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Financial Regulations and Cleanup and Closure
Brent Gaschler, PEEnvironmental Engineer, Utah DEQ, DWMRCOctober 2024 1
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Financial Regulations (Utah Administrative Code)
R315‐15‐10 Financial Requirements
R315‐15‐12 Financial Assurance
R315‐15‐17 Wording of Financial Assurance Mechanisms
(These first three financial regulations are together often
referred to as the Used Oil “financial assurance”
requirements)
Cleanup and Closure Regulation (Utah Administrative Code)
R315-15-11 Cleanup and Closure
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Purposes of Financial Assurance
1)To ensure funding is available for the State of Utah to conduct
cleanup and closure if the permit holder cannot fulfill their
obligations
2)Provide funds to address third-party claims for property damage and
bodily injury
3)Assist businesses in managing the financial risks associated with
used oil operations
4)Encourage responsible environmental practices by ensuring that
companies have the financial means to address pollution incidents
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Up to Three Coverages May Be Required
Coverage #1 - “Commercial General
Liability,” “Automobile Liability,” and
“Workers Compensation and Employers
Liability”
Coverage #2 - “Environmental Pollution
Legal Liability for Bodily Injury or Property
Damage to Third-Parties
Coverage #3 - Facility “Cleanup and
Closure” financial assuranceFi
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What Coverages are Required for Each Permit?
Used Oil Collection Centers - coverages #1 and #2, unless this
requirement is waived by the Director
Used Oil Transporter - coverages #1 and #2
Used Oil Transfer Facility - coverages #1, #2, and #3
Used Oil Processor/Re -refiner - coverages #1, #2, and #3
Used Oil Off-Specification Fuel Burner - coverages #1, #2, and #3
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Coverage #1 - ACORD Certificate of Liability Insurance
General Liabilities Financial Assurance
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Coverage #2 – Pollution Liability Endorsement (Form 17.6, 17.7, or 17.9)
Environmental Pollution Liability for Bodily Injury and Property Damage Financial Assurance
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Coverage #3 – Cleanup and Closure Endorsement (Form 17.5)
Cleanup and Closure Financial Assurance
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Used Oil Collection Center Permit – Conditional Waiver of Required
Coverages if the Following Criteria are Met
1)The used oil storage tank is in good condition with no severe
rusting, apparent structural defects, or deterioration
2)There is adequate secondary containment that is impervious to
used oil to prevent used oil released from migrating out of the
system
3)The storage tank or container is clearly labeled with the words
"Used Oil“
4)DIYer log entries are complete, including the name and address of
the generator, date, and quantity of used oil received
5)Oil sorbent material is readily available for immediate cleanup of
spills
Otherwise, General liabilities (coverage #1), and Environmental
Pollution Legal Liability (coverage #2), are required
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Used Oil Transporter Permit - Required Coverages #1 and #2
Coverage #1 - General liabilities, including Motor Vehicles, Worker
Compensation, and Commercial General Liability
a)Submit an “ACORD Certificate of Liability Insurance” each year
upon expiration. All policy effective dates must be current
Coverage #2 - Environmental Pollution Legal Liability for Bodily
Injury or Property Damage to Third-Parties
a)Submit “Form 17.6 – The Utah Used Oil Transporter Pollution
Liability Endorsement For Sudden Occurrence” each year upon
expiration
b)Coverage must be in the amount of $1 million per occurrence,
with an annual aggregate of $2 million
c)Note that the endorsement’s effective date must be current, and
that endorsements are considered to last only one-year
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Used Oil Transfer Facility, Processor/Re -refiner, and Off-specification Fuel
Burner Permits - Required Coverages #1, #2, and #3
Coverage #1 - General liabilities, including operation of motor
vehicles, worker compensation, and contractor liability
a)Submit an “ACORD Certificate of Liability Insurance” each year
upon expiration. All policy effective dates must be current (none
expired)
Coverage #2 - Environmental Pollution Legal Liability for Bodily Injury
or Property Damage to Third-Parties
a)Submit each year a “Utah Used Oil Pollution Liability
Endorsement,” using either Form 17.7 or Form 17.9
i.To use Form 17.7 - Tanks, storage vessels, and used oil
processing equipment must be raised above grade-level
sufficiently to allow for visual inspection of their undersides.
