ILLINOIS POLLUTION CONTROL BOARD

December 27,

1984

IN THE MATTER

OF:

FINANCIAL ASSURANCE

FOR

CLOSURE

)

R84-22A

AND POST-CLOSURE CARE

OF WASTE

)

DISPOSAL SITES

(EMERGENCY RULES)

)

IN

TI.~E

MATTER OF:

)

FINANCIAL

ASSURANCE FOR CLOSURE

)

R84-~2B

AND POST-CLOSURE

CARE

OF

WASTE

)

DISPOSAL

SITES

(TEMPORARY RULES)

)

FINAL ORDERS

ADOPTED

EMERGENCY RULE

(R84-22A)

PROPOSED RULE~

SECOND NOTICE

(R84-22B)

OPINION OF THE

BOARD

(by J~Anderson):

This Opinion

supports the Board~sOrder of this

same

date adopting emergency rules

and sending regular rules

to

Second Notice~

Public Act

83-775 became effective on September 24,

1983,

Provisions

of

this law, which are fully set out

below,

prohibit

certain non-hazardous waste disposal

opera-

tions after March

1,

1985 without a performance bond

or

other security

for the purpose of insuring closure of the

site and post~closure1care in

accordance with the Environ-

mental Protection Act

and Board

rules~

Section 21,1(b)

of

the Act requires the Board to adopt by January

1,

1985 rules

which specify the type and amount of the bonds or other

securities

•On June

8,

1984 the Board opened this Docket for the

purpose of promulgating regulations implementing P,A,

83-

775,

On Ju~y19,

1984 the Board proposed such as amendments

to Part 807

The proposal appear•.d at

8 Ili~Reg, 14145,

August•~

10,

1984,

On August

2, 1984 the Board authorized the hearing

officer to seek outside expertise to assist in developing

the record,

Another Board Assistant, who had not been

directly involved in development of the proposal and t~sti-

mony, acted as hearing officer at the formal hearings,

1”Act”:

Ill, Rev, Stat, i983, ch~ 111½, parse

1001 et seq,

otherwise indicated, references

to “Sections”

or “Parts” are to Illinois Administrative Code, Title 35~

3The Board appreciates the assistance of Morton

F.

Dorothy

in drafting these rules and of Marili McFawn in conducting the

hearings

---

—2—

The

Board

held five

hearings

as follows:

1,

September

7,

1984, Chicago

2,

September 17, 1984,

Springfield

3~

September 24, 1984, Chicago

4~

September 28, 1984, Carbondale

5~

October

9,

1984, Springfield

The following witnesses

testified, with

the

primary

area of testimony indicated:

l~

Morton Dorothy,

Pollution Control Board,

concerning

the overall outline of the proposal

(R~ 12),

2~

Douglas Andrews, ~

testifying

on behalf

of the

Illinois Chapter of the

National Solid Waste Manage-

ment Association

(NSWMA), concerning the number and

sizes of sites

(R,

171)

3,

Gary

Medler,

counsel

to the

Illinois Commissioner

of Banks and Trusts, concerning

trust funds and

letters of credit

CR.

206),

4,

Kenneth Smith, Deputy Director of the Illinois

Department of Insurance, concerning insurance and

bonds

(R.

220)

5~

Carol Lee,

from the United States Environmental

Protection Agency

(USEPA), testifying on behalf

of

NSWMA,

concerning

self-insurance

(R,

232)

6.

Paul Bailey, ICF~ Inca,

testifying at the behest

of the Board, concerning self-insurance

CR,

282)

7,

Thomas Golz,

from

USEPA,

testifying at the behest

of the Board, concerning self-insurance

CR,

531),

8~

Janes W, Morgan, testifying at the behest of the

Board, concerning the Wisconsin financial assurance

program

CR.

568),

9~

Charles Johnson, Technical Director of the NSWMA,

concerning interim closure plan rules (R~ 633),

10,

Joseph Benedict,

John Sexton Contractors, Inc~,

concerning interim

closure

plan rules

CR,

655).

11.

Patrick Lynch, P,E,,

testifying at

the behest of the

Board, concerning closure plans and cost estimates

CR,

681)

62~126

---

—3—

12.

David

C. Beck, P,E., testifying on behalf of NSWMA,

concerning closure plans and cost estimates

1032)

13.

James Ambroso, Land

& Lakes Company, testifying on

behalf of NSWNA concerning self-insurance

CR.

793).

14,

Larry Eastep, P.E.,

from the Illinois Environmental

Protection Agency

(IEPA or Agency), concerning

closure plans

and cost estimates and implementation

CR.

846)

15,

Sally

S. Whalen,

Illinois Manufacturers Association,

concerning

on-site exemptions and legislative

intent

CR.

988).

16.

John

L.

Kirby, Executive Director,

Illinois

Solid

Waste

Association

(ISWA), concerning interim

rules

CR,

1001)

Following

the

received the following written public comment:

1.

Illinois

Department of Insurance, August 10,

2.

Cecos International, September 7,

1984.

DuPage County Forest Preserve District~,September 19,

1984.

4,

GRCDA,

International Association of

Waste Management

Professionals,

September 7,

1984.

5.

Surety Association

of Illinois, October

18, 1984.

6.

Chicago Association

of Commerce

&

Industry,

October 19,

1984,

7,

John Sexton Contractors,

October

19,

1984,

8.

Granite City

Steel Division of National Steel

Corporation,

Interlake Inc., Keystone

Steel

& Wire

Company, LTV

Steel Company, Northwestern Steel

&

Wire Company,

and United States Steel Corporation,

October 25,

1984.

9.

Illinois Power

Company, October

25,

1984.

10.

Agency, October

26,

1984.

11,

NSWMA, October

26,

1984.

62427

---

—4—

Motions for

leave to file comments

late are granted,

The Board is

required to adopt rules by January

1,

1985;

yet, it

has not received an economic impact study.

The Board

will

therefore adopt emergency rules, and

send

temporary

rules

to second notice pursuant to Section 27(b)

and

27(c)

of the

Act.

The Board will split the docket

into

Subdockets R84-22A and R84-22B, with the former reserved

for

the

emergency

rules and the latter for the temporary rules.

The

existing

record in R84-22 is incorporated into

each

Subdocket.

There

are

a number of issues which, although they were

not

addressed in

this Docket adequately to allow the

Board

to adopt

regulations,

appear to merit further

consideration.

These

include

self-insurance for commercial

disposal sites,

financial guarantees by units of local government

and

establishment

of a risk pool to which operators

could contrib-

ute instead of

providing individual financial assurance,

The

Board will

shortly open a new docket and solicit

proposals

addressing these

issues.

At the

outset,

the Board notes that the scope

o~f

the

R84-l7 proceedings, or any other proceedings concerning

“Chapter

7 and 9,”

is not intended to be limited by any over-

lapping issues that may have been addressed in this R84-22

STATUTORY PROVISIONS.

The non-hazardous

waste

permit requirement is

contained

in Section

21(d)

of the Act, which reads as follows:

No

person shall:***

d.

Conduct any

waste—storage, waste-treatment,

or

waste—disposal operations:

1,

Without a permit granted by

the Agency or in

violation of any conditions imposed by

such

permit,

including periodic reports and

full

access to adequate records and the

inspection

of

facilities,

as may be necessary to assure

compliance

with

this Act and with regulations

and

standards adopted thereunder; provided,

however,

that no permit

shall

be required

for

any person

conducting a waste—storage,

waste—

treatment,

or waste—disposal operation for

wastes generated by such person~sown

activities

which are stored,

treated, or disposed

within

the site where such wastes are generated;

or,

2.

In violation of any

regulations or standards

62428

---

Thm~

~

sct’on

(d)

shall not apply to hazardous

waste.***

The x~

~nt

portions of

P.A. 83-775 are contained

in

Sectioi

~theAct,

which reads as follows:

~i

~on other

than the State of Illinois,

its

~

~

and

institutions, or a unit of local

~o,exr,pwnt shall

conduct any waste disposal

operation

r

r (~ter

March

1,

1985, which requires

a

permit

:ubsection

Cd) of Section 21 of this Act,

~

such

person has

posted with the Agency a

~nce

bond

or other security for the purpose

cing

closure

of the site and post-closure

c-

~.

accordance with this Act and regulations

AN Inereunder.

b,

Au

-.

usfore

January

1,

1985, the Board shall

a~cj~re~ulations

to

promote

the purposes of this

Stm:tlur

Without

limiting the generality of

this

aANi~.ir.

~.tj,

such

regulations may, among other

tAN ~

prescribe

the type and amount of the

pe~torriance

bonds or

other securities required

under subsection

(a)

of this Section, and the

~ndi

i~ons

under

which the State is entitled to

~ol1ect monies

from such performance bonds or

ther securities.

The bond amount shall be

directly

r~ated to the

design and volume of the waste

h~s~esi1

facility.

i

riereby

created within the State Treasury

cc

iii

I

u~dto be known as

the

“Landfill Closure

~i~A

?~~t

Closure

Fund”.

Any monies forfeited to

if Illinois from any performance bond or

~

inity required under this Section shall

~u AN the

“Landfill Closure and

Post-

I

rd” and shall, upon

approval by

the

‘r

and the

Director, be used by and under

~tion of the

Agency for the purposes for

AN performance

bond

or

other security was

d.

y is authorized to enter

into such

contracts

-

s~ mnents

as it may deem

necessary to carry

mrposes of this

Section.

Neither the

m~the Director, nor any

State employee

iiable

for any damages or injuries

arising

resulting

from any action taken under

e

t-.~

scy shall have

the authority to approve

or

A.

~u.

ie

any performance

bond or other security

n~rseantto

subsection

(a)

of this Section.

~u whose performance bond

or other security

-~

;coved by the

Agency may contest

the

62429

---

disapproval as

a permit

denial appeal

pursuant to

Section 40 of this Act.

f.

The Agency may establish such procedures as

it may

deem necessary for

the purpose of implementing

and

executing its

responsibilities under this

Section.

g.

Nothing in this Section

shall bar a

cause of

action by the

State for any other penalty or

relief provided by this Act or any other law,

OVERVIEW

The following is a brief summary of the rules and major

issues.

