1. (a)

   1. (1) As provided in 40 C.F.R. § 258.74, the mechanisms used to demonstrate financial assurance under this subpart must ensure that the funds necessary to meet the costs of closure, post-closure care, and corrective action for known releases will be available whenever they are needed.
   2. (2) Owners and operators must choose from the options specified in subsections (b) – (k) of this section.
   3. (3) Financial assurance required by this subpart should be filed on forms developed and provided by the Division of Environmental Quality.

2. (b) Trust fund.

   1. (1)

      1. (A) An owner or operator may satisfy the requirements of this section by establishing a trust fund which conforms to the requirements of this subsection.
      2. (B) The trustee must be an entity which has the authority to act as a trustee and whose trust operations are regulated and examined by a federal or state agency.
      3. (C) A copy of the trust agreement must be placed in the facility's operating record and provided to the Director of the Division of Environmental Quality for approval.

   2. (2)

      1. (A) Payments into the trust fund must be made annually by the owner or operator over the term of the initial permit or over the remaining life of the permitted facility, whichever is shorter, in the case of a trust fund for closure or post-closure care, or over one-half (1/2) of the estimated length of the corrective action program in the case of corrective action for known releases.
      2. (B) This period is referred to as the pay-in period.

   3. (3)

      1. (A) For a trust fund used to demonstrate financial assurance for closure and post-closure care, the first payment into the fund must be at least equal to the current cost estimate for closure or post-closure care, except as provided in subsection (k) of this section, divided by the number of years in the pay-in period as defined in subdivision (b)(2) of this section.
      2. (B) (B) The amount of subsequent payments must be determined by the following formula: where CE is the current cost estimate for closure or post-closure care (updated for inflation or other changes), CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period.

   4. (4)

      1. (A) For a trust fund used to demonstrate financial assurance for corrective action, the first payment into the trust fund must be at least equal to one-half (1/2) of the current cost estimate for corrective action, except as provided in subsection (k) of this section, divided by the number of years in the corrective action pay-in period as defined in subdivision(b)(2) of this section.
      2. (B) The amount of subsequent payments must be determined by the following formula: where RB is the most recent estimate of the required trust fund balance for corrective action, i.e., the total costs that will be incurred during the second half of the corrective action period, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period.
   5. (5) The initial payment into the trust fund must be made before the initial receipt of waste or before the effective date of this section, April 9, 1997, whichever is later, in the case of closure and post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.
   6. (6) If the owner or operator establishes a trust fund after having used one (1) or more alternate mechanisms specified in this section, the initial payment into the trust fund must be at least the amount that the fund would contain if the trust fund were established initially and annual payments made according to the specifications of this subdivision (b)(6) and subsection (b) of this section, as applicable.

   7. (7)

      1. (A) The owner or operator or other person authorized to conduct closure, post-closure care, or corrective action activities may request reimbursement from the trustee for these expenditures.
      2. (B) Requests for reimbursement will be granted by the trustee only if sufficient funds are remaining in the trust fund to cover the remaining costs of closure, post-closure care, or corrective action, and if justification and documentation of the cost is placed in the operating record.
      3. (C) Within thirty (30) days of disbursement, or an alternative schedule acceptable to the director, the trustee shall notify the director of each reimbursement made from the trust fund.
      4. (D) The owner or operator shall provide a copy of the documentation of the justification for reimbursement to the director and place the justification for reimbursement in the operating record.
   8. (8) The trust fund may be terminated by the owner or operator only if the owner or operator substitutes alternate financial assurance as specified in this section or if he or she is no longer required to demonstrate financial responsibility in accordance with the requirements of 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

3. (c) Surety bond guaranteeing payment or performance.

   1. (1)

      1. (A) An owner or operator may demonstrate financial assurance for closure or post-closure care by obtaining a payment or performance surety bond which conforms to the requirements of this subsection.
      2. (B) An owner or operator may demonstrate financial assurance for corrective action by obtaining a performance bond which conforms to the requirements of this subsection.
      3. (C) The bond must be effective before the initial receipt of waste or before the effective date of this section, April 9, 1997, whichever is later, in the case of closure and post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.
      4. (D) The owner or operator shall provide the bond to the director for approval and place a copy of the bond in the operating record.
      5. (E) The surety company issuing the bond must, at a minimum, be among those listed as acceptable sureties on federal bonds in Circular 570 of the United States Department of the Treasury.
   2. (2) The penal sum of the bond must be in an amount at least equal to the current closure, post-closure care, or corrective action cost estimate, whichever is applicable, except as provided in subsection (l) of this section.
   3. (3) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond.

