Article 4. Allowable Financial Mechanisms
9VAC20-70-120. (Repealed.)
Article 4
Allowable Financial Mechanisms
Historical Notes
Derived from VR672-20-1 §§ 3.5, 3.6, eff. July 22, 1987; repealed, Virginia Register Volume 14, Issue 6, eff. January 7, 1998.
9VAC20-70-140. Allowable financial mechanisms.
The mechanisms used to demonstrate financial assurance shall ensure that the funds necessary to meet the costs of closure, post-closure care, and corrective action for known releases will be available whenever they are needed. Owners and operators shall choose from the options specified in this article.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998.
9VAC20-70-150. Trust fund.
A. An owner or operator may satisfy the requirements of this article by establishing a trust fund that conforms to the requirements of this section and by submitting an originally signed triplicate of the trust agreement to the director. The owner or operator shall also place a copy of the trust agreement into the facility's operating record. The trustee for the trust fund shall be a bank or financial institution that has the authority to act as a trustee and whose trust operations are regulated and examined by the Commonwealth of Virginia.
B. Payments into the trust fund shall be made annually by the owner or operator over the active or the remaining life of the solid waste management unit, whichever is shorter. In the case of a trust fund for closure or post-closure care, this is known as the "pay-in period." In the case of a trust fund for corrective action for known releases, the "corrective action pay-in period" is one-half of the estimated length of the corrective action program.
C. If a trust fund is used to demonstrate financial assurance for closure and post-closure care:
1. For a new facility, the first payment shall be made at least 60 days before the initial receipt of waste for treatment or disposal. A receipt from the trustee for this payment shall be submitted by the owner or operator to the director before this initial receipt of waste. For an existing facility, permitted or unpermitted, the first payment is due on the effective date of the trust agreement.
2. The first payment shall be at least equal to the current closure cost and, if applicable, post-closure care estimate divided by the number of years in the pay-in period. The amount of the first payment shall be determined by the formula:
| First payment is the | Cost Estimate | or | CE |
| Total Years | TY |
where CE is the current closure and post-closure cost estimate and TY is the number of years in the pay-in period. Subsequent payments shall be made no later than 30 days after each anniversary date of the first payment. The amount of each subsequent payment shall be determined by this formula:
| Next payment is the | Cost Estimate – Current Value of the trust fund | or | CE - CV |
| Remaining Years | RY |
where CE is the current closure and post-closure care cost estimate (updated for inflation), CV is the current value of the trust fund, and RY is the number of years remaining in the pay-in period.
D. For a trust fund used to demonstrate financial assurance for corrective action, the first payment into the trust fund shall be at least equal to one-half of the current cost estimate for corrective action divided by the number of years in the corrective action pay-in period as defined in subsection B of this section. The amount of subsequent payments shall be determined by the following formula:
| Next payment is | The most recent estimate of the trust fund balance – the Current Value of the trust fund | or | RB - CV |
| Corrective Action Remaining Years | CARY |
where RB is the most recent estimate of the required trust fund balance for corrective action (i.e., the total costs that will be incurred during the second half of the corrective action period), CV is the current value of the trust fund, and CARY is the number of years remaining on the pay-in period. The initial payment into the trust fund shall be made no later than 120 days after the corrective action remedy has been selected.
E. The owner or operator must submit to the director prior to the anniversary date:
1. The calculation for determining the appropriate payment amount into the trust;
2. A statement from the trustee documenting the current fund value used to calculate the appropriate trust payment (this is the CV value); and
3. A statement from the trustee indicating the amount of the deposit into the trust fund.
F. If the owner or operator establishes a trust fund after having used one or more alternate mechanisms specified in this section, the initial payment into the trust fund shall be at least the amount that the fund would contain if the trust fund were established initially and annual payments made according to the specifications of this section, as applicable.
G. The owner or operator may accelerate payments into the trust fund or he may deposit the full amount of the cost estimate at the time the fund is established. However, the value of the fund shall be maintained at no less than the value would have been if annual payments were made as specified in subsections B through F of this section, as applicable. Owners and operators of solid waste management units other than landfills shall deposit the full amount of the cost estimate at the time the fund is established.
H. Whenever the cost estimate changes after the pay-in period is completed, the owner or operator shall compare the new estimate with the trustee's most recent annual valuation of the trust fund. If the value of the fund is less than the amount of the new cost estimate, the owner or operator shall, within 60 days of the change in the cost estimate, deposit a sufficient amount into the fund so that its value after payment at least equals the amount of the new estimate, or obtain other financial assurance as specified in this article to cover the difference. If the value of the trust fund is greater than the total amount of the cost estimate, the owner or operator may submit a written request to the director for release of the amount that is in excess of the cost estimate.
