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 ' ------- -2- 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. ------- -3- 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 ------- ------- |