Financial Assurance Effective Date for Owners and Operators of
Municipal Solid Waste Landfill Facilities
[Federal Register: April 7, 1995]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 258
[FRL-5186-1]
RIN 2050-AE27
Financial Assurance Effective Date for Owners and Operators of
Municipal Solid Waste Landfill Facilities
AGENCY: Environmental Protection Agency [EPA].
ACTION: Final rule.
SUMMARY: The Environmental Protection Agency is amending the criteria
for Municipal Solid Waste Landfills (MSWLFs) under subtitle D of the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6921 et seq.,
by delaying the effective date of the Financial Assurance Criteria set
out at 40 CFR part 258, subpart G, until April 9, 1997. The extension
applies to any size MSWLF, including remote, very small landfills as
defined at 40 CFR 258.1(f)(1), and delays the compliance date for
MSWLFs by two years, from April 9, 1995 until April 9, 1997 (for
remote, very small landfills by 18 months, from October 9, 1995 until
April 9, 1997).
EFFECTIVE DATE: The amendments in this final rule are effective March
31, 1995. The effective date of subpart G of part 258 (Secs. 258.70
through 258.74) which was added at 56 FR 51016 is delayed until April
9, 1997.
ADDRESSES: The docket for this rulemaking is available for public
inspection at Room M-2616, U.S. EPA, 401 M Street SW., Washington, DC
20460 from 9 a.m. to 4 p.m., Monday through Friday, excluding holidays.
The docket number is F-95-FADF-FFFFF. Call (202) 260-9327 to make an
appointment with the docket clerk. As provided in 40 CFR Part 2, a
reasonable fee may be charged for copying services.
FOR FURTHER INFORMATION CONTACT: The RCRA Hotline toll free at (800)
424-9346 or in Washington, D.C. at (703) 412-9810, from 8:30 a.m. to
7:30 p.m. EST, Monday through Friday, excluding holidays; or Nancy
Hunt, Office of Solid Waste (5303W), U.S. Environmental Protection
Agency, 401 M Street SW, Washington, DC 20460 at (703) 308-8762.
SUPPLEMENTARY INFORMATION:
Preamble Outline
I. Authority.
II. Background.
III. Response to Comments and Analysis of Issues.
A. Support for Extension.
B. Opposition to Extension.
C. Local Governments.
D. Remote/Very Small Landfills.
E. Unfunded Mandate.
IV. Effective Date.
V. Economic and Regulatory Impacts.
A. Executive Order 12866.
B. Regulatory Flexibility Act.
C. Paperwork Reduction Act.
I. Authority
These amendments to Title 40, part 258, of the Code of Federal
Regulations are promulgated under the authority of sections 1008(a)(3),
2002(a), 4004(a), and 4010(c) of the Resource Conservation and Recovery
Act (RCRA), as amended, 42 U.S.C. 6907(a)(3), 6912(a), 6944(a), and
6949a(c).
II. Background
The Agency proposed revised criteria for municipal solid waste
landfills (MSWLFs), including financial assurance requirements, on
August 30, 1988 (see 53 FR 33314). The purpose of the financial
assurance requirements is to assure that adequate funds will be readily
available to cover the costs of closure, post-closure care, and
corrective action associated with MSWLFs.
In the August 30, 1988 proposal, rather than proposing specific
financial assurance mechanisms, the Agency proposed a financial
assurance performance standard. The Agency solicited public comment on
this performance standard approach and, at the same time, requested
comment on whether the Agency should develop financial test mechanisms
for use by local governments and corporations.
In response to comment, the Agency promulgated several specific
financial mechanisms in the October 9, 1991 final rule on MSWLF
criteria (56 FR 50978), in addition to the financial assurance
performance standard of section 258.74, which allows approved States to
use any State-approved mechanism that meets that performance standard.
Commenters on the August 30, 1988 proposal also supported the
development of financial tests for local governments and for
corporations to demonstrate that they can satisfy the goals of
financial assurance on their own, without the need to produce a thirdparty
instrument to assure that the obligations associated with their
landfill will be met. The Agency agreed with commenters and in the
October 9, 1991 preamble, announced its intention to develop both a
local government and corporate financial test in advance of the
effective date of the financial assurance provisions.
