Regulations: Title 27, Environmental Protection--Division 2, Solid Waste

Chapter 6. Financial Assurances at Solid Waste Facilities and at Waste Management Units for Solid Waste

Subchapter 3. Allowable Mechanisms

Article 2. CIWMB - Financial Assurance Mechanisms

(a) The trust fund shall have a trustee that is authorized to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.

(b) The trust agreement shall be worded as specified by and established by using Form CIWMB 100 (11/06) which is incorporated by reference, with appropriate amendments to identify that the mechanism is utilized for closure and/or postclosure maintenance and/or third party operating liability and/or corrective action.

(c) If, at any time, the value of the trust fund is greater than the required amount of coverage minus the amount of coverage demonstrated by another mechanism, the operator may request in writing that the CIWMB authorize the release of the excess funds. The CIWMB shall review the request within 90 days of receipt of the request. If any excess funds are verified, the CIWMB shall instruct the trustee to release the funds.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Section 43040, 43103 and 43500-43610, Public Resources Code.

(a) The enterprise fund shall dedicate its revenue exclusively or with exclusive first priority to financing closure and/or postclosure maintenance and/or corrective action.

(b) Revenue generated by an enterprise fund shall be deposited into a financial assurance mechanism that the operator demonstrates, to the satisfaction of the CIWMB, meets the following requirements:

(1) The mechanism will provide equivalent protection to a trust fund in ensuring that the assured amount of funds shall be available in a timely manner for closure and/or postclosure maintenance and/or corrective action;

(2) The revenue deposited into the mechanism will be used exclusively to finance closure and/or postclosure maintenance and/or corrective action, as applicable, and will remain inviolate against all other claims, including any claims by the operator, the operator's governing body, and the creditors of the operator and its governing body;

(3) The mechanism authorizes the CIWMB to direct the provider of financial assurance to pay closure or postclosure maintenance or corrective action costs if the CIWMB determines that the operator has failed or is failing to perform closure or postclosure maintenance or corrective action activities, as applicable, as covered by the mechanism;

(4) The financial operations of the provider of the financial assurance are regulated by a federal or state agency, or the provider is otherwise certain to maintain and disburse the assured funds properly;

(5) If the provider of financial assurance has authority to invest revenue deposited into the mechanism, the provider shall exercise investment discretion similar to a trustee; and

(6) The mechanism meets other requirements that the CIWMB determines are needed to ensure that the assured amount of funds shall be available in a timely manner for closure and/or postclosure maintenance and/or corrective action.

Note:

Authority cited:
Section 40502,Public Resources Code.

Reference:
Sections 43103, 43500-43610, Public Resources Code.

(a) The terms of issuance of government securities shall specify that proceeds from the sale of the securities shall be deposited into a financial assurance mechanism that meets the requirements of Section (b).

(b) The securities shall have been issued and the proceeds already deposited into the financial assurance mechanism that provides equivalent protection to a trust fund by meeting the following requirements:

(1) Proceeds from the sale of securities shall be used exclusively and only as applicable, to:

(A) Pay costs of closure activities identified in the most recently approved closure plan; and/or

(B) Pay costs of postclosure maintenance identified in the most recently approved postclosure maintenance plan; and/or

(C) Pay claims by third parties for bodily injury and property damage caused by accidental occurrences; and/or

(D) Pay costs of corrective action activities in the most recently approved corrective action plan; and

(E) All funds shall remain inviolate against all other claims, including any claims by the operator, the operator's governing body, and the creditors of the operator and its governing body;

(2) The financial operations of the provider of the financial assurance shall be regulated by a federal or state agency, or the provider shall be otherwise certain to maintain and disburse the assured funds properly;

(3) If the provider of financial assurance has authority to invest revenue deposited into the mechanism, the provider shall exercise investment discretion similar to a trustee; and

(4) The mechanism meets other reasonable requirements that the CIWMB determines are necessary to ensure that the assured funds shall be available in a timely manner.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code. 

Reference:
Section 43040, 43103 and 43500-43610, Public Resources Code.

(a) The institution issuing a letter of credit shall have the authority to issue letters of credit and its letter-of-credit operations shall be regulated and examined by a federal or state agency.

(b) The letter of credit shall be worded and completed, with appropriate amendments to identify that the mechanism is utilized for closure and/or postclosure maintenance and/or corrective action costs, as specified by form CIWMB 101 (12/01) which is incorporated by reference. The original mechanism must be submitted to the CIWMB.

(c) The letter of credit shall be accompanied by a letter from the operator identifying the number, issuing institution, and date of issuance of the letter of credit and the name, address, solid waste information system number, and amount of funds assured by the letter of credit for closure and/or postclosure maintenance and/or corrective action for each solid waste landfill. If the letter of credit is for more than one coverage requirement and/or for more than one solid waste landfill, appropriate sublimits must also be clearly identified within the letter of credit.

