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-------
III-6
3. Arrangements for the Financial Test. The only outside arrangements
that must be made for the financial test are with an independent certified
public accountant. Because the vast majority of owners or operators who will
select the financial test will already have their financial statements
independently audited, no explanation of how to select an independent
accountant is necessary.
4. Submission of Documents to EPA. To use the financial test as a
means of satisfying financial requirements, owners or operators must submit
the following:
a) Chief Financial Officer's Letter Including Data from Audited
Financial Statements. The owner or operator must submit to the Regional
Administrator a letter signed by its CHIEF FINANCIAL OFFICER. The letter
must be worded and include the data as specified in the regulations in force
on the date of submission. A copy of the required wording as it currently
appears in the regulations is included as Attachment III-3.
The letter must specify the EPA Identification Number, name, and address
of all facilities covered by the financial test. If the owner or operator is
using the financial test to establish financial assurance for closure or
post-closure care as well as liability coverage, the same letter must be used
for both purposes.
Owners or operators using the financial test to demonstrate satisfaction
of both liability coverage and closure or post-closure care financial
requirements must fill in four paragraphs regarding facilities and closure
and/or post-closure cost estimates. The owner or operator must list in the:
• First paragraph, all the owner's or operator's
facilities which are assured for closure or
post-closure care by the financial test in an EPA-
administered financial responsibility program.
• Second paragraph, all facilities owned or
operated by subsidiaries which the owner or
operator has guaranteed through the corporate
guarantee for closure or post-closure care in an
EPA-administered financial responsibility program.
• Third paragraph, facilities of the owner or
operator or its subsidiaries for which the owner or
operator has demonstrated financial assurance for
closure or post-closure care by satisfaction of a
financial test or corporate guarantee in a State
program of financial responsibility that has
received INTERIM OR FINAL AUTHORIZATION.
-------
III-7
• Fourth paragraph, all the owner's or operator's
facilities for which financial assurance for
closure or post-closure care has not been
demonstrated to EPA or a State because they are
located in a state with interim authorization, but
without effective financial responsibility
requirements.
For each facility listed in one of the preceding paragraphs, the owner or
operator must include its EPA Identification Number, name, address, and
current closure and/or post-closure cost estimates. Each cost estimate must
be identified as for either closure or post-closure care.
The chief financial officer may not add closure or post-closure cost
estimates included as liabilities to tangible net worth if liability coverage
alone is being satisfied by the financial test. The cost estimates may be
included as liabilities only if the financial test is being used for closure
and post-closure care assurance.
b) Accountant's Report on Examination. The owner or operator
must submit a copy of the independent certified public accountant's REPORT ON
EXAMINATION of the year-end financial statements for the latest complete
fiscal year. This is the standard report containing the auditor's opinion
which accompanies the annual report. There is no EPA required form for this
report, but examples are given in Chapter VII of the manual for Financial
Assurance for Closure and Post-Closure Care.
c) Special Report. The owner or operator must submit a SPECIAL
REPORT from an independent certified public accountant to the Regional
Administrator which contains the accountant's confirmation that the financial
data contained in the letter from the chief financial officer can be derived
from the independently audited year-end financial statements and footnotes for
the latest complete fiscal year. The special report must also state that no
matters came to the attention of the independent certified public account
which caused him to believe that the information in the chief financial
officer's letter should be adjusted. There is no required form for the
special report, but a sample special report is shown in Attachment III-4.
5. Updating and Maintaining Coverage. The owner or operator must
submit updated information annually within 90 days of the close of the owner's
or operator's fiscal year. The owner or operator must satisfy all of the
financial test criteria at each annual update. As with the initial
submission, the updated information consists of the letter from the Chief
Financial Officer, the accountant's report on examination, and the special
report from the accountant. The letter from the chief financial officer must
exactly follow the wording shown in Attachment III-3.
If the year-end financial statements indicate that the owner or operator
is still qualified to use the financial test, but can no longer completely
cover the amount of the annual aggregate liability coverage requirements, the
-------
III-8
firm may wish to combine liability insurance with the financial test to
provide the necessary coverage. This situation would occur if the firm could
not meet requirement B of Exhibits III-2 and III-3, but could meet all other
financial test requirements. However, if the year-end financial statements
indicate that the financial status of the owner or operator has changed so
that it no longer can satisfy the other requirements of the financial test,
the owner or operator must obtain insurance for the entire amount of annual
aggregate liabilities. This situation would occur if the firm could not meet
requirements A or C or D of Exhibits III-2 or III-3, or any of the other
financial test requirements. In either case, evidence of insurance must be
submitted to the EPA Regional Administrator within 90 days after the close of
the firm's fiscal year.
The owner or operator must inform the Regional Administrator within 10
days after being named as a debtor in a bankruptcy proceeding.
6. Release from RCRA Liability Coverage Requirements. To obtain
release from the liability coverage requirements, the owner or operator must
submit to the Regional Administrator certification that all covered facilities
have been closed in accordance with the specifications in each approved
closure plan. The certification must be supplied by both the owner or
operator and by an independent registered professional engineer.
7. Permitted Facility Requirements. A new PERMITTED FACILITY must
submit the letter from the chief financial officer and the reports from an
independent certified public accountant at least 60 days before the date on
which hazardous waste is first received for treatment, storage, or disposal.
There is no provision for extending this deadline to accomodate firms whose
fiscal year ends ninety days before. Requirements for EXISTING FACILITIES
are described in Section A.8 of Chapter II.
B. REGIONAL OFFICE RESPONSIBILITIES
This section outlines the duties of the EPA Regional Office in reviewing
the submission of financial data and handling subsequent contingencies. A
summary checklist is provided by Attachment III-2 at the end of this chapter.
I. Qualifications of Accountant. EPA personnel should first confirm
that the independent accountant responsible for preparing the report on
examination and special report is licensed by a state as a. certified public
accountant. Staff can check the credentials of the accountant by contacting
the State Board of Accountancy in the state where the accountant resides. The
State Boards are listed in Appendix B-4 of the manual for Financial Assurance
for Closure and Post-Closure Care.
2. Conformity to Other Requirements
a) Chief Financial Officer's Letter. EPA personnel should review
the letter from the chief financial officer and verify that it is complete and
accurate. The firm should be contacted to verify that the signatory of the
-------
III-9
letter is the chief financial officer -- the person required to sign SEC
FORM 10-K or the equivalent. The financial test criteria should be applied
to the annual aggregate liability coverage requirements, which are $2 million
per year for sudden accidental occurrences, $6 million per year for nonsudden
accidental occurences, or $8 million per year in combination, or the portion
thereof that is not covered by liability insurance. If any of the criteria
for the financial test are not met, or if anything is missing from the letter,
the Regional Administrator should immediately notify the owner or operator and
ensure that liability insurance is obtained or proper submissions made.
If the financial test is also being used to provide financial coverage of
closure or post-closure costs, the same letter from the chief financial
officer must be submitted for both purposes. In this case, the criteria of
the financial test are applied to the sum of the annual aggregate liability
coverage requirements and the closure or post-closure cost estimates covered
by the financial test.
If there is any reason to question the validity of the financial data, the
Regional Administrator may want to request the audited financial statements
from'the firm, or obtain the Form 10-K from the U.S. Securities and Exchange
Commission (SEC) (see Section C, Sources of Further Information). MOODY'S
or STANDARD AND POOR'S bond guides may be checked to verify that the bond
ratings are as claimed. Major libraries (public and university) as well as
libraries in Regional Offices of the SEC should have current editions of the
bond rating guides. The reference staff of any library will know where the
nearest copies are held.
To assist in future evaluations of the owner's or operator's submissions,
it is strongly recommended that the Regional staff establish a file of data
taken directly from the chief financial officer's letter for each owner or
operator. Exhibit III-4 is an example of such a file. The use of the file
will be described in Section 3 below.
b) Review of the Accountant's Opinion of the Financial Statements.
EPA personnel should next determine what kind of opinion was expressed in the
accountant's report on examination: UNQUALIFIED OPINION, Qualified Opinion,
or Adverse Opinion; or if there was a Disclaimer of Opinion.
An Unqualified Opinion can be recognized because it consists of two short
paragraphs expressing no doubts about the financial statements. See
Attachment VII-4 of the manual for Financial Assurance for Closure and
Post-Closure Care for two examples of Unqualified Opinions.
-------
111-10
EXHIBIT 111-4
SAMPLE FILE ON OWNER OR OPERATOR
DATE OF
CLOSE OF FISCAL YEAR
Owner/Operator
Initial Second Third
Year Year Year
1. Annual Aggregate Liability Coverage
Requirements and total closure and
post-closure cost estimates if
applicable
2. Bond Rating
3. Total Liabilities
4. Tangible Net Worth
5. Net Worth
6. Current Assets
7. Current Liabilities
8. Net Working Capital
9. Sum of Net Income, Depreciation,
Depletion, and Amortization
10. Total assets in U.S.
11. Total assets
12. Line 4 divided by Line 1
13. Line 8 divided by Line 1
14. Line 10 divided by Line 11
15. Line 10 divided by Line 1
-------
III-9
letter is the chief financial officer -- the person required to sign SEC
FORM 10-K or the equivalent. The financial test criteria should be applied
to the annual aggregate liability coverage requirements, which are $2 million
per year for sudden accidental occurrences, $6 million per year for nonsudden
accidental occurences, or $8 million per year in combination, or the portion
thereof that is not covered by liability insurance. If any of the criteria
for the financial test are not met, or if anything is missing from the letter,
the Regional Administrator should immediately notify the owner or operator and
ensure that liability insurance is obtained or proper submissions made.
If the financial test is also being used to provide financial coverage of
closure or post-closure costs, the same letter from the chief financial
officer must be submitted for both purposes. In this case, the criteria of
the financial test are applied to the sum of the annual aggregate liability
coverage requirements and the closure or post-closure cost estimates covered
by the financial test.
