5 CCR 1002-66
DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT Water Quality Control Commission REGULATION NO. 66 - FINANCIAL ASSURANCE CRITERIA REGULATIONS FOR COLORADO HOUSED COMMERCIAL SWINE FEEDING OPERATIONS 5 CCR 1002-66 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] _______________________________________________________________________________
66.0 AUTHORITY
These regulations are promulgated pursuant to section 25-8-101 et seq C.R.S. as amended, and in particular 25-8-202(1)(d) and (2), 25-8-501.1, 25-8-504, and 24-4-103.
66.1 APPLICABILITY
The provisions of these regulations are applicable to all housed commercial swine feeding operations, as defined under section 61.2 of the Colorado Discharge Permit System Regulations, Regulation No. 61 (5 CCR 1002-61).
66.2 PURPOSE
(1) These regulations establish the criteria necessary for a housed commercial swine feeding operation to satisfy when using one or more of the following financial assurance instruments, as identified in subsection 61.13(4)(h)(x) of Regulation No. 61:
(2) These regulations supplement the housed commercial swine feeding operation discharge permit regulations in section 61.13 of Regulation No. 61. Housed commercial swine feeding operations are subject to both the provisions of section 61.13 of Regulation No. 61 and to the provisions of Regulation No. 66.
66.3 DEFINITIONS
(1) “APPLICANT” means a person that has submitted to the Division an application for an individual discharge permit for a housed commercial swine feeding operation.
(2) “CLOSURE COSTS” means the total dollar estimate for closure, post-closure, and corrective action costs shown in the current approved financial assurance plan(s) for a permittee, or as otherwise required by the Division pursuant to subsection 61.13(4)(h)(vi)(B)-(C) of Regulation No. 61. Code of Colorado Regulations 1 (3) “COMPANY” - means a voluntary association formed and organized to carry on a business in the legal name of the association and includes, but is not limited to, a sole proprietorship, partnership, corporation, and limited liability entity.
(4) “DIVISION” means the Water Quality Control Division of the Colorado Department of Public Health and Environment.
(5) “FACILITY” - means a housed swine feeding operation, as defined under section 61.2 of the Colorado Discharge Permit System Regulations, Regulation No. 61 (5 CCR 1002-61), that is covered by a permit.
(6) “FINANCIAL ASSURANCE PLAN” - means a plan that addresses the final closure, post-closure, and corrective action activities for a housed commercial swine feeding operation, in accordance with subsection 61.13(3)(h) of Regulation No. 61.
(7) “FINANCIAL STATEMENTS” - means formal records of the financial activities of a business, person, or other entity that provide an overview of the financial condition in both the short- and long-terms of the business, person, or other entity. For the purpose of this regulation, financial statements include the balance sheet and income statement.
(8) “OPERATION” - means a housed commercial swine feeding operation, as defined under section 61.2 of the Colorado Discharge Permit System Regulations, Regulation No. 61 (5 CCR 1002-61).
(9) “PERMIT” means an individual discharge permit issued to a housed commercial swine feeding operation pursuant to Regulation No. 61, including new permits, renewals, and temporary permits.
(10) “PERMITTEE” means a person that has been issued an individual discharge permit for a housed commercial swine feeding operation.
(11) “PERSON” means an individual, corporation, partnership, association, state or political subdivision thereof, federal agency, state agency, municipality, Commission, or interstate body.
(12) “PERSONAL FINANCIAL STATEMENT” - means a document stating an individual’s assets, liabilities and other information typically required by a financial institution to underwrite a loan request.
(13) “PRIVATE COMPANY” - means a company whose ownership is private and is not subject to filing requirements of the U.S. Securities and Exchange Commission.
(14) “PUBLIC COMPANY” - means a company whose stock is traded on an organized stock exchange and that is subject to filing requirements of the U.S. Securities and Exchange Commission.
(15) “SUBSIDIARY COMPANY” - means a company in which another, generally larger company, known as the parent company, owns all or at least a majority of the stock. For the purpose of this regulation, a parent company is a public company.
(16) “TANGIBLE NET WORTH” - means the physical worth of a company or individual minus any value derived from intangible assets such as copyrights, patents, goodwill, and intellectual property, Tangible net worth is calculated by taking the value of a company’s total assets and subtracting the value of total liabilities and intangible assets.
66.4 IRREVOCABLE STANDBY LETTER OF CREDIT CRITERIA
Code of Colorado Regulations 2 A permittee or applicant may satisfy the financial assurance requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by submitting to the Division an irrevocable standby letter-of-credit that conforms to the requirements of section 66.4. The issuing institution must have the authority to issue a letter of credit and its operations must be regulated by a federal or state agency.
(1) The letter of credit must be effective as of the date of issuance.
(2) A letter-of-credit must be in full conformance with Article 5 of the uniform commercial code, C.R.S. 4- 5-101 et seq, as amended.
(3) The wording of the letter-of-credit must be identical to the wording specified for a letter of credit in Appendix A.
(4) A permittee or applicant who uses a letter-of-credit to satisfy closure costs must also establish a standby trust fund, unless an alternate instrument has been established by the state of Colorado to directly receive monies, or the permittee or applicant has previously established a trust fund under section 66.5. Under the terms of the letter-of-credit, all amounts paid pursuant to a draft by the Division will be deposited by the issuing institution directly into the standby trust fund, or trust fund, in accordance with instructions from the Division. This standby trust fund must meet the requirements of a trust fund (section 66.5), except the following provisions are not required:
(5) Where a standby trust fund is established in accordance with subsection 66.4(4), the wording of the standby trust must be identical to the wording specified in Appendix C and the standby trust must be submitted to the Division concurrently with the letter-of-credit.
(6) The letter-of-credit must be accompanied by a letter from the permittee or applicant referring to the letter of credit by number, issuing institution, and date, and providing the following information: the name and address of the housed commercial swine feeding operation facilities, and the amount of funds assured for closure costs for the facilities by the letter-of-credit.
(7) The letter-of-credit must be irrevocable and issued for a period of at least one (1) year.
(8) The letter-of-credit must provide that the expiration date will be automatically extended for a period of at least one (1) year unless, at least 90 days before the current expiration date, the issuing institution notifies the permittee or applicant and the Division by certified mail of a decision not to extend the expiration date. Under the terms of the letter-of-credit, the 90 days will begin on the date when the permittee or applicant and the Division have received the notice, as evidenced by a certified mail return receipt.
(9) The letter-of-credit must provide that the issuing institution waives all rights of set off or liens against the letter-of-credit.
(10) The letter-of-credit must be issued in an amount at least equal to the closure costs, less any amount covered by another financial assurance instrument(s).
