Section 329 IAC 3.1-15-8 - Liability requirementsAuthority: IC 13-14-8; IC 13-22-2-4
Affected: IC 13-22-2; 40 CFR 264.147
Sec. 8.
(a) An owner or operator of a hazardous waste treatment, storage, recovery, or disposal facility, or a group of such facilities, shall demonstrate financial responsibility for bodily injury and property damage to third parties caused by sudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator shall have and maintain liability coverage for sudden accidental occurrences in the amount of at least one million dollars ($1,000,000) per occurrence with an annual aggregate of at least two million dollars ($2,000,000), exclusive of legal defense costs. This liability coverage may be demonstrated in one (1) of the following six (6) ways: (1) An owner or operator may demonstrate the required liability coverage by having liability insurance as specified as follows:(A) Each insurance policy must be amended by attachment of the hazardous waste facility liability endorsement or evidenced by a certificate of liability insurance. The wording of the endorsement must be identical to the wording specified in section 10(i) of this rule. The wording of the certificate of insurance must be identical to the wording specified in section 10(j) of this rule. The owner or operator shall submit a signed duplicate original of the endorsement or the certificate of insurance to the commissioner. If requested by the commissioner, the owner or operator shall provide a signed duplicate original of the insurance policy. An owner or operator of a new facility shall submit the signed duplicate original of the hazardous waste facility liability endorsement or the certificate of liability insurance to the commissioner at least sixty (60) days before the date on which hazardous waste is first received for treatment, storage, recovery, or disposal. The insurance must be effective before this initial receipt of hazardous waste.(B) Each insurance policy must be issued by an insurer that, at a minimum, is licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one (1) or more states.(2) An owner or operator may meet the requirements of this section by passing a financial test for liability coverage as specified in subsection (e) or by using the guarantee for liability coverage as specified in subsection (f).(3) An owner or operator may meet the requirements of this section by obtaining a letter-of-credit for liability coverage as specified in subsection (g).(4) An owner or operator may meet the requirements of this section by obtaining a surety bond for liability coverage as specified in subsection (h).(5) An owner or operator may meet the requirements of this section by establishing a trust fund for liability coverage as specified in subsection (i).(6) An owner or operator may demonstrate the required liability coverage through the use of a combination of insurance, financial test, guarantee, letter-of-credit, surety bond, or trust fund except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amounts required by this subsection. If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under this subsection, the owner or operator shall specify at least one (1) such assurance as primary coverage and shall specify the other assurance as excess coverage. An owner or operator shall notify the commissioner in writing within thirty (30) days whenever a claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in this subsection, a certification of valid claim for bodily injury or property damages caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is entered between the owner or operator and third party claimant for liability coverage under this subsection, or a final court order establishing a judgment for bodily injury or property damage caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under this subsection.
(b) An owner or operator of a surface impoundment, landfill, land treatment facility, or disposal miscellaneous unit that is used to manage hazardous waste or a group of such facilities shall demonstrate financial responsibility for bodily injury and property damage to third parties caused by nonsudden accidental occurrences arising from operations of the facility or group of facilities. The owner or operator shall have and maintain liability coverage for nonsudden accidental occurrences in the amount of at least three million dollars ($3,000,000) per occurrence with an annual aggregate of at least six million dollars ($6,000,000), exclusive of legal defense costs. An owner or operator who meets the requirements of this subsection may combine the required per occurrence coverage levels for sudden and nonsudden accidental occurrences into a single per occurrence level and combine the required annual aggregate coverage levels for sudden and nonsudden accidental occurrences into a single annual aggregate level. Owners or operators who combine coverage levels for sudden and nonsudden accidental occurrences shall maintain liability coverage in the amount of at least four million dollars ($4,000,000) per occurrence and eight million dollars ($8,000,000) annual aggregate. This liability coverage may be demonstrated in one (1) of the following six (6) ways as specified in subdivisions (1) through (6):(1) An owner or operator may demonstrate the required liability coverage by having liability insurance as specified in this subdivision as follows:(A) Each insurance policy must be amended by attachment of the hazardous waste facility liability endorsement or evidenced by a certificate of liability insurance. The wording of the endorsement must be identical to the wording specified in section 10(i) of this rule. The wording of the certificate of insurance must be identical to the wording specified in section 10(j) of this rule. The owner or operator shall submit a signed duplicate original of the endorsement or the certificate of insurance to the commissioner. If requested by the commissioner, the owner or operator shall provide a signed duplicate original of the insurance policy. An owner or operator of a new facility shall submit the signed duplicate original of the hazardous waste facility liability endorsement or the certificate of liability insurance to the commissioner at least sixty (60) days before the date on which hazardous waste is first received for treatment, storage, recovery, or disposal. The insurance must be effective before this initial receipt of hazardous waste.