   4. (4)

      1. (A) The owner or operator must establish a standby trust fund.
      2. (B) The standby trust fund must meet the requirements of subsection (b) of this section except the requirements for initial payment and subsequent annual payments specified in subdivisions (b)(2) – (5) of this section.

   5. (5)

      1. (A) Payments made under the terms of the bond will be deposited by the surety directly into the standby trust fund.
      2. (B) Payments from the trust fund must be approved by the trustee.

   6. (6)

      1. (A) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the owner and operator and to the director one hundred twenty (120) days in advance of cancellation.
      2. (B) If the surety cancels the bond, the owner or operator must obtain alternate financial assurance as specified in this section.
   7. (7) The owner or operator may cancel the bond only if alternate financial assurance is substituted as specified in this section or if the owner or operator is no longer required to demonstrate financial responsibility in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

4. (d) Letter of credit.

   1. (1)

      1. (A) An owner or operator may satisfy the requirements of this section by obtaining an irrevocable standby letter of credit which conforms to the requirements of this subdivision (d)(1).
      2. (B) The letter of credit must be effective before the initial receipt of waste or before the effective date of this section, April 9, 1997, whichever is later, in the case of closure and post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.
      3. (C) The owner or operator shall provide the letter of credit to the director for approval and place a copy of the letter of credit in the operating record.
      4. (D) The issuing institution must be an entity which has the authority to issue letters of credit and whose letter-of-credit operations are regulated and examined by a federal or state agency.
   2. (2) A letter from the owner or operator referring to the letter of credit by number, issuing institution, and date, and providing the following information: name, address of the facility, and the amount of funds assured, must be included with the letter of credit, which shall be provided to the director and shall be placed in the operating record.

   3. (3)

      1. (A) The letter of credit must be irrevocable and issued for a period of at least one (1) year in an amount at least equal to the current cost estimate for closure, post-closure care, or corrective action, whichever is applicable, except as provided in subsection (b) of this section.
      2. (B) The letter of credit must provide that the expiration date will be automatically extended for a period of at least one (1) year unless the issuing institution has canceled the letter of credit by sending notice of cancellation by certified mail to the owner and operator and to the director one hundred twenty (120) days in advance of cancellation.
      3. (C) If the letter of credit is canceled by the issuing institution, the owner or operator must obtain alternate financial assurance.
   4. (4) The owner or operator may cancel the letter of credit only if alternate financial assurance is substituted as specified in this section or if the owner or operator is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

5. (e) Insurance.

   1. (1)

      1. (A) An owner or operator may demonstrate financial assurance for closure and post-closure care by obtaining insurance which conforms to the requirements of this subsection.
      2. (B) The insurance must be effective before the initial receipt of waste or before the effective date of this section, April 9, 1997, whichever is later.
      3. (C) At a minimum, the insurer must be licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in the State of Arkansas.
      4. (D) The owner or operator shall provide the insurance policy to the director for approval and place a copy of the insurance policy in the operating record.

   2. (2)

      1. (A) The closure or post-closure care insurance policy must guarantee that funds will be available to close the permitted facility whenever final closure occurs or to provide post-closure care for the permitted facility whenever the post-closure care period begins, whichever is applicable.
      2. (B) The policy must also guarantee that once closure or post-closure care begins, the insurer will be responsible for the paying out of funds to the owner or operator or other person authorized to conduct closure or post-closure care, up to an amount equal to the face amount of the policy.

   3. (3)

      1. (A) The insurance policy must be issued for a face amount at least equal to the current cost estimate for closure or post-closure care, whichever is applicable, except as provided in subsection (b) of this section.
      2. (B) The term "face amount" means the total amount the insurer is obligated to pay under the policy.
      3. (C) Actual payments by the insurer will not change the face amount, although the insurer's future liability will be lowered by the amount of the payments.

   4. (4)

      1. (A) An owner or operator, or any other person authorized to conduct closure or post-closure care, may receive reimbursements for closure or post-closure expenditures, whichever is applicable.
      2. (B) 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 post-closure care, and if justification and documentation of the cost is placed in the operating record.
      3. (C) The owner or operator must notify the director that the documentation of the justification for reimbursement has been placed in the operating record and that reimbursement has been received, and provide a copy of the justification to the director if requested.

   5. (5)

      1. (A) Each policy must contain a provision allowing assignment of the policy to a successor owner or operator.
      2. (B) Such assignment may be conditional upon consent of the insurer, provided that such consent is not unreasonably refused.

