401 KAR 48:310.
Financial requirements and bonds.
RELATES TO: KRS
224.01-010-224.01-070, 224.40-100-224.43-345, 224.99-010, Chapter 355
STATUTORY
AUTHORITY: KRS 224.10-100, 224.40-305, 224.40-650, 40 C.F.R. Parts 257, 258
NECESSITY,
FUNCTION, AND CONFORMITY: KRS 224.40-305 requires the cabinet to promulgate
administrative regulations for the managing, processing, or disposal of wastes.
KRS 224.40-650 requires that persons engaging in the management, processing,
and disposal of waste obtain a permit. KRS 224.650 and KRS 224.40-110 require
permit applicants to post a performance bond with a mechanism of financial
assurance. This chapter establishes the minimum technical standards for solid
waste sites or facilities. This administrative regulation sets forth the
financial requirements for closure, closure care, and corrective action.
Section 1.
Financial Assurance Criteria. The financial assurance criteria and bond
requirements apply to each owner and operator of any solid waste disposal site
or facility. Any owner or operator that is a city, county, urban-county
government, 109 district, taxing district, political subdivision of the
Commonwealth, the Commonwealth, or any agency thereof, or any entity whose
debts and liabilities are the debts and liabilities of the above entities,
shall be required to comply with Sections 2, 3, and 15 of this administrative
regulation.
Section 2.
Closure Cost Estimate. Except as provided by KRS 224.40-120, the owner or
operator shall have a detailed written estimate, in current dollars, of the
cost of hiring a third party to close the solid waste disposal site or facility
in accordance with the closure plan developed to satisfy the closure
requirements in Section 4(1) of 401 KAR 48:060, Section (15) of 401 KAR 48:070,
Section 4 of 401 KAR 48:170, Section 5 of 401 KAR 48:200, and KRS 224.40.650.
(1) The estimate
shall equal the cost of closing the solid waste disposal site or facility at
the point in the active life when the extent and manner of its operation would
make closure the most expensive. The cabinet shall adjust the figure for
inflation and other factors each year. The owner or operator shall base the
cost estimate on the following elements:
(a) Design;
(b) Site grading
and drainage;
(c) Hauling and
placing of each element of the approved cap;
(d) Final
grading and drainage of the cap;
(e) Revegetation
of the cap; and
(f) Quality
control and construction certification.
(2) The owner or
operator shall increase the closure cost estimate and the amount of financial
assurance provided under Section 5 of this administrative regulation if changes
to the closure plan or solid waste disposal site or facility conditions
increase the maximum cost of closure at any time during the active life.
(3) The owner or
operator may request a reduction in the closure cost estimate and the amount of
financial assurance provided under Section 5 of this administrative regulation
if he can demonstrate that the cost estimate exceeds the maximum cost of
closure at any time over the life of the solid waste disposal site or facility.
(4) The owner or
operator shall keep a copy of the latest closure cost estimate at the solid
waste disposal site or facility until the owner or operator has been notified
by the cabinet that he has been released from closure financial assurance
requirements under Section 5 of this administrative regulation.
Section 3.
Closure Care Cost Estimate. (1) Except as provided for by KRS 224.40-120, the
owner or operator of each solid waste site or facility shall have a detailed
written estimate, in current dollars, of the cost of hiring a third party to
conduct each phase of closure care monitoring and maintenance in accordance
with the closure care plan developed to satisfy the closure care requirements
of Section 3 of 401 KAR 48:060, Section 13 of 401 KAR 48:090, and Section 3 of
401 KAR 48:170. The closure care cost estimate for each phase of closure care
used to demonstrate financial assurance in Section 6 of this administrative regulation
shall be calculated by multiplying the annual cost estimate for each phase of
closure care by the number of years of closure care required. For contained
landfills, the closure care estimate mandated by KRS 224.40-650 shall be a
minimum of $10,000 per year, using 1990 as the baseline year.
(2) The cost
estimate for each phase of closure care shall be based on the most expensive
costs of closure care during that phase. The cabinet shall adjust the figure
each year for inflation and other factors.