(11) Following a determination that the permittee has failed to perform final closure or post-closure or corrective actions in accordance with the current, approved financial assurance plan and other permit requirements when required to do so, the Division may draw on the letter-of-credit. Code of Colorado Regulations 3 (12) If the permittee does not establish alternate financial assurance that meets the requirements of subsections 61.13(4)(h(iii)-(iv) of Regulation No. 61, within 60 days after receipt by both the permittee and the Division of a notice from the issuing institution that it has decided not to extend the letter-of-credit beyond the current expiration date, the Division will draw on the letter-of-credit within 30 days prior to the expiration date. The Division may delay the drawing if the issuing institution grants an extension of the term of the credit. During the last thirty (30) days of any such extension the Division will draw on the letter-of-credit if the permittee has failed to provide alternate financial assurance that meets the requirements of subsections 61.13(4)(h(iii)-(iv) of Regulation No. 61.
(13) Reimbursements- If the value of the letter-of-credit is greater than the closure costs, the permittee may submit a written request with appropriate documentation justifying the request to the Division for the release of the amount in excess of the closure costs.
(14) The Division shall agree to termination of a letter-of-credit when the provisions of subsection 61.13(4)(h)(xii) or (xiii) of Regulation No. 61 have been satisfied.
66.5 TRUST FUND CRITERIA
Code of Colorado Regulations 4 A permittee or applicant may satisfy the financial assurance requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by establishing a trust fund that conforms to the requirements of section 66.5 and submitting the trust agreement to the Division. The trustee must be an entity which has the authority to act as a trustee and its trust operations must be regulated and examined by a federal or state agency.
(1) The trustee, to be validated by the comptroller or banking commission, shall be the trust division of a federal or state chartered bank with capital and surplus of not less than $10,000,000, selected by the operator and acceptable to the Division. Said bank must be located and legally chartered to operate in one of the fifty (50) states. The trustee shall direct the investment of funds in the trust, using the standard of care of a fiduciary. No funds shall be released, disbursed, or transferred by the trustee from this trust without the express written authorization of the Division.
(2) The trust agreement must be effective as of the date of issuance.
(3) The wording of the trust agreement must be identical to the wording specified for a trust agreement in Appendix B, and no changes are allowed without Division approval. The trust agreement must be accompanied by a formal certification of acknowledgment.
(4) Reimbursements- If the value of the trust fund is greater than the closure costs, the permittee may submit a written request with appropriate documentation justifying the request to the Division for the release of the amount in excess of the closure costs.
Code of Colorado Regulations 5 (5) The Division shall agree to termination of a trust fund when the provisions of subsection 61.13(4)(h)(xii) or (xiii) of Regulation No. 61 have been satisfied.
(6) A trust fund must provide that the trustee waives all rights of set off or liens against the trust fund.
66.6 SURETY BOND CRITERIA (for guaranteeing performance or payment)
A permittee or applicant may satisfy the requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by submitting to the Program a surety bond that conforms to the requirements of section 66.6. A surety bond can be for the purpose of either guaranteeing full closure of a facility(ies) or guaranteeing payment of closure cost funds into a standby trust fund. The surety company issuing the bond and any co-sureties must have the authority to issue a surety bond and must be regulated and examined by a federal or state agency. The surety company must be conducting business in Colorado and issue the bond subject to the applicable laws and jurisdiction of the state of Colorado. If co-sureties are being used, the original bond must reflect that fact.
(1) If the surety is using reinsurance, a treasury reinsurance form must be submitted with the bond to the Division or within forty-five (45) days thereafter.
(2) The surety bond must be effective as of the date of issuance.
(3) The wording of the surety bond must be identical to the wording for either a payment guarantee surety bond in Appendix D or a performance guarantee bond in Appendix E, as applicable.
(4) A permittee or applicant who uses a surety bond to satisfy the requirements of this section must also establish a standby trust fund, unless there has been an alternate instrument established by the State of Colorado to directly receive monies, or the applicant or permittee has previously established a trust fund under section 66.5. Under the terms of the bond, all payments made there under will be deposited by the surety directly into the standby trust fund, or other trust fund, in accordance with the instructions from the Division. This standby trust fund must meet the requirements of the trust fund, section 66.5, except the following provisions are not required:
(5) Where a standby trust fund is established in accordance with subsection 66.6(4), the wording of the standby trust must be identical to the wording specified in Appendix C and the standby trust must be submitted to the Division concurrently with the surety bond.
(6) The bond must guarantee that the permittee will, as applicable:
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(7) Under the terms of the bond, the surety will become liable on the bond obligation when the permittee fails to perform as guaranteed by the bond.
(8) The penal sum of the bond must be in an amount at least equal to the closure costs, less amounts covered by alternative financial assurance instruments.
(9) The Division shall agree to termination of a bond when the provisions of subsection 61.13(4)(h)(xii) or
(10) A bond must provide that the surety waives all rights of set off or liens against the bond.
66.7 INSURANCE
A permittee or applicant may satisfy the requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by obtaining insurance for closure, post-closure, and corrective actions that conforms to the requirements of section 66.7, and submitting a certificate for such insurance to the Division.
(1) At a minimum, the insurer must be licensed to transact the business of insurance or be eligible to provide insurance as an excess or surplus lines insurer, and comply with Title 10 Insurance Code, C.R.S., as amended. The insurance company must be conducting business in Colorado and assure the policy is subject to the laws and jurisdiction of the State of Colorado. The insurance company must be regulated and examined by a federal or state agency.
(2) The insurance must be effective as of the date of issuance.
(3) The wording of the certificate of insurance must be identical to the wording specified for a certificate of insurance in Appendix F.
(4) The insurance policy must be issued for a face amount at least equal to closure costs. The term "face amount" means the total amount the insurer is obligated to pay under the policy. 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.
(5) The insurance policy must guarantee that funds will be available to close and provide post-closure and corrective action care of the permitted facility(ies) whenever closure, post-closure, or corrective action occurs. The policy must also guarantee that once closure, post-closure, or corrective action begins, the insurer will be responsible for paying out funds, up to an amount equal to the face amount of the policy, upon the direction of the Division.
(6) If the permittee wishes to pay for closure and post-closure activities directly, without accessing the insurance coverage, this may be done after receiving written approval by the Division. All terms, limits and other applicable information must accompany this approval.
(7) Reimbursements- After beginning partial or final closure, post-closure, and/or corrective action care of a facility(ies), a permittee may request reimbursements for closure, post-closure, and/or corrective action expenditures by submitting itemized receipts to the Division.
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(8) The permittee must maintain the policy in full force and effect until the Division gives written consent to termination of the policy by the permittee. Failure to pay the premium, without substitution of an approved alternate financial assurance mechanism that meets the requirements of subsections 61.13(4)(h)(iii)-(iv) of Regulation No. 61, will constitute a violation of these regulations. Such violation will be deemed to begin upon receipt by the Division of a notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration of the insurance policy.
(9) An insurance policy must contain a provision allowing assignment of the policy to a successor permittee. Such assignment may be conditional upon consent of the insurer, provided such consent is not unreasonably refused.
(10) 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. 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. If there is a failure to pay the premium, the insurer may elect to cancel the policy by sending notice of cancellation by certified mail to the permittee and the Division 90 days in advance of cancellation.
