35 Ill. Adm. Code 727.240
Financial Requirements
Section 727.240Â Financial Requirements
a)Â Â Â Â Â Â Â Â Applicability
and Substance of the Financial Requirements
1)Â Â Â Â Â Â Â Â The
regulations in this Section apply to owners and operators who treat or store
hazardous waste under a RCRA standardized permit, except as provided in Section
727.100(a)(2) or subsection (a)(4).
2)Â Â Â Â Â Â Â Â The
facility owner or operator must do each of the following:
A)Â Â Â Â Â Â Â It
must prepare a closure cost estimate as required in subsection (c);
B)Â Â Â Â Â Â Â It
must demonstrate financial assurance for closure as required in subsection (d);
and
C)Â Â Â Â Â Â Â It
must demonstrate financial assurance for liability as required in subsection
(h).
3)Â Â Â Â Â Â Â Â The
owner or operator must notify the Agency if the owner or operator is named as a
debtor in a bankruptcy proceeding under Title 11 (Bankruptcy) of the United
States Code (see also subsection (i)).
4)Â Â Â Â Â Â Â Â States
and the federal government are exempt from the requirements of this Section.
BOARD NOTE:Â Subsection (a) is
derived from 40 CFR 267.140 (2017).
b)Â Â Â Â Â Â Â Â Definitions
of Terms as Used in This Section
1)Â Â Â Â Â Â Â Â "Closure
plan" means the plan for closure prepared in accordance with the requirements
of Section 727.210(c).
2)Â Â Â Â Â Â Â Â "Current
closure cost estimate" means the most recent of the estimates prepared in
accordance with subsections (c)(1), (c)(2), and (c)(3).
3)Â Â Â Â Â Â Â Â This
subsection (b)(3) corresponds with 40 CFR 267.141(c), which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
4)Â Â Â Â Â Â Â Â "Parent
corporation" means a corporation that directly owns at least 50 percent of
the voting stock of the corporation which is the facility owner or operator.Â
In this instance, the owned corporation that is the facility owner or operator
is deemed a "subsidiary" of the parent corporation.
5)Â Â Â Â Â Â Â Â This
subsection (b)(5) corresponds with 40 CFR 267.141(e), which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
6)Â Â Â Â Â Â Â Â The
following terms are used in the specifications for the financial tests for
closure and liability coverage. The definitions are intended to assist in the
understanding of these regulations and are not intended to limit the meanings
of terms in a way that conflicts with generally accepted accounting practices:
"Assets" means all
existing and all probable future economic benefits obtained or controlled by a
particular entity.
"Current plugging and
abandonment cost estimate" means the most recent of the estimates prepared
in accordance with 35 Ill. Adm. Code 704.212(a), (b), and (c).
"Independently audited"
refers to an audit performed by an independent certified public accountant in
accordance with generally accepted auditing standards.
"Liabilities" means
probable future sacrifices of economic benefits arising from present
obligations to transfer assets or provide services to other entities in the
future as a result of past transactions or events.
"Tangible net worth"
means the tangible assets that remain after deducting liabilities; such assets
would not include intangibles such as goodwill and rights to patents or
royalties.
7)Â Â Â Â Â Â Â Â In
the liability insurance requirements, the terms "bodily injury" and
"property damage" have the meanings given them by applicable State
law. However, these terms do not include those liabilities that, consistent
with standard industry practices, are excluded from coverage in liability
insurance policies for bodily injury and property damage. The Agency intends
the meanings of other terms used in the liability insurance requirements to be
consistent with their common meanings within the insurance industry. The
definitions given below of several of the terms are intended to assist in the
understanding of these regulations and are not intended to limit their meanings
in a way that conflicts with general insurance industry usage.
"Accidental occurrence"
means an accident, including continuous or repeated exposure to conditions,
that results in bodily injury or property damage neither expected nor intended
from the standpoint of the insured.
"Legal defense costs"
means any expenses that an insurer incurs in defending against claims of third parties
brought under the terms and conditions of an insurance policy.
"Sudden accidental
occurrence" means an occurrence that is not continuous or repeated in
nature.
8)Â Â Â Â Â Â Â Â "Substantial
business relationship" means the extent of a business relationship necessary
under applicable state law to make a guarantee contract issued incident to that
relationship valid and enforceable. A "substantial business
relationship" must arise from a pattern of recent or ongoing business
transactions, in addition to the guarantee itself, such that the Agency can
reasonably determine that a substantial business relationship currently exists
between the guarantor and the facility owner or operator
that is adequate consideration to support
the obligation of the guarantee relating to any liability towards a third-party
.Â
"Applicable state law", as used in this subsection (b)(8), means the
laws of the State of Illinois and those of any sister state that govern the
guarantee and the adequacy of the consideration.
BOARD NOTE:Â Subsection (b) is
derived from 40 CFR 267.141 (2017). Subsection (b)(8) is also derived from the
discussion at 53 Fed. Reg. 33938, 41-43 (Sept. 1, 1988). The term "substantial
business relationship" is also independently defined in 35 Ill. Adm. Code
724.241(h) and 725.241(h). Any Agency determination that a substantial
business relationship exists is subject to Board review pursuant to Section 40
of the Act.
c)Â Â Â Â Â Â Â Â Cost Estimate
for Closure
1)Â Â Â Â Â Â Â Â The
facility owner or operator must have at the facility a detailed written
estimate, in current dollars, of the cost of closing the facility in accordance
with the requirements in Section 727.210(b) through (f) and applicable closure
requirements in Sections 727.270(g), 727.290(l), and 727.900(i).
A)Â Â Â Â Â Â Â The
estimate must equal the cost of final closure at the point in the facility's
active life when the extent and manner of its operation would make closure the
most expensive, as indicated by the closure plan (see Section 727.210(c)(2)).