(3) The owner or
operator shall increase the amount of the closure care cost estimate and the
amount of financial assurance provided under Section 6 of this administrative
regulation if changes in the closure care plan or facility conditions increase
the maximum costs of closure care.
(4) The owner or
operator may request a reduction in the closure cost estimate and the amount of
financial assurance provided under Section 6 of this administrative regulation
if he can demonstrate to the satisfaction of the cabinet that the cost estimate
exceeds the maximum costs of closure care remaining over the closure care
period.
(5) The owner or
operator shall keep a copy of the latest closure care cost estimate at the
facility until he has been notified by the cabinet that he has been released
from closure care financial assurance requirements for the entire facility
under Section 6 of this administrative regulation.
Section 4.
Financial Mechanisms. The mechanisms used to demonstrate financial assurance
under this administrative regulation shall ensure that the funds necessary to
meet the costs of closure and closure care will be available in a timely manner
whenever they are needed. The owner or operator shall execute a performance
bond specified in Section 7 with one (1) or a combination of the financial
mechanisms in Sections 9, 10, 11, 12, and 13 of this administrative regulation,
that satisfies the following criteria:
(1) The
financial assurance mechanism shall ensure that the amount of funds is
sufficient to cover the costs of closure and closure care;
(2) The
financial assurance mechanism shall ensure that funds shall be available in a
timely fashion;
(3) The
financial assurance mechanism shall guarantee the availability of the required
amount of coverage from the effective date of these requirements or prior to
the initial receipt of solid waste, whichever is later, until the owner or
operator establishes an alternative financial assurance mechanism or is
released from the financial assurance requirements under Sections 5, 6, 7, and
14 of this administrative regulation. The amount of financial assurance
obtained from a single financial institution shall not exceed the limit of
federal insurance, when such assurance is provided by a financial institution
that uses federal insurance to guarantee the availability of funds.
Section 5.
Closure Financial Assurance. Except as provided by KRS 224.40-120, the owner or
operator of each solid waste disposal site or facility shall establish, in
accordance with Section 4 of this administrative regulation, financial
assurance for closure of the facility, in an amount equal to the most recent
closure cost estimate prepared in accordance with Section 2 of this
administrative regulation. The owner or operator shall provide continuous
coverage for closure until released from financial assurance requirements. The
owner or operator may be released from financial assurance requirements for
closure after a site visit by a cabinet representative and approval by the
cabinet. For contained landfills, the owner or operator shall submit the
certification that closure has been completed in accordance with the approved
closure plan. Following receipt of the closure certification or completion of
the closure inspection, the cabinet shall:
(1) Notify the
owner or operator in writing that he is no longer required to maintain
financial assurance for closure; or
(2) Provide the
owner or operator with a detailed written statement of any reason to believe
that closure has not been conducted in accordance with the approved closure
plan.
Section 6.
Closure Care. Except as provided by KRS 224.40-120, the owner or operator of
each solid waste site or facility shall provide for closure care as required
under Section 3 of 401 KAR 48:060, Section 13 of 401 KAR 48:090, and Section 3
of 401 KAR 48:170 for the required period following the cabinet's acceptance of
closure. The owner or operator of a contained landfill may be released from
closure care requirements after the cabinet has received a certification that
the closure care period has been completed in accordance with the approved plan
as required under Section 13 of 401 KAR 48:090. Following receipt of the
closure care certification, the cabinet shall notify the owner or operator with
a detailed written statement of any reason to believe that closure care has not
been conducted in accordance with the approved closure care plan.
Section 7.
Performance Bond. Before the cabinet shall issue a permit, the owner or
operator of a solid waste disposal site or facility that is required to execute
a performance bond and post a financial assurance mechanism or other security
pursuant to KRS 224.40-650 shall complete the performance bond and financial
assurance mechanism in a manner approved by the cabinet. To satisfy the
financial requirement, the owner or operator shall submit a performance bond
(see Section 8 of this administrative regulation) and one (1) or more of the
following five (5) financial mechanisms:
(1) Surety bond
as specified in Section 9 of this administrative regulation;
(2) Letter of
credit as specified in Section 10 of this administrative regulation;
(3) Escrow
agreement as specified in Section 11 of this administrative regulation;
(4) Trust
agreement as specified in Section 12 of this administrative regulation; or
(5) Insurance
policy as specified in Section 13 of this administrative regulation.