(11) If the insurer provides notice of its intent to cancel the insurance policy in accordance with subsection 66.7(10), the permittee must obtain alternate financial assurance that meets the requirements of subsections 61.13(4)(h)(iii)-(iv) of Regulation No. 61. The permittee must establish alternate financial assurance within 60 days of receiving notice of cancellation. Failure of the permittee to establish alternative financial assurance, as required, shall be a violation of the permit and may be cause for revocation of the permit.
(12) Cancellation, termination, or failure to renew the policy may not occur and the policy will remain in full force and effect in the event that on or before the date of expiration of the policy one of the following occurs:
Code of Colorado Regulations 8 (13) At a minimum, all premiums shall be paid annually and proof of payment shall be supplied to the Division by no later than 30 days after payment.
(14) Commencing on the date that liability to make payments pursuant to the insurance policy accrues, the insurer will thereafter annually increase the face amount of the policy. Such increase must be equivalent to the face amount of the policy, less any payments made, multiplied by an amount equivalent to 85 percent of the most recent investment rate or of the equivalent coupon-issue yield announced by the U.S. Treasury for 26-week treasury securities.
(15) The Division shall agree to termination of an insurance policy when the provisions of subsection 61.13(4)(h)(xii) or (xiii) of Regulation No. 61 have been satisfied.
(16) An insurance policy must provide that the insurer waives all rights of set off or liens against the insurance policy.
66.10 FINANCIAL TEST CRITERIA
A permittee or applicant may satisfy the requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by satisfying the requirements of this section. After the Division approves the use of the financial test instrument by a permittee or applicant, the requirements of section 66.10 must be met annually by the permittee or applicant.
(1) Financial requirements To pass the financial test, the applicant or permittee must satisfy the following conditions:
(2) Reporting and other requirements Code of Colorado Regulations 10
(3) Confidential business information
Code of Colorado Regulations 11
(4) The Division shall agree to termination of a financial test instrument when the provisions of subsection 61.13(4)(h)(xii) or (xiii) of Regulation No. 61 have been satisfied.
66.11 WRITTEN GUARANTEE CRITERIA
A permittee or applicant may satisfy the requirements of subsection 61.13(4)(h)(x) of Regulation No. 61 by obtaining a written individual or business guarantee that meets the requirements of this section. After the Division approves the use of the written guarantee instrument by a permittee or applicant, the requirements of section 66.11 must be met annually by the permittee or applicant.
(1) The terms of a written guarantee must provide that:
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(2) A guarantor must be one of the following persons:
(3) A guarantor must meet the financial test requirements of subsections 66.10(1)(a)-(c).
(4) The permittee or applicant must submit to the Division the guarantor’s financial statements for the latest completed fiscal year, in accordance with the following, as applicable:
(5) The permittee or applicant must submit to the Division a letter from the guarantor that meets the following requirements:
(6) Reporting and other requirements
(7) The permittee is no longer required to meet the requirements of section 66.11 when either of the following occurs:
(8) Confidential business information
(9) The Division shall agree to termination of a written guarantee instrument when the provisions of sections 66.11(6)(b) and 66.11(7) have been satisfied.
66.12 – 66.19 RESERVED
66.20 STATEMENT OF BASIS, SPECIFIC STATUTORY AUTHORITY, AND PURPOSE: JULY 12,
BASIS AND PURPOSE A. APPLICABILITY The provisions in Commission Regulation No. 66 (5 CCR 1002-66), apply to housed commercial swine feeding operations (HCSFOs), as defined under section 61.2(40) of the Colorado Discharge Permit System Regulations, Regulation No. 61 (5 CCR 1002-61). Regulation No. 66 supplements the HCSFO discharge permit regulations in section 61.13 of Regulation No. 61 and, therefore, HCSFOs are subject to the provisions of both Regulations No. 66 and No. 61.13.
B. PURPOSE OF THE REGULATION The proposal considered by the Commission during this rulemaking hearing is the adoption of Regulation No. 66, which is a new Commission regulation. The proposal is the result of a stakeholder process that was initiated in November 2008 for the purpose of establishing a guidance document for the financial test and guarantee financial assurance mechanism for HCSFOs, in accordance with subsection 61.13(4)(h)(viii) of Regulation No. 61. A proposed guidance document was brought before the Commission at an informational hearing in November 2009. In response to statements from the Division and HCSFO producers at the hearing, the Commission agreed that, in lieu of continuing the hearing on the guidance document, a rulemaking hearing would be set to consider putting into regulation the criteria for all financial assurance instruments. Since the November 2009 hearing, the Division met with stakeholders to develop the proposal for today’s rulemaking. The purpose of Regulation No. 66 is to establish the criteria necessary for a HCSFO to satisfy when using one or more of the financial assurance instruments identified in the current subsection 61.13(4)(h) of Regulation No. 61. The Commission agrees with the recommendation of staff and parties to this hearing that the financial instrument criteria be established and placed into this new Regulation No. 66 for the following reasons:
- Subsection 61.13(4)(h)(viii) of Regulation No. 61 requires that the Water Quality Control Division (Division) approve submitted financial assurance instruments. Criteria for the instruments are necessary for the purposes of providing the Division and HCSFOs language that an instrument must have in order to be approved.
Code of Colorado Regulations 16 - The regulatory provisions needed to establish the financial assurance criteria are lengthy and include appendices, making them awkward to add to the permitting requirements of Regulation No. 61. - Placing the criteria in a new stand-alone regulation allows financial assurance criteria to be readily found and used for financial assurance purposes.
Because Regulation No. 66 supplements section 61.13 of Regulation No. 61, the Commission also adopted in this rulemaking revisions to subsection 61.13(4)(h) that, among other things, makes reference to the provisions of Regulation No. 66.
C. DISCUSSION OF REGULATORY PROVISIONS Section 66.3 (Definitions): Definitions were included for the purpose of providing clarity of the meaning of certain words used in the regulation. The definitions of “Division” , “Permit” , and “Person” were taken from Regulation No. 61. Definitions of financial terms were taken from financial dictionary sites on the Internet and revised as appropriate to meet the focus of Regulation No. 66. Sections 66.6 through 66.9 (Criteria for Four Financial Assurance Instruments): These sections address the criteria for the following financial assurance instruments: irrevocable standby letter of credit, trust fund, surety bond, and insurance. The criteria for these instruments were based on the language in section 1.8 of the Colorado Solid and Hazardous Waste Commission’s “Regulations Pertaining to Solid Waste Sites and Facilities” (6 CCR 1007-2). The Commission determined that it was reasonable to use the language from section 1.8 of 6 CCR 1007-2 for the following reasons: - Section 1.8 is a Colorado environmental regulation that has been in place for several years and addresses the same financial assurance instruments that are the subject of sections 66.6 through 66.9.
- Section 1.8 is based on language that was established by the federal Resource Conservation and Recovery Act (RCRA) regulations pertaining to financial assurance for closure of facilities having waste material.
