Virginia Law

Part III. Closure Plans and Financial Assurance Criteria

9VAC25-650-50. General purpose and scope.

A. Any owner or operator of a privately owned sewerage system subject to this regulation shall file with the department a plan to abate, control, prevent, remove, or contain any substantial imminent threat to public health or the environment that is reasonably likely to occur if such facility ceases operations. Such plan shall be referred to as a closure plan. The closure plan shall include a detailed written estimate of the cost to implement the plan. The owner or operator shall file a closure plan and associated cost estimate for the facility with the department concurrently with the owner's or operator's first VPDES permit application for issuance or reissuance for the facility. Closure plans and cost estimates filed with the department shall be reviewed by the owner or operator and updated as necessary at the end of each VPDES permit term. Revised and updated closure plans shall be filed with the department concurrently with each subsequent VPDES permit application.

B. Closure plans and cost estimates shall be subject to review by the department. The owner or operator shall be notified in writing within 60 days of receipt of the closure plan and cost estimate of the department's decision to approve or disapprove the proposed closure plan and cost estimate. If the department disapproves the closure plan or cost estimate, the department shall notify the owner or operator as to what measures, if any, the owner or operator may take to secure approval. If the owner or operator submits a closure plan that is not approvable by the department, the department may, at its sole discretion, promulgate a closure plan and cost estimate for the facility, subject to appeal by the owner or operator only as to content under the Virginia Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

C. Closure plans shall be implemented when the department has determined, at its sole discretion, that the facility has ceased operations. The owner or operator of a privately owned facility shall notify the department within 24 hours of the facility ceasing operations as defined in this chapter.

D. In order to assure that the costs associated with protecting public health and the environment are to be recovered from the owner or operator in the event that a facility subject to this regulation ceases operation, the owner or operator of such facility shall submit to the department one or a combination of the financial assurance mechanisms described in this chapter. Financial assurance mechanisms shall be in amounts calculated as the inflation-adjusted cost estimate using the procedures set forth in this chapter.

E. In the case of new facilities or increased discharges from existing facilities, the selected financial assurance mechanism or mechanisms shall be filed with the department no less than 90 days prior to the discharge or increased discharge to state waters.

F. The department may disapprove the proposed evidence of financial assurance if the mechanism or mechanisms submitted do not adequately assure that funds will be available for implementation of the closure plan. The owner or operator shall be notified in writing of the department's decision to approve or disapprove the proposed mechanism. If the department disapproves the financial assurance mechanism, the department shall notify the owner or operator as to what measures, if any, the owner or operator may take to secure approval.

G. Closure plans, cost estimates, and financial assurance mechanisms shall remain in place for the active life of the facility and for the time required to complete the activities specified in the closure plan.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; Errata, 18:7 VA.R. December 17, 2001; amended, Virginia Register Volume 31, Issue 21, eff. July 30, 2015; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-60. Closure plans.

A. The owner or operator of a privately owned sewerage system subject to this chapter shall provide a closure plan which abates, controls, prevents, removes, or contains any substantial threat to public health or the environment that is reasonably likely to occur if the facility ceases operations.

B. Closure plans shall be submitted to the department by the owner or operator concurrently with its application for a VPDES permit for the facility or as otherwise required by special order. Existing closure plans filed with the department shall be reviewed by the owner or operator, modified as necessary, and resubmitted to the department concurrently with an owner's or operator's application for a reissued VPDES permit. The submittal shall include a written summary of the results of the review and any modifications to the closure plan.

C. Closure plans shall consist of one or more of the following:

1. The cessation of the discharge of pollutants to state waters, followed by closure of the facility in accordance with the facility closure plan prepared in accordance with 9VAC25-790-120 E 3 and approved by the department.

2. Connection to an alternative treatment works, such as a POTW, including rerouting of all influent flow, followed by closure of the VPDES permitted facility in accordance with the facility closure plan prepared in accordance with 9VAC25-790-120 E 3 and approved by the department.

3. Transfer of the facility to a local government, provided that written agreement of the receiving local government to obtain a VPDES permit and operate and maintain the facility in accordance with the VPDES permit and all other applicable laws and regulations, is obtained and included as part of the closure plan.

4. Contract operation of the facility for a period of two years after initial implementation of the closure plan, regardless of the date of initial implementation. Contract operation shall be by a named private company or other entity licensed to operate wastewater treatment facilities in the Commonwealth of Virginia and licensed to operate the specific facility to which the closure plan applies. A closure plan consisting of or including contract operation shall include a written, signed contract executed by the contract operator, contingent only upon approval of the closure plan by the department. The contract shall specify that the contract operator shall operate the facility for the term of the contract in accordance with the terms and conditions of the owner's or operator's VPDES permit for the facility. The contract shall also specify that the contract operator shall assume, without exception, all responsibilities and liabilities associated with the facility's discharge to state waters and with the owner's or operator's VPDES permit in the event the closure plan is implemented. The owner or operator of the facility and the owner of the private company or entity contracted to operate the facility under the closure plan shall not be the same person.

5. An alternative plan which will abate, control, prevent, remove, or contain any substantial or imminent threat to public health or the environment that is reasonably likely to occur if the facility ceases operations.

D. Closure plans shall designate and authorize a named third party who, upon notification by the department, will implement the closure plan. The closure plan shall include written agreement by the named third party, bearing that person's signature, to implement the closure plan in accordance with the requirements of the closure plan for the duration of the VPDES permit term. Where the closure plan includes contract operation of the facility, the named third party may be the contract operator.

E. Closure plans may not consist of the transfer or sale of the facility to another private entity which also would be subject to this regulation.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 31, Issue 21, eff. July 30, 2015; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-70. Transfer of ownership or permit.

