CHAPTER Env-Sw 1400 FINANCIAL ASSURANCE
Statutory
Authority: RSA 149-M:7, RSA 149-M:9
Revision Note:
Document #8459, effective 10-28-05, readopted with
amendments, renumbered, and redesignated former Chapter Env-Wm 3100 as Env-Sw
1400, pursuant to a rules reorganization plan for Department rules approved by
the Director of the Office of Legislative Services on 9-7-05. The source notes for each section of Env-Sw
1400 identify the former subtitle Env-Wm and number for the respective rule
prior to Document #8459.
PART Env-Sw 1401 PURPOSE AND APPLICABILITY
Env-Sw 1401.01 Purpose. The purpose of the rules in this chapter is
to identify requirements and procedures for providing and maintaining a
financial assurance plan to guarantee the cost of closing a facility, including
post-closure care, and, for a facility subject to 40
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3101.01);
ss by #10599, eff 7-1-14
Env-Sw 1401.02 Applicability.
(a) The rules in this chapter shall apply to all
facilities, except as provided by (b) below.
(b) The rules in this chapter shall not apply to
a:
(1)
Permit-exempt facility;
(2)
Permit-by-notification facility;
(3)
Facility for which the closure cost estimate, prepared in accordance
with Env-Sw 1403.02, is $3,000 or less;
(4)
Emergency permit facility;
(5)
Limited private non-landfill facility;
(6)
Publicly owned non-landfill facility; or
(7)
A facility having coverage under Env-Sw 1900.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3101.02);
ss by #10599, eff 7-1-14
PART Env-Sw
1402
DEFINITIONS
Env-Sw 1402.01 “Binding
commitment” means a signed loan agreement between the permittee and the state
of
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3102.01);
ss by #10599, eff 7-1-14
Env-Sw 1402.02 “Debt
service” means the amount of principal and interest due on a loan in the
current year.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3102.02);
ss by #10599, eff 7-1-14
Env-Sw 1402.03 “Deficit”
means a negative balance calculated by taking the beginning fund balance plus
annual revenue minus total annual expenditures.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3102.03);
ss by #10599, eff 7-1-14
Env-Sw 1402.04 “Local
government” means a legally-recognized political
subdivision in the state of
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3102.04);
ss by #10599, eff 7-1-14
Env-Sw 1402.05 “Total annual
revenue” means proceeds from all taxes and fees collected by the local
government responsible for landfill closure, but does
not include the proceeds from borrowing or asset sales or proceeds earned from
funds managed by a local government on behalf of a specific third party.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3102.05);
ss by #10599, eff 7-1-14
PART Env-Sw
1403 FINANCIAL ASSURANCE REQUIREMENTS
Env-Sw 1403.01 Financial
Assurance Plan
Preparation and Submittal.
(a) A permittee shall establish, implement and maintain an approved financial assurance plan
to guarantee the cost of facility closure, including post-closure care as
required by the facility permit and the solid waste rules.
(b) A financial assurance plan shall include:
(1)
A closure cost estimate prepared in accordance with Env-Sw 1403.02;
(2)
Provisions for guaranteeing the cost of facility closure based on one or
any combination of the options specified in Env-Sw
1403.03 through Env-Sw 1403.05;
(3)
For the options specified in Env-Sw 1403.03,
the identity and
contact information of the financial institution providing the
guarantee; and
(4)
For a local government proposing to use the state approved local government financial
test to assure its obligations, as provided in Env-Sw
1403.05:
a.
A letter signed by the local government’s chief financial officer which:
1. Identifies all current cost estimates covered
by a financial test, as described in Env-Sw 1403.05;
and
2. Provides evidence of and certifies that the
local government meets the conditions of Env-Sw
1403.05(a) through (h);
b.
The local government’s year-end financial statements for the latest
fiscal year, audited by an independent, certified public accountant (CPA) who
conducts comprehensive audits, with:
1. The unqualified opinion of the auditor; or
2. The qualified opinion of and a written
explanation by the auditor as to why the qualification should be deemed insufficient
to warrant disallowance of the financial test;
c.