The Agency has delayed the effective date of the financial
responsibility provisions until April 9, 1995 (see 58 FR 51536) in
order to provide adequate time to promulgate a financial test for local
governments and another for corporations before the effective date of
the financial assurance provisions. The delayed effective date also was
intended to provide owners and operators sufficient time to determine
whether they satisfy the applicable financial test criteria for all of
the obligations associated with their facilities, and to obtain a
guarantor or an alternate instrument, if necessary. The Agency also
recognized that local governments, in particular, require notice of the
requirements in order to plan their budgets for the upcoming year.
The Agency proposed a local government financial test and a
corporate financial test on December 27, 1993 (see 58 FR 68353) and
October 12, [[Page 17650]] 1994 (see 59 FR 51523), respectively. The
Agency expects to promulgate the local government test in the fall of
1995 and the corporate test in the spring of 1996. The Agency,
therefore, proposed an additional extension on October 18, 1994 to
delay the current April 9, 1995 effective date for subtitle D financial
assurance requirements by one year until April 9, 1996 (see 59 FR
52498) to allow MSWLF owners and operators that qualify to demonstrate
financial assurance for their closure, post-closure, and corrective
action obligations through the use of a financial test. Owners and
operators who meet the requirements of the financial tests will not be
required to obtain a third-party financial assurance instrument<SUP>1
for these obligations.
\1\For a description of the third-party instruments available to
MSWLF owners and operators see 56 FR 50978.
III. Response to Comments and Analysis of Issues
This section summarizes and addresses the major comments out of a
total of 139 comments received on the October 18, 1994 proposal. A
discussion of, and response to, all comments can be found in the docket
for this rulemaking.
A. Support for Extension
Most commenters support the proposal to extend the effective date
of the financial assurance requirements. Many commenters, however,
expressed concern that the proposed one-year extension until April 9,
1996 would not be enough time for MSWLF owners and operators to meet
the financial assurance requirements by using the local government and
corporate financial tests. Not only have the financial tests not been
promulgated yet, but States will need time to incorporate the financial
tests into their regulations and MSWLF owners and operators will then
need time to comply with the recordkeeping and reporting requirements
of the financial test (or with the requirements of an alternate
financial assurance instrument).
The Agency agrees that one year may not be enough time to take
advantage of a financial test and, accordingly, has decided to extend
the effective date of the financial assurance requirements for MSWLF
owners and operators by two years from April 9, 1995 until April 9,
1997 (for landfill owners and operators of remote, very small landfills
by 18 months, from October 9, 1995 until April 9, 1997). Although the
Agency would like to implement the financial assurance requirements as
soon as possible, the Agency must also balance the goals of ensuring
protection of human health and the environment and minimizing the costs
of regulatory compliance to owners and operators of MSWLFs. The Agency
believes that the potential cost savings to MSWLF owners and operators
of complying with financial assurance requirements through the use of a
financial test outweigh the risks of delaying their implementation. The
Agency does not believe that delaying the effective date of the
financial assurance requirements by a temporary extension will result
in a significant threat to human health and the environment. The
purpose of the financial assurance requirements is to ensure that funds
will be available to cover the costs of closure and post-closure care
if the owner or operator is unable to cover these costs when they
occur. The delay in implementing the financial assurance requirements,
however, does not in any way affect the owner or operator's existing
obligation to conduct closure and post-closure care at the facility
when required in a manner consistent with the Subtitle D criteria, and
to pay the costs incurred in conducting those activities. Like other
future business expenses, the Agency anticipates that most owners and
operators have prepared or are currently preparing to meet these
expenses. Thus, it is unlikely that a delay in implementing the
financial responsibility requirements will result in significant
numbers of unfunded closure and post-closure care activities.
The Agency believes that the two-year extension adopted in this
rule can be fairly characterized as the logical outgrowth of the
October 18, 1994 proposal. Although the proposed rule contemplated a
one-year extension, the point was to provide notice of the need for
additional time for MSWLF owners and operators to meet the financial
assurance requirements through the use of a financial test. In light of
the comments received, the Agency is now persuaded that a two-year, not
a one-year, extension is necessary for MSWLF owners and operators to
meet the financial assurance requirements through the use of a
financial test.
B. Opposition to Extension
Four commenters out of a total of 139 commenters oppose extending
the time for MSWLFs to comply with financial assurance requirements.