A. If a privately owned sewerage system subject to this regulation is to be sold or if ownership is to be transferred in the normal course of business, the owner or operator shall notify the department, in written form through certified mail, of such intended sale or transfer at least 30 days prior to such sale or transfer. The notification shall provide the full name, address, and telephone number of the person to whom the facility is to be sold or transferred. The notice shall include a written agreement between the existing and the new permittee containing a specific date for transfer of permit responsibilities, coverage, and liabilities between them.

B. Changes in the ownership or operational control of a facility may be made as a minor modification with prior written approval of the department in accordance with 9VAC25-31-380, except as otherwise provided in this section. When a transfer of ownership or operational control occurs, the new owner or operator shall demonstrate compliance with this chapter and the department shall approve the financial mechanism prior to the transfer of the permit. Upon demonstration to the department by the new owner or operator of compliance with this chapter, the department shall notify the old owner or operator that the old owner or operator no longer needs to comply with this chapter as of the date of demonstration.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 36, Issue 6, eff. December 26, 2019; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-80. Cost estimate for facility closure.

A. The owner or operator shall prepare for approval by the department, a detailed written estimate of the cost of implementing the closure plan. The written cost estimate shall be submitted concurrently with the closure plan.

1. The closure plan cost estimate shall equal the full cost of implementation of the closure plan in current dollars.

2. The closure cost estimate shall be based on and include the costs to the owner or operator of hiring a third party to implement the closure plan. The third party may not be either a parent corporation or subsidiary of the owner or operator.

3. The closure cost estimate may not incorporate any salvage value that may be realized by the sale of wastes, facility structures or equipment, land or other facility assets at the time of implementation of the closure plan.

B. During the term of the VPDES permit, the owner or operator shall adjust the implementation cost estimate for inflation within 60 days prior to the anniversary date of the establishment of the financial assurance mechanism used to comply with this chapter. The adjustment may be made by recalculating the implementation cost in current dollars, or by using an inflation factor derived from the most recent Implicit Price Deflator for Gross National Product published by the U.S. Department of Commerce in its Survey of Current Business, as specified below. The inflation factor is the result of dividing the latest published annual deflator by the deflator for the previous year.

1. The first adjustment is made by multiplying the implementation cost estimate by the latest inflation factor. The result is the adjusted implementation cost estimate.

2. Subsequent adjustments are made by multiplying the latest adjusted cost estimate by the latest inflation factor.

C. During the term of the VPDES permit, the owner or operator shall revise the implementation cost estimate concurrently with any revision made to the closure plan which increases the implementation cost. The revised implementation cost estimate shall be adjusted for inflation as specified in subdivisions B 1 and B 2 of this section.

D. The owner or operator may reduce the implementation cost estimate and the amount of financial assurance provided under this section, if it can be demonstrated that the cost estimate exceeds the cost of implementation of the closure plan. The owner or operator shall obtain the approval of the department prior to reducing the amount of financial assurance.

E. The owner or operator shall provide continuous coverage to implement the closure plan until released from financial assurance requirements by the department.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-90. Trust Agreement.

A. An owner or operator of a privately owned sewerage system may satisfy the requirements of this chapter by establishing an irrevocable trust fund that conforms to the requirements of this section and by submitting an originally signed duplicate of the trust agreement to the department. The trustee shall be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal agency or the State Corporation Commission (Commonwealth of Virginia).

B. The trust agreement shall be irrevocable and shall continue until terminated at the written direction of the grantor, the trustee, and the department, or by the trustee and the department if the grantor ceases to exist. Upon termination of the trust, all remaining trust property, less final administration expenses, shall be delivered to the grantor. The wording of the trust agreement shall be identical to the wording as follows, except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted. The trust agreement shall be accompanied by a formal letter of certification of acknowledgement as specified in this chapter.

TRUST AGREEMENT

Trust agreement, the "Agreement," entered into as of (date) by and between (name of the owner or operator), a (name of state) (insert "corporation," "partnership," "association," "proprietorship," or appropriate identification of type of entity), the "Grantor," and (name of corporate trustee), (insert "Incorporated in the state of ________" or "a national bank"), the "Trustee."

Whereas, the State Water Control Board of the Commonwealth of Virginia has established certain regulations applicable to the Grantor, requiring that an owner or operator of a private sewage treatment facility shall provide assurance that funds will be available when needed for implementation of a closure plan. The attached Schedule A contains the name and address of the facility covered by this trust agreement;

Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee;

Now, therefore, the Grantor and the Trustee agree as follows:

Section 1. Definitions. As used in this Agreement:

(a) The term "Grantor" means the owner or operator who enters into this Agreement and any successors or assigns of the Grantor.

(b) The term "Trustee" means the Trustee who enters into this Agreement and any successor Trustee.

Section 2. Establishment of Fund.

The Grantor and the Trustee hereby establish a trust fund, the "Fund," for the benefit of the Department of Environmental Quality of the Commonwealth of Virginia. The Grantor and the Trustee intend that no third party have access to the Fund. Payments made by the provider of financial assurance pursuant to the Director of the Department of Environmental Quality's instruction are transferred to the Trustee and are referred to as the Fund, together with all earnings and profits thereon, less any payments or distributions made by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor as provider of financial assurance, any payments necessary to discharge any liability of the Grantor established by the Department of Environmental Quality.

Section 3. Payment for Implementation of the Closure Plan.

The Trustee shall make payments from the Fund as the Director, Department of Environmental Quality shall direct, in writing, to provide for the payment of the costs of implementation of the closure plan for the facility covered by the financial assurance mechanism identified in this Agreement.

The Trustee shall reimburse the Grantor, or other persons as specified by the Department of Environmental Quality, from the Fund for implementation of the closure plan in such amounts as the Director of the Department of Environmental Quality shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as the Director of the Department of Environmental Quality specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.

Section 4. Payments Comprising the Fund.

