any of
the following assets:
1. Cash.
2. Securities issued by the federal
government.
3. Debt securities
issued by a commission, board, agency, or other instrumentality of the federal
government that have a rating that is the highest rating category assigned by
Standard & Poor's Corporation, Moody's Investors Service, or other similar
nationally recognized rating agency.
4. State bonds issued under subch. I of ch.
18, Stats.
5. Corporate bonds that
have a rating that is the highest rating category assigned by Standard &
Poor's Corporation, Moody's Investors Service, or other similar nationally
recognized rating agency. Corporate bonds may not be used to provide more than
50 percent of the required amount of proof of financial
responsibility.
(b) If a
person required to submit proof establishes an escrow account, the amount shall
be determined under s. NR 756.08 and the account shall be with a bank or
financial institution located within the state of Wisconsin that is examined
and regulated by the state or a federal agency. A total of no more than the
amount of the Federal Deposit Insurance Corporation insurance limit in cash and
certificates of deposit may be placed into escrow accounts or trust accounts
established by the person required to submit proof in the same bank or
financial institution for the purposes of providing financial assurance to the
department . U.S. government securities shall be used in these escrow or trust
accounts for amounts in excess of the amount of the Federal Deposit Insurance
Corporation insurance limit. All interest or coupon payments shall accumulate
in the account. A duplicate original of the escrow agreement for closure or
long-term care, with original signatures, shall be submitted to the department
for approval. Escrow account forms shall be supplied by the department . The
department shall be a party to the escrow agreement, which shall provide that
there shall be no withdrawals from the escrow account except as authorized in
writing by the department . The escrow agreement shall further provide that the
department shall have the right to withdraw and use part, or all, of the funds
in the escrow account to carry out the respective requirements of the approved
plan and compliance schedule if the person required to submit proof fails to do
so. The department shall mail notification of its intent to use funds for that
purpose to the last known address of the person required to submit
proof.
(4) IRREVOCABLE
TRUST.
(a) A person required to submit proof
may create an irrevocable trust. The corpus of the irrevocable trust may
include any of the following:
1. Securities
issued by the federal government.
2. Debt securities issued by a commission,
board, agency, or other instrumentality of the federal government that have a
rating that is the highest rating category assigned by Standard & Poor's
Corporation, Moody's Investors Service, or other similar nationally recognized
rating agency.
3. State bonds
issued under subch. I of ch. 18, Stats.
4. Corporate bonds that have a rating that is
the highest rating category assigned by Standard & Poor's Corporation,
Moody's Investors Service, or other similar nationally recognized rating
agency. Corporate bonds may not be used to provide more than 50 percent of the
required amount of proof of financial responsibility.
(b) If a person required to submit proof
creates an irrevocable trust, the trust shall be exclusively for the purpose of
ensuring that the person required to submit proof or any successor in interest
will comply with the requirements of the approved plan and compliance schedule.
The trust agreement shall designate the department as sole beneficiary. The
trustee shall be a bank or other financial institution located within the state
of Wisconsin that has the authority to act as a trustee and whose trust
operations are regulated and examined by the state or a federal agency. The
trust corpus shall consist of cash, certificates of deposit, or U.S. government
securities in the amount determined under s. NR 756.08. A total of no more than
the amount of the Federal Deposit Insurance Corporation insurance limit in cash
and certificates of deposit may be placed into escrow accounts or trust
accounts established by the owner in the same bank or financial institution for
the purposes of providing financial assurance to the department . U.S.
government securities shall be used in these escrow or trust accounts for
amounts in excess of the Federal Deposit Insurance Corporation insurance limit.
All interest or coupon payments shall accumulate in the account. A duplicate
original of the trust agreement with original signatures shall be submitted to
the department for approval. Trust forms shall be supplied by the department .
The trust agreement shall provide that there shall be no withdrawal from the
trust fund except as authorized in writing by the department . The trust
agreement shall further provide that sufficient funds shall be paid from the
trust fund to the beneficiary in the event that the person required to submit
proof or any successor in interest fails to complete the respective
requirements of the approved plan and compliance schedule. The department shall
mail notification of its intent to use funds for that purpose to the last known
address of the person required to submit proof.
(5) IRREVOCABLE LETTER OF CREDIT.
(a) A person required to submit proof may
submit an irrevocable letter of credit. The letter of credit shall be in the
amount determined under s. NR 756.08, and available exclusively for the purpose
of assuring that all respective requirements of the approved plan and
compliance schedule will be complied with. The original letter of credit shall
be delivered to the department for approval. Letter of credit forms shall be
supplied by the department .
(b) A
letter of credit shall be issued by a bank or financial institution that has
the authority to issue letters of credit and whose letter of credit operations
are examined and regulated by a federal agency, or in the case of a bank or
financial institution located within the state of Wisconsin, that is examined
and regulated by the state or a federal agency. The department shall be the
beneficiary of the letter of credit.
