Companies that manage waste may be required to provide financial assurance sufficient to clean up after their operations end. Financial assurance helps prevent taxpayers from bearing these costs. If a business takes care of other people’s wastes, it probably needs financial assurance, also sometimes called financial responsibility.
Financial assurance also helps protect businesses that take their waste to management facilities. If a company sends their waste to a disposal business that later goes bankrupt, the company that generated the waste is still financially responsible — even if they paid the disposal company to handle it. Doing business with a company that has proper financial assurance helps guarantee that a generator will not have to pay twice to get rid of the same waste.
Who needs financial assurance?
Companies that are currently in the business of treating, storing, disposing, or recycling dangerous waste (including used oil, solvents, and antifreeze) for other businesses must provide two types of financial assurance at all times when they are operating:
- 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 U.S. 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 forms
Ecology is 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.