I. If the owner or operator substitutes other financial assurance as specified in this article for all or part of the trust fund, he may submit a written request to the director for release of the amount in excess of the current cost estimate covered by the trust fund.
J. Within 60 days after receiving a request from the owner or operator for release of funds specified in subsections H and I of this section, the director will instruct the trustee to release to the owner or operator such funds as the director deems appropriate, if any, in writing.
K. After beginning closure or during the period of post-closure care or corrective action, an owner or operator or any other person authorized to conduct closure, post-closure care, or corrective action may request reimbursement for closure, post-closure, or corrective action expenditures by submitting itemized bills to the director. Requests for reimbursement will be granted by the director only if sufficient funds are remaining in the trust fund to cover the remaining costs of closure, post-closure care, or corrective action. Reimbursements will not be made from the trust fund until the pay-in period is complete. Within 60 days after receiving bills for closure, post-closure care, or corrective action activities, the director shall instruct the trustee to make reimbursements in those amounts as the director determines are in accordance with the closure or post-closure plan or are otherwise justified.
L. The director shall agree to terminate the trust when:
1. The owner or operator substitutes alternate financial assurance as specified in this article; or
2. The director notifies the owner or operator that he is no longer required by this article to maintain financial assurance for the closure, post-closure care or corrective action.
M. The wording of the trust agreement shall be identical to the wording specified in 9VAC20-70-290 A and the trust agreement shall be accompanied by a formal certification of acknowledgment. Schedule A of the trust agreement, as described in 9VAC20-70-290 A, shall be updated within 60 days after a change in the amount of the current cost estimate covered by the agreement.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-160. Surety bond guaranteeing payment or performance.
A. An owner or operator may demonstrate financial assurance for closure or post-closure care by obtaining a payment or performance surety bond that satisfies the requirements of this section. An owner or operator may demonstrate financial assurance for corrective action by obtaining a performance bond which conforms to the requirements of this section. A copy of the bond shall be placed in the facility's operating record.
1. An owner or operator of a new facility shall submit the original bond to the director at least 60 days before the date on which waste is first received for treatment or disposal. In case of existing facilities, the owner or operator who substitutes a surety bond for another financial assurance mechanism already in place shall submit the bond to the director at least 30 days before the expiration date of the previous mechanism.
2. The bond shall be effective before the initial receipt of waste; January 7, 1998; or the expiration date of the previous assurance mechanism, whichever is later, or no later than 120 days after the corrective action remedy has been selected.
3. The surety company issuing the bond shall, at a minimum, be among those listed as acceptable sureties on federal bonds in Circular 570 of the U.S. Department of Treasury and must be licensed pursuant to Chapter 10 (§ 38.2-1000 et seq.) of Title 38.2 of the Code of Virginia.
4. The owner or operator shall submit with the bond evidence that the power of attorney of the attorney-in-fact executing the bond is recorded pursuant to § 38.2-2416 of the Code of Virginia.
B. The surety bond shall name the facility operator or owner as the principal and name the Department of Environmental Quality, Commonwealth of Virginia as the obligee.
C. The penal sum of the bond shall be in an amount at least equal to the current closure, post-closure care or corrective action cost estimate, whichever is applicable.
D. The term of a closure bond shall be for the active life of the facility for which a permit is applied by the owner or operator through the closure period. A bond used for post-closure care assurance shall extend through the post-closure period. A bond used for corrective action shall extend through the corrective action period.
E. The bond shall guarantee that the owner or operator will:
1. Perform final closure, post-closure care, or corrective action in accordance with the closure or post-closure plan and other requirements in any permit for the facility;
2. Perform final closure, post-closure care, or corrective action following an order to begin closure, post-closure, or corrective action issued by the director or by a court, or following issuance of a notice of termination of the permit; or
3. Provide alternate financial assurance as specified in this article within 60 days after receipt by the director of a notice of cancellation of the bond from the surety.
F. The surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.
G. Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming an owner or operator as debtor, the owner or operator shall notify the director by certified mail of such commencement.
H. The owner or operator shall establish a standby trust fund. The standby trust fund shall meet the requirements of 9VAC20-70-150 except the requirements for initial payment and subsequent annual payments.
I. Payments made under the terms of the bond will be deposited by the surety directly into the standby trust fund. Payments from the trust fund shall be approved by the trustee.
J. If upon amendment of the permit, the cost estimate increases to an amount greater than the amount of the penal sum of the bond, the owner or operator shall, within 60 days after the increase, cause the penal sum of the bond to be increased to an amount at least equal to the new estimate or obtain other financial assurance, as specified in this article to cover the increase. Whenever the cost estimate decreases, the penal sum may be reduced to the amount of the cost estimate following written approval by the director. Notice of an increase or decrease in the penal sum shall be sent to the director by certified mail within 60 days after the change.