For Regulation No. 66, the language from section 1.8 of 6 CCR 1007-2 was revised as appropriate to have it pertain to HCSFOs and have it include needed clarifications. In addition, language was added to the instruments so that they would comply with the four requirements of subsection 61.13(4)(h) of Regulation No. 61 presented below. An exception is that the letter of credit and insurance instruments do not allow for the “written consent” requirement stated in the fourth bullet, below. However, the State of Colorado would be protected by the requirement in Regulation No. 66 that a permittee submit alternate financial assurance prior to one of these instruments being canceled by the issuing entity. - Standby Trust- With the exception of the trust fund, insurance, and the financial test or guarantee, financial assurance instruments require the establishment of a standby trust. - The issuing institution of any of the financial assurance instruments, except financial test or guarantee, must have the authority to issue that instrument and its operations shall be regulated and examined by a federal or state agency.
- An issuing institution of a financial assurance instrument is required to waive all rights of set off or liens against the instrument.
- No form of financial assurance shall be approved unless it contains a term that provides that the financial assurance may not be cancelled by the surety or guarantor unless 60 days prior written notice is given the Division and the Division gives written consent, which may be granted only when the requirements of section 61.13 of Regulation No. 61 have been fulfilled. Code of Colorado Regulations 17 Section 66.10 (Financial Test Criteria): The financial test and written guarantee instruments (FTG) are the only instruments that do not provide for funds being set aside that the Division can access to hire a third-party to close a facility(ies). As a result, the Commission noted in the Statement of Basis, Specific Statutory Authority and Purpose, Regulation 61.52, (“Statement of Basis and Purpose” ) accompanying the January 2003 rulemaking on the HCSFO regulations (section 61.13 of Regulation No. 61) that, where a permittee has been approved to use one of the FTG instruments, the expectation exists that the permittee will use its own funds to properly close the operation before abandoning the operation or going out of business. If this expectation is not met, the only recourse available to the Division to properly close the operation against the permittee or guarantee is to bring a court action to enforce the permittee’s closure obligations. To prevent such potentially drawn out and uncertain court actions, the Commission concluded that the financial standards for a financial test should identify permittees and guarantors having solid financial status. The Commission considered its statements in the 2003 Statement of Basis and Purpose, in its January 2003 rulemaking in adopting financial test criteria in today’s rulemaking. The hearing record shows that a main focus of stakeholder discussion was determining financial test threshold values, such as for a ratio. To assist in the discussions, Dr. Norm Dalsted (Colorado State University, Department of Agricultural and Resource Economics) served as an agricultural finance expert resource. One of Dr. Dalsted’s documents written to the stakeholders regarding financial test criteria is included in the hearing record. Also included in the hearing record is a letter from the Farm Credit Services of America’s Omaha office (FCS) indicating that FCS wants a borrower from the swine industry to maintain a liquidity ratio of at least 1.1 to 1.2, and that the inclusion of breeding swine value on the current assets side of the ledger is very typical among lenders in the swine industry. While agreement does not exist among all parties to the hearing, the Commission believes it is reasonable based on the hearing record to establish the following three financial thresholds for the financial test instrument:
- Solvency test: tangible net worth of 2.0 more than closing costs identified in the approved Financial Assurance Plan.
- Liquidity ratio test: a ratio of at least 1.2 when comparing current assets (which can include the value of breeding swine) to current liabilities. The Commission understands that the lending industry does not find it necessary to require an adjustment to current liabilities where the value of breeding stock is added to current assets.
- U.S assets test: assets located in the United States must equal or be greater than the sum of closure costs identified in the approved Financial Assurance Plan. The Commission believes that the above thresholds accomplish the following desirable outcomes: - Provide a measure of both short-term (via the liquidity ratio test) and long-term (via the solvency test) financial health of a HCSFO.
- Identify a HCSFO with a strong financial status.
- Are not overly burdensome such that a number of HCSFOs would not be able to meet the thresholds. The Commission recognized in its March 1999 rulemaking on HCSFO regulations that because financial assurance costs could be significant, it did not intend that satisfying financial assurance obligations create an undue financial burden upon producers. - Provide satisfactory assurance that closure obligations will be met by the permittee because a HCSFO with a financial test instrument must annually meet the thresholds. Code of Colorado Regulations 18 - With regard to the solvency test, reasonably ensures that a HCSFO currently has the ability to pay closure costs. Such ability is indicated by a 2.0 multiplier, according to the preamble for the April 7, 1982 federal financial assurance requirements for hazardous waste treatment, storage, and disposal facilities.
- With regard to the U.S. assets test, reasonably ensures Division accessibility to a permittee’s funds in the event of the HCSFO’s bankruptcy or other default with respect to facility closure. The Commission is aware that in order for a HCSFO to demonstrate that it meets the financial test thresholds, it must submit to the Division its financial statements, and that a HCSFO may want to protect these statements from being subject to disclosure under the Colorado Open Records Act (sections 214- 72-102 to 205, C.R.S.) (CORA); for example, the information could be detrimental to the HCSFO’s competitive position. Therefore, the Commission adopted language for Regulation No. 66 that addresses how a HCSFO can claim that certain information, including financial statements, are proprietary, confidential business information and should not be disclosed to the public under CORA. The Commission adopted language requiring a HCSFO to immediately report to the Division that it no longer meets the financial test threshold requirements, and requiring that such a HCSFO establish alternative financial assurance. The Commission emphasizes that it is imperative that a HCSFO maintain valid financial assurance so that the State of Colorado is protected from the costs of closure of an operation. Language also was adopted providing for the Division to request additional information from a HCSFO for the purpose of determining if the HCSFO continues to meet the financial test threshold requirements. The Commission encourages the Division to use common sense and sound judgment in determining when to request such additional information, and when a HCSFO no longer meets financial test threshold requirements.
The Commission is aware that subsidiary companies typically do not have their financial statements audited by a certified public accountant. In order to ensure that these financial statements reflect accurate information about the companies, the Commission adopted language requiring that financial statements of subsidiary companies be prepared in accordance with accounting principles acceptable to the Division. The Commission understands that a commonly accepted accounting principle tool are the Generally Accepted Accounting Principles (“GAAP” ) published by the Federal Accounting Standards Board. As a result, the Commission intends that GAAP are the preferred accounting principles, unless the Division accepts an equivalent or better tool.