B)Â Â Â Â Â Â Â The
closure cost estimate must be based on the costs to the owner or operator of
hiring a third party to close the facility. A third party is a party who is
neither a parent nor a subsidiary of the owner or operator. (See the
definition of parent corporation in subsection (b)(4).) The owner or operator
may use costs for on-site disposal if it can demonstrate that on-site disposal
capacity will exist at all times over the life of the facility.
C)Â Â Â Â Â Â Â The
closure cost estimate may not incorporate any salvage value that may be
realized with the sale of hazardous wastes, or non-hazardous wastes, facility
structures or equipment, land, or other assets associated with the facility at
the time of partial or final closure.
D)Â Â Â Â Â Â Â The
facility owner or operator may not incorporate a zero cost for hazardous
wastes, or non-hazardous wastes that might have economic value.
2)Â Â Â Â Â Â Â Â During
the active life of the facility, the facility owner or operator must adjust the
closure cost estimate for inflation within 60 days prior to the anniversary
date of the establishment of the financial instruments used to comply with
subsection (d). For an owner or operator using the financial test or corporate
guarantee, the closure cost estimate must be updated for inflation within 30
days after the close of the guarantor's fiscal year and before submission of
updated information to the Agency as specified in subsection (n)(3). The
adjustment may be made by recalculating the maximum costs of closure in current
dollars, or by using an inflation factor derived from the most recent Implicit
Price Deflator for Gross Domestic Product (Deflator) published by the U.S.
Department of Commerce in its Survey of Current Business, as specified in
subsections (c)(2)(A) and (c)(2)(B). The inflation factor is the result of
dividing the latest published annual Deflator by the Deflator for the previous
year.
A)Â Â Â Â Â Â Â The
first adjustment is made by multiplying the closure cost estimate by the
inflation factor. The result is the adjusted closure cost estimate.
B)Â Â Â Â Â Â Â Subsequent
adjustments are made by multiplying the latest adjusted closure cost estimate
by the latest inflation factor.
BOARD NOTE:Â The table of
Deflators is available as Table 1.1.9. in the National Income and Product
Account Tables, published by U.S. Department of Commerce, Bureau of Economic
Analysis, National Economic Accounts, available on-line at the following web
address:Â
www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=13.
3)Â Â Â Â Â Â Â Â During
the active life of the facility, the facility owner or operator must revise the
closure cost estimate no later than 30 days after the Agency has approved the
request to modify the closure plan, if the change in the closure plan increases
the cost of closure. The revised closure cost estimate must be adjusted for
inflation as specified in subsection (c)(2).
4)Â Â Â Â Â Â Â Â The
facility owner or operator must keep the following at the facility during the
operating life of the facility:Â the latest closure cost estimate prepared in
accordance with subsections (c)(1) and (c)(3) and, when this estimate has been
adjusted in accordance with subsection (c)(2), the latest adjusted closure cost
estimate.
BOARD NOTE:Â Subsection (c) is
derived from 40 CFR 267.142 (2017).
d)Â Â Â Â Â Â Â Â Financial
Assurance for Closure. The facility owner or operator must establish financial
assurance for closure of each storage or treatment unit that it owns or
operates. In establishing financial assurance for closure, the owner or
operator must choose from among the financial assurance mechanisms in subsections
(d)(1) through (d)(7). The owner or operator can also use a combination of
mechanisms for a single facility if the combination meets the requirement in
subsection (d)(8), or it may use a single mechanism for multiple facilities as
in subsection (d)(9). The Agency must release the owner or operator from the
requirements of this subsection (d) after the owner or operator meets the
criteria pursuant to subsection (d)(10).
1)Â Â Â Â Â Â Â Â Closure
Trust Fund. An owner or operator may use the "closure trust fund"
that is specified in 35 Ill. Adm. Code 724.243(a)(1), (a)(2), and (a)(6)
through (a)(11). For purposes of this subsection (d)(1), the following
provisions also apply:
A)Â Â Â Â Â Â Â Payments
into the trust fund for a new facility must be made annually by the owner or
operator over the remaining operating life of the facility as estimated in the
closure plan, or over three years, whichever period is shorter. This period of
time is hereafter referred to as the "pay-in period".
B)Â Â Â Â Â Â Â For a
new facility, the facility owner or operator must make the first payment into
the closure trust fund before the facility may accept the initial storage. A
receipt from the trustee must be submitted by the owner or operator to the
Agency before this initial storage of waste. The first payment must be at
least equal to the current closure cost estimate, divided by the number of
years in the pay-in period, except as provided in subsection (d)(8) for
multiple mechanisms. Subsequent payments must be made no later than 30 days
after each anniversary date of the first payment. The owner or operator
determines the amount of each subsequent payment by subtracting the current
value of the trust fund from the current closure cost estimate, and dividing
this difference by the number of years remaining in the pay-in period.Â
Mathematically, the formula is as follows:
NP
=
(CCE - CVTF)
YRPP
Where:
NPÂ Â Â Â Â Â Â Â =Â Â the amount of the
next payment
CCEÂ Â Â Â Â =Â Â the current closure
cost estimate
CVTFÂ Â Â =Â Â the current value of
the trust fund
YRPPÂ Â Â =Â Â Â the years remaining
in the pay-in period
C)Â Â Â Â Â Â Â The
owner or operator of a facility existing on the effective date of this
subsection (d)(1) can establish a trust fund to meet the financial assurance
requirements of this subsection (d)(1). If the value of the trust fund is less
than the current closure cost estimate when a final approval of the permit is
granted for the facility, the owner or operator must pay the difference into
the trust fund within 60 days.
D)Â Â Â Â Â Â Â The
facility owner or operator may accelerate payments into the trust fund or
deposit the full amount of the closure cost estimate when establishing the
trust fund. However, the owner or operator must maintain the value of the fund
at no less than the value that the fund would have if annual payments were made
as specified in subsections (d)(1)(B) or (d)(1)(C).