(d) The letter of credit shall be irrevocable and shall be issued for a period of at least one year, except as Noted in (d)(2).

(1) The letter of credit shall provide that the expiration date will be automatically extended for a period of at least one year, unless the issuing institution provides notice of termination as specified in Section 22231.

(2) If an operator fails to demonstrate alternate coverage within 60 days after receiving a notice of termination, the CIWMB may allow an issuing institution an extension to the term of a letter of credit for a period of time shorter than one year.

(e) The issuing institution shall become liable under the terms of the letter of credit if the CIWMB determines that the operator has failed or is failing to perform closure or postclosure maintenance or corrective action activities as guaranteed by the mechanism.

(f) The operator may cancel the letter of credit only if alternate financial assurance is substituted as specified in Section 22227 or if the operator is released from the requirements of this section in accordance with Section 22235.

Note:

Authority cited:
Section 40502, Public Resources Code.

Reference:
Sections 43103, 43500-43610, Public Resources Code.

(a) The status of the surety company issuing a surety bond shall be among those listed as holding certificates of authority as acceptable sureties on Federal bonds and as acceptable reinsuring companies in Circular 570 of the U.S. Department of the Treasury which is published on July 1 of each year in the Federal Register.

(b) The penal sum of the bond must be in an amount at least equal to the closure and/or postclosure and/or the corrective action cost estimate, except as provided in Section 22228.

(c) The surety bond shall be worded and completed as specified by one of the following forms, which shall be supplied by the CIWMB. The original mechanism must be submitted to the CIWMB:

(1) Form CIWMB 102(a) (12/01) which is incorporated by reference, for a surety bond guaranteeing performance of closure; or

(2) Form CIWMB 102(b) (12/01) which is incorporated by reference, for a surety bond guaranteeing performance of postclosure maintenance; or

(3) Form CIWMB 102(c) (4/96) which is incorporated by reference, for a surety bond guaranteeing performance of reasonably foreseeable and/or known corrective action activities; or

(4) Form CIWMB 103(a) (12/01) which is incorporated by reference, for a surety bond guaranteeing payment of closure costs; or

(5) Form CIWMB 103(b) (12/01) which is incorporated by reference, for a surety bond guaranteeing payment of postclosure maintenance costs; or

(6) Form CIWMB 103(c) (12/01) which is incorporated by reference, for a surety bond guaranteeing payment of reasonably foreseeable and/or known corrective action costs.

(d) The surety company shall become liable under the terms of the bond if the CIWMB determines that the operator has failed or is failing to perform closure or postclosure maintenance or corrective action as guaranteed by the bond.

(e) Payments made under the terms of the bond will be deposited by the surety directly into the depository trust fund, as identified in Section 22237.

(f) The operator may cancel the bond only if alternate financial assurance is substituted as specified in Section 22227 or if the operator is no longer required to demonstrate financial responsibility in accordance with Section 22235.

Note:

Authority cited:
Section 40502, Public Resources Code.

Reference:
Sections 43103, 43500-43610, Public Resources Code.

(a) A pledge of revenue shall consist of a resolution by the governing body of the operator or provider of financial assurance authorizing an agreement between the operator or provider of financial assurance and the CIWMB to establish the pledge. The resolution and the agreement shall remain effective continuously throughout the period in which the pledge of revenue is used to satisfy the requirements of Subchapter 2 of this Chapter.

(b) The agreement establishing the pledge of revenue shall contain the following items:

(1) The types and sources of pledged revenue;

(2) The amount of revenue pledged from each source;

(3) The period of time that each source of revenue is pledged to be available; and

(4) The solid waste landfill(s) and the current postclosure and/or corrective action cost estimate(s) that are covered by the pledge.

(5) The authorization for the CIWMB to direct payment for postclosure maintenance and/or corrective action if the CIWMB determines that the operator has failed or is failing to perform postclosure maintenance or corrective action activities covered by the mechanism.

(c) An operator or provider of financial assurance shall pledge the following types of revenue that the operator or provider of financial assurance controls and that will be available in a timely manner to pay for postclosure maintenance or corrective action:

(1) User fees, rents, or other guaranteed revenue from existing or planned solid waste facilities;

(2) Tax increases within statutory limitations; and/or

(3) Other guaranteed revenues that are acceptable to the CIWMB.

(d) If an operator or provider of financial assurance ceases at any time to retain control of its ability to allocate any pledged revenue to pay postclosure maintenance or corrective action costs, the operator or provider of financial assurance shall notify the CIWMB and shall obtain alternate coverage within 60 days after control lapses.

Note:

Authority Cited:
Section 40502, Public Resources Code. 

Reference:
Sections 43103, 43500-43610, Public Resources Code.

(a) To pass the financial means test, an operator or a guarantor shall be a private entity and shall meet the criteria of (d), (e), (f) or (g) based on independently audited year-end financial statements for the latest completed fiscal year.