   6. (6)

      1. (A) 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.
      2. (B) 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.
      3. (C) 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 to the director one hundred twenty (120) days in advance of cancellation.
      4. (D) If the insurer cancels the policy, the owner or operator must obtain alternate financial assurance as specified in this section.

   7. (7)

      1. (A) For insurance policies providing coverage for post-closure care, commencing on the date that liability to make payments pursuant to the policy accrues, the insurer will thereafter annually increase the face amount of the policy.
      2. (B) Such increase must be equivalent to the face amount of the policy, less any payments made, multiplied by an amount equivalent to eighty-five percent (85%) of the most recent investment rate or of the equivalent coupon-issue yield announced by the United States Treasury for twenty-six-week United States Treasury securities.
   8. (8) The owner or operator may cancel the insurance policy only if alternate financial assurance is substituted as specified in this section or if the owner or operator is no longer required to demonstrate financial responsibility in accordance with the requirements of 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

6. (f) Corporate financial test. An owner or operator that satisfies the requirements of this subsection may demonstrate financial assurance up to the amount specified in this subsection:

   1. (1) Financial component.

      1. (A) The owner or operator must satisfy one (1) of the following three (3) conditions:

7. (i) A current rating for its senior unsubordinated debt of AAA, AA, A, or BBB as issued by Standard and Poor's, or Aaa, Aa, A, or Baa as issued by Moody's;

   1. (ii) A ratio of less than one and one-half (1.5) comparing total liabilities to net worth; or

      1. (iii) A ratio of greater than ten-hundredths (0.10) comparing the sum of net income plus depreciation, depletion, and amortization, minus ten million dollars ($10,000,000), to total liabilities.

      2. (B) The tangible net worth of the owner or operator must be greater than:

         1. (i) The sum of the current closure, post-closure care, corrective action cost estimates, and any other environmental obligations, including guarantees, covered by a financial test plus ten million dollars ($10,000,000) except as provided in subdivision (f)(1)(B)(ii) of this section; or
         2. (ii) Ten million dollars ($10,000,000) in net worth plus the amount of any guarantees that have not been recognized as liabilities on the financial statements provided all of the current closure, post-closure care, and corrective action costs and any other environmental obligations covered by a financial test are recognized as liabilities on the owner's or operator's audited financial statements, and subject to the approval of the director.
      3. (C) The owner or operator must have assets located in the United States amounting to at least the sum of current closure, post-closure care, corrective action cost estimates, and any other environmental obligations covered by a financial test as described in subdivision (f)(3) of this section;

   2. (2) Recordkeeping and reporting requirements.

      1. (A) The owner or operator must place the following items into the facility's operating record and furnish those records to the director for approval:

         1. (i) A letter signed by the owner's or operator's chief financial officer that:

8. (a) (a) Lists all the current cost estimates covered by a financial test, including, but not limited to:

   1. (1) (1) Cost estimates required for municipal solid waste management facilities under 40 C.F.R. pt. 258;
   2. (2) (2) Cost estimates required for UIC facilities under 40 C.F.R. pt. 144, if applicable;
   3. (3) (3) Cost estimates required for petroleum underground storage tank facilities under 40 C.F.R. pt. 280, if applicable;
   4. (4) (4) Cost estimates required for PCB storage facilities under 40 C.F.R. pt. 761, if applicable; and
   5. (5) (5) Cost estimates required for hazardous waste treatment, storage, and disposal facilities under 40 C.F.R. pts. 264 and 265, if applicable; and

9. (b) (b) Provides evidence demonstrating that the firm meets the conditions of either subdivision (f)(1)(A)(i), (f)(1)(A)(ii), or (f)(1)(A)(iii) of this section and subdivisions (f)(1)(B) and (C) of this section;

   1. (ii)
10. (a) (a) A copy of the independent certified public accountant's unqualified opinion of the owner's or operator's financial statements for the latest completed fiscal year.

11. (b) (b) To be eligible to use the financial test, the owner's or operator's financial statements must receive an unqualified opinion from the independent certified public accountant.

    1. (c) (c) An adverse opinion, disclaimer of opinion, or other qualified opinion will be cause for disallowance, with the potential exception for qualified opinions provided in subdivision (f)(2)(A)(ii)(d) of this section.

       1. (d) (d) The director may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the director deems that the matters which form the basis for the qualification are insufficient to warrant disallowance of the test.