If there is any reason to question the validity of the financial data, the
Regional Administrator may want to request the audited financial statements
from the firm, or obtain the Form 10-K from the U.S. Securities and Exchange
Commission (SEC) (see Section C, Sources of Further Information). MOODY'S
or STANDARD AND POOR'S bond guides may be checked to verify that the bond
ratings are as claimed. Major libraries (public and university) as well as
libraries in Regional Offices of the SEC should have current editions of the
bond rating guides. The reference staff of any library will know where the
nearest copies are held.
To assist in future evaluations of the owner's or operator's submissions,
it is strongly recommended that the Regional staff establish a file of data
taken directly from the chief financial officer's letter for each owner or
operator. Exhibit III-4 is an example of such a file. The use of the file
will be described in Section 3 below.
b) Review of the Accountant's Opinion of the Financial Statements.
EPA personnel should next determine what kind of opinion was expressed in the
accountant's report on examination: UNQUALIFIED OPINION, Qualified Opinion,
or Adverse Opinion; or if there was a Disclaimer of Opinion.
An Unqualified Opinion can be recognized because it consists of two short
paragraphs expressing no doubts about the financial statements. See
Attachment VII-4 of the manual for Financial Assurance for Closure and
Post-Closure Care for two examples of Unqualified Opinions.
-------
III-10
EXHIBIT 111-4
SAMPLE FILE ON OWNER OR OPERATOR
DATE OF
CLOSE OF FISCAL YEAR
Owner/Operator
Initial Second Third
Year Year Year
1. Annual Aggregate Liability Coverage
Requirements and total closure and
post-closure cost estimates if
applicable
2. Bond Rating
3. Total Liabilities
4. Tangible Net Worth
5. Net Worth
6. Current Assets
7. Current Liabilities
8. Net Working Capital
9. Sum of Net Income, Depreciation,
Depletion, and Amortization
10. Total assets in U.S.
11. Total assets
12. Line 4 divided by Line 1
13. Line 8 divided by Line 1
14. Line 10 divided by Line 11
15. Line 10 divided by Line 1
-------
III-ll
EXHIBIT 111-4 (continued)
SAMPLE FILE ON OWNER OR OPERATOR
16. Line 9 divided by Line 3
17. Line 6 divided by Line 7
18. Line 3 divided by Line 5
19. Qualified Auditor's Opinion?
Initial
Year
Second
Year
Third
Year
NOTES:
[Adverse Business Press Releases, Competitive Problems, Bond Ratings Drop]
-------
111-12
Qualified Opinions express some reservations by the accountant that the
financial statements fairly or completely represent the financial condition
and operating results of the owner or operator. Qualified Opinions are easily
recognized because the final paragraph of the opinion will usually begin with
"In our opinion, subject to ...", or "in our opinion, except for...."
"Subject to" Qualified Opinions are given when the accountant believes the
financial statements only represent fairly the economic condition of the owner
or operator subject to the outcome of certain unforeseeable events. Examples
of "Subject to" Qualified Opinions are given in Attachments VII-7, VII-11, and
VII-12 of the manual for Financial Assurance for Closure and Post-Closure
Care.
"Except for" Qualified Opinions are given when the accountant believes the
financial statements, except for certain qualifications, represent fairly the
economic condition of the owner or operator. The phrase "except for" appears
somewhere in the opinion. Examples of "Except for" Qualified Opinions are
given in Attachments VII-8, VII-9, and VII-10 of -he manual for Financial
Assurance for Closure and Post-Closure Care.
An Adverse Opinion is given when the accountant believes that the
financial statements do not present fairly the financial condition of the
owner or operator. The auditor will clearly state this in the final paragraph
of the opinion. An example of an adverse opinion is given in Attachment
VIII-6 of the manual for Financial Assurance for Closure and Post-Closure
Care.
A Disclaimer of Opinion means that the accountant cannot express an
opinion on the financial statements of the owner or operator. A report on
examination will still be given, but the final paragraph will state that an
opinion could not be expressed on the financial statements. An example of a
disclaimer of opinion is given in Attachment VII-7 of the manual for Financial
Assurance for Closure and Post-Closure Care.
Some examples of conditions likely to result in a Qualified Opinion,
Adverse Opinion, and Disclaimer of Opinion are given in Exhibit III-5.
When evaluating accountants' opinions, EPA personnel should:
1. Immediately "pass" an owner or operator if it has received an
Unqualified Opinion and meets all the other requirements. Probably at least
907a of the owners and operators who use the financial test will have
Unqualified Opinions. Accountants generally render Unqualified Opinions to
most large companies. Since owners or operators must have a tangible net
worth of at least $10 million to qualify for the financial test, most
applicants will fall into this category.
2. Immediately disqualify an owner or operator from the financial
test if it has received either (1) an Adverse Opinion, or (2) a Disclaimer of
Opinion. None of the owners or operators should have these types of
-------
111-13
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111-14
opinions. The regulations explicitly disqualify owners or operators from the
financial test if they have either of these two types of opinions. In
addition, although not specifically addressed in the regulations, a "subject
to" type of Qualified Opinion based on a "going concern" issue is generally
considered so serious that any firm receiving one should be disqualified from
the financial test. See Attachment VII-8 of the manual for Financial
Assurance for Closure and Post-Closure Care for an example of a "subject to"
Qualified Opinion based on a "going concern" issue. If disqualified, the
owner or operator should be notified immediately. The Regional Administrator
must ensure that evidence of insurance for liability coverage requirements is
submitted within 30 days after notification of disqualification.
3. Conduct further investigations if an owner or operator received
any other type of Qualified Opinion (either an "except for" or a "subject
to"). A small number of owners or operators, perhaps 10%, will have Qualified
Opinions. Most of the review effort should be directed toward owners or
operators falling into this category. The rest of this section provides
guidance on how to evaluate these opinions.
EPA Staff should undertake the following four steps whenever an owner or
operator has a Qualified Opinion (either an "except for" or "subject to,"
excluding those rendered on the basis of a "going concern" issue):
1. The owner or operator should be asked to submit a copy of the
latest financial statements. Alternatively, a copy of the latest Form 10-K
could be obtained from the SEC.
2. The opinion rendered by the accountant should be thoroughly
understood in the context of the financial statements:
• If it is an "except for" opinion, the EPA staff
should determine if the part of the statements which
gives rise to the "except for" qualification has any
bearing on the owner's or operator's ability to pass
the financial test; or
• If it is a. "subject to" opinion, EPA staff should
determine the likelihood of the occurrence of the event
the accuracy of the financial statements are "subject
to", and the importance of the event's occurrence or
nonoccurrence on the owner's or operator's ability to
pass the financial test.
3. If not enough information is available in the opinion or
financial statements to make a satisfactory decision, the firm should be
required to submit a written explanation of why the qualification should not
be grounds for disallowal of the use of the financial test.
4. If the matter is still unresolved, contact EPA headquarters for
additional assistance.
-------
111-15
When the Regional Administrator disallows use of the financial test
because of a qualified opinion, the owner or operator must provide evidence of
insurance within 30 days after notification of disallowance.
c) Special Report from Auditor. EPA personnel should review the
auditor's confirmation of the letter from the chief financial officer, and
verify that the auditor has reviewed the data specified in the chief financial
officer's letter and was able to trace the data back to figures found in the
owner's or operator's independently audited, year-end financial statements for
the latest fiscal year. It should be noted that the auditor's confirmation
does not pass judgment on whether the owner or operator, is economically
viable, nor does it assess the value of the financial data contained in the
letter. No specific form is required for the auditors special report.
However, Attachment III-4 provides an example of an auditor's confirmation.
3. Record keep ing and Tracking Systems. As financial information is
received, relevant data should be recorded and verified. The code for the
financial test and the amount of the cost estimates for which financial
assurance for closure or post-closure care and liability coverage are provided
by the financial test should be entered into the HWDMS. Regional Office staff
could keep a file on each submitting firm, such as the one shown in Exhibit
III-4 (pp. 111-10 and 11) which summarizes key financial data. The
recordkeeping and tracking system should be used to keep track of all owners
or operators, with most of the effort focused on firms that:
• Fail to submit chief financial officer's letter
within 90 days after the close of their fiscal year;
• Barely pass the criteria of the financial test; and
• Receive adverse business publicity.
Section 5 below provides more detail on type of firms that should be monitored
closely.
4. Variance Requests. Chapter II, Section B.4 provides guidance on how
the Regional Administrator should handle VARIANCE requests.
5. Updating and Maintaining Coverage. The Regional Administrator must
re-evaluate each owner or operator every year following the same procedures
each time.
a) Reviewing Annual Submissions. Within 90 days after the close of
every fiscal year, the owner or operator must resubmit updated information
including the letter from the chief financial officer, a copy of the
accountant's report on examination of the year-end financial statements, and
the special audit report. Failure to do so is an indication of financial
deterioration of the submitting firm, thus late submissions should be
monitored closely. All the financial test criteria must be met; if not the
owner or operator must submit evidence of insurance to the Regional
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111-16
Administrator within 90 days after the close of the fiscal year for which
year-end financial data show the owner or operator no longer meets the test
requirements.
b) On-going Monitoring. The Regional Office staff can monitor the
business press for adverse news about owners or operators. Ideally, an
on-line computerized business data base service such as DIALOG could be used
for this purpose. Through the computerized data base, or manually, the
Business Periodical Index and the F&S Corporate Index can be searched using
the firm's name as a "keyword," for:
• Omission of a dividend;
• Delisting from an exchange;
• Suspended trading;
• Mergers, Acquisitions, Divestitures;
• Financial losses;
• Competitive problems;
• Bankruptcy proceedings;
• Decreases in bond ratings; and
• Sharp stock price decreases.
