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2007 Financial Assurances Contracted Study: Comments on White Papers

White Paper Comments-Rural Counties’ Environmental Services Joint Powers Authority (ESJPA)

August 17, 2007

The following comments were submitted to the California Integrated Waste Management Board by the Rural Counties’ Environmental Services Joint Powers Authority (ESJPA) on August 17, 2007.

Here are comments from the Rural Counties’ ESJPA.

White Paper on Task 2: Review of Mechanisms

It is unclear why the "Task 2 White Paper: Review of Mechanisms" paper does not make a recommendation of which of the two "core set of effectiveness criteria" to use. The first set of "Certainty"," Adequacy", "Liquidity", and "Administrative burden and cost" seems the most appropriate criteria to use. rather than combining the first two criteria as proposed in the second set.

White Paper on Task 3, Step 1: Analysis of Selected Conceptual Fund Designs

It is not clear which fund design is being reviewed. Is this an overview of all current or all potential funds or a review of the criteria for Post-30 postclosure maintenance and corrective action concepts? This paper seems to be a record of discussions on which funds designs were selected for evaluation.

Given that the post-30 coverage issue was a main focus of this study and the fundamental differences between public and private sector financial abilities, we strongly recommend that Exhibit 4 also include a model for Defaulted post-30 postclosure maintenance and corrective action for "Both Public and/or Private" operations. The impacts of public and private sector operations should be analyzed together and separately.

White Paper on Task 3, Step 2: Review Pooled Funds Experience

For reasons indicated above, the experiences of private sector pooled funds should be analyzed together and separately from public sector pooled funds. This may be what was intended as part of the "type of facilities" but we recommend that this distinction should be explicitly identified in this analysis.

Draft White Paper on Task 3 Fund Working Model: Modeling Performance Defaults (8/9/07)

The modeling performance questions should also consider the differences between potential performance defaults of private vs. public landfills. Each sector should receive separate analysis. It is not appropriate to solely analysis both together.

The second bullet under "reasons for treating postclosure maintenance and corrective action differently" seems incorrect.

Because corrective action expenditures may be more urgent and attract more attention than postclosure maintenance outlays, corrective action may be less likely to be defaulted than postclosure maintenance

Shouldn't the default for corrective action be more likely?

The first bullet statement under "Role of Financial Assurances" is not correct. FA is required for post-30 postclosure maintenance since the requirement is for 30 years "or until the landfill no longer poses a threat". This demonstration can be longer than 30 years. It is more correct to indicate this and it does not change the analysis since some funds are currently based upon a 30 year period.

The Public Sector Defaults on page 13 should address other mechanisms than just bonds since other funding types may be used.

White Paper on Task 4: Insurance Product

No comments.

Mary Pitto
Regulatory Program Director
Regional Council of Rural Counties
(916) 447-4806

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Last updated: April 18, 2008