Payments made to the Trustee for the Fund shall consist of cash and securities acceptable to the Trustee.

Section 5. Trustee Management.

The Trustee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiaries and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that:

(i) Securities or other obligations of the Grantor, or any other operator of the facility, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 USC § 80a-2(a), shall not be acquired or held, unless they are securities or other obligations of the federal or a state government;

(ii) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the federal or state government; and

(iii) Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon.

Section 6. Commingling and Investment.

The Trustee is expressly authorized in its discretion:

(a) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and

(b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 USC § 80a-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion.

Section 7. Express Powers of Trustee.

Without in any way limiting the powers and discretions conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered:

(a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition;

(b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted;

(c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund;

(d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the federal or state government; and

(e) To compromise or otherwise adjust all claims in favor of or against the Fund.

Section 8. Taxes and Expenses.

All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund.

Section 9. Advice of Counsel.

The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any questions arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel.

Section 10. Trustee Compensation.

The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the Grantor.

Section 11. Successor Trustee.

The Trustee may resign or the Grantor may replace the Trustee, but such resignation or replacement shall not be effective until the Grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes administration of the trust in writing sent to the Grantor and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 9.

Section 12. Instructions to the Trustee.

All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in the attached Schedule B or such other designees as the Grantor may designate by amendment to Schedule B. The trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests and instructions by the Department of Environmental Quality to the Trustee shall be in writing, signed by the Director of the Department of Environmental Quality, and the Trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor or the Department of Environmental Quality hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or the Department of Environmental Quality, except as provided for herein.

Section 13. Irrevocability and Termination.

Subject to the right of the parties to amend this Agreement as provided in Section 17, this Trust shall be irrevocable and shall continue until terminated at the written direction of the Grantor and the Trustee, or by the Trustee and the Director of the Department of Environmental Quality, if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be delivered to the Grantor.

Section 14. Immunity and Indemnification.

The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor or the Department of Environmental Quality issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense.

Section 15. Choice of Law.

This Agreement shall be administered, construed, and enforced according to the laws of the Commonwealth of Virginia.

Section 16. Amendment of Agreement.

This Agreement may be amended by an instrument executed in writing executed by the Grantor, the Trustee, and the Director of the Department of Environmental Quality, Commonwealth of Virginia, or by the Trustee and the Director of the Department of Environmental Quality, Commonwealth of Virginia, if the Grantor ceases to exist.

Section 17. Annual Valuation.

The Trustee will annually, at the end of the month coincident with or preceding the anniversary date of establishment of the Fund, furnish the Grantor and to the Director of the Department of Environmental Quality, Commonwealth of Virginia, a statement confirming the value of the Trust. Any securities in the Fund will be valued at market value as of no more than 30 days prior to the date of the statement. The failure of the Grantor to object in writing to the Trustee within 90 days after the statement has been furnished to the Grantor and the Director of the Department of Environmental Quality, Commonwealth of Virginia will constitute a conclusively binding assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to matters disclosed in the statement.

Section 18. Interpretation.

As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement.

In Witness whereof the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals (if applicable) to be hereunto affixed and attested as of the date first above written. The parties below certify that the wording of this Agreement is identical to the wording specified in 9VAC25-650-90 B as such regulations were constituted on the date written above.

(Signature of Grantor)

(Name of the Grantor)

(Title)

Attest:

(Signature of Trustee)

(Name of the Trustee)

(Title)

(Seal)

(Signature of Witness)

(Name of Witness)

(Title)

(Seal)

CERTIFICATE OF ACKNOWLEDGMENT

State of ______________________________

County of ______________________________

On this (date), before me personally came (owner's or operator's representative) to me known, who, being by me duly sworn, did depose and say that she/he resides at (address), that she/he is (title) of (corporation), the corporation described in and which executed the above instrument; that she/he knows the seal of said corporation; that the seal affixed to such instrument is such corporate seal; that is was so affixed by order of the Board of Directors of said corporation; and that she/he signed her/his name thereto by like order.

(Signature of Notary Public)

(Name of Notary Public)

My Commission expires:___________________

SCHEDULE A

Name of Facility

Address of facility

Closure Cost Estimate

VPDES Permit Number

C. The irrevocable trust fund, when established, shall be funded for the full required amount of coverage, or funded for part of the required amount of coverage and used in combination with other mechanisms that provide the remaining required coverage. Schedule A of the trust agreement shall be updated within 60 days after a change in the amount of the approved cost estimate covered by the agreement.

D. If the value of the trust fund is greater than the required amount of coverage, the owner or operator may submit a written request to the department for release of the excess.

E. If other financial assurance as specified in this chapter is substituted for all or part of the trust fund, the owner or operator may submit a written request to the director for release of the excess.

F. Within 60 days after receiving a request from the owner or operator for release of funds as specified in subsection D or E of this section, the department will instruct the trustee to release to the owner or operator such funds, if any, that the department determines to be eligible for release and specifies in writing.

G. Whenever the cost estimate changes, 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 10 days of the change in the approved cost estimate, deposit a sufficient amount into the trust 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 department for release of the amount that is in excess of the cost estimate.

H. After beginning implementation of the closure plan, an owner or operator or any other person authorized to implement the closure plan may request reimbursement for implementation expenditures by submitting itemized bills to the department. Within 60 days after receiving bills for plan implementation activities, the department shall instruct the trustee to make reimbursements in those amounts as the department determines are in accordance with the closure plan or are otherwise justified.

I. The department shall agree to terminate the trust when:

1. The owner or operator substitutes alternate financial assurance as specified in this article; or

2. The department notifies the owner or operator that he is no longer required to maintain financial assurance for the implementation of the closure plan.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 36, Issue 6, eff. December 26, 2019; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-100. Surety bond.