A detailed discussion appears below,

The rules implement the bond requirement of Section

21.1

of the Act by requiring the preparation

of

closure and

post—closure care plans, and cost estimates based on these

plans.

The operator is required to

provide

financial

assurance

in an amount equal to the cost estimate.

Financial

assurance can be given by several

mechanisms, including a

trust

fund,

surety bond,

letter of credit and closure

insur-

R84—17

The rules rely on the existing

closure and

post—closure

care

requirements for sanitary landfills in Part 807.

These

are

subject to revision in R84-l7.

Operators will be required

to

base cost estimates on the existing regulations pending

modification,

Operators may be required to update plans

in

the

future to meet new regulations, and to provide additional

financial assurance,

The rules primarily affect persons:

1)

who conduct a “disposal” operation or an “indefinite

storage operation”; and

2)

who are required to have a

permit (Section

21(d)

of the Act and Section

807,601);

and

3)

who receive waste for disposal or indefinite

storage on or after March 1,

1985; and

4)

who are not a governmental unit,

Persons with permits who conduct other types of waste

management operations,

such as treatment and storage, will

have

to comply with the general closure rules,

Those who

62430

---

—7—

have Section

21(d)

permits will be required to file

closure

plans with

their

next permit modification application (Section

807.205)

Persons who conduct waste management operations but are

exempt from the permit requirement must comply with the

general closure rules, but need not prepare plans or provide

financial assurance (Section 807.501).

Sites which

stop accepting waste for disposal or indefi-

nite storage

by

March

1,

1985, will not be required to

provide

financial assurance

(Section 807.601).

The governmental

units exemption applies only

to persons

which

“conduct” waste disposal

operations.

Private

contractors

who conduct

operations on a

site owned by local

government

must

provide financial

PHASE-IN PROVISIONS

Under

the rules

operators have three choices on

March

1,

1985.

They can

avoid the financial assurance requirement by

ceasing

to accept

waste and initiating closure pursuant to

existing

permit

conditions,

Alternatively, they can provide

financial assurance either by preparing a closure and post-

closure care plan and cost estimate, or by submitting a cost

estimate based on the interim formula (Section 807.624).

Operators who are not able to obtain financial assurance

may file

variance

petitions pursuant to Part 104.

Operators who utilize the interim formula will be

required

to prepare closure

and post—closure care

plans and

cost

estimates with

the next application to modify

the

permit,

or by March

SELF-INSURANCE

The

Board has

limited

self-insurance to those

operators

who

meet

the USEPA

financial test,

and who derive

less

than

half

their revenue from

waste disposal operations.

Self-

insurance

will

be

available to few,

if any,

sites,

since on-

site

disposal is not

subject to the permit or financial

assurance

requirement.

The Board has provided self-insurance

as an

option for

any on-site operators which might be subject

to the

permit

requirement, or for diversified firms which

also conduct

waste

disposal operations.

OTHER

FINANCIAL MECHANISMS

Several alternative

financial mechanisms were

suggested

at the

hearings.

These

included an escrow account, a

savings

account, a

cash deposit

with the Agency and a risk

pool

(R.

194,

237, 240,

242,

248,

279,

62-131

---

—8--

The escrow account is similar to a trust, and should be

available from basically the same banks at a similar cost.

A savings account

in the Agency’s name would not be secure

in the absence of a formal trust agreement stating the

trustee’s duties and preventing the operator’s creditors

from seizing the account.

A

cash deposit with the Agency might be a very desirable

mechanism.

It

would save operators administrative costs,

and give

the. State complete security.

However,

the landfill

closure and post-closure fund can receive only money which

is “forfeited,” and cannot refund money following proper

closure by the operator.

If the Board were to allow use of

the fund

as

a pooled trust fund, there would be a possibility

that the money would be treated as general revenue to the

State, and be unavailable for closure of any site

in the

absence of

an

appropriation,

Another possibility is establishment of a risk pooi

to

which each operator contributes during the active life

of

the site,

The Board lacks the authority to create

a fund

in

the State Treasury, and to obligate the State to pay money

out of such

a fund.

In addition,

this would require continuing

oversight of rates and an administrative apparatus to collect

premiums and handle claims, each of which would require express

SUBPART A:

Section 807,104

“Abandonment”

“Abandonment’1 means the failure to initiate closure

within

30 days after receipt of the “final volume of waste’.

Section 807.503 requires the operator to give notice

to the

Agency of

receipt

of a final volume within

30 days; Section

807.506

requires the

operator to initiate closure within the

same time period.

Abandonment is a condition which triggers

liability by financial institutions

(Sections 807.662 et

seq.)

(R.

16,

117,

141,

429,

496,

688,

Section 807.104

“Compaction”

A definition of “treatment”

appears below.

“Treatment”

includes “reduction in volume.”

the definition of “treatment”

in the definition of “compac-

tion”

(R.

16,

Section 807.104

terminology which is described below

(R.

16),

62-132

---

—9—

Section 807104

“Disposal”

Section 21(d)

of the Act requires a permit for anyone

who conducts a “waste-storage, waste-treatment, or waste-

disposal operation,” with certain exemptions.

Section 21,1(a)

prohibits the conduct of any waste disposal operation, for

which

a permit is required, without a performance bond or

other security.

The definition of disposal

is therefore

essential to the scope of the permit requirement and to the

decision

as

to which sites must provide financial assurance

(R.

17)

The definition is taken from Section

3 of the Act, with

the final sentence added:

“As used in this Part,

‘disposal’

includes methods of storage or treatment in which there

is

no certain plan to remove wastes or waste residues from

the

storage or

treatment

unit to another unit for ultimate

disposal.”

“Indefinite storage” has been defined below to

cover situations in which there

is a plan, but there may be

technical or economic obstacles to actually implementing

the

plan.

Persons

who store waste with no plan for disposal, or

with an

unworkable

plan, will have to provide financial

assurance as though they were operating disposal sites

(R.

428,

434,

439,

445, 447,

456,

462,

Section 807.104

“Facility”

As used presently in Part 807

“facility” refers to a

portion of a “site” used for a regulated activity.

This

conflicts with the usage in the RCRA program in which a

“facility”

is roughly equivalent to the entire “site”

(Section 720.110)

The Board has replaced “facility”

with

“unit” as

the

preferred term to be used when referring to

a

portion

of

a “site”

CR.

17),

Section

807.104

“Final

Volume of Waste”

A quantity of

waste

is

assumed to be the “final

volume”

if

the

operator

receives no additional waste

within

30 days

thereafter

The

operator can overcome the presumption

by

demonstrat:Lng

that

he

expects additional waste

CR.

429).

Receipt of

the final

volume starts the

30 day period

in

which

the operator

must notify the Agency and initiate

closure

(Sections

807.505 and 807,506).

Failure to do

so is

“abandonment” which is a condition triggering liability by a

financial

institution

(Sections 807.662 et seq.).

Abandonment of a general waste site is likely to consist

of cessation

of

activity because of financial difficulty,

or,

in the

case of very small

sites, the death or illness of a

sole

proprietor.

The site

will be left unattended,

with

open

dumping

of

refuse without

compaction or daily cover

(R.

786,

966).

Such

waste

would not be received “by

the

62-133

---

—10—

and would not affect the question of whether an earlier

volume was

a “final volume”.

Section 807.104

“Hazardous Waste”

This definition controls the exclusion of “hazardous

waste” from the permit requirement of Section 21(d)

of the

Act.

The Board has incorporated the elaborate definition of

Part

721.

This

definition

is

not

identical

to

the

definition

in the Act.

The Board was obliged to adopt the Part 721

definition pursuant to Section 22.4(a) of the Act.

It fixes

the scope of the RCRA permit requirement of Section 21(f)

of

the Act.

Utilizing the same definition of hazardous waste

here

assures

that

waste

which

is

exempt

from

the

Section

21(d)

permit is within the Section 21(f)

RCRA permit require-

ment

CR.

17)

Section 807.104

“Indefinite Storage”

“Indefinite storage” is

a type of “treatment” or “storage”

in which the operator has a plan to remove wastes or residues

from the unit, but technical or economic considerations may

make it difficult to remove the wastes or residues prior to

closure.

Wastes are presumed to be in indefinite storage if

they remain in

a unit for more than one year.

The operator

is required to prepare contingent closure and post—closure

care plans and provide financial assurance in an amount

sufficient to close the indefinite storage unit as a dis-

posal unit,

This definition closes a loophole in the proposal

which

would have allowed an operator to avoid the financial assur-

ance requirement by declaring disposal to be storage.

Two

examples would include speculative recycling of a waste

which may someday become valuable,

and operation of

a perco—

lation and infiltration lagoon.

In the first case,

if the

waste becomes valuable it will be sold.

However,

to

satisfy

the intent of Section 21,1, the operator must provide finan-

cial assurance to close the accumulated waste as a

landfill

if the waste cannot be sold and it is too expensive or

difficult to remove it to a landfill.

In the second case,

wastes are pumped to an unlined lagoon for treatment or

storage without periodic removal of wastes or residues, some

of which may migrate into underlying soils.

It is likely

that such a lagoon will have to be closed as a landfill

because of

the

cost and technical difficulties of removal

(R.

362,

428,

434,

439,

445,

447,

456,

462,

506,

687k

Section 807.104

“Facility”

has been changed to

“unit”

(R.

18).

62-134

---

—11—

Section 807.104

“Operator”

The “operator”

is

the person who conducts a waste

treatment,

storage

or

disposal

operation

which

requires

a

permit pursuant to Section 21(d)

of the Act.

The “owner”

is

not

necessarily the

operator

(R.

18, 23).

Section 807.104

“Owner”

The

“owner”

owns the land on which someone conducts a

waste treatment,

storage or disposal operation.

If there is

no other person in responsible charge,

the “owner”

is

also

the “operator”

and subject to the

permit requirement of

Section 21(d)

of

the

Act

(R.

18,

23).

Section 807.104

“Refuse”

“Refuse” has

been replaced with the preferred term

“waste”,

which

is

used

in

Section

21 (d).

Section 807.104

“Salvaging”

“Solid waste” has been replaced with the preferred

term

“waste”.