(B) Each insurance policy must be issued by an insurer that, at a minimum, is licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one (1) or more states.(2) An owner or operator may meet the requirements of this section by passing a financial test for liability coverage as specified in subsection (e) or by using the guarantee for liability coverage as specified in subsection (f).(3) An owner or operator may meet the requirements of this section by obtaining a letter-of-credit for liability coverage as specified in subsection (g).(4) An owner or operator may meet the requirements of this section by obtaining a surety bond for liability coverage as specified in subsection (h).(5) An owner or operator may meet the requirements of this section by establishing a trust fund for liability coverage as specified in subsection (i).(6) An owner or operator may demonstrate the required liability coverage through the use of a combination of insurance, financial test, guarantee, letter-of-credit, surety bond, or trust fund except that the owner or operator may not combine a financial test covering part of the liability coverage requirement with a guarantee unless the financial statement of the owner or operator is not consolidated with the financial statement of the guarantor. The amounts of coverage demonstrated must total at least the minimum amount required by this subsection. If the owner or operator demonstrates the required coverage through the use of a combination of financial assurances under this subsection, the owner or operator shall specify at least one (1) such assurance as primary coverage and shall specify the other assurance as excess coverage.(7) An owner or operator shall notify the commissioner in writing within thirty (30) days whenever any of the following occurs: (A) A claim results in a reduction in the amount of financial assurance for liability coverage provided by a financial instrument authorized in subdivisions (1) through (6).(B) A certification of valid claim for bodily injury or property damages caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is entered between the owner or operator and third party claimant for liability coverage under subdivisions (1) through (6).(C) A final court order establishing a judgment for bodily injury or property damages caused by a sudden or nonsudden accidental occurrence arising from the operation of a hazardous waste treatment, storage, or disposal facility is issued against the owner or operator or an instrument that is providing financial assurance for liability coverage under subdivisions (1) through (6).(8) If an owner or operator demonstrates to the satisfaction of the commissioner that the levels of financial responsibility required by subsection (a) or this subsection are not consistent with the degree and duration of risk associated with treatment, storage, recovery, or disposal at the facility or group of facilities, the owner or operator may obtain an exemption from the commissioner. The request for exemption must be submitted to the commissioner as part of the application under 40 CFR 270.14 for a facility that does not have a permit, or pursuant to the procedures for permit modification under 329 IAC 3.1-13-7 for a facility that has a permit. If granted, the exemption must take the form of an adjusted level of required liability coverage, with such level to be based on the commissioner's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. The commissioner may require an owner or operator who requests an exemption to provide such technical and engineering information as is deemed necessary by the commissioner to determine a level of financial responsibility other than that required by subsection (a) or this subsection. Any request for an exemption for a permitted facility must be treated as a request for a permit modification under 40 CFR 270.41(a)(5) and 329 IAC 3.1-13-7.(c) If the commissioner determines that the levels of financial responsibility required by subsection (a) or (b) are not sufficient for the degree and duration of risk associated with treatment, storage, or disposal at the facility or group of facilities, the commissioner may adjust the level of financial responsibility required under subsection (a) or (b) as may be necessary to protect human health and the environment. This adjusted level will be based on the commissioner's assessment of the degree and duration of risk associated with the ownership or operation of the facility or group of facilities. In addition, if the commissioner determines that there is a significant risk to human health and the environment from nonsudden accidental occurrences resulting from the operation of a facility that is not a surface impoundment, landfill, or land treatment facility, the commissioner may require that an owner or operator of the facility comply with subsection (b). An owner or operator shall furnish to the commissioner, within ninety (90) days, any information that the commissioner requests to determine whether cause exists for such adjustments of level or type of coverage. Any adjustment of the level or type of coverage for a facility that has a permit must be treated as a permit modification under 329 IAC 3.1-13-7.(d) Within sixty (60) days after receiving certifications from the owner or operator and an independent registered professional engineer that final closure has been completed in accordance with the approved closure plan, the commissioner shall notify the owner or operator in writing that the owner or operator is no longer required by this section to maintain liability coverage for that facility unless the commissioner has reason to believe that closure has not been in accordance with the approved closure plan.(e) The requirements for a financial test for liability coverage are as follows: (1) An owner or operator may satisfy the requirements of this section by demonstrating that the owner or operator passes a financial test as specified in this subsection. To pass this test, the owner or operator shall meet the criteria of either clause (A) or (B) as follows: (A) The owner or operator shall have the following:(i) Net working capital and tangible net worth each at least six (6) times the amount of liability coverage to be demonstrated by this test.(ii) Tangible net worth of at least ten million dollars ($10,000,000).