A. An owner or operator may satisfy the requirements of this chapter by obtaining a surety bond that conforms to the requirements of this section and by submitting an originally signed duplicate of the bond to the department. The surety company issuing the bond shall be licensed to operate as a surety in the Commonwealth of Virginia and be among those listed as acceptable sureties on federal bonds in the latest Circular 570 of the U.S. Department of the Treasury.

B. The surety bond shall be on surety company letterhead and worded as follows, except that instructions in parentheses shall be replaced with the relevant information and the parentheses deleted.

PERFORMANCE BOND

Date bond executed: _____________

Period of coverage: _____________

Effective date: _____________

Principal: (legal name and address of owner or operator) _____________

Type of organization: (insert "individual" "joint venture," "partnership," "corporation," or appropriate identification of type of organization) _____________

State of incorporation (if applicable): _____________

Surety: (name(s) and business address) _____________

Scope of Coverage:

(List the name of and the address where the private sewage treatment facility assured by this mechanism is located. List the coverage guaranteed by the bond: operation, maintenance, and closure of the privately owned sewage treatment facility)

Penal sum of bond: $ _____________

Surety's bond number: _____________

Know All Persons by These Presents, that we, the Principal and Surety(ies), hereto are firmly bound to the Department of Environmental Quality, Commonwealth of Virginia, ("DEQ") in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sums jointly and severally only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sums only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum.

Whereas said Principal is required under § 62.1-44.18:3 of the State Water Control Law of the Code of Virginia to provide financial assurance to implement a plan to abate, control, prevent, remove, or contain any substantial or imminent threat to public health or the environment that is reasonably likely to occur if such facility ceases operations (closure plan);

Now, therefore, the conditions of the obligation are such that if the Principal shall faithfully implement the closure plan in accordance with the Director of the DEQ's instructions to implement the plan for the facility described above, or if the Principal shall provide alternate financial assurance, acceptable to DEQ and obtain the Director's written approval of such assurance, within 60 days after the date the notice of cancellation is received by the Director of the DEQ from the Surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect.

The Surety(ies) shall become liable on this bond when the Principal has failed to fulfill the conditions described above. Upon notification by the Director of the DEQ that the owner or operator has failed to fulfill the conditions above or that the DEQ has determined that the facility has ceased operations, the Surety(ies) shall either implement the closure plan or forfeit the full amount of the penal sum as directed by the Director of the DEQ under 9VAC25-650-140.

The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the penal sum shown on the face of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum.

The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the Director of the DEQ, Commonwealth of Virginia, 1111 East Main Street, Suite 1400, Richmond, Virginia 23219, provided, however, that cancellation shall not occur (1) during the 120 days beginning on the date of receipt of the notice of cancellation by the Principal and Director of the DEQ as shown on the signed return receipt; or (2) while a compliance procedure is pending.

In Witness Thereof, the Principal and Surety(ies) have executed this Bond and have affixed their seals on the date set forth above.

The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in 9VAC25-650-100 B as such regulations were constituted on the date this bond was executed.

PRINCIPAL

(Signature(s))

(Name(s))

(Title(s))

(Corporate seal)

CORPORATE SURETY(IES)

(Name and address)

State of Incorporation:

Liability limit: $ _______________

(Signature(s))

(Name(s) and title(s))

(Corporate seal)

(For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.)

Bond premium: $ ______________

C. Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.

D. The bond shall guarantee that the owner or operator or any other authorized person will:

1. Implement the closure plan in accordance with the approved closure plan and other requirements in any permit for the facility;

2. Implement the closure plan following an order to do so issued by the department or by a court.

E. The surety bond shall guarantee that the owner or operator shall provide alternate financial assurance as specified in this part within 60 days after receipt by the department of a notice of cancellation of the bond from the surety.

F. If the approved 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 part 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 department. Notice of an increase or decrease in the penal sum shall be sent to the department by certified mail within 60 days after the change.

G. 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 department. Cancellation cannot occur, however:

1. During the 120 days beginning on the date of receipt of the notice of cancellation by the department as shown on the signed return receipt; or

2. While an enforcement procedure is pending.

H. The surety shall provide written notification to the department by certified mail no less than 120 days prior to the expiration date of the bond, that the bond will expire and the date the bond will expire.

I. In regard to implementation of a closure plan either by the owner or operator, by an authorized third party, or by the surety, proper implementation of a closure plan shall be deemed to have occurred when the department determines that the closure plan has been completed. Such implementation shall be deemed to have been completed when the provisions of the facility's approved closure plan have been executed and the provisions of any other permit requirements or enforcement orders relative to the closure plan have been complied with.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 31, Issue 21, eff. July 30, 2015; Volume 34, Issue 13, eff. February 19, 2018; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-110. Letter of credit.

A. An owner or operator may satisfy the requirements of this chapter by obtaining an irrevocable standby letter of credit that conforms to the requirements of this section and by submitting an originally signed duplicate of the letter of credit to the department. The issuing institution shall be an entity that has the authority to issue letters of credit in the Commonwealth of Virginia and whose letter-of-credit operations are regulated and examined by a federal agency or the State Corporation Commission.

B. The letter of credit shall be on financial institution letterhead and worded as follows, except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted.

IRREVOCABLE STANDBY LETTER OF CREDIT

(Name and address of issuing institution)

Beneficiary:

Director

Department of Environmental Quality (DEQ)

P.O. Box 1105

Richmond, Virginia 23218

1111 East Main Street, Suite 1400

Richmond, Virginia 23218

Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No.________ in your favor, at the request and for the account of (owner or operator name) of (address) up to the aggregate amount of (in words) U.S. dollars, ($(insert dollar amount)), available upon presentation of

(1) your sight draft, bearing reference to this letter of credit, No._______ and

(2) your signed statement reading as follows:

"I certify that the amount of the draft is payable pursuant to regulations issued under authority of § 62.1-44.18:3 of the Code of Virginia."