12. (e) (e) If the director does not allow use of the test, the owner or operator must provide alternate financial assurance that meets the requirements of this section;

    1. (iii)
13. (a) (a) If the chief financial officer's letter providing evidence of financial assurance includes financial data showing that the owner or operator satisfies subdivision (f)(1)(A)(ii) or (f)(1)(A)(iii) of this section that are different from data in the audited financial statements referred to in subdivision (f)(2)(A)(ii) of this section or any other audited financial statement or data filed with the United States Securities and Exchange Commission, then a special report from the owner's or operator's independent certified public accountant to the owner or operator is required.

14. (b) (b) The special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements, the findings of that comparison, and the reasons for any differences; and

    1. (iv) If the chief financial officer's letter provides a demonstration that the firm has assured for environmental obligations as provided in subdivision (f)(1)(B)(ii) of this section, then the letter shall include a report from the independent certified public accountant that verifies that all of the environmental obligations covered by a financial test have been recognized as liabilities on the audited financial statements, how these obligations have been measured and reported, and that the tangible net worth of the firm is at least ten million dollars ($10,000,000) plus the amount of any guarantees provided.

       1. (B) An owner or operator must place the items specified in subdivision (f)(2)(A) of this section in the operating record, notify the director that these items have been placed in the operating record, and submit the items to the director for approval 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 one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.

       2. (C)

          1. (i) After the initial placement of items specified in subdivision (f)(2)(A) of this section in the operating record, the owner or operator must annually update the information, place updated information in the operating record within ninety (90) days following the close of the owner or operator's fiscal year, and furnish the information to the director for approval.
          2. (ii) The director may provide up to an additional forty-five (45) days for an owner or operator who can demonstrate that ninety (90) days is insufficient time to acquire audited financial statements.
          3. (iii) The updated information must consist of all items specified in subdivision (f)(2)(A) of this section.

       3. (D) The owner or operator is no longer required to submit the items specified in this subdivision (f)(2) or comply with the requirements of this subsection when the owner or operator:

          1. (i) Substitutes alternate financial assurance as specified in this section that is not subject to these recordkeeping and reporting requirements; or
          2. (ii) Is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

       4. (E) If the owner or operator no longer meets the requirements of subdivision (f)(1) of this section, the owner or operator must, within one hundred twenty (120) days following the close of the owner or operator's fiscal year:

          1. (i) Obtain alternative financial assurance that meets the requirements of this section;
          2. (ii) Place the required submissions for that assurance in the operating record; and
          3. (iii) Notify the director that the owner or operator no longer meets the criteria of the financial test and submit the alternate financial assurance for approval.

       5. (F)

          1. (i) The director may, based on a reasonable belief that the owner or operator may no longer meet the requirements of subdivision (f)(1) of this section, require at any time the owner or operator to provide reports of its financial condition in addition to or including current financial test documentation as specified in subdivision (f)(2) of this section.
          2. (ii) If the director finds that the owner or operator no longer meets the requirements of subdivision (f)(1) of this section, the owner or operator must provide alternate financial assurance that meets the requirements of this section; and

    2. (3) Calculation of costs to be assured. When calculating the current cost estimates for closure, post-closure care, corrective action, or the sum of the combination of such costs to be covered, and any other environmental obligations assured by a financial test referred to in subsection (f) of this section, the owner or operator must include cost estimates required for solid waste management facilities under this part, as well as cost estimates required for the following environmental obligations, if it assures them through a financial test, obligations associated with:

       1. (A) UIC facilities under 40 C.F.R. pt. 144;
       2. (B) Petroleum underground storage tank facilities under 40 C.F.R. pt. 280;
       3. (C) PCB storage facilities under 40 C.F.R. pt. 761; and
       4. (D) Hazardous waste treatment, storage, and disposal facilities under 40 C.F.R. pts. 264 and 265.

15. (g) Local government financial test.

    1. (1)

       1. (A) An owner or operator may use a financial test to demonstrate financial assurance for closure, post-closure care, and corrective action costs up to a specified maximum limit.
       2. (B) An owner or operator that satisfies the requirements of subdivisions (g)(2) – (4) of this section may demonstrate financial assurance up to the amount specified in subdivision (g)(5) of this section.

    2. (2) Financial component.

