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Solid Waste Facilities: Financial Assurances
2007 Contracted Study
CalRecycle directed its staff to conduct a study to identify potential long-term threats and financial assurance mechanisms for long-term postclosure maintenance and corrective action at solid waste landfills.
Current statutes and regulations require owners/operators to be responsible for postclosure maintenance activities at solid waste landfills for a minimum of 30 years after closure and until it can be demonstrated by the owner/operator that the waste no longer poses a threat. However, financial assurance demonstrations for these activities currently are only required for the first 30 years of postclosure maintenance. Over the last three years, CalRecycle has been exploring the issue and consideration of whether and how financial assurance demonstrations should be required for more than 30 years.
In November 2003, December 2004, August 2005 (Word 2000, 29 KB), October 2005 and January 2006, CalRecycle staff held workshops and work group meetings to discuss the various issues of postclosure maintenance as it is currently implemented, including, but not limited to, the ongoing necessity to maintain closed landfills beyond 30 years; the costs of potential corrective action necessary at landfills; the current financial assurance demonstrations provided to the State; and, the potential for new financial assurance demonstrations and financing mechanisms.
As a result of these public workshops and public working group meetings, Assembly Member Cindy Montanez authored Assembly Bill 2296 (Chapter 504, Statute of 2006), enacted on September 27, 2006. This bill requires CalRecycle to conduct a study by January 1, 2008, to:
- Define the conditions that potentially affect solid waste landfills, including technologies and engineering controls designed to mitigate potential risks, to identify potential long-term threats to public health and safety and the environment.
- Study various financial assurance mechanisms that would protect the State from long-term postclosure maintenance and corrective action costs in the event that a landfill owner or operator fails to meet its legal obligations to fund postclosure maintenance or corrective action during the postclosure period.
The bill also requires CalRecycle, when conducting the study, to consult with representatives of the League of California Cities, the County Supervisors Association of California, private and public waste management service providers, and environmental organizations.
At its meeting on September 12, 2006, CalRecycle approved allocation proposal 2006-D-8 (Word 2000, 62 KB), during its consideration of agenda item 22, for $300,000 from the Integrated Waste Management Account (IWMA) to conduct a study of the availability and applicability of financial assurance mechanisms that could be used to cover long-term postclosure maintenance and known or reasonably foreseeable corrective action at solid waste landfills.
The study will identify potential long-term threats and financial assurance mechanisms for long-term postclosure maintenance and corrective action at solid waste landfills. It will assess the pros and cons of various options such as a statewide requirement in which all operators contribute to a pooled fund to provide for the longer-term care and/or corrective actions faced at facilities, or a statewide requirement that operators purchase insurance coverage for any costs faced at the facility that are not already identified and otherwise insured to the State. The study will also define potential threats to public health and safety or the environment posed by the location and conditions of different landfills, as well as possible positive aspects of landfill construction and containment techniques and materials, which could impact long-term threats to public health and safety or the environment. Specific contract requirements are identified in the Scope of Work (Word 2000, 93 KB), which CalRecycle approved at its November 15, 2006 Meeting (Word 2000, 60 KB). Based upon the results of the study, staff will provide CalRecycle with recommendations in a staff report regarding long-term postclosure maintenance and corrective action financial assurance requirements.
At its meeting on May 15, 2007, CalRecycle approved ICF Consulting Services of Fairfax, Virginia as the contractor during its consideration of agenda item 10 (Word 2000, 65 KB). The term of the contract is June 14, 2007 to December 1, 2007.
In response to the requirements of AB 2296 that CalRecycle consult with specified representatives in conducting the study, CalRecycle staff will be working with representatives of the following stakeholders during the contract period:
- League of California Cities
- California State Association of Counties (CSAC)
Private and Public Waste Services
- Solid Waste Association of North America (SWANA)
- Regional Council of Rural Counties (RCRC)
- Solid Waste Industry Group (SWIG)
- Los Angeles (LA) County Integrated Waste Management Task Force
- LA County Department of Public Works, Environmental Programs Division
- LA County Sanitation District
- Californians Against Waste (CAW)
- Sierra Club
The consulting group will serve as consultants throughout the contract process by reviewing and commenting on each draft deliverable developed by the contractor. Because the time allowed for completing the contract is less than 5 1/2 months, the consulting group will have approximately one week to review and comment on each draft deliverable. CalRecycle staff will review all of the comments received from the consulting group before submitting staff's recommendations to the contractor. In addition, all comments received from the consulting group will be forwarded to the contractor as information. All comments submitted by the consulting group are available for review.
The study consists of two components:
- Component I: Requires the contractor to evaluate applicable financial assurance demonstrations for long-term postclosure maintenance and corrective action financial exposures for both active and closed landfills, and develop a working model for a statewide pooled fund and criteria for insurance coverage for all exposures not already identified and assured.
- Component II: Requires the contractor to identify potential risks posed by the location and condition of solid waste landfills, evaluate how construction techniques and materials and environmental control systems may exacerbate or mitigate potential risks to public health and safety or the environment, and evaluate how these risks are likely to change over time.
The components are divided into six separate tasks:
- Task 1: Finalize a detailed work plan for Tasks 2 through 4 indicating the steps that will be taken in completing each task.
- Task 2: Review existing financial demonstrations and provide a detailed report of appropriate applicable alternative financial mechanisms. (A minimum of 70 percent of the costs for this task must be directed to subtask 3, which is the development of appropriate alternative financial mechanisms with similar security attributes as current assurances.)
- Task 3: Develop a detailed report of demonstrations consisting of a working model of a statewide pooled fund to receive equitable contributions from all operating solid waste landfills within California to cover all long-term postclosure maintenance and corrective action at active and closed solid waste landfills.
- Task 4: Develop a model product that could be purchased by all landfill operators to provide an umbrella insurance policy capable of assuring all long-term postclosure maintenance and corrective action costs at active and closed landfills not already identified and assured to CalRecycle.
- Task 5: Finalize a detailed work plan for Task 6 indicating the steps that will be taken in completing the task.
- Task 6: Develop a detailed report showing factor analysis, assumptions, and recommendations along with automated methodology for determining overall financial assurances coverage levels for any active or closed landfill in California.
Financial Assurances, http://www.calrecycle.ca.gov/SWFacilities/Financial/
Richard Castle: Richard.Castle@calrecycle.ca.gov (916) 341-6343