A report to the local government by the local government’s independent
CPA, as follows:
1. The report shall be based on performing a
review of the financial ratios required by Env-Sw
1403.05(a)(3), if applicable, and the requirements of Env-Sw
1403.05(b) and Env-Sw 1403.05(c)(3) and (4); and
2. The report shall state the procedures
performed and the CPA’s findings; and
d.
A copy of the comprehensive annual financial report (CAFR) used to comply
with Env-Sw 1403.05(d) or certification that the
requirements of Governmental Accounting Standards Board Statement 18, No.
101-A, published August, 1993 have been met.
(c) A proposed financial assurance plan shall be:
(1)
Submitted by the permittee in accordance with Env-Sw
303; and
(2)
Reviewed and approved by the department pursuant to Env-Sw 1404.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3103.01);
ss by #10599, eff 7-1-14
Env-Sw 1403.02 Closure
Cost Estimation.
(a) The dollar amount guaranteed by a financial
assurance plan shall be no less than the estimated total closure, including
post-closure costs determined pursuant to (b) through (h), below.
(b) The closure cost estimate shall be figured
based on representative current market rates for having a third party perform
all required closure activities at the point in the facility’s active life when
the extent and manner of facility operations in compliance with permit
conditions and applicable laws and rules makes closure the most expensive, as
indicated by the approved facility closure plan. For landfills, the closure cost estimate
shall also include the cost of having a third party perform all required
post-closure activities for a period of 30 years from the date of the estimate
unless the post-closure period has been modified pursuant to Env-Sw 807.05(d).
(c) For a landfill constructed in phases, the
permittee may figure closure costs in accordance with (b) above based on the
constructed area of the facility only, instead of the entire permitted
footprint.
(d) Any facility subject to the corrective action
requirements specified in 40
(e) The cost of removing and disposing of all
wastes not permitted to remain at the facility following closure shall be
included in the closure cost estimate, excluding actively managed select
processed recyclable materials.
(f)
Salvage value from the sale of facility structures, equipment or other
assets associated with the facility and profits from the sale of recyclable
materials shall not be treated as a credit to reduce total closure costs.
(g)
The closure cost estimate shall:
(1)
Be itemized and documented to show the unit cost and quantity of each
item, service, and activity required to close the facility in accordance with
the solid waste rules and the approved facility closure plan;
(2)
For
landfills, include a line item for qualified professional oversight of all closure activities;
(3) For facilities other
than landfills whose most recent closure cost estimate is $50,000 or more,
include a line item for qualified professional oversight of all closure activities;
(4) Include a line
item for contingencies equaling no less than 10% of the total itemized costs;
(5)
For landfills, include a line item for the following costs if final
design plans and specifications for landfill closure are not yet approved:
a.
The cost of preparing final design plans and specifications for closure;
and
b.
The cost of the fee specified in Env-Sw
310.08(b) for filing an application for a type II permit modification to obtain
final design plan approval for construction of all required landfill closure systems;
(6)
For landfills, be certified by a qualified professional engineer; and
(7) For lined landfills subject to 40
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3103.02);
ss by #10599, eff 7-1-14
Env-Sw 1403.03 Financial
Assurance Mechanisms,
(a) Financial assurance shall be provided in one,
or any combination, of the following forms:
(1)
An irrevocable letter of credit issued for a period of at least one year
from an institution whose operations are regulated and examined by a federal or
New Hampshire state agency and found to be in good standing;
(2)
A claims incurred insurance policy, except that
insurance issued by an affiliated captive insurance company shall not be
acceptable;
(3)
A surety bond issued by a surety company listed as an acceptable surety
on federal bonds in the version of the U.S. Department Circular 570 that is
current as of the date the bond is acquired;
(4)
A trust fund established in accordance with the laws of the state of
(5)
For a landfill, a binding commitment between the permittee and the state
of New Hampshire for a state revolving fund loan designated for closure of the
landfill; or
(6)
Another mechanism that meets the criteria provided in 40
(b) If using a surety bond, insurance policy or
letter of credit, the permittee shall also establish a standby trust to receive
the proceeds of the surety bond, insurance policy or letter of credit.