One commenter argues that MSWLF owners and operators could comply
at this time using currently available financial assurance mechanisms,
such as a trust fund, letter of credit or surety bond, and that an
extension would only serve to delay closure of MSWLFs that could not
meet financial assurance requirements. A related comment argues that
repeated delays undermine the credibility of the financial assurance
program; that the use of a trust fund is preferable to a financial
test; and that any additional delay in implementing the financial
assurance requirements for local governments should be no more than
eight months after the April 1995 effective date.
Although many MSWLF owners and operators could comply with
financial assurance requirements using currently available
alternatives, the Agency is committed to developing a local government
and corporate financial test as an alternative to third party financial
mechanisms for the reasons discussed above. The Agency, therefore,
believes that MSWLF owners and operators should not have to select a
financial assurance mechanism until all the financial assurance
alternatives are available, including the financial tests, so that
MSWLF owners and operators can assess all the alternatives to determine
which one will best serve their needs.
The Agency disagrees that delaying the effective date will only
serve to delay closure of facilities than cannot meet the financial
assurance criteria. MSWLFs are already subject to design and operating
requirements that are more extensive, and significantly more expensive,
than the financial assurance criteria. MSWLFs that were unable to meet
Federal minimum design and operating requirements have already closed.
The State of Missouri argues that a delay in implementing Federal
financial assurance requirements would place MSWLF owners and operators
in States that already require financial assurance at a competitive
disadvantage with MSWLF owners and operators in States that do not
currently require financial assurance, as well as place States with
existing or planned financial assurance programs in the position of
having to spend valuable time and effort to delay their own programs.
The Agency does not believe that an additional two years to comply
with Federal financial assurance requirements would create a
competitive disadvantage between MSWLF owners and operators in States
with different financial assurance requirements. The available evidence
suggests that the costs of transporting waste--even between adjacent
States--will more than offset the additional costs of disposing of
waste in a State with financial assurance requirements. Further, since
waste disposal contracts are generally written to cover several
[[Page 17651]] years, the Agency believes it is unlikely waste
generators will shift disposal to a different MSWLF during a temporary
extension period.
Furthermore, in the absence of a significant competitive
disadvantage among States as a result of the delay there is, arguably,
no need for States with existing or planned financial assurance
programs to change their own requirements. States can adopt
requirements under State law that are more stringent than the Federal
requirements and, therefore, do not need to delay implementing their
own financial assurance requirements. Indeed, States that adopt
responsible financial assurance requirements over the next two years
will be better able to cover unanticipated MSWLF closure or postclosure
costs. If, however, a State chose to delay its own financial
assurance requirements, the commenter has not shown that it would be
prohibitively expensive or difficult to implement such an extension.
A commenter from the insurance and surety industry argues that
delaying the effective date of the financial assurance requirements to
allow the use of a financial test would ultimately undermine the
purpose of the financial assurance requirements and force States to
incur the costs of closing, and remediating releases from, MSWLFs that
cannot meet financial assurance requirements. The argument is that the
use of a financial test would mean that only the least financially able
MSWLF owners and operators would purchase third-party financial
assurance instruments, which would discourage the continued development
of alternate financial assurance instruments in the insurance and
surety industry, thereby, making it more expensive and more difficult
to obtain third-party financial assurance instruments. Financially
weaker MSWLF owners and operators would, therefore, be unable to meet
financial assurance requirements and would seek to further reduce the
requirements necessary to meet a financial test. Inevitably, States
would be burdened with the closure and response costs of financially
weak MSWLF owners and operators that are either unable to obtain thirdparty
financial assurance instruments or that are allowed to continue
to operate as a result of a devalued financial test.
This comment is more appropriately addressed to the proposed
financial tests themselves, rather than to a delay in implementing the
financial assurance requirements. At this time it is difficult, if not
impossible, to predict how many MSWLFs will or will not be able to meet
a financial test, because the local government and corporate financial
tests have not yet been promulgated or otherwise finalized.
Accordingly, the Agency will address this issue more fully in the
financial test rulemakings. Even if, however, insurance and surety
mechanisms become expensive and difficult to obtain due to underwriting
considerations, owners and operators still have the option of obtaining
a guarantee, a letter of credit, or of establishing a trust fund to
comply with financial assurance obligations. Trust funds, in
particular, are available to all owners and operators regardless of
corporate affiliation or prevailing market conditions, because creating
a trust fund does not present a financial risk.