K. The bond shall remain in force for its term unless the surety sends written notice of cancellation by certified mail to the owner or operator and to the director. Cancellation cannot occur, however:
1. During the 120 days beginning on the date of receipt of the notice of cancellation by the director as shown on the signed return receipt; or
2. While an enforcement action is pending.
L. In the event of failure of the owner or operator to comply with the final closure, post-closure care or corrective action requirements, the director shall request the surety to perform or cause to have performed closure, post-closure, or corrective action. As an alternative to performing final closure, post-closure, or corrective action, the surety may forfeit the full amount of the penal sum to the Department of Environmental Quality, Commonwealth of Virginia.
M. The owner or operator may cancel the bond if the director has given prior written consent based on receipt of evidence of alternative financial assurance as specified in this article or if the owner or operator is no longer required to demonstrate financial responsibility.
N. The director will notify the surety if the owner or operator provides alternate financial assurance as specified in this article.
O. The surety will not be liable for deficiencies in the performance of closure by the owner or operator after the owner or operator has been notified by the director that the owner or operator is no longer required by this article to maintain financial assurance for closure or post-closure care of the facility.
P. In regard to closure or post-closure performed either by the owner or operator or by the surety, proper final closure of a solid waste management facility shall be deemed to have occurred when the director determines that final closure or post-closure has been completed.
Q. In regard to corrective action performed by either the owner or operator or by the surety, completion of a corrective action plan of a solid waste management facility shall be deemed to have occurred when the director determines that corrective action has been completed.
R. The director may cash the surety bond if it is not replaced 30 days prior to expiration with alternate financial assurance acceptable to the director or if the owner or operator fails to fulfill the conditions of the bond.
S. The wording of the surety bond shall be identical to the wording specified in 9VAC20-70-290 B.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-170. Letter of credit.
A. An owner or operator may satisfy the requirements of this article by obtaining an irrevocable standby letter of credit that satisfies the requirements of this section and by submitting the original letter of credit to the director. A copy of the letter of credit shall be placed in the facility's operating record. The letter of credit shall be effective before the initial receipt of waste or before January 7, 1998, whichever is later, in case of closure and post-closure care, or no later than 120 days after the corrective action remedy has been selected. The issuing institution shall be a bank or other financial institution that has the authority to issue letters of credit and whose letter of credit operations are regulated and examined by the Commonwealth of Virginia, by a federal agency, or by an agency of another state.
B. The letter of credit shall be irrevocable and issued for a period of at least one year in an amount at least equal to the current cost estimate for closure, post-closure care, or corrective action, whichever is applicable. The letter of credit shall provide that the expiration date will be automatically extended for a period of at least one year. If the issuing institution decides not to extend the letter of credit beyond the current expiration date it shall, at least 120 days before the date, notify both the owner or operator and the director by certified mail of that decision. The 120-day period will begin on the date of receipt by the director as shown on the signed return receipt. Expiration cannot occur, however, while an enforcement action is pending. Within 60 days of receipt of notice from the issuing institution that it does not intend to extend the letter of credit, the owner or operator shall obtain alternate financial assurance and submit it to the director.
C. Whenever the cost estimate increases to an amount greater than the amount of credit, the owner or operator shall, within 60 days of the increase, cause the amount of credit to be increased to an amount at least equal to the new estimate or obtain other financial assurance as specified in this article to cover the increase. Whenever the cost estimate decreases, the letter of credit may be reduced to the amount of the new estimate following written approval by the director. The issuing institution shall send the notice of an increase or decrease in the amount of the credit to the director by certified mail within 60 days of the change.
D. In the event of failure of the owner or operator to comply with the final closure, post-closure care or corrective action requirements, the director may cash the letter of credit.
E. The owner or operator may cancel the letter of credit only if alternate financial assurance acceptable to the director is substituted as specified in this article or if the owner or operator is released by the director from the requirements of this chapter.
F. The director shall return the original letter of credit to the issuing institution for termination when:
1. The owner or operator substitutes acceptable alternate financial assurance for closure, post-closure care, or corrective action as specified in this article; or
2. The director notifies the owner or operator that he is no longer required by this article to maintain financial assurance for closure, post-closure, or corrective action of the facility.
G. The owner or operator shall establish a standby trust fund. The standby trust fund shall meet the requirements of 9VAC20-70-150 except the requirements for initial payment and subsequent annual payments.
H. Payments made under the terms of the letter of credit will be deposited by the issuing institution directly into the standby trust fund. Payments from the trust fund shall be approved by the director.
I. The director may cash the letter of credit if it is not replaced 30 days prior to expiration with alternate financial assurance acceptable to the director.
