Financial assurance for cleanup operations
Financial assurance (sometimes called financial responsibility) is a security that covers projected waste cleanup costs. It helps:
- Cover costs of environmental cleanup, if needed.
- Prevent taxpayers from bearing cleanup costs.
- Ensure that businesses do not pay twice to dispose of the same waste.
All permitted dangerous waste facilities must provide financial assurance. Waste service providers may offer it, but it is not required.
Why is financial assurance needed?
Most businesses that generate dangerous waste use another business (either a waste service provider or a permitted dangerous waste facility) to manage or dispose of that waste. However, the business that generates the waste is still responsible for it, even after it's transferred.
Financial assurance provides the security to the generator that any unforeseeable issues that arise with the handling or disposal of their waste will be covered by the waste service provider or permitted dangerous waste facility.
Who needs to provide financial assurance?
Permitted dangerous waste facilities (businesses that treat, store, dispose, or recycle dangerous waste for other businesses) must provide two types of financial assurance at all times:
- Liability coverage to pay financial claims made against the facility for bodily harm or property damage related accidents at covered facilities. The minimum liability coverage required is $2 million per incident and $4 million dollars annually.
- Closure coverage based on a site-specific closure plan and cost estimate to close the facility at the end of its useful life (or sooner due to sale, bankruptcy, or some other event). The closure plan and cost estimate must be based on the maximum inventory of wastes that is allowed at the facility. It must also assume that all waste removal, decontamination of structures and equipment, and other closure work will be performed by an outside contractor (not facility staff).
Depending on site-specific conditions, facilities may also need to cover:
- Liability coverage for "non-sudden" accidents such as a leaking tank.
- Post-closure monitoring and maintenance if a site is going to close with waste remaining on site.
- Cleanup or corrective action activities if required by an Agreed Order or Consent Decree.
Businesses that generate dangerous waste don’t usually need to have financial assurance, even if they treat their waste on site.
Enforcing financial assurance requirements
Most types of financial assurance are required by federal law, and the Environmental Protection Agency (EPA) leads enforcement in many situations, especially for Superfund sites. Ecology enforces financial assurance rules for most companies in Washington, however EPA may take enforcement actions if they aren’t satisfied with the financial assurance provided by a company.
Financial assurance calculations and documents
- Financial assurance types includes liability, closure, post-closure, and corrective action.
- Financial assurance annual updates explains inflation adjustment and offers the yearly inflation factors for cost estimates.
- Financial assurance mechanisms describe methods for providing financial assurance, such as trust funds, payment bonds, and letters of credit.
Financial assurance forms
We are developing web-based forms to help you prepare financial assurance documents. Until they are available, email us, and we can send you a Microsoft Word document to fill in.