Section 807,104

“Scavenging”

“Facility” has been replaced with the preferred term

“unit”,

Section 807,104

“Site”

The definition has been modified

to make it

clear

that.

the term “site” refers

to

the

area

around

a

regulated

“unit”

and

that

a

“site” may

include one or more such

“units”.

The definition

of

“site”

is

important

in the on—site

exemption

from the

Section 21(d)

permit requirement,

No

permit is

required for

a “unit” which is on

the same piece

of real

estate as the

operation which generated

the

“waste”

and

which

is under the

control of the same entity

which

generated

the wmste

(R.

19,

22),

Section

807,104

“Solid Waste”

This is

modified to reflect the preferred term

“waste”,

Section

807 104

“Solid Waste Disposal”

This concept

has been replaced by the definitions

of

“disposal” and “waste”, the terms

used in Section 21(d)

of

62-135

---

—12—

Section

807.104

“Solid

Waste

Management”

This has been replaced by the preferred term “waste

Section 807.104

“Storage” and “Treatment”

These definitions are taken from Section

3 of the Act.

They are used in Section

21(d)

to fix the scope of the

permit requirement.

Section

807.104

“Unit”

This term replaces “facility”.

The phrase “device,

mechanism, equipment or area”

is taken from the old defini-

tion of “facility”. The rest of the definition has been

reworded

to

read

“used

for

storage,

treatment

or

disposal

of

waste”

to

agree

with

the

terminology

of

Section

21(d)

of

the

Act

(R.

21,

24,

Section 807.104

“Waste”

This definition fixes the scope of the permit require-

ment of Section 21(d)

is concerned.

The definition is taken from Section

3 of the

Act.

Section 807.104

“Waste Management”

This definition is taken from the old definition of

“solid waste management”.

The terminology has been changed

to refer to “storage, treatment or disposal of waste”

to

reflect the terminology of Section 21(d) of the Act.

This

is

a generic term for any activity subject to the permit

requirement.

SUBPART B:

WASTE

PERMITS

Section 807.205

Applications for Permit

Paragraph

(1)

requires that applications contain a

closure plan and a post—closure care plan showing how the

operator will provide closure and post—closure care in

accordance with all applicable regulations, which will be

discussed below

(R.

35,

953).

Original cost estimates will

also be required with the application

(R.

361).

Actual

financial assurance need not be tendered until just prior

to

receipt of waste

Section 807.206

Section 21(d) (1)

permit conditions involving reports, access to records and

62-136

---

—13—

inspections.

This

has been added to the existing

general

language of Section 807,206(a), which is derived from

Section

39(a)

of

the Act

(R.

37).

Section 807.206(c)

contains

a listing of permit condi-

tions,

related to financial assurance, which must be in all

permits.

The conditions are as follows with the

related

proposed section indicated:

1.

A closure plan

(Section 807.503)

2.

For disposal sites,

a post—closure care plan

(Section 807,523)

3.

A requirement

that the operator

notify the Agency

within 30 days after receiving a final volume

of

waste

(Section 807.505);

4.

A requirement that the operator commence execution

of

the

closure plan within 30 days after the site

receives its final volume of waste (Section

807.506)

5.

A requirement

that the operator file any final

180 days prior to receipt of the final volume of

waste

(Section 807.505)

6.

A requirement to provide financial assurance in an

amount equal to the current cost estimate

(Sections

807.601 and 807,603);

7.

A requirement

to update the current cost estimate

every other year

(Section 807.623).

Section 807.209

Permit Revision

Section

807.209(h)

provides that a permittee may

request

modification

at

any

time

by

filing

an application

reflecting

the

modification.

This

appears to be the existing

Agency

interpretatIon

(R.

42,

362,

941)

SectiOn

807,214

Revised Cost Estimates

This

Section

relates to the biennial cost adjustment

of

Section 807.623.

Cost

adjustments which do

not

result

from

modification

of

a closure or post—closure care plan

are a

special

type

of

permit

application in which the operator

needs

to provide

only

mANimal

information.

This provision

does not

require

the Agency to take affirmative

action.

However,

the

Agency

can

deny

the

application within 90 days

if

the

cost

estimate

does not

relate to the plan or if the Agency

does

not agree

with

the costs

(R.

951).

62-137

---

—14—

SUBPART E:

CLOSURE AND POST-CLOSURE CARE

Section 807.501

Purpose, Scope and Applicability

Subpart E establishes general rules on closure and

post-closure care which are supplemented by the sanitary

landfill closure and post—closure care rules of Subpart C.

Subpart E requires that operators of sites with permits

prepare closure and post-closure care plans which will

become permit conditions.

The plans will form the basis of

the cost estimate of Subpart F, which fixes the amount of

financial assurance which must be provided.

Sites which are not required to have Section

21(d)

permits are not required to prepare plans,

or to provide

financial assurance

(R.

68,

85, 90),

Existing

sites which

are required to have a permit may elect to utilize the

formula of Section 807.624 in lieu of preparing plans and a

cost estimate to meet the March

1,

1985 date.

Such sites

will be required to provide closure plans with the next

modification application or

by

March

1,

1988

(Sections

Section 807.502

Closure Performance Standard

This Section contains the general standard for closure

of

a waste management

site.

The operator must close the

site in a manner:

which minimizes the need for further

maintenance;

and which controls, minimizes or eliminates,

post—closure release of waste,

waste constituents,

leachate,

contaminated rainfall,

or waste decomposition products

to

the groundwater or surface waters or to the atmosphere

to

the extent necessary to prevent threats to human health or

the environment

(R.

69,

166).

This general standard is supplemented by the specific

closure requirements for sanitary landfills which are listed

below,

All waste management sites must meet the

general

closure

standard,

but only sanitary landfills need

meet the

following specific rules

(R.

69,

95, 154,

682,

953)

Section

807.305

A total of two feet of final cover

within

60

days

following

the

placement

of

refuse

in

a

final

lift.

807.313

Prohibition on discharge of contaminants

807.314(e)

Adequate measures to monitor and

control

leachate

62-138

---

—15—

Section

807.315

Prohibition on damage to waters of

the

State.

807.316

Closure plan required in application.

807.318

Monitoring

of

gas, water and settling

for three years after closure; remedial

action

during

the

three

year

period;

filing of a plat.

The closure standard requires closure

so as to prevent

post-closure release of “waste constituents” and “waste

decomposition products”.

This

is not to be construed as an

absolute prohibition on release of water or gas from the

completed landfill.

Control

is required only “to the extent

necessary to prevent threats to human health or the environ-

ment”

(R.

166,

955).

The

closure performance standard, which is a minimal

whether required to have a permit or not

(R.

56,

Section 807.503

Closure Plan

The closure and post—closure care plans will become

conditions of the site permits.

Modification of the plans

will require permit modification.

The Agency can deny a

permit because of deficiencies in the plans, or it can issue

a permit with modified plans.

A

possible

alternative

is

a

rule

which

just

requires

preparation and maintenance of a plan even by permitted

sites.

This is what is required in the RCBA interim status

rules

at 35 Ill. Adm.

Code 725.212.

This alternative has

been rejected for two reasons.

First,

in a scheme where

permits are actually required,

it seems unwise to leave

an

element so essential to protection of the environment out of

the permit.

Second, because the plan is essential to the

cost estimate and amount of financial assurance, prior

Agency review is necessary to accomplish the purposes of

Section 21.1 of the Act

(R.

71,

99, 848,

850).

However, the

Board has allowed cost estimates based on a formula without

plans during the initial transition period

(Section 807.624).

During the next three years operators will be required to

formalize plans only with the first permit modifications,

In addition to forming the basis for the cost estimate,

the plans form the basis for the determination as to whether

a site is a treatment or storage unit on the one hand, or a

disposal unit or indefinite storage unit on the other,

62-139

---

—16—

Under the definitions in the Act and Section 807,104,

treat-

ment and storage involve temporary placement of waste,

while

disposal involves permanent placement, or loss of the

waste

into the background.

Indefinite storage involves storage

under circumstances in which costs or technical difficulties

will force closure as a disposal unit.

Only sites with

disposal units and indefinite storage units are required to

provide financial assurance.

Existing Sections 807,316 (a)

(10),

(a) (14),

(a) (15) (A)

and

(a) (15) (K)

require virtually the same material

in sanitary

landfill applications as is required in the proposed closure

plan rules,

However, these are usually not brought together

into a single portion of a permit identified as a closure

plan

CR. 685,

697, 715,

725),

The operator must prepare a closure plan detailing

steps necessary for final closure at the end of the intended

operating life and a plan for premature final closure

at the

point in the intended operating life when .the cost of

closure will be the greatest.

The point in the intended

operating life when the cost of closure will be the greatest

is referred to as the

“point of maximum exposure” or the

“point of maximum cost exposure” in this Opinion.

Although

these could coincide,

some landfills would be expected to

reach the point of maximum cost exposure early in their

operating life

(R. 119,

286,

363,

416, 430,

688,

719,

756,

763,

780,

848,

854).

The plan for premature closure forms

the basis of the cost estimate.

The possibility of a

default by

a landfill operated according to the rules and

permit conditions up to the end of its intended operating

life is remote

(R.

684,

725,

756).

The primary risk intended

to be addressed is that of premature closure by a landfill

which has not been properly operated,

The premature closure

plan should give a better indication of the cost involved in

such closure,

The closure plan must specify both

the year of intended

closure and the year in which the cost of closure is expected

to be

greatest.

These are important to determination of

the

pay—in period if

financial assurance is provided through a

trust fund

(R.

364,

431,

683, 687).

The operator must include a temporary shutdown plan

if

the operator wants a permit which would authorize temporary

shutdowns prior to final closure

(R,

51,

78).

A seasonal

operation or one which could be affected by strikes should

apply for a temporary shutdown plan.

Temporary shutdown is to be distinguished from partial

shutdown which involves closure of a portion of a site while

operations are ongoing on another portion

(R.

51,

78,

92,

142,

363,

430,

688).

Partial shutdown may be addressed two

62-140

---

—17—

ways.

First, the operator can ask that the permit be modified

to specify certain “areas” pursuant to Section 807.507.

The

operator could then prepare separate plans and cost estimates

for each area, providing financial assurance when waste

is

first disposed in each

area, and obtaining release with

respect to closure costs when closure is completed.