This letter of credit may be drawn on to implement the closure plan for the facility identified below in the amount of (in words) ($(insert dollar amount)). (Name of facility and address of the facility assured by this mechanism, and number of hookups served by the system.)

This letter of credit is effective as of (date) and shall expire on (date), but such expiration date shall be automatically extended for a period of (at least the length of the original term) on (expiration date) and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify the Director of the DEQ and the owner or operator by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event that the owner or operator is so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by the Director of the DEQ and the owner or operator, as shown on the signed return receipt.

Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall submit the amount of the draft directly to DEQ in accordance with your instructions.

We certify that the wording of this letter of credit is identical to the wording required in 9VAC25-650-110 B as such regulations were constituted on the date shown immediately below.

Attest:

(Signature(s) and title(s) of official(s) of issuing institution)

(Date)

This credit is subject to (insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce," or "the Uniform Commercial Code").

C. 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 implementation of the closure plan. 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 expiration date, notify both the owner or operator and the department by certified mail of that decision. The 120-day period will begin on the date of receipt by the department as shown on the signed return receipt. Expiration cannot occur, however, while an enforcement procedure is pending. If the letter of credit is canceled by the issuing institution, the owner or operator shall obtain alternate financial assurance to be in effect prior to the expiration date of the letter of credit.

D. Whenever the approved 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 part 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 department. The issuing institution shall send the notice of an increase or decrease in the amount of the credit to the department by certified mail within 60 days of the change.

E. Following a determination by the department that the owner or operator has failed to provide alternate financial assurance within 60 days after the date the notice of cancellation is received by the owner or operator or has ceased operations at the facility or has failed to implement the closure plan in accordance with the approved plan or other permit or special order requirements, the department will draw on the letter of credit.

F. The owner or operator may cancel the letter of credit only if alternate financial assurance acceptable to the department is substituted as specified in this part or if the owner or operator is released by the department from the requirements of this chapter.

G. The department 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 implementation of the closure plan as specified in this part; or

2. The department notifies the owner or operator that he is no longer required by this part to maintain financial assurance for implementation of the closure plan for the facility.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 28, Issue 18, eff. June 6, 2012; Volume 31, Issue 21, eff. July 30, 2015; Volume 34, Issue 13, eff. February 19, 2018; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-120. Certificate of deposit.

A. An owner or operator may satisfy the requirements of this chapter, wholly or in part, by assigning all rights, title and interest of a certificate of deposit to the department, conditioned so that the owner or operator shall comply with the approved facility closure plan filed for the facility. The issuing institution shall be an entity that has the authority to issue certificates of deposit in the Commonwealth of Virginia and whose operations are regulated and examined by a federal agency or the State Corporation Commission (Commonwealth of Virginia). The owner or operator must submit the originally signed assignment and the originally signed certificate of deposit, if applicable, to the department.

B. The assignment shall be on financial institution letterhead and worded as follows, except that instructions in parentheses shall be replaced with the relevant information and the parentheses deleted.

ASSIGNMENT OF CERTIFICATE OF DEPOSIT ACCOUNT

City,______________________________ 20______________________________

FOR VALUE RECEIVED, the undersigned assigns all right, title and interest to the Virginia Department of Environmental Quality, Commonwealth of Virginia and its successors and assigns the Virginia Department of Environmental Quality the principal amount of the instrument, including all monies deposited now or in the future to that instrument, indicated below:

__If checked here, this assignment includes all interest now and hereafter accrued.

Certificate of Deposit Account No.

This assignment is given as security to the Virginia Department of Environmental Quality in the amount of ____________________ Dollars ($____________________).

Continuing Assignment. This assignment shall continue to remain in effect for all subsequent terms of the automatically renewable certificate of deposit.

Assignment of Document. The undersigned also assigns any certificate or other document evidencing ownership to the Virginia Department of Environmental Quality.

Additional Security. This assignment shall secure the payment of any financial assurance obligations of the (name of owner/operator) to the Virginia Department of Environmental Quality for closure activities at the (facility name and permit number) located (physical address).

Application of Funds. The undersigned agrees that all or any part of the funds of the indicated account or instrument may be applied to the payment of any and all financial assurance obligations of (name of owner/operator) to the Virginia Department of Environmental Quality for closure activities at the (facility name and address). The undersigned authorizes the Virginia Department of Environmental Quality to withdraw any principal amount on deposit in the indicated account or instrument including any interest, if indicated, and to apply it in the Virginia Department of Environmental Quality's discretion to fund closure at the (facility name) or in the event of (name of owner or operator)'s failure to comply with the regulation entitled Closure Plans and Demonstration of Financial Capability, 9VAC25-650-10 et seq. The undersigned agrees that the Virginia Department of Environmental Quality may withdraw any principal and/or interest from the indicated account or instrument without demand or notice. The undersigned agrees to assume any and all loss of penalty due to federal regulations concerning the early withdrawal of funds. Any partial withdrawal of principal or interest shall not release this assignment.

The party or parties to this Assignment set their hand or seals, or if corporate, has caused this assignment to be signed in its corporate name by its duly authorized officers and its seal to be affixed by authority of its Board of Directors the day and year above written.

SEAL

(Owner)

(Print name)

SEAL

(Owner)

(Print name)

THE FOLLOWING SECTION IS TO BE COMPLETED BY THE BRANCH OR LENDING OFFICE:

The signature(s) as shown above compare correctly with the name(s) as shown on record as owner(s) of the Certificate of Deposit indicated above. The above Assignment has been properly recorded by placing a hold in the amount of $____________________for the benefit of the Virginia Department of Environmental Quality.