       1. (A) The local government owner or operator must satisfy subdivision (g)(2)(A)(i) of this section, bond rating requirement, or subdivision (g)(2)(A)(ii) of this section, financial ratio alternative, in order to qualify to use the financial test:

          1. (i) If the owner or operator has outstanding, rated, general obligation bonds that are not secured by insurance, a letter of credit, or other collateral or guarantee, it must 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 on all such general obligation bonds; or
          2. (ii) The owner or operator must satisfy each of the following financial ratios based on the owner or operator’s most recent audited annual financial statement:
16. (a) (a) A ratio of cash plus marketable securities to total expenditures greater than or equal to five-hundredths (0.05); and

17. (b) (b) A ratio of annual debt service to total expenditures less than or equal to twenty-hundredths (0.20).

    1. (B) The local government owner or operator must prepare its financial statements in conformity with generally accepted accounting principles for governments and have its financial statements audited by an independent certified public accountant or appropriate state agency.

       1. (C) A local government is not eligible to assure its obligations under this section if it:

          1. (i) Is currently in default on any outstanding general obligation bonds;
          2. (ii) 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. (iii) Operated at a deficit equal to five percent (5%) or more of total annual revenue in each of the past two (2) fiscal years; or
          4. (iv)
18. (a) (a) Receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant or appropriate state agency auditing its financial statement as required under subdivision (g)(2)(B) of this section.

19. (b) (b) However, the director of an approved state agency may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the director deems the qualification insufficient to warrant disallowance of the use of the test.

    1. (D) The following terms used in this subsection are defined as follows:

       1. (i) “Deficit” equals total annual revenues minus total annual expenditures;

          1. (ii) “Total revenues” include revenues from all taxes and fees but does not include the proceeds from borrowing or asset sales, excluding revenue from funds managed by local government on behalf of a specific third party;
          2. (iii) “Total expenditures” include all expenditures excluding capital outlays and debt repayment;
          3. (iv) “Cash plus marketable securities” means all the cash plus marketable securities held by the local government on the last day of a fiscal year, excluding cash and marketable securities designated to satisfy past obligations such as pensions; and
          4. (v) “Debt service” means the amount of principal and interest due on a loan in a given time period, typically the current year.

    2. (3) Public notice component.

       1. (A) The local government owner or operator must place a reference to the closure and post-closure care costs assured through the financial test into its next comprehensive annual financial report (CAFR) after the effective date of this section or prior to the initial receipt of waste at the facility, whichever is later.

       2. (B) Disclosure must include the:

          1. (i) Nature and source of closure and post-closure care requirements;
          2. (ii) Reported liability at the balance sheet date;
          3. (iii) Estimated total closure and post-closure care cost remaining to be recognized;
          4. (iv) Percentage of landfill capacity used to date; and
          5. (v) Estimated landfill life in years.
       3. (C) A reference to corrective action costs must be placed in the CAFR not later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.
       4. (D) For the first year the financial test is used to assure costs at a particular facility, the reference may instead be placed in the operating record until issuance of the next available CAFR if timing does not permit the reference to be incorporated into the most recently issued CAFR or budget.
       5. (E) For closure and post-closure costs, conformance with Governmental Accounting Standards Board Statement 18 assures compliance with this public notice component.

    3. (4) Recordkeeping and reporting requirements.

       1. (A) The local government owner or operator must place the following documentation in the facility’s operating record and furnish the information to the director for approval:

          1. (i) A letter signed by the local government’s chief financial officer that:
20. (a) (a) Lists all the current cost estimates covered by a financial test, as described in subdivision (g)(5) of this section;

21. (b) (b) Provides evidence and certifies that the local government meets the conditions of subdivisions (g)(2)(A) – (C) of this section; and

    1. (c) (c) Certifies that the local government meets the conditions of subdivisions (g)(3) and (5);

       1. (ii) The local government’s independently audited year-end financial statements for the latest fiscal year (except for local governments where audits are required every two (2) years where unaudited statements may be used in years when audits are not required), including the unqualified opinion of the auditor who must be an independent, certified public accountant (CPA) or an appropriate state agency that conducts equivalent comprehensive audits;

          1. (iii)
22. (a) (a) A report to the local government from the local government’s independent certified public accountant or the appropriate state agency based on performing an agreed upon procedures engagement relative to the financial ratios required by subdivision (g)(2)(A)(iii) of this section, if applicable, and the requirements of Rule 22.1405(g)(1)(ii)(C) and (D).

23. (b) (b) The CPA or state agency’s report should state the procedures performed and the CPA or state agency’s findings; and

    1. (iv) A copy of the CAFR used to comply with subdivision (g)(3) of this section or certification that the requirements of Governmental Accounting Standards Board Statement 18 have been met.