Alterna-

tively,

the operator could allow for the opening and closing

of units in a single plan,

identifying the situation in

which the greatest exposure would occur.

The operator could

then post a bond

in the amount required to close the site at

the point of greatest exposure.

The proposal required that a copy of the closure plan

be kept at the site so that it would be available to the

Agency inspectors.

This could impose a hardship in that

many general waste sites lack a permanent structure which

would be

a suitable repository.

The Board has modified the

proposal to require the plan to be maintained at a location,

approved in the permit, where it will be available during

Section 807.504

Amendment of Closure Plan

This Section is similar to Section 724.212(b)

in the

RCRA rules.

1.

Modification in the operating plans or site design

2.

Temporary suspension of waste acceptance, or

reduction or increase in volume.

3.

Change in the expected year of closure, or the

year in which the cost of premature closure will

be the greatest.

Under Section 807.209 the operator would be allowed

to

file an application to modify at any time.

Section 807.504

is not intended to limit the

operator’s right to amend, but

to state certain situations in which he must amend.

The second and third situations under which the closure

plan must be amended are directed in part at sites which go

into a temporary or partial shutdown which is not provided

for in the closure plan.

Violations of Section 807.504(b)

or

(c)

could be alleged if activity slowed or ceased at the

site without an amended plan.

Section 807.503 allows the

operator to provide a

temporary

shutdown plan which will not

trigger the need to amend

thc

closure plan.

Existing Section

807.316 (a) (12)

requires the operator to specify expected

quantities of waste in the application.

The proposal has

been modified to specifically state that changes, reductions

62-141

---

—18—

or increases which are authorized by the permit do not

trigger the requirement to amend

(R.

72,

91,

93,

366,

374,

496,

688,

780,

786).

Section 807.505

Notice of Closure and Final Amendment to

Plan

Section 807.505(a)

requires the operator

to give notice to

the Agency within 30

days after receipt of the final volume

of waste.

Violation of this section could be alleged in

a

situation in which an operator abandoned a site without

notice.

Section 807.505(b)

requires any final amendment to the

closure plan to be filed at least 180 days before receipt of

the final volume.

The Agency would be allowed to act on the

late application, but violation could be alleged

in an

enforcement action.

This requirement serves two purposes.

First,

it should ensure that the Agency will have adequate

time to review these applications.

Second,

it encourages

operators to maintain a realistic closure plan which is up-

to-date with current operations so that it could actually be

executed in the event of unexpected cessation of operations

(R.

74,

82,

938).

Whether an operator must send a notice of partial

closure depends on whether the site has been divided into

areas under Section 807.507

(R. 430,

687)

.

If there are

such areas,

the operator must send notices as though they

were separate sites.

Otherwise, notice need not be sent

until

final closure is reached.

However,

such partial

closure activities would have to proceed according

to

the

Section 807.506

Initiation of Closure

This requires that the operator commence treatment,

removal or disposal of all wastes from the site in accordance

with the closure plan within 30 days after receipt of the

final volume of waste.

This rule

serves two purposes.

First,

it establishes a time frame for closure to be con-

sidered by the Agency in reviewing a closure plan.

Second,

a violation could be alleged if an operator abandoned a site

(R.

75, 367,

959).

The operator of an indefinite storage must either

initiate removal of wastes and waste residues,

or must

initiate closure in accordance with the contingent closure

Section 807.507

Paragraph

(a)

with the Agency dividing the site into areas.

62-142

---

—19—

include at least one entire unit,

If the permit specifies

such areas, the Agency is to treat them as separate sites

for purposes of financial assurance.

This means separate

closure plans and cost estimates.

The operator could provide

separate financial assurance for each area, or could lump

pursuant

to

Section 807.642

(R.

51,

78,

92,

142,

363,

430,

433,

688,

957).

The Board construes Section 21,1

as requiring financial

assurance for closure of any treatment

or storage units

associated with a disposal unit which are located on the

same site.

Paragraph

(b)

prevents the use of the area

mechanism to evade the requirement of financial assurance

for associated treatment and storage units.

Although they

could be placed in separate areas,

financial assurance would

have to be provided.

An operator can group units which are already closed

into areas which are already in post-closure care.

The

Agency should not require closure plans or cost estimates

for these areas.

However, paragraph

Cc)

provides that post-

closure care continues until the entire site is closed.

The

operator cannot use this mechanism to cut short the post-

closure care for the site required by Subpart C.

The proposal contained a section specifying duties of

the operator during closure.

This has been dropped as incon-

sistent with Section 807.502

CR.

75,

367,

372).

Section 807.508

Certification of Closure

When closure

is completed the operator and his engineer

provide an affidavit to the Agency.

When the Agency determines

that the site has been closed in accordance with the plan,

it notifies the operator of the date on which the post-

closure care period begins

(R.

76,

144,

155,

163,

165,

368,

421,

959).

The Board has dropped from the proposal a requirement

that the operator specify the locations of special waste in

the as—built plans

(R.

163,

165,

368, 688),

Section 807,509

Use of Waste Following Closure

After closure an operator may accept waste as autho-

rized

in

the

closure

plan.

Operators

often

utilize

construc-

tion debris as part of cover material or for subsidence and

erosion control

CR.

683).

The Agency may control such usage

by permit condition.

Section 807.523

Post-closure Care Plan

proposed.

62-143

---

—20—

how

he

would

comply

with

the post-closure care provisions

specified in the rules specific to each type of disposal

facility.

Presently these would only be the rules appli-

cable to sanitary landfills

(R.

77,

369,

449,

458)

Operators of indefinite storage units must provide a

contingent post-closure care plan which will have to be

executed if the operator fails to remove all wastes and

waste residues on closure

(R.

369,

448, 455).

Section 807.524

Implementation and Completion of Post-

closure Care Plan

The operator of a disposal site must implement the

post-closure care plan commencing with certification of

closure

(R,

77,

371).

The operator of an indefinite storage

unit must implement the contingent post—closure care plan

unless the Agency determines that he removed all wastes and

waste residues during the closure period.

The Agency is to certify that the post-closure care

period has ended when it determines that the post—closure

care plan has been completed and that the site will not

cause future violations.

The length of the post-closure

care period for sanitary landfills is determined from the

existing Subpart C rules

(R.

SUBPART F:

FINANCIAL ASSURANCE FOR CLOSURE

AND POST-CLOSURE CARE

Section

807,600

Purpose, Scope and Applicability

This Subpart provides the method by which the operator

gives

“financial assurance” to satisfy the requirement of

Section 21.1 of the Act.

The operator prepares closure and

post-closure care plans pursuant to Subpart E.

Operators of

non—governmental disposal sites prepare cost estimates based

on these plans.

They must provide financial assurance in an

amount equal to the cost estimate.

Several mechanisms are

provided by which the financial assurance can be given.

Section 807.601

Requirement to Obtain Financial Assurance

This Section paraphrases Section 21.1(a) of the Act.

The phrase “unless such person has posted with the Agency a

performance bond or

other security for the purpose of insuring

closure of the site and post—closure care in accordance with

the Act and regulations adopted thereunder” has been replaced

with “unless such person has provided financial assurance in

accordance with this Subpart”.

The Subpart defines and imple-

ments the first-quoted language.

62-144

---

—21—

The Section also states the requirement to obtain

financial assurance for an indefinite storage

unit,

This

is defined in Section 807.104.

As

is explained above, these

units must

be required to provide financial assurance to

satisfy the purposes of Section 21.1 of the Act.

Paragraph

Ca)

includes the local government exemption

taken from Section 21.1(a)

of the Act.

The Board construes

this exemption to apply only when the governmental unit is

actually conducting waste disposal operations:

that is,

when the governmental unit is the “operator”.

If the govern-

mental unit is the “owner” of the

site,

but another person

“conducts” waste disposal on the site, the other person must

provide financial assurance for closure.

A proviso has been

added to state this expressly

CR.

53,

64,

686, 782,

943),

Paragraph

(b)

interprets the requirement to provide

financial assurance by March

1,

1985.

Sites which accept

waste

for

disposal

or

indefinite storage after that date

will

be

required to provide financial assurance,

including

both existing sites and future sites.

Section

807,602

Time for Submission of Financial Assurance

Sites existing on March 1,

1985 must provide financial

assurance by that date.

Future sites will

be required to

provide financial assurance prior to waste receipt.

Plans

and cost estimates must be provided with the permit application.

The Agency will issue the operating permit with requirements

to provide financial assurance as conditions, including a

requirement to tender financial assurance prior to receipt

of waste.

There is nothing

to keep the operator from ten-

dering the financial assurance prior to permit issuance

(R.

35,

262,

390,

460,

938).

Section

807,603

Upgrading Financial Assurance

The operator has

90 days to increase the amount of

financial assurance

if the cost estimate goes up or

if the

value of

a trust fund goes down or

if the operator is dis—

qualified from self-insurance.

Otherwise,

the operator must

maintain the

financial

assurance

at

least

equal

to

the

cost

estimate at all times.

For example, the operator must

anticipate the cancellation or termination of financial

instruments and substitute alternative instruments in advance

of cancellation or termination.

These provisions were with

Sections

807.661

et

seq.

in

the

proposal, but have been

grouped in the emergency rules.

Section 807.604

Release of Financial Institution

There are three types of releases which were provided

with each instrument

in

the proposal.

These have been

grouped into separate sections for each type of release:

62- 145

---

—22—

Section

807.604

Release of financial institution following a

substitution of financial assurance or

release of the operator.

807.606

Release of the operator upon completion of

closure and post—closure care

807.661

Partial release of financial institution

et seq.

following a reduction in cost estimate,

Partial release following completion of closure

is

to

be treated as a reduction in the cost estimate by reducing

to

zero the closure cost element.

Section 807.605

Application

of

Proceeds and Appeal

There are basically two extreme enforcement

situations

which could arise involving closure.

In the simple situation

the operator is bankrupt or has simply abandoned the site

and it will clearly be up to the Agency to arrange for

closure.

In

the

complex

situation,

the

operator

is

on

the

site,

but

the Agency alleges violation of the rules and

believes

that

closure is necessary to protect the environment.

In the complex situation an enforcement action must be

brought

before

the

Board.

