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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