Section 8.
Wording of the Performance Bond. A performance bond guaranteeing performance of
closure and closure care, or closure individually and closure care
individually, shall be executed on DEP Form 6053-A, entitled "Performance
Bond" (September 1994), which is hereby incorporated by reference. This
document may be obtained from the Division of Waste Management, 14 Reilly Road,
Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m., eastern
time, Monday through Friday, excluding state holidays.
Section 9.
Wording of Surety Bond. (1) A surety bond, as allowed in Sections 4 and 7 of
this administrative regulation, shall be executed on DEP Form 6053-L, entitled
"Surety Bond" (September 1994), which is hereby incorporated by
reference. This document may be obtained from the Division of Waste Management,
14 Reilly Road, Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30
p.m., eastern time, Monday through Friday, excluding state holidays.
(2) To be
eligible to issue a surety bond, a surety shall be listed as acceptable in the
current edition of U.S. Treasury Circular 570. The penal sum of the bond shall
not exceed the amount of the surety's underwriting limitation.
Section 10.
Wording of the Instrument for a Letter of Credit. A letter of credit, as
allowed by Sections 4 and 7 of this administrative regulation, shall be
executed on DEP Form 6053-B, entitled "Irrevocable Letter of Credit"
(July 1994), which is hereby incorporated by reference. This document may be
obtained from the Division of Waste Management, 14 Reilly Road, Frankfort,
Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m., eastern time, Monday
through Friday, excluding state holidays.
Section 11.
Wording of the Escrow Agreement. An escrow agreement, as allowed in Sections 4
and 7 of this administrative regulation, shall be executed on DEP Form 6053-C,
entitled "Escrow Agreement" (July 1994), which is hereby incorporated
by reference. This document may be obtained from the Division of Waste Management,
14 Reilly Road, Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30
p.m., eastern time, Monday through Friday, excluding state holidays. If a
certificate of deposit is used in conjunction with the escrow agreement, it
shall be made payable to the financial institution as the escrow agent.
Section 12.
Wording of Trust Fund Agreement. A trust fund, as allowed by Sections 4 and 7
of this administrative regulation, shall be executed on DEP Form 6053-K,
entitled "Trust Fund Agreement" (September 1994), which is hereby
incorporated by reference. This document may be obtained from the Division of
Waste Management, 14 Reilly Road, Frankfort, Kentucky 40601, (502) 564-6716,
from 8 a.m. to 4:30 p.m., eastern time, Monday through Friday, excluding state
holidays.
Section 13.
Insurance Policies. (1) The owner or operator of a solid waste disposal site or
facility may provide an insurance policy to demonstrate the financial assurance
for closure or closure care of the facility. The insurance policy shall conform
with the requirements of this section and shall be submitted along with DEP
Form 6053-D, entitled "Certificate of Insurance for Closure or Closure
Care" (July 1994), which is hereby incorporated by reference. DEP Form
6053-D may be obtained from the Division of Waste Management, 14 Reilly Road,
Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m., eastern
time, Monday through Friday, excluding state holidays.
(2) The insurance
policy shall guarantee that the funds will be available to close the solid
waste disposal site or facility when closure occurs or to provide closure care
for the solid waste site or facility when the closure care period begins,
whichever is applicable. The policy shall guarantee that once closure or
closure care begins, whichever is applicable, the insurer will be responsible
for the paying out of funds to the owner or operator or other person authorized
to conduct closure or closure care, up to an amount equal to the face amount of
the policy. The insurance policy shall be issued for a face amount at least
equal to the current closure cost estimate for closure or the current closure
care cost estimate, whichever is applicable. The term "face value" refers
to the total amount the insurer is obligated to pay under the policy. Actual payments
by the insurer shall not change the face amount, although the insurer's future
liability will be lowered by the amount of payments.