If

the

Agency

proved

a

violation,

the Board could order that a closure plan be implemented,

and that the proceeds of financial assurance be available

for execution of the plan.

In

the simpler case this would

be

a

needless formality

(R, 116,

965).

The financial assurance instruments

are governed

by

the

general Illinois law pertaining to trusts, bonds,

etc.

If

the conditions

of

the

instrument

obtain

and

the

Agency

gives

the required notices, but the financial institution refuses

to

pay,

the

Agency

should

sue

in

Circuit

Court,

or

whatever

court

may

be

appropriate.

The

filing

of

an

enforcement

action

is

not

necessarily

a

condition

precedent.

However an

enforcement

action

may

be

necessary

to

establish

that

the

condition

of the financial instrument has obtained,

Section

807,605(c)

lists

seven

Agency

actions

which

are

deemed

permit

denials,

These

are

tantamount to disapproval

of a bond and are appealable as provided in Sections 21,1(e)

and 5(d)

of the Act,

The necessity for Circuit Court reso-

lution of these disputes

is avoided by providing an appeal

route

(R.

118,

141),

Section 807.606

Release of the Operator

The

Agency

is

required

to

release

the

operator

from

the

requirement

to

maintain

financial

assurance

for

closure

62-146

---

—23—

within 60 days after receipt of affidavits from the operator

or his engineer that the site

has

been

closed

according

to

the

plan,

Paragraph

(b)

includes a similar provision

for

post—closure

care

(R.

118,

161,

384),

The

Agency

can

withhold

release

if it

has

reason

to

believe

the

closure has not been

in accordance with the plan, or that continued post-closure

care

is required by the rules,

Section

807.620

Current

Cost Estimate

The proposal differs from the RCRA rules in that under

the Board rules cost estimates for closure and post-closure

care are combined into a single cost estimate.

The operator

must give financial assurance in this amount,

This reduces

the

volume of rules, but creates possible problems relating

to

release

of

closure

assurance

(R.

118,

384,

967).

The

rules do not prevent an operator from providing separate

financial assurance for closure and post-closure care,

The

operator could obtain

release

of

the

financial

assurance for

closure by modifying the cost estimate on closure, reducing to

zero the closure

cost estimate,

Section 807,621

Cost Estimate for Closure

The operator is required to

maintain

a

written

estimate

of the cost of closing the site.

The cost estimate will be

a permit condition,

although revision of a cost estimate can

be accomplished under Section 807,214 without filing a

complete

application

(R,

119,

143,

385,

450)

The

cost

estimate

is

based on

“current dollars,” meaning

the

cost

to do the

work

assuming

closure

were

required

tomorrow

(R,

457),

This

amount

is

not

to

be discounted for

the

time

lag

to

expected

closure.

The

operator

must

revise

the

closure

cost

estimate

whenever

a

change

in

the

closure plan

increases

the

cost

of

closure.

The

operator must also update the cost

estimate

at

least

once

every

two

years

(Section

807.623),

The

cost

estimate

must

be

based

on

the

steps

necessary

for

premature final closure of the site at

the

time

in

its

intended operating

life

when

the

cost

of

closure would be

greatest,

or

at

the

end

of

its

intended

operating

life,

whichever

cost

is

greatest.

As

provided in Section 807,503,

the operator must plan

for both

of

these

contingencies

in

the closure plan

CR,

119,

385,

688,

719,

756).

Once the

point of maximum exposure has passed, the operator

can

revise the plan to reflect any decreased

maximum

future

exposure.

The

cost

estimate

must

be

based on third party costs:

the

operator

must

assume

that

the

Agency

will

contract with

62-147

---

--24—

an unrelated party to implement the closure plan.

This will

probably

be

the

situation

if the operator becomes bankrupt

or abandons the site,

so

that the third party cost assumption

forms a better estimate

of the potential liability

CR.

304,

309,

385,

396,

454,

522,

700,

785)

The cost estimate may not include an allowance for

salvage

value

for waste or equipment,

or the resale value of

the completed landfill.

These items are speculative, and

the

value

may

depend on whether the site has been properly

operated and closed.

Since the proceeds would be applied in

a situation in which the operator had failed in one of these

areas, the salvage value should not be included in the

estimate

(R.

304,

307,

385).

The rule details the elements which go into the cost

estimate

(R,

690,

849).

This rule does not require that

sites provide these items on closure.

However, they must be

included in the estimate if required for closure of the

site.

The most important cost elements are the area to receive

final cover and the cost of obtaining and placing the cover.

If an operator has an identified source of adequate cover on

the

site,

his

closure cost estimate will likely be much less

than an operator who will have to purchase and transport

cover to the site

CR.

690,

700,

719,

762).

The closure plan and cost estimate should only address

the activities which are to be done at the point of premature

or final

closure,

Activities which are done in construction

or normal operation of the site in anticipation of closure

should be addressed

in the construction or operating permit.

The

operator

should not be required to pay for a closure

activity and still maintain financial assurance for that

activity.

Section 807,622

Cost Estimate for Post—Closure Care

The cost estimate for post—closure care

is based on the

annual cost of monitoring and maintenance times the number

of years of post—closure care required.

For sanitary landfills

this is three years

CR. 120,

150,

386),

The cost estimate is based on the expected costs of

post—closure care as disclosed in the post—closure care plan

(R.

120,

138).

There is no provision for contingency funding

to pay for unanticipated costs such as might result from a

liner failure or retrofitting of

a leachate collection

system.

Nor is there any provision for third party liability

insurance.

Section 21.1 of the Act is limited to financial

assurance for the expected costs of closure and post—closure

care.

82-148

---

—25—

The major cost elements include cover stabilization and

groundwater monitoring.

The operator should estimate the

percentage of the cover which will require remedial action

to control erosion or subsidence each year.

The number of

parameters and frequency of groundwater monitoring should be

specified by the Agency in the permit

(R. 385,

690,

700,

719,

724,

849).

Section 807.623

Biennial Revision of Cost Estimate

The proposal required the operator to adjust the cost

estimate for inflation on an annual basis based on the GNP

deflator.

Several revisions to the inflation adjustment

provisions were suggested at the hearings.

These included:

1.

Prospective inflation adjustment at the outset, in

which the operator projects an inflation rate at

the outset throughout the expected operating life

(R.

120,

693,

968)

2.

Annual prospective adjustments based on last

year’s inflation rate

(R,

386,

397,

422,

424,

453,

457)

The problem with long-term prospective inflation adjust-

ment is that the formulas are very involved and the result

is no better than the inflation forecast.

The Agency would

have to review economic forecasts.

There would also have to

be a mechanism for reviewing the projected closure cost

against actual inflation, and a requirement of modification

if they get too far out of line.

Short—term prospective adjustment requires the operator

to estimate the cost today, then determine the cost to close

in one year, assuming the inflation rate in the coming year

will equal the rate during the preceding year.

The cost to

close in one year would then become today’s cost estimate,

This approach reflects reality rather well,

in that the

operator

is

more likely to close a year later than on the

date the estimate is prepared and last year’s inflation is

a

good estimate of next year’s.

However,

It

is

likely to

introduce a lot of confusion to gain an adjustment which may

be less than the other uncertainties involved.

The Board has determined to utilize a biennial review

of the cost estimates, with adjustments to reflect actual

changes

in cost elements.

This gets the Agency totally out

of the business of reviewing inflation figures, and into

reviewing actual costs with which it should have ongoing

experience.

It would be helpful if the Agency compiled

current unit cost figures from permits for distribution to

the public.

62-149

---

—26—

The biennial update will not be nearly so burdensome as

an annual update

(R.

693).

Also, the Board has provided an

abbreviated application mechanism for the revised cost

estimates which do not result from a change in the plans

(Section 807,214)

The operator is required to update the cost estimate at

least once every two years.

If the operator updates the

cost

estimate in connection with a permit modification

before revision is due, the two years starts over.

Section 807.624

Interim Formula for Cost Estimate

The permanent structure of the rules follows the site-

specific plan/cost estimate approach.

This has many advantages,

including the ability to accommodate site-specific factors,

the specification of duties on closure, and financial incen-

tives to adopt operating modes with less exposure

(R.

188,

290,

689).

However,

there are not enough engineers in the

State to prepare the needed plans and cost estimates by

March

1,

nor enough employees at the Agency to review the

submissions

(R.

179,

694,

768,

774,

779, 850,

852,

876,

902),

The Board will therefore adopt a formula which,

although it gives only a crude estimate of potential costs,

can be used as an interim measure to fix the amount of

financial assurance.

Each operator will be required to file

a closure plan and cost estimate whenever he files the next

application to modify the permit.

Plans and estimates will

be required for all sites by March 1,

1988.

Operators will

be allowed the option of providing a plan and cost estimate

initially,

which

they

should do if the formula

disadvantages

them

(R.

880).

The cost estimate based on the formula will serve as

a

cost estimate under the rules.

The requirements to close in

accordance

with the plans will be understood to mean in

accordance with the existing permit conditions and closure

and post—closure care regulations for financial assurance

instruments based on the formula,

The formula cannot be used to calculate financial

assurance under the RCRA rules.

The most important element of the cost estimate

is the

area which will need final cover.

There are several considera-

tions affecting the projection of this area.

The

first is

the area which is presently in need of final cover.

This

necessitates

a brief discussion of types of cover.

Existing

Section 807,305 provides for three types of cover:

a)

Daily Cover

-

a compacted layer of at least

6 inches

of suitable material shall be placed on all exposed

refuse at the end of each day of operation.

62-150

---

—27—

b)

Intermediate Cover

-

at the end of each day of

operation, in all but the final lift of a

sanitary

landfill,

a compacted layer of at least

12 inches

of suitable material shall be placed on all surfaces

of the landfill where no additional refuse will

be deposited within

60 days.

c)

Final Cover

-

a compacted layer of not less than two

feet of suitable material shall be placed over the

entire surface of each portion of the final lift not

later than 60 days following the placement of refuse

in the final lift, unless

a different schedule has

been authorized

in the operating permit.

The Board construes Section 807.305 to mean that a

total of at least two feet of cover must be over the

waste

when closure is completed

(In

re Ch.

7,

R72-5,

8 PCB 695,

July

31, 1973;

IEPA v.

