Standby Trust Agreement for Closure / Post-Closure Bond - Dept. of Environmental Protection in All States
Table of Contents
Brief Summary
If you are using a surety bond for hazardous waste closure or post-closure financial assurance, the bond alone is not enough. The regulator also wants an originally signed standby trust agreement filed with it. Getting both lined up together keeps your permit file from bouncing back.
Under the federal hazardous waste rules that state environmental agencies administer, an owner or operator who uses a surety bond guaranteeing payment for closure or post-closure care must also set up a standby trust fund. Any money the surety pays goes straight into that trust. The bond's penal sum must be at least the current closure or post-closure cost estimate, so the amount is set by your facility's own estimate, not by a fixed figure. Confirm the current forms and filing steps with your state Department of Environmental Protection before the bond is issued.
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How to Apply for a Standby Trust Agreement for Closure / Post-Closure Bond:
- Get the current closure or post-closure cost estimate for the facility, which sets the minimum penal sum.
- Choose a trustee and prepare the standby trust agreement using the wording at 40 CFR 264.151(a) or your state's equivalent form.
- Provide financial statements and ownership information for underwriting.
- Have the surety issue the bond using the required wording at 40 CFR 264.151(b) or your state's form.
- Submit the bond and an originally signed duplicate of the standby trust agreement to the state environmental agency.
- For a new facility, file at least 60 days before hazardous waste is first received.
Detailed Information About the All States Standby Trust Agreement for Closure / Post-Closure Bond:
How the bond and the trust fit together
Hazardous waste treatment, storage and disposal facilities must show they can pay for closure, and disposal facilities also for post-closure care. One accepted method is a surety bond guaranteeing payment into a trust fund, set out at 40 CFR 264.143(b) for closure and 264.145(b) for post-closure care, with matching rules for interim status facilities at 265.143 and 265.145.
The owner or operator who uses that bond must also establish a standby trust fund. Under the bond, every payment the surety makes is deposited directly into the standby trust as the regulator instructs. An originally signed duplicate of the trust agreement must be submitted with the bond. Until money actually goes into the trust, the regulations do not require payments into it, updates to Schedule A, annual valuations or notices of nonpayment.
Most states run this program under their own authorized hazardous waste rules, which follow the federal ones. Where a state Department of Environmental Protection runs the program, it is the agency that receives the bond and trust agreement.
How much the bond has to be
There is no flat amount. The penal sum must be at least equal to the current closure cost estimate, or the current post-closure cost estimate for a post-closure bond. If the estimate rises above the penal sum, the owner or operator has 60 days to raise the bond or add other financial assurance to cover the difference. The bond can be reduced to a lower estimate only with the regulator's written approval.
What the bond guarantees
The owner or operator promises to fund the standby trust up to the penal sum before final closure begins, or within 15 days after a final order to begin closure, or to replace the bond with other approved financial assurance within 90 days after the surety sends notice of cancellation. If the owner or operator does none of these, the surety pays into the trust.
Who is exempt
40 CFR 264.140(c) exempts states and the federal government from these financial requirements.
Other details applicants miss
The bond wording must be identical to 40 CFR 264.151(b), and the trust agreement follows the wording at 264.151(a). The surety must appear on the U.S. Treasury Circular 570 list. A new facility must file the bond at least 60 days before it first receives hazardous waste. The surety cannot cancel during the 120 days after both the owner or operator and the regulator receive the cancellation notice.
Cost
Premium depends on the size of the cost estimate and the financial strength and credit of the owner or operator. Large estimates are usually underwritten on full corporate financial statements.
Eligibility and Requirements for an All States Standby Trust Agreement for Closure / Post-Closure Bond:
- Surety listed in U.S. Treasury Circular 570.
- Penal sum at least equal to the current closure or post-closure cost estimate.
- Standby trust fund established with an eligible trustee.
- Bond wording identical to the regulatory form.
- Raise the bond or add other assurance within 60 days of any increase in the cost estimate.
All States Standby Trust Agreement for Closure / Post-Closure Bond FAQs:
No. It is a trust agreement that sits empty until the surety pays. The surety bond is the guarantee. The rules require both when a payment bond is used for closure or post-closure assurance.
By your facility's current closure or post-closure cost estimate. The penal sum must be at least that amount.
Within 60 days you must increase the penal sum to match or add other financial assurance for the difference.
Yes, by certified mail to you and the regulator, but cancellation cannot take effect during the 120 days after both receive the notice. You must replace the assurance within 90 days of receiving the notice or the surety pays into the trust.
States and the federal government are exempt under 40 CFR 264.140(c).