E)Â Â Â Â Â Â Â The
facility owner or operator must submit a trust agreement with the wording specified
by the Agency pursuant to subsection (l)(3).
2)Â Â Â Â Â Â Â Â Surety
Bond Guaranteeing Payment into a Closure Trust Fund. An owner or operator may
use the "surety bond guaranteeing payment into a closure trust fund",
as specified in 35 Ill. Adm. Code 724.243(b), including the use of the surety
bond instrument designated by the Agency pursuant to subsection (1)(3), and the
standby trust specified at 35 Ill. Adm. Code 724.243(b)(3).
3)Â Â Â Â Â Â Â Â Surety
Bond Guaranteeing Performance of Closure. An owner or operator may use the
"surety bond guaranteeing performance of closure", as specified in 35
Ill. Adm. Code 724.243(c), the submission and use of the surety bond instrument
designated by the Agency pursuant to subsection (1)(3), and the standby trust
specified at 35 Ill. Adm. Code 724.243(c)(3).
4)Â Â Â Â Â Â Â Â Closure
Letter of Credit. An owner or operator may use the "closure letter of credit"
specified in 35 Ill. Adm. Code 724.243(d), the submission and use of the
irrevocable letter of credit instrument designated by the Agency pursuant to
subsection (1)(3), and the standby trust specified in 35 Ill. Adm. Code
724.243(d)(3).
5)Â Â Â Â Â Â Â Â Closure
Insurance. An owner or operator may use "closure insurance", as
specified in 35 Ill. Adm. Code 724.243(e), utilizing the certificate of
insurance for closure designated by the Agency pursuant to subsection (1)(3).
6)Â Â Â Â Â Â Â Â Corporate
Financial Test. An owner or operator that satisfies the requirements of this
subsection (d)(6) may demonstrate financial assurance up to the amount
specified in this subsection (d)(6).
A)Â Â Â Â Â Â Â Financial
component. See subsection (m).
BOARD NOTE:Â It was necessary for
the Board to codify corresponding 40 CFR 267.143(f)(1) as subsection (m) to
comport with Illinois Administrative Code indent level codification
requirements. The Board intends that any citation to this subsection (d),
(d)(6), or (d)(6)(A) also include added subsection (m), as applicable.
B)Â Â Â Â Â Â Â Recordkeeping
and Reporting Requirements. See subsection (n).
BOARD NOTE:Â It was necessary for
the Board to codify 40 CFR 267.143(f)(2) as subsection (n) to comport with
Illinois Administrative Code indent level codification requirements. The Board
intends that any citation to this subsection (d), (d)(6), or (d)(6)(B) also
include added subsection (n), as applicable.
7)Â Â Â Â Â Â Â Â Corporate
Guarantee
A)Â Â Â Â Â Â Â A
facility owner or operator may meet the requirements of this subsection (d) by obtaining
a written guarantee. The guarantor must 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 must meet the requirements for owners or operators in subsection
(d)(6) and must comply with the terms of the guarantee. The wording of the
guarantee must be identical to the wording designated by the Agency pursuant to
subsection (1)(3). The certified copy of the guarantee must accompany the
letter from the guarantor's chief financial officer and accountants' opinions.Â
If the guarantor's parent corporation is also the parent corporation of the
owner or operator, the letter from the guarantor's chief financial officer must
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 must describe this "substantial
business relationship" and the value received in consideration of the
guarantee.
B)Â Â Â Â Â Â Â For a
new facility, the guarantee must be effective and the guarantor must submit the
items in subsection (d)(7)(A) and the items specified in subsection (n)(1) to
the Agency at least 60 days before the owner or operator places waste in the
facility.
C)Â Â Â Â Â Â Â The
terms of the guarantee must provide as required by subsection (o).
BOARD NOTE:Â It was necessary for
the Board to codify 40 CFR 267.143(g)(3) as subsection (o) to comport with
Illinois Administrative Code indent level codification requirements. The Board
intends that any citation to this subsection (d), (d)(7), or (d)(7)(C) also
include added subsection (o), as applicable.
D)Â Â Â Â Â Â Â If a
corporate guarantor no longer meets the requirements of subsection (d)(6)(A),
the owner or operator must, within 90 days, obtain alternative assurance, and
submit the assurance to the Agency for approval. If the owner or operator
fails to provide alternate financial assurance within the 90-day period, the
guarantor must provide that alternate assurance within the next 30 days, and
submit it to the Agency for approval.
E)Â Â Â Â Â Â Â The
guarantor is no longer required to meet the requirements of this subsection
(d)(7) when either of the following occurs:
i)Â Â Â Â Â Â Â Â Â The
facility owner or operator substitutes alternate financial assurance as
specified in this subsection (d); or
ii)Â Â Â Â Â Â Â Â The
facility owner or operator is released from the requirements of this subsection
(d) in accordance with subsection (d)(10).
8)Â Â Â Â Â Â Â Â Use
of Multiple Financial Mechanisms. An owner or operator may use more than one
mechanism at a particular facility to satisfy the requirements of this
subsection (d). The acceptable mechanisms are trust funds, surety bonds
guaranteeing payment into a trust fund, letters of credit, insurance, the
financial test, and the guarantee, except owners or operators cannot combine
the financial test with the guarantee. The mechanisms must be as specified in
subsections (d)(1), (d)(2), (d)(4), (d)(5), (d)(6), and (d)(7), respectively,
except it is the combination of mechanisms rather than a single mechanism that
must provide assurance for an amount at least equal to the cost estimate. If
an owner or operator uses a trust fund in combination with a surety bond or
letter of credit, it may use the trust fund as the standby trust for the other
mechanisms. A single trust fund can be established for two or more
mechanisms. The Agency may use any or all of the mechanisms to provide for
closure of the facility.
9)Â Â Â Â Â Â Â Â Use
of a Financial Mechanism for Multiple Facilities. An owner or operator may use
a financial mechanism for multiple facilities, as specified in 35 Ill.
