N.Y. Comp. Codes R. & Regs. Tit. 6 §§ 383-6.5

Current through Register Vol. 46, No. 45, November 2, 2024

Section 383-6.5 - Alternate financial assurance methods and instruments

(a) The permittee must provide alternate financial assurance methods or instruments for the difference between:

(1) the sum of the cost estimates for implementing the closure plan, the post-closure plan, and the institutional control plan; and

(2) the amount currently in the closure, post-closure, and institutional control trust.

(b) The permittee must provide such alternate financial assurance methods or instruments until the trustee of the closure, post-closure, and institutional control trust states in writing and demonstrates to the satisfaction of the department that such trust is fully funded in the amounts required by sections 383-6.6 through 383-6.8 of this Subpart.

(c) The permittee must provide alternate financial assurance methods or instruments for the difference between:

(1) the amount currently in the remedial action/third-party compensation trust (operation, closure, and post-closure periods); and

(2) the coverage amounts required by sections 383-6.9(a) and 383-6.10(a) of this Subpart.

(d) The permittee must provide such alternate financial assurance methods or instruments until the trustee of the remedial action/third-party compensation trust (operation, closure, and post-closure periods) states in writing and demonstrates to the satisfaction of the department that such trust is fully funded in the amounts required pursuant to sections 383-6.9(a) and 383-6.10(a) of this Subpart.

(e) The permittee must provide alternate financial assurance methods or instruments for the difference between:

(1) the amount currently in the remedial action/third-party compensation trust (institutional control period); and

(2) the amounts established pursuant to sections 383-6.9(b) and 383-6.10(b) of this Subpart.

(f) The permittee must provide such alternate financial assurance methods or instruments until the trustee of the remedial action/third-party compensation trust (institutional control period) states in writing and demonstrates to the satisfaction of the department that such trust is fully funded in the amounts required pursuant to sections 383-6.9(b) and 383-6.10(b) of this Subpart.

(g) The permittee must submit documentation to the department demonstrating that the alternate financial assurance methods or instruments have been obtained. This documentation, including copies of the executed alternate coverage instruments, must be submitted within five days of the day the permittee obtained the financial assurance method or instrument.

(h) The language of all financial methods or instruments submitted by the permittee, except for alternate trusts and liability insurance, must include provisions providing that any funds drawn under the financial method or instrument must be paid by the issuer making payment directly into that trust or trusts established pursuant to section 383-6.4(a) of this Subpart covering the purpose for which the alternate financial assurance method or instrument was established.

(i) Within 60 days after the department approves an adjustment or revision to the financial assurance plan in accordance with section 383-6.3(e) or (f) of this Subpart, the permittee must adjust the amounts of the financial assurance instruments to reflect the adjustments to the financial assurance plan.

(j) After establishing one or more financial assurance methods or instruments, the permittee must notify the department in writing at least 90 days in advance of the cancellation or amendment of such methods or instruments, and no such cancellation or amendment may be executed without prior written approval of the department.

(k) Cancellation or nonrenewal.

(1) The duration of financial assurance methods or instruments, provided by the permittee for compliance with this Part must be open ended unless:

(i) either the permittee or the provider of the instrument agrees in writing to substitute an alternate financial assurance instrument; and

(ii) the substitute instrument is in an amount equivalent to the financial assurance method or instrument which either the permittee or the provider is seeking to terminate.

(2) Renewal of financial assurance methods or instruments must be automatic, unless the provider of the financial assurance method or instrument send written notice of the intention not to renew to:

(i) the permittee, the department, and the trustee(s) of the trust(s) for which instrument(s) are providing alternate financial assurance; and

(ii) sends such notice not less than 90 days prior to the renewal date. If the permittee fails to obtain a replacement financial method or instrument within 60 days of notification by the provider, the provider must provide funds, up to the full amount of the financial assurance method or instrument, to the trustee of the trusts established by section 383-6.4 of this Subpart, as directed by the department.