(b) The phrase "amount of liability coverage to be demonstrated by the test" as used in (d) and (e) refers to the amount of liability coverage required by Section 22216.

(c) The phrase "current cost estimates covered by the test" as used in (f) and (g) refers to the current postclosure cost estimate required by (h)(1) to be shown in paragraphs 1 and 2 of the letter from the chief financial officer.

(d) To cover operating liability the operator or guarantor shall have:

(1) Net working capital and tangible net worth each at least six times the amount of liability coverage to be demonstrated by the test; and

(2) Tangible net worth of at least $15 million; and

(3) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the amount of liability coverage to be demonstrated by the test.

(e) To cover operating liability the operator or guarantor shall have:

(1) A current rating for its most recent bond issuance of AAA, AA, A, or BBB issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's; and

(2) Tangible net worth of at least six times the amount of liability coverage to be demonstrated by the test; and

(3) Tangible net worth of at least $15 million; and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the amount of liability coverage to be demonstrated by the test.

(f) To cover postclosure maintenance the operator or guarantor shall have:

(1) Two of the following three ratios: a ratio of total liabilities to net worth that is less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities that is greater than 0.1; and a ratio of current assets to current liabilities that is greater than 1.5; and

(2) Net working capital and tangible net worth each at least six times the sum of the current cost estimate covered by the test; and

(3) Tangible net worth of at least $15 million; and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the sum of the current cost estimate covered by the test.

(g) To cover postclosure maintenance the operator or guarantor shall have:

(1) A current rating for its most recent bond issuance of AAA, AA, A, or BBB issued by Standard and Poor or Aaa, Aa, A, or Baa as issued by Moody's; and

(2) Tangible net worth at least six times the sum of the current cost estimate covered by the test, and

(3) Tangible net worth of at least $15 million and

(4) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the sum of the current cost estimate covered by the test.

(h) Within 90 days after the close of each financial reporting year, the operator or the guarantor shall submit the following items to the CIWMB and, in the case of a guarantor, to the operator;

(1) A letter on the operator's or guarantor's official letterhead stationary that is worded and completed as specified in form CIWMB 104 (11/06) which contains an original signature of the operator's or guarantor's chief financial officer.

(A) An operator or guarantor shall use form CIWMB 104 (11/06) to demonstrate or guarantee financial responsibility for liability coverage only or postclosure costs only or both liability and postclosure maintenance. If the operator or guarantor is using a similar financial means test to demonstrate liability coverage and/or postclosure maintenance for facilities in other states, the operator shall list those out-of- state facilities, as well as the California facilities on this test.

(2) A copy of an independent certified public accountant's report on examination of the operator's or guarantor's financial statements for the latest completed fiscal year, with a copy of the operator's or guarantor's financial statements for the latest completed fiscal year.

(3) A letter from an independent certified public accountant stating that:

(A) He or she has compared the data in the letter in (h)(1), from the chief financial officer specified as having been derived from the financial statements for the latest completed fiscal year of the operator or the guarantor, with the amounts in the financial statements; and

(B) Based on the comparison, no matters came to his or her attention that caused him or her to believe that the specified data should be adjusted.

(4) If the operator or the guarantor is required to make such a filing, a copy of the operator's or guarantor's most recent form 10-K filed with the U.S. Securities and Exchange Commission.

(i) The CIWMB may require updated financial statements at any time from the operator or guarantor. If the CIWMB finds that the operator or guarantor no longer meets the financial means test requirements of (d),(e),(f), or (g) based on such reports or other information, including but not limited to, credit reports and reports from other state agencies, the operator shall obtain alternate coverage within 60 days after receiving the notification of such a finding.

(j) If, at the time of its annual filing, an operator using the financial means test fails to meet the requirements of the financial means test under (d),(e),(f), or (g), the operator shall obtain alternate coverage within 60 days after the determination of such failure.

(k) If the operator fails to obtain alternate coverage within the times specified in (i) or (j), the operator shall notify the CIWMB by certified mail within 10 days of such failure.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Sections 43040 and 43103, Public Resources Code.

(a) The guarantor shall be:

(1) A parent corporation of the operator;

(2) A firm whose parent corporation is also the parent corporation of the operator; or

(3) A firm engaged in a substantial business relationship with the operator and issuing the guarantee as an act incident to that business relationship.

(b) The guarantor shall meet the requirements of the financial means test under Section 22246 of this Article based on the guarantor's audited year-end financial statements.

(c) The guarantee shall be worded and completed as specified by form CIWMB 105 (12/01), which is incorporated by reference.

(d) The terms of the guarantee shall specify that if:

(1) The operator fails or is failing to perform postclosure maintenance in accordance with the applicable approved postclosure maintenance plan when required to do so, the guarantor shall either:

(A) Perform postclosure maintenance in accordance with the applicable approved postclosure maintenance plan; or

(B) Establish and fund a trust fund, as specified in Section 22240, in the name of the operator in the amount of the applicable current postclosure maintenance cost estimate covered by the guarantee.