Adm. Code 724.243(h).
10)Â Â Â Â Â Â Â Â Release
of the Owner or Operator from the Requirements of this Subsection (d). Within
60 days after receiving certifications from the owner or operator and an
independent registered professional engineer that final closure has been
completed in accordance with the approved closure plan, the Agency will notify
the owner or operator in writing that the owner or operator is no longer
required by this subsection (d) to maintain financial assurance for final
closure of the facility, unless the Agency has reason to believe that final
closure has not been completed in accordance with the approved closure plan.Â
The Agency must provide the owner or operator with a detailed written statement
of any such reasons to believe that closure has not been conducted in
accordance with the approved closure plan.
BOARD NOTE:Â Subsection (d) is
derived from 40 CFR 267.143 (2017).
e)Â Â Â Â Â Â Â Â This
subsection (e) corresponds with 40 CFR 267.144, which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
f)Â Â Â Â Â Â Â Â This subsection
(f) corresponds with 40 CFR 267.145, which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
g)Â Â Â Â Â Â Â Â This
subsection (g) corresponds with 40 CFR 267.146, which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
h)Â Â Â Â Â Â Â Â Liability
Requirements
1)Â Â Â Â Â Â Â Â Coverage
for Sudden Accidental Occurrences. The owner or operator of a hazardous waste
treatment or storage facility, or a group of such facilities, must 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 must 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 (h)(1)(A) through (h)(1)(G):
A)Â Â Â Â Â Â Â Trust Fund
for Liability Coverage. The owner or operator may meet the requirements of
this subsection (h) by obtaining a trust fund for liability coverage as
specified in 35 Ill. Adm. Code 724.247(j).
B)Â Â Â Â Â Â Â Surety
Bond for liability coverage. The owner or operator may meet the requirements
of this subsection (h) by obtaining a surety bond for liability coverage as
specified in 35 Ill. Adm. Code 724.247(i).
C)Â Â Â Â Â Â Â Letter
of Credit for Liability Coverage. The owner or operator may meet the
requirements of this subsection (h) by obtaining a letter of credit for
liability coverage as specified in 35 Ill. Adm. Code 724.247(h).
D)Â Â Â Â Â Â Â Insurance
for Liability Coverage. The owner or operator may meet the requirements of this
subsection (h) by obtaining liability insurance as specified in 35 Ill. Adm.
Code 724.247(a)(1).
E)Â Â Â Â Â Â Â Financial
Test for Liability Coverage. The owner or operator may meet the requirements
of this subsection (h) by passing a financial test as specified in subsection
(h)(6).
F)Â Â Â Â Â Â Â Â Guarantee
for Liability Coverage. The owner or operator may meet the requirements of
this subsection (h) by obtaining a guarantee as specified in subsection (h)(7).
G)Â Â Â Â Â Â Â Combination
of Mechanisms. The owner or operator may demonstrate the required liability
coverage through the use of combinations of mechanisms as allowed by 35 Ill.
Adm. Code 724.247(a)(6).
H)Â Â Â Â Â Â Â An
owner or operator must notify the Agency in writing within 30 days whenever
either of the following occurs:
i)Â Â Â Â Â Â Â Â Â A
claim results in a reduction in the amount of financial assurance for liability
coverage provided by a financial instrument authorized in subsections (h)(1)(A)
through (h)(1)(G); or
ii)Â Â Â Â Â Â Â Â A
Certification of Valid Claim for bodily injury or property damages caused by a
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 pursuant to
subsections (h)(1)(A) through (h)(1)(G); or
iii)Â Â Â Â Â Â Â A
final court order establishing a judgment for bodily injury or property damage
caused by a 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 pursuant to subsections (h)(1)(A) through (h)(1)(G).
2)Â Â Â Â Â Â Â Â This
subsection (h)(2) corresponds with 40 CFR 267.147(b), which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
3)Â Â Â Â Â Â Â Â This
subsection (h)(3) corresponds with 40 CFR 267.147(c), which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
4)Â Â Â Â Â Â Â Â This
subsection (h)(4) corresponds with 40 CFR 267.147(d), which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
5)Â Â Â Â Â Â Â Â Period
of Coverage. Within 60 days after receiving certifications from the facility
owner or operator and an independent registered professional engineer that
final closure has been completed in accordance with the approved closure plan,
the Agency must notify the owner or operator in writing that he is no longer
required by this section to maintain liability coverage from that facility,
unless the Agency has reason to believe that closure has not been in accordance
with the approved closure plan.
6)Â Â Â Â Â Â Â Â Financial
Test for Liability Coverage. A facility owner or operator that satisfies the
requirements of this subsection (h)(6) may demonstrate financial assurance for
liability up to the amount specified in this subsection (h)(6):
A)Â Â Â Â Â Â Â Financial Component
i)Â Â Â Â Â Â Â Â Â If
using the financial test for only liability coverage, the owner or operator
must have tangible net worth greater than the sum of the liability coverage to
be demonstrated by this test plus $10 million.
ii)Â Â Â Â Â Â Â Â The
owner or operator must have assets located in the United States amounting to at
least the amount of liability covered by this financial test.
iii)Â Â Â Â Â Â Â An
owner or operator who is demonstrating coverage for liability and any other
environmental obligations, including closure pursuant to subsection (d)(6),
through a financial test must meet the requirements of subsection (d)(6).
B)Â Â Â Â Â Â Â Recordkeeping
and Reporting Requirements. See subsection (p).
BOARD NOTE:Â It was necessary for
the Board to codify 40 CFR 267.147(f)(2) as subsection (p) to comport with
Illinois Administrative Code indent level codification requirements. The Board
intends that any citation to this subsection (h), (h)(6), or (h)(6)(B) also
include added subsection (p), as applicable.