(3) The requirements of this subdivision do not apply to liability insurance.

(l) Proof of forfeiture.

(1) The permittee must establish alternate financial assurance methods or instruments and obtain written approval of such alternate financial assurance methods or instruments from the department within 60 days after the permittee receives a nonrenewal notice from the provider.

(2) In the event that the permittee does not obtain alternate financial assurance methods or instruments within such 60-day period, the provider of the alternate financial assurance method or instrument must automatically provide funds, up to the full amount of the financial assurance method or instrument, to the trustee(s) of the trusts established by section 383-6.4 of this Subpart, as directed by the department.

(3) Proof of forfeiture must not be necessary to collect on the financial assurance method or instrument.

(4) The requirements of this subdivision do not apply to liability insurance.

(m) Allowable financial assurance methods or instruments. Upon the approval of the department, a permittee may use one or more of the financial assurance methods or instruments specified in paragraphs (1) through (5) of this subdivision to meet the requirements of this section.

(1) Alternate trust. The permittee may obtain alternate coverage required by this Subpart through the use of an alternate trust that conforms to the requirements of this paragraph and section 383-6.12(a) of this Subpart. The executed alternate agreement must be submitted to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart for which the alternate trust is providing alternate coverage.

(i) The permittee must submit an executed alternate trust agreement to the trustee of the trust for which the alternate trust is providing alternate coverage and an originally signed duplicate to the department. If the alternate trust is used as part of the financial assurance plan in effect before the operation period, the alternate trust must be in effect at least 60 days prior to initial receipt of waste at the land disposal facility.

(ii) A trust used as an alternate financial method or instrument must be funded, at the time the alternate trust agreement is executed, for the full amount of the difference between:

(a) the amount determined pursuant to sections 383-6.6 through 383-6.8 and sections 383-6.9 and 383-6.10 of this Subpart, and the amount held in the trusts established pursuant to section 383-6.4(a) of this Subpart; or

(b) the amount held in such trusts established pursuant to section 383-6.4(a) of this Subpart and the amount provided by such alternate financial assurance methods or instruments established pursuant to subdivision (m) of this section.

(iii) The alternate trust must be funded by a single lump-sum payment by the permittee into the alternate trust at the time the alternate trust agreement becomes effective.

(iv) The alternate trust agreement must be identical to the wording required by section 383-6.12(a) of this Subpart and must be accompanied by a formal acknowledgment.

(v) The permittee must appoint the trustee to supervise and manage the alternate trust. The appointment of the initial, and any subsequent, trustee is subject to the prior written approval of the department. The trustee(s) of the alternate trust(s) must be an entity that has the authority to act as a trustee and whose trust operations are regulated by a Federal or State agency. The trustee's duties are limited to the duties set forth in the trust instrument required pursuant to section 383-6.12(a) of this Subpart.

(vi) Following a determination by the department that funds are required for purposes for which the alternate trust guarantees funds, the trustee(s) of the alternate trust(s) must provide such funds to the trustee(s) of the trust(s) established pursuant to section 383-6.4(a) of this Subpart, as directed by the department.

(vii) If expenditures are made from the alternate trust, the trustee of each such trust must:

(a) calculate the revised value of the alternate trust;

(b) send written notification of the revised amount to the permittee, the department, and the trustee(s) of the trust(s), established pursuant to section 383-6.4(a) of this Subpart, for which the alternate trust provides alternate financial assurance; and

(c) send such notification within 30 days of the time such funds are paid.

(viii) The permittee may terminate the alternate trust provided the department has given its prior written consent based on receipt of documents from the permittee of alternate financial assurance as required by subdivision (k) of this section. After the department certifies in writing that the financial assurance for which the alternate trust was created is no longer necessary, the trustee(s) of the alternate trust must transfer any funds remaining in the trust to the permittee.