(2) The operator fails to satisfy a judgment or an award for bodily injury and property damage to third parties caused by accidental occurrences, or fails to pay an amount agreed in settlement of a claim arising from or alleged to arise from such injury and damage, the guarantor shall satisfy such judgment, award, or settlement agreement up to the limits of the guarantee.

(e) If the guarantor fails to meet the requirements of the financial means test under Section 22246 or wishes to terminate the guarantee, the guarantor shall send notice of such failure or termination by certified mail to the operator and the CIWMB within 90 days after the end of that financial reporting year. The guarantee shall terminate no less than 60 days after the date that the operator and the CIWMB have received the notice of such failure or termination, as evidenced by the return receipts. The guarantor shall establish alternate coverage as specified in Section 22228 on behalf of the operator within 60 days after such notice, unless the operator has done so.

(f) The CIWMB may require updated financial statements at any time from a guarantor. If the CIWMB finds, on the basis of such reports or information from other sources, including but not limited to, credit reports and reports from other state agencies, that the guarantor no longer meets the financial means test requirements of Section 22246 or any requirements of Section 22247, the CIWMB shall notify the guarantor and operator of such finding by certified mail. The guarantor shall establish alternate coverage as specified in Section 22228 on behalf of the operator within 60 days after such notice, unless the operator has done so.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Sections 43040, 43103 and 43500-43610, Public Resources Code.

(a) The issuer of the insurance policy shall be an insurer, including a captive insurance company that, at a minimum, is licensed by the California Department of Insurance to transact the business of insurance in the State of California as an admitted carrier.

(b) If coverage is not available as specified in (a), the operator may seek coverage from an insurer, including a captive insurance company that, at a minimum, shall be eligible to provide insurance as an excess or surplus lines insurer in California.

(c) If coverage is obtained as described in (b), the insurance shall be transacted by and through a surplus lines broker currently licensed under the regulations of the California Department of Insurance [California Insurance Code (CIC), Division 1, Part 2, Chapter 6] and upon the terms and conditions prescribed by the California Department of Insurance.

(d) The CIWMB or its designee may object to the use of any insurer at anytime, whether before or after placement of coverage based on information obtained from, but not limited to, the Surplus Line Association of California, Best's Insurance Reports, and/or the Non-Admitted Insurers Quarterly List.

(e) The closure or postclosure maintenance insurance or reasonably foreseeable corrective action policy shall guarantee that funds will be available to close the solid waste landfill whenever final closure occurs or to provide postclosure maintenance for the solid waste landfill whenever the postclosure maintenance period begins or provide for corrective action for the solid waste landfill if corrective action is deemed necessary, whichever is applicable. The policy shall also guarantee that once the closure or postclosure maintenance or corrective action program begins, the insurer will be responsible for the paying out of funds to the operator or person authorized to conduct closure or postclosure maintenance or corrective action, up to an amount equal to the face amount of the policy.

(f) The insurance policy shall be issued for a face amount at least equal to the most recently approved closure and/or postclosure maintenance and/or reasonably foreseeable corrective action cost estimate(s) whichever is applicable, unless the policy is being used in combination with another acceptable mechanism. 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 may be lowered by the amount of the payments.

(g) An operator, or any other person authorized to conduct closure or postclosure maintenance or corrective action, may receive reimbursements for closure or postclosure maintenance or corrective action expenditures, whichever is applicable. Requests for reimbursement will be granted by the insurer only if the remaining value of the policy is sufficient to cover the remaining costs of closure or postclosure maintenance or corrective action and if the expenditures have been reviewed and approved in writing by the CIWMB or its designee.

(h) Notwithstanding any other provisions of this section, if either partial or complete closure, postclosure maintenance or corrective action activities are ordered by the CIWMB or its designee as a result of failure by the operator or person authorized to conduct such activities, the policy shall also guarantee that the insurer shall be responsible for paying out funds to the CIWMB for deposit into a special account established by the CIWMB for closure, postclosure maintenance or corrective action activities of the facility. The policy shall further guarantee that the insurer shall, without delay, pat to the CIWMB the amount the CIWMB requests, up to an amount equal to the face amount of the policy. CIWMB requests for payment will be based on current estimated expenses as determined by the CIWMB for closure, postclosure maintenance or corrective action activities. Any payments made by the insurer that exceed the actual expenses incurred in performing the insured activity will be repaid to the insurer at the completion of the insured activity.

(i) Each policy shall contain a provision allowing assignment of the policy to a successor operator. Such assignment may be conditional upon consent of the insurer, provided that such consent is not unreasonably refused.

(j) 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, 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 cancellation by certified mail to the owner and operator, and the CIWMB 120 days in advance of cancellation. If the insurer cancels the policy, the owner or operator must obtain alternate financial assurance as specified in Section 22228.

