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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2005-P-00026
September 26, 2005
Why We Did This Review
This report addresses efforts
of the Environmental
Protection Agency (EPA) to
implement financial assurance
requirements at hazardous
waste facilities regulated
under the Resource
Conservation and Recovery
Act (RCRA). Regulators have
expressed concern that some
of the methods used to ensure
that facilities have sufficient
funds to cover facility closure
costs are limited, may not be
effective, and may financially
impact EPA and States.
Background
RCRA hazardous waste
facilities are required to
provide assurance that they
have sufficient financial assets
to cover closure costs for all
permitted and interim status
units as well as post-closure
costs for all land-based units.
EPA has authorized all but
two of the States (Iowa and
Alaska) to implement these
requirements.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2005/
20050926-2005-P-00026.pdf
Catalyst for Improving the Environment
Continued EPA Leadership Will Support State Needs for
Information and Guidance on RCRA Financial Assurance
What We Found
EPA does not have adequate data on financial assurance at hazardous waste
treatment, storage, and disposal facilities regulated under RCRA. Unlike many
other types of permit information, basic financial assurance information has not
been reported into EPA's national database. This hampers efforts to evaluate the
effectiveness of current financial assurance mechanisms and make adjustments to
ensure facilities have sufficient funds for closure and post-closure costs.
State and EPA financial assurance officials need to improve communication
mechanisms to share financial assurance information. EPA also needs to update
guidance, particularly for insurance, and needs to uniformly oversee State
programs. Such actions will improve the ability of States to make informed
decisions on the adequacy of financial assurance mechanisms. Further, States and
EPA staff have expressed concern with aspects of the financial test and other
financial assurance mechanisms. Although States and regions expressed concerns
about financial assurance, we noted few examples in which failures occurred.
EPA is taking positive steps to address various issues. The Office of Enforcement
and Compliance Assurance formally identified financial assurance as a program
priority. EPA is incorporating some necessary financial assurance data elements
into its information system, and recently implemented a successful financial
assurance training program for States. EPA has asked its Environmental Financial
Advisory Board to study and make recommendations on financial assurance issues
of concern. Our work supports EPA's efforts and identifies additional
improvement opportunities.
What We Recommend
We recommend that EPA implement financial assurance data elements after
ensuring the information needs will be satisfied by these elements; actively engage
States and regions in developing communication mechanisms and guidance;
continue support of financial assurance training; develop mechanisms to ensure
adequate EPA regional oversight of State programs; and clarify goals, milestones,
and timelines for addressing financial assurance modifications. EPA generally
agreed with our recommendations, and made suggestions that we incorporated into
the report. The Agency's full response to the recommendations is in Appendix A.

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