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2007 Financial Assurances Contracted Study: Comments on White Papers

White Papers Comments--California State Association of Counties (CSAC)

The following comments were submitted to the California Integrated Waste Management Board by the California State Association of Counties (CSAC) on the dates indicated.

Date Comments Were Submitted to CIWMB: August 17, 2007 | October 10, 2007

October 10, 2007

Thank you for the opportunity to review and comment on the following four white papers on behalf of CSAC:

  • Draft White Paper on Task 3, Step 4 (c): Modeling the Timing and Duration of Corrective Actions in Fund Working Model (#8)
  • Draft White Paper on Task 3, Step 4 (d): Modeling the Costs of Corrective Actions in Fund Working Model (#9)
  • Draft White Paper on Task 3, Step 5: Modeling How Landfills will Provide Funds in Fund Working Model (#12)
  • Draft White Paper on Task 3, Step 4: Modeling the Frequency of Corrective Actions in Fund Working Model (#7)

The following comments represent the review by the CSAC Solid Waste Policy Committee.

In the Task 3, Step 4 (c) white paper (#8)-Question 5. Proposed minimum and maximum durations of CA [corrective action]. Professional judgment is used for Exhibit 1. without supporting data. So it is difficult to comment when it is unclear how these durations will influence the cost.

ICF [ICF Consulting Services, LLC] proposes to use statistical analysis and probabilities to determine number of CA, duration, years on onset, and relationship of landfill characteristics to those probabilities. Statistical analysis with a high confidence level is based on relevant data and ICF acknowledges that the data and correlations are not well documented. Further, in Question 5 the authors state "projections of the average number of CA are based on best professional judgment at this time". It would seem that the number of corrective actions a landfill must undertake is probably the single biggest cost impact to the model and yet the author admits that there is no good supporting data.

The Task 3 Step 4 (d) white paper (#9) ICF correctly states that the relationship between size (permitted capacity) and costs and duration of corrective actions is uncertain. As opposed to size, why not use factors such as rainfall, geology and depth to groundwater to determine cost and duration of CA as they recommend in determining frequency in white paper #7? It is our opinion that size is not appropriate to use for this aspect of the model. A large landfill in a remote location, low rain fall, arid climate and with engineering controls is less of a threat of CA than a small landfill with the opposite factors if the landfill is run exactly the same.

Assumptions cannot be used to model, if the model is to be relevant. Good empirical data must be the basis of the model. The issue is, is there enough empirical data to yield relevant results? If not, how can CA calculations be determined?

On Question 2: Statistical distribution would seem to be more representative for the model, if enough empirical data exists for use in the model.

On Question 3: Reference is made to CA coverage by 282 landfills from the SWIS. And yet there are only a total of 78 corrective actions for those landfills. It doesn't appear to track with the numbers of corrective actions per site that it is proposed to use in the model. In one County's case, assuming a large landfill because it has 25 million yds capacity and a portion unlined, Exhibit 10 shows the average CA estimate to be $4.2 M, which is roughly 3x their currently approved CA estimate. Again, if the model is based on weak data, then what would be the basis to determine that more CA dollars are truly necessary.

With regard to Question 4: It is unclear what method ICF is recommending. If no actual data exists on the relationship between cost distribution and duration of CA projects? Then why not use an even distribution.

With regard to Question 6: The amounts may be subject to debate, but it is important that the Pledge of Revenue mechanism remain a tool for county facilities.

In reviewing the Task 3 Step 5 white paper (#12) We agree with ICF's conclusions on the two questions posed. This white paper states that only active landfills will be contributing to the fund, will the model take into account the 70% recycling goals currently under consideration. Increased recycling goals and the potential for alternative technologies to come into their own over the next few decades, will further reduce the number of total tons going into active landfills and should be taken in to account when establishing the fund.

On the Task 3 Step 4 white paper (#7) Question 3 relating landfill characteristics to the number of corrective actions, while Proximity to Urban Areas, Engineering Controls, Rainfall and Hydrology are all appropriately related to number of corrective actions, Permitted Capacity in our experience has no bearing whatsoever on the number of potential corrective actions.

