United States offjce of So|id Waste
Environmental Protection and Emergency Response EPA/530-SW-91-007
A9encV (OS-305) June 1991
Office of Solid Waste ~~ ~~ "
v°/EPA Environmental
Fact Sheet
Proposed Revisions to the
Subtitle C Financial
Responsibility Requirements
The Environmental Protection Agency (EPA) is proposing
revisions to the financial responsibility requirements for closure and
post-closure care and for third-party liability coverage under Subtitle
C of the Resource Conservation and Recovery Act (RCRA). The
financial responsibility requirements provide mechanisms that
owners and operators of hazardous waste management facilities
must use to demonstrate that sujficientjunds are available to pay
for all their hazardous waste management operations.
Background
EPA requires owners and operators of hazardous waste
management facilities to be able to demonstrate financial assurance
to cover all closure and post-closure costs. Such assurance must
cover costs stemming from completion of all operations, monitoring
and maintenance costs after the facility closes, and liability insurance
to cover third-party damages that may arise from accidents or waste
mismanagement.
mismanagement.
EPA's current regulations allow facilities to use a corporate
financial test to demonstrate their ability to cover these costs Owners
and operators who cannot meet the test's requirements must use other
instruments to demonstrate their financial assurance, such as a trust
fund or a letter of credit.
Action
EPA is proposing to amend several aspects of the financial
responsibility requirements. These include revising the corporate
financial test, expanding the financial assurance instruments
streamlining closure deed notification, developing an automated
financial reporting system, and revising third-party liability coverage
The following table details these proposed changes '
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REVISIONS TO THE CORPORATE FINANCIAL TEST
Current Regulations Proposed Changes
Owners and operators: • Modify the net-worth requirement.
• must have net working capital amd tangible net-worth • Eliminate the net-working-capital multiples and bond-
at least six times the sum of the costs being covered rating alternative of both closure and post-closure care
by the financial test, and third-party liability.
• may use a bond-rating alternative, and • Amend the current financial ratio requirement of the
• must meet certain ratio requirements for closure and financial tests for closure and post-closure care.
post-closure costs.
EXPANSION OF FINANCIAL ASSURANCE INSTRUMENTS
Current Regulations Proposed Changes
The September 1,1988, rulemaking expanded the Extend the availability of the non-parent guarantee
instruments available to demonstrate third-party liability to demonstrate financial assurance for closure and post-
coverage to include the non-parent corporate guarantee closure costs.
mechanism. This mechanism allows a company other
than the parent corporation to provide a guarantee if the
company has a "substantial business relationship" with
the owner or operator.
DEED NOTIFICATION REQUIREMENT
Current Regulations Proposed Changes
• EPA may release owners and operators from financial Condition the release from financial responsibility
responsibility 60 days after receiving certification that requirements upon the deed certification. This will
closure has been completed in accordance with the ensure better compliance with the deed notification
approved closure plan. requirement
• Owners and operators of closing land disposal facilities
must file a notation on the deed within 60 days to
indicate to future owners that the property has been
used as a hazardous waste management facility.
DEVELOPMENT OF AUTOMATED FINANCIAL REPORTING SYSTEM
Current Regulations Proposed Changes
Tracking financial responsibility requirements has Develop an automated financial system that, when
become increasingly complex for regions and states due linked with public data bases, could perform many
to additional financial assurance mechanisms and activities, including updating cost estimates for
multistate firms. inflation and calculating the financial test.
REVISIONS TO THIRD-PARTY LIABILITY COVERAGE
Current Regulations Proposed Changes
The September 1,1988, final rule established a • Revise the claims reporting requirement
requirement for third-party liability claims allowing • Change the standby trust provisions for third-party
the use of a letter of credit to demonstrate third- liability coverage.
party liability coverage.
Conclusion
The portions of this proposed rule revising the corporate financial test
would affect all permitted and interim-status facilities that use the
current financial test to demonstrate financial assurance. Authorized
states that allow the financial test as a mechanism would be required
to adopt the revised test, since it is more stringent than the current
test.
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Public Comment
EPA is requesting public comment on this proposed rule.
Comments should be sent to EPA within 60 days of the Federal
Register notice's publication date. For instructions on submitting
written comments, please see the Federal Register notice. It is
available for free by calling the RCRA Hotline or by visiting EPAs
RCRA Docket in Washington, D.C.
For More Information
For further information, or to order a copy of the Federal
Register notice, please call the RCRA Hotline Monday through
Friday, 8:30 a.m. to 7:30 p.m. EST. The Hotline telephone
numbers are:
National toll-free: (800) 424-9346
For the hearing impaired (TDD): (800) 553-7672
Washington, D.C., area: (703) 920-9810
Washington, D.C., area (TDD): (703) 486-3323
Please send all written requests to:
RCRA Information Center (OS-305)
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
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