Resource Conservation and Recovery Act (RCRA)
Financial Assurance Requirements

• Background
• Amount of Financial Assurance Needed for Closure and Post-closure 
• Acceptable Types of FA Mechanisms
• FA Templates or Model Documents
  
  • Closure or Post-Closure Instrument
  • Third Party Liability FA Instruments
• NJDEP Contacts for RCRA FA
  (RCRA Subtitle C (40 C.F.R. Parts 264/265, Subpart H))
• NJDEP Mailing Address
• Helpful Web Sites

Background

The US Environmental Protection Agency (EPA) has established specific closure and post-closure care requirements to minimize long-term environmental and health threats posed by hazardous waste treatment storage and disposal facilities (TSDFs). These requirements alone do not guarantee that owners and operators of these TSDFs will have sufficient funds to properly close and maintain the site. EPA has promulgated the financial assurance (FA) requirements to ensure that owners and operators of TSDFs could not default to federal funds because they were unable or unwilling to cover significant closure and post-closure costs.  The requirements for such FA appear in RCRA Subtitle C (40 C.F.R. Parts 264/265, Subpart H).

Parts 264/265, Subpart H, outline the mechanisms an owner and operator may use to prove that funds will be available as well as to determine the amounts that must be provided. Subpart H also establishes minimum amounts of liability coverage for accidents during the active life of the facility. Together, these requirements comprise the RCRA provisions known as financial assurance.

The New Jersey Department of Environmental Protection oversees the financial assurance requirements for New Jersey hazardous waste treatment storage and disposal facilities undergoing closure or post closure care pursuant to RCRA Subtitle C (40 C.F.R. Parts 264/265, Subpart H) on behalf of the US Environmental Protection Agency.

Amount of Financial Assurance Needed for Closure and Post-closure 

All units that manage hazardous waste are required to demonstrate financial assurance for closure. The first step in this process is preparing a closure cost estimate. Closure costs include the expenses for ceasing operation of the unit or facility and safely closing the unit and cleaning up any contamination. Post-Closure care costs include long-term maintenance of the unit or facility, monitoring, and record keeping during the required post-closure care period. Units that will be clean closed (i.e., tanks, surface impoundments, or waste piles where all wastes and contaminated soils and equipment are removed) are not subject to post-closure care financial assurance requirements.

Owner/operators calculate cost estimates based on the cost of paying a third party to perform the required closure and post-closure care activities as outlined in the facility's operating permit. Cost estimates must be adjusted annually throughout the operational life of the facility to account for inflation. Owner/operators may either recalculate these costs each year, or use the Department of Commerce, Bureau of Economic Analysis' Implicit Price Deflator (IPD) to calculate the inflation factor and adjust the initial cost estimate. Instructions for using the IPD are included in the regulations (see 40 C.F.R §264/265.142(b)). 

In cases where the owner/operators are subject to both the closure and post-closure care FA requirements, they must prepare cost estimates for both closure activities and post-closure care activities and demonstrate financial assurance for each expense.

The regulations in Subpart H outline how hazardous waste TSDF owner/operators should determine cost estimates, the acceptable mechanisms for demonstrating financial assurance, and the minimum amounts of liability coverage required.

All cost estimates should be submitted to the Program for review and approval.

Acceptable Types of FA Mechanisms

An owner and operator may demonstrate financial assurance for closure and post-closure by choosing from the following financial mechanisms:

1. Trust Fund
2. Surety Bonds (two types)
1. Payment Bonds
2. Performance Bonds
3. Letter of Credit
4. Insurance
5. Financial Test
6. Corporate Guarantee

IMPORTANT NOTE: The above financial assurance mechanisms are different than the Remediation Funding Source mechanisms established under New Jersey Statute for remediation activities under the NJDEP Site Remediation Program.  An owner/operator may be required to establish both at facility or site - separate and distinct financial assurance and remediation funding source mechanism  - subject to each authority.

FA Templates or Model Documents

Wording for RCRA FA mechanisms must be in compliance with 40 C.F.R. 264.151(a)(1) through (n)(2) and incorporated in accordance with N.J.A.C. 7:26G-8.1 and 9.1.  The following RCRA FA templates are provided as a courtesy to assist with required wording/language for RCRA regulated units undergoing closure and/or post-closure (only) which are required to provide financial assurance.

Each template has associated instructions that provide helpful reminders.

Click on the document name to view the language.  Text in blue and red are instructions and should be deleted from your final document.

Every attempt is made to ensure the document wording is accurate and up-to-date. However, the Program is unable to guarantee the accuracy of the sample language in terms of the current regulations. All users are encouraged to check the regulations directly. The instruments listed in federal regulations 40 CFR 264.151(a) through (n) are incorporated and modified by the State of New Jersey regulations N.J.A.C. 7:26G-8.1 and 9.1 to the language in the following lists of documents. Both the federal and state laws must be examined together to gain a clear understanding of the financial assurance requirements.

Please be advised that if you are using a SINGLE RCRA FA mechanism to provide coverage for multiple facilities, outside of the State of New Jersey in addition to a facility(ies) located in New Jersey, then notice should also be provided to the EPA Regional Administrator(s) in the region(s) where the facility(ies) are located, as well as the NJDEP Commissioner.  Both the Federal and NJ regulations require notice to both the NJDEP and the EPA Regional Administrator(s) of the region affected by the owner and operator’s RCRA FA mechanisms and/or the regions where the facilities are located.

When mailing documentation to the EPA Regional Administrator(s), please mail with the ATTENTION TO: Chief RCRA Branch.  Addresses for EPA Regional Administrators can be found on the EPA website, http://www.epa.gov.

CLOSURE OR POST-CLOSURE INSTRUMENTS

Note: Instruments b, c, and d must be accompanied by a standby trust fund meeting the requirements of Instrument a.

The linked documents are in Microsoft Word format.

THIRD PARTY LIABILITY FA INSTRUMENTS

Note: Instrument k must be accompanied by a standby trust fund using the language found in Instrument n.

The linked documents are in Microsoft Word format.

NJDEP Contacts for RCRA FA
(RCRA Subtitle C (40 C.F.R. Parts 264/265, Subpart H)):

NJDEP Mailing Address:

Mail Code: 401-02C
New Jersey Department of Environmental Protection
Division of Solid and Hazardous Waste
Bureau of Planning and Licensing
401 East State Street, 2nd Floor West
P.O. Box 420
Trenton, NJ  08625-0420
PHONE: (609) 777-1951
FAX: (609) 633-9839

Helpful Web Sites:

NJDEP Hazardous Waste Rules:
https://www.nj.gov/dep/dshw/resource/hazreg03.pdf

 EPA Web Sites:

1. EPA’s Financial Assurance Main Page
   http://www.epa.gov/osw/hazard/tsd/td/ldu/financial/index.htm
2. RCRA Financial Assurance Resources
   http://www.epa.gov/osw/hazard/tsd/td/ldu/financial/facover.htm
3. Meeting the Financial Assurance Requirements
   http://www.epa.gov/osw/hazard/tsd/td/ldu/financial/famech.htm
4. RCRA Financial Assurance Tools
   http://www.epa.gov/osw/hazard/tsd/td/ldu/financial/fatools.htm