(2) Surety bond. A permittee may obtain alternate coverage required by this Subpart through the use of performance surety bonds or payment surety bonds. A performance surety bond may be used only to provide alternate coverage for implementation of the closure plan, post-closure plan, and institutional control plan. A payment surety bond may be used to provide alternate coverage for implementation of the closure plan, post-closure plan, and institutional control plan, and/or coverage required by sections 383-6.9 and 383-6.10 of this Subpart for remediation of failures and third party compensation.

(i) A surety bond must conform to the requirements of this paragraph and section 383-6.12(b) or (c) of this Subpart. The permittee must submit the surety bond to the trustee(s) of the trust(s) for which the surety bond is providing alternate coverage and an originally signed duplicate to the department. If the surety bond is used as part of the financial assurance plan in effect before the operation period, the surety bond must be in effect at least 60 days prior to the initial receipt of waste by the land disposal facility. The surety company issuing the surety bond must, at a minimum, be among those listed as acceptable sureties on Federal surety bonds in Circular 570 of the U.S. Department of the Treasury.

(ii) The wording of the surety bond must be identical to the wording specified by section 383-6.12(b) or (c) of this Subpart.

(iii) The payment surety bond must guarantee that if the permittee fails to fulfill any of the obligations, established pursuant to this Subpart, for which the payment bond guarantees funds, then the surety must provide funds, up to the amount of the penal sum of the bond, to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart, as directed by the department.

(iv) The performance surety bond must guarantee that the surety will:

(a) perform the activities specified by the closure plan, post-closure plan, and/or institutional control plan if the permittee fails to perform the activities specified by the closure plan, the post-closure plan, or the institutional control plan; or

(b) make payments to the trustee(s) of the trust(s) established by section 383- 6.4 of this Subpart, as directed by the department in writing, up to an amount equal to the penal sum of the performance surety bond. Following a determination by the department that the permittee has not implemented the closure plan, post-closure plan, or institutional control plan, the surety must undertake the required performance, or provide funds to the trustee of the closure, post-closure and institutional trust, as directed by the department, to pay for the necessary performance, up to the amount of the penal sum of the performance surety bond.

(v) The penal sum of the surety bond, when combined with funds in the trust(s) established pursuant to section 383-6.4(a) of this Subpart for which the surety bond is providing alternate coverage and any other financial assurance method or instrument which guarantees funds to such trust, must be at least equal to the amount required pursuant to section 383-6.4(d) of this Subpart.

(vi) Under the terms of the surety bond, the surety may cancel the surety bond by sending notice of cancellation by certified mail, return receipt requested, to the permittee, the department, and the trustee(s) of the trust(s) for which the surety is providing alternate coverage not less than 90 days prior to the renewal date for the surety bond.

(a) The surety must not cancel the surety bond unless the permittee has:

(1) obtained alternate financial assurance methods or instruments;

(2) received approval from the department for such financial assurance methods or instruments in accordance with subdivisions (j) and (k) of this section; and

(3) met the above requirements of subclauses (1) and (2) of this clause no later than 30 days after the permittee received notice of cancellation.

(b) If the permittee fails to obtain an alternate financial assurance method or instrument acceptable to the department in accordance with subdivisions (j) and (k) of this section, then the surety must provide funds, up to the amount of the penal sum of the bond, to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart, as directed by the department.

(vii) The permittee may cancel the surety bond if the department has given prior written consent based on receipt of documentation from the permittee of an alternate financial assurance method or instrument as required by subdivisions (j) and (k) of this section.

(3) Letter of credit. A permittee may obtain alternate coverage required by this Subpart through the use of an irrevocable standby letter of credit that conforms to the requirements of this paragraph and section 383-6.12(d) of this Subpart.

(i) The permittee must submit the letter of credit to the trustee(s) of the trust(s) for which the letter of credit is providing alternate coverage and an originally signed duplicate to the department. If the letter of credit is used as part of the financial assurance plan in effect before the operation period, the letter of credit must be in effect at least 60 days prior to the initial receipt of waste by the land disposal facility. The 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.

