N.M. Admin. Code § 20.9.10.22

Current through Register Vol. 35, No. 23, December 10, 2024

Section 20.9.10.22 - CORPORATE FINANCIAL TEST

A private entity that satisfies the financial test requirements of this section may provide a corporate guarantee for financial assurance up to the amounts specified in this section for closure, post-closure care, phase I and phase II assessments, and corrective action.

A. Financial component.

(1) The owner or operator shall satisfy at least one of the following three conditions:

(a) a current rating for its senior unsubordinated debt of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A or Baa as issued by Moody's;

(b) a ratio of less than 1.5 comparing total liabilities to net worth; or

(c) a ratio of greater than 0.10 comparing the sum of net income plus depreciation, depletion and amortization, minus $10 million, to total liabilities.

(2) The tangible net worth of the owner or operator shall be greater than:

(a) the sum of the current closure, post-closure care, phase I and phase II assessments, and corrective action cost estimates and any other environmental obligations, including guarantees, covered by a financial test plus $10 million; or

(b) $10 million in net worth plus the amount of any guarantees that have not been recognized as liabilities on the financial statements, provided all of the current closure, post-closure care, phase I and phase II assessments and corrective action costs and any other environmental obligations covered by a financial test are recognized as liabilities on the owner's or operator's audited financial statements;

(c) the owner or operator shall have assets located in the United States amounting to at least the sum of current closure, post-closure care, phase I and phase II assessments, corrective action cost estimates, and any other environmental obligations covered by a financial test as described in Subsection C of 20.9.10.22 NMAC.

B. Recordkeeping and reporting requirements.

(1) An owner or operator seeking to demonstrate that it meets the corporate financial test shall file the following items with the department:

(a) a letter signed by the owner's or operator's chief financial officer that lists all the current cost estimates covered by a financial test, including, but not limited to, cost estimates required for municipal solid waste management facilities and cost estimates required for any facilities described in Subsection C of 20.9.10.22 NMAC, and provides evidence demonstrating that the firm meets the conditions of Subsection A of this section;

(b) a copy of the independent certified public accountant's unqualified opinion of the owner's or operator's financial statements for the latest completed fiscal year; to be eligible to use the financial test, the owner's or operator's financial statements must receive an unqualified opinion from the independent certified public accountant; an adverse opinion, disclaimer of opinion, or other qualified opinion shall be cause for disallowance, except that the secretary may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the secretary deems that the matters which form the basis for the qualification are insufficient to warrant disallowance of the test;

(c) if the chief financial officer's letter providing evidence of financial assurance includes financial data showing that the owner or operator satisfies Subparagraphs (b) or (c) of Paragraph (1) of Subsection A of 20.9.10.22 NMAC that are different from data in the audited financial statements referred to in Subparagraph (b) of Paragraph (1) of Subsection B of 20.9.10.22 NMAC or any other audited financial statement or data filed with the securities and exchange commission, then a special report from the owner's or operator's independent certified public accountant to the owner or operator is required; the special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements, the findings of that comparison, and the reasons for any differences; and

(d) if the chief financial officer's letter provides a demonstration that the firm has assured for environmental obligations as provided in Subparagraph (b) of Paragraph (2) of Subsection A of 20.9.10.22 NMAC, then the letter shall include a report from the independent certified public accountant that verifies that all of the environmental obligations covered by a financial test have been recognized as liabilities on the audited financial statements, how these obligations have been measured and reported, and that the tangible net worth of the firm is at least $10 million plus the amount of any guarantees provided.

(2) The owner or operator shall meet the requirements of 20.9.10.22 NMAC unless the owner or operator provides alternate financial assurance that is approved in writing by the secretary or if the secretary notifies him in writing that he is no longer required to provide financial assurance.

(3) The owner or operator shall satisfy the requirements of the corporate financial test at the close of each fiscal year. If the owner or operator no longer meets the requirements of the test, the owner or operator shall, within 60 days following the close of the owner or operator's fiscal year, obtain alternate financial assurance approved in writing by the secretary.

(4) The secretary, based on a reasonable belief that the owner or operator may no longer meet the requirements of the corporate financial test, may require the owner or operator to provide reports of its financial condition at any time. If the secretary finds that the owner or operator no longer meets the requirements of the corporate financial test, the owner or operator shall provide alternate financial assurance.

C. Calculation of costs to be assured. When calculating the current cost estimates for closure, post-closure care, phase I and phase II assessments, corrective action, or the sum of the combination of such costs to be covered, and any other environmental obligations assured by a corporate financial test, the owner or operator shall include cost estimates required for municipal solid waste management facilities under this part, as well as cost estimates required for the following environmental obligations, if they are assured through a corporate financial test: obligations associated with UIC facilities under 40 CFR Part 144, petroleum underground storage tank facilities under 40 CFR Part 280, PCB storage facilities under 40 CFR Part 761, and hazardous waste treatment, storage, and disposal facilities under 40 CFR Parts 264 and 265.

N.M. Admin. Code § 20.9.10.22

20.9.10.22 NMAC - Rp, 20 NMAC 9.1.IX.906, 8/2/2007