(3) The owner or
operator, or any other person authorized to conduct closure or closure care,
may receive reimbursements for closure or closure care expenditures. Requests
for reimbursement for expenditures shall be made by submitting itemized bills
to the cabinet. The cabinet shall determine whether the closure or closure care
expenditures are in accordance with the approved closure or closure care plan,
or are otherwise justified, and if so, shall instruct the insurer to make
reimbursements in such amounts as the cabinet specifies in writing. If the
cabinet has reason to believe that the cost of closure or closure care will be
greater than the face amount of the policy, then the cabinet may withhold
reimbursement of such amounts and set forth the reasons for the withholding in
writing.
(4) An insurance
policy shall contain a provision allowing assignment of the policy to a
successor owner or operator. This assignment may be conditional upon consent of
the insurer, provided the consent is not unreasonably refused.
(5) The
insurance policy shall 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 shall, at a minimum, provide the insured with the option
of renewal at the face amount of the expiring policy. If there is a failure to
pay the premium, the insurer may cancel the policy by sending notice of the
cancellation by certified mail to the owner or operator and to the cabinet 120
days or more in advance of the cancellation. Cancellation, termination, or failure
to renew shall not occur, and the policy shall remain in force, if on or before
the date of expiration:
(a) Closure is
ordered by the cabinet or a court of competent jurisdiction;
(b) The owner or
operator is named as debtor in a voluntary or involuntary bankruptcy proceeding
under Title 11 U.S. Code; or
(c) The premium
is paid.
(6) If the
insurer cancels the policy, the owner or operator shall obtain by the effective
date of the cancellation, alternate financial assurance as specified in this
administrative regulation.
(7) For
insurance policies providing coverage for closure care, commencing on the date
that liability to make payments pursuant to the policy accrues, the insurer
shall thereafter annually increase the face amount of the policy. This increase
shall be equivalent to the face amount of the policy, less any payments made,
multiplied by an amount equivalent to eighty-five (85) percent of the most
recent investment rate or the equivalent coupon-issued yield announced by the
U.S. Treasury for twenty-six (26)-week treasury securities.
(8) The owner or
operator may cancel the insurance policy only if alternate financial insurance
is substituted and approved by the cabinet, as specified in this administrative
regulation, or if the owner or operator is no longer required to demonstrate
financial assurance in accordance with Section 14 of this administrative
regulation and 401 KAR Chapters 47 and 48.
(9) If the owner
or operator chooses to purchase an insurance policy to cover the cost of
closure or closure care, whichever is applicable, the chosen insurer shall be
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 of
the United States of America.
(10) The owner
or operator shall submit a copy of the insurance policy and an executed DEP
Form 6053-D to the cabinet for approval prior to this method of financial
insurance being accepted. The owner or operator shall also execute a performance
bond in accordance with Section 7 of this administrative regulation.
Section 14.
Release of Financial Assurance Mechanisms and Performance Bonds. (1) Financial
assurance mechanisms and performance bonds posted to assure proper closure of a
solid waste disposal site or facility shall be released two (2) years after the
date that the cabinet determines the final cover has been constructed and
revegetated with permanent vegetation and all of requirements of the approved
closure plan have been accomplished. The cabinet may withhold a portion of the
financial assurance mechanism in the amount necessary to correct deficiencies
in the solid waste disposal site or facility or its closure system.
(2) Financial
assurance mechanisms and performance bonds posted to assure performance and
closure of landfarming facilities shall be released when the owner or operator
demonstrates to the cabinet's satisfaction that the site has been closed and is
in compliance with 401 KAR 47:030, 401 KAR 48:300, and KRS Chapter 224.
(3) Financial
assurance mechanisms and performance bonds posted to assure proper closure care
shall be released when the owner or operator demonstrates to the cabinet's
satisfaction that the solid waste disposal site or facility has completed
closure care activities in conformance with the approved closure care plan
under Section 3 of 401 KAR 48:060, Section 13 of 401 KAR 48:090, or Section 3
of 401 KAR 48:170.
Section 15.
Financial Assurance for Publicly-Owned Facilities. The owner or operator of a publicly-owned
solid waste disposal facility shall provide a budget for the permitting,
construction, operation, closure, and closure care of the facility consistent
with the permit application, closure plan, and closure care cost estimates. The
budget shall be revised and submitted annually. When elements of the facility's
permitting, construction, operation, closure, or closure care are to be
accomplished by contract or agreement, a copy of the contract or agreement
shall be submitted to the cabinet.