(iii) Assets located in the United States amounting to at least:(AA) ninety percent (90%) of the total assets; or(BB) six (6) times the amount of liability coverage to be demonstrated by this test. (B) The owner or operator shall have the following: (i) A current rating for the most recent bond issuance of: (AA) AAA, AA, A, or BBB as issued by Standard and Poor's; or(BB) Aaa, Aa, A, or Baa as issued by Moody's.(ii) Tangible net worth of at least ten million dollars ($10,000,000).(iii) Tangible net worth at least six (6) times the amount of liability coverage to be demonstrated by this test.(iv) Assets located in the United States amounting to at least:(AA) ninety percent (90%) of the total assets; or(BB) six (6) times the amount of liability coverage to be demonstrated by this test.(2) As used in subdivision (1), "amount of liability coverage" refers to the annual aggregate amounts for which coverage is required under subsections (a) through (b).(3) To demonstrate that the owner or operator meets this test, the owner or operator shall submit the following to the commissioner:(A) A letter signed by the owner's or operator's chief financial officer and worded as specified in section 10(g) of this rule. If an owner or operator is using the financial test to demonstrate both assurance for closure or post-closure care, as specified by sections 4(g) and (6)(g) of this rule, and liability coverage, the owner or operator shall submit the letter specified in section 10(g) of this rule to cover both forms of financial responsibility. A separate letter as specified in section 10(f) of this rule is not required.(B) A copy of the independent certified public accountant's report on examination of the owner's or operator's financial statements for the latest completed fiscal year.(C) A special report from the owner's or operator's independent certified public accountant to the owner or operator stating the following:(i) The independent certified public accountant has compared the data that the letter from the chief financial officer specifies as having been derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements.(ii) In connection with that procedure, no matters came to the attention of the independent certified public accountant that caused the independent certified public accountant to believe that the specified data should be adjusted.(4) An owner or operator of a new facility shall submit the items specified in subdivision (3) to the commissioner at least sixty (60) days before the date on which hazardous waste is first received for treatment, storage, recovery, or disposal.(5) After the initial submission of items specified in subdivision (3), the owner or operator shall send updated information to the commissioner within ninety (90) days after the close of each succeeding fiscal year. This information must consist of all three (3) items specified in subdivision (3).(6) If the owner or operator no longer meets the requirements of subdivision (1), the owner or operator shall obtain insurance, a letter-of-credit, a surety bond, a trust fund, or a guarantee for the entire amount of required liability coverage as specified in this section. Evidence of liability coverage must be submitted to the commissioner within ninety (90) days after the end of the fiscal year for which the year-end financial data reflects that the owner or operator no longer meets the test requirements.(7) The commissioner may disallow use of this test on the basis of qualifications in the opinion expressed by the independent certified public accountant in the report on examination of the owner's or operator's financial statements. (See subdivision (3)(B).) An adverse opinion or a disclaimer of opinion is cause for disallowance. The commissioner shall evaluate other qualifications on an individual basis. The owner or operator shall provide evidence of insurance for the entire amount of required liability coverage as specified in this section within thirty (30) days after notification of disallowance.(f) The requirements for a guarantee for liability coverage are as follows:(1) Subject to subdivision (2), an owner or operator may meet the requirements of this section by obtaining a written guarantee, hereinafter referred to as guarantee. The guarantor shall be the direct or higher tier parent corporation of the owner or operator or a firm whose parent corporation is also the parent corporation of the owner or operator. The guarantor shall meet the requirements for owners or operators in subsection (e). The wording of the guarantee must be identical to the wording specified in 329 IAC 3.1-14-34. A certified copy of the guarantee must accompany the items sent to the commissioner as specified in subsection (e)(3). One (1) of these items must include the letter from the guarantor's chief financial officer. If the guarantor's parent corporation is also the parent corporation of the owner or operator, the letter must describe the value received in consideration of the guarantee. The terms of the guarantee must provide the following: (A) If the owner or operator fails to satisfy a judgment based on a determination of liability for bodily injury or property damage to third parties caused by sudden or nonsudden accidental occurrences, or both as the case may be, arising from the operation of facilities covered by this guarantee, or fails to pay an amount agreed to in settlement of claims arising from or alleged to arise from such injury or damage, the guarantor shall satisfy the judgment or pay the amount agreed to in settlement of claims up to the limits of coverage.(B) The guarantee must remain in force unless the guarantor sends notice of cancellation by certified mail to the owner or operator and to the commissioner. The guarantee may not be terminated unless and until the commissioner approves in writing alternate liability coverage complying with 329 IAC 3.1-14-24 or this section.(2) In the case of the corporations incorporated in the United States, a guarantee may be used to satisfy the requirements of this section only if: (A) the attorney general or insurance commissioner of the state in which the guarantor is incorporated; and(B) the attorney general or insurance commissioner of Indiana; have submitted a written statement to the commissioner that a guarantee executed as described in this section and 329 IAC 3.1-14-34 is a legally valid and enforceable obligation in that state.
