Surety Bond Guaranteeing Performance

Section 811 Section 811.712  Surety Bond Guaranteeing Performance a)         An owner or operator may satisfy the requirements of this Subpart by obtaining a surety bond which conforms to the requirements of this Section and submitting the bond to the Agency.  A surety bond obtained by an owner or operator of an MSWLF unit must be effective before the initial receipt of waste or before April 9, 1997 (the effective date of the financial assurance requirements under RCRA Subtitle D regulations), or such later date granted pursuant to Section 811.700(g), whichever is later, in the case of closure and post-closure care, or no later than 120 days after the remedy has been selected in accordance with the requirements of Section 811.325. b)         The surety company issuing the bond shall be licensed to transact the business of insurance by the Department of Insurance, pursuant to the Illinois Insurance Code [215 ILCS 5] , or at a minimum the insurer must be licensed to transact the business of insurance or approved to provide insurance as an excess or surplus lines insurer by the insurance department in one or more states, and approved by the U.S. Department of the Treasury as an acceptable surety. [415 ILCS 5/21.1(a.5)] BOARD NOTE:  The U.S. Department of the Treasury lists acceptable sureties in its Circular 570. c)         The surety bond must be on the forms specified in Appendix A, Illustration D. d)         Any payments made under the bond will be placed in the Landfill Closure  and Post-Closure Fund within the State Treasury. e)         Conditions: 1)         The bond must guarantee that the owner or operator will: A)        Provide closure and post-closure care in accordance with the closure and post-closure care plans in the permit and, if the bond is a corrective action bond, provide corrective action in accordance with Section 811.326; and B)        Provide alternative financial assurance, as specified in this Subpart, and obtain the Agency's written approval of the assurance provided within 90 days after receipt by both the owner or operator and the Agency of a notice from the surety that the bond will not be renewed for another term. 2)         The surety will become liable on the bond obligation when, during the term of the bond, the owner or operator fails to perform as guaranteed by the bond. The owner or operator fails to perform when the owner or operator: A)        Abandons the site; B)        Is adjudicated bankrupt; C)        Fails to initiate closure of the site or post-closure care or corrective action when ordered to do so by the Board pursuant to Title VIII of the Act, or when ordered to do so by a court of competent jurisdiction; D)        Notifies the Agency that it has initiated closure or corrective action, or initiates closure or corrective action, but fails to close the site or provide post-closure care or corrective action in accordance with the closure and post-closure care or corrective action plans. E)        For a corrective action bond, fails to implement corrective action at an MSWLF unit in accordance with Section 811.326; or F)         Fails to provide alternative financial assurance, as specified in this Subpart, and obtain the Agency's written approval of the assurance provided within 90 days after receipt by both the owner or operator and the Agency of a notice from the surety that the bond will not be renewed for another term. 3)         Upon failure of the owner or operator to perform as guaranteed by the bond, the surety shall have the option of: A)        providing closure and post-closure care in accordance with the closure and post-closure care plans; or B)        carrying out corrective action in accordance with the corrective action plan; or C)        paying the penal sum. f)         Penal sum: 1)         The penal sum of the bond must be in an amount at least equal to the current cost estimate. 2)         Whenever the current cost estimate decreases, the penal sum may be reduced to the amount of the current cost estimate following written approval by the Agency. 3)         Whenever the current cost estimate increases to an amount greater than the penal sum, the owner or operator, within 90 days after the increase, must either cause the penal sum to be increased to an amount at least equal to the current cost estimate and submit evidence of that increase to the Agency or obtain other financial assurance, as specified in this Subpart, and submit evidence of the alternative financial assurance to the Agency. g)         Term: 1)         The bond must be issued for a term of at least one year and must not be cancelable during that term. 2)         The surety bond must provide that, on the current expiration date and on each successive expiration date, the term of the surety bond will be automatically extended for a period of at least one year unless, at least 120 days before the current expiration date, the surety notifies both the owner or operator and the Agency by certified mail of a decision not to renew the bond.  Under the terms of the surety bond, the 120 days will begin on the date when both the owner or operator and the Agency have received the notice, as evidenced by the return receipts. 3)         The Agency shall release the surety by providing written authorization for termination of the bond to the owner or operator and the surety when either of the following occurs: A)        An owner or operator substitutes alternative financial assurance, as specified in this Subpart; or B)        The Agency releases the owner or operator from the requirements of this Subpart in accordance with 35 Ill. Adm. Code 813.403(b). h)         Cure of default and refunds: 1)         The Agency shall release the surety if, after the surety becomes liable on the bond, the owner or operator or another person provides financial assurance for closure and post-closure care of the site or corrective action at an MSWLF unit, unless the Agency determines that the closure or post-closure care plan, corrective action at an MSWLF unit, or the amount of substituted financial assurance is inadequate to provide closure and post-closure care or implement corrective action at an MSWLF unit in compliance with this Part. 2)         After closure and post-closure care have been completed in accordance with the closure and post-closure care plans and the requirements of this Part or after the completion of corrective action at an MSWLF unit in accordance with Section 811.326, the Agency shall refund any unspent money which was paid into the "Landfill Closure and Post-Closure Fund" by the surety, subject to appropriation of funds by the Illinois General Assembly. i)          The surety will not be liable for deficiencies in the performance of closure by the owner or operator after the Agency releases the owner or operator from the requirements of this Subpart. BOARD NOTE:  MSWLF corrective action language at subsection (a) is derived from 40 CFR 258.74(b)(1) (1996). P.A. 89-200, signed by the Governor on July 21, 1995 and effective January 1, 1996, amended the deadline for financial assurance for MSWLFs from April 9, 1995 to the date that the federal financial assurance requirements actually become effective, which was April 9, 1997. On November 27, 1996 (61 Fed. Reg. 60337), USEPA added 40 CFR 258.70(c) (1996), codified here as Section 811.700(g), to allow states to waive the compliance deadline until April 9, 1998. The other clarifying changes reflect the inclusion of financial assurance requirements for implementing corrective action at MSWLF units under this Section.