(c) The letter of credit shall provide either
that the unused portion of the letter of credit shall be payable in full to the
department upon the expiration of the letter of credit or that as long as any
respective obligation of the person required to submit proof remains under the
plan and compliance schedule, the letter of credit may not be canceled by the
bank or financial institution unless a replacement letter of credit or other
proof of financial responsibility under this section is provided to the
department by the person required to submit proof. If the bank or financial
institution proposes to cancel a letter of credit, the bank or financial
institution shall provide notice to the department and the person required to
submit proof in writing by registered or certified mail not less than 90 days
prior to the proposed cancellation date. Not less than 30 days prior to the
expiration date of the 90-day notice period, the person required to submit
proof shall deliver to the department a replacement letter of credit or other
proof of financial responsibility under this section, in the absence of which
either the letter of credit shall remain in effect as long as any respective
obligation of the person required to submit proof remains under the plan and
compliance schedule or the unused portion of the letter of credit shall be
payable in full to the department .
(d) If the bank or financial institution
becomes bankrupt or insolvent or if its authorization to do business is revoked
or suspended, the person required to submit proof shall, within 30 days after
receiving written notice of bankruptcy, insolvency, revocation, or suspension,
deliver to the department a replacement letter of credit or other proof of
financial responsibility under this section, and the replacement letter of
credit shall either remain in effect as long as any respective obligation of
the person required to submit proof remains under the plan and compliance
schedule or be payable in full to the department .
(e) The letter of credit shall further
provide that the department has the right to withdraw and use part, or all, of
the funds to carry out the respective requirements of the plan and compliance
schedule if the person required to submit proof fails to do so. The department
shall mail notification of its intent to use the funds for that purpose to the
last known address of the person required to submit proof.
(6) INSURANCE.
(a) A person required to submit proof may
submit an insurance policy. The insurance policy shall be issued for the
maximum risk limit determined under s. NR 756.08. A certificate of insurance
shall be delivered to the department for approval. Certificate of insurance
forms shall be submitted on a form supplied by the department .
(b) Except for captive insurance companies,
the insurer shall be licensed to transact the business of insurance or eligible
to provide insurance as an excess or surplus lines insurer in one or more
states. The department , after conferring with the Wisconsin insurance
commissioner, shall determine the acceptability of a surplus lines or captive
insurance company to provide coverage for proof of financial responsibility.
The department shall ask the insurance commissioner to provide a financial
analysis of the insurer including a recommendation as to the insurer's ability
to provide the required coverage. The department shall be the beneficiary of
the insurance policy. The department may require a periodic review of the
acceptability of a surplus lines or captive insurance company.
(c) The insurance policy shall provide either
that the unused proceeds of the policy shall be payable in full to the
department upon expiration of the policy or that, as long as any respective
obligation of the person required to submit proof remains under the plan and
compliance schedule, the insurance policy may not be canceled by the insurer
unless a replacement insurance policy or other proof of financial
responsibility under this section is provided to the department by the person
required to submit proof. If the insurer proposes to cancel an insurance
policy, the insurer shall provide notice to the department and to the person
required to submit proof in writing by registered or certified mail not less
than 90 days prior to the proposed cancellation date. Not less than 30 days
prior to the expiration of the 90-day notice period, the person required to
submit proof shall deliver to the department a replacement insurance policy or
other proof of financial responsibility under this section, and either the
policy shall remain in effect as long as any respective obligation of the
person required to submit proof remains under the plan and compliance schedule
or the proceeds of the policy shall be payable in full to the
department .
(d) If the insurance
company becomes bankrupt or insolvent or if the company receives an unfavorable
evaluation under s.
618.41(6)
(d), Stats., the person required to submit
proof shall, within 30 days after receiving written notice of bankruptcy,
insolvency, or an unfavorable evaluation, deliver to the department a
replacement insurance policy or other proof of financial responsibility under
this section and the replacement policy or other proof of financial
responsibility shall either remain in effect as long as any respective
obligation of the person required to submit proof remains under the plan and
compliance schedule or be payable in full to the department .
(e) The insurance policy shall further
provide that funds, up to an amount equal to the maximum risk limit of the
policy, will be available to the department to carry out the respective
requirements of the approved plan and compliance schedule if the person
required to submit proof fails to do so. The department shall mail notification
of its intent to use the funds for that purpose to the last known address of
the person required to submit proof.
(f) Each insurance policy shall contain a
provision allowing assignment of the policy to a successor person required to
submit proof . Assignment may be conditioned upon the consent of the insurer,
provided consent is not unreasonably refused.
(7) OTHER METHODS. The department may
consider other methods of financial responsibility that the department finds
satisfactory to ensure that the person required to submit proof will comply
with the respective requirements specified in the plan and compliance schedule.
The department may consider other financial commitments made payable to or
established for the benefit of the department to ensure the person required to
submit proof will comply with the requirements of the approved plan and
compliance schedule. The department shall review the request of any person
required to submit proof to establish proof of financial responsibility to
determine whether the proposed method provides a degree of assurance that is at
least equal to that provided by the methods listed in this section. The
department may review such a request after the person required to submit proof
submits a complete request, all supporting information, and any additional
information required by the department as part of the plan and compliance
schedule.
Notes
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