1. (A) The manufacturer of a passive soil-based on-site disposal system shall provide to the department evidence of financial assurance in the form of a bond, letter of credit, cash escrow, or other assurance acceptable to the department in the initial amount of one hundred thousand dollars, which must be available for payment of unsatisfied final judgments for warranty claims by the property owner if the manufacturer refuses to pay a legitimate warranty claim or claims or is financially unable to honor the warranty required after a court of competent jurisdiction or arbitrator has rendered a final judgment or decision against the manufacturer. The manufacturer shall deliver to the department evidence of the annually revised financial assurance amount based on the following formula on or before December 31 of the year preceding the year for which the financial assurance is required. A failure rate of three percent and a repair cost of two thousand five hundred dollars must be assumed until data are available from systems installed in this State that indicate a different failure rate or repair cost should be used for a particular system. The manufacturer is responsible for collecting and reporting the data used to calculate the number of systems installed in this State each year. The amount of financial assurance must be increased from the initial amount of one hundred thousand dollars, as necessary, based on the following formula:

   FA=NxFxC

   Where FA is the financial assurance amount in dollars;

   N is the number of systems installed in this State over the previous five years; F is the failure rate of the system by percentage; and

   C is the average cost of repair.

2. (B) The department may require an amount of financial assurance in excess of the amount calculated pursuant to the formula in subsection (A) if the department documents excessive, unsatisfied warranty claims which make the amount of financial assurance as calculated inadequate. The department may rescind approval of any product which the department documents as having a failure rate greater than that of a conventional gravel trench. The department must waive the financial assurance requirements calculated pursuant to the formula in subsection (A) if the failure rates do not exceed those of conventional gravel systems as set forth in subsection (D).
3. (C) Licensed septic tank contractors and manufacturers shall file monthly reports of all repairs of on-site wastewater systems with the department's Division of On-site Wastewater Management on a form provided by the department.
4. (D) The department shall conduct a review of all documented failures of on-site wastewater systems beginning five years after this act's effective date. Subsequent reviews may be conducted at more frequent intervals thereafter. If at any time after five years from this act's effective date, the department determines that the documented failure rates of any specific manufactured brand of passive soil-based on-site disposal system exceeds that of conventional gravel on-site wastewater systems, the department shall eliminate allowances for reduction in sizing as set forth in Section 44-55-1330(3)(b) for that specific system or product. A failing system must be defined as a passive on-site disposal system or conventional gravel system where wastewater has discharged to the surface of the ground or backed up into the dwelling.

HISTORY: 2003 Act No. 49, Section 1, eff June 6, 2003.