       1. (B) The items required in subdivision (g)(4)(A) must be placed in the facility operating record as follows:

          1. (i) In the case of closure and post-closure care, either before the effective date of this section, which is April 9, 1997, or prior to the initial receipt of waste at the facility, whichever is later; or
          2. (ii) In the case of corrective action, not later than one hundred twenty (120) days after the corrective action remedy is selected in accordance with the requirements of 8 CAR § 60-1208.
       2. (C) After the initial placement of the items in the facility’s operating record, the local government owner or operator must update the information and place the updated information in the operating record within one hundred eighty (180) days following the close of the owner or operator’s fiscal year.

       3. (D) The local government owner or operator is no longer required to meet the requirements of this subdivision (g)(4) when:

          1. (i) The owner or operator substitutes alternate financial assurance as specified in this section; or
          2. (ii) The owner or operator is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

       4. (E)

          1. (i) A local government must satisfy the requirements of the financial test at the close of each fiscal year.
          2. (ii) If the local government owner or operator no longer meets the requirements of the local government financial test it must, within 210 days following the close of the owner or operator’s fiscal year:
24. (a) (a) Obtain alternative financial assurance that meets the requirements of this section;

25. (b) (b) Place the required submissions for that assurance in the operating record and furnish those submissions to the director for approval; and

    1. (c) (c) Notify the director that the owner or operator no longer meets the criteria of the financial test and that alternate assurance has been obtained.

       1. (F)

          1. (i) The director, based on a reasonable belief that the local government owner or operator may no longer meet the requirements of the local government financial test, may require additional reports of financial condition from the local government at any time.
          2. (ii) If the director of an approved state agency finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of the local government financial test, the local government must provide alternate financial assurance in accordance with this section.

    2. (5) Calculation of costs to be assured. The portion of the closure, post-closure care, and corrective action costs for which an owner or operator can assure under this subsection is determined as follows:

       1. (A) If the local government owner or operator does not assure other environmental obligations through a financial test, it may assure closure, post-closure care, and corrective action costs that equal up to forty-three percent (43%) of the local government’s total annual revenue;

       2. (B)

          1. (i) If the local government assures other environmental obligations through a financial test, including those associated with UIC facilities under 40 C.F.R. pt. 280, PCB storage facilities under 40 C.F.R. pt. 761, and hazardous waste treatment, storage, and disposal facilities under 40 C.F.R. pts. 264 and 265, it must add those costs to the closure, post-closure care, and corrective action costs it seeks to assure under this subsection.
          2. (ii) The total that may be assured must not exceed forty-three percent (43%) of the local government’s total annual revenue;
       3. (C) The owner or operator must obtain an alternate financial assurance instrument for those costs that exceed the limits set in subdivisions (g)(5)(A) and (B) of this section.

26. (h) Corporate guarantee.

    1. (1)

       1. (A) An owner or operator may meet the requirements of this section by obtaining a written guarantee.
       2. (B) The guarantor must be the direct or higher-tier parent corporation of the owner or operator, a firm whose parent corporation is also the parent corporation of the owner or operator, or a firm with a substantial business relationship with the owner or operator.

       3. (C) The guarantor must:

          1. (i) Meet the requirements for owners or operators in subsection (f) of this section; and
          2. (ii) Comply with the terms of the guarantee.
       4. (D) A certified copy of the guarantee must be placed in the facility's operating record and furnished to the director for approval along with copies of the letter from the guarantor's chief financial officer’s and accountant’s opinions.
       5. (E) If the guarantor's parent corporation is also the parent corporation of the owner or operator, the letter from the guarantor's chief financial officer must describe the value received in consideration of the guarantee.
       6. (F) If the guarantor is a firm with a substantial business relationship with the owner or operator, this letter must describe this substantial business relationship and the value received in consideration of the guarantee.
    2. (2) The guarantee must be effective and all required submissions placed in the operating record 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 in the case of corrective action, no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.

    3. (3) The terms of the guarantee must provide that:

       1. (A) If the owner or operator fails to perform closure, post-closure care, and/or corrective action of a facility covered by the guarantee, the guarantor will:

          1. (i) Perform, or pay a third party to perform, closure, post-closure care, and/or corrective action as required (performance guarantee); or
          2. (ii) Establish a fully funded trust fund as specified in subsection (b) of this section in the name of the owner or operator (payment guarantee);

       2. (B)

          1. (i) The guarantee will remain in force for as long as the owner or operator must comply with the applicable financial assurance requirements of this section unless the guarantor sends prior notice of cancellation by certified mail to the owner or operator and to the director.
          2. (ii) Cancellation may not occur, however, during the one hundred twenty (120) days beginning on the date of receipt of the notice of cancellation by both the owner or operator and the director, as evidenced by the return receipts; and

       3. (C)

          1. (i) If notice of cancellation is given, the owner or operator must, within ninety (90) days following receipt of the cancellation notice by the owner or operator and the director:
27. (a) (a) Obtain alternate financial assurance;

28. (b) (b) Place evidence of that alternate financial assurance in the facility operating record; and

    1. (c) (c) Submit the alternate financial assurance to the director for approval.