7)Â Â Â Â Â Â Â Â Guarantee
for Liability Coverage
A)Â Â Â Â Â Â Â Subject
to subsection (h)(7)(B), a facility owner or operator may meet the requirements
of this subsection (h) by obtaining a written guarantee, hereinafter referred
to as "guarantee". The guarantor must 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 must meet the requirements for owners or operators in subsections
(h)(6)(A) and (h)(6)(B). The wording of the guarantee must be identical to the
wording designated by the Agency pursuant to subsection (1)(3). A certified
copy of the guarantee must accompany the items sent to the Agency, as specified
in subsection (h)(6)(B). One of these items must 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 must 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 must describe this "substantial business
relationship" and the value received in consideration of the guarantee.
i)Â Â Â Â Â Â Â Â Â If
the facility 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 accidental occurrences 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.
ii)Â Â Â Â Â Â Â Â This
subsection (h)(7)(A)(ii) corresponds with 40 CFR 267.147(g)(1)(ii), which USEPA
has marked "Reserved". This statement maintains structural
consistency with the corresponding federal rules.
B)Â Â Â Â Â Â Â Foreign
Corporations. See subsection (q).
BOARD NOTE:Â It was necessary for
the Board to codify 40 CFR 267.147(g)(2) as subsection (q) to comport with Illinois
Administrative Code indent level codification requirements. The Board intends
that any citation to this subsection (h), (h)(7), or (h)(7)(B) also include
added subsection (q), as applicable. See the further explanation of the
differences between subsection (q) and 40 CFR 267.147(g)(2) in the Board note
appended to subsection (q).
BOARD NOTE:Â Subsection (h) is
derived from 40 CFR 267.147 (2017).
i)Â Â Â Â Â Â Â Â Â Incapacity
of Owners or Operators, Guarantors, or Financial Institutions
1)Â Â Â Â Â Â Â Â The
facility owner or operator must notify the Agency by certified mail of the
commencement of a voluntary or involuntary proceeding under Title 11
(Bankruptcy) of the United States Code, naming the owner or operator as debtor,
within 10 days after commencement of the proceeding. A guarantor of a
corporate guarantee as specified in subsections (d)(7) and (h)(7) must make
such a notification if it is named as debtor, as required under the terms of
the corporate guarantee designated by the Agency pursuant to subsection (1)(3).
2)Â Â Â Â Â Â Â Â An
owner or operator who fulfills the requirements of subsection (d) or (h) by
obtaining a trust fund, surety bond, letter of credit, or insurance policy will
be deemed to be without the required financial assurance or liability coverage
in the event of bankruptcy of the trustee or issuing institution, or a
suspension or revocation of the authority of the trustee institution to act as
trustee or of the institution issuing the surety bond, letter of credit, or
insurance policy to issue such instruments. The owner or operator must
establish other financial assurance or liability coverage within 60 days after
such an event.
BOARD NOTE:Â Subsection (i) is
derived from 40 CFR 267.148 (2017).
j)Â Â Â Â Â Â Â Â Â This
subsection (j) corresponds with 40 CFR 267.149, which USEPA has marked
"Reserved". This statement maintains structural consistency with the
corresponding federal rules.
k)Â Â Â Â Â Â Â Â State Assumption of Responsibility
1)Â Â Â Â Â Â Â Â If
the State either assumes legal responsibility for an owner's or operator's
compliance with the closure care or liability requirements of this Part or
assures that funds will be available from State sources to cover those
requirements, the owner or operator will be in compliance with the requirements
of subsection (d) or (h) if USEPA Region 5 determines that the State's
assumption of responsibility is at least equivalent to the financial mechanisms
specified in this Section. USEPA has stated that USEPA Region 5 will evaluate
the equivalency of State guarantees principally in terms of the following: Â the
certainty of the availability of funds for the required closure care activities
or liability coverage; and the amount of funds that will be made available.Â
USEPA has stated that USEPA Region 5 may also consider other factors as it
deems appropriate. Â The facility owner or operator must submit to USEPA Region
5 a letter from the State describing the nature of the State's assumption of
responsibility together with a letter from the owner or operator requesting
that the State's assumption of responsibility be considered acceptable for
meeting the requirements of this Section. The letter from the State must
include, or have attached to it, the following information:Â the facility's
USEPA identification number, the facility name and address, and the amount of
funds for closure care or liability coverage that are guaranteed by the State.Â
USEPA has stated that USEPA Region 5 will notify the owner or operator of its
determination regarding the acceptability of the State's guarantee in lieu of
financial mechanisms specified in this Section. USEPA has stated that USEPA
Region 5 may require the owner or operator to submit additional information as
is deemed necessary to make this determination. Pending this determination,
the owner or operator will be deemed to be in compliance with the requirements
of subsection (d) or (h), as applicable.
2)Â Â Â Â Â Â Â Â If a
State's assumption of responsibility is found acceptable as specified in
subsection (k)(1) except for the amount of funds available, the owner or
operator may satisfy the requirements of this Section by use of both the
State's assurance and additional financial mechanisms as specified in this
Section. The amount of funds available through the State and federal
mechanisms must at least equal the amount required by this Section.
BOARD NOTE:Â Subsection (k) is
derived from 40 CFR 267.150 (2017).
l)Â Â Â Â Â Â Â Â Â Wording of the Instruments
1)Â Â Â Â Â Â Â Â Forms
for using the corporate financial test to demonstrate financial assurance for
closure. The chief financial officer of an owner or operator of a facility
with a RCRA standardized permit who uses a financial test to demonstrate
financial assurance for that facility must complete a letter as specified in
subsection (d)(6). The letter must be worded as designated by the Agency
pursuant to subsection (1)(3).
2)Â Â Â Â Â Â Â Â Forms
for using the financial test to demonstrate financial assurance for third-party
liability. The chief financial officer of an owner or operator of a facility
with a RCRA standardized permit who use a financial test to demonstrate
financial assurance only for third party liability for that (or other RCRA
standardized permit) facility (or those facilities) must complete a letter as
specified in subsection (h)(6). The letter must be worded as designated by the
Agency pursuant to subsection (1)(3).