(k) For insurance policies providing coverage for postclosure maintenance, 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. Such increases must be equivalent to the face amount of the policy, less any payments made, multiplied by an amount equivalent to 85 percent of the most recent investment rate or of the equivalent coupon-issue yield announced by the U.S. Treasury for 26-week Treasury securities.

(l) The operator may cancel the insurance policy only if alternate financial assurance is substituted as specified in Section 22227, or if the operator is no longer required to demonstrate financial responsibility in accordance with the requirements of Subchapter 2 of this Chapter.

(m) Each closure and/or postclosure maintenance and/or reasonably foreseeable corrective action insurance policy shall be evidenced by a certificate of insurance established by using form CIWMB 106 (05/2001), which is incorporated by reference. Each certificate of insurance shall contain the insurer's warranty that the policy conforms in all respects with the requirements of this Subdivision, as applicable, and as such regulations were constituted on the date the policy is certified to on an annual basis. In addition, the insurer shall agree that any provision of the policy inconsistent with these regulations is amended to eliminate such inconsistency by submittal of the certification for closure and/or postclosure maintenance and/or reasonably foreseeable corrective action insurance.

Note:

Authority cited:
Sections 40502, Public Resources Code.

Reference:
Sections 43103, 43500-43610, Public Resources Code.

(a) To pass the local government financial test, and to demonstrate financial responsibility for postclosure maintenance and/or corrective action costs, an operator or a guarantor shall be a local government agency and shall meet the criteria of (e),(f),(i) and (j) based on financial statements prepared in conformity with Generally Accepted Accounting Principles for governments and have its financial statements audited by an independent certified public accountant.

(b) A local government is not eligible to assure its obligations under Section 22249 if it:

(1) Is currently in default on any outstanding general obligation bonds, or

(2) Has any outstanding general obligation bonds rated lower than Baa as issued by Moody's or BBB as issued by Standard and Poor's, or

(3) Has operated at a deficit equal to five percent or more of total annual revenue in each of the past two fiscal years, or

(4) Receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant auditing its financial statement as required by (a).

(c) The phrase "current postclosure maintenance cost estimates covered by the test" refers to the current postclosure maintenance cost estimate required by (j)(1) to be shown in paragraphs 1 and 2 of the letter from the chief financial officer.

(d) The phrase "current corrective action cost estimates covered by the test" refers to the current corrective action cost estimate required by (j)(1) to be shown in paragraphs 1 and 2 of the letter from the chief financial officer.

(e) The total amount of postclosure maintenance costs and corrective action costs which can be assured under this local government financial test is determined as follows:

(1) If the local government operator or guarantor does not assure other environmental obligations through a financial test, it may assure postclosure maintenance costs and/or corrective action costs that equal up to 43 percent of the local government's total annual revenue.

(2) If the local government operator or guarantor assures other environmental obligations through a financial test, including but not limited to those associated with underground injection control wells, petroleum underground storage tank facilities, PCB storage facilities, and hazardous waste treatment, storage, and disposal facilities, it must add those costs to the postclosure maintenance costs and/or corrective action costs it seeks to assure. The total that may be assured must not exceed 43 percent of the local government's or guarantor's total annual revenue.

(3) The operator or guarantor must obtain an alternate financial assurance instrument for those costs that exceed the limits set in (1) and (2).

(f) The operator or guarantor shall meet the criteria of either (g) or (h) based on the operator's or guarantor's most recent audited annual financial statements prepared in conformity with Generally Accepted Accounting Principles for governments.

(g) The operator or guarantor shall satisfy each of the following financial ratios based on the operator's or guarantor's most recent audited annual financial statements prepared in conformity with Generally Accepted Accounting Principles for governments:

(1) Liquidity ratio: a ratio of cash plus marketable securities to total expenditures greater than or equal to 0.05; and

(2) Debt service ratio: a ratio of annual debt service to total expenditures less than or equal to 0.20; or

(h) An operator or guarantor with outstanding, rated, general obligation bonds that are not secured by insurance, a letter of credit, or other collateral or guarantee must have such bonds with current investment grade rating as follows:

(1) Aaa, Aa, A or Baa, as issued by Moody's on all such general obligation bonds; or

(2) AAA, AA, A, or BBB, as issued by Standard and Poor's on all such general obligation bonds.

(i) The operator or guarantor shall provide public notice of the local government's assured obligations by placing a reference to the postclosure maintenance costs and/or corrective action costs assured through the financial test into its next comprehensive annual financial report (CAFR). If timing does not permit the reference to be incorporated into the most recently issued CAFR or budget prior to the first year the financial test is used to assure local government solid waste facility obligations, the reference may instead be placed in the operating record until issuance of the next available CAFR. The operator shall certify that the reference to the postclosure maintenance costs and/or corrective action costs assured through the financial test is provided. The operator's certification shall be submitted with the chief financial officer letter as specified in (j)(2).

(1) For postclosure maintenance costs, conformance with Government Accounting Standards Board (GASB) Statement 18 assures compliance with this public notice requirement.