       1. (ii) If the owner or operator fails to provide alternate financial assurance within the ninety-day period, the guarantor must:
29. (a) (a) Provide that alternate assurance within one hundred twenty (120) days of the cancellation notice;

30. (b) (b) Obtain alternative assurance;

    1. (c) (c) Place evidence of the alternate assurance in the facility operating record; and

       1. (d) (d) Submit the alternate financial assurance to the director for approval.

    2. (4)

       1. (A) If a corporate guarantor no longer meets the requirements of subdivision (g)(2) of this section, the owner or operator must, within ninety (90) days, obtain alternative assurance, place evidence of the alternate assurance in the facility operating record, and submit the alternate financial assurance to the director for approval.
       2. (B) If the owner or operator fails to provide alternate financial assurance within the ninety-day period, the guarantor must provide that alternate assurance within the next thirty (30) days.

    3. (5) The owner or operator is no longer required to meet the requirements of this subsection (h) when:

       1. (A) The owner or operator substitutes alternate financial assurance as specified in this section; or

       2. (B) The owner or operator is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

          1. (i) Local government guarantee.
    4. (1) A local government owner or operator may demonstrate financial assurance for closure, post-closure care, and corrective action by obtaining a written guarantee provided by a local government.
    5. (2) The guarantor must meet the requirements of the local government financial test in subsection (g) of this section, and must comply with the terms of a written guarantee.

    6. (3) Terms of the written guarantee.

       1. (A) The guarantee must be effective before the initial receipt of waste or before the effective date of this section, whichever is later, in the case of closure, post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.

       2. (B) The guarantee must provide that:

          1. (i) If the owner or operator fails to perform closure, post-closure care, and/or corrective action of a facility covered by the guarantee, the guarantor will:
31. (a) (a) Perform, or pay a third party to perform, closure, post-closure care, and/or corrective action as required; or

32. (b) (b) Establish a fully funded trust fund as specified in subsection (b) of this section in the name of the owner or operator;

    1. (ii)
33. (a) (a) The guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail to the owner or operator and to the director.

34. (b) (b) Cancellation may not occur, however, during the one hundred twenty (120) days beginning on the date of receipt of the notice of cancellation by both the owner or operator and the director, as evidenced by the return receipts; and

    1. (iii)

35. (a) (a) If a guarantee is canceled, the owner or operator must, within ninety (90) days following receipt of the cancellation notice by the owner or operator and the director:

    1. (1) (1) Obtain alternate financial assurance;
    2. (2) (2) Place evidence of that alternate financial assurance in the facility operating record; and
    3. (3) (3) Furnish the alternate financial assurance to the director for approval.

36. (b) (b) If the owner or operator fails to provide alternate financial assurance within the ninety-day period, the guarantor must:

    1. (1) (1) Provide that alternate assurance within one hundred twenty (120) days following the guarantor’s notice of cancellation;
    2. (2) (2) Place evidence of the alternate assurance in the facility operating record; and
    3. (3) (3) Furnish the alternate financial assurance to the director for approval.

    4. (4) Recordkeeping and reporting.

       1. (A) The owner or operator must place a certified copy of the guarantee along with the items required under subdivision (g)(4) of this section into the facility’s operating record before the initial receipt of waste or before the effective date of this section, whichever is later, in the case of closure, post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.

       2. (B) The owner or operator is no longer required to maintain the items specified in subdivision (i)(4) of this section when:

          1. (i) The owner or operator substitutes alternate financial assurance as specified in this section; or
          2. (ii) The owner or operator is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

       3. (C)

          1. (i) If a local government guarantor no longer meets the requirements of subsection (g) of this section, the owner or operator must, within ninety (90) days:
37. (a) (a) Obtain alternative assurance;

38. (b) (b) Place evidence of the alternate assurance in the facility operating record; and

    1. (c) (c) Furnish the alternate financial assurance to the director for approval.

