Section 33.1-20-14-07 - [Effective until 10/1/2024] Specific requirements of mechanisms for financial assurance1.Trust fund. A trust fund must satisfy the requirements of this subsection. a. The trustee must be an entity which has authority to act as a trustee in this state and whose trust operations are regulated and examined by a federal or state agency.b. Payments into the trust fund must be made annually over the initial permit or over the remaining life of the solid waste management unit or facility whichever is shorter. This is the pay-in period.c. The first payment into the trust fund must equal or exceed the current cost estimate for closure or postclosure, whichever is applicable, divided by the number of years defined in subdivision b. The amount of subsequent payments must be determined by the following formula: Click here to view image
Where CE is the current cost estimate, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period.
d. The initial payment into the trust fund must be made for new or expanded facilities before the initial receipt of solid waste or for existing facilities before the effective date as provided by subsection 1 of section 33.1-20-14-01.e. If an owner or operator establishes a trust fund after having used one or more alternative mechanisms specified in section 33.1-20-14-03, the initial payment into the trust fund must equal or exceed the amount that the fund would contain if the fund were established initially and annual payments made according to subdivision c.f. The owner or operator, or other person authorized to conduct closure or postclosure care may request reimbursement from the trustee for these expenses. Requests for reimbursement will be approved by the trustee only if sufficient funds are remaining in the trust fund.2.Surety bond. A surety bond guaranteeing payment or performance must satisfy to the requirements of this subsection.a. The penal sum of the bond must be in an amount equal to or greater than the current closure or postclosure cost estimate, whichever is applicable. The surety company issuing the bond, at a minimum, must be among those acceptable sureties on federal bonds in Circular 570 of the United States department of treasury and be authorized to do business within this state.b. Under the terms of the bond, the surety must become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.c. The owner or operator must establish a standby trust fund that meets the requirement of subsection 1, except for payment provisions in subdivisions b, c, and d.d. Payments made under the terms of the bond must be deposited by the surety into the standby trust fund. Payments from the trust fund must be approved by the trustee.e. Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the owner or operator and to the department one hundred twenty days or more in advance of the cancellation. If the surety cancels the bond, the owner or operator must obtain alternate financial assurance.3.Letter of credit. A letter of credit must satisfy the requirements of this subsection. a. The issuing institution of a letter of credit must have authority to issue letters of credit in this state and its operations must be regulated and examined by a federal or state agency.b. A letter from the owner or operator, referring to the letter of credit by number, issuing institution, and date and including the name and address of the solid waste management unit or facility and the amount of funds assured, must be provided with the letter of credit to the department.c. The letter of credit must be irrevocable and issued for a period of at least one year in an amount at least equal to the current cost estimate for closure or postclosure care, whichever is applicable. The letter of credit must provide that the expiration date will be automatically extended for a period of one year unless the issuing institution has canceled the letter of credit by sending notice of cancellation to the owner or operator and to the department one hundred twenty days or more in advance of the cancellation. If the letter of credit is canceled by the issuing institution, the owner or operator must obtain alternate financial assurance.d. The owner or operator shall establish a standby trust fund that meets the requirement of subsection 1, except for payment provisions in subdivisions b, c, and d.4.Insurance. Insurance must satisfy the requirements of this subsection. a. The insurer must be licensed to transact the business of insurance in this state, or eligible to provide insurance as an excess or surplus lines insurer in one or more states.b. The insurance policy must guarantee that funds will be available to close the solid waste management unit or facility whenever closure occurs or to provide postclosure care whenever the postclosure period begins, whichever is applicable. The policy must also guarantee that, once closure or postclosure care begins, the insurer will be responsible for paying out funds up to an amount equal to the face amount of the policy upon the direction of the department to such party or parties as the department specifies.c. The insurance policy must be issued for a face amount at least equal to the current cost estimate for closure or postclosure care, whichever is applicable. The term face amount means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the face amount, although the insurer's future liability will be lowered by the amount of the payments.d. Each insurance policy must contain a provision allowing assignment of the policy to a successor owner or operator. Such assignment may be conditional upon consent of the insurer.e. The insurance policy must provide that the insurer may not cancel, terminate, or fail to renew the policy, except for failure to pay the premium. The automatic renewal of the policy must provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay a premium, the insurer may cancel the policy by sending notice of cancellation by certified mail to the owner or operator and to the department one hundred twenty days or more in advance of cancellation. If the insurer cancels the policy, the owner or operator must obtain alternate financial assurance. Cancellation, termination, or failure to renew may not occur; however, during the one hundred twenty days beginning with the date of receipt of a notice by the department and the owner or operator as evidenced by the return receipts. Cancellation, termination, or failure to renew may not occur, and the policy will remain in full force and effect in the event that on or before the date of expiration:
(1) The department deems the facility abandoned;(2) The permit is terminated or revoked, or a new permit is denied;(3) Closure is ordered by the department or a state court or other court of competent jurisdiction;(4) The owner or operator is named as debtor in a voluntary or involuntary proceeding under United States Code title 11 (bankruptcy); or(5) The premium due is paid.f. After beginning partial or final closure or during the postclosure period, or both, an owner or operator or any other person authorized to perform closure or postclosure may request reimbursement for closure or postclosure expenditures by submitting itemized bills to the department. The owner or operator may request reimbursement for partial closure only if the remaining value of the policy is sufficient to cover the maximum cost of closing the facility over its remaining operating life. After receiving bills for closure or postclosure activities, the department shall determine whether the expenditures are in accordance with the partial or final closure or postclosure plan or otherwise justified and if so, the department shall instruct the insurer to make reimbursement in such amounts as the department specifies in writing. If the department has reason to believe that the maximum cost of closure over the remaining life of the facility will be significantly greater than the face amount of the policy, the department may withhold reimbursement of such amounts as the department deems prudent until the department determines, in accordance with section 33.1-20-14-08, that the owner or operator is no longer required to maintain financial assurance for final closure of the facility. If the department does not instruct the insurer to make such reimbursement, the department will provide the owner or operator with a detailed written statement of reasons.5.Financial test and corporate guarantee. A financial test or corporate guarantee must satisfy the requirements of this subsection. a. For the financial test, the owner or operator must have: (1) A ratio of current assets to current liabilities greater than one and five-tenths, or a current rating for the owner's or operator's most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's; and(2) Net working capital and tangible net worth each at least four times the sum of the current cost estimates for closure or postclosure, whichever is applicable; and(3) Tangible net worth of at least two million dollars; and(4) Assets located in the United States amounting to at least four times the current cost estimates for closure or postclosure care, whichever is applicable.b. To demonstrate the financial test, the owner or operator must submit the following items to the department in a letter which transmits: (1) A copy of an independent certified public accountant's report on examination of the owner's or operator's financial statements for the latest fiscal year; and(2) A report from an independent certified public accountant to the owner or operator stating that: (a) The accountant has compared the data which the letter from the chief financial officer specifies as having been derived from the independently audited, yearend financial statements for the latest fiscal year; and(b) In connection with that procedure, no matters came to lead the accountant to believe that specified data should be adjusted.c. After initial submission of the items in subdivision b, the owner or operator must send updated information to the department no later than August thirty-first of each succeeding fiscal year. This information must consist of all items specified in subdivision b.d. If the owner or operator no longer meets the requirements of subdivision a, the owner or operator must send notice by certified mail to the department within ninety days and establish alternate financial assurance within one hundred twenty days.e. The department may disallow use of the financial test on the basis of qualification in the opinion expressed by the certified public accountant in the accountant's report on examination of owner's or operator's statements. An adverse opinion or a disclaimer of opinion may be cause for disallowance. The owner or operator shall provide alternate financial assurance within thirty days after notification of the disallowance.f. An owner or operator may meet the requirements of this subsection by obtaining a written guarantee. The guarantor must be the direct or higher-tier parent corporation of the owner or operator, a firm whose parent corporation is also the parent corporation of the owner or operator, or a firm with a substantial business relationship with the owner or operator. The guarantor must meet the requirements of subdivisions a through e and a certified copy of the guarantee must accompany the items in subdivision b. The terms of the guarantee must provide that: (1) Guarantor will complete closure or postclosure care, whichever is applicable, if the owner or operator fails to do so; and(2) The corporate guarantee will remain in effect unless the guarantor sends notice of cancellation by certified mail to the owner or operator and to the department; and(3) Guarantor will provide alternate financial assurance within ninety days if the corporate guarantee is canceled and if the owner or operator fails to provide approved alternate financial assurance.N.D. Admin Code 33.1-20-14-07
Adopted by Administrative Rules Supplement 370, October 2018, effective 1/1/2019.Amended by Administrative Rules Supplement 2020-377, July 2020, effective 7/1/2020.General Authority: NDCC 23.1-08-03; S.L. 2017, ch. 199, § 1
Law Implemented: NDCC 23.1-08-03; S.L. 2017, ch. 199, § 23