__If checked here, the accrued interest on the Certificate of Deposit indicated above has been maintained to capitalize versus being mailed by check or transferred to a deposit account.

I certify that the wording of this Assignment is identical to the wording required in 9VAC25-650-120 B as such regulations were constituted on the date shown immediately below.

(Signature)

(Date)

(Print name)

(Title)

C. The amount of the certificate of deposit shall be at least equal to the current closure cost estimate for the facility for which the permit application has been filed or any part thereof not covered by other financial assurance mechanisms. The owner or operator shall maintain the certificate of deposit and assignment until all activities required by the approved facility closure plan have been completed.

D. 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 current closure cost estimate.

E. Following a determination by the department that the owner or operator has ceased operations at the facility or has failed to complete closure activities in accordance with the approved facility closure plan or other permit or special order, the department shall cash the certificate of deposit.

F. Whenever the approved closure cost estimate increases to an amount greater than the amount of the certificate of deposit, the owner or operator shall, within 60 days of the increase, cause the amount of the certificate of deposit to be increased to an amount at least equal to the new estimate or obtain other financial assurance as specified in this chapter to cover the increase. Whenever the cost estimate decreases, the owner or operator may reduce the amount of the certificate of deposit to the new estimate following written approval by the department. The owner or operator must submit a certificate of deposit and assignment reflecting the new cost estimate within 60 days of the change in the cost estimate.

G. The department shall return the original assignment and certificate of deposit, if applicable, to the issuing institution for termination when:

1. The owner or operator substitutes acceptable alternate financial assurance for implementation of the closure plan as specified in this chapter; or

2. The department notifies the owner or operator that the owner or operator is no longer required by this chapter to maintain financial assurance for implementation of the closure plan for the facility.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 31, Issue 21, eff. July 30, 2015; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-124. Corporate financial test.

A. 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 plan 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 plan cost estimates and any other environmental obligations covered by a financial test as described in subdivision 3 of this subsection.

2. Reporting requirements.

a. To demonstrate that the owner or operator 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 or managing member and worded as specified in 9VAC25-650-124 B.

(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 (a) of this subdivision A 2 a (2):

(a) To be eligible to use the financial test, the owner's or operator's financial statements referenced in subdivision 2 a (2) of this subsection 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 part.

(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 or managing member'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 subsection 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 or managing member'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 or managing member's letter should be adjusted.

(5) A certification from the corporation's chief financial officer or managing member stating the method for funding closure costs and the amount currently designated for closure costs in the corporation's financial statements worded as specified in 9VAC25-650-124 B.

b. 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 a of this subsection at least 60 days before the date that the former assurance expires.

c. After the initial submission of items specified in subdivision 2 a of this subsection, the owner or operator shall update the information and submit updated information to the director within 90 days following the close of the owner's or operator's fiscal year. This information must consist of all five items specified in subdivision 2 a of this subsection.

d. The owner or operator is no longer required to submit the items specified in subdivision 2 a of this subsection when:

(1) The owner or operator substitutes alternate financial assurance as specified in this part; or

(2) The owner or operator is released from the requirements of this part by the director.

e. If the owner or operator no longer meets the requirements of subdivision 1 of this subsection, the owner or operator shall, within 120 days following the close of the owner's or operator's fiscal year, obtain alternative financial assurance that meets the requirements of this part, 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 require reports of financial condition at any time from the owner or operator in addition to those specified in subdivision 2 a of this subsection. 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 subsection, the owner or operator shall provide alternate financial assurance as specified in this part 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) (a) of this subsection). 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 part within 30 days after notification of the disallowance.

3. Calculation of costs to be assured. When calculating the current cost estimates for closure, and any other environmental obligations assured by a financial test referred to in subdivision 1 of this subsection, the owner or operator must include cost estimates required for closure plans for privately owned sewerage systems under this part, as well as cost estimates required for the following environmental obligations, if it assures them through 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; hazardous waste treatment, storage, and disposal facilities under 40 CFR Parts 264 and 265; and municipal solid waste management facilities under 9VAC20-70.

B. The wording of the letter from the chief financial officer or managing member shall be as follows, except that instructions in parentheses shall be replaced with the relevant information and the parentheses deleted.

Dear (Sir, Madam):

I am the chief financial officer or managing member of (name and address of firm). This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in 9VAC25-650-124 of the Closure Plans and Demonstration of Financial Capability Regulation (9VAC25-650) ("Regulation").

(Fill out the following four paragraphs regarding privately owned sewerage systems (9VAC25-650), solid waste, regulated medical waste, yard waste composting, hazardous waste, underground injection (regulated under the federal program in 40 CFR Part 144, or its equivalent in other states), petroleum underground storage (9VAC25-590), above ground storage facilities (9VAC25-640) and PCB storage (regulated under 40 CFR Part 761) facilities and associated cost estimates. If your firm has no facilities that belong in a particular paragraph, write "None" in the space indicated. For each facility, include its name, address, permit number, if any, and current closure, post-closure care, corrective action or any other environmental obligation cost estimates. Identify each cost estimate as to whether it is for closure, post-closure care, corrective action or other environmental obligation.)

1. This firm is the owner or operator of the following facilities for which financial assurance is demonstrated through the corporate test specified in 9VAC25-650-124 or its equivalent in other applicable regulations. The current closure plan cost estimates covered by the test are shown for each facility:

2. This firm guarantees, through the corporate guarantee specified in 9VAC25-650-124, the financial assurance for the following facilities owned or operated by subsidiaries of this firm. The current closure plan cost estimates so guaranteed are shown for each facility:

3. This firm, as owner or operator or guarantor, is demonstrating financial assurance for the following facilities through the use of a financial test. The current closure plan cost estimates covered by such a test are shown for each facility:

4. This firm is the owner or operator of the following privately owned sewerage systems for which financial assurance is not demonstrated through the financial test or any other financial assurance mechanism. The current closure plan cost estimates for the facilities which are not covered by such financial assurance are shown for each facility:

This firm (insert "is required" or "is not required") to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal year.

