SB624: Bill Text

SB624,,3 Analysis by the Legislative Reference Bureau

Proof of financial responsibility for municipal solid waste facilities

This bill provides an alternative method for a municipality to establish the proof of financial responsibility required for a solid waste facility.

Under current law, the owner or operator of a solid or hazardous waste storage, treatment, or disposal facility (owner or operator) must maintain proof of financial responsibility to ensure the availability of funds for compliance with closure and long-term care requirements and, if necessary, for taking any required corrective action in the event of a spill or leak. The standard method for proving financial responsibility is to obtain, for example, a bond, deposit, escrow account, or irrevocable trust that is payable to or established for the benefit of the Department of Natural Resources. Alternatively, current law allows an owner or operator that is a for-profit business or a public heat, light, water, or power utility to establish proof of financial responsibility to ensure compliance with closure and long-term care requirements using a net worth test. The net worth test requires, among other things, a certain level of net worth, liabilities to net worth ratio, and credit worthiness.

This bill allows a municipality that owns or operates a solid waste facility to use an alternative method to establish proof of financial responsibility to ensure compliance with closure and long-term care requirements and any required corrective action, similar to the method allowed for local governments under federal law. Under the bill, a municipality may prove financial responsibility by showing either that all of its outstanding general obligation bonds have a rating of at least “Baa” if issued by Moody’s or at least “BBB” if issued by Standard & Poor’s, or that its ratio of cash plus marketable securities to total expenditures is 0.05 or greater and that its ratio of annual debt service to total expenditures is 0.20 or lower. Under the bill, if a solid waste facility is owned or operated by more than one municipality, any of the municipalities may establish proof of financial responsibility on behalf of itself and the other owners or operators. The bill also requires DNR to establish additional rules relating to the alternative method established under this bill.

Payment of closure, long-term care, and corrective action costs

This bill also allows DNR to pay costs associated with closure and long-term care requirements and any required corrective action for a solid or hazardous waste storage, treatment, or disposal facility that has established proof of financial responsibility using either the net worth test or the alternative method for municipal facilities that is created under the bill. The bill allows DNR to pay these costs if the owner or operator has failed to comply with closure, long-term care, or corrective action requirements specified in any rule, order, plan of operation, or other plan approval and if either 1) the owner or operator’s failure to comply is due to bankruptcy, insolvency, or other inability to pay the costs, or 2) DNR determines that the failure to comply presents an imminent or substantial danger to human health or the environment.

To cover these costs, the bill allows DNR to transfer moneys from an existing appropriation account, which is funded from the segregated waste management fund, to a new appropriation account dedicated to this purpose. Under the bill, DNR must request approval from the Joint Committee on Finance for any transfers that are intended to support payments for a facility that exceed $300,000, and must notify JCF of all other transfers.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

SB624,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB624,1 Section 1. 20.370 (4) (dq) of the statutes is amended to read:

SB624,,6 20.370 (4) (dq) Solid waste management — waste management fund. From the waste management fund, all moneys received in the waste management fund, except moneys appropriated under pars. (dr), (dt), (dy) and (dz), for the purpose of administering a program of corrective action, closure, and long-term care of and environmental repairs to solid and hazardous waste facilities under s. 289.68.

SB624,2 Section 2. 20.370 (4) (dr) of the statutes is created to read:

SB624,,8 20.370 (4) (dr) Solid waste management — department action on corrective action, closure, and long-term care. From the waste management fund, all moneys received under s. 289.68 (4m) (b) for the purpose of administering a program of corrective action, closure, and long-term care of solid and hazardous waste facilities under s. 289.68 (4m) (a).

SB624,3 Section 3. 289.41 (3) (c) of the statutes is amended to read:

SB624,,10 289.41 (3) (c) Changes. The owner or operator may change from one standard method of establishing proof of financial responsibility under par. (a) to another or standard method under par. (a), to an alternative method under sub. (3m), or to a net worth method of establishing proof of financial responsibility under sub. (4).

