AB 492

Proof of financial responsibility for municipal solid waste facilities

This bill provides an alternative method for a municipality to establish the

proof of financial responsibility required for a solid waste facility.

Under current law, the owner or operator of a solid or hazardous waste storage,

treatment, or disposal facility (owner or operator) must maintain proof of financial

responsibility to ensure the availability of funds for compliance with closure and

long-term care requirements and, if necessary, for taking any required corrective

action in the event of a spill or leak. The standard method for proving financial

responsibility is to obtain, for example, a bond, deposit, escrow account, or

irrevocable trust that is payable to or established for the benefit of the Department

of Natural Resources. Alternatively, current law allows an owner or operator that

is a for-profit business or a public heat, light, water, or power utility to establish

proof of financial responsibility to ensure compliance with closure and long-term

care requirements using a net worth test. The net worth test requires, among other

things, a certain level of net worth, liabilities to net worth ratio, and credit

worthiness.

This bill allows a municipality that owns or operates a solid waste facility to use

an alternative method to establish proof of financial responsibility to ensure

compliance with closure and long-term care requirements and any required

corrective action, similar to the method allowed for local governments under federal

law. Under the bill, a municipality may prove financial responsibility by showing

either that all of its outstanding general obligation bonds have a rating of at least

“Baa” if issued by Moody's or at least “BBB” if issued by Standard & Poor's, or that

its ratio of cash plus marketable securities to total expenditures is 0.05 or greater and

that its ratio of annual debt service to total expenditures is 0.20 or lower. Under the

bill, if a solid waste facility is owned or operated by more than one municipality, any

of the municipalities may establish proof of financial responsibility on behalf of itself

and the other owners or operators. The bill also requires DNR to establish additional

rules relating to the alternative method established under this bill.

Payment of closure, long-term care, and corrective action costs

This bill also allows DNR to pay costs associated with closure and long-term

care requirements and any required corrective action for a solid or hazardous waste

storage, treatment, or disposal facility that has established proof of financial

responsibility using either the net worth test or the alternative method for municipal

facilities that is created under the bill. The bill allows DNR to pay these costs if the

owner or operator has failed to comply with closure, long-term care, or corrective

action requirements specified in any rule, order, plan of operation, or other plan

approval and if either 1) the owner or operator's failure to comply is due to

bankruptcy, insolvency, or other inability to pay the costs, or 2) DNR determines that

the failure to comply presents an imminent or substantial danger to human health