Section 66.11 (Written Guarantee Criteria): A written guarantee is a financial assurance instrument that a permittee can obtain from an entity guaranteeing that it will properly close the permittee’s facility(ies) in the event that the permittee fails to do so. The criteria for this instrument in Regulation No. 66 was based on the Colorado Solid and Hazardous Waste Commission’s “Regulations Pertaining to Solid Waste Sites and Facilities” (6 CCR 1007-2). The Commission determined that it was appropriate to use the language from 6 CCR 1007-2 for the same reasons as discussed for sections 66.6 through 66.9, above. For the purpose of Regulation No. 66, the language from section 1.8 of 6 CCR 1007-2 was revised as appropriate to have it pertain to HCSFOs. In addition, the Commission adopted language that provides for an individual with a substantial business relationship with an applicant or permittee to be a guarantor. Appendices A through F (Wording for Six Financial Assurance Instruments): The language for the financial assurance instruments applicable to these appendices was taken from Appendix A of the Colorado Solid and Hazardous Waste Commission’s “Regulations Pertaining to Solid Waste Sites and Facilities” (6 CCR 1007-2). The Commission determined that it was appropriate to use the language from the Appendix A in 6 CCR 1007-2 for the same reasons as discussed for sections 66.6 through 66.9, above.
For the purpose of Regulation No. 66, the language from Appendix A in 6 CCR 1007-2 was revised as appropriate to have it pertain to HCSFOs, have it include needed clarifications, and to have it comply with the requirements of subsection 61.13(4)(h) of Regulation No. 61, as discussed for sections 66.6 through 66.9, above.
Code of Colorado Regulations 19 Appendices G and H (Wording for Financial Test and Written Guarantee Instruments): The Commission adopted these appendices because they are the product of language from the corresponding instruments in Appendix A in 6 CCR 1007-2 and of the Division’s discussions with stakeholders. PARTIES TO THE RULEMAKING HEARING 1. Colorado Livestock Association (CLA)
2. Mountain Prairie, LLC 3. Murphy-Brown of Yuma 4. M. Sue Jarrett 5. Seaboard Foods, LLC APPENDIX A Wording for Irrevocable Standby Letter of Credit A letter of credit must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:
We hereby establish our irrevocable standby letter of credit no. ______ in your favor, at the request and for the account of [permittee’s or applicant’s name and address] up to the aggregate amount of [in words] U.S. Dollars $ ______, available upon presentation of:
Code of Colorado Regulations 20 This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each successive expiration date, unless, at least 90 days before the current expiration date, we notify both you and [permittee’s or applicant’s name] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event you are so notified, any unused portion of the credit shall be available upon presentation of your sight draft and your signed statement in accordance with the requirements herein, for 90 days after the date of receipt by both you and [permittee’s or applicant’s name], as shown on the signed return receipts.
Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the specified amount of the draft directly into the standby trust fund of [permittee’s or applicant’s name], in accordance with your instructions, unless an alternate mechanism has been established by the State of Colorado to directly receive monies.
We hereby waive all rights of set off or liens against this letter of credit. We certify that the wording of this letter of credit is identical to the wording specified in Water Quality Control Commission Regulation No. 66 (5 CCR 1002-66) as constituted on the date shown immediately below.
[Signature(s) and title(s) of official(s) of issuing institution] [date] This credit is subject to [insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce," or "the Uniform Commercial Code"].
APPENDIX B Wording for a Trust Agreement A trust agreement for a trust fund must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: Trust Agreement Trust Agreement, the "Agreement", entered into as of [date] by and between [name of the permittee], a [name of state][insert "corporation", "partnership", "association", or "proprietorship"], the "Grantor", and [name of corporate trustee], [insert "incorporated in the State of Colorado" or "a national bank"], the "Trustee."
Whereas, the Colorado Department of Public Health and Environment, Water Quality Control Division, a regulatory agency of the State of Colorado, has established certain regulations applicable to the Grantor, requiring that a permittee or applicant for a housed commercial swine feeding operation shall provide assurance that funds will be available when needed for closure, post-closure, and corrective actions for the operation’s facilities; and, Whereas, the Grantor has elected to establish a trust to provide all or a part of such financial assurance for the facilities identified herein; and, Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee. Code of Colorado Regulations 21 Now, therefore, the Grantor and the Trustee agree as follows: Section 1. Definitions as used in this Agreement
Section 2. Identification of Facilities and Closure costs: This Agreement pertains to the facilities and associated closure, post-closure and corrective action costs identified on attached Schedule A [on Schedule A, for each facility list the name, address, and the closure costs, or portions thereof, for which financial assurance is demonstrated by this Agreement]. Section 3. Establishment of Fund: The grantor and the trustee hereby establish a trust fund, the "Fund", for the benefit of the Colorado Department of Public Health and Environment, Water Quality Control Division. The grantor and the trustee intend that no third party have access to the fund except as herein provided. The fund is established initially as consisting of the property which is acceptable to the trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the trustee is referred to as the fund, together with all earnings and profits thereon, less any payments or distributions made by the trustee pursuant to this Agreement. The fund shall be held by the trustee, IN TRUST, as hereinafter provided. The trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the grantor, any payments necessary to discharge any liabilities of the grantor established by the Division.
Section 4. Payment for Closure, Post-Closure, and/or Corrective Actions: The trustee shall make payments from the fund as the Division shall direct, in writing, to provide for the payment of the costs of closure, post-closure, and/or corrective actions for the facility(ies) covered by this Agreement. The trustee shall reimburse the grantor or other persons as specified by the Division from the fund for closure, post- closure, and/or corrective action expenditures in such amount as the Division shall direct in writing. In addition, the trustee shall refund to the grantor such amounts as the Division specifies in writing. Upon refund, such funds shall no longer constitute part of the fund as defined herein. Section 5. Payment Comprising the Fund: Payments made to the trustee for the fund shall consist of cash or securities acceptable to the trustee.
Section 6. Trustee Management: The trustee shall invest and reinvest the principal and income of the fund and keep the fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the grantor may communicate in writing to the trustee from time to time, subject, however, to the provisions of this Section 6. In investing reinvesting, exchanging, selling, and managing the fund, the trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that:
Code of Colorado Regulations 22
Section 12. Trustee Compensation: The trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the grantor. Section 13. Successor Trustee: The trustee may resign or the grantor may replace the trustee, but such resignation or replacement shall not be effective until the grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the trustee hereunder. Upon the successor trustee's acceptance of the appointment, the trustee shall assign, transfer and pay over to the successor trustee the funds and properties then constituting the fund. If for any reason the grantor cannot or does not act in the event of the resignation of the trustee, the trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes the administration of the trust in a writing sent to the grantor, the Division, and the present trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the trustee as a result of any of the acts contemplated by this Section 13 shall be paid as provided in Section 9.
Section 14. Instructions to the Trustee: All orders, requests, and instructions by the grantor to the trustee shall be in writing, signed by such persons as are designated in the attached Exhibit A or such other designees as the grantor may designate by amendment to Exhibit A. The trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by the Division to the trustee shall be in writing, signed by the director or his designees, and the trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the grantor or Division hereunder has occurred. The trustee shall have no duty to act in the absence of such orders, requests, and instructions from the grantor and/or the Division, except as provided for herein.
Section 15. Notice of Nonpayment: The trustee shall notify the grantor and the Division, by certified mail within 10 days following the expiration of the 30-days period after the anniversary of the establishment of the trust, if no payment is received from the grantor during that period. After the pay-in period is completed, the trustee shall not be required to send a notice of nonpayment. Section 16. Amendment of Agreement: This Agreement may be amended by an instrument in writing executed by the grantor, the trustee, and the Division, or by the trustee and the Division if the grantor ceases to exist.