(c) The standby trust shall be established with a
financial institution that has the authority to act as a trustee and whose
operations are regulated and examined by a federal or
(d) Each financial assurance instrument specified
in (a) and (b) above, except (a)(5), shall specifically identify the state of
(e) Funds held in trust accounts may be invested, but shall provide for the preservation of
principal.
(f)
Financial assurance documents, including a standby trust, shall be as
specified by 40
(1)
The phrase “hazardous waste” shall be replaced with the phrase “solid
waste”;
(2)
The phrase “EPA administrator” shall be replaced with the phrase “department
on behalf of the state of
(3)
All cites to “40
(4)
The term “RCRA C” shall be omitted.
(g) Letters of credit shall include provisions
to:
(1)
Automatically extend the expiration date by at least one year unless, at
least 120 days before the current expiration date, the issuing institution
notifies the permittee and the department by certified mail, return receipt
requested, of a decision to not extend the expiration date;
and
(2) Provide written notification of
pending insolvency or bankruptcy of the issuer to the permittee and the
department, sent by certified mail, return receipt requested within 3 days of
the date the issuing institution initiates proceedings to declare insolvency or
bankruptcy.
(h) Insurance policies and surety bonds shall
include a provision to prohibit any cancellation without prior notice of
cancellation being sent to the permittee and the department by certified mail,
return receipt requested, at least 120 days before the effective date of
cancellation.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3103.03);
ss by #10599, eff 7-1-14
Env-Sw 1403.04 Financial
Assurance Mechanisms, Public Facilities. A
public landfill subject to 40 CFR 258 shall provide financial assurance by:
(a) Any of the mechanisms identified in Env-Sw 1403.03;
(b) A capital reserve fund that shall be funded
in a manner to provide sufficient funds for closure and post-closure care at
the scheduled time of closure; or
(c) The local government
financial test specified in Env-Sw 1403.05, for a
facility owned and operated by a single municipality.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3103.04);
ss by #10599, eff 7-1-14
Env-Sw 1403.05 Local
Government Financial Test.
(a) A local government proposing to assure its
obligations under the state approved local government financial test shall meet
the following requirements as applicable:
(1)
If the local government has outstanding, rated, general obligation bonds
not secured by insurance, a letter of credit, or other collateral or guarantee,
all such general obligation bonds shall have a current rating of Aaa, Aa, A, or Baa, as issued by Moody’s, or AAA, AA, A, or
BBB, as issued by Standard and Poor’s;
(2) The local government shall be included in an
outstanding bond issue through the New Hampshire municipal bond bank and shall
not be in default; or
(3)
The local government shall satisfy each of the following financial
ratios based on the local government’s most recent audited annual financial
statement:
a.
The ratio of cash plus marketable securities to total expenditures shall
be greater than or equal to 0.05, using available cash and marketable
securities held by the local government on the last day of the fiscal year,
excluding cash and marketable securities designated to satisfy past obligations
or special purposes other than landfill closure such as pensions and capital
reserve funds not held for landfill closure purposes; and
b.
The ratio of annual debt service to total expenditures shall be less
than or equal to 0.20, where total expenditures shall exclude capital outlays,
debt repayment, capital reserve funds not expended for landfill closure
purposes, trust funds, and pension funds.
(b) The local government proposing to assure its
obligations under the state approved local government financial test shall:
(1)
Prepare its financial statements in conformity with generally accepted
accounting principles for governments; and
(2)
Have its financial statements audited by an independent certified public
accountant.
(c) A local government shall not be eligible to
assure its obligations under the state approved local government financial test
if it:
(1)
Is currently in default on any outstanding general obligation bonds or
outstanding bonds with the
(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;
(3)
Operated at a deficit equal to 5% or more of total annual revenue in
each of the past 2 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 and negatively impacting the current financial position of the local
government.
(d) A local government shall disclose in each
comprehensive annual financial report (CAFR) all closure and post-closure care
costs and corrective action costs, if any, which the local government has
assured through the financial test provisions in 40 CFR 258.50.
(e) Disclosure pursuant to (d) above shall
include:
(1)
The nature and source of the closure and post-closure care requirements;
(2)
The reported liability at the balance sheet date;
(3)
The estimated total closure and post-closure care cost remaining to be recognized;
(4)
The percentage of landfill capacity used to date; and
(5)
The estimated landfill life in years.