In any event, the Agency does not believe that a temporary delay in
implementing the Subtitle D financial assurance requirements in
anticipation of the development of a financial test will cause
financial services firms to abandon the market for, or otherwise limit
their development of, third-party financial assurance instruments.
First, it is the Agency's understanding that providers of financial
assurance mechanisms make decisions regarding potential markets and the
desirability of entering those markets based on evaluations of longterm
market demand; arguably, a two-year delay should not have a
significant effect on this long term decision-making. Second, an
extensive market for financial assurance mechanisms, which is
sufficient to maintain the infrastructure of the market for such
mechanisms, already exists independent of the RCRA Subtitle D financial
assurance requirements. For example, owners and operators of hazardous
waste treatment, storage and disposal facilities (TSDFs), underground
storage tanks, and PCB commercial storage facilities must meet
financial assurance requirements, which include third-party mechanisms
that are essentially the same as those provided for in the Subtitle D
criteria.
C. Local Governments
Some commenters argue that local governments as a class should be
exempt from meeting financial assurance requirements for MSWLFs,
because unlike private MSWLFs owners and operators, local governments
do not go out of business or otherwise disappear. Today's rule and the
October 18, 1994 proposal, however, only address the issue of extending
the effective date for meeting the financial assurance requirements for
MSWLFs; they do not raise the issue of whether certain classes of MSWLF
owners and operators, such as local governments, should be exempt from
the financial assurance requirements. The Agency previously addressed
this issue in the October 9, 1991 rule that revised the minimum Federal
standards, including financial assurance criteria, for MSWLFs (see 56
FR 50978). At that time, the Agency determined that local governments
should not be exempt from financial assurance requirements because
local governments may be unable to obtain the immediate funds necessary
to meet closure and/or corrective action obligations at MSWLFs so as to
ensure protection of human health and the environment. Local
governments, for example, often have relatively limited resources,
limited flexibility in their annual budgets and a limited ability to
quickly obtain traditional sources of financing or revenues, such as
bond issues, taxes and intergovernmental transfers.
D. Remote/Very Small Landfills
Today's rule extends the effective date of the financial assurance
requirements for all MSWLF owners and operators, including remote, very
small (less than 20 tons per day) landfills as defined at 40 CFR
Sec. 258.1(f)(1), until April 9, 1997. Although the proposed rule
contemplated extending the effective date of the financial assurance
requirements for all MSWLFs, this was apparently unclear to several
commenters who suggested that the Agency extend the deadline for the
remote, very small landfills as well as for the general class of
MSWLFs. Remote/very-small landfills had been subject to different
deadlines for meeting the MSWLF criteria than the general class of
MSWLFs; until today's rule the effective date of the financial
assurance requirements for owners and operators of remote, very small
landfills was October 9, 1995 (see 58 FR 51536).
E. Unfunded Mandate
A few commenters assert that the financial assurance requirements
contained in the October 9, 1991 final rule on MSWLF Criteria (56 FR
50978) constitute a Federal unfunded mandate on local governments.
Today's rule, however, provides regulatory relief by extending for two
years the effective date by which MSWLF owners and operators (including
local government owners and operators) must meet those financial
assurance requirements. Moreover, the purpose of the extension provided
by this rule is to allow the Agency sufficient time to promulgate a
rule to give MSWLF owners and operators additional flexibility to meet
the financial assurance requirements. That rule will allow owners and
[[Page 17652]] operators to use a financial test instead of a more
expensive third-party instrument to assure that adequate funds will be
readily available to cover the costs of closure, post-closure care, and
corrective action associated with MSWLFs.
IV. Effective Date
Today's rule is effective immediately. Section 3010(b) of RCRA
provides that regulations respecting requirements applicable to the
treatment, storage, or disposal of hazardous waste shall take effect
six months after the date of promulgation. However, section 3010(b)(1)
of RCRA allows the Agency to set a shorter effective date if the Agency
finds that the regulated community does not need six months to come
into compliance with the new regulation.