3)Â Â Â Â Â Â Â Â The
Agency must designate standardized forms based on 40 CFR 264.151 and 40 CFR
267.151 (Wording of the Instruments), each incorporated by reference in 35 Ill.
Adm. Code 720.111(b), with such changes in wording as are necessary under
Illinois law. Any owner or operator required to establish financial assurance
under this Section must do so only upon the standardized forms promulgated by
the Agency. The Agency must reject any financial assurance document that is
not submitted on such standardized forms.
BOARD NOTE:Â Subsection (l) is
derived from 40 CFR 267.151 (2017).
m)Â Â Â Â Â Â Â Financial
Component for Using the Corporate Financial Test to Demonstrate Financial
Assurance for Closure
1)Â Â Â Â Â Â Â Â The
facility owner or operator must satisfy one of the following three conditions:
A)Â Â Â Â Â Â Â A
current rating for its senior unsecured debt of AAA, AA, A, or BBB, as issued
by Standard and Poor's, or Aaa, Aa, A or Baa, as issued by Moody's; or
B)Â Â Â Â Â Â Â A
ratio of less than 1.5 comparing total liabilities to net worth; or
C)Â Â Â Â Â Â Â 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)Â Â Â Â Â Â Â Â The
tangible net worth of the owner or operator must be greater than both of the
following:
A)Â Â Â Â Â Â Â The
sum of the current environmental obligations (see subsection (n)(1)(A)(i)),
including guarantees, covered by a financial test plus $10 million, except as
provided in subsection (m)(2)(B); and
B)Â Â Â Â Â Â Â $10
million in tangible net worth plus the amount of any guarantees that have not
been recognized as liabilities on the financial statements provided all of the
environmental obligations (see subsection (n)(1)(A)(i)) covered by a financial
test are recognized as liabilities on the owner's or operator's audited
financial statements, and subject to the approval of the Agency.
3)Â Â Â Â Â Â Â Â The
facility owner or operator must have assets located in the United States
amounting to at least the sum of environmental obligations covered by a
financial test as described in subsection (n)(1)(A)(i).
BOARD NOTE:Â Subsection (m) is
derived from 40 CFR 267.143(f)(1) (2017). The Board moved the corresponding
federal provision to comport with Illinois Administrative Code indent level
codification requirements. The Board intends that any citation to subsection
(d), (d)(6), or (d)(6)(A) also include this added subsection (m), as
applicable.
n)Â Â Â Â Â Â Â Â Recordkeeping
and Reporting Requirements for Using the Corporate Financial Test to Demonstrate
Financial Assurance for Closure
1)Â Â Â Â Â Â Â Â The
facility owner or operator must submit the following items to the Agency:
A)Â Â Â Â Â Â Â A
letter signed by the owner's or operator's chief financial officer that
provides the following information:
i)Â Â Â Â Â Â Â Â Â It
lists all the applicable current types, amounts, and sums of environmental
obligations covered by a financial test. These obligations include both
obligations in the programs that USEPA directly operates and obligations where
USEPA has delegated authority to a State or approved a State's program. These
obligations include, but are not limited to the information described in
subsection (n)(1)(E).
BOARD NOTE:Â It was necessary for
the Board to codify 40 CFR 267.143(f)(2)(i)(A)(
1
) through (f)(2)(i)(A)(
1
)(
vii
)
as subsections (n)(1)(E) through (n)(1)(E)(vii) to comport with Illinois
Administrative Code indent level codification requirements. The Board intends
that any citation to subsection (d), (d)(6), or (d)(6)(B) or to this subsection
(n), (n)(1), (n)(1)(A), or (n)(1)(A)(i) also include added subsection (n)(1)(E)
through (n)(1)(E)(vii), as applicable.
ii)Â Â Â Â Â Â Â Â It
provides evidence demonstrating that the firm meets the conditions of either
subsection (m)(1)(A), (m)(1)(B), or (m)(1)(C) and subsections (m)(2) and
(m)(3).
B)Â Â Â Â Â Â Â 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, disclaimer of opinion, or
other qualified opinion will be cause for disallowance, with the potential
exception for qualified opinions provided in the next sentence. The Agency may
evaluate qualified opinions on a case-by-case basis and allow use of the
financial test in cases where the Agency deems that the matters that form the
basis for the qualification are insufficient to warrant disallowance of the
test. If the Agency does not allow use of the test, the owner or operator must
provide alternate financial assurance that meets the requirements of this
section within 30 days after the notification of disallowance.
C)Â Â Â Â Â Â Â If the
chief financial officer's letter providing evidence of financial assurance includes
financial data showing that the owner or operator satisfies subsection
(m)(1)(B) or (m)(1)(C) that are different from data in the audited financial
statements referred to in subsection (n)(1)(B) or any other audited financial
statement or data filed with the SEC, 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 must be based upon an agreed upon procedures
engagement in accordance with professional auditing standards and must describe
the procedures performed in comparing the data in the chief financial officer'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.
D)Â Â Â Â Â Â Â If the
chief financial officer's letter provides a demonstration that the firm has
assured for environmental obligations as provided in subsection (m)(2)(B), then
the letter must 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, how these obligations have been measured and reported, and that the
tangible net worth of the firm is at least $10 million plus the amount of any
guarantees provided.
E)Â Â Â Â Â Â Â Contents
of the letter signed by the chief financial officer (for the purposes of
subsection (n)(1)(A)(i)):
i)Â Â Â Â Â Â Â Â Â The
liability, closure, post-closure and corrective action cost estimates required
for hazardous waste treatment, storage, and disposal facilities pursuant to the
applicable provisions of 35 Ill. Adm. Code 724.201, 724.242, 724.244, 724.247,
725.242, 725.244, and 725.247;
ii)Â Â Â Â Â Â Â Â The
cost estimates required for municipal solid waste management facilities
pursuant to the applicable provisions of Subpart G of 35 Ill. Adm. Code 811;
iii)Â Â Â Â Â Â Â The
current plugging cost estimates required for UIC facilities pursuant to 35 Ill.