Section 17. Irrevocability and Termination: Subject to the right of the parties to amend this Agreement as provided in Section 16, this trust shall be irrevocable and shall continue until terminated at the written agreement of the grantor, the trustee and the Division (upon 90 days prior written notice having been given to the Division and the Division has given written consent to terminate the Agreement), or by the trustee and the Division, if the grantor ceases to exist. Upon termination of the trust, all remaining trust property, less final trust administration expenses, shall be delivered to the grantor. Code of Colorado Regulations 24 Section 18. Immunity and Indemnification: The trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this trust, or in carrying out any directions by the grantor or the Division issued in accordance with this Agreement. The trustee shall be indemnified and saved harmless by the grantor or from the trust fund, or both, from and against any personal liability to which the trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the grantor fails to provide such defense.
Section 19. Choice of Law: This Agreement shall be administered, construed, and enforced according to the laws of the State of Colorado.
Section 20. Interpretation: As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. In witness whereof the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the date first above written: The parties below certify that the wording of this Agreement is identical to the wording specified in these regulations were constituted on the date first above written.
Section 21. Waiver of Rights: The trustee waives all rights of set off or liens against this Agreement. [Signature of grantor] [Title] [Seal] Attest: [Signature of attestor] . [Title] [Signature of trustee] [Name of trustee] [Title] [Seal] Attest: [Signature of attestor] . [Title] (B) The following is an example of the certification of acknowledgment which must accompany the trust agreement for a trust fund.
Code of Colorado Regulations 25 [Signature of notary public] APPENDIX C Wording for Standby Trust Agreement A trust agreement for a standby trust fund must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: Standby Trust Agreement Standby Trust Agreement, the "Agreement", entered into as of [date] by and between [name of the permittee], a [name of state] [insert "corporation", "partnership", "association", or "proprietorship"], the "Grantor", and [name of corporate Trustee], [insert "incorporated in the State of Colorado" or "a national bank"], the "Trustee."
Whereas, the Colorado Department of Public Health and Environment, Water Quality Control Division, a regulatory agency of the State of Colorado, has established certain regulations applicable to the Grantor, requiring that a permittee or an applicant for a housed commercial swine feeding operation shall provide assurance that funds will be available when needed for closure, post-closure, and corrective actions for the operation; and, Whereas, the Grantor has elected to establish a standby trust to provide all or a part of such financial assurance for the facility(ies) identified herein; and, Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee; and, Now, therefore, the Grantor and the Trustee agree as follows: Section 1. Definitions as used in this Agreement (a) The term "Grantor" means the permittee or applicant who enters into this Agreement and any successors or assigns of the Grantor.
(b) The term "Trustee" means the trustee who enters into this Agreement and any successor Trustee. Section 2. Identification of Facilities and Closure costs: This Agreement pertains to the facility(ies) and associated closure, post-closure, and corrective action costs identified on attached Schedule A [on Schedule A, for each facility list the name, address, and the closure, post-closure, and corrective action costs, or portions thereof, for which financial assurance is demonstrated by this Agreement]. Section 3. Establishment of Fund: The grantor and the trustee hereby establish a trust fund, the "Fund", for the benefit of the Colorado Department of Public Health and Environment, Water Quality Control Division. The grantor and the trustee intend that no third party have access to the fund except as herein provided. The fund is established initially as consisting of the property which is acceptable to the trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the trustee is referred to as the fund, together with all earnings and profits thereon, less any payments or distributions made by the trustee pursuant to this Agreement. The fund shall be held by the trustee, IN TRUST, as hereinafter provided. The trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the grantor, any payments necessary to discharge any liabilities of the grantor established by the Division.
Code of Colorado Regulations 26 Section 4. Payment for Closure, Post-Closure, and/or Corrective Actions: The trustee shall make payments from the fund as the Division shall direct, in writing, to provide for the payment of the closure, post-closure, and corrective action costs for the facility(ies) covered by this Agreement. The trustee shall reimburse the grantor or other persons as specified by the Division from the fund for closure, post- closure, and/or corrective action expenditures in such amount as the Division shall direct in writing. In addition, the trustee shall refund to the grantor such amounts as the Division specifies in writing. Upon refund, such funds shall no longer constitute part of the fund as defined herein. Section 5. Payment Comprising the Fund: Payments made to the trustee for the fund shall consist of cash or securities acceptable to the trustee.
Section 6. Trustee Management: The trustee shall invest and reinvest the principal and income of the fund and keep the fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the grantor may communicate in writing to the trustee from time to time, subject, however, to the provisions of this Section 6. In investing reinvesting, exchanging, selling, and managing the fund, the trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that:
(a) Securities or other obligations of the grantor, or any other permittee of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 80A-2.(a), shall not be acquired or held, unless they are securities or other obligations of the Federal or a State government;
(b) The trustee is authorized to invest the fund in time or demand deposits of the trustee, to the extent insured by an agency of the Federal or State government; and (c) The trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon. Section 7. Commingling and Investment: The trustee is expressly authorized in its discretion:
(a) To transfer from time to time any or all of the assets of the fund to any common, commingled, or collective trust fund created by the trustee in which the fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and (b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80A-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the trustee. The trustee may vote such shares in its discretion.
Section 8. Express Powers of Trustee: Without in any way limiting the powers and discretions conferred upon the trustee by the other provision of this Agreement or by law, the trustee is expressly authorized and empowered:
(a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition;
(b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted;
Code of Colorado Regulations 27 (c) To register any securities held in the fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the trustee shall at all times show that all such securities are part of the fund;
(d) To deposit any cash in the fund in interest-bearing accounts maintained or savings certificates issued by the trustee, in its separate corporate capacity, or in any other banking institution affiliated with the trustee, to the extent insured by an agency of the Federal or State government; and (e) To compromise or otherwise adjust all claims in favor of or against the fund. Section 9. Taxes and Expenses: All taxes of any kind that may be assessed or levied against or in respect of the fund and all brokerage commissions incurred by the fund shall be paid from the fund. All other expenses incurred by the trustee in connection with the administration of this trust, including fees for legal services rendered to the trustee, the compensation of the trustee to the extent not paid directly by the grantor, and all other proper charges and disbursements of the trustee shall be paid from the fund. Section 10. Advice of Counsel: The trustee may from time to time consult with counsel, who may be counsel to the grantor, with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. The trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel.
Section 11. Trustee Compensation: The trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the grantor. Section 12. Successor Trustee: The trustee may resign or the grantor may replace the trustee, but such resignation or replacement shall not be effective until the grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the trustee hereunder. Upon the successor trustee's acceptance of the appointment, the trustee shall assign, transfer and pay over to the successor trustee the funds and properties then constituting the fund. If for any reason the grantor cannot or does not act in the event of the resignation of the trustee, the trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes the administration of the trust in a writing sent to the grantor, the Division, and the present trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the trustee as a result of any of the acts contemplated by this Section 12 shall be paid as provided in Section 9.