J. The wording of the letter of credit shall be identical to the wording specified in 9VAC20-70-290 C.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-180. Certificate of deposit.
A. An owner or operator of a facility (with the exception of sanitary landfills) may satisfy the requirements of this article, wholly or in part, by assigning all rights, title and interest of a certificate of deposit to the Department of Environmental Quality, Commonwealth of Virginia, conditioned so that the owner or operator shall comply with the closure, post-closure care or corrective action plan filed for the site. The amount of the certificate of deposit shall be at least equal to the estimated closure, post-closure care or corrective action cost for the site for which the permit application has been filed or any part thereof not covered by other financial responsibility mechanisms. The owner or operator shall maintain the certificate of deposit until proper final closure, post-closure care or corrective action is completed. The original assignment and the certificate of deposit, if applicable, must be submitted to the department to prove that the certificate of deposit has been obtained and meets the requirements of this section. A copy of the certificate of deposit shall be maintained in the facility's operating record.
B. The owner or operator shall be entitled to demand, receive and recover the interest and income from the certificate of deposit as it becomes due and payable as long as the market value of the certificate of deposit plus any other mechanisms used continue to at least equal the amount of the estimated current closure, post-closure care, or corrective action cost.
C. In the event of failure of the owner or operator to comply with the final closure, post-closure care or corrective action requirements, the director shall cash the certificate of deposit.
D. The owner or operator shall establish a standby trust fund. The standby trust fund shall meet the requirements of 9VAC20-70-150 except the requirements for initial payment and subsequent annual payments.
E. Payments made under the terms of the certificate of deposit will be deposited by the issuing institution directly into the standby trust fund. Payments from the trust fund shall be approved by the director.
F. The wording of the assignment shall be identical to the wording specified in 9VAC20-70-290 D.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-190. Insurance.
A. An owner or operator may demonstrate financial assurance for closure, post-closure care or corrective action by obtaining insurance which conforms to the requirements of this section. The insurance shall be effective before the initial receipt of waste or before January 7, 1998, whichever is later, in the case of closure and post-closure care, or no later than 120 days after the corrective action remedy has been selected. The insurer must be licensed pursuant to Chapter 10 (§ 38.2-1000 et seq.) of Title 38.2 of the Code of Virginia. The owner or operator shall provide the director with an original signed copy of the insurance policy and place a copy in the operating record. The department shall be listed as an additional insured on the policy, but the department will not be obligated for payment of the premium in any manner.
B. The insurance policy shall guarantee that funds will be available to close the solid waste management unit whenever final closure occurs, to provide post-closure care for the solid waste disposal unit whenever the post-closure care period begins, or to perform corrective action whenever the corrective action period begins, whichever is applicable. The policy shall also guarantee that once closure, post-closure care, or corrective action begins, the insurer will be responsible for paying funds to the owner or operator or other person authorized to conduct closure, post-closure care, or corrective action up to an amount equal to the face amount of the policy.
C. The insurance policy shall be issued and maintained for a face amount at least equal to the current cost estimate for closure, post-closure care, or corrective action, whichever is applicable. The term face amount means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the face amount although the insurer's future liability will be lowered by the amount of the payments.
D. The insurance policy shall provide that the insurer will pay closure, post-closure, or corrective action expenditures, whichever is applicable, on behalf of the owner or operator or any other person authorized to conduct closure, post-closure care, or corrective action. Justification and documentation of the expenditures must be submitted to and approved by the director. Requests for payment will be granted by the insurer only if the remaining value of the policy is sufficient to cover the remaining costs of closure, post-closure care, or corrective action, or if the director approves the payment. The insurer shall notify the director when a payment has been made.
E. Each policy shall contain a provision allowing assignment of the policy to a successor owner or operator. Such assignment may be conditional upon consent of the insurer, provided that such consent is not unreasonably refused.
F. The insurance policy shall provide that the insurer may not cancel, terminate or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy shall, at a minimum, provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may cancel the policy by sending notice of cancellation by certified mail to the owner and operator and to the director 120 days in advance of cancellation. Within 60 days of receipt of notice from the insurer that it does not intend to renew the policy, the owner or operator shall obtain alternate financial assurance and submit it to the director.
G. For insurance policies providing coverage for post-closure care, commencing on the date that liability to make payments pursuant to the policy accrues, the insurer will thereafter annually increase the face amount of the policy. Such increase shall be equivalent to the face amount of the policy, less any payments made, multiplied by an amount equivalent to 85% of the most recent investment rate or of the equivalent coupon-issue yield announced by the U.S. Treasury for 26-week Treasury securities.
H. The owner or operator may cancel the insurance policy only if alternate financial assurance is substituted as specified in this article, or if the owner or operator, is no longer required to demonstrate financial responsibility.
I. Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy) of the U.S. Code, naming an owner or operator as debtor, the owner or operator shall notify the director by certified mail of such commencement.
J. The wording of the insurance certificate shall be identical to the wording specified in 9VAC20-70-290 E.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-200. Corporate financial test.
An owner or operator may satisfy the requirements for financial assurance by demonstrating that he passes a financial test as specified in this section. To pass this test the owner or operator shall meet the following criteria:
1. Financial component.
a. The owner or operator shall satisfy one of the following three conditions:
(1) Supply documentation demonstrating that the owner or operator has a current rating for its senior unsubordinated 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;
(2) A ratio of less than 1.5 comparing total liabilities to net worth; or
(3) A ratio of greater than 0.10 comparing the sum of net income plus depreciation, depletion and amortization, minus $10 million, to total liabilities.
b. The tangible net worth of the owner or operator shall be greater than the sum of the current closure, post-closure care, corrective action cost estimates and any other environmental obligations covered by a financial test plus $10 million.
c. The owner or operator shall have assets located in the United States amounting to at least the sum of current closure, post-closure care, corrective action cost estimates and any other environmental obligations covered by a financial test as described in subdivision 3 of this section.
2. Reporting requirements.
a. To demonstrate that he meets the financial component, the owner or operator shall submit the following items to the director and place copies of the items in the facility's operating record:
(1) An original letter signed by the owner's or operator's chief financial officer and worded as specified in 9VAC20-70-290 F.
(2) 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 except as provided in subdivision 2 a (2) (a) of this section:
(a) To be eligible to use the financial test, the owner's or operator's financial statements referenced in subdivision 2 of this section shall 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. The director may evaluate qualified opinions on a case by case basis and allow use of the financial test in cases where the director deems that the matters which form the basis for the qualification are insufficient to warrant disallowance of the test. If the director does not allow use of the test, the owner or operator shall provide alternate financial assurance as specified in this article.
(b) (Reserved.)
(3) A copy of the owner's or operator's audited financial statements for the latest completed fiscal year.
(4) If the chief financial officer's letter providing evidence of financial assurance includes financial data that are different from data in the audited financial statements referred to in subdivision 2 a (2) of this section or any other audited financial statement or data filed with the Securities Exchange Commission (SEC), a special report from the owner's or operator's independent certified public accountant to the owner or operator is required stating that:
(a) He has compared 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; and
(b) In connection with that examination, no matters came to his attention which caused him to believe that the data in the chief financial officer's letter should be adjusted.
(5) A certification from the corporation's chief financial officer stating the method for funding closure and post-closure costs, and the amount currently designated for closure and post-closure costs in the corporation's financial statements worded as specified in 9VAC20-70-290 H.
b. An owner or operator shall submit the items specified in subdivision 2 of this section before the initial receipt of waste or before January 7, 1998, whichever is later in the case of closure; post-closure care, or no later than 120 days after the corrective action remedy has been selected. If the owner or operator changes the financial assurance mechanism to corporate financial test from any other mechanism, the owner or operator shall submit the items specified in subdivision 2 of this section at least 60 days before the date that the former assurance expires.
c. After the initial submission of items specified in subdivision 2 of this section, the owner or operator shall update the information and submit updated information to the director within 90 days following the close of the owner or operator's fiscal year. This information must consist of all five items specified in subdivision 2 of this section.
d. The owner or operator is no longer required to submit the items specified in subdivision 2 of this section when:
(1) He substitutes alternate financial assurance as specified in this article; or
(2) He is released from the requirements of this article by the director.
e. If the owner or operator no longer meets the requirements of subdivision 1 of this section, the owner or operator shall, within 120 days following the close of the owner or operator's fiscal year, obtain alternative financial assurance that meets the requirements of this article, notify the director that the owner or operator no longer meets the criteria of the financial test and submit the alternate assurance documentation.
f. The director may, based on a reasonable belief that the owner or operator may no longer meet the requirement of this article, require reports of financial condition at any time from the owner or operator in addition to those specified in subdivision 2 of this section. If the director finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of subdivision 1 of this section, the owner or operator shall provide alternate financial assurance as specified in this article within 30 days after notification of such a finding.
g. 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 subdivision 2 a (2) of this section). 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 alternate financial assurance as specified in this article within 30 days after notification of the disallowance.
