NYSDEC Proposes to Require Financial Assurance for Certain State Superfund and Brownfield Sites

The New York State Department of Environmental Conservation (NYSDEC) has released for public comment a draft guidance that would for the first time establish Financial Assurance (FA) for certain state Superfund and Brownfield programs  sites with remedies that require Operation, Maintenance and Monitoring (OM&M).

The proposed DER #41 Proposed Guidance would apply to superfund and brownfield sites where the the present worth of the OM&M costs are estimated to exceed $3MM or it is anticipated that the selected remedy will require OM&M for greater than 10 years. The need for FA would be determined during the remedy selection process. For state superfund sites, The need to provide FA would be discussed in the Basis for Selection – Criteria 7 – Cost Effectiveness of the Record of Decision (ROD). For brownfield sites, the FA will be discussed in the Decision Document.

If NYSDEC is required, NYSDEC would accept the following five forms of FA:

  • Trust Agreement – fully funded account (trust fund)
  • Surety Bond – guaranteeing payment must be accompanied by a Standby Trust Agreement (establishment of an unfunded trust account)
  • Letter of Credit – must be accompanied by a Standby Trust Agreement (establishment of an unfunded trust account)
  • Insurance – Policy which provides declarations and endorsements, must be accompanied with a Certificate of Insurance.
  • A combination of the above instruments which face value total the required cost estimate. If multiple FA instruments are used, the remedial party shall specify at least one such instrument as “primary” coverage and shall specify the other instruments as “excess.

The agency could draw upon the FA instrument if the remedial party is unable to submit an acceptable Periodic Review Report, the NYSDEC determines the institutional controls/engineering controls /EC are not being maintained or the remedy is no longer effective.

NYSDEC proposes that the cost estimate for the FA and the instrument(s) would be adjusted for inflation every five (5) years (e.g., within 60 days of the fifth anniversary of the establishment of the FA. The agency also proposes to allow the remedial party to request a reduction in FA at any time with supporting documentation satisfactory to the DEC. Any transfers of a Certificates of Completion (the NYSDEC version of a no further action letter) must include applicable FA by the new remedial party.

The proposed guidance clarifies that the new FA obligations would not apply for state superfund sites that are being remediated under the corrective action under the state Resource Conservation Recovery Act (RCRA) program. Such sites will continue to be subject to the RCRA FA obligations.

NYSDEC will be accepting written comments through September 12th.

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