Giachini, PCB 77—143;

33 PCB 547,

May 24,

1979).

Many landfills apply intermediate cover to completed

areas,

leaving final cover to closure of the entire

site,

Others apply final cover

as soon as an area or trench is

completed

(R,

768,

789,

798,

853,

855,

857,

869,

878,

904,

908,

910),

Intermediate cover is subject to erosion if

it

is not seeded and maintained

(R.

858).

It is difficult to

judge the depth and sufficiency of the intermediate cover

CR.

870,

905,

910).

Because of the need to base the formula

on simple facts not likely

to be subject to dispute, the

Board

will

allow

deduction

from

the

presently

affected

area

only the area which has received full final cover.

Most sites plan to apply final cover to much of the

site

before

final

acceptance

of

waste,

such

that

only

a

very

small

area

is

expected

to

remain

on

closure

(R,

787).

As

has

been

discussed

above,

the

financial

assurance

requirement

needs

to

be

based

on

closure

at

the

point in the

expected

operating

life

when

the

cost

of

premature

closure

would

be

the

greatest,

which

may

not

correspond

with

the

expected

final

closure,

However,

it is

not

possible

to

determine

the

point

of

maximum

exposure without review of a

site--specific

plan.

The formula has to use a method

for computing

the

maximum

exposure with reference to facts which are

not

likely

to be subject to dispute.

Mr. Lynch suggested a formula which predicts the amount

of exposed refuse generated after a certain number of years,

(Y), based on the average depth

(AD)

of the landfill and the

annual volume of waste

(AWR)

received

CR,

691,

703,

717,

723).

It should be possible to determine both of these from

the site permit

(Section 807.316),

If the permit is not up—

to-date,

it should be possible to measure the actual depth,

62-151

---

—28--

and determine the actual receipts in recent years.

The

formula

is as follows, with the area in acres:

A

=

(Y)

(AWR)

~200) (Ad)

It

is necessary to specify a value for

Y,

the number of

years of waste accumulation.

Y

is a projection of the

number of years which would elapse between the cessation of

normal cover activities by the operator and the initiation

of site closure by an Agency contractor.

The formula will

give the area to be covered assuming people continue to dump

at the same rate after the operator stops covering.

During

this period the operator’s non-compliance would come to the

Agency’s attention,

inspections would be conducted, letters

sent,

enforcement initiated, hearings held,

an order entered

and appealed, and a contract let.

Based on past experience,

this would likely take three years

CR.

671,

718,

729,

785).

The Board has therefore assigned a value of three to Y in

the formula,

The acreage requiring cover is computed by adding the

presently exposed area to the projected exposed area which

could be created within three years.

However, this cannot

exceed the total permitted area which has not received final

cover as of January

1, 1985.

The next major element in the formula is the cost per

acre

(CPA).

Most of this is the cost per cubic yard for

cover material,

Ideally this should include the cost to

purchase the cover, lift it, transport it, spread and grade

it

(H,

698,

762,

847).

The Board received three estimates

of this cost:

Cost per

Cubic yard

$1.00

R.

692,

698

1.30

R.

763,

768,

771,

783

2.30

H.

847,

891,

897

These costs all assume that cover material

is available

within

a short distance of the site

(R.

692,

771,

847,

861),

If the cover must be transported

a great distance, the cost

would be four to five times greater

CR.

692).

The Board is

prepared to assume for purposes of the interim rule that a

source of cover material is readily available at each site.

The $2.30 figure is based on a contract recently let by

the Agency for the Broverman/Taylorville landfill which is

being closed with State funds

(8

Ill. Reg.

23951, December 14,

1984).

In many respects this may be the best estimate of

what it might cost the Agenay to close a site

in the future.

62-152

---

—29—

However,

this landfill was a hazardous waste site with a

large uncovered area which was never operated in accordance

with the regulations

(IEPA v. Harold Broverman and Theodore

Baker d/b/a Taylorville Landfill, PCB 76—114,

28 PCB 123,

November 10,

1977; Fifth District, penalty reduced

(Rule 23

Order), May 25,

1979). ~iFor purposes of the interim rule the

Board will accept $1.30/cubic yard as the best estimate of

the cost of cover,

It takes around 3200 cubic yards of material to cover

an acre to

a depth of two feet

(R, 763,

692),

At $1.30 per

cubic yard,

this results in $4,160 per acre.

The cost of

establishing vegetat~ou.must be added to this.

Although the

rules do not

explicitl~

require the operator to establish

vegetation,

it

is necessary to stabilize the cover against

erosion

(R. 692, 763~~:i93),If vegetation were omitted from

the closure cost,

it ~culd be necessary to include a greater

allowance for erosion

in

the post—closure care cost.

The Board has reco:Lved three estimates of the cost of

establishing vegetative cover:

Cost per acre

$500

R.

763

$832

R.

692

$1235

(Ex.

18)

The Board will accept the $832/acre figure as the best

estimate of the cost of establishing a vegetative cover,

Together with the

cost of

cover material, the cost per acre

to cover is approximately $5000/acre, which the Board will

utilize as the value

for CPA

in the formula.

There are other elements which would go into a complete

closure plan and cost estimate

(R, 892,

900),

However,

it

does not appear feasible or necessary to include them in the

interim formula,

The post—closure care cost formula includes

the

annual

cost of subsidence

and

erosion repair, and the cost of

groundwater monitoring

CR.

693,

764,

858),

Subsidence and

erosion depends on the percentage of the total

cover area

which requires repair each year

(P).

The Board has received

two estimates:

2

R.

764

5

H,

693

The Board has accepted 5

as the percentage of the

total cover which

will

require repair during each year of

the post-closure care period.

62-.153

---

—30—

The other element of post—closure care cost

is the cost.

of sampling groundwater.

The rule assumes that monitoring

wells will be constructed during the operating life of the

site,

so that no allowance has been made for construction

(H,

777),

The sampling cost depends on the number of wells,

the frequency of sampling and the number of parameters

analyzed.

All of the witnesses agreed on quarterly sampling

(H.

692,

765,

Ex.,

18).

Two

witnesses

suggested

formulas

involving

a

cost

per

well, while the Agency suggested requiring four wells

(H.

692,

765,

Ex.

18)

.

Permits should specify certain well locations

(H.

777,

Section 807.316(a)(l5)(A)).

However it is possible

that some sites may not have wells specified.

A minimal

program involves one well upgradient to establish the back-

ground water quality, and two wells downgradient to detect.

leaks,

The Board has therefore specified three as a minimal

number of wells to be used in the formula,

Any

greater

number actually existing or specified in the permit will he

included in the formula.

A

basic

permit should require analysis for alkalinity,

boron,

chloride,

pH,

residue on evaporation, specific conduc-

tance,

sulfate and total organic carbon

(H.

765,

894).

The

cost of basic sampling and analysis is about $150 per sampling

(H.

692,

724,

765,

777).

The Agency repcrts

a range of $133

to $696 per sampling with an average of $288 per sampling

(Ex.

18).

The higher costs appear to result from analysis

beyond the eight basic parameters

(R.

894),

The Board

accepts

$150

per

samplii~

as

a

good

estimate

of the basic sampling cost.

With four samplings per

year,

this works out

to

$600 per well per year.

To recapitulate, the interim formu’a

for

the cost

estimate is as follows,

The area requ±iingcover

(A)

is

the

sum of the existing exposed area plus the potential future

exposed area according to the following formula:

A

=

A(ExistIng)

-F

3 AWR

3200 AD

A cannot be greater than the total permitted area which

has not received final cover.

The closure cost estimate

is:

CCE

=

(CPA) (A)

($5000/acre) (A)

The post-closure cost estimate is:

PCCE

=

:3

( (CPA) (P) (A)

+

(600) (M))

=

750A

+

l800M

62-154

---

—31--

The complete

cost estimate is:

CE

=

5750A ~

1BOOM

~ki~

number

of wells

(M) cannot be less than three.

Section 307.640

Mechanisms

for

Financial

Assurance

The

operator may use any of the following mechanisms:

1.

Trust

fund

2.

Forfeiture

bond

3.

Performance bond

4,

Letter of Credit

5.

Closure

insurance

6.

Self-insurance

(for non—commercial sites only),

Section 807.641

Use of Multiple Financial Mechanisms

The operator may use

a

combination

of

trust

funds,

forfeiture bonds,

letters

of

credit

and

closure insurance

to

give

financial

assurance

for

a

site.

Performance

bonds

and self—insurance cannot be used in combinations.

Section 807.642

Use of

a

Financial

Mechanism

for

Multiple

Sites

The

operator

may

use

a

single mechanism to provide

financial

assurance

for

more

than

one

site,

The

amount

is

the

sum

of

the

cost

estimates

for

the

sites,

Section

807.643

Trust

Fund

for

Unrelated

Sites

The

Board

has

allowed

a

multiple

unrelated

operator’s

trust

fund

in

which

several

operators

contribute

to a single

trust.

This

should

reduce

each

operator’

s

share

of

the

admin-

istrative

cost

of

maintaining the trust.

The

trust

works

just

like

Section

807. 661, with

a

few

exceptions

The

trustee

must

maintain

books

which show

each

site’s

account,

The

evaluation

is

made

on

the

date

of

creation

of

the

trust,

regardless

of

the

dates

each

site

joined.

Payments

out

of

the

trust

for

a

specific

site

are

only

from

the

account

for

each

site.

Section

807,644

RCRA

Financial

Assurance

The

operator

is

not

required

to

give

financial

assurance

under

Part

807

if

he

demonstrates

that

the

RCRA

closure

and

post-closure

plans

will

result

in

closure

and

post—closure

care

in accordance

with

the

requirements

of

Part

807,

and

that

he has provided adequate

RCRA

financial

assurance.

If

there

are closure activities required under Part

807

which

are

not

62-155

---

—32—

required

under

the

RCRA

rules,

the

operator

can

either

include

the

Part

807

activities

in

the

RCRA

plan

and

increase

the

RCRA

financial

assurance, or provide a separate Part

807

plan

and financial assurance.

Section

807,661

Trust Fund

The

operator

may

satisfy the financial assurance require-

ment

by

establishing

a

trust fund for the benefit of the

Agency.

The

trustee receives annual payments during the

operating life of the site.