(f) Conformance with Governmental Accounting
Standards Board Statement 18, No. 101-A, published August,
1993 shall be deemed in compliance with (d) above.
(g) Subject to (h) below, a local government may
use the state approved local government financial test to assure closure,
post-closure, and corrective action costs that equal up to 43% of the local
government’s total annual revenue.
(h)
If the local government assures other environmental obligations through
a financial test, including those associated with underground injection control
wells (
(1)
Add those costs to the closure, post-closure, and corrective action
costs it seeks to assure through use of the state approved local government financial
test; and
(2)
Assure that the total shall not exceed 43% of the local government’s
total annual revenue.
(i) A local
government shall obtain an alternate financial assurance instrument as
specified in Env-Sw 1403.03 for those costs that
exceed the limits set in (g) and (h) above.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3103.05);
ss by #10599, eff 7-1-14
PART Env-Sw
1404
REVIEW AND APPROVAL
Env-Sw 1404.01 Review. The department shall review a proposal for
financial assurance as part of the permit application or closure plan review
process, as applicable.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3104.01);
ss by #10599, eff 7-1-14
Env-Sw 1404.02 Approval. A proposal for financial assurance shall not
be approved if the department determines that the proposal does not:
(a) Meet the requirements for financial assurance
specified in this part; or
(b) Satisfy the requirements of RSA 149-M:9, X.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter heading
for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3104.02); ss by
#10599, eff 7-1-14
PART Env-Sw
1405
ADJUSTMENTS AND CHANGES
Env-Sw
1405.01 Modifications.
(a) An approved financial assurance plan shall
not be modified unless the permittee obtains written approval from the
department.
(b) To obtain written approval to modify an
approved financial assurance plan, the permittee shall apply for a permit
modification pursuant to Env-Sw 315.
(c) Applications to modify an approved financial
assurance plan shall include all of the information
required by Env-Sw 1404.01.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3105.01);
ss by #10599, eff 7-1-14
Env-Sw 1405.02 Updates.
(a) A permittee shall submit at least one update
of the facility’s closure cost estimate to the department no later than March
31 of the third calendar year after submitting an initial closure cost estimate
or the last most recent updated closure cost estimate, as applicable.
(b) During the years in which submittal of a
closure cost estimate is not required by (a), above, lined landfills subject to
40 CFR 258 operated on or after October 9, 1993 shall
obtain an updated cost estimate and place it in the facility’s operating
record.
(c) If a permittee obtains an updated closure cost
estimate, pursuant to (b), above, that exceeds the last most recent estimate,
the permittee shall update its financial assurance mechanism in an amount
consistent with the most current closure cost estimate.
(d) A local government using the state approved
local government financial test shall:
(1)
Annually update and place in the facility’s operating record all
documentation required by Env-Sw 1403.01(b)(4) within
180 days following the close of the local government's fiscal year; and
(2) Produce its financial
records for inspection by the department upon request.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3105.02);
ss by #10599, eff 7-1-14
Env-Sw 1405.03 Replacement.
(a) A permittee shall submit a revised financial
assurance plan for approval pursuant to Env-Sw
1405.01 within 30 days of learning that any portion of its financial assurance
shall be canceled or not renewed by the issuer.
(b) The permittee shall demonstrate that it has
obtained replacement financial assurance promptly upon receiving the
department’s approval of a revised plan, but no later than 30 days before the
cancellation or expiration date of the existing financial assurance.
(c) A local government using the state approved
local government financial test to assure its obligations shall satisfy the
requirements of the financial test at the close of each fiscal year. If the local government no longer meets the
requirements of the local government financial test it shall, within 210 days
following the close of the local government’s fiscal year, obtain alternative
financial assurance as specified in Env-Sw 1403.03.
Source. #6619-B, eff 10-29-97; (See Revision Note at chapter
heading for Env-Sw 1400); ss by #8459, eff 10-28-05 (formerly Env-Wm 3105.03);
ss by #10599, eff 7-1-14
Appendix
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Rule |
State Statute(s) Implemented |
Federal Regulations Implemented |
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Env-Sw 1400 |
RSA 149-M:7, II,
RSA 149-M:9, X |
40 CFR 258 |