Section 13. Instructions to the Trustee: All orders, requests, and instructions by the grantor to the trustee shall be in writing, signed by such persons as are designated in the attached exhibit A or such other designees as the grantor may designate by amendment to Exhibit A. The trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by the Division to the trustee shall be in writing, signed by the director or his designees, and the trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the grantor or Division hereunder has occurred. The trustee shall have no duty to act in the absence of such orders, requests, and instructions from the grantor and/or the Division, except as provided for herein.
Code of Colorado Regulations 28 Section 14. Amendment of Agreement: This Agreement may be amended by an instrument in writing executed by the grantor, the trustee, and the Division, or by the trustee and the Division if the grantor ceases to exist.
Section 15. Irrevocability and Termination: Subject to the right of the parties to amend this Agreement as provided in Section 14, this trust shall be irrevocable and shall continue until terminated at the written agreement of the grantor, the trustee and the Division (upon 90 days prior written notice having been given to the Division and the Division has given written consent to terminate the Agreement), or by the trustee and the Division, if the grantor ceases to exist. Upon termination of the trust, all remaining trust property, less final trust administration expenses, shall be delivered to the grantor. Section 16. Immunity and Indemnification: The trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this trust, or in carrying out any directions by the grantor or the Division issued in accordance with this Agreement. The trustee shall be indemnified and saved harmless by the grantor or from the trust fund, or both, from and against any personal liability to which the trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the grantor fails to provide such defense.
Section 17. Choice of Law: This Agreement shall be administered, construed, and enforced according to the laws of the State of Colorado.
Section 18. Interpretation: As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. In witness whereof the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the date first above written: The parties below certify that the wording of this Agreement is identical to the wording specified in Water Quality Control Commission Regulation No. 66 (5 CCR 1002-66) as constituted on the date first above written.
Section 19, Waiver of Rights: The trustee waives all rights of set off or liens against this Agreement. [Signature of grantor] [Title] [Seal] Attest: [Signature of attestor] . [Title] [Signature of trustee] [Name of trustee] [Title] [Seal] Attest: [Signature of attestor] . [Title] Code of Colorado Regulations 29 (B) The following is an example of the certification of acknowledgment which must accompany the trust agreement for a trust fund.
Whereas said principal is required, under the Colorado regulations pertaining to housed commercial swine feeding operations, to have a permit in order to own or operate each housed commercial swine feeding operation facility identified above; and, Whereas said principal is required to provide financial assurance for closure, post-closure, and corrective actions, as a condition of the permit; and, Whereas said principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance, unless an alternate mechanism has been established by the State of Colorado to directly receive monies.
Now, therefore, the conditions of the obligation are such that if the principal shall faithfully, before the beginning of final closure of each facility identified above, fund the standby trust fund in the amount(s) identified above for the facility(ies);
Or, if the principal shall fund the standby trust fund in such amount(s) within 15 days after an order to begin closure is issued by the Division or a U.S. District court or other court of competent jurisdiction; Or, if the principal shall provide alternate financial assurance, as specified in these regulations and obtain the Division's written approval of such assurance, within 60 days after the date notice of cancellation is received by both the principal and the Division from the surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect. The surety(ies) shall become liable on this bond obligation only when the principal has failed to fulfill the conditions described above. Upon notification by the Division that the principal has failed to perform as guaranteed by this bond, the surety(ies) shall place funds in the amount guaranteed for the operation(ies) into the standby trust fund as directed by the Division. The liability of the surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the surety(ies) hereunder exceed the amount of said penal sum.
The surety(ies) may cancel or terminate the bond by sending notice of cancellation by certified mail to the principal and to the Division at least 90 days prior to cancellation, provided, however, that cancellation shall not occur during the 90 days beginning on the date of receipt of the notice of cancellation by both the principal and the Division, as evidenced by the return receipts, and the Division has given written consent to terminate the bond.
The surety(ies) waive all rights of set off or liens against the bond. In witness whereof, the principal and surety(ies) have executed this financial guarantee bond and have affixed their seals on the date set forth above.
Code of Colorado Regulations 31 The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the principal and surety(ies) and that the wording of this surety bond is, at minimum, identical to the wording specified in Water Quality Control Commission Regulation No. 66 (5 CCR 1002- 66) as constituted on the date this bond was executed.
Principal [Signature(s)] [Name(s)] [Title(s)] [Corporate seal] Corporate Surety(ies)
Whereas said principal is required, under the Colorado regulations pertaining to housed commercial swine feeding operations, to have a permit in order to own or operate each facility identified above, and, Whereas said principal is required to provide financial assurance for closure, post-closure, and corrective actions, as a condition of the permit; and, Whereas said principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance, unless an alternate mechanism has been established by the State of Colorado to directly receive monies.
Now, therefore, the conditions of this obligation are such that if the principal shall faithfully perform closure, post-closure, and corrective actions whenever required to do so, of each facility for which this bond guarantees such actions, in accordance with the approved financial assurance plan and other requirements of the permit;
Or, if the principal shall provide alternate financial assurance as specified in these regulations, and obtain the Division's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the principal and the Division from the surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect. The surety(ies) shall become liable on this bond obligation only when the principal has failed to fulfill the conditions described above.
Code of Colorado Regulations 33 Upon notification by the Division that the principal has been found in violation of the closure, post-closure, and corrective action requirements of these regulations, for a facility(ies) for which this bond guarantees performances of closure, post-closure, and corrective actions, the surety(ies) shall either perform closure, post-closure, and corrective actions in accordance with the approved financial assurance plan and other permit requirements, or place the closure costs guaranteed for the facility into the standby trust fund as directed by the Division.
Upon notification by the Division that the principal has failed to provide alternate financial assurance that meets the requirements of subsections 61.13(4)(h)(iii)-(iv) of Regulation No. 61, and obtain written approval of such assurance from the Division during the 60 days following receipt by both the principal and the Department of a notice of cancellation of the bond, the surety(ies) shall place funds in the amount guaranteed for the facility(ies) into the standby trust fund as directed by the Division. The surety(ies) hereby waive(s) notification of amendments to financial assurance plans, permits, applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond.
The liability of the surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the surety(ies) hereunder exceed the amount of said penal sum.
The surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the owner or operator and to the Division provided, however, that cancellation shall not occur during the 90 days beginning on the date of receipt of the notice of cancellation by both the principal and the Division, as evidenced by the return receipts.
The principal may terminate this bond by sending written notice to the surety(ies), provided, however, that no such notice shall become effective until the surety(ies) receive(s) written authorization for termination of the bond by the Division.
In witness whereof, the principal and surety(ies) have executed this performance bond and have affixed their seals on the date set forth above.