The regulated community does not need six months to come into
compliance with today's rule, because the provisions of this rule
delays the regulatory requirements of financial responsibility and
allows the Agency time to develop additional, more flexible, methods
for MSWLF owners and operators to comply with the regulations. Today's
rule, therefore, is immediately effective under section 553(d) of the
Administrative Procedure Act.
V. Economic and Regulatory Impacts
A. Executive Order 12866
Under Executive Order 12866, which was published in the Federal
Register on October 4, 1993 (see 58 FR 51735), the Agency must
determine whether a regulatory action is ``significant'' and,
therefore, subject to OMB review and the requirements of the Executive
Order. The Order defines ``significant regulatory action'' as one that
is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlement, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
The Agency believes that this final rule does not meet the
definition of a major regulation. Thus, the Agency is not conducting a
Regulatory Impact Analysis, and today's final rule is not subject to
review by the Office of Management and Budget (OMB) based upon
Executive Order 12886.
B. Regulatory Flexibility Act
Under the Regulatory Flexibility Act [5 U.S.C. 601 et seq.] at the
time an Agency publishes a proposed or final rule, it generally must
prepare a Regulatory Flexibility Analysis that describes the impact of
the rule on small entities (i.e., small businesses, small
organizations, and small governmental jurisdictions), unless the
Administrator certifies that the rule will not have a significant
economic impact on a substantial number of small entities. The effect
of this final rule is to provide small entities with additional time to
meet the financial assurance requirements of subtitle D regarding
closure and post-closure costs. Therefore, pursuant to 5 U.S.C. 605b,
the Agency believes that this final rule will not have a significant
impact on a substantial number of small entities.
C. Paperwork Reduction Act
The Agency has determined that there are no new reporting,
notification, or recordkeeping provisions associated with today's final
rule.
List of Subjects in 40 CFR Part 258
Environmental protection, Reporting and recordkeeping requirements,
Waste treatment and disposal.
Dated: March 31, 1995.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, title 40 chapter I, of the
Code of Federal Regulations is amended as follows:
PART 258--CRITERIA FOR MUNICIPAL SOLID WASTE LANDFILLS
The authority citation for part 258 continues to read as
follows:
Authority: 42 U.S.C. 6907(a)(3), 6912(a), 6944(a), and 6949a(c);
33 U.S.C. 1345(d) and 1345(e).
2. Sec. 258.70 is amended by revising paragraph (b) to read as
follows:
Sec. 258.70 Applicability and effective date.
* * * *
(b) The requirements of this section are effective April 9, 1997.
3. Sec. 258.74 is amended by revising paragraph (a)(5) to read as
follows:
Sec. 258.74 Allowable mechanisms.
* * * *
(a) * * *
(5) The initial payment into the trust fund must be made before the
initial receipt of waste or before the effective date of the
requirements of this section (April 9, 1997), whichever is later, in
the case of closure and post-closure care, or no later than 120 days
after the corrective action remedy has been selected in accordance with
the requirements of Sec. 258.58.
* * * *
Sec. 258.74 is amended by revising the third sentence of
paragraph (b)(1); by revising the second sentence of paragraph (c)(1);
and by revising the second sentence of paragraph (d)(1) to read as
follows:
Sec. 258.74 Allowable mechanisms.
* * * *
(b) * * *
(1) * * * The bond must be effective before the initial receipt of
waste or before the effective date of the requirements of this section
(April 9, 1997), whichever is later, in the case of closure and postclosure
care, or no later than 120 days after the corrective action
remedy has been selected in accordance with the requirements of
Sec. 258.58.* * *
* * * *
(c) * * *
(1) * * * The letter of credit must be effective before the initial
receipt of waste or before the effective date of the requirements of
this section (April 9, 1997), whichever is later, in the case of
closure and post-closure care, or no later than 120 days after the
corrective action remedy has been selected in accordance with the
requirements of Sec. 258.58. * * *
* * * *
(d) * * *
(1) * * * The insurance must be effective before the initial
receipt of waste or before the effective date of the requirements of
this section (April 9, 1997), whichever is later, in the case of
closure and post-closure care, or no later than 120 days after the
corrective action remedy has been selected in accordance with the
requirements of Sec. 258.58.* * *
* * * *
[FR Doc. 95-8605 Filed 4-6-95; 8:45 am]
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