The report should provide actual data to support running the model for 240 years, supporting their assumption that a landfill will still pose a threat after 240 years. For example landfills have a gas generation curve lasting only 20-30 years after closure, there should never be a need for 5-10 medium cost corrective actions, if they are primarily gas related. In general, due to decomposition the longer a landfill is closed, the less likely corrective action becomes, it is difficult to believe that any landfill would need 17-29 corrective actions over the 240 year period of the model. Overall, the numbers Exhibit seem unreasonable high. There should be no correlation made between running the model at 240 years and stating that landfills pose a threat for 240 years unless the data is provided to support such an assumption.

Again thanks for the opportunity to comment.

Susan R. Klassen, Deputy Director
Department of Transportation and Public Works
2300 County Center Drive, Suite B100
Santa Rosa, CA 95403
Phone: (707) 565-2231
Fax: (707) 565-2620
E-mail: sklassen@sonoma-county.org

August 17, 2007

Thank you for the opportunity to review and comment on the following white papers on behalf of CSAC:

Task 2: Review of Mechanisms

Task 3: Step 1 Analysis of Selected Conceptual Fund Design

Task 3: Step 2 Review Pooled Fund Experience Task 3, Working Model-Modeling Performance Defaults Task 4 Insurance Pool

The comments are based upon review by the CSAC Solid Waste Management Committee.

Task 1: Step 1 Exhibit 3-Conceptual Fund Designs Selected for Evaluation

While it is understood that the number of conceptual models needed to be reduced to make the final report manageable to the reader, the white paper does not discuss the rationale/reason that CIWMB contract managers used to decide that only models that are for "defaults only" and "mandatory participation" should be run. If the justification for this decision is not clearly explained in the report, it will appear arbitrary and call the validity of the entire fund modeling exercise into question. Especially since, as stated in the Task 3, Step 2 white paper, "a mandatory participation feature is an uncommon feature of most state funds."

The goal of this contract appears to be to have a report which becomes the basis to revise existing financial assurance mechanisms such that they provide better protection, in terms of safety, availability and adequacy.

As a result financial assurances for corrective action and postclosure maintenance are expected to be revised to cover extended ranges of potential costs and scenarios for longer terms than 30 years. Assuming all landfills currently subject to financial assurance requirements are required to comply with future more extensive, secure and costly financial assurances, also being required to contribute to a pooled fund just increases the financial burden to operators in an environment where the default potential has been dramatically reduced. Is it intended that the pooled fund also be used to fund postclosure maintenance and corrective action on landfills for which financial assurances were never required?

Task 3: Working Model-Modeling Performance Defaults

The information presented in this working paper supports the fact that the potential for performance defaults is significantly lower for landfills where the financial assurances are provided by a public entity, which was recognized in the original regulations. Therefore, CSAC urges that this lower level of default risk related to financial assurances provided by public entities be taken into account when revising the rules, to provide some relief to public entities already burdened by many other unfunded mandates.

Task 4: Insurance Pool

CSAC is supportive of ICF's position, as stated on page 2 of 4 of this white paper, to not include "permanent defaults" in the fund modeling.

Some additional questions:

Is there an assumption being used for this study for the duration of "post 30-year postclosure maintenance"?

There are "282 landfills in the study universe". Of these, it is unclear how many are active and how many are closed. Can this information be provided in the next transmittal of information for our review? Also, what is the actual total number of landfills in the state which are currently subject to financial assurance requirements and would be subject to participating in a mandatory pooled fund?

Again thank you for the opportunity to comment.

Susan R. Klassen, Deputy Director
Department of Transportation and Public Works
2300 County Center Drive, Suite B100
Santa Rosa, CA 95403
Phone: (707) 565-2231
Fax: (707) 565-2620
E-mail: sklassen@sonoma-county.org

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Last updated: April 18, 2008


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