(2) The following, including the GASB requirements, shall be disclosed:

(A) The nature and source of requirements for those obligations assured by the local government financial test including postclosure maintenance costs and/or corrective action costs; and

(B) Postclosure maintenance costs recognized at the balance sheet date; and

(C) Estimated postclosure maintenance costs remaining to be recognized; and

(D) Percentage of landfill capacity used to date, as of the end of the latest completed fiscal year; and

(E) Remaining landfill capacity reported in cubic yards or tons as of the end of the latest completed fiscal year; and

(F) Estimated remaining useful landfill life in years; and

(G) Corrective action costs. The reference shall be placed in the CAFR not later than 120 days after the corrective action remedy has been selected as required under Article 1, Subchapter 3, Chapter 3 (Section 20380 et seq.).

(j) Within 180 days after the close of each financial reporting year, the operator or guarantor shall submit the following items to the CIWMB and, in the case of a guarantor also, to the operator;

(1) A letter on the local government's letterhead stationary that is worded and completed as specified in Form CIWMB 112(7/98), which is incorporated by reference, which contains an original signature of the local government's chief financial officer. An operator or guarantor shall use Form CIWMB 112(7/98) to demonstrate or guarantee financial responsibility for postclosure maintenance costs and/or corrective action costs.

(A) If the operator or guarantor is using a similar financial test to demonstrate postclosure maintenance costs and/or corrective action costs for other environmental obligations including but not limited to those associated with underground injection control wells, petroleum underground storage tank facilities, PCB storage facilities, and hazardous waste treatment, storage, and disposal facilities, the operator or guarantor shall list those facilities, as well as the solid waste facility obligations it seeks to assure.

(2) A letter from the local government's treasurer or auditor-controller certifying the relative size (43%) threshold as specified in (e), and the public notice requirement as specified in (i) have been satisfied.

(3) A copy of an independent certified public accountant's report on examination of the operator's or guarantor's financial statements for the latest completed fiscal year, with a copy of the operator's or guarantor's financial statements for the latest completed fiscal year.

(A) An unqualified opinion of the independent certified public accountant is required.

(B) Local governments that have audits conducted only once every two years due to state law, may use the latest annual statement, audited or unaudited, provided that the most recent audit resulted in an unqualified opinion from the auditor.

(4) A letter from an independent certified public accountant that performed the audit:

(A) Stating that he or she has reviewed the letter required by (j)(1) from the chief financial officer including data derived from the financial statements for the latest completed fiscal year of the operator or the guarantor, and compared the data with the amounts in the financial statements; and

(B) Describing the procedures performed and related findings, including whether or not there were discrepancies found in the comparison, based on an agreed-upon procedures engagement performed in accordance with American Institute of Certified Public Accountants, Inc.'s (AICPA's) Statement on Auditing Standards No. 75, Engagements to Apply Agreed-Upon Procedures to Specified Elements, Accounts or Items of a Financial Statement.

(5) A copy of the comprehensive annual financial report (CAFR) used to comply with (i) or certification by the local government's treasurer or auditor-controller that the requirements of General Accounting Standards Board Statement 18 have been met.

(6) A copy of the bond rating on the bond rating service's letterhead stationery.

(k) The CIWMB may require updated financial statements at any time from the operator or guarantor. If the CIWMB finds that the operator or guarantor no longer meets the local government financial test requirements of (g) or (h), the operator shall obtain alternate coverage within 60 days after receiving the notification of such a finding.

(l) If, when preparing its annual update, an operator using the local government financial test fails to meet the requirements of the financial test under (g) or (h), the operator shall obtain alternate coverage within 210 days after the close of the financial reporting year.

(m) If the operator fails to obtain alternate coverage within the times specified in (k) or (l), the operator shall notify the CIWMB by certified mail within 10 business days of such failure.

(n) A local government financial test may be combined with another payment mechanism to assure the amount of required coverage specified in Sections 22211 and 22221 of Subchapter 2.

Note:

Authority cited:
Sections 40502 and 43601.5, Public Resources Code. 

References:
Sections 43500 through 43610.1, Public Resources Code, Part 258.74(f) and (h), Title 40 Code of Federal Regulations.

(a) The guarantor shall be a local government which meets the requirements of the Local Government Financial Test under Section 22249 of this Article based on the guarantor's audited year-end financial statements.

(b) The guarantee shall be worded and completed as specified by form CIWMB 113(7/98), which is incorporated by reference.

