SECTION 252:515-27-81. Corporate financial test

(a)   Corporate test authorized. A corporate owner/operator that satisfies the requirements of this Section may demonstrate financial assurance up to the amount specified in this Section.

(b)   Financial component. The following demonstrations must be submitted to the DEQ for approval and a copy of the approved demonstrations placed in the operating record.

(1)   The corporation must satisfy one of the following three conditions:

(A)   a current rating for its senior unsubordinated debt of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A or Baa as issued by Moody's; or

(B)   a ratio of less than 1.5 comparing total liabilities to net worth; or

(C)   a ratio of greater than 0.10 comparing the sum of net income plus depreciation, depletion and amortization, minus $10 million, to total liabilities.

(2)   The corporation's tangible net worth must be greater than:

(A)   The sum of the current closure, post-closure care, corrective action cost estimates and any other environmental obligations, including guarantees, covered by a financial test plus $10 million except as provided in (B) of this paragraph.

(B)   $10 million in net worth plus the amount of any guarantees that have not been recognized as liabilities on the financial statements provided all of the current closure, post-closure care, and corrective action costs and any other environmental obligations covered by a financial test are recognized as liabilities on the corporation's audited financial statements, and subject to the approval of the DEQ.

(3)   The corporation must have assets located in the United States amounting to at least the sum of current closure, post-closure care, corrective action cost estimates and any other environmental obligations covered by a financial test as described in (d) of this Section.

(c)   Recordkeeping and reporting. The following must by submitted to the DEQ for approval and a copy of the approved documents placed in the operating record.

(1)   a letter signed by the owner/operator's chief financial officer that:

(A)   lists all the current cost estimates covered by a financial test, including, but not limited to:

(i)   cost estimates required for municipal solid waste management facilities under this Chapter;

(ii)   cost estimates required for UIC facilities under 40 CFR Part 144, if applicable;

(iii)   cost estimates required for petroleum underground storage tank facilities under 40 CFR Part 280, if applicable;

(iv)   cost estimates required for PCB storage facilities under 40 CFR Part 761, if applicable; and

(v)   cost estimates required for hazardous waste treatment, storage, and disposal facilities under 40 CFR parts 264 and 265, if applicable; and

(B)   provides evidence demonstrating that the corporation meets the conditions of either (b)(1)(A), (b)(1)(B), or (b)(1)(C) of this Section, and (b)(2) and (b)(3) of this Section.

(2)   a copy of an independent certified public accountant's unqualified opinion of the owner/operator's financial statements for the latest completed fiscal year. A corporate owner/operator may not use the corporate test as a financial assurance mechanism if it receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant. In such case, alternate financial assurance meeting the requirements of this Part shall be provided.

(3)   If the chief financial officer's letter providing evidence of financial assurance includes financial data showing that owner/operator satisfies (b)(1)(B) or (b)(1)(C) of this Section that are different from data in the audited financial statements referred to in (c)(2) of this Section or any other audited financial statement or data filed with the SEC, then a special report from the owner/operator's independent certified public accountant to the owner/operator is required. The special report shall be based upon an agreed upon procedures engagement in accordance with professional auditing standards and shall describe the procedures performed in comparing the data in the chief financial officer's letter derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements, the findings of that comparison, and the reasons for any differences.

(4)   If the chief financial officer's letter provides a demonstration that the firm has assured for environmental obligations as provided in (b)(2)(B) of this Section, then the letter shall include a report from the independent certified public accountant that verifies that all of the environmental obligations covered by a financial test have been recognized as liabilities on the audited financial statements, how these obligations have been measured and reported, and that the tangible net worth of the firm is at least $10 million plus the amount of any guarantees provided.

(d)   Calculation of costs to be assured. When calculating the current cost estimates for closure, post-closure care, corrective action, or the sum of the combination of such costs to be covered, and any other environmental obligations assured by a financial test referred to in this Section, the owner/operator must include:

(1)   cost estimates required for municipal solid waste management facilities under this Chapter; and

(2)   cost estimates required for the following if it assures them through a financial test:

(A)   obligations associated with UIC facilities under 40 CFR Part 144

(B)   obligations associated with petroleum underground storage tank facilities under 40 CFR Part 280;

(C)   obligations associated with PCB storage facilities under 40 CFR Part 761; and

(D)   obligations associated with hazardous waste treatment, storage, and disposal facilities under 40 CFR parts 264 and 265.

(e)   New financial assurance required. If the owner/operator no longer meets the requirements of (b) of this Section, the owner/operator must obtain DEQ approved alternative financial assurance that meets the requirements of this Part within 120 days following the close of the owner/operator's fiscal year.

(f)   DEQ may request financial information. The DEQ may, based on a reasonable belief that the owner/operator may no longer meet the requirements of (b) of this Section, require the owner/operator to provide reports of its financial condition in addition to or including current financial test documentation as specified in (c) of this Section. If the DEQ finds that the owner/operator no longer meets the requirements of (b) of this Section, the owner/operator must comply with (e) of this Section.

[Source: Added at 20 Ok Reg 1151, eff 6-1-03]