Adm. Code 704.212;
iv)Â Â Â Â Â Â Â The
federally required cost estimates required for petroleum underground storage
tank facilities pursuant to 40 CFR 280.93;
v)Â Â Â Â Â Â Â Â The
federally required cost estimates required for PCB storage facilities pursuant
to 40 CFR 761.65;
vi)Â Â Â Â Â Â Â Any
federally required financial assurance required by or as part of an action
undertaken pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act (42 USC 9601 et seq.); and
vii)Â Â Â Â Â Â Any
other environmental obligations that are assured through a financial test.
BOARD NOTE:Â Subsections (n)(1)(E)
through (n)(1)(E)(vi) are derived from 40 CFR 267.143(f)(2)(i)(A)(
1
)
through (f)(2)(i)(A)(
1
)(
vi
) (2017). The Board moved the
corresponding federal provision to comport with Illinois Administrative Code
indent level codification requirements. The Board intends that any citation to
subsection (d), (d)(6), (d)(6)(B), (n), (n)(1), (n)(1)(A), or (n)(1)(A)(i) also
include added subsections (n)(1)(E) through (n)(1)(E)(vi), as applicable.
2)Â Â Â Â Â Â Â Â The
owner or operator of a new facility must submit the items specified in
subsection (n)(1) to the Agency at least 60 days before placing waste in the
facility.
3)Â Â Â Â Â Â Â Â After
the initial submission of items specified in subsection (n)(1), the owner or
operator must send updated information to the Agency within 90 days following
the close of the owner's or operator's fiscal year. The Agency may provide up
to an additional 45 days for an owner or operator who can demonstrate that 90
days is insufficient time to acquire audited financial statements. The updated
information must consist of all items specified in subsection (n)(1).
4)Â Â Â Â Â Â Â Â The
owner or operator is no longer required to submit the items specified in this
subsection (n) or comply with the requirements of subsection (d)(6) when either
of the following occurs:
A)Â Â Â Â Â Â Â The
owner or operator substitutes alternate financial assurance as specified in
subsection (d) that is not subject to these recordkeeping and reporting
requirements; or
B)Â Â Â Â Â Â Â The
Agency releases the owner or operator from the requirements of subsection (d)
in accordance with subsection (d)(10).
5)Â Â Â Â Â Â Â Â An
owner or operator who no longer meets the requirements of subsection (m) cannot
use the financial test to demonstrate financial assurance. Instead an owner or
operator who no longer meets the requirements of subsection (m), must do the
following:
A)Â Â Â Â Â Â Â It
must send notice to the Agency of intent to establish alternate financial
assurance as specified in this section. The owner or operator must send this
notice by certified mail within 90 days following the close of the owner's or
operator's fiscal year for which the year-end financial data show that the
owner or operator no longer meets the requirements of this subsection (n) and
subsections (d), (m), and (o); and
B)Â Â Â Â Â Â Â It
must provide alternative financial assurance within 120 days after the end of
such fiscal year.
6)Â Â Â Â Â Â Â Â The
Agency may, based on a reasonable belief that the owner or operator may no
longer meet the requirements of subsection (m), require at any time the owner
or operator to provide reports of its financial condition in addition to or
including current financial test documentation as specified in this subsection
(n). If the Agency finds that the owner or operator no longer meets the
requirements of subsection (m), the owner or operator must provide alternate
financial assurance that meets the requirements of subsection (d).
BOARD NOTE:Â Subsection (n) is
derived from 40 CFR 267.143(f)(2) (2017). The Board moved the corresponding
federal provision to comport with Illinois Administrative Code indent level
codification requirements. The Board intends that any citation to subsection
(d), (d)(6), or (d)(6)(B) also include this added subsection (n), as
applicable.
o)Â Â Â Â Â Â Â Â The
terms of the guarantee for using the corporate guarantee to demonstrate
financial assurance for closure must provide as follows:
1)Â Â Â Â Â Â Â Â If
the facility owner or operator fails to perform closure at a facility covered
by the guarantee, the guarantor will accomplish the following:
A)Â Â Â Â Â Â Â It
will perform, or pay a third party to perform closure (performance guarantee);
or
B)Â Â Â Â Â Â Â It
will establish a fully funded trust fund as specified in subsection (d)(1) in
the name of the owner or operator (payment guarantee).
2)Â Â Â Â Â Â Â Â The
guarantee will remain in force for as long as the facility owner or operator
must comply with the applicable financial assurance requirements of this
Section unless the guarantor sends prior notice of cancellation by certified
mail to the owner or operator and to the Agency. 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 Agency as evidenced by the
return receipts.
3)Â Â Â Â Â Â Â Â If
notice of cancellation is given, the facility owner or operator must, within 90
days following receipt of the cancellation notice by the owner or operator and
the Agency, obtain alternate financial assurance, and submit documentation for
that alternate financial assurance to the Agency. If the owner or operator
fails to provide alternate financial assurance and obtain the written approval
of such alternative assurance from the Agency within the 90-day period, the
guarantor must provide that alternate assurance in the name of the owner or
operator and submit the necessary documentation for the alternative assurance
to the Agency within 120 days after the cancellation notice.