Regional Offices should coordinate their review procedures with EPA
Headquarters. Approaches to centralizing some review procedures for the
financial test are currently being studied.
c) Further Investigation. Under the regulations for financial
assurance for closure or post-closure care costs, the Regional Administrator
can obtain reports of financial condition from the owner or operator if he
believes that the firm may no longer meet the financial test criteria. Based
on the requested reports or any other material, the Regional Administrator may
then disallow use of the financial test and require that alternate coverage be
provided.
The liability coverage regulations do not specifically grant the Regional
Administrators the same power to obtain information from owners or operators
or disallow use of the financial test. However, if the tests are used to
cover both liability and closure/post-closure care financial requirements,
the Regional Administrator would still retain these powers, but only in
reference to closure or post-closure care assurance. In the final analysis,
this means that the Regional Administrator can disallow use of the financial
test for closure or post-closure costs at any time during the year, but for
the liability coverage requirements only at the end of the owner's or
operator's fiscal year.
6. Release from Requirements. The Regional Administrator should
release the owner or operator from the liability coverage requirements if
proper certification of closure for all facilities has been submitted from
both owner or operator and an independent registered professional engineer.
The certifications must state that the facility has been closed in accordance
with the specifications in its closure plan. Owners or operators do not need
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111-17
to demonstrate liability coverage for facilities correctly certified as
properly closed, however, owners or operators are not released from the
liability coverage requirements until all their facilities have been so
certified.
7. Permitted Facility Requirements. For new facilities the financial
test submissions for sudden coverage, and nonsudden coverage if applicable,
must be submitted to EPA at least 60 days before the initial receipt of
waste. For further information on permitted facility requirements see Section
B.8 of Chapter II.
C. SOURCES OF FURTHER INFORMATION
For further information on the financial test, Background Document for
the Financial Test and Municipal Revenue Test, September 16, 1981, including
Appendix A - Evaluating the Effectiveness of Alternative Financial Tests,
September 4, 1981 and Appendix B - Cost Analysis for a Financial Test,
September 4, 1981. See also Background Document, Financial Test for
Liability Coverage including Appendix: Cost Analysis for a Financial Test
for Liability Coverage, April 9, 1982.
Standard reference books are listed in Section D of Chapter VII of the
manual for Financial Assurance for Closure and Post-Closure Care.
To obtain Form 10-K or 10-Q reports from the SEC, contact: The U.S.
Securities and Exchange Commission's Public Reference Room, located at 1100 L
Street, N.W., Washington, D.C. (telephone: (202) 523-5506). Copies of
reports can be obtained by mail.
Finally, the American Institute of Certified Public Accountants, 1620 Eye
Street, N.W., Washington, D.C. 20006, (202) 872-8190 may be of assistance.
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:n-i&
ATTACHMENT III-I
RCRA LIABILITY COVERAGE FINANCIAL TEST CHECKLIST
FOR OWNERS OR OPERATORS
Paragraph
Number *
(2) Owner or operator's financial statements are audited by an
independent certified public accountant.
(2) If a notice of disallowance is issued because of a qualified
opinion in the report on examination, submit evidence of
insurance by 30 days after notification.
" Owner or operator meets requirements of the appropriate
Alternative I or Alternative II tests, depending on whether or
not the tests are used to satisfy closure or post-closure care
costs and liability coverage requirements in combination.
(4) Submit letter from chief financial officer. Use same letter to
cover both liability coverage and closure or post-closure care
requirements, if applicable.
" Submit independent CPA's report on examination of year-end
financial statements.
" Submit independent CPA''s special report confirming data in
chief financial officer's letter.
" Request extension of initial reporting deadline if fiscal year
ends less than 90 days before effective date of regulations.
(5) Submit no later than 90 days after the end of every fiscal year
an updated:
Chief financial officer's letter
Independent CPA's report on examination of year-end
financial statements
Independent CPA's confirmation of data in chief
financial officer's letter
Submit evidence of liability insurance coverage to EPA within
90 days after end of fiscal year if owner or operator no longer
meets requirements of financial test.
Notify Regional Administrator within 10 days after the
commencement of a bankruptcy proceeding.
Numbers correspond to the paragraphs in Section A.
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111-19
ATTACHMENT 111-2
RCRA LIABILITY COVERAGE FINANCIAL TEST CHECKLIST
FOR REGIONAL OFFICES
The Regional Administrator should ensure that:
Paragraph
Number *
(1) The independent accountant is certified by the State Board of
Accountancy in the state where the accountant resides.
(2) The required criteria are satisfied in the chief financial
officer's letter. The same letter is used to cover both
liability coverage and closure or post-closure care financial
requirements, if applicable.
" The chief financial officer's letter is signed.
Independent auditor's report on examination of year-end
financial statements is reviewed:
"Pass" owners or operators with unqualified opinions
who otherwise qualify.
Immediately disqualify owners or operators with
disclaimers of opinion, adverse opinions, or "subject to"
qualified opinions based on a "going concern" issue.
Submit to further investigation owners or operators
with any other type of qualified opinion.
Owners or operators that are disqualified because of a
qualified opinion are notified, and evidence of insurance
submitted within 30 days after notification.
The independent auditor's special report, confirming the chief
financial officer's letter is acceptable.
* Numbers correspond to paragraphs in Section B.
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111-20
ATTACHMENT 111-2 (continued)
RCRA LIABILITY COVERAGE FINANCIAL TEST CHECKLIST
FOR REGIONAL OFFICES
Paragraph
Number
(3) Relevant data is recorded, and if appropriate, entered into
HWDMS.
" Financial information is verified.
(5) The following are submitted no later than 90 days after the
close of each fiscal year:
Updated chief financial officer's letter
Independent auditor's report on examination of
year-end financial statements.
Updated special report
* Numbers correspond to paragraphs in Section B.
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111-21
ATTACHMENT 111-3
REQUIRED WORDING FOR LETTER FROM CHIEF FINANCIAL OFFICER
40 CFR 264.51 (g)
Letter from Chief Financial Officer (to demonstrate liability coverage or
to demonstrate both liability coverage and assurance of closure or
post-closure care).
[Address to Regional Administrator of every region in which facilities for
which financial responsibility is to be demonstrated through the financial
test are located.]
I am the chief financial officer of [owner's or operator's name and
address]. This letter is in support of the use of the financial test to
demonstrate financial responsibility for liability coverage [insert "and
closure and/or post-closure care" if applicable] as specified in Subpart H of
40 CFR Parts 264 and 265.
[Fill out the following paragraphs regarding facilities and liability
coverage. For each facility, include its EPA Identification Number, name, and
address].
The owner or operator identified above is the owner or operator of the
following facilities for which liability coverage is being demonstrated
through the financial test specified in Subpart H of 40 CFR Parts 264 and 265:
[If you are using the financial test to demonstrate coverage of both
liability and closure and post-closure care, fill in the following four
paragraphs regarding facilities and associated closure and post-closure cost
estimates. If there are no facilities that belong in a particular paragraph,
write "None" in the space indicated. For each facility, include its EPA
Identification Number, name, address, and current closure and/or post-closure
cost estimates. Identify each cost estimate as to whether it is for closure
or post-closure care.]
1. The owner or operator identified above owns or operates the following
facilities for which financial assurance for closure or post-closure
care is demonstrated through the financial test specified in Subpart
H of 40 CFR Parts 264 and 265. The current closure and/or
post-closure estimates covered by the test are shown for each
facility:
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111-22
ATTACHMENT 111-3 (continued)
REQUIRED WORDING FOR LETTER FROM CHIEF FINANCIAL OFFICER
40 CFR 264.51(g)
2. The owner or operator identified above guarantees, through the
corporate guarantee specified in Subpart H of 40 CFR Parts 264 and
265, the closure and post-closure care of the following facilities
owned or operated by its subsidiaries. The current cost estimates
for the closure or post-closure care so guaranteed are shown for each
facility:
In States where EPA is not administering the financial requirements
of Subpart H of 40 CFR Parts 264 and 265, this owner or operator is
demonstrating financial assurance for the closure or post-closure
care of the following facilities through the use of a test equivalent
or substantially equivalent to the financial test specified in
Subpart H of 40 CFR Parts 264 and 265. The current closure and/or
post-closure cost estimates covered by such a test are shown for each
facility:
4. The owner or operator identified above owns or operates the following
hazardous waste management facilities for which financial assurance
for closure or, if a disposal facility, post-closure care, is not
demonstrated either to EPA or a State through the financial test or
any other financial assurance mechanism specified in Subpart H of 40
CFR Parts 264 and 265 or equivalent or substantially equivalent State
mechanisms. The current closure and/or post-closure cost estimates
not covered by such financial assurance are shown for each facility:
This owner or operator [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 owner or operator ends on [month, day]. The
figures for the following items marked with an asterisk are derived from this
owner's or operator's independently audited, year-end financial statements and
footnotes for the latest completed fiscal year, ended [date].
[Fill in part A if you are using the financial test to demonstrate
coverage only for the liability requirements.]
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111-23
ATTACHMENT 111-3 (continued)
REQUIRED WORDING FOR LETTER FROM CHIEF FINANCIAL OFFICER
ALTERNATIVE I
Part A. Liability Coverage for Accidental Occurrences
[Fill in Alternative I if the criteria of paragraph (f)(l)(i) of §§264.147
or 265.147 are used. Fill in Alternative II if the criteria of paragraph
(f)(l)(ii) of §§264.147 or 265.147 are used.]
ALTERNATIVE I
1. Amount of annual aggregate liability coverage to be 9-
demonstrated
«
*2. Current assets
*3. Current liabilities *-
4. Net working capital (line 2 minus line 3) *-
§
*5. Tangible net worth v-
*6. If less than 90% of assets are located in the
U.S., give total U.S. assets *-
YES NO
7. Is line 5 at least $10 million?
8. Is line 4 at least 6 times line 1?
9. Is line 5 at least 6 times line 1?
*10. Are at least 90% of assets located in the
U.S.? If not, complete line 11.