3. Calculation of costs to be assured. When calculating the current cost estimates for closure, post-closure care, corrective action, or the sum of the combination of such costs to be covered, and any other environmental obligations assured by a financial test referred to in subdivision 1 of this section, the owner or operator must include cost estimates required for municipal solid waste management facilities under this part, as well as cost estimates required for the following environmental obligations, if it assures them through a financial test obligations associated with underground injection control (UIC) facilities under 40 CFR 144.62, petroleum underground storage tank facilities under 9VAC25-590-10 et seq., above ground storage tank facilities under 9VAC25-640-10 et seq.), polychlorinated biphenyls (PCB) storage facilities under 40 CFR Part 761, and hazardous waste treatment, storage, and disposal facilities under 40 CFR Parts 264 and 265.
4. During the period of post-closure care, the director may approve a decrease in the current post-closure cost estimate for which this test demonstrates financial assurance if the owner or operator demonstrates to the director that the amount of the cost estimate exceeds the remaining cost of the post-closure care.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-210. Local government financial test.
An owner or operator who satisfies the requirements of subdivisions 1 through 3 of this section may demonstrate financial assurance using the local government financial test up to the amount specified in subdivision 4 of this section.
1. Financial component.
a. The owner or operator shall satisfy the provisions of subdivision 1 a of this section, as applicable:
(1) If the owner or operator has outstanding, rated, general obligation bonds that are not secured by insurance, a letter of credit, or other collateral or guarantee, he shall supply the director with documentation demonstrating that the owner or operator has a current rating of Aaa, Aa, A, or Baa, as issued by Moody's, or AAA, AA, A, or BBB, as issued by Standard and Poor's on all such general obligation bonds; or
(2) If the owner or operator does not have outstanding, rated general obligation bonds, he shall satisfy each of the following financial ratios based on the owner's or operator's most recent audited annual financial statement:
(a) A ratio of cash plus marketable securities to total expenditures greater than or equal to 0.05; and
(b) A ratio of annual debt service to total expenditures less than or equal to 0.20.
b. The owner or operator shall prepare his financial statements in conformity with Generally Accepted Accounting Principles for governments and have his financial statements audited by an independent certified public accountant or by the Auditor of Public Accounts.
c. An owner or operator is not eligible to assure his obligations under this section if he:
(1) Is currently in default on any outstanding general obligation bonds;
(2) Has any outstanding general obligation bonds rated lower than Baa as issued by Moody's or BBB as issued by Standard and Poor's;
(3) Operated at a deficit equal to 5.0% or more of total annual revenue in each of the past two fiscal years; or
(4) Receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant or Auditor of Public Accounts auditing his financial statement as required under subdivision 1 b of this section. However, the director may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the director deems the qualification insufficient to warrant disallowance of the test.
2. Public notice component. The local government owner or operator shall place a reference to the closure, post-closure care, or corrective action costs assured through the financial test into the next comprehensive annual financial report (CAFR) after January 7, 1998, or prior to the initial receipt of waste at the facility, whichever is later. Disclosure shall include the nature and source of closure and post-closure requirements, the reported liability at the balance sheet date, the estimated total closure and post-closure care cost remaining to be recognized, the percentage of landfill capacity used to date, and the estimated landfill life in years. A reference to corrective action cost shall be placed in CAFR no later than 120 days after the corrective action remedy has been selected in accordance with 9VAC20-81-260. For the first year the financial test is used to assure costs at a particular facility, the reference may instead be placed in the operating record until issuance of the next available CAFR if timing does not permit the reference to be incorporated into the most recently issued CAFR or budget. For closure and post-closure care costs, conformance with Government Accounting Standards Board Statement 18 assures compliance with this public notice component.
3. Recordkeeping and reporting requirements.
a. The local government owner or operator must submit to the department the following items and place copies of the items in the facility's operating record:
(1) An original letter signed by the local government's chief financial officer worded as specified in 9VAC20-70-290 G;
(2) The local government's independently audited year-end financial statements for the latest fiscal year, including the unqualified opinion of the auditor who must be an independent, certified public accountant or an appropriate state agency that conducts equivalent comprehensive audits;
(3) A report to the local government from the local government's independent certified public accountant (CPA) or the Auditor of Public Accounts based on performing an agreed upon procedures engagement relative to the financial ratios required by subdivision 1 a (2) of this section, if applicable, and the requirements of subdivisions 1 b, 1 c (3), and 1 c (4) of this section. The CPA or state agency's report shall state the procedures performed and the CPA or state agency's findings;
(4) A copy of the comprehensive annual financial report (CAFR) used to comply with subdivision 2 of this section or certification that the requirements of General Accounting Standards Board Statement 18 have been met; and
(5) A certification from the local government's chief executive officer stating in detail the method selected by the local government for funding closure and post-closure costs. If the method selected by the local government is a trust fund or similar mechanism, there shall be included a certification from the local government's chief financial officer indicating the current reserve obligated to closure and post-closure care cost. If the method selected by local governments is the use of annual operating budget and Capital Investment Funds, there shall be a certification from the local government's chief financial officer so indicating. Nothing herein shall be construed to prohibit the local government from revising its plan for funding closure and post-closure care costs if such revision provides economic benefit to the local government and if such revision provides adequate means for funding closure and post-closure care cost. This certification shall be worded as specified in 9VAC20-70-290 H.