(ii) The wording of the letter of credit must be identical to the wording required by section 383-6.12(f) of this Subpart.

(iii) The firm issuing the letter of credit must hold a rating in one of the three highest rating grades (i.e., within the A range) as determined by a nationally recognized independent rating agency (e.g., Moody's, Standard and Poor's).

(iv) The letter of credit must be accompanied by a letter from the permittee which:

(a) identifies the letter of credit by number, issuing institution, and date; and

(b) states the name and address of the land disposal facility, and the amount of funds assured by the letter of credit.

(v) The letter of credit must be irrevocable and issued for a period of at least one year. The letter of credit must provide that the expiration date will be automatically extended for a period of at least one year unless the issuing institution decides not to extend the expiration date and sends notice of that decision by certified mail, return receipt requested:

(a) to the permittee, the department, and the trustee(s) of the trust(s) for which the letter of credit is providing alternate coverage; and

(b) within at least 90 days before the current expiration date. Under the terms of the letter of credit, the 90 days will begin on the date when the permittee, the department, and the trustee(s) of the trust(s) for which the letter of credit is providing alternate coverage have received the notice, as evidenced by the return receipts.

(vi) The permittee must establish alternate financial assurance methods or instruments as required by subdivisions (j) and (k) of this section and obtain written approval of such alternate financial assurance instruments from the department within 60 days after receipt of a notice from the issuing institution of a decision not to extend the expiration date of the letter of credit.

(vii) If the permittee does not obtain alternate financial methods or instruments within such 60-day period, the issuing institution must provide funds, up to the aggregate amount of the letter of credit, to the trustee(s) of the trusts established by section 383-6.4 of this Subpart, as directed by the department. The department may delay this required transfer of funds if the issuing institution grants in writing an extension of the term of the letter of credit. During the last 30 days of any such extension, the department may draw on the letter of credit if the permittee has failed to establish alternate financial assurance methods or instruments as required by subdivisions (j) and (k) of this section and has failed to obtain written approval of such alternate financial assurance methods or instruments from the department.

(viii) Following a determination by the department that funds are required for purposes of which the letter of credit guarantees funds, the issuing institution must provide such funds, up to the aggregate amount of the letter of credit, to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart, as directed by the department.

(ix) The department must direct the trustee(s) of the trust(s) for which the letter of credit is providing alternate financial assurance to return the letter of credit to the issuing institution for termination when a permittee substitutes alternate financial methods or instruments as required by subdivisions (j) and (k) of this section.

(4) Liability insurance. A permittee may obtain alternate coverage required by this Subpart for remediation of failures or personal injury and property damage to third parties caused by the operation of the land disposal facility through the use of liability insurance that conforms to the requirements of this paragraph and section 383-6.12(e) of this Subpart. The permittee must submit such insurance policy and certificate of insurance to the trustee(s) of the trust(s) for which the insurance policy is providing alternate coverage and an originally signed duplicate of each to the department. The permittee may use liability insurance only for coverage of remediation of failures and for personal injury and property damage to third parties caused by the operation of the land disposal facility.

(i) A permittee must submit the certificate of insurance required by subdivision 383-6.12(e) of this Subpart and a copy of the liability insurance policy to the trustee(s) of the trust(s) for which the liability insurance is providing alternate coverage and an originally signed duplicate to the department. If the liability insurance is used as part of the financial assurance plan in effect before the operation period, the liability insurance policy must be in effect at least 60 days prior to the initial receipt of waste by the land disposal facility. At a minimum, the insurer must be authorized by the Superintendent of the New York State Insurance Department to conduct the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer in New York State.

(ii) The insurance policy must be issued for a limit of liability at least equal to the coverage amount required by sections 383-6.9 and 383-6.10 of this Subpart, except as provided in subdivision (n) of this section.