(3) In the case of the corporations incorporated outside the United States, a guarantee may be used to satisfy the requirements of this section only if: (A) the non-U.S. corporation has identified a registered agent for service of process in Indiana and in the state in which it has its principal place of business; and(B) the attorneys general or insurance commissioners of Indiana and the state in which the guarantor corporation has its principal place of business have submitted a written statement to the commissioner that a guarantee executed as described in this section and 329 IAC 3.1-14-34 is a legally valid and enforceable obligation in that state. (g) The requirements for a letter-of-credit for liability coverage are as follows: (1) An owner or operator may satisfy the requirements of this section by obtaining an irrevocable standby letter-of-credit that conforms to the requirements of this section and by submitting a copy of the letter-of-credit to the commissioner.(2) The financial institution issuing the letter-of-credit must be an entity that has the authority to issue letters-of-credit and whose letter-of-credit operations are regulated and examined by a federal or state agency.(3) The wording of the letter-of-credit must be identical to the wording specified in 329 IAC 3.1-14-37.(4) An owner or operator who uses a letter-of-credit to satisfy the requirements of this section may also establish a standby trust fund. Under the terms of such a letter-of-credit, all amounts paid pursuant to a draft by the trustee of the standby trust must be deposited by the issuing institution into the standby trust in accordance with instructions from the trustee. The trustee of the standby trust fund must be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.(5) The wording of the standby trust fund must be identical to the wording specified in 329 IAC 3.1-14-40.(h) The requirements for a surety bond for liability coverage are as follows: (1) An owner or operator may satisfy the requirements of this section by obtaining a surety bond that conforms to the requirements of this section and by submitting a copy of the bond to the commissioner.(2) The surety company issuing the bond must be among those listed as acceptable sureties on federal bonds in the current Circular 570 of the U.S. Department of the Treasury.(3) The wording of the surety bond must be identical to the wording specified in 329 IAC 3.1-14-38.(4) A surety bond may be used to satisfy the requirements of this section only if:(A) the attorney general or insurance commissioner of the state in which the surety is incorporated; and(B) the attorney general or insurance commissioner of Indiana; have submitted a written statement to the commissioner that a surety bond executed as described in this subsection and 329 IAC 3.1-14-38 is a legally valid and enforceable obligation in that state.
(i) The requirements for trust fund for liability coverage are as follows: (1) An owner or operator may satisfy the requirements of this section by establishing a trust fund that conforms to the requirements of this section and by submitting an originally signed duplicate of the trust agreement to the commissioner.(2) The trustee shall be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.(3) The trust fund for liability coverage must be funded for the full amount of the liability coverage to be provided by the trust fund before it may be relied upon to satisfy the requirements of this section. If at any time after the trust fund is created the amount of funds in the trust fund is reduced below the full amount of the liability coverage to be provided, the owner or operator, by the anniversary date of the establishment of the fund or within one hundred twenty (120) days of the reduction, whichever is sooner, shall either add sufficient funds to the trust fund to cause its value to equal the full amount of the liability coverage to be provided or obtain other financial assurance as specified in this section to cover the difference. As used in this subsection, "the full amount of the liability coverage to be provided" means the amount of coverage for sudden, nonsudden, or sudden and nonsudden occurrences required to be provided by the owner or operator by this subsection, less the amount of financial assurance for liability coverage that is being provided by other financial assurance mechanisms being used to demonstrate financial assurance by the owner or operator.(4) The wording of the trust fund must be identical to the wording specified in 329 IAC 3.1-14-39.Solid Waste Management Board; 329 IAC 3.1-15-8; filed Jan 24, 1992, 2:00 p.m.: 15 IR 998; errata filed Feb 6, 1992, 3:15 p.m.: 15 IR 1027; filed Apr 1, 1996, 11:00 a.m.: 19 IR 2034; errata filed Apr 30, 1996, 10:00 a.m.: 19 IR 2289; readopted filed Jan 10, 2001, 3:25 p.m.: 24 IR 1535