The fiscal year of this firm ends on (month, day). The figures for the following items marked with an asterisk are derived from this firm's independently audited, year-end financial statements for the latest completed fiscal year, ended (date).

(Fill in Alternative I if the criteria of 9VAC25-650-124 A 1 a (1) are used. Fill in Alternative II if the criteria of 9VAC25-650-124 A 1 a (2) are used. Fill in Alternative III if the criteria of 9VAC25-650-124 A 1 a (3) are used.)

ALTERNATIVE I

ALTERNATIVE II

ALTERNATIVE III

I hereby certify that the wording of this letter is identical to the wording in 9VAC25-650-124 B of the Closure Plans and Demonstration of Financial Capability Regulation as such regulation is constituted on the date shown immediately below.

C. Certification of funding.

CERTIFICATION OF FUNDING

I certify the following information details the current plan for funding closure at the privately owned sewerage systems listed below.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 31, Issue 21, eff. July 30, 2015.

9VAC25-650-127. Corporate guarantee.

A. An owner or operator may meet the requirements of this part by obtaining a written guarantee, referred to in this section as "corporate guarantee." The guarantor shall be the direct or higher-tier parent corporation or direct or higher-tier parent company of the owner or operator, a firm whose parent corporation or parent company is also the parent corporation or parent company 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 9VAC25-650-124 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 9VAC25-650 127 G. The corporate guarantee shall accompany the items sent to the director as specified in 9VAC25-650-124 A 2. A copy of the guarantee and other items listed in of 9VAC25-650-124 A 2 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. 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 of a facility covered by the corporate guarantee in accordance with the closure 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 as required (performance guarantee); or

b. Establish a fully funded trust fund as specified in 9VAC25-650-90 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 part 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 within 120 days of issuing the cancellation notice.

E. If a corporate guarantor no longer meets the requirements of subdivision 1 of 9VAC25-650-124, 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.

G. The wording of the corporate guarantee shall be as follows, except that instructions in parentheses shall be replaced with the relevant information and the parentheses deleted.

CORPORATE GUARANTEE

Guarantee made this (date) by (name of guaranteeing entity), a business corporation or company organized under the laws of the state of (insert name of state), herein referred to as guarantor. This guarantee is made on behalf of the (owner or operator) of (business address), which is (one of the following: "our subsidiary"; "a subsidiary of (name and address of common parent corporation or parent company) of which guarantor is a subsidiary"; or "an entity with which the guarantor has a substantial business relationship, as defined in Part I of the Closure Plan and Demonstration of Financial Capability Regulation 9VAC25-650") to the Virginia Department of Environmental Quality ("Department"), obligee, on behalf of the (owner or operator) of (business address).

Recitals:

1. Guarantor meets or exceeds the financial test criteria in 9VAC25-650-124 and agrees to comply with the reporting requirements for guarantors as specified in 9VAC25-650-127 of the Closure Plan and Demonstration of Financial Capability Regulation ("Regulation").

2. (Owner or operator) owns or operates the following sewage treatment plant(s) covered by this guarantee: (List for each facility: name, address, and permit number, if any.)

3. "Closure plans" as used below refer to the plans maintained as required by the Regulation.

4. For value received from (owner or operator), guarantor guarantees to the Department that in the event that (owner or operator) fails to perform closure of the above facility(ies) in accordance with the closure plan and other (requirements of the) permit or (the order) whenever required to do so, the guarantor shall do so or establish a trust fund as specified in 9VAC25-650-90 in the name of (owner or operator) in the amount of the current closure plan cost estimates.

5. Guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor shall send within 90 days, by certified mail, notice to the director and to (owner or operator) that guarantor intends to provide alternate financial assurance as specified in 9VAC25-650, in the name of (owner or operator). Within 120 days after the end of such fiscal year, the guarantor shall establish such financial assurance unless (owner or operator) has done so.

6. The guarantor agrees to notify the director by certified mail of a voluntary or involuntary proceeding under Title 11 (Bankruptcy) of the United States Code, naming guarantor as debtor, within 10 days after commencement of the proceeding.

7. Guarantor agrees that within 30 days after being notified by the director of a determination that guarantor no longer meets the financial test criteria or that guarantor is disallowed from continuing as a guarantor of closure, guarantor shall establish alternate financial assurance as specified in 9VAC25-650 in the name of (owner or operator) unless (owner or operator) has done so.

8. Guarantor agrees to remain bound under this guarantee notwithstanding any or all of the following: amendment or modification of the closure plan, amendment or modification of the permit, amendment or modification of the order, the extension or reduction of the time of performance of closure, or any other modification or alteration of an obligation of the owner or operator pursuant to the Regulation or § 62.1-44.18:3 of the Code of Virginia.

9. Guarantor agrees to remain bound under this guarantee for so long as (owner or operator) shall comply with the applicable financial assurance requirements of the Regulation for the above-listed facilities, except as provided in paragraph 10 of this agreement.

10. (Insert the following language if the guarantor is (a) a direct or higher-tier parent corporation or company or (b) a firm whose parent corporation or parent company is also the parent corporation or parent company of the owner or operator:) Guarantor may terminate this guarantee by sending notice by certified mail to the Director of the Department of Environmental Quality and to the (owner or operator), provided that this guarantee may not be terminated unless and until (the owner or operator) obtains and the director approves alternate financial assurance coverage complying with the requirements of 9VAC25-650. (Insert the following language if the guarantor is a firm qualifying as a guarantor due to its "substantial business relationship" with the owner or operator:) Guarantor may terminate this guarantee 120 days following the receipt of notification of cancellation through certified mail by the director and by (the owner or operator).