Upon closure the trustee pays

out

as

directed

by the Agency.

The trustee pays the operator

if he closes

the

site,

or, alternatively, pays the Agency’s

contractor.

The

trustee

must be an entity with authority to act as

a

trustee,

Illinois

firms

must be regulated by the Illinois

Commissioner of Banks and Trusts.

Out—of—state firms must

comply with the Foreign Corporations as Fiduciaries Act

(Ill.

Rev.

Stat.

1983,

ch.

17, par.

2801 et seq.).

The

Agency should reject financial assurance in the form of

a

trust unless the trustee complies with these requirements.

Limiting

trustees

to those supervised by the Commissioner

of Banks

and

Trusts

provides

assurance

that

the

trustee

will carry out its duties in a manner such that funds will

he available for closure

(R.

206,

215).

The Board

will specify the form of trust agreements in

Appendix A

CR.

123,

390).

The

operator

must make

a

payment

into

the

trust

fund

each

year

during

the

“pay—in period,” which

is equal

to

the

number of

years

remaining

until

the

site

reaches

the point

in

its

operating

life

at

which

the

cost

of premature closure

would

be

the

crreatest

(H, 688,

757).

The Board has also

specified Lhat the pay--in period be not less than three

nor

more

than

ten

years9

so as to avoid requiring immediate

full

funding for

sites

which

may

already

be

at

the

point

of

maximum

closure

cost,

and

yet

to

assure

reasonably

prompt

funding

for all

sites

(H,

388,

398,

782)

.

It

is necessary

to specify limits

since Illinois permits are of indefinite

duration

(R,

688),

An operator who elects to

utilize

the

trust

fund mechan-

ism has an obligation to the State

to fund the trust and to

provide

closure

and post-closure care in accordance

with

these

rules,

Closure

and post—closure care costs are a necessary

expense

associated

with landfill operations.

This expense

should

he.

recognized

during

the

operating

life

of

the

site,

rather

than

being

postponed to the time of actual closure

(H.

244,

474)

62-156

---

—33—

The

trustee must evaluate the trust annually.

The

trustee will be obliged to invest the funds under the terms

of the agreement,

The annual evaluation will reflect the

losses or gains,

The operator will

have

90 days to make up

any shortfall resulting from evaluation

(Section 807,603),

The operator can also request release of profits in excess

of

the

cost. estimate

(Section 807.661(e)).

The evaluation

date can he moved up for the convenience of the operator or

trustee,

The proposal was drawn from

40

CFR

264.143(a),

The

other

changes

from

the

proposal

include

the

following:

1.

Time

for

submission

by

new facilities has been

moved

to

Section

807,602,

2.

Requirement to update the trust agreement with

a change in the cost estimate has been deleted,

3,

Provisions

on

release

have

been

moved

to

Sections

807,604

and

807.606.

Section 807.662

Surety Bond Guaranteeing Payment

The operator may satisfy the financial assurance require-

ment by tendering a surety bond guaranteeing that the operator

will close

the

site in accordance with the plan or the

surety will pay

the

amount

of

the

bond

which

is

based

on

the

current

cost

estimate.

This mechanism assumes that

the

operator

will provide closure, with the surety liable

only

on

default,

The surety

company

must

be

licensed

by

the

Illinois

Department

of

Insurance.

The

Agency

should

reject

bonds

in

which

the

surety

is not

so licensed.

This

requirement

will

assure

oversight of the financial institution to insure

that

funds

will

be

available when needed.

This requirement

will

not

re

strict the number

of

surety

companies

available

significantly

since

the

majority of sureties acceptable in

Circular

570

of

the U.

S. Department of the Treasury

are

licensed

in

Illinois

(H.

221,

227)

The

Board will specify the form of bonds in Appendix A

CR.

123,

461.

465),

The

Board

has

eliminated the requirement of a standby

trust

fund

to

receive payments made under the bond,

Any

such payments will be placed in the landfill closure and

post—closure

fund

where they may be earmarked for application

to the

site

pursuant to Section 22.1(c)

of the Act,

Deletion

of the

standby

trust fund will save costs for the regulated

community

(H,

390,

461).

62-157

---

—34--

The

bond

must guarantee that the operator will provide

closure and post-closure care i~iaccordance with the plans

in

the

permit.

The surety becomes liable when the operator:

abandons

the

site

as defined in Section 807,104; becomes

bankrupt;

fails to initiate closure at the time the Board

or a

court

orders

closure

to

begin;

or, initiates closure,

but

fails

to complete

closure

and post-closure care in

accordance

with

the plans.

Abandonment occurs when the operator fails to initiate

closure

within

30 days after receiving a final volume of

waste,

If no waste is received within a 30-day period, the

operator must demonstrate that it expects additional waste

(Section

807.104),

Bankruptcy

renders

it highly unlikely that an operator

will be able to perform closure and post-closure care,

It

has

therefore

been

listed

as

a

condition triggering

the

surety’

s

liability.

Abandonment

and

bankruptcy represent simple factual

situations which do not directly involve the question of

whether

the

operator is in compliance with environmental

regulations.

If the surety refuses to pay on notice,

the

Agency should sue in Circuit Court, which would make the

determination as

to whether the abandonment or bankruptcy

had

in

fact taken

place,

The

surety does not directly guarantee that the operator

will

comply

with

Board

regulations

and

permit

conditions

in

operation of

the

site.

If the Agency believes

a site is

poorly operated,

it must file an enforcement action to obtain

a finding

of

violation.

If the order directs closure of the

site, the surety becomes liable only

if

the

operator

fails

to

close

as ordered.

The fourth condition of default would occur when

the

operator starts to close the site but fails to complete the

job

as

specified

in the closure and post—closure care plans.

This

is

similar

to

a construction contract bond in which the

surety

becomes

liable

if the contractor fails to build a

build-

ing

according

bo

specifications.

The

proposal

was drawn from 40 CFR 264,143(b) but

differs to one respect.

That Section allows for cancellation

of the bend

b

the surety on a 120-day notice to the Agency

and the

operator,

but

makes the failure to obtain other

financial

assurance

in a 90—day period a condition leading

to

liability by

the surety,

Surety companies object to this

open-ended liability

CR.

796).

In

order

to

attempt

to

make

bonds

more

available

to

operators,

the

Board has specified

that

bonds

he

for

at least four years, but has dropped the

62-158

---

—35—

provisions

making

cancellation

a

condition

leading

to

liability.

The

four

years

would

provide

assurance

for

a

reasonable

period

of

time

during

which

the

Agency

could

file

an

enforce—

ment

action

and obtain a closure order if operations turned

bad.

Four

years

seems to be within the range of construction

projects.

This change does leave the State

in an exposed

position if the operator does not provide additional assurance

on terminat:Lon of a bond.

The

Board

has

provided for an automatic twelve—month

extension of the surety’s liability if the operator fails

to provide substitute financial assurance.

The Agency should

file an enforcement action alleging only failure to provide

financial assurance if

it wishes to ensure completion of the

proceedings during the twelve-month period.

The

following

provisions

of

the

proposal have been

moved

to

other

Sections:

1,

When

financial assurance must be submitted;

2.

Requirement to increase the amount of financial

assurance;

.3,

Release of operator;

4,

Release of financial institution.

Section

807,663

Surety Bond Guaranteeing Performance

The performance bond is identical to the

forfeiture

bond

except

that

the

surety

has the option of implementing

the closure and post-closure care plans instead of paying

the penal sum,

The performance bond is specifically men-

tioned in Section 22.1 of the Act.

However, the State may

encounter difficulties in supervising a surety in the per--

forrriance

of

closure

(H.

392).

Section

807,,664

Letter of Credit

The operator may satisfy the

financial assurance require-

ment by obtaining a letter of credit from a financial institu-

tion,

The

letter

of credit is similar to

a bond in that it

assumes

that

the

operator will provide closure,

If he fails,

the

Agency writes

a draft against the letter of credit

and

presents

it

for

payment through banking channels,

The issuing

institution pays the draft,

and then attempts to collect from

the operator the amountspaid like a loan,

The financial institution must be an entity with autho-

rity to issue letters of credit.

Its letter-of-credit

operations must be regulated by the Illinois Commissioner of

~anks and Trusts,

or it must be insured by FDIC or FSLIC.

62-159

---

—36--

The

Agency

should reject financial assurance in the

form

of

letters of credit from institutions which do not meet

one

of

these

criteria,

which are intended to provide assurance that

the

financial

institution will be managed in such a way that

funds will

he

available for closure.

Although FDIC and

FSLIC

ito

cot actually insure letters of credit,

their over-

sight provi.des

some assurance of continuity of the financial

institution

(H.

208,

213,

216).

The

Board will specify forms for letters of credit in

Appendix

A,

The

Board has deleted the proposed requirement of a

standby trust fund,

Any

payments under

a letter of credit

will go into the landfill closure and post-closure fund

in

the

State Treasury pursuant to Section 21.1 of the Act.

This should reduce compliance costs

(H.

390,

461).

The

Agency

is allowed to draw on the letter of

credit

if

the

operator fails to provide closure

and

post—closure

care in accordance with the plans.

The Agency may draw under

the

same

conditions as for a bond.

As

it

bid

with the bonds,

the Board has provided that

letters

of

credit

are irrevocable for at least four

years,

but

has

deleted

the

proposed conditions allowing the Agency

to draw on

the

letter of

credit

if the operator fails to

provide

addiLional financial assurance on notice of cancel—

Iat

Ion.

Section 807,665

Closure

Insurance

The

operator

may satisfy the financial assurance require—

meat

by

providing

closure

insurance

with

the Agency as a

benefioiary.

Closure

insurance

is

similar

to

a

trust

fund

in

that

payment

is not

dependent

on

any

default

of

the

operator~

the

insurance company pays even if the operator

voluntarily

closes

the

site

and

does

the

work,

The

insurance

company

must

be

licensed

to transact

the

business

of

insurance

by

the

Illinois

Department of Insur—

ance,

Tie

Agency

should reject as financial assurance

any

insurance

incas

a

firm which

is not so licensed,

Oversight

by

the

Department

of

Insurance

is

necessary to assure

that

the

insuranco

company is managed in such a way that

funds

will

heaaaila.hle

for closure

(R,

221,

391),

The

closure

insurance policy must be approved by the

Department of Insurance

(H.

