RCRA Subpart H Financial Assurance: Overview

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RCRA Subpart H Financial Assurance Overview

• Presented to
• CT Corrective Action Owners Group, Sept. 8, 2005
• By
• Mark A. Latham,
• Environmental Analyst
• CT Department of Environmental Protection

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• ...Financial responsibility protects public
  health and the environment by promoting the
  proper and safe handling of hazardous materials
  and protecting against a liable party defaulting
  on closure or clean up obligationsAbsent
  financial assurance, protection of human health
  and the environment would depend on available
  governmental financial resources causing a shift
  in costs from the responsible parties to the
  state and federal taxpayers1.
• 1Exerpts taken from EPAs National Program
  Managers Guidance Section II. National
  Priorities for Enforcement and Compliance
  Assurance.

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Take Home Messages

• Problems identified with current financial
  assurance instruments
• Increased scrutiny of TSDs subject to RCRA
  Subpart H financial assurance requirements
• DEP compliance assistance available
• Similar principles apply to Corrective Action
  financial responsibility

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One of EPAs NationalPriorities (FY 06-07)

• Financial assurance is listed on EPA National
  Priority List partly based on CTs Review of File
  
• National Program Manager Guidance published June
  2005
• http//epa.gov/compliance/resources/policies/data
  /planning/npmguidance2006.pdf

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Problems Identified

• Few facilities had no issues
• Facility personnel not familiar with Financial
  Test provisions/ discrepancies identified
• Annual cost estimates not updated per RCRA/ state
  requirements
• Language of instruments is not consistent with
  RCRA/state requirements

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Current Efforts

• DEP/ EPA joint effort in follow up process
• Past and present non-compliance with RCRA Subpart
  H requirements
• Using normal enforcement process for quick return
  to compliance including requests for further
  information per EPAs Authority under RCRA
  Section 3007
• 30 Information Requests sent (to-date).

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EPA 3007 Information Requests Detailed

• Additional information needed to provide
  documentation of past activities
• Requested Information
• Current owner/operator corporate relationships
• T/S/D (regulated unit) specific
• Present and past financial assurance
  documentation
• Financial release documentation
• Owner/operators written certification

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Demonstration of Financial Responsibility

• Types of Instruments
• Trust Fund (Funded or Standby)
• Irrevocable Standby Letter of Credit (LOC)
• Surety Bond (Payment or Performance)
• Insurance
• Financial Test (self insurance) and/or
• Corporate Guarantee.
• Standby trusts are required in CT
• FA instruments must equal current cost estimate
• CT DEP formats web accessible (coming soon)

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Overview of Financial Assurance Instruments

• Issued by financial institutions recognized by a
  federal or state agency (e.g., FDIC, Federal
  Reserve, Circular 570, CT Department of Banking
  or Insurance, etc.)
• Instruments must be evergreen
• Submittal/tracking requirements standby trusts,
  deadlines, original duplicates
• Same instruments used for Corrective Action
  financial responsibility

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Cost Estimates (C-E) Detailed

• Based on closure and post-closure work plans
• Reflects maximum cost of closing all units
  concurrently for the year it was prepared
• Annual increases for inflation and/or
  modifications
• Resources
• See U.S. Department of Commerce Bureau of
  Economic Analysis web site for inflation factor
  http//www.bea.gov/bea/newsrel/gdpnewsrelease.htm.
  
• Means Building and Construction Cost Data
  http//www.rsmeans.com/
• Draft DEP Inflation Factor Guidance

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Financial Responsibility for Corrective Action

• Intended for TSDs to provide adequate financial
  assurance for investigation and remediation
  costs.
• Financial responsibility will be a condition in
  all permits and/or orders.
• DEP may accept phased-in approach on a case by
  case basis consistent with EPAs Interim
  Guidance on Financial Responsibility for
  Facilities subject to RCRA Corrective Action
  dated 9/30/03 http//www.epa.gov/Compliance/resour
  ces/policies/cleanup/rcra/interim-fin-assur-cor-ac
  t.pdf (handout provided).

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Financial Assurance Contacts

• Waste Engineering and Enforcement Division
• Compliance Assistance Hotline [phone]
• Mark A. Latham [phone]
• Mark.Latham_at_po.state.ct.us
• Kevin T. Sullivan [phone]
• Kevin.T.Sullivan_at_po.state.ct.us
• DEP Remediation/ Corrective Action Program
• Diane Duva [phone]
• Diane.Duva_at_po.state.ct.us
• EPA Corrective Action Program
• Matt Hoagland [phone]
• Hoagland.Matt_at_epa.gov
• David Lim [phone]
• Lim.David_at_epa.gov

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• QUESTIONS?