Section 16.
Financial Assurance for Captive Facilities. (1) A solid waste disposal site or
facility that is operated exclusively by a solid waste generator on property
owned by the solid waste generator for the purpose of accepting industrial
solid waste exclusively from the solid waste generator may meet the financial
assurance requirements of this administrative regulation by completing a
performance bond and submitting one (1) of the following financial assurance
mechanisms: any of the five (5) mechanisms set forth in Section 7 of this
administrative regulation; a corporate guarantee, in accordance with Section 17
of this administrative regulation and executed on DEP Form 6053-E; a corporate
financial test, in accordance with Section 17 and executed on DEP form 6053-F;
or any alternative mechanism that meets the criteria of Section 4 of this administrative
regulation and is approved by the cabinet.
(2)(a) The
following documents are hereby incorporated by reference:
1. DEP Form
6053-E, entitled "Corporate Guarantee for Closure or Closure Care"
(July 1994); and
2. DEP form
6053-F, entitled "Letter from Chief Financial Officer on Corporate
Financial Test" (July 1994).
(b) The
documents referenced in paragraph (a) of this subsection may be obtained from
the Division of Waste Management, 14 Reilly Road, Frankfort, Kentucky 40601,
(502) 564-6716, from 8 a.m. to 4:30 p.m., eastern time, Monday through Friday,
excluding state holidays.
Section 17.
Financial Test and Corporate Guarantee. (1) The owner of a captive facility as
defined in Section 16 of this administrative regulation may satisfy the
requirements of this administrative regulation by demonstrating that he passes
a financial test as specified in this section. To pass this test, the owner or
operator shall meet the criteria set forth in paragraph (a) and either
paragraph (b) or (c) of this subsection:
(a) Less than
fifty (50) percent of the parent corporations' gross revenues are derived from
solid waste disposal operations.
(b) The owner or
operator shall have:
1. Satisfaction
of at least two (2) of the following ratios: a ratio of total liabilities to
net worth less than two (2.0); a ratio of the sum of net income plus
depreciation, depletion, and amortization to total liability greater than
one-tenth (0.1); or a ratio of current assets to current liabilities greater
than one and five-tenths (1.5);
2. Net working
capital and tangible net worth each at least six (6) times the sum of the
current closure and current closure care cost estimates;
3. Tangible net
worth of at least ten (10) million dollars; and
4. Assets in the
United States amounting to at least ninety (90) percent of total assets or at
least six (6) times the sum of the current closure and current closure care
cost estimates.
(c) The owner or
operator shall have:
1. A current
rating for his 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";
2. Tangible net
worth at least six (6) times the sum of the current closure and current closure
care cost estimates;
3. Tangible net
worth of at least ten (10) million dollars; and
4. Assets
located in the United States amounting to at least ninety (90) percent of total
assets or at least six (6) times the sum of the current closure and current
closure care cost estimates.
(2) The phrase
"current closure and current closure care cost estimates" as used in
subsection (1) of this section refers to the cost estimates required under
Sections 2 and 3 of this administrative regulation and referenced in the letter
from the owner or operator's chief financial officer.
(3) To
demonstrate that requirements of this test are met, the owner or operator shall
submit the following items to the cabinet:
(a) A letter
signed by the owner or operator's chief financial officer and worded as
specified on DEP Form 6053-F;
(b) A copy of a
report by an independent certified public accountant examining the owner or
operator's financial statements for the most recently completed fiscal year;
and
(c) A special
report from the owner's or operator's independent certified public accountant
to the owner or operator stating that:
1. The auditor
has compared the data that the letter from the chief financial officer
specified as having been derived from the independently audited year-end
financial statements for the most recent fiscal year with the amounts in such
financial statements; and
2. In connection
with that procedure, no matters came to his attention that caused him to
believe that the specified data should be adjusted.
(4) After the
initial submission of the items specified in subsection (3) of this section,
the owner or operator shall send updated information to the cabinet not later
than ninety (90) days after the close of each succeeding fiscal year. This
information shall include all three (3) items specified in subsection (3) of
this section.