(c) When the guarantee specifies coverage for postclosure maintenance costs, the terms shall also specify:

(1) If the operator fails to perform postclosure maintenance in accordance with the applicable approved postclosure maintenance plan when required to do so, the guarantor shall either:

(A) Perform, or pay a third party to perform, postclosure maintenance in accordance with the applicable approved postclosure maintenance plan; or

(B) Establish and fund a trust fund as specified in Section 22240 of this Article, in the name of the operator in the amount of the applicable current postclosure maintenance cost estimate covered by the guarantee; and/or

(d) When the guarantee specifies coverage for corrective action costs, the terms shall also specify:

(1) If the operator fails to perform corrective action in accordance with the applicable approved corrective action plan when required to do so, the guarantor shall either:

(A) Perform, or pay a third party to perform, corrective action in accordance with the applicable approved corrective action plan; or

(B) Establish and fund a trust fund as specified in Section 22240 of this Article, in the name of the operator in the amount of the applicable current corrective action cost estimate covered by the guarantee; and/or

(e) The guarantee will remain in force unless the guarantor fails to meet the requirements of Sections 22249 and/or 22249.5 of this Article, or wishes to terminate the guarantee. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by both the operator and the CIWMB, as evidenced by return receipts.

(1) The guarantor shall send a notice of cancellation by certified mail to the operator, and the CIWMB, within 180 days after the end of that financial reporting year. The guarantee shall terminate no less than 120 days after the date that the operator and the CIWMB received the notice of cancellation, as evidenced by the return receipts.

(2) If the guarantee is cancelled, the operator shall establish alternate assurance as specified in Section 22228 of Article 1 of this Subchapter within 60 days after such notice.

(3) If the operator fails to provide alternate financial assurance:

(A) The operator shall send notice of such failure by certified mail to the guarantor, and the CIWMB, within the same 60 day period; and

(B) The guarantor must provide alternate assurance as specified in Section 22228 of Article 1 of this Subchapter within 60 days after the date of the operator's notice.

(f) The CIWMB may require updated financial statements at any time from a guarantor. If the CIWMB finds that the guarantor no longer meets the local government financial test or guarantee requirements of Sections 22249 and/or 22249.5 of this Article, the CIWMB shall notify the guarantor and operator of such finding by certified mail. If the CIWMB notifies the guarantor and the operator that the guarantee is no longer acceptable, the operator and guarantor shall comply with Section 22249.5 (e) (2) and (3) of this Article.

(g) Only a guarantee for payment, rather than performance of work, may be combined with another payment mechanism to assure the amount of required coverage specified in Sections 22206, 22211, 22216, and/or 22221 of Subchapter 2.

Note:

Authority cited:
Sections 40502 and 43601.5, Public Resources Code. 

References:
Sections 43500 through 43610.1, Public Resources Code, Part 258.74(f) and (h), Title 40 Code of Federal Regulations.

(a) A federal entity which is responsible for closure or postclosure maintenance of one or more solid waste landfills located in California may, in lieu of using the other financial mechanisms provided in this Article, provide a Federal Certification for each solid waste landfill, in accordance with this section.

(b) Each Federal Certification shall include the following:

(1) A commitment by the federal entity to make a timely request for the funds needed to complete the closure and postclosure maintenance activities described in the most recently approved final closure and postclosure maintenance plans in accordance with Executive Order 12088 dated October 13, 1978 and OMB Circular A-106 dated December 31, 1974, which are incorporated by reference, or any pertinent amendments to those requirements;

(2) Copies of the initial closure and postclosure maintenance cost estimates and any amendments thereto, prepared pursuant to Section 21820 and Section 21840, respectively; and

(3) A commitment by the federal entity not to restructure the closure and postclosure funding in a manner that would interfere with timely completion of closure or postclosure maintenance activities.

(c) Should Congress fail to appropriate the necessary funding for closure and postclosure maintenance of a disposal facility, the federal entity shall advise the CIWMB within 90 days of such failure, and shall provide to the CIWMB, documentation of all measures it will undertake to ensure that closure and postclosure activities are completed in accordance with the most recently approved closure and postclosure maintenance plans.

(d) Nothing in this section shall be deemed to require any federal entity, or employees, agents, or representative thereof, to violate the federal Anti-Deficiency Act, 31 U.S.C. Section 1341.

(e) Each federal entity owning or operating a solid waste landfill in California on or after January 1, 1989, and choosing to provide assurance by using the Federal Certification, shall file the necessary documents with the CIWMB not later than 120 days after the effective date of these amendments or, for new disposal facilities, at the time of application for a solid waste facility permit.

(f) A federal entity may choose to act as a provider of financial assurance for closure or postclosure maintenance on behalf of private or other entities operating solid waste landfills, if either:

(1) The solid waste landfill is located on federal land; or

(2) The operator operates or manages the solid waste landfill pursuant to a contract with the federal entity or an applicable subcontract.

Note:

Authority Cited:
Section 40502, Public Resources Code.

Reference:
Sections 43103, 43500 through 43610, Public Resources Code.

(a) The issuer of the insurance policy shall be an insurer that, at a minimum, is licensed by the California Department of Insurance to transact the business of insurance in the State of California as an admitted carrier.

(b) If coverage is not available as specified in (a), the operator may seek coverage by an insurer which, at a minimum, shall be eligible to provide insurance as an excess or surplus lines insurer in California.