SB624,4 Section 4. 289.41 (3m) of the statutes is created to read:

SB624,,12 289.41 (3m) Alternative method of establishing financial responsibility for solid waste disposal facilities; minimum financial standards for municipalities. (a) Alternative method requirements. A municipality may establish proof of financial responsibility for solid waste disposal facilities as required under sub. (2) by applying to the department and meeting the alternative method requirements. The department shall establish by rule the minimum financial requirements for a municipality to establish proof of financial responsibility under this subsection. If a facility is owned or operated by more than one municipality, any such municipality may establish proof of financial responsibility under this subsection on behalf of itself and the other municipalities that are owners or operators. A municipality that seeks to establish proof of financial responsibility under this subsection shall satisfy the minimum financial requirements established by rule and all of the following requirements:

SB624,,13 1. If the municipality has any outstanding, rated, general obligation bonds, none have been rated lower than “Baa” as issued by Moody’s Investors Service or “BBB” as issued by Standard & Poor’s Corporation.

SB624,,14 2. The municipality’s most recent audited annual financial statement shows a ratio of cash plus marketable securities to total expenditures of not less than 0.05, and a ratio of annual debt service to total expenditures of not greater than 0.20.

SB624,,15 (b) Failure to meet alternative method requirements. If at any time the department determines that a municipality does not meet the minimum financial requirements under par. (a) 1. and 2. and established by rule, the municipality shall, within 45 days of the department’s determination, establish proof of financial responsibility using one of the standard methods under sub. (3).

SB624,5 Section 5. 289.41 (11) (a) 4. of the statutes is amended to read:

SB624,,17 289.41 (11) (a) 4. The department may request the department of justice to initiate court action against the owner or operator to recover moneys sufficient to pay the cost of complying with the closure and long-term care requirements of the specified in any rule, order, plan of operation, or other plan approval or approved plan under s. 291.29. Any moneys recovered in this type of action or as a settlement in anticipation of this type of action shall be credited to the waste management fund.

SB624,6 Section 6. 289.68 (1) of the statutes is amended to read:

SB624,,19 289.68 (1) Payments from the waste management fund. The department may expend moneys in the waste management fund only for the purposes specified under subs. (3) to (6) and 1991 Wisconsin Act 39, section 9142 (2w). The department may expend moneys appropriated under s. 20.370 (4) (dq) for the purposes specified under subs. (3) and (5) and 1991 Wisconsin Act 39, section 9142 (2w). The department may expend moneys appropriated under s. 20.370 (4) (dt) for the purposes specified under sub. (4). The department may expend moneys appropriated under s. 20.370 (4) (dy) and (dz) for the purposes specified under sub. (6). The department may expend moneys appropriated under s. 20.370 (4) (dr) for the purposes specified under sub. (4m).

SB624,7 Section 7. 289.68 (4m) of the statutes is created to read:

SB624,,21 289.68 (4m) Payments of closure, long-term care, and corrective action costs. (a) Payments. The department may expend moneys appropriated under s. 20.370 (4) (dr) to pay costs associated with closure, long-term care requirements, and corrective action for a facility that has established proof of financial responsibility under s. 289.41 (3m) or (4), if the owner or operator of the facility has failed to comply with closure, long-term care, or corrective action requirements specified in any rule, order, plan of operation, or other plan approval and if any of the following applies:

SB624,,22 1. The owner or operator’s failure to comply is due to bankruptcy, insolvency, or other inability to pay the costs.

SB624,,23 2. The department determines that the failure to comply presents an imminent or substantial danger to human health or the environment.

SB624,,24 (b) Transfer of funds; joint finance approval. The department may transfer money from the appropriation account under s. 20.370 (4) (dq) to the appropriation account under s. 20.370 (4) (dr) for the purposes specified under par. (a). The department shall notify the joint committee on finance of transfers that are intended to support payments for a facility under par. (a) that do not exceed $300,000. The department may not make any transfers that are intended to support payments for a facility under par. (a) that exceed $300,000