11. Guarantor agrees that if (owner or operator) fails to provide alternate financial assurance as specified in the Regulation and obtain written approval of such assurance from the director within 90 days after a notice of cancellation by the guarantor is received by the director from guarantor, guarantor shall provide such alternate financial assurance in the name of (owner or operator).

12. Guarantor expressly waives notice of acceptance of this guarantee by the Department or by (owner or operator). Guarantor also expressly waives notice of amendments or modifications of the closure plan and of amendments or modifications of the facility permit(s) or order.

I hereby certify that the wording of this guarantee is identical to the wording in 9VAC25-650-127 G of the Closure Plan and Demonstration of Financial Capability Regulation as such regulation was constituted on the date shown immediately below.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 31, Issue 21, eff. July 30, 2015.

9VAC25-650-130. Multiple financial mechanisms.

An owner or operator may satisfy the requirements of this chapter by establishing more than one financial mechanism per facility, except that mechanisms guaranteeing performance, rather than payment, may not be combined with other mechanisms.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001.

9VAC25-650-140. Drawing on financial assurance mechanism.

A. The department shall require the surety or institution issuing a letter of credit or certificate of deposit to submit to the department the amount of funds stipulated by the department, up to the limit of funds provided by the financial assurance mechanism when:

1. The owner or operator fails to establish alternate financial assurance within 60 days after receiving notice of cancellation of the surety bond, letter of credit or certificate of deposit; or

2. The conditions of subsection B of this section are satisfied.

B. The b department makes a final determination that a privately owned sewerage system has ceased operation.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-150. Waiver of requirements.

A. The department may waive the filing of the closure plan required pursuant to this chapter for any person who operates a privately owned sewerage system or treatment works subject to this regulation that was permitted prior to January 1, 2001, and discharges less than 5,000 gallons per day upon a finding that such person has not violated any regulation of the board or order of the department, any condition of a permit to operate the facility, or any provision of the State Water Control Law, § 62.1-44.2 et seq. of the Code of Virginia for a period of not less than five years.

B. No waiver shall be approved by the department until after the governing body of the locality in which the facility is located approves the waiver after a public hearing.

C. The department may revoke a waiver at any time for good cause.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-160. Release of the owner or operator from the financial assurance requirements.

A. Where the closure plan results in the termination of discharge to state waters and a VPDES permit for the discharge is no longer required, the department shall verify, within 60 days after receiving certification from the owner or operator that the closure plan has been completed in accordance with the requirements of the approved closure plan, permit or other order, whether the closure plan has been completed. Unless the department has reason to believe that the closure plan has not been implemented in accordance with the appropriate plan or other requirements, the department shall notify the owner or operator in writing that the owner or operator is no longer required to maintain financial assurance for the particular facility. Such notice shall release the owner or operator only from the requirements for financial assurance for the facility; it does not release the owner or operator from legal responsibility for meeting the facility closure standards. If no written notice of termination of financial assurance requirements or of failure to properly implement the closure plan is received by the owner or operator within 60 days after certifying proper implementation of the closure plan, the owner or operator may request the department for an immediate decision in which case the department shall respond within 10 days after receipt of such request.

B. Where a VDPES permit for the facility is no longer required under State Water Control Law, the department shall notify the owner or operator in writing that the owner or operator is no longer required to maintain financial assurance for the facility. Such notice shall release the owner or operator only from the requirements for financial assurance for the facility.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-170. Cancellation or renewal by a provider of financial assurance.

A. Except as otherwise provided, a provider of financial assurance may cancel or fail to renew an assurance mechanism by sending a notice of termination by certified mail to the owner or operator. Termination of a surety bond or a letter of credit may not occur until 120 days after the date on which the owner or operator receives the notice of termination, as evidenced by the return receipt.

B. If a provider of financial assurance cancels or fails to renew for reasons other than incapacity of the provider as specified in 9VAC25-650-180, the owner or operator shall obtain alternate coverage as specified in this section and shall submit to the department the appropriate original forms listed in 9VAC25-650-90, 9VAC25-650-100, 9VAC25-650-110, or 9VAC25-650-120 documenting the alternate coverage within 60 days after receipt of the notice of termination. If the owner or operator fails to obtain alternate coverage within 60 days after receipt of the notice of termination, the owner or operator shall immediately notify the department of such failure and submit:

1. The name and address of the provider of financial assurance;

2. The effective date of termination; and

3. A copy of the financial assurance mechanism subject to the termination maintained in accordance with this chapter.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 31, Issue 21, eff. July 30, 2015; Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-180. Incapacity of owners or operators, or financial institution.

A. An owner or operator shall notify the department by certified mail of the commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming the owner or operator as debtor, within 10 days after commencement of the proceeding.

B. An owner or operator who fulfills the requirements of 9VAC25-650-50 D by obtaining a trust fund, a letter of credit, a surety bond, or certificate of deposit will be deemed to be without the required financial assurance 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 a surety bond, letter of credit, or certificate of deposit to issue such mechanisms. The owner or operator shall establish other financial assurance within 60 days of such event.

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 39, Issue 5, eff. November 23, 2022.

9VAC25-650-190. (Repealed.)

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; repealed, Virginia Register Volume 31, Issue 21, eff. July 30, 2015.

9VAC25-650-200. Notices to the Department of Environmental Quality.

All requirements of this chapter for notification to the Department of Environmental Quality shall be addressed as follows:

Statutory Authority

§§ 62.1-44.15 and 62.1-44.18:3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 18, Issue 4, eff. December 5, 2001; amended, Virginia Register Volume 28, Issue 18, eff. June 6, 2012; Volume 34, Issue 13, eff. February 19, 2018; Volume 39, Issue 5, eff. November 23, 2022.