1. (a) An owner or operator may satisfy the requirements of financial assurance for closure by obtaining insurance which conforms to the requirements of this section, in addition to the requirements specified in Subchapters A and B of this chapter (relating to General Financial Assurance Requirements and Financial Assurance Requirements for Closure), and submitting an originally signed certificate to the executive director.
2. (b) 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 one or more states.
3. (c) The wording of the certificate of insurance must be identical to the wording specified in §37.341 of this title (relating to Certificate of Insurance).
4. (d) The insurance policy must be issued for a face amount at least sufficient to satisfy the requirements for which financial assurance for closure is required, or when a combination of mechanisms are used in accordance with §37.41 of this title (relating to Use of Multiple Financial Assurance Mechanisms), the face amount plus the amount of the combined mechanism(s) must be at least equal to the current closure cost estimate. Actual payments by the insurer shall not change the face amount, although the insurer's future liability shall be lowered by the amount of the payments.
5. (e) For a claims-made insurance policy, the owner or operator shall place in escrow, as instructed by the executive director, an amount sufficient to pay an additional year of premiums for renewal of the policy. When the owner or operator fails to provide an alternate financial assurance mechanism, the executive director may use these funds to renew the policy.
6. (f) The insurance policy must guarantee that funds shall be available whenever needed to fulfill obligations of the insured under this chapter. The policy shall also guarantee that once closure of a facility for which closure insurance was provided begins, the issuer shall be responsible for paying out funds, up to an amount equal to the face amount of the policy, upon the direction of the executive director, to such party or parties as the executive director specifies.
7. (g) After beginning closure of a facility, an owner or operator or any other person authorized to perform closure may request reimbursement for closure expenditures by submitting itemized bills to the executive director. Within 60 days after receiving bills for closure activities, the executive director shall determine whether the closure expenditures are in accordance with the closure plan or the closure requirements, and if so, he shall instruct the insurer to make reimbursement in such amounts as the executive director specifies in writing. If the executive director has reason to believe that the cost of closure will be significantly greater than the face amount of the policy, he may withhold reimbursement of such amounts as he deems prudent until he determines, in accordance with Subchapters A and B of this chapter, that the owner or operator is no longer required to maintain general financial assurance requirements for the facility. If the executive director does not instruct the insurer to make such reimbursements, he shall provide the owner or operator with a detailed written statement of reasons.
8. (h) The owner or operator must maintain the policy in full force and effect until the executive director consents to termination of the policy by the owner or operator as specified in Subchapter A of this chapter. Failure to pay the premium, without substitution of alternate financial assurance as specified in this subchapter, shall constitute a violation of these regulations, warranting such remedy as the executive director deems necessary. Such violation shall be deemed to begin upon receipt by the executive director of a notice of cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration of the policy.
9. (i) The 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 shall, at a minimum, provide the insured with the mechanism 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, terminate, or fail to renew the policy by sending notice by certified mail to the owner or operator and the executive director. Cancellation, termination, or failure to renew may not occur, however, during 120 days beginning with the date of receipt of the notice by both the executive director and the owner or operator, as evidenced by the return receipts.

10. (j) Cancellation, termination, or failure to renew may not occur and the policy shall remain in full force and effect in the event that on or before the date of expiration:

    1. (1) the executive director deems the facility abandoned; or
    2. (2) the registration or permit expires, is terminated, or revoked, or a new or renewal registration or permit is denied; or
    3. (3) closure is ordered by the executive director of the commission or by a United States district court or other court of competent jurisdiction; or
    4. (4) the owner or operator is named as debtor in a voluntary or involuntary proceeding under Title 11 (Bankruptcy), United States Code; or
    5. (5) the premium due is paid.
11. (k) Each policy must contain a provision allowing assignment of the policy to a successor owner or operator. Such assignment may be conditional upon consent of the insurer, provided such consent is not unreasonably refused.

Source Note:The provisions of this §37.241 adopted to be effective December 30, 1996, 21 TexReg 12297.