b. The items required in subdivision 3 a of this section shall be submitted to the department and placed in the facility operating record as follows:
(1) In the case of closure and post-closure care, either before January 7, 1998, or prior to the initial receipt of waste at the facility, whichever is later; or
(2) In the case of corrective action, not later than 120 days after the corrective action remedy is selected in accordance with the requirements of 9VAC20-81-260.
c. After the initial submission of the items, the local government owner or operator must update the information, place a copy of the updated information in the operating record, and submit the updated documentation described in subdivisions 3 a (1) through (6) of this section to the department within 180 days following the close of the owner or operator's fiscal year.
d. The local government owner or operator is no longer required to meet the requirements of subdivision 3 of this section when:
(1) The owner or operator substitutes alternate financial assurance as specified in this section; or
(2) The owner or operator is released from the requirements of this section in accordance with 9VAC20-70-111 E, 9VAC20-70-112 B, or 9VAC20-70-113 C.
e. A local government shall satisfy the requirements of the financial test at the close of each fiscal year. If the local government owner or operator no longer meets the requirements of the local government financial test it must, within 210 days following the close of the owner or operator's fiscal year, obtain alternative financial assurance that meets the requirements of this section, place a copy of the financial assurance mechanism in the operating record, and submit the original financial assurance mechanism to the director.
f. The director, based on a reasonable belief that the local government owner or operator may no longer meet the requirements of the local government financial test, may require additional reports of financial condition from the local government at any time. If the director finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of the local government financial test, the local government shall provide alternate financial assurance in accordance with this article.
4. Calculation of costs to be assured. The portion of the closure, post-closure, and corrective action costs for which an owner or operator can assure under subdivision 1 of this section is determined as follows:
a. If the local government owner or operator does not assure other environmental obligations through a financial test, it may assure closure, post-closure, and corrective action costs that equal up to 43% of the local government's total annual revenue or the sum of total revenues of constituent governments in the case of regional authorities.
b. If the local government assures other environmental obligations through a financial test, including those associated with UIC facilities under 40 CFR 144.62, petroleum underground storage tank facilities under 9VAC25-590, polychlorinated biphenyls storage facilities under 40 CFR Part 761, and hazardous waste treatment, storage, and disposal facilities under Part IX or X of the Virginia Hazardous Waste Management Regulations (9VAC20-60), it shall add those costs to the closure, post-closure, and corrective action costs it seeks to assure under subdivision 1 of this section. The total shall not exceed 43% of the local government's total annual revenue.
c. The owner or operator shall obtain an alternate financial assurance mechanism for those costs that exceed the limits set in subdivisions 4 a and 4 b of this section.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia; §§ 1008(a)(3), 2002, and 4004(a) of the Resource Conservation and Recovery Act; 40 CFR Part 258.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001; Volume 27, Issue 22, eff. August 3, 2011; Volume 29, Issue 21, eff. August 1, 2013; Volume 35, Issue 24, eff. September 5, 2019.
9VAC20-70-220. Corporate guarantee.
A. An owner or operator may meet the requirements of this article by obtaining a written guarantee, hereafter referred to as "corporate 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.
B. Financial component. The guarantor shall meet the requirements for owners or operators in 9VAC20-70-200 and shall comply with the terms of the corporate guarantee.
C. Reporting requirements.
1. The wording of the corporate guarantee shall be identical to the wording specified in 9VAC20-70-290 J. The corporate guarantee shall accompany the items sent to the director as specified in subdivision 2 of 9VAC20-70-200. A copy of the guarantee and other items listed in subdivision 2 of 9VAC20-70-200 shall be placed in the facility's operating record.
2. If the guarantor's parent corporation is also the parent corporation of the owner or operator, the 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.
3. The guarantee shall be effective and the guarantor shall submit the items specified in subdivision 2 of 9VAC20-70-200 before the initial receipt of the waste or before the effective date of this amendment, whichever is later in the case of closure or post-closure care, or no later than 120 days after the corrective action remedy has been selected. If the owner or operator changes the financial assurance mechanism to corporate guarantee from any other mechanism, the guarantor shall submit the required items 60 days before the former mechanism expires.
D. The terms of the corporate guarantee shall provide that:
1. If the owner or operator fails to perform final closure or post-closure care, or corrective action of a facility covered by the corporate guarantee in accordance with the closure, post-closure care or corrective action plan and other permit or order requirements whenever required to do so, the guarantor shall:
a. Perform, or pay a third party to perform, closure, post-closure care, and/or corrective action as required (performance guarantee); or
b. Establish a fully funded trust fund as specified in 9VAC20-70-150 in the name of the owner or operator (payment guarantee).