11. Is line 6 at least 6 times line 1?
ALTERNATIVE II
1. Amount of annual aggregate liability coverage to be
demonstrated
*2. Current bond rating of most recent issuance and
name of rating service
3. Date of issuance of bond
4. Date of maturity of bond
-------
YES NO
111-24
ATTACHMENT 111-3 (continued)
Part A (continued)
ALTERNATIVE II (continued)
-5. Tangible net worth
*6. Total assets in U.S. (required only if less than
90% of assets are located in the U.S.)
7. Is line 5 at least $10 million?
8. Is line 5 at least 6 times line 1?
"9. Are at least 90% of assets located in the
U.S.? If not, complete line 10.
10. Is line 6 at least 6 times line 1?
[Fill in part B if you are using the financial test to demonstrate
assurance of both liability coverage and closure or post-closure care.]
Part B. Closure or Post-Closure Care and Liability Coverage
[Fill in Alternative I if the criteria of paragraphs (f)(l)(i) of
§§264.143 or 264.145 and (f)(l)(i) of §264.147 are used or if the criteria of
paragraphs (e)(l)(i) of §§265.143 or 265.145 and (f)(l)(i) of §265.147 are
used. Fill in Alternative II if the criteria of paragraphs (f)(l)(ii) of
§§264.143 or 264.145 and (f)(l)(i:L) of §264.147 are used or if the criteria of
paragraphs (e)(l)(ii) of §§265.143 or 265.145 and (f)(l)(ii) of §265.147 are
used.]
ALTERNATIVE I
*
1. Sum of current closure and post-closure cost estimates
[total of all cost estimates listed above]
2. Amount of annual aggregate liability coverage to
be demonstrated
3. Sum of lines 1 and 2
r4. Total liabilities (if any portion of the closure or
post-closure cost estimates is included in your total
liabilities, you may deduct the amount of that
portion from this line and add that amount to lines
5 and 6)
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111-25
, t*
ATTACHMENT 111-3 (continued)
Pait 3 (continued)
ALTERNATIVE I (continued)
§
*5. Tangible net worth y
$
»6. Net worth y
«
*7. Current assets
§
""8. 'Jjrrerit liabilities
*9. Net working capital [line 7 minus line 8] *
5
*10. The sum of net income plus depreciation, depletion, y
and amortization
-11. Total assets in U.S. (required only if less than 90 *
percent of assets are located in the U.S.)
YES NO
12. Is line 5 at least $10 million?
13. Is line 5 at least 6 times line ??
14. Is line 9 at least 6 times line 3?
*15. Are at least 90 percent of assets located
in the U.S.? If not, complete line 16.
16. Is line 11 at xeast 6 times line 3?
17. Is line 4 divided by line 6 less than 2.0?
18. Is line 10 divided by line 4 greater than 0.1?
19. Is Line 7 diviueu ;.y . - - •? •; • - - •-• - :^an 1.5?
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111-26
ATTACHMENT 111-3 (continued)
Part B (continued)
ALTERNATIVE II
6
1. Sum of current closure and post-closure cost estimates y
[total of all cost estimates listed above]
2. Amount of annual aggregate liability coverage to
be demonstrated *
3. Sum of lines 1 and 2 "
4. .Current bond rating of most recent issuance and
name of rating service
5. Date of issuance bond
6 Date of maturity of bond
*7. Tangible net worth (if any portion of the closure and *
post-closure cost estimates is included in "total
liabilities" on your financial statements, you may
add the amount of that portion to this line)
*8. Total assets in the U.S. (required only if less than *
90 percent of assets are located in the U.S.)
YES NO
9. Is line 7 at least $10 million?
10. Is line 7 at least 6 times line 3?
*11. Are at least 90% of assets located
in the U.S.? If not, complete line 12.
12. Is line 8 at least 6 times line 3?
I hereby certify that the wording of this letter is identical to the
wording specified in 40 CFR 264.151(g) as such regulations were constituted on
the date shown immediately below.
[Signature]
[Name]
[Title]
[Date]
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111-27
ATTACHMENT 111-4
EXAMPLE OF AUDITOR'S SPECIAL REPORT,
CONFIRMATION OF CHIEF FINANCIAL OFFICER'S LETTER
We have examined the financial statements of XYZ Company for the year
ended December 31, 19X1, and have issued our report thereon dated March 15,
19X2. Our examination was made in accordance with generally accepted auditing
standards and, accordingly, included such tests of the accounting records and
such other auditing procedures as we considered necessary in the circumstances.
The Company has prepared documents to demonstrate its financial
responsibility under the Environmental Protection Agency's financial assurance
regulations, in compliance with 40 CFR 264 and 265, Subpart H. This letter is
furnished to assist the Company in complying with these regulations and should
not be used for other purposes.
The attached schedule reconciles the specified information furnished in
the chief financial officer's letter in response to the regulations with the
Company's financial statements. In connection therewith, we have:
1. Agreed the amounts in the column "per financial
statements" with amounts contained in the Company's
financial statements for the year ended December 31,
19X1.
2. Agreed the amounts in the column "per chief financial
officer's letter" to the Letter prepared in response to
the regulations.
3. Recomputed the totals and percentages.
Because the above procedures do not constitute an examination made in
accordance with generally accepted auditing standards, we do not express an
opinion on any amounts or items referred to above. In connection with the
procedures referred to above, no matters came to our attention that caused us
to believe the Schedule should be adjusted.
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111-28
Line number
in
CFO's Letter
ATTACHMENT 111-4 (continued)
XYZ COMPANY
LIABILITY COVERAGE REQUIREMENTS
YEAR ENDED DECEMBER 31, 19X1
SCHEDULE RECONCILING AMOUNTS CONTAINED IN THE
CHIEF FINANCIAL OFFICER'S LETTER FURNISHED IN
RESPONSE TO 40 CFR 264 AND 265, SUBPART H TO
AMOUNTS CONTAINED IN THE FINANCIAL STATEMENTS
Per
Financial
Statements
Per
CFO's
Letter
2
3
4
5
Total current assets
Total current liabilities
Net working capital (2 - 3)
Net Worth
Less: Cost in excess of
value of tangible
assets acquired
Tangible net worth
X
X
XX
XX
X
XX
X
X
XX
XX
[balance of schedule not
illustrated]
[This illustrates the
form of schedule which is
contemplated. Details
and reconciling items
will differ in specific
situations.]
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IV. COMPLYING WITH LIABILITY COVERAGE
REQUIREMENTS USING STATE MECHANISMS
As discussed in Section D of Chapter 1, owners or operators are subject
to applicable state laws or regulations pertaining to liability coverage in
addition to the Federal RCRA requirements. This chapter only applies to
facilities located in states where EPA is administering liability coverage
requirements.1-1 The chapter explains how owners or operators of facilities
in these states may satisfy Federal liability coverage requirements using
state laws.
Owners or operators may satisfy the Federal RCRA liability coverage
requirements by arranging for coverage under the authority of a state
government in two ways. First, an owner or operator may provide assurance
through a State-required liability coverage mechanism equivalent to those
specified in the Federal RCRA requirements. Many states are expected to adopt
the Federal requirements discussed in this manual or equivalent rules; in
those cases, satisfaction of State requirements may be used to demonstrate
compliance with RCRA requirements. Second, a state government or state fund
may assume legal or financial responsibility for all or part of the potential
liabilities of a facility. Such an assumption of liability, similarly, may
satisfy all or a part of the RCRA liability coverage requirements.
Pertinent EPA regulations are listed below:
EXHIBIT IV-I
RCRA STATE LIABILITY COVERAGE MECHANISM REGULATIONS
Topic Interim Status Permitted Facilities
State-Required Mechanisms 40 CFR 265.149 40 CFR 264.149
State Assumption of 40 CFR 265.150 40 CFR 264.150
Responsibility
Source: Title 40, Code of Federal Regulations (CFR).
1JEPA interim status liability coverage regulations (40 CFR 265) do not
apply in states that have received PHASE I INTERIM AUTHORIZATION, although
RCRA standards (40 CFR 264) must be satisfied to receive a RCRA permit.
States with PHASE II INTERIM AUTHORIZATION will administer their own
liability coverage requirements for both INTERIM STATUS and PERMITTED
FACILITIES. See Chapter 1, Section D for a discussion of the applicability
of Federal and State requirements.
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IV-2
A. RESPONSIBILITIES OF THE OWNER OR OPERATOR
This section outlines the requirements for using State mechanisms to
satisfy Federal rules and the responsibilities of owners or operators.
Included as Attachment IV-1 is a checklist summarizing the requirements for
owners or operators.
I. Satisfying State Requirements. Owners or operators must initially
identify what State liability coverage requirements apply and whether or not
the state itself assumes responsibility for liability claims. (See Exhibit
IV-2.) State liability coverage requirements may not be identical to RCRA
requirements, although the allowable mechanisms typically include liability
insurance. The EPA is not currently aware of any instance where a state
assumes legal responsibility for an owner's or operator's compliance with RCRA
liability coverage requirements or assures that funds will be available from
state sources to cover these requirements. EPA may propose to delete this
option. EPA is currently developing a guidance on the issue of determination
of equivalence of State financial responsibility mechanisms and State programs.
Because state laws and regulations are still being developed or
promulgated, it is strongly suggested that owners and operators check with the
appropriate state agency for the requirements in any particular state. See
Appendix B-l of the manual for Financial Assurance for Closure and Post-
Closure Care for a list of state agencies. An owner or operator whose
facility is located in any state with liability coverage requirements must
satisfy both the State and Federal requirements. State and Federal officials
encourage, early and frequent contacts with agency staffs to discuss
requirements. Similarly, an owner or operator will need to determine whether
his facility is eligible for a State assumption of responsibility for
liability coverage.