223,

225,

228)

The

Insurance

company becomes

liable

to

pay

out

on

the

policy

wheneve::u

the

operator

abandons

the

site;

the

operator

becomes

bankrupt;

the

Board

orders

the

site

closed;

the

62-160

---

—37—

operator notifies the Agency

that

it is initiating closure;

or,

the operator initiates closure.

The insurer must pay

out funds at the direction of the Agency to whomever is

providing

closure

and post—closure care.

An

insurance policy can be cancelled only for failure

to

pay

the

premium.

As closure approaches the operator

builds

equity

in

the

policy

which

he

is entitled to on

closure.

The

insurer

must

give

the

Agency

120

days’

notice

before cancellation for non-payment of the premium.

The

insurer cannot cancel

if the premium due

is paid by the

operator or the Agency.

The proposal specified abandonment, bankruptcy,

etc.

as

conditions preventing cancellation.

These have been reworded

to

be

consistent

with

the

rest

of

the

proposal

and

have

been

stated with the guarantee of the policy.

If the insurer

becomes liable under paragraph

(e)

during the cancellation

grace

period,

it

continues

to be liable after the period

has

ended.

The

proposal

provided

specifically

that

failure

to

pay

the premium was a violation of the regulations.

This has

been dropped as

unnecessary.

If the failure to pay results

in inadequate financial

assurance, the operator will be in

violation of Section 21.1 of the Act and Section 807.601.

Section 807.666

Self—insurance for Non-commercial Sites

The

Board

has

added

a

self-insurance

provision

to

the

proposal.

The

rule

is

largely

drawn

from

the

federal

RCRA

financial

test

of

40

CFR 264.143(e).

Section 22.1 of the Act requires a “performance bond or

other security.”

The RCRA financial test alone does not

meet this description.

The Board has therefore required

operators

seeking

to

use the financial test to provide

a

bond without surety.

The assets of the firm will be suffi-

cient security if the operator meets the financial test and

other requirements of the Section.

The bond without surety

will place the State in a better position as a creditor

in

the event of the operator’s bankruptcy.

The bond will

provide a liquidated amount which the State can claim against

the

operator’s assets.

Furthermore, the language of the

bond places the burden of proof on the operator to prove

that he provided closure and post—closure care

in accordance

with the bond conditions

CR.

128, 281,

288,

316,

323,

332,

426).

The

financial

test is intended to identify firms

with

financial problems sufficiently far in advance so that the

firm still has assets to provide alternate financial assur-

ance

(R.

311).

The test balances reliability against avail-

ability:

the

test

attempts

to

exclude

all

firms

which

will

62-161

---

—38—

become bankrupt,

and to pass all

firms which will not become

bankrupt

(H.

318).

USEPA

selected 15 financial ratios from a list of

possible ratios.

It

arrived at the financial test after

testing these

15 against samples of bankrupt and non-bankrupt

firms,

The USEPA

financial test

is expected to allow 96

of

non-bankrupt

firms

to

pass,

but

is

expected

to

pass

only

0.1

of

firms

which

will

later

enter

bankruptcy

(R.

345).

In

choosing

the

financial

test,

USEPA

sought

to

minimize

the

sum

of

the

public and private costs, reasoning that

increased costs

to operators were passed

on

to

the

public.

The

balancing

involved

public and private administrative

costs

as

well

as

possible

public

costs

from

unfunded

closure

(R,

320)

The

RCRA

financial test is capable of predicting impend-

ding bankruptcy

sufficiently far in advance that the firm

should

have

sufficient assets to

provide

alternate

financial

assurance

at

the time it fails the test,

even if its financial

condition

is

rapidly deteriorating

(H.

311,

319,

353, 415,

517)

The

financial test includes alternate provisions involving

bond

ratings

for firms with publicly-held debt and ratios

which

can be

used by firms without ratings.

The bond rating

test

is

often

used by public utilities, which have trouble

meeting the

ratio

tests,

but which are financially sound

(H,

270,

3l2~

315,

330)

To

meet

the

financial test, an operator

must

have

a

tanqibie

net

worth which

is:

:L,

At

least

six times the current

cost estimate;

and

2.

At least

$10,000,000,

The

I~LO,OO0,00~tangible

net

worth

requirement

is

related

to

the

probability

that

a

firm

wiLl

become

bankrupt:

exclusion

of

firms

with a lesser tangible

net

worth

reduces

the

frequency

of

bankruptcy by fifty percent

CR.

239,

247,

281,

312.

:326,

331,

343,

355,

509).

The requirement

of a

tangible

net

worth at

least six times the cost estimate

is

an

indicat:.on of

whether a firm is large enough to complete

the

closure

and

post—closure care to which

it has obligated

itself

(R.

239,

312,

326,

328,

330,

355,

509).

The

operator

is

also required to provide an opinion

from

a

certified

public accountant,

An adverse opinion or

disclaimer

will

he

cause for disallowance.

Other qualifica-

tions

may

result

in disallowance of the

test

(R.

240,

268,

313,

518).

62-162

---

—39—

A

more stringent financial test could

be

constructed by

adding a requirement that the ratio of net fixed assets

to

total assets be greater than 0.3.

The Wisconsin financial

test incorporates this ratio

(H.

346,

350,

352,

516,

525),

The Board sees no need to make the test more stringent.

The

RCRA test is based on studies of the bankruptcy

rates for firms other than commercial disposal firms

(H.

232,

347,

415,

503),

The RCRA financial assurance requirement

applies to hazardous waste treatment and storage facilities,

as well as disposal facilities, and applies on-site as well

as off--site,

Off-site hazardous waste disposal facilities

are only a tiny fraction of the RCRA universe, which

consists

mostly of manufacturing concerns managing

their

own

waste

(R.

332,

417)

The

Illinois

financial

assurance

requirement

under consideration applies almost entirely

to off--site

disposal

(Sections

21(d) and 21.1

of

the

Act),

Firms

which

meet the financial test tend

to

be

large

diversified

companies.

However,

if

the

test

were

applied

only to firms

in

any specialized line of business,

the

State

would be

subject

to greater risk because the economy

could

turn

against

that

specialized line,

resulting in a large

number

of

unfunded

closures.

The

firms

which

could

use

the

test under this proposal would be almost entirely engaged in

a single line of business:

commercial waste disposal.

Furthermore, these firms are in a highly regulated area with

high

exposure

to

rapidly

changing

regulations.

The

firms

are all exposed to major liability for potential environ-

mental damage they may be causing

CR.

315,

347,

351,

354,

419)

The

Board

has

restricted

use

of

the

financial test to

firms

which

are

not

engaged

in

commercial

waste

disposal.

This

is

defined

in

terms

of

whether

the

fIrm

derives

more

than

50

of

its

gross

revenue

from

waste

disposal

activities.

The

definition

suggested

at

the

hearing

was

more

than

80

of

gross

revenue

in waste management activities

(H.

352),

The

Board

has lowered the percentage

to 50,

but

has

used

disposal as

a criterion,

Therefore

a firm

also

involved

in

commercIal

waste

treatment

may

be

eligible

for

the financial

test.

Participants

suggested a test at the hearings and

in

the

public

comments,

The

suggested

test

was

that

the

tangible

net

worth

exceed

the

cost

estimate

CR.

796;

NSWMA comment

of

October

26,

1984).

Since

the

cost

estimate

is

not

treated

as a liability

in computing tangible net worth,

it is possible

that

a

firm

could

meet

this

test

and

immediately

declare

bankruptcy simply by recognizing its obligation

to provide

closure and post—closure care as a liability (Appendix A).

This would be short of the three years prediction needed

to

---

—40—

make

certain that

the operator has sufficient assets

to

provide

alternate

financial

assurance

at the time it

first

fails

the

test.

It

may

be possible to construct a financial

test which

commercial disposal operations could meet,

However, the

participants

in

this

rulemaking came forward with no firm

evIdence suggesting the ability of any test to predict the

failure of such firms sufficiently far in advance that

alternate

financial assurance could be

provided.

Participants have

provided evidence that small

landfills

may

not be able

to obtain financial assurance, and may

hence

have to close

CR.

174,

186),

Participants have suggested a

financial

test. as

a way of avoiding such closures, which

would

he

a

hardship

on

the

public

in

some

areas

of

the

State,

as

well as

operators.

However, such small operations

are

arguably the

ones

most likely to become bankrupt.

Part 104 and

Title

IX

of

the

Act

provide

a

variance

mechanism by which

operators which experience arbitrary or

unreasonable

hardship may temporarily avoid the bond requirement.

The

HCRA

rules provide that

a parent corporation can

guarantee

the operator’s cost estimate

if the parent meets

the

financial

test.

The

Board

has

specified

a

form

on

which

the parent’s guarantee must be made.

This

is similar to

the forfeiture bond form.

The

RCPA

rules limit the corporate guarantee

to parent

corporatIons

which

own

more

than 50

of the operator~s

voting

stock

(40

CFR

264141(d)),

The

Board

has

dropped

the

50

requsrement,

but

continues

to

require

some ownership interest

in

the

operator,

Unrelated firms offering this

type

of

guarantee

are

in

the

business

of

writing surety bonds,

and

should be

licensed

by the Department of Insurance

(H,

221,

227,

245,

271,

280,

324)

The

Board

has

continued to limit financial tests

and

guarantees

to

corporations.

The

financial

tests

are

geared

toward

corporate

accounting practices,

and

no

one

has

proposed

a

test

applicable

to individuals,

Furthermore, there is

a

chance

that.

an

individual will die, leaving the State in

a

posItion

in

which

it

would

have to claim against

the assets

of an

estate

(H.

246,

272)

This Opinion supports the Board~sOrder of December 27,

1984,

62-164

---

—41—

Board Member

J. Marlin concurred.

Board Member

B. Forcade dissented.

I, Dorothy

M. Gunn, Clerk of the Illinois Pollution

Control Board,

hereby certify that the above Opinion was

adopted on the

~?7~-

day of

~

,

1984 by a vote

of

~

~.

/L~1

__

Dorothy M. Gunn, Clerk

Illinois Pollution Control Board

62-165