DEEP: Financial Assurance

Financial Assurance for Closure, Post-Closure and Corrective Action

As of July 1, 2011, pursuant to Public Act 11-80, the name of the agency changed to the Department of Energy and Environmental Protection (CT DEEP). Therefore, all financial assurance instruments including new amendments, riders, endorsements, certificates, or policies that are submitted to CT DEEP after July 1, 2011 must state the Commissioner of Energy and Environmental Protection. 

Overview
Cost Estimates / Annual Inflation Adjustments
Wording of Instruments
Financial Assurance Instrument Formats
Questions? We Can Help

Overview

Financial assurance is required for owners, operators or permittees of certain hazardous waste, solid waste and other facilities to ensure that they will have sufficient funds to pay for cleanup, closure, or post-closure care.

Hazardous Waste Facilities: §§ 22a-449(c)-104 and 105 of the Regulations of Connecticut State Agencies (RCSA) incorporates by reference, with certain changes, the Resource Conservation Recovery Act (RCRA) financial assurance regulations found in the Code of Federal Regulations (CFR) at 40 CFR Parts 264/265, Subpart H Financial Requirements (Part 264 applies to permitted hazardous waste Treatment, Storage or Disposal (TSD) facilities and Part 265 applies to interim status TSD facilities). These regulations specify how to determine cost estimates, and the acceptable instruments and wording for demonstrating financial assurance. In addition, TSD facilities must have liability coverage for accidental releases of hazardous constituents, and for any resulting bodily injury or property damage of third parties.

The financial assurance provisions are intended to have no lapse in coverage for any length in time when changing instruments, or when a cancellation notice is received. Cancellation of an instrument is taken very seriously, and in general, requires: 1) an owner or operator to establish another acceptable "alternate" financial assurance instrument; and 2) seek CT DEEP’s approval of such new instrument within 90 days of receipt by the owner or operator and the CT DEEP of the notice of cancellation. Failure to do so may result in an enforcement action or executing the right to draw on the instrument being canceled.

Please note that properties owned by municipal and quasi-governmental agencies are not exempt from the financial assurance requirements. However, state and federal governments are exempted from these requirements.

For Property Transfer Program filings and new owners or operators of TSD facilities, an updated RCRA Part A Permit Application must be submitted 90-days prior to the transfer of ownership or operational control, and supply the CT DEEP with financial assurance within 6 months after the transfer. It is recommended that buyers and seller ensure that any RCRA obligations including financial assurance are addressed contractually as a condition of the transfer of ownership or operational control per RCSA §§22a-449(c)-104 and 105 incorporating 40 CFR 270.42(b) and 40 CFR 270.72(a)(4), as applicable.

Solid Waste and Other Facilities: The solid waste regulations and facility permits refer to the hazardous waste regulations for how to determine cost estimates, and the acceptable instruments and wording for demonstrating financial assurance. Liability coverage is usually not required for solid waste and other facilities.

Cost Estimates

The value of a financial assurance instrument is based on an accurate accounting of all costs covering closure, post-closure care or site-wide corrective action activities. The owner or operator must have a detailed written estimate in current dollars to cover these costs. The cost estimate should be appended to the closure plan(s).

Annual Inflation Adjustments: Each year, the cost estimate must be adjusted for inflation, unless the facility is no longer in its "active life" (see note at the end of this section). The term active life only pertains to hazardous waste facilities. The annual adjustment must be done in one of two ways: 1) complete recalculation of the maximum cost in current dollars; or 2) using an inflation factor specified in the regulations. Please review our Annual Inflation Factor Calculation Guidance.

If the owner or operator recalculates the cost estimate, it should include at least the following items to reflect current costs for labor, materials and equipment items, as applicable: waste removal, transportation and disposal; decontamination and removal of equipment; groundwater monitoring and analysis; erosion controls and land maintenance activities; regular reporting; Connecticut Professional Engineer’s certification; etc. Cost estimates include a 15% contingency for unforeseen events that may increase the cost of closure, post-closure maintenance and care or corrective action activities.

Revised cost estimates must be submitted to the CT DEEP within 30 days following the date at which the cost estimate was adjusted which is more stringent than the federal financial assurance program. This submittal is separate from the financial assurance being updated to reflect an increase in cost estimate per §§ 22a-449(c)-104(b) and 105(d) as applicable. For example, the revised cost estimate must be submitted to CT DEEP separately from the financial test demonstration. You should send these submittals to the attention of the "Financial Assurance Coordinator" (see Questions? We Can Help for contact and address information).

In general, cost estimates are reviewed during the permit application or closure / post-closure plan review process or as a provision of a compliance plan. The required financial assurance amount is included as a condition in the permit or plan. Any cost estimate revisions to the permit or plan, including reductions, must be coordinated through the appropriate CT DEEP program staff, as applicable.

Note: "active life" of a facility means the period from the initial receipt of hazardous waste at the facility until the CT DEEP receives certification of closure for all treatment, storage and disposal units at the facility. For example, an interim status facility that only has a post-closure financial assurance obligation is no longer in its active life, and does not need to adjust its post-closure cost estimate each year.

Wording of Instruments

The instruments must be worded exactly as set out in the regulations, except that the instructions in brackets are to be replaced with the relevant information and the brackets deleted. Note that CT DEEP has made certain wording changes as necessary to adapt the federal language for consistency with State requirements.

CT DEEP has created instrument formats (see following section) to simplify document preparation and ensure consistency with the wording requirements. Different programs require slightly different wording, so there is a set of formats for each of the programs that typically require financial assurance. Please be sure to fill out the correct financial assurance instrument format(s), including any additional instruments required (see footnote 1 in the following section).

CT DEEP has locked each instrument format to discourage submissions of instruments to which wording changes have been made to the formats. Making wording changes most often leads to wording that CT DEEP cannot accept, and tends to add significant time evaluating and processing the instrument and associated documents such as permits.

When using these formats to establish financial assurance, you should instruct your financial institution, broker or surety to not add or delete any language from CT DEEP’s instrument formats. Please be advised that our agency cannot accept the financial assurance instrument if it does not incorporate the exact language as set out in the RCSA.

Financial Assurance Instrument Formats

All formats are provided as Word documents. If you need an alternate format or if you have any questions, contact the toll-free COMPASS hotline at 888-424-4193 or the Hazardous Waste Financial Assurance Coordinator at 860-424-3023.

Hazardous Waste (Closure / Post-Closure)
Hazardous Waste (Liability Coverage)
RCRA Corrective Action (Site-Wide)
Solid Waste (Closure / Post-Closure)
Recycling General Permit (Closure)
Note 1 - A standby trust fund must be established in concert with each of these instruments.
Note 2 - Performance Bonds cannot be established for post-closure care at RCRA Interim Status Facilities.

Questions? We Can Help

If you have any questions, please contact the Waste Engineering and Enforcement’s toll-free Compliance Assistance (COMPASS) Hotline at 888-424-4193 or the Financial Assurance Coordinator at 860-424-3023.

CT DEEP can provide a short list of financial institutions that have successfully prepared financial assurance documents in the past.

Please send your hazardous and solid waste financial assurance documentation including revised cost estimates, originally-signed financial assurance instruments and amendments to the attention of the "Financial Assurance Coordinator" at the address immediately below, unless otherwise specified in the permit or order.

Attn: Financial Assurance Coordinator
Connecticut Department of Energy and Environmental Protection
Waste Engineering & Enforcement Division
4th Floor
79 Elm Street
Hartford, CT 06106-5127

Content last edited August 27, 2015