2. Submission of Required Information to EPA. To use a State-required
mechanism to satisfy RCRA requirements, the owner or operator must submit to
the Regional Office evidence of the establishment of the mechanism, such as a
letter from the appropriate state agency, a copy of the CERTIFICATE OF
INSURANCE or ENDORSEMENT, etc. The submission of evidence must be
accompanied by a request that the State-required mechanism be considered
acceptable for meeting the Federal RCRA liability coverage requirements. (See
Attachments IV-3 through IV-5.) The submission must include the amount and
types of coverage assured through the State mechanism as well as identifying
information on each facility to be covered, including the facility's EPA
Identification Number, name, and address. Additional information may be
requested by the Regional Administrator in order to determine the mechanism's
acceptability.
Some states may provide assurance of payment of all or part of liability
coverage responsibilities. In order to take advantage of such laws to
demonstrate compliance with RCRA liability coverage requirements, the owner or
operator must submit two letters: (1) a letter from the appropriate state
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IV-3
EXHIBIT IV-2
STATE LIABILITY COVERAGE REQUIREMENTS AND ASSUMPTIONS
OF RESPONSIBILITY AS OF JUNE 1, 1982 IN STATES WITHOUT INTERIM
AUTHORIZATION AS OF SEPTEMBER I, 1982
Has Liability Coverage Provides Assumption
Requirements of Responsibility
Alaska No
Colorado 3J
District of Columbia 1J
Hawaii 3J
Idaho No
Michigan *
Minnesota 1J
Missouri *
Nevada 3J
New Jersey * *J
New Mexico 3J
New York *
Ohio No
Puerto Rico * 2J
South Dakota No
Virgin Islands *
Washington *
West Virginia 1J
Wyoming No
* State has some provision for the item in question.
1J Requirements have been drafted or proposed but not yet adopted.
2J Some liability mechanism is required but the nature of the mechanism
has not been specified.
3J No regulations have yet been issued but some mechanism is required by
state statute.
bj A state compensation fund is available for property damage, not
personal injury; however, the fund does not explicitly assume the liability of
the owner or operator.
Source: IGF Incorporated.
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IV-4
agency describing the nature of the State's assumption of liability coverage
responsibility, together with (2) a letter requesting that the State's
assumption of responsibility be considered acceptable for fulfilling the RCRA
liability coverage requirements. (See Attachment IV-3.) The letter from the
state must include, or have attached, the following information: the
facility's EPA Identification Number, name, address, and the amount of funds
guaranteed by the state. The owner or operator may be required to submit
additional information requested by the Regional Administrator.
3. Satisfying Federal Requiraments. The owner or operator may need to
supplement the State mechanism or guarantee in order to provide complete RCRA
coverage. For example, a State liability coverage requirement may only
provide for $500,000 coverage for SUDDEN and $1,000,000 for NONSUDDEN
ACCIDENTAL OCCURRENCES. On the other hand, a. state may require $l/$2 million
in sudden coverage but have no requirement for nonsudden liability assurance.
Or a state compensation fund may provide coverage only for PROPERTY DAMAGE
claims, not BODILY INJURY. The owner or operator has the option of either
increasing or supplementing the amount of funds available through the
State-required mechanism or using additional RCRA mechanisms. The total
amount of funds available through the State and Federal mechanisms must at
least equal the amount required under RCRA.
4. Maintaining Coverage. Owners or operators have a continuing
responsibility to maintain adequate liability coverage. Thus, owners or
operators must maintain coverage by paying premiums and providing alternate
coverage in the event of the incapacity of the insurer, etc. Procedures for
doing this will vary with the type of mechanism being used; owners or
operators should consult the other chapters in this manual for details. The
owner or operator should also arrange for the Regional Administrator to
receive any notice of termination, cancellation, or nonrenewal required of the
insurer, etc.
5. Permitted Facility Requirements. To receive a RCRA permit, new and
EXISTING FACILITIES must satisfy RCRA liability coverage requirements for
PERMITTED FACILITIES. If the facility is located in a state without INTERIM
AUTHORIZATION, or with interim authorization but without effective liability
coverage requirements, liability coverage must be demonstrated to the
appropriate Regional Administrator as described in the other chapters of this
manual. State-required mechanisms or assumptions of responsibility may be
used to fulfill RCRA requirements in whole or part as discussed previously.
The main point to remember is that unless the facility is located in a state
with Phase II interim authorization to issue permits in lieu of RCRA peririts
(see Exhibit 1-1), it must satisfy Federal RCRA standards to receive a RCRA
permit and may comply by using State-required mechanisms or State assumptions
of responsibility, if any. In some cases, states with Phase II interim
authorization for storage facilities and incinerators may not have liability
coverage requirements in effect by the effective date of the Federal RCRA
liability coverage requirements. However, these states must commit to adopt
liability coverage requirements substantially equivalent to Fedsral RCRA
standards as quickly as practicable and in no event later thaa the state's
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IV-5
^•lication for an additional Component of Phase II interim authorization.
r^Bsmuch as no state is expected to receive Phase II interim authorization for
permitting land disposal facilities by the effective date of the liability
"coverage requirements, land disposal facilities must comply with the Federal
RCRA standards (including nonsudden coverage) to receive a RCRA permit. See
tSection A.8 of Chapter II for a more detailed discussion.
B. REGIONAL OFFICE RESPONSIBILITIES
This section outlines the responsibilities of the Regional Offices in
reviewing State liability coverage mechanisms for equivalency. A summary
checklist is provided as Attachment IV-2.
I. Evaluating Equivalency. The Regional Administrator must determine
whether the State mechanism or assumption of responsibility provides liability
coverage at least equivalent to the Federal RCRA liability coverage
mechanisms. Equivalency should be evaluated principally in terms of two
criteria:
(1) Certainty of the availability of funds for claims.
For example, the State mechanism must demonstrate a
minimal risk of defaulting or lapsing due to insurer
liquidation, change in ownership, or cancellation of
insurance, without the provision of alternate coverage.
(2) The amount of funds that will be made available. The
owner or operator must demonstrate that the State
mechanism will assure payment of claims arising from
sudden and nonsudden accidental occurrences exclusive
of LEGAL DEFENSE COSTS in amounts at least equal to
the Federal RCRA requirements. Any requests for
VARIANCES should be handled as described in Chapter
II, Section B.4.
Regional Administrators must evaluate State mechanisms and compare them to
the allowable Federal mechanisms principally on the basis of the two criteria
of certainty of coverage and amount of funds. This could be a very complex
task, and the Regional Administrator must be careful to consider many
factors. These factors include:
• Qualifications required of participating financial
institutions and insurers;
• Requirements of the FINANCIAL TESTS, if applicable;
• Time periods covered by the State mechanism;
• The amount of funds assured as compared to the RCRA
requirements;
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IV-6
• Exclusion of legal defense costs; and
• Provision for future contingencies, including
bankruptcy, cancellation, or changing mechanisms.
In general, Regional Offices should first analyze the State mechanism
itself for adequacy before reviewing the amount of coverage offered. State
liability coverage mechanisms typically include insurance, SELF-INSURANCE,
and, in some cases, financial tests. This means that Regional Offices can use
Federal requirements as a benchmark for evaluating these instruments. In
reviewing the components of a mechanism, Regional Offices should distinguish
requirements that are more stringent than the Federal RCRA rules from
requirements that are less stringent.
Regional Offices should review State financial tests against Federal
financial test criteria with special care because this mechanism does not
involve the advance financing of a fund for later use or the UNDERWRITING of
the risk of claims (e.g., insurance).
The checklists provided throughout this manual may be used for evaluating
equivalency. Regional Offices may wish to consult with EPA Headquarters to
discuss questions and options for evaluating equivalency. A more detailed
guidance on equivalency determinations is being reviewed and will be made
available to Regional Office personnel.
State assumptions of responsibility may be more difficult to review in
the absence of Federal standards for comparison. Regional Offices should
review exactly which claims are covered by such an assumption (e.g., personal
injury and property damage). Regional Offices should not attempt to evaluate
the future adequacy of State liability claims funds but may ask to review any
such studies prepared by the responsible state agency.
The Regional Administrator must also determine which types of liability
claims are covered neither by the State mechanism nor by the State assumption
(if any) in order to identify additional coverage needed to satisfy Federal
requirements. A state, for example, may only require coverage for sudden
accidental occurrences.
Finally, the dollar amount of coverage must also be reviewed to determine
equivalency. If the amount provided is inadequate, the owner or operator
should be required either to increase coverage afforded by the State
mechanisms or establish an additional Federal mechanism.
2. Reviewing Submissions. The Regional Administrator should review
the information submitted by the owner or operator to verify that all the
required information is included. In addition to the facility's EPA
Identification Number, name, address, and the amount of liability coverage
assured, the following should be reviewed:
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IV-7
• evidence of the establishment of a State-required
mechanism, such as a copy of the insurance policy,
endorsement or certificate of insurance, or corporate
guarantee with the state listed as a beneficiary,
including all required attachments, such as
ACKNOWLEDGEMENTS, POWER OF ATTORNEY, etc.;
• a letter from the state describing the nature of the
State's assumption of responsibility, if any, signed by
an appropriate state-agency official; and
• a cover letter requesting that the State mechanism
and/or assumption of responsibility be considered
acceptable for meeting, in whole or part, the Federal
RCRA liability coverage requirements.
Three pieces of information should be entered into the HVDMS: (1) the
code for the type of instrument being used; (2) the amount of the cost
estimates for which financial assurance for closure or post-closure care and
liability coverage are provided by the financial test; and (3) the name of the
financial third party (e.g., insurer) or parent guarantor.
Three sample owner or operator request letters are included as
attachments. They represent situations where:
(1) a combination of a State-required mechanism and
assumption of responsibility are requested to satisfy
fully or partially the Federal RCRA requirements
(Attachment IV-3);
(2) State-required mechanisms equivalent to RCRA
assurances are requested to fully satisfy the Federal
RCRA requirements (Attachment IV-4); and
(3) a State-required mechanism not equivalent to RCRA
assurances is requested to fully or partially satisfy
the Federal RCRA requirements (Attachment IV-5).
