California Integrated Waste Management Board

WorkshopJuly 9, 2009

AB 2296 Consulting Group

Financial Assurances Phase

II Rulemaking1

Sankofa Bird

2

Agenda Introductions and General Overview Options to Address the May 2009 Board

Direction for Phase II Regulations on Closed/Closing Facilities Postclosure Maintenance Financial Assurances Corrective Action Financial Assurances

Lunch Break Continuity of Financial Assurances During

Transfer of Ownership Wrap Up and Next Steps

3

Overview of Operating, Closing, and Closed

LandfillsWhat is the impact of establishing

a rolling 30X level of financial assurance on current landfill operators?Cash-type and Non cash-type

demonstrationsHow many facilities are impacted?

4

Landfills Years Into Postclosure Maintenance

What is the impact of establishing a rolling 30X level of financial assurance on current landfill operators?Adjusted Annual Cost Estimate for

Inflation Since ClosureCompared to Current Amount of

Demonstration6 of 20 Have Received

DisbursementsReturning to 30X Would Impact

6 Closed Landfills with Cash Mechanisms

Cost an Estimated $2.3 million6

Options to Address Postclosure Maintenance

Closing/Closed1. 30X the PCM estimate

a) Same as Operating – including criteria allowing step-down

b) Allow build up period for cash mechanisms2. Not require increase (to 30X) above

current demonstration level, no less than 15X

3. Perform Evaluation to set level(options to determine level?)

7

1.a) Same as Operating – including criteria allowing step-down

Pros: More Protective Minimal System

Impact Equity Ease of Administration May Be Eligible for

Step-down

Cons: Increased Early

Defaults Increased Enforcement Inability for Some to

Raise Additional Funds Fairness – already

closed and imposing additional financial demonstration requirement

8

1.b) Allow Build Up Period for Cash MechanismsPros: Reduces Impact Flexibility Opportunity to Step-

down Reduced Enforcement

Cons: Equity for cash vs.

non-cash mechanisms

9

2. Not require increase (to 30X) above current demonstration level, no less than 15X

Pros: Mitigates Impact on

Individual Landfills Fairness

Cons: Increase Exposure to

State Equity for operating vs

closing/closed and for cash vs non-cash

10

3. Perform Evaluation to Set Level – Not Less Than 15XPros: Better Match

Likelihood of Default and Level of Assurance

Cons: High Transaction

Costs for Operator and Board

Criteria outside existing Mechanisms/program difficult to develop

11

What is the impact of the Corrective Action Direction?

Effective July 1, 1991267 of 282 Landfills are subject125 landfills are currently in

compliance with Water Board Requirements (47%)

Final cover replacement is more expensive 93% of the time (based on in place levels of FA demonstrations) 12

Corrective Action – Estimated Financial

Exposure

13

*This amount includes $677 million for Eagle Mountain landfill

Total Dollar Amounts for all Facilities of Difference from Water Quality CA Estimate to Cap Replacement Estimate – in Millions of Dollars

Public Private Total

Active $489.5 $945.1* $1,434.5

Closing $26.2 $23.3 $49.5

Closed $45.8 $46.1 $91.9

Total $561.4 $1,014.5 $1,575.9

Percentage of Total Facilities by type and activity In Compliance Public Private Total

Active 51% 70% 57%Closing 46% 33% 44%Closed 33% 32% 33%Total 44% 55% 47%

Corrective Action – Estimated Financial

Exposure

14

*This amount includes $677 million for Eagle Mountain landfill

Total Dollar Amounts for All Facilities to Achieve Compliance (based on Cap Replacement divided by Compliance Ratio – Millions of Dollars)

Public Private TotalActive $959.7 $1,063.7* $2,023.4Closing $56.7 $69.9 $126.6Closed $139.3 $145.0 $284.3Total $1,155.8 $1,278.6 $2,603.5

These exposure estimates represent the extrapolated values calculated from the exposure (based on May 2009 Board direction) for each landfill category (i.e., Active-Public, Active-Private, etc.) divided by the current percentage of compliance within each category to identify the estimated exposure calculated for 100% of each type landfill reaching compliance.

Options to Address Corrective Action

Closing/Closed1. Same as Active/Operating

a) Immediatelyb) Allow Build Up Period

2. Original Phase II Proposal – Broaden Use of Water Board Financial Assurance

3. Delay Effective Date For Final Cover Replacement

4. Site Specific Corrective Action Plan5. Include Costs in Pooled Fund

15

1.a) Same as Active/Operating

Pros: More Protective Minimal System

Impact Equity Ease of Administration

Cons: Increased Early

Defaults Increased Enforcement Inability for Some to

Raise Additional Funds Fairness – already

closed and imposing additional financial demonstration requirement

16

1.b) Allow Build Up Period

Pros: May work well in

Combination w/ Option 2 (next slide)

Reduces Impact Flexibility Reduced Enforcement

Cons: Equity for cash vs.

non-cash mechanisms

17

2. Original Phase II Proposal – Broaden Use of Water Board Financial AssurancePros: Simple to Implement Minimal Financial

Impact Equity Fairness

Cons: Might not provide

enough financial assurance to cover the exposure

Doesn’t address Major Maintenance

18

3. Delay Effective Date For Final Cover ReplacementPros:

Note: This option would not require closed landfills to comply with the cover replacement estimate, but would require compliance with the original Phase II proposal (using Water Board corrective action estimate for financial assurance purposes).

Cons: Might not provide enough

financial assurance to cover the exposure

Doesn’t address Major Maintenance

19

Incentivizes Closing landfills to be certified Closed (SD-4.2)

4. Site Specific Corrective Action PlanPros: Recognizes potential

for Major Maintenance Fairness

Cons: Monetary Expense to

Develop Plan Workload to Review

Plans Equity Issue (unless

also imposed on operating landfills)

20

5. Include Costs in Mandatory Pooled FundPros: Would reduce the

amount required for individual financial assurances

Cons: There is no Pooled

Fund(s) yet

21

Continuity of Financial Assurances During Transfer

of OwnershipStay at current landfill financial

assurance requirementAutomatically step-up to 30XAlternative “X” level

5X incrementsBased on what criteria?

22

Phase II Rulemaking Timeline

Aug 2009 – Additional Board Direction on Closed/Closing Landfills

Aug-Oct 2009 – 45-day comment periodNov-Dec 2009 – 15-day comment periodDec 2009 – Board adoptionJan 2010 – Prepare Formal Response to

Comments and Final Statement of Reasons

Feb 10 – Legal ReviewFeb 27, 2010 – Submit to OAL

23