(5) If the owner
or operator no longer meets the requirements of subsection (1) of this section,
notice shall be sent to the cabinet of the intent to establish alternate
financial assurance, as specified in this administrative regulation. The notice
shall be sent by certified mail no later than ninety (90) days after the end of
the fiscal year for which the year-end financial data show that the owner or
operator no longer meets the requirements. The owner or operator shall provide
that alternate financial assurance no later than 120 days after the end of that
fiscal year.
(6) The cabinet
may, based on a reasonable belief that the owner or operator no longer meets
the requirements of subsection (1) of this section, require reports of
financial condition at any time from the owner or operator in addition to those
specified in subsection (3) of this section. If the cabinet finds, on the basis
of these reports or other information, that the owner or operator no longer
meets the requirements of subsection (1) of this section, the owner or operator
shall provide alternate financial assurance as specified in this administrative
regulation no later than thirty (30) days after notification of this a finding.
(7) The cabinet
may disallow use of this test on the basis of qualifications in the opinion
expressed by the independent certified public accountant in his report on
examination of the owner or operator's financial statements. An adverse opinion
or disclaimer of opinion shall be cause for disallowance. The cabinet shall
evaluate other qualifications on an individual basis. The owner or operator
shall provide alternate financial assurance as specified in this administrative
regulation no later than thirty (30) days after notification of the disallowance.
(8) The owner or
operator is no longer required to submit the items specified in subsection (3)
of this section when:
(a) The owner or
operator substitutes alternative financial assurance for closure or closure
care specified in this administrative regulation; or
(b) The cabinet
notifies the owner or operator, in accordance with Section 14 of this
administrative regulation, that it is no longer required to maintain financial
assurance for closure or closure care of the solid waste disposal site or
facility.
(9) The owner or
operator may meet the requirements of this section by obtaining a written
guarantee, hereafter referred to as a "corporate guarantee". The
guarantor shall be the parent corporation of the captive facility as defined in
Section 16 of this administrative regulation. The guarantor shall meet the
requirements for owners or operators in subsections (1) to (7) of this section
and shall comply with the terms of DEP Form 6053-E. The corporate guarantee
shall accompany the items sent to the director as specified in subsection (3)
of this section. The terms of the corporate guarantee shall provide that:
(a) If the owner
or operator fails to perform closure or closure care of a facility provided for
by the corporate guarantee in accordance with the closure or closure care plan
and permit requirements, the guarantor shall do so or shall establish a trust
fund, in the name of the owner or operator, as specified in Section 12 of this
administrative regulation;
(b) The
corporate guarantee shall remain in force unless the guarantor sends notice of
cancellation by certified mail to the owner or operator and to the cabinet.
Cancellation may not occur, however, during the 120-day period beginning on the
first day that both the owner or operator and the cabinet have received notice
of cancellation, as evidenced by the certified mail return receipts; and
(c) If the owner
or operator fails to provide alternate financial assurance as specified in this
administrative regulation, and fails to obtain the written approval of this
alternate financial assurance from the cabinet not later than ninety (90) days
after both the owner or operator and the cabinet have received notice of
cancellation of the corporate guarantee from the guarantor, the guarantor shall
provide the alternate financial assurance in the name of the owner or operator.
Section 18.
Financial Assurance for Corrective Action. (1) The owner or operator of a
facility required to prepare and submit a groundwater corrective action plan
under 401 KAR 48:300 shall prepare a detailed written estimate, in current
dollars, of the cost of hiring a third party to conduct the corrective action
activities in accordance with the corrective action plan developed under 401
KAR 48:300. The corrective action cost estimate shall account for the total
cost estimate of corrective action activities as described in the corrective
action plan for the entire corrective action period. The cabinet shall annually
adjust this estimate for inflation and other factors, until the corrective
action program is completed in accordance with 401 KAR 48:300 and the approved
plan.
(2) The owner or
operator shall increase the corrective action cost estimate in the amount of
financial assurance provided under subsection (1) of this section if changes in
the corrective action plan or conditions at the solid waste disposal site or
facility increased the maximum cost of corrective action.
(3) The owner or
operator may request from the cabinet a reduction in the amount of corrective
action cost estimate and the amount of financial assurance provided under
subsection (1) of this section if the cost estimate exceeds the maximum
remaining cost of corrective action.