The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the principal and surety(ies) and that the wording of this surety bond is, at minimum, identical to the wording specified in the Water Quality Control Commission Regulation No. 66 (5 CCR 1002-66) as constituted on the date this bond was executed. Principal [Signature(s)] [Name(s)] [Title(s)] [Corporate seal] Corporate Surety(ies)
Code of Colorado Regulations 34 Liability limit: $ [Signature(s)] [Name(s) and title(s)] [Corporate seal] [For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for surety above.] Bond premium: $ APPENDIX F Wording for Insurance Certificate The standard insurance industry certificate of insurance form (ACORD form), as prescribed by the Colorado Insurance Commission, shall be used to evidence coverage for closure, post-closure, and corrective action costs for the permittee or applicant. The following information is to be included in the certificate of insurance:
(1) Name, address, and telephone number of agency; and the underwriter.
(2) Name of facilities being covered (if list is too long additional pages may be attached).
(3) Indication of type of coverage (closure, post-closure and corrective actions).
(4) Amount of coverage (closure costs or closure, post-closure and/or corrective action).
(5) A statement of certification, in the comment section, worded as follows: "This certificate certifies that the policy to which this certificate applies, provides coverage for closure, post-closure, and/or closure action in connection with the insured's obligation to demonstrate financial assurance under section 61.13 of 5 CCR 1002-61, as amended (Colorado Discharge Permit System Regulations).
(6) A statement indicating that the insurer waives all rights of set off or liens against the policy.
(7) A statement indicating that the policy will not be cancelled by the insurer unless 90 days prior written notice is given to the Division.
(8) Authorized company representatives' signature.
APPENDIX G Wording for Financial Test Letter from a Public Company A financial test letter from a public company must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. Director Colorado Department of Public Health and Environment Code of Colorado Regulations 35 Environmental Agriculture Program OE-B2 4300 Cherry Creek Drive South Denver, CO 80246-1530 Re: [Applicant or Permittee Name] [Permit No.] Dear Sir or Madam:
I am the chief financial officer of [Applicant or Permittee Name]. This letter is in support of [Applicant or Permittee Name]’s use of the financial test to demonstrate financial assurance for closure costs, in accordance with subsection 61.13(4)(h) of the Colorado Water Quality Control Commission’s (Commission’s) Colorado Discharge Permit System Regulations (5 CCR 1002-61) and section 66.10 of the Commission’s Financial Assurance Criteria Regulations (5 CCR 1002-66). [Applicant or Permittee Name] is the owner or operator of the following housed commercial swine feeding operation facilities in Colorado under [permit number(s)] for which all or a portion of financial assurance for closure costs is demonstrated through the financial test: [list facilities] The following information is applicable to the above facilities:
I am the [Officer’s Title] of [Applicant or Permittee Name] who has financial responsibility for [Applicant or Permittee Name] and is authorized to bind [Applicant or Permittee Name]. The [Applicant or Permittee Name] is a subsidiary of [Parent Company’s Name]. This letter is in support of [Applicant or Permittee Name]’s use of the financial test to demonstrate financial assurance for closure costs, in accordance with subsection 61.13(4)(h) of the Colorado Water Quality Control Commission’s (Commission’s) Colorado Discharge Permit System Regulations (5 CCR 1002-61) and section 66.10 of the Commission’s Financial Assurance Criteria Regulations (5 CCR 1002-66).
[Applicant or Permittee Name] is the owner or operator of the following housed commercial swine feeding operation facilities in Colorado under [permit number’s], for which all or a portion of financial assurance for closure costs is demonstrated through the financial test: [list facilities] The following information is applicable to the above facilities:
I am the [Officer’s Title] of [Applicant or Permittee Name] who has financial responsibility for [Applicant or Permittee Name] and is authorized to bind [Applicant or Permittee Name]. This letter is in support of [Applicant or Permittee Name]’s use of the financial test to demonstrate financial assurance for closure costs, in accordance with the Colorado Water Quality Control Commission’s (Commission’s) Colorado Discharge Permit System Regulations (5 CCR 1002-61) and section 66.10 of the Commission’s Financial Assurance Criteria Regulations (5 CCR 1002-66).
[Applicant or Permittee Name] is the owner or operator of the following housed commercial swine feeding operation facilities in Colorado under [permit number’s] for which all or a portion of financial assurance for closure costs is demonstrated through the financial test: [list facilities] The following information is applicable to the above facilities:
I declare that the statements, financial values, and other facts stated herein are true and correct. I acknowledge that making a false, fictitious, or fraudulent statement in the letter is punishable under the criminal laws of Colorado as perjury under section 18-8-503, C.R.S. [Signature] [Name] [Title] [Date] Enc: Fiscal year [Year] Financial Statements APPENDIX J Wording for Written Guarantee Letter Code of Colorado Regulations 39 A written guarantee letter must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. Director Colorado Department of Public Health and Environment Environmental Agriculture Program OE-B2 4300 Cherry Creek Drive South Denver, CO 80246-1530 Re: [Applicant or Permittee Name] [Permit No.] Dear Sir or Madam:
I am [Select one of the following: 1) the [Officer’s Title] of [Company Name] who has financial responsibility for [Company Name] and is authorized to bind [Company Name]; or, 2) an individual with a substantial business relationship with the [Applicant or Permittee] (i.e., an individual guarantor)]. The legal contact address for [Company Name, or Individual Name] is: [Address]. This letter is in support of [Applicant or Permittee]’s use of the written guarantee to demonstrate financial assurance for closure costs, in accordance with subsection 61.13(4)(h) of the Colorado Water Quality Control Commission’s (Commission’s) Colorado Discharge Permit System Regulations (5 CCR 1002-61) and section 66.11 of the Commission’s Financial Assurance Criteria Regulations (5 CCR 1002-66). This guarantee made this [date] by [Name of Guaranteeing Entity], [an individual guarantor; or, a company organized under the laws of the State of [Name of State]], herein referred to as guarantor, to the Colorado Department of Public Health and Environment’s Environmental Agriculture Program (Program), oblige, on behalf of [Applicant or Permittee], which is [Select one of the following: “our subsidiary company” ; or, “an entity with which the guarantor has a substantial business relationship” ], to meet the requirements of section 66.11. [If applicable, describe the substantial business relationship]. Recitals Guarantor guarantees to the Program that, in the event that [Applicant or Permittee] fails to perform closure, post-closure activities, and any necessary corrective actions for any of [Applicant or Permittee]’s housed commercial swine feeding operation facility(ies) listed below in accordance with [Applicant or Permittee]’s approved financial assurance plan, permit, and/or as required by the Program, the guarantor shall do so or establish a trust fund in the name of [Applicant or Permittee] in the amount of all or an applicable portion of the closure costs. [Applicant or Permittee] owns or operates the following housed commercial swine feeding operation facilities in Colorado under [Permit Number(s)] for which all or a portion of financial assurance for closure costs is guaranteed: [List Facilities]
Code of Colorado Regulations 41