Otherwise Form 17.9 is to be used
ii.Form 17.7 coverage must be in the amount of $1 million per
occurrence, with an annual aggregate of $2 million
iii.Form 17.9 coverage must be in the amount of $4 million per
occurrence, with an annual aggregate of $8 million
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Coverage #2 continued - Environmental Pollution Legal Liability for Bodily
Injury or Property Damage to Third -Parties
b)Although less commonly used, mechanisms other than Insurance may be
used
i.Form 17.10 – Letter of Credit for Third Party Damages from
Environmental Pollution Liability with Optional Standby Trust Agreement
ii.Form 17.11 - Payment Bond for Third Party Damages from Environmental
Pollution Liability
iii.Form 17.12 - Trust Agreement for Third Party Damages from
Environmental Pollution Liability
iv.Note that the required limits of liability are the same for these
instruments as for endorsement Forms 17.7 or 17.9
Coverage #3 - Facility cleanup and closure
a)Submit “Form 17.5 – Utah Used Oil Pollution Liability Insurance
Endorsement for Cleanup and Closure” each year upon expiration
b)Coverage must be in the amount of the yearly inflation adjusted cleanup
and closure cost (R315-15-11)
c)Other mechanisms are acceptable, including:
i.Form 17.2 – Trust Agreement
ii.Form 17.3 - Surety Bond Guaranteeing Payment into a Standby Trust
Agreement
iii.Form 17.4 - Irrevocable Standby Letter of Credit with Standby Trust
Agreement
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Cleanup and Closure Regulation
Each Used Oil Collection Center, Used Oil Transfer Facility, Used Oil
Processor/Re-Refiner, and Used Oil Off-Specification Fuel Burner must:
1)Remove all used oil and used oil residues from the site of operation
2)Return the facility to a post-operational land use in a manner that
minimizes the need for further maintenance
3)Control, minimize, or eliminate to the extent necessary to protect
human health and the environment, the post-closure escape of used
oil, used oil constituents, leachate, contaminated run-off, or used oil
decomposition products to the ground or surface waters, or to the
atmosphere
Each Used Oil Transfer Facility, Used Oil Processor/Re-Refiner, and Used Oil Off-Specification Fuel Burner must:
1)Submit a closure financial mechanism meeting the requirements of
R315-264-140 through 151
a.Used Oil Collection Centers, however, are not required to post a
financial assurance mechanism, but are otherwise subject to the
cleanup and closure requirements of R315-15-10 and R315-15-11
(R315-15-12.2c)
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Cleanup and Closure Plan
Required for the following permits: Used Oil Transfer Facility, Used Oil
Processor/Re-refiner, and Used Oil Off-Specification Fuel Burner
A closure plan is a step-by-step outline of how a facility is to be
decommissioned, so that the cleanup objectives from the previous slide
can be accomplished. It is a binding document that becomes
incorporated into a facility’s permit
It includes a detailed description of the steps needed to remove and
decontaminate all used oil and used oil residues from containment system
components, equipment, structures, and soils during partial or final
cleanup and closure
It incorporates procedures for cleaning equipment, removing
contaminated soils, methods for sampling and testing surrounding soils,
and criteria for determining the extent of decontamination required to
satisfy closure
It must address the management and disposal of all residues resulting
from the decontamination activity, including but not limited to rinse
waters, rags, personal protective equipment, and small hand implements
What Permits are Not Required to Submit a Closure Plan? Used Oil
Collection Center, and Used Oil Transporter
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Closure Cost Estimates
A facility that is required to submit a closure plan (Used Oil Transfer
Facility, Used Oil Processor/Re -refiner, and Used Oil Off-Specification
Fuel Burner) must obtain a financial instrument to cover the dollar
amount of the cost estimate for cleanup and closure
The cost estimate is based on the site-specific cleanup tasks, as well as
the verification sampling portions of the closure plan
It should be based on third-party direct-estimated costs, or on third -
party costs using RS Means methods, applications, procedures, and
use cost values applicable to the location of the facility
The cost estimate must use the maximum inventory of used oil to be
stored onsite at any one time during the life of the facility
It needs to include all costs of removing, transporting, and disposing
of used oil and used oil residues, and must identify the off-site used
oil facility to be used
The cost estimate is required to be increased annually for inflation,
using an inflation factor calculated from data published by the Federal
Bureau of Economic Analysis
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Closure Costs - Template with Itemized Tasks
Facility Decommissioning, Soil and Groundwater Testing, and Closure Certification Costs
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Common Problems Encountered – Part 1
1)Coverages not being maintained, uninterrupted, throughout the
life of the permit, as required by code
2)Insurance agents mistakenly advising their clients that used oil
Environmental Pollution Liability is covered by Commercial
General Liability or Motor Vehicle policies
3)Agents who are unfamiliar with how to acquire a used oil
Environmental Pollution Liability policy. These policies need to
be obtained from what’s called the excess and surplus line
insurance market
4)Assuming insurance endorsements are perpetually valid. All
insurance endorsements need to be updated and resubmitted
each year (DWMRC must verify that all terms and conditions
were renewed)
5)Insurance Companies that will not provide a facility cleanup and
closure policy because the risk is unfamiliar to them, or the risk
doesn't meet their guidelines
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Common Problems Encountered – Part 2
6)Cost estimates that are not adjusted each year for inflation
(skipped years), and not reported correctly in the permit
holder’s Annual Report
7)Estimates that don’t use the maximum permitted capacity of
used oil
8)Estimates not using third -party costs, as required. (The cost
estimate is not what it would cost the permit holder to
cleanup and close their own facility. It is the cost for the State
of Utah to hire an independent third-party to perform this
work)
9)Estimates not including all costs involved in removing,
transporting, and disposing of used oil, and not identifying
the proposed off-site facility to be used for disposal
10)Failure to provide evidence each year to DWMRC that the
closure cost financial assurance instrument has had its dollar
amount increased
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Questions About Financial Assurance? Brent Gaschler, PE Environmental Engineer brgaschler@utah.gov (385) 454-5330
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