BOARD NOTE:Â Subsection (o) is
derived from 40 CFR 267.143(g)(3) (2017). The Board moved the corresponding
federal provision to comport with Illinois Administrative Code indent level
codification requirements. The Board intends that any citation to subsection
(d), (d)(7), or (d)(7)(C) also include this added subsection (o), as
applicable.
p)Â Â Â Â Â Â Â Â Recordkeeping
and Reporting Requirements
1)Â Â Â Â Â Â Â Â The
owner or operator must submit the following items to the Agency:
A)Â Â Â Â Â Â Â A
letter signed by the owner's or operator's chief financial officer that
provides evidence demonstrating that the firm meets the conditions of subsections
(h)(6)(A)(i) and (h)(6)(A)(ii). If the firm is providing only liability
coverage through a financial test for a facility or facilities with a permit
pursuant to this Part 727, the letter should use the wording in subsection
(l)(2). If the firm is providing only liability coverage through a financial
test for facilities regulated pursuant to this Part 727, it should use the
letter designated by the Agency pursuant to subsection (1)(3). If the firm is
providing liability coverage through a financial test for a facility or
facilities with a permit pursuant to this Part 727, and it assures closure
costs or any other environmental obligations through a financial test, it must
use the letter in subsection (l)(1) for the facilities issued a permit pursuant
to this Part 727.
B)Â Â Â Â Â Â Â 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, disclaimer of opinion, or
other qualified opinion will be cause for disallowance, with the potential
exception for qualified opinions provided in the next sentence. The Agency may
evaluate qualified opinions on a case-by-case basis and allow use of the
financial test in cases where the Agency deems that the matters that form the
basis for the qualification are insufficient to warrant disallowance of the
test. If the Agency does not allow use of the test, the owner or operator must
provide alternate financial assurance that meets the requirements of this
subsection (h) within 30 days after the notification of disallowance.
C)Â Â Â Â Â Â Â If the
chief financial officer's letter providing evidence of financial assurance
includes financial data showing that the owner or operator satisfies
subsections (h)(6)(A)(i) and (h)(6)(A)(ii) that are different from data in the
audited financial statements referred to in subsection (p)(1)(B) or any other
audited financial statement or data filed with the SEC, 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 must be based upon an agreed
upon procedures engagement in accordance with professional auditing standards
and must describe the procedures performed in comparing the data in the chief
financial officer'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.
2)Â Â Â Â Â Â Â Â The
owner or operator of a new facility must submit the items specified in subsection
(p)(1) to the Agency at least 60 days before placing waste in the facility.
3)Â Â Â Â Â Â Â Â After
the initial submission of items specified in subsection (p)(1), the facility
owner or operator must send updated information to the Agency within 90 days
following the close of the owner's or operator's fiscal year. The Agency may
provide up to an additional 45 days for an owner or operator who can
demonstrate that 90 days is insufficient time to acquire audited financial
statements. The updated information must consist of all items specified in
subsection (p)(1).
4)Â Â Â Â Â Â Â Â The
owner or operator is no longer required to submit the items specified in this
subsection (p) or comply with the requirements of subsection (h)(6) when either
of the following occurs:
A)Â Â Â Â Â Â Â The
facility owner or operator substitutes alternate financial assurance as
specified in subsection (h) that is not subject to these recordkeeping and
reporting requirements; or
B)Â Â Â Â Â Â Â The
Agency releases the facility owner or operator from the requirements of subsection
(h) in accordance with subsection (d)(10).
5)Â Â Â Â Â Â Â Â An
owner or operator that no longer meets the requirements of subsection (h)(6)(A)
cannot use the financial test to demonstrate financial assurance. An owner or
operator who no longer meets the requirements of subsection (h)(6)(A), must do
the following:
A)Â Â Â Â Â Â Â Send
notice to the Agency of intent to establish alternate financial assurance as
specified in this section. The facility owner or operator must send this
notice by certified mail within 90 days following the close of the owner's or
operator's fiscal year for which the year-end financial data show that the
owner or operator no longer meets the requirements of this Section.
B)Â Â Â Â Â Â Â Provide
alternative financial assurance within 120 days after the end of that fiscal
year.
6)Â Â Â Â Â Â Â Â The
Agency may, based on a reasonable belief that the owner or operator may no
longer meet the requirements of subsection (h)(6)(A), require at any time the
owner or operator to provide reports of its financial condition in addition to
or including current financial test documentation as specified in this
subsection (p). If the Agency finds that the owner or operator no longer meets
the requirements of subsection (h)(6)(A), the owner or operator must provide
alternate financial assurance that meets the requirements of subsection (h).
BOARD NOTE:Â Subsection (p) is
derived from 40 CFR 267.147(f)(2) (2017). The Board moved the corresponding
federal provision to comport with Illinois Administrative Code indent level codification
requirements. The Board intends that any citation to subsection (h), (h)(6),
or (h)(6)(B) also include this added subsection (p), as applicable.
q)Â Â Â Â Â Â Â Â Foreign
Corporations
1)Â Â Â Â Â Â Â Â The
guarantor must execute the guarantee in Illinois. The guarantee must be
accompanied by a letter signed by the guarantor that states
as follows
:
A)Â Â Â Â Â Â Â The
guarantee was signed in Illinois by an authorized agent of the guarantor;
B)Â Â Â Â Â Â Â The
guarantee is governed by Illinois law; and
C)Â Â Â Â Â Â Â The
name and address of the guarantor’s registered agent for service of process.
2)Â Â Â Â Â Â Â Â The
guarantor must have a registered agent pursuant to Section 5.05 of the Business
Corporation Act of 1983 [805 ILCS 5/5.05] or Section 105.05 of the General
Not-for-Profit Corporation Act of 1986 [805 ILCS 105/105.05].
BOARD NOTE:Â Subsection (q) is
derived from 40 CFR 267.147(g)(2) (2017). The Board moved the corresponding
federal provision to comport with Illinois Administrative Code indent level
codification requirements. The Board intends that any citation to subsection
(h), (h)(7), or (h)(7)(B) also includes this added subsection (q), as
applicable. The text of 40 CFR 267.147(g)(2) is substantially identical to
that of 40 CFR 264.147(g)(2). The Board has substituted the language of 35
Ill. Adm. Code 724.247(g)(2), which corresponds with 40 CFR 264.147(g)(2), for
that of 40 CFR 267.147(g)(2).