(iii) The liability insurance policy must guarantee that funds will be available immediately upon determination that a valid claim has been presented to provide payments up to an amount equal to the limits of liability.

(iv) The permittee must maintain the policy in full force and effect until the department consents to termination of the policy by the permittee. The permittee must pay all premiums when due and perform all other actions necessary to maintain the insurance policy in full force and effect. Failure to pay the premium, without substitution of alternate financial methods or instruments, constitutes a violation of these regulations. Such violation shall be deemed to begin upon receipt by the department of notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the expiration date of the insurance policy.

(v) The liability policy must provide that the insurer may not cancel, terminate, or fail to renew the policy except for the permittee's failure to pay the premium. The automatic renewal of the policy must, at a minimum, provide the insured with the option of renewal at the limits of liability of the expiring policy. If the permittee fails to pay the premium, the insurer may elect to cancel, terminate, or fail to renew the policy by sending notice by certified mail, return receipt requested, to the permittee, the department, and the trustee(s) of the trust(s) for which the insurance policy is providing alternate financial assurance. Cancellation, termination, or failure to renew may not occur during the 120 days beginning with the date of receipt of the notice by the permittee, the department, and the trustee(s), of the trust(s) for which the insurance policy is providing alternate financial assurance, as evidenced by the return receipts. Cancellation, termination, or failure to renew must not occur and the policy must remain in full force and effect in the event that on or before the expiration date of the insurance policy:

(a) the department determines that the land disposal facility has been abandoned; or

(b) the permit issued by the department is terminated or revoked or a permit renewal is denied; or

(c) closure is ordered by the department, any other agency with regulatory jurisdiction over the land disposal facility, or a court of competent jurisdiction;

(d) the premium due is paid; or

(e) the permittee is named as a debtor in a voluntary or involuntary bankruptcy proceeding.

(vi) The permittee must obtain written approval from the department to terminate the insurance policy when the permittee substitutes an alternate financial assurance method or instrument as required by subdivisions (j) and (k) of this section.

(5) Guarantee. The permittee may obtain alternate coverage required by this Subpart through the use of a written guarantee that conforms to the requirements of this paragraph and section 383-6.12(f) of this Subpart.

(i) The permittee must submit such guarantee to the trustee(s) of the trust(s) for which the guarantee is providing alternate assurance and an originally signed duplicate to the department. If the guarantee is used as part of the financial assurance plan in effect before the operation period, the guarantee must be in effect at least 60 days prior to initial receipt of waste at the land disposal facility.

(ii) The guarantor may be a corporate or other legal or financial affiliate of the permittee.

(iii) A guarantor must provide proof that it is capable of providing the financial assurances being guaranteed on behalf of the permittee by submitting documentation to the department containing information sufficient to allow the department to evaluate the suitability of the guarantee as an alternate financial assurance method or instrument. The information must include, but is not limited to:

(a) name, address, partnerships (and proportion of ownership) and state of incorporation of the firm seeking to provide the guarantee, the form of its business organization, and the guarantor's business relationship to the facility owner or operator (such as "subsidiary", "affiliate", etc.);

(b) copy of the applicant's articles of incorporation and bylaws or other similar documents, if the applicant is not an individual (e.g.,corporation);

(c) past experience as a guarantor, including whether the guarantor has ever qualified as a guarantor in any state, whether such authority has ever been revoked, whether the guarantor has ever defaulted on any previous guarantees, and whether an application to act as a guarantor has ever been denied;

(d) copies of any guarantees provided to the proposed guarantor by any parent or holding companies of the proposed guarantor regarding the project;

(e) details concerning the guarantor's past and present insurance coverage;

(f) rationale for the applicant to act as guarantor, including but not limited to cost savings;

(g) balance sheets, income and profit and loss statements of the guarantor prepared by an independent certified public accountant;

(h) information concerning reserves, guarantees, or other support for the guarantee;

(i) information concerning legal authorization or power to provide a guarantee;

(j) copies of the last three years of any rating of the applicant's firm by a bond rating service (e.g., Moody's or Standard and Poor's);

(k) description of any litigation involving the guarantor that may have a negative economic impact on its operations;

(l) information concerning authorization by stockholders, directors, or other firm owners of power to provide the guarantee; and

(m) any other information required by the department at the time of application.