       1. (ii) If the owner or operator fails to obtain alternate financial assurance within that ninety-day period, the guarantor must provide that alternate assurance within the next thirty (30) days.
39. (j) State-approved mechanism. An owner or operator may satisfy the requirements of this section by obtaining any other mechanism that meets the criteria specified in subsection (m) of this section, and that is approved by the director.

40. (k) State assumption of responsibility.

    1. (1) If the director either assumes legal responsibility for an owner’s or operator's compliance with the closure, post-closure care, and corrective action requirements of this part, or assures that the funds will be available from state sources to cover the requirements, the owner or operator will be in compliance with the requirements of this section.

    2. (2) Any state assumption of responsibility must meet the criteria specified in subsection (m) of this section.

       1. (l) Use of multiple financial mechanisms.
    3. (1) An owner or operator may satisfy the requirements of this section to demonstrate financial assurance for closure, post-closure, and corrective action, as required by 8 CAR §§ 60-1402, 60-1403, and 60-1404 by establishing more than one (1) financial mechanism per facility, except that mechanisms guaranteeing performance rather than payment may not be combined with other instruments.

    4. (2) The mechanisms must be as specified in subsections (b) – (l) of this section, except that financial assurance for an amount at least equal to the current cost estimate for closure, post-closure care, and/or corrective action may be provided by a combination of mechanisms rather than a single mechanism.

       1. (m) Financial assurance sufficiency. The language of the mechanisms listed in subsections (b) – (l) of this section must ensure that the instruments satisfy the following criteria:
    5. (1) The financial assurance mechanisms must ensure that the amount of funds assured is sufficient to cover the costs of closure, post-closure care, and corrective action for known releases when needed;
    6. (2) The financial assurance mechanisms must ensure that funds will be available in a timely fashion when needed;
    7. (3) The financial assurance mechanisms must be obtained by the owner or operator by the effective date of these requirements or prior to the initial receipt of solid waste, whichever is later, in the case of closure and post-closure care, and no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208, until the owner or operator is released from the financial assurance requirements under 8 CAR §§ 60-1402, 60-1403, and 60-1404; and
    8. (4) The financial assurance mechanisms must be legally valid, binding, and enforceable under state and federal law.

41. (n) Use of a financial mechanism for multiple facilities.

    1. (1) The owner or operator may use a single financial assurance mechanism to meet financial assurance requirements for more than one (1) permitted facility located in Arkansas.
    2. (2) The mechanism submitted to the director must include a list showing, for each facility, the permit number, name, address, and amount of funds for closure and post-closure care or corrective action assured by the mechanism.
    3. (3) The amount of funds available through the mechanism must be no less than the sum of funds that would be available if a separate mechanism had been filed and maintained for each facility.
    4. (4) In a financial assurance forfeiture action for any of the facilities covered by the mechanism, the director may order forfeiture of only the amount of funds designated for that facility, unless the permittee agrees to the use of additional funds available under the mechanism.

42. (o) Municipality or county contract of obligation.

    1. (1)

       1. (A) A municipality or county may satisfy the requirements of this section by executing a contract of obligation with the division which conforms to the requirements of this subsection.
       2. (B) The contract of obligation shall be a binding, enforceable agreement on the municipality or county, allowing the division to collect the required amount from any funds being disbursed or to be disbursed from the state to the municipality or county.
    2. (2) To assure compliance with this subsection, the maximum amount pledged under the contract of obligation shall not exceed the total amount of general revenue disbursed to the municipality or county in the last fiscal year, or, if approved by the director, the amount currently projected by the state to be disbursed during the current fiscal year.

    3. (3)

       1. (A) The contract of obligation must be irrevocable and issued for a period of at least one (1) year.
       2. (B) The contract of obligation must be effective before the initial receipt of waste or before the effective date of this section, April 9, 1997, whichever is later, in the case of closure and post-closure care, or no later than one hundred twenty (120) days after the corrective action remedy has been selected in accordance with the requirements of 8 CAR § 60-1208.

    4. (4)

       1. (A) The owner or operator shall:

          1. (i) Provide the contract of obligation to the director for approval; and
          2. (ii) Place a copy of the contract of obligation in the operating record.
       2. (B) Upon execution by the director, the contract shall be filed with the Secretary of the Department of Finance and Administration.
    5. (5) The owner or operator may cancel the contract of obligation only if alternate financial assurance is substituted as specified in this section or if the owner or operator is released from the requirements of this section in accordance with 8 CAR § 60-1402(b), 8 CAR § 60-1403(b), or 8 CAR § 60-1404(b).

Codification Notes: “UIC” means underground injection control. "PCB" means polychlorinated biphenyls.