(4) The owner or
operator shall provide continuous coverage for corrective action until released
from the financial requirements for corrective action under subsection (7) of
this section.
(5) Within 120
days of approval of the corrective action plan, the owner or operator shall
post a performance bond executed on DEP Form 6053-G, entitled "Performance
Bond for Corrective Action" (September 1994), which is hereby incorporated
by reference. This document may be obtained from the Division of Waste
Management, 14 Reilly Road, Frankfort, Kentucky 40601, (502) 564-6716, from 8
a.m. to 4:30 p.m., eastern time, Monday through Friday, excluding state
holidays. The owner or operator shall also post one (1) or a combination of the
following financial assurance mechanisms in the amount set forth in the
corrective action cost estimate:
(a) A surety
bond executed on DEP Form 6053-M, entitled "Surety Bond for Corrective
Action" (September 1994), which is hereby incorporated by reference. This
document may be obtained from the Division of Waste Management, 14 Reilly Road,
Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m., eastern
time, Monday through Friday, excluding state holidays;
(b) A trust fund
executed on DEP Form 6053-J, entitled "Trust Agreement for Corrective
Action" (July 1994), which is hereby incorporated by reference. This
document may be obtained from the Division of Waste Management, 14 Reilly Road,
Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m., eastern time,
Monday through Friday, excluding state holidays;
(c) A letter of
credit executed on DEP Form 6053-H, entitled "Irrevocable Letter of Credit
for Corrective Action" (July 1994), which is hereby incorporated by
reference. This document may be obtained from the Division of Waste Management,
14 Reilly Road, Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30
p.m., eastern time, Monday through Friday, excluding state holidays;
(d) An escrow
agreement executed on DEP Form 6053-I, entitled "Escrow Agreement for
Corrective Action" (July 1994), which is hereby incorporated by reference.
This document may be obtained from the Division of Waste Management, 14 Reilly
Road, Frankfort, Kentucky 40601, (502) 564-6716, from 8 a.m. to 4:30 p.m.,
eastern time, Monday through Friday, excluding state holidays;
(e) Any other
financial assurance mechanism that complies with subsections (1) to (4) of this
section and is approved by the cabinet.
(6) The owner or
operator may satisfy the requirements of this section by establishing one (1)
or more of the financial mechanisms listed in subsection (5) of this section.
(7) The
financial insurance mechanisms posted to assure performance of the corrective
action required under 401 KAR 48:300 shall be released when the owner or
operator demonstrates to the cabinet's satisfaction that the groundwater
corrective action plan's remedial measures have been completed and that the
facility is in compliance with 401 KAR 48:300 and KRS Chapter 224.
Section 19. Use
of Multiple Financial Mechanisms at Single Facilities and Single Mechanisms at
Multiple Facilities. (1) The owner or operator may satisfy the requirements of
this administrative regulation by establishing more than one (1) financial
mechanism for each facility. These mechanisms are limited to trust funds,
escrow agreements, surety bonds, letter of credit, and insurance. The
mechanisms shall be as specified in Sections 8 to 12 of this administrative
regulation respectively, except that it is the combination of mechanisms,
rather than each single mechanisms, that shall provide financial assurance for
an amount at least equal to the current closure or closure care cost estimates.
(2) The owner or
operator may use a financial assurance mechanism specified in this administrative
regulation to meet the requirements of this administrative regulation for more
than one (1) facility. Evidence of financial assurance submitted to the cabinet
shall include a list showing, for each facility, the name, address, and amount
of funds for closure and closure care assurance by the financial mechanism. The
amount of funds available through the financial mechanism shall be no less than
the sum of the funds that would be available if a separate financial mechanism
had been established and maintained for each facility. In directing funds
available through the financial mechanism for closure or closure care of any of
the facilities provided for by the financial mechanism, the cabinet may direct
only the amount of funds designated for the facility, unless the owner or operator
agrees to the use of additional funds available under the financial mechanism.
(16 Ky.R. 1807; Am. 2236; 2398; eff. 5-8-90; 21 Ky.R. 515; 1112; eff. 11-7-94.)