(iv) The guarantee must be identical to the wording required by section 383- 6.12(d) of this Subpart. The terms of the guarantee must provide that:

(a) if the permittee fails to implement the closure plan, the post-closure plan, or the institutional control plan, in accordance with the directions of the department whenever required to do so, the guarantor must provide funds, up to the full amount of the guarantee, to the trustee(s) of the trusts established by section 383-6.4 of this Subpart, as directed by the department; and/or

(b) if the permittee fails to remediate failures or to compensate third parties for judgments, releases, or settlements for personal injury or for property damage caused by the operation of the land disposal facility to which the guarantee applies, the guarantor must provide funds, up to the full amount of the guarantee, to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart, as directed by the department;

(c) under the terms of the guarantee, the guarantor may cancel the guarantee by sending notice of cancellation by certified mail, return receipt requested to the permittee, the department, and the trustee(s) of the trust(s) for which the guarantee is providing alternate financial assurance. Cancellation must not occur, however, during the 90 days beginning on the date of receipt of the notice of cancellation by the permittee, the department, and the trustee(s) of the trust(s) for which the guarantee is providing alternate financial assurance; and

(d) the guarantor must provide up to the full amount of the guarantee:

(1) alternate financial assurance instrument(s) in the name of the permittee; or

(2) funds to the trustee(s) of the trust(s) established by section 383-6.4 of this Subpart, as directed by the department in the event that:

(i) the permittee fails to provide alternate financial assurance methods or instruments as required by subdivisions (j) and (k) of this section;

(ii) obtain the written approval of such alternate financial assurance methods or instruments from the department; and

(iii) obtain such approval within 60 days after receipt of a notice of cancellation by the permittee, the department, and trustee(s) of the trust(s) for which the guarantee is providing alternate financial assurance.

(v) The department may require the guarantor to submit reports of its financial condition at any time. If the department finds, on the basis of such reports or other information, that the guarantor no longer is capable of providing the financial assurance guaranteed, the permittee must, within 30 days after notification by the department of such a finding, provide alternate financial assurance method(s) or instrument(s) as required by subdivisions (j) and (k) of this section, and obtain written approval of such alternate financial method(s) or instrument(s) from the department.

(vi) The department may determine that the guarantor fails to meet the requirements of this section on the basis of qualifications in an opinion expressed in a report of an independent certified public accountant on examination of the guarantor's financial statements. An adverse opinion or a disclaimer of opinion will be cause for such a determination. The department may evaluate other qualifications on an individual basis.

(vii) The permittee may cancel the guarantee if the department has given prior written consent based on receipt of documentation from the permittee of an alternate financial method or instrument as required by subdivisions (j) and (k) of this section.

(n) Use of multiple alternate financial instruments.

(1) A permittee may satisfy the requirements of this section by establishing more than one alternate financial instrument to guarantee costs or expenses of:

(i) implementing the closure plan, post-closure plan, and/or institutional control plan;

(ii) remedial action; and/or

(iii) third-party compensation for personal injury and/or property damage caused by the operation of the land disposal facility.

(2) The permittee may combine only trusts, surety bonds, letters of credit, liability insurance, and guarantees that conforms to the requirements of this section, except that the combination of financial methods or instruments, rather than a single financial method or instrument, must provide financial assurance for an amount at least equal to the requirements of subdivisions (a), (c) and (e) of this section.

N.Y. Comp. Codes R. & Regs. Tit. 6 §§ 383-6.5