Resort to state law as a means of fulfilling applicable RCRA requirements
will fall into one of these three typical situations.
3. Verifying Conformity to Requirements. Regional Administrators must
advise owners or operators concerning the acceptability of State mechanisms
and assumptions of responsibility. Pending this determination, the owner or
operator will be deemed to be in compliance with the applicable RCRA liability
coverage requirements. Any additional coverage needed for the assurance to be
at least equivalent to RCRA requirements should be specified. Additional
assurances may be provided by increasing the amounts available under State
mechanisms or using additional mechanisms meeting RCRA requirements.
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IV-8
4. Ensuring Maintenance of Coverage. Should the state receive interim
authorization to administer its own hazardous waste management program, the
Regional Administrator should consent to the termination of liability coverage
mechanisms only when no lapse in coverage will result. The Regional
Administrator should arrange to receive any notice of termination,
cancellation, or nonrenewal required of the insurer, etc.
5. Permitted Facility Requirements. Owners or operators may use
State-required mechanisms or State assumptions of responsibility to satisfy
Federal liability coverage requirements for permitted facilities in states
which have not received applicable Phase II interim authorization. The
guidance in this chapter applies to such situations.
C. SOURCES OF FURTHER INFORMATION
Because many state laws and regulations are currently in a state of flux,
owners or operators are advised to contact the appropriate state agency to
determine applicable requirements. State agency contacts are listed in
Appendix B-l of the manual for Financial Assurance for Closure and
Post-Closure Care. EPA Regional Office contacts can also advise regarding
the authorization status of State programs (see Appendix A).
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IV-9
ATTACHMENT IV-I
RCRA STATE LIABILITY COVERAGE MECHANISMS CHECKLIST
FOR OWNERS OR OPERATORS
Paragraph
Number *
(1) Identify pertinent state laws and requirements which can be
used to satisfy RCRA regulations.
(2) Submit by the effective date:
Letter requesting consideration of State mechanism and/or
assumption of responsibility to apply for RCRA requirements
Signed copies of documents (with associated attachments,
acknowledgments, or certificates)
Letter from state agency acknowledging completion of
State requirements, if available
Letter from state agency describing the nature of the
State's assumption of responsibility
EPA Identification Number and information on each
facility, including amount of liability coverage assured.
(3) Satisfy Federal requirements by providing additional coverage
as necessary.
Arrange for the Regional Administrator to receive copies of all
notices of non-renewal, cancellation, or termination of assurance.
(4) Maintain coverage throughout operating life of facility,
including
Change of mechanisms as required to maintain coverage in
the event of incapacity, disallowance, liquidation or
ineligibility of insurer
Numbers correspond to paragraphs in Section A.
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IV-10
ATTACHMENT IV-2
RCRA STATE LIABILITY COVERAGE MECHANISMS CHECKLIST
FOR REGIONAL OFFICES
The Regional Administrator should ensure that:
Paragraph
Number *
(1) Equivalency of State mechanisms or assumptions of
responsibility is determined principally on the basis of:
Certainty of availability of funds, including:
Qualifications for insurers, parent guarantors, or
financial test
Enforceability of corporate guarantees
Adequate notice prior to termination, cancellation, or
non-renewal of insurance and provisions for obtaining
alternate coverage prior to termination, cancellation, or
non-renewal
Requirements of financial test (e.g., assets, ratios)
Provisions for maintenance of coverage in the event of
liquidation or incapacity of insurer, or bankruptcy or
incapacity of parent guarantor; transfer of ownership or
operation; change in mechanism
Source of funds to be used by states assuring payment of
liability claims.
Amount of funds available, including:
Sudden and nonsudden coverage per accidental occurrence
and in the aggregate, compared to RCRA requirements
Exclusion of legal defense costs
Types of claims covered
Amount of funds available through State accounts or
revolving funds
Numbers correspond to paragraphs in Section B.
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IV-11
ATTACHMENT IV-2 (continued)
RCRA STATE MECHANISMS CHECKLIST FOR REGIONAL OFFICES
Paragraph
Number *
(2) The initial submission is complete, including:
Owner or operator request letter
Evidence of establishment of State mechanism, such as
copies of executed (i.e., signed) insurance certificates,
financial instruments, letters of acknowledgment from state
agency, etc.
Identifying information for covered facilities and amount
of coverage
Copy of letter from state agency describing assumption of
responsibility
" The owner or operator is notified of the equivalency
determination
(3) The amount of coverage at least equals the amount required by
RCRA standards
State mechanisms and/or assurance completely fulfill RCRA
requirements
Coverage provided by additional mechanisms is consistent
with RCRA requirements
(4) Coverage is maintained
State mechanisms provide for maintenance of coverage and
owner or operator is in compliance
There is no lapse in coverage if the state receives
interim authorization
* Numbers correspond to paragraphs in Section B.
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IV-12
ATTACHMENT IV-3
SAMPLE OWNER OR OPERATOR REQUEST LETTER (I)
HazWaste Corp.
Address
Date
EPA Regional Administrator
U.S. EPA Region
Street Address
City, State, Zip Code
Subject: RCRA Liability Coverage Requirements
Dear Sir/Madam:
This letter is submitted to request that RCRA liability coverage
requirements (40 CFR 265) be deemed satisfied, in whole or part, by State
mechanisms and/or assumptions of responsibility with which HazWaste Corp. is
in compliance.
HazWaste Corp. owns and operates three (3) facilities in State X whose EPA
Identification Numbers and addresses are as follows:
[Insert identifying information]
State X requires financial responsibility demonstrations to cover the
costs of personal injury claims consistent with the degree and duration of the
risk imposed. Both sudden and nonsudden accidental occurrences are covered in
aggregate amounts of $4 million per occurrence and $8 million aggregate per
year. See Rules 26.04 and 26.08 of the State X Department of Environmental
Protection. HazWaste Corp. has established the required insurance, as
evidenced by the following documents which are attached:
(A) Copy of certificate of insurance (Attachment A) and
(B) Letter from State X Department of Environmental
Protection acknowledging satisfaction of state
requirements (Attachment B).
In addition, State X has established a Spill Compensation Fund to provide
for property damage claims. See Rules 30.50 through 30.70. We have attached
a letter from the state agency acknowledging the applicability of the State
fund to our facilities. (See Attachment C.)
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IV-13
ATTACHMENT IV-3 (continued)
SAMPLE OWNER OR OPERATOR REQUEST LETTER (I)
In conclusion, we request that the combination of our State-required
financial responsibility demonstrations and the State compensation fund be
deemed to satisfy completely Federal RCRA liability coverage requirements. We
will be pleased to provide any further information you may need.
Sincerely,
President, HazWaste Corp.
Attachments
A. Certificate of Insurance
3. State agency acknowledgment
C. State assumption of responsibility
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IV-14
ATTACHMENT IV-4
SAMPLE OWNER OR OPERATOR REQUEST LETTER (II)
Waste Control Inc.
Address
Date
EPA Regional Administrator
U.S. EPA Region
Street Address
City., State, Zip Code
Subject: RCRA Liability Coverage Requirements
Dear Sir/Madam:
This letter is submitted to request that RCRA liability coverage
requirements be deemed satisfied by State rules with which Waste Control Inc.
has complied.
Waste Control Inc. owns and operates one (1) facility in State Y located
at [insert address] assigned EPA Identification Number [insert number].
State Y has adopted by reference the RCRA liability coverage requirements
of 40 CFR 264 and 265, as amended. See Rule 70Y(2) of the State Department of
Natural Resources. Waste Control Inc. has secured an insurance policy
endorsement issued by , a copy of which is attached. The State Y
[insert appropriate agency] has accepted this insurance policy as fulfilling
the requirements of Rule 70Y(2).
Accordingly, we request that the establishment of this liability assurance
mechanism be determined acceptable for meeting the requirements of 40 CFR
265. Further information, if needed, will be supplied at your request.
Thank you,
Comptroller, Waste Control Inc.
Attachments
A. Insurance Policy Endorsement (copy)
B. State agency acknowledgment (copy)
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IV-15
ATTACHMENT IV-5
SAMPLE OWNER OR OPERATOR REQUEST LETTER (III)
Synthetic Chemical Industries
Address
Date
EPA Regional Administrator
U.S. EPA Region
Street Address
City, State, Zip Code
Subject: RCRA Liability Coverage Requirements
Synthetic Chemical Industries ("SCI") owns two hazardous waste facilities
in the State of Z, both of which are in interim status and subject to the
liability coverage requirements of 40 CFR 265. The EPA Identification Numbers
and addresses are:
[Insert identifying information]
SCI has complied with Section 394B of the Public Health Code of State Z by
providing insurance to assure the payment of damage claims for property damage
and personal injury resulting from sudden accidental occurrences. As required
by state law, this insurance must be in the amount of $10,000 per acre of land
for which a State Z permit is required, but in no event for less than
$100,000. SCI has obtained insurance of $250,000 and $420,000, respectively,
for the two sites identified above. Pursuant to state law, liability coverage
is to extend until five (5) years after the closure of the landfill. This
obligation is binding on the heirs, representatives, successors, and assignees
of SCI.
SCI requests that this State-required mechanism be determined acceptable
for meeting the liability coverage requirements of 40 CFR 265, in whole or in
part. Pending this determination, SCI understands that it will be deemed to
be in compliance with such requirements (40 CFR 265.149(b)). SCI intends to
provide whatever additional liability coverage assurances are determined
necessary.
Sincerely,
General Counsel, SCI
^Attachments
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GLOSSARY OF TERMS*
ACCIDENTAL OCCURRENCE
An accident, including continuous or repeated exposure to conditions,
which results in bodily injury or property damage neither expected nor
intended from the standpoint of the insured.
ACCOUNTANTS OPINION
See REPORT ON EXAMINATION.