(c) If coverage is obtained as described in (b), the insurance shall be transacted by and through a surplus line broker currently licensed under the regulations of the California Department of Insurance and upon the terms and conditions prescribed in the California Insurance Code (CIC), Division 1, Part 2, Chapter 6.

(d) The CIWMB or its designee may object to the use of any insurer at anytime, whether before or after placement of coverage based on information obtained from, but not limited to, the Surplus Line Association of California, Best's Insurance Reports, and/or the Non-Admitted Insurers Quarterly List.

(e) Each insurance policy shall be either:

(1) Evidenced by a certificate of liability insurance established by using form CIWMB 107 (12/01), which is incorporated by reference; or

(2) Amended and evidenced by a liability insurance endorsement established by using form CIWMB 108 (12/01), which is incorporated by reference.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Sections 43040 and 43103, Public Resources Code.

(a) To use the self-insurance and risk management mechanism an operator shall:

(1) Be a public entity;

(2) Be self-insured;

(3) Employ a risk manager;

(4) Have an active safety and loss prevention program that seeks to minimize the frequency and magnitude of third party damages caused by accidental occurrences and other self-insured losses;

(5) Have procedures for and a recent history of timely investigation and resolution of any claims for third party damages caused by accidental occurrences and other self-insured losses; and

(6) Satisfy any other reasonable conditions that the CIWMB determines are needed to ensure that the assured amount of funds shall be available in a timely manner.

(b) This coverage shall be demonstrated by using form CIWMB 109 (12/01), which is incorporated by reference.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Sections 43040 and 43103, Public Resources Code.

(a) To be eligible to use this mechanism to demonstrate financial responsibility for compensating third parties for bodily injury and property damage, the operator shall fulfill the requirements of (a) through (e) of this section no later than July 2, 1992.

(b) The operator shall submit a signed certification to the CIWMB on form CIWMB 110 (12/01), which is incorporated by reference; and

(c) The operator shall submit certification of coverage to demonstrate the establishment and maintenance of comprehensive general liability insurance coverage with limits in at least the amounts specified in Article 3 of Subchapter 2 of this Chapter. This insurance must conform to the requirements of Section 22251(a - d) and/or Section 22252(a); and

(d) The operator shall demonstrate the establishment of an environmental liability fund, which shall be fully funded, as described before July 2, 1997. This means that the operator shall make the initial payment as described in (d)(3) by July 2, 1992 and subsequent payments as described in (d)(4) on July 1st of the following years: 1993, 1994, 1995, 1996, and 1997.

(1) The environmental liability fund shall have a trustee that is authorized to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.

(2) The environmental liability fund shall be established by using form CIWMB 111 (4/96), which is incorporated by reference.

(3) The funding of the environmental liability fund shall be initiated with a payment of $200,000 or a payment that is at least equal to the applicable aggregate liability coverage amount specified in Article 3 of Subchapter 2 of this Chapter, divided by 5, which is the maximum number of years in the pay-in period.

(4) On each anniversary date of July 1, the minimum payment shall be determined by this formula:

Minimum Payment = AC - CV ,
                             Y + 1

where AC is the aggregate coverage required, CV is the current value of the trust fund and Y is the number of years remaining in the pay-in period.

(5) The operator may accelerate payments into the environmental liability fund. However, the value of the environmental liability fund shall be maintained at no less than the value that the environmental fund would have, if payments were made as specified in (d)(3) and (d)(4).

(6) If the value of the environmental liability fund becomes greater than the total amount of the applicable aggregate liability coverage, the operator may request in writing that the CIWMB authorize the release of the excess funds. The CIWMB shall review the request within 90 days of receipt of the request. If any excess funds are verified, the CIWMB shall instruct the trustee to release the funds.

(e) The operator may substitute any alternate financial assurance mechanism(s), as identified in Section 22227, for the Insurance and Environmental Fund mechanism.

Note:

Authority cited:
Section 40502 and 43040, Public Resources Code.

Reference:
Sections 43040 and 43103, Public Resources Code.

(a) An operator may satisfy the requirements of this Chapter by obtaining any other mechanism that meets the following criteria, and that is approved by the CIWMB.

(1) The financial assurance mechanisms must ensure that the amount of funds assured is sufficient to cover the costs assured when needed;

(2) The financial assurance mechanisms must ensure that funds will be available in a timely fashion when needed;

(3) The financial assurance mechanism(s) must be obtained by the operator before the first waste is received at a new facility and before any other financial mechanism is cancelled at existing facilities. The financial mechanism must be maintained until the operator is released from the financial assurance requirements under this Chapter.

(4) The financial assurance mechanisms must be legally valid, binding and enforceable under State and Federal law.

Note:

Authority cited:
Sections 40502 and 40508, Public Resources Code. 

Reference:
Sections 40508 and 43103, Public Resources Code; Section 258.74, Title 40, Code of Federal Regulations.

Last updated: May 05, 2008