2. The corporate guarantee will remain in force unless the guarantor sends a prior notice of cancellation by certified mail to the owner or operator and to the director. 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 director, as evidenced by the return receipts.
3. If a guarantee is canceled, the owner or operator must, within 90 days following receipt of the cancellation notice by the owner or operator, obtain alternate financial assurance, and submit the required documentation to the director.
4. If the owner or operator fails to provide alternate financial assurance as specified in this article and to obtain the written approval of such alternate assurance from the director within 90 days after the receipt by both the owner or operator and the director of a notice of cancellation of the corporate guarantee from the guarantor, the guarantor will provide such alternate financial assurance in the name of the owner or operator.
E. If a corporate guarantor no longer meets the requirements of subdivision 1 of 9VAC20-70-200, the owner or operator must, within 90 days following the close of the guarantor's fiscal year, obtain alternative assurance and submit the required documentation to the director. If the owner or operator fails to provide alternate financial assurance within the 90-day period, the guarantor must provide that alternate assurance within 120 days following the close of the guarantor's fiscal year, obtain alternative assurance, and submit the necessary documentation to the director.
F. The owner or operator is no longer required to submit the items specified in this section when:
1. The owner or operator substitutes alternate financial assurance; or
2. The owner or operator is released from the requirements by the director.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-230. Local government guarantee.
A. An owner or operator may demonstrate financial assurance for closure, post-closure, and corrective action, as required by this article, by obtaining a written guarantee provided by a local government. The guarantor shall meet the requirements of the local government financial test in 9VAC20-70-210 and shall comply with the terms of a written guarantee.
B. Terms of the written guarantee. The guarantee shall be effective before the initial receipt of waste or before January 7, 1998, whichever is later, in the case of closure, post-closure care, or no later than 120 days after the corrective action remedy has been selected. The guarantee shall provide that:
1. If the owner or operator fails to perform closure, post-closure care, and/or corrective action of a facility covered by the guarantee, the guarantor will:
a. Perform, or pay a third party to perform, closure, post-closure care, and/or corrective action as required; or
b. Establish a fully funded trust fund as specified in 9VAC20-70-150 in the name of the owner or operator.
2. The guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail to the owner or operator and to the director. 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 director, as evidenced by the return receipts.
3. If a guarantee is canceled, the owner or operator shall, within 90 days following receipt of the cancellation notice by the owner or operator and the director, obtain alternate financial assurance, place evidence of that alternate financial assurance in the facility operating record, and notify the director. If the owner or operator fails to provide alternate financial assurance-within the 90-day period, the guarantor shall provide that alternate assurance within 120 days following the close of the guarantor's fiscal year, obtain alternative assurance acceptable to the director, place evidence of the alternate assurance in the facility operating record, and submit the alternate assurance to the director.
C. Recordkeeping and reporting.
1. The owner or operator shall submit a signed original guarantee on the form in 9VAC20-70-290 K to the department along with items required under subdivision 3 of 9VAC20-70-210 and place a copy of the document into the facility's operating record before the initial receipt of waste or before January 7, 1998, whichever is later in the case of closure, post-closure care, or no later than 120 days after the corrective action remedy has been selected.
2. The owner or operator is no longer required to maintain the items specified in 9VAC20-170-190 when:
a. The owner or operator substitutes alternate financial assurance as specified in this section; or
b. The owner or operator is released from the requirements of this chapter.
3. If a local government guarantor no longer meets the requirements of 9VAC20-70-210, the owner or operator shall, within 90 days following the close of the guarantor's fiscal year, obtain alternative assurance acceptable to the director, place evidence of the alternate assurance in the facility operating record, and submit alternate assurance to the director. If the owner or operator fails to provide alternate financial assurance within the 90-day period, the guarantor shall provide that alternate assurance within 120 days.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-240. (Repealed.)
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; repealed, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.
9VAC20-70-250. Multiple financial mechanisms.
An owner or operator may satisfy the requirements of this article by establishing more than one financial mechanism per facility, except that mechanisms guaranteeing performance, rather than payment, may not be combined with other mechanisms. The mechanisms shall be specified in 9VAC20-70-150 through 9VAC20-70-230, except that financial assurance for the amount at least equal to the current cost estimate for closure, post-closure care, or corrective action may be provided by a combination of mechanisms, rather than a single mechanism.
Statutory Authority
§§ 10.1-1402 and 10.1-1410 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 14, Issue 6, eff. January 7, 1998; amended, Virginia Register Volume 18, Issue 3, eff. November 21, 2001.