ACKNOWLEDGE, ACKNOWLEDGMENT (OF AN INSTRUMENT)
Formal declaration before an authorized official such as a notary, by the
person who executed the instrument, that it is his free act and deed.
ADMITTED CARRIER
An insurance company licensed to do business in a state.
ADVERSE OPINION
Statement by an accountant that the financial statements of the firm do
not present fairly the financial condition of the firm in conformity with
generally accepted accounting principles. This type of opinion will cause
the EPA to disallow the financial test for the firm.
AGENT
Person authorized to sell insurance coverage as a representative of an
insurer or underwriter. May need to be licensed. See also BROKER.
ALIEN INSURER
An insurance company domiciled outside the United States.
AMORTIZATION
Gradual reduction of the accounting or "book" value of a fixed asset by
allocation of part of the cost of the asset over time to individual
accounting periods. The term is used to refer to assets whose life is
limited but which do not physically wear out. Examples include
copyrights, patents, and leases. See also DEPRECIATION.
ANNUAL AGGREGATE AMOUNT
The maximum liability protection afforded by an insurance policy in any
given year. RCRA regulations currently require minimum annual aggregate
levels at $2.0 million for sudden accidental occurrences and $6.0 million
for nonsudden accidental occurrences.
* These designations are intended to assist the reader in understanding the
regulations. This glossary does not purport to set out the full definition of
each term used in all contexts.
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G-2
ASSETS
All existing and all probable future economic benefits obtained or
controlled by a particular entity. Any right or physical property that is
owned and has a monetary value.
AUDIT
Systematic inspection of accounting records involving analyses, tests and
confirmations.
AUTOMATIC EXTENSION, AUTOMATIC RENEWAL
Continuation of an insurance policy or letter of credit without the need
for renegotiation.
BINDER
A record of an insurance transaction or arrangement issued by a carrier
pending delivery of the formal insurance contract (policy).
BODILY INJURY
Such physical injuries as are recoverable as a liability under applicable
state law. However, the term does not include those liabilities which,
consistent with standard industry practice, are excluded from coverage in
liability policies for bodily injury. For example, the insurance policy
need not cover injuries caused by war, injuries covered by worker's
compensation or disability benefits, or intentional injuries.
BOND RATING
An assessment of the credit-worthiness of an obligor with respect to a
specific debt obligation (bond). Ratings are designated by letter--e.g.
AA, A, B, etc. For the purpose of these regulations, Moody's and Standard
& Poor's are the only two acceptable bond-rating corporations. See also
INVESTMENT GRADE.
BROKER
An independent businessperson whose principal function is to represent an
insured (client) in obtaining optimum insurance protection at the most
advantageous price. A broker is not a licensed representative of any
particular insurer and is thus free to arrange insurance (i.e., "shop" a
risk) from virtually any commercial insurer. See also AGENT.
BUY BACK
A type of coverage excluded under the basic terms of the policy which can
be included for the payment of an additional premium. Normally refers to
reinstatement of limits used up by claims payments.
CGL
Stands for "Comprehensive General Liability" which is a policy form
designed to provide an "all hazards" scope of protection, subject to
certain exclusions and conditions specified in the policy form.
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. * . •
G-3
CAPTIVE INSURER
An insurance company set up by a company or group of companies to insure
their own risks, or risks common to the group. Captive insurers may
qualify under the Federal regulations by obtaining a license in one of the
several states which currently license captive insurers or by becoming
eligible or authorized to transact the business of insuring as a surplus
lines or excess insurer in a state.
CARRIER
An insurance company.
CASH FLOW
In accounting, a company's net income (sales minus operating expenses)
plus allowances for depreciation, depletion, and amortization. Represents
the funds available for working capital and expansion.
CERTIFICATE OF INSURANCE
A statement obtained from the insurer certifying that it has issued
insurance as represented in the certificate. Not part of the insurance
policy itself.
CERTIFIED PUBLIC ACCOUNTANT (CPA)
An accountant with a special state license indicating that he or she meets
certain requirements for the public practice of accounting. Although
requirements vary from state to state, all must pass an examination
administered by the American Institute of Certified Public Accountants.
CHIEF FINANCIAL OFFICER
The principal financial officer required to sign SEC FORM 10-K's or the
equivalent.
CLAIMS MADE
An insurance policy form under which coverage is triggered only when
claims are made during the policy period. The period of coverage under
claims made policy forms may be further expanded or restricted by
incorporation of "Discovery Period" or "Retroactive Period" provisions.
See also, OCCURRENCE-BASED COVERAGE.
CLOSURE OR POST-CLOSURE CARE INSURANCE
A type of insurance coverage that provides funds for final closure or
post-closure care and thereby satisfies the financial assurance
requirements for closure and post-closure care. Not to be confused with
liability insurance.
CORPORATE GUARANTEE
A guarantee by the owner's or operator's parent corporation that it will
meet all financial assurance obligations specified in the regulations.
Not permitted as a means of liability coverage.
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G-4
CURRENT ASSETS
Cash or other assets or resources commonly identified as those which are
reasonably expected to be realized in cash or sold or consumed during the
normal operating cycle of the business or within one year if the operating
cycle is less than one year.
CURRENT LIABILITIES
Obligations whose liquidation is reasonably expected to require the use of
existing resources properly classifiable as current assets or the creation
of other current liabilities or those expected to be satisfied within a
relatively short period of time, usually one year.
DEDUCTIBLE
That part or amount of a loss which is not covered by the insurer, but is
retained by the insured. Under RCRA, deductibles are permitted, however,
the regulations require the insurer to pay any deductible and then seek
reimbursement from the insured policyholder. See also POLICY LIMITS,
SELF-INSURANCE, and SELF-RETENTION.
DEPLETION
In accounting, an allowance made for the shrinkage or exhaustion of a
natural resource.
DEPRECIATION
In accounting, the method of allocating part of the cost of an asset that
will be used up over time to individual accounting periods. The number of
accounting periods does not necessarily correspond to the actual life of
the asset, i.e., a building that lasts 40 yeas may be depreciated over 10
years. See AMORTIZATION.
DISCLAIMER OF OPINION
Statement that the auditor does not express an opinion on the financial
statements of the firm. This statement will cause EPA to disallow the use
of the financial test for the firm.
ENDORSEMENT
In insurance, a form attached to an insurance policy that describes the
original terms of the policy and any alterations in those terms.
Specifically, the attachment to the owner's or operator's policy that
provides liability coverage for bodily injury and property damage.
ENVIRONMENTAL IMPAIRMENT LIABILITY INSURANCE
A type of insurance coverage designed to provide financial protection to
an owner or operator from pollution or environmental damage claims.
EXCESS COVERAGE
This type of insurance provides coverage above a specified figure and up
to a specified limit. This insurance can be combined with a CGL policy to
raise the liability limits of specified coverages. Also see UMBRELLA
COVERAGE.
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G-5
EXCESS OR SURPLUS LINES
The designation that a state may give to insurance companies which provide
the insurance coverages which are not readily available from companies
licensed or "admitted" to transact business in that state. Because such
companies cannot be regulated, states often control their ability to
transact business through the regulation of brokers and agents. In
addition, some states maintain lists of eligible excess or surplus lines
insurers which brokers may place business with. For an Excess or Surplus
Line carrier's policy to comply with the regulations, the carrier must be
eligible to provide coverage in one or more states. Captive or alien
insurers not meeting either the licensing or eligibility requirements
cannot issue liability policies which will comply with the regulations.
EXCLUSION
A provision in an insurance policy that certain causes of loss or certain
results are not covered by the policy under any circumstances.
EXISTING FACILITY
A facility that was in operation, or for which construction commenced, on
or before November 19, 1980. A facility has commenced construction if the
owner or operator has obtained Federal, state, and local approval to begin
construction, and physical construction has begun, or contracts for
physical construction have been signed.
XTENDED REPORTING PERIOD
Often referred to as a "Discovery Period." A provision in claims made
policy forms which provides that an insured, for the payment of an
additional premium, may obtain an extension of coverage following
termination of the policy, for losses occurring during the policy period
but which are not brought until after the policy's termination.
FACE AMOUNT OF POLICY
The total amount the insurer is obligated to pay under the policy. The
insurer's limit of liability or POLICY LIMIT.
FACE VALUE
The value of a security, insurance policy, or letter of credit, expressed
as a specific sum of money, which is printed, stamped, or otherwise narked
on its face.
FIDUCIARY
A person with the duty to act on behalf of another or to protect the
interests of another.
FINAL AUTHORIZATION
Approval by EPA of a State program which has met the requJrements of
§3006(b) of RCRA and the applicable requirements of Part 123, Subparts A
and B. The earliest a State program can receive fin^l authorization is
January 26, 1983.
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G-6
FINANCIAL STATEMENTS
Formal reports of the status of accounts at a particular time, prepared to
show the operating results and financial condition of the firm. The
statements include the balance sheet, income statement, and statement of
changes in financial position.
FINANCIAL TEST
Two sets of criteria related to a company's financial soundness, specified
in RCRA regulations, either of which if satisfied by an owner or operator
will establish liability coverage. A similar financial test can be used
by an owner, operator, or corporate parent to establish financial
assurance for closure and post-closure care.
FIRST DOLLAR BASIS
An insurance policy which, in the event of a loss within the policy limit,
will pay the entire loss. RCRA regulations require that if a policy
incorporates a deductible the insurer will settle the claim and seek
reimbursement from the insured, unless the financial test is being used by
the owner or operator to assure that portion of the coverage requirements.
FORM 10-K, FORM 10-Q
A type of report that U.S. corporations file with the Securities and
Exchange Cdmmission. It frequently contains more information than the
annual report distributed to stockholders. The 10-K is submitted
annually; the 10-Q quarterly.
GRADUAL POLLUTION COVERAGE
Also referred to as nonsudden pollution coverage; a policy designed to
provide insurance protection for pollution incidents which take place over
time and result in bodily injury or property damage neither expected nor
intended by the insured.
GUARANTOR
^One who guarantees payment of a present or future obligation.
INTERIM AUTHORIZATION
Approval by EPA of a state hazardous waste program that has met the
requirements of §3006(c) of RCRA and applicable requirements of Part 123,
Subpart F. Interim authorization will expire no later than January 26,
1985. See also PHASE I and PHASE II.
INTERIM STATUS FACILITIES
Existing hazardous waste management facilities which submitted
notification under RCRA Section 2010 and Part A of the RCRA permit
application by November 19, 1980. Facility owners and operators with
interim status are treated as having been issued a permit until EPA or a
state with interim authorization for Phase II or final authorization under
Part 123 makes a final determination on the permit application. Facility
owners and operators with interim status are not relieved from complying
with State requirements.
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VESTMENT GRADE
A bond or other debt instrument with a rating from Moody's of Aaa, Aa, A,
or Baa; or a rating from Standard & Poor's of AAA, AA, A, or BBB.
ISSUER
The party who issues an insurance policy or guarantee.
LEGAL DEFENSE COSTS
Any expenses that an insurer incurs in defending against claims of third
parties brought under the terms and conditions of an insurance policy.
LIABILITIES
In accounting, probable future sacrifices of economic benefits arising
from present obligations to transfer assets or provide services to other
entities in the future as a result of past transactions or events. In
law, legally binding obligations, often to THIRD PARTIES.
LIABILITY LIMITS
See POLICY LIMITS.
MOODY'S
One of the two bond-rating agencies acceptable for purposes of these
regulations. Address: Moody's Investors Service, Inc., 99 Church Street,
New York, New York 10007.
T INCOME
The difference between total sales and total costs of goods sold plus
expenses over the fiscal year.
NET WORKING CAPITAL
Current assets minus current liabilities.
NET WORTH
Total assets minus total liabilities; it is equivalent to owner's equity.
NONSUDDEN ACCIDENTAL OCCURRENCE
An accident, including continuous or repeated exposure to conditions
resulting in bodily injury or property damage neither expected nor
intended from the standpoint of an insured.
OCCURRENCE-BASED COVERAGE
A form of insurance contract which covers claims based on whether the
causal event occurred during the policy period, not whether the claim was
filed during the policy period. It is not currently available for
nonsudden pollution occurrences.
PARENT CORPORATION
A corporation which directly owns at least 50 percent of the voting stock
of the corporation which is the facility owner or operator; the latter
corporation is deemed a "subsidiary" of the parent corporation.
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G-8
PARENT GUARANTOR
A parent corporation which provides a corporate guarantee.
PERMITTED FACILITIES
Facilities which have demonstrated compliance with RCRA standards and have
received final RCRA permits.
PHASE I INTERIM AUTHORIZATION
The first phase of interim authorization of State programs by EPA. It
allows states to administer a hazardous waste program in lieu of and
corresponding to that portion of the Federal program which covers
identification and listing of hazardous waste, generators and transporters
of hazardous waste, and establishes preliminary standards for hazardous
waste treatment, storage, and disposal facilities. States need not have
established financial responsibility requirements to receive Phase I
interim authorization.
PHASE II INTERIM AUTHORIZATION
The second phase of interim authorization of State programs by 2?A. It
allows states to establish a permit program for hazardous waste -reatment,
storage, and disposal facilities in lieu of and corresponding -:> the
Federal hazardous waste permit program, including financial assurince
requirements for both interim status and permitted facilities. Phase II
interim authorization is granted in separate components for treatment,
storage, and land disposal facilities.
POLICY LIMITS
The maximum amount the insurer is obligated to pay in the settlement of
claims, often expressed on an annual aggregate and per occurrence basis.
POLLUTION LIABILITY INSURANCE
Insurance designed to provide protection for bodily injury, property
damage and environmental impairment resulting from the sudden or gradual
discharge, dispersal, release, escape or seepage of toxic substances into
the environment.
POWER OF ATTORNEY
A written authorization, of another party to act as one's agent or attorney.
PREMIUM PAYMENTS
The periodic payments of money which the policy-holder agrees to pay the
insurer for an insurance policy.
PROPERTY DAMAGE
Such damage to property which is recoverable as a liability under
applicable state law. However, the term does not include those
liabilities which, consistent with standard industry practice, are
excluded from coverage in liability policies for property damage. For
example, the RCRA insurance policy need not cover property damage caused
by war, covered by automobile insurance policies, or intentionally caused.
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QUALIFIED OPINION
Statement by an accountant that the financial statements of a firm present
fairly the financial condition of the firm, subject to certain conditions,
or except for certain limitations.
REPORT ON EXAMINATION
The independent certified public accountant's report on the financial
statements, support schedules, and footnotes. Often referred to as the
accountant's report or the auditor's opinion. The report on examination
usually contains two paragraphs --a scope paragraph and an opinion
paragraph. The scope paragraph indicates the financial presentations
covered by the opinion and affirms that generally accepted auditing
standards and practices have been followed by the auditors. The opinion
paragraph contains the accountant's opinion of the financial statements,
schedules and footnotes. The opinion can be unqualified, qualified, or
adverse; or there can be a disclaimer of opinion. See QUALIFIED OPINION,
UNQUALIFIED OPINION, ADVERSE OPINION, and DISCLAIMER OF OPINION.
RETROACTIVE DATE
A provision in claims made policy forms to limit coverage for occurrences
which occurred prior to that date.
RIDER
In insurance, a form adding special provisions to a policy. See also
ENDORSEMENT.
SECURITIES OR OTHER OBLIGATIONS
Written instruments showing evidence of indebtedness of a business or
equity ownership of a business. Bonds are securities which bear interest.
SELF-INSURANCE, SELF-RETENTION
The financing of losses from within the financial structure of an entity,
rather than transferring losses to an insurance company by purchase of
liability insurance. Owners and operators may comply with the RCRA
financial responsibility requirements using self insurance by passing the
financial test specified in the regulations.
SPECIAL REPORT
The independent certified public accountant's confirmation that the
financial data in the letter from the chief financial officer were derived
from the annual report and need no adjustment.
STANDARD & POOR'S
One of the two bond-rating agencies acceptable for purposes of these
regulations. Address: Standard & Poor's Corp., 25 Broadway, New York,
New York 10004 or P.O. Box 992, New York, New York 10275.
SUDDEN ACCIDENTAL OCCURRENCE
An accidental occurrence which is not continuous or repeated in rature.
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G-10
TANGIBLE NET WORTH
Net worth minus intangible assets, such as goodwill and rights to patents
or royalties.
THIRD PARTIES
Persons not parties to the insurance contract between insurer and insured
but who may make claims under the policy.
TOTAL LIABILITIES
Total debts owed by a business or individual including all liabilities.
UMBRELLA COVERAGE
A form of liability insurance designed to increase the limits of liability
as excess insurance over primary policies. In addition, the umbrella form
may provide a broader scope of coverage than the underlying primary
policies. When this occurs the umbrella "drops down" and acts as a
primary insurance policy. See also EXCESS LIABILITY.
UNDERWRITE (A RISK)
To insure or assume a risk. In insurance, a person or company underwrites
all or part of the risk against theft, fire, death, or whatever the policy
stipulates, in exchange for a payment called a premium.
UNQUALIFIED OPINION
Statement by an accountant that the financial statements of a firm present
fairly the financial position, results of operations, and changes in
financial position in conformity with generally accepted accounting
principles consistently applied.
VARIANCE
An alteration in the general terms of a requirement based on
considerations specific to a facility.
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APPENDIX A
EPA FINANCIAL ASSURANCE REGIONAL OFFICE CONTACTS
For information on implementation of the financial assurance regulations,
contact the EPA regional offices below:
Region I (Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island, Vermont)
Gary Gosbee
Waste Management Branch
John F. Kennedy Building
Boston, Massachusetts 02203
(617) 223-3468
Region II (New Jersey, New York, Puerto Rico, U.S. Virgin Islands)
Helen S. Beggun, Chief
Grants Administration Branch
26 Federal Plaza
New York, New York 10278
(212) 264-9860
Region III (Delaware, District of Columbia, Maryland,
Pennsylvania, Virginia, West Virginia)
Anthony Donatoni
Hazardous Materials Branch
6th and Walnut Streets
Philadelphia, Pennsylvania 19106
(215) 597-7937
Region IV (Alabama, Florida, Georgia, Kentucky, Mississippi,
North Carolina, South Carolina, Tennessee)
Micky Hartnett
Residuals Management Branch
345 Courtland Street, N.E.
Atlanta, Georgia 30365
(404) 881-3067
Region V (Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin)
Thomas Golz
Waste Management Branch
230 South Dearborn Street
Chicago, Illinois 60604
(312) 886-4023
Please mark all submissions: "Attention: RCRA Financial Requirements"
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A-2
Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, Texas)
Henry Onsgard
U.S. EPA Regional Office
1201 Elm Street
First International Building
Dallas, Texas 75270
(214) 767-8941
Ragion V!l (Iowa, Kansas, Missouri, Nebraska)
Robert L. Morby, Chief
Hazardous Materials Branch
324 East llth Street
Kansas City, Missouri 64106
(816) 374-3307
Region VIII (Colorado, Montana, North Dakota, South Dakota, Utah,
Wyoming)
Carol Lee
Waste Management Branch
1860 Lincoln Street
Denver, Colorado 80295
(303) 837-6258
Region IX (American Samoa, Arizona, California, Commonwealth of
the Northern Marianas Islands, Guam, Hawaii, Nevada)
Richard Procunier
Hazardous Materials Branch
215 Fremont Street
San Francisco, California 94105
(415) 974-8157
Region X (Alaska, Idaho, Oregon, Washington)
Kenneth D. Feigner, Chief
Waste Management Branch
1200 Sixth Avenue
Seattle, Washington 98101
(206) 442-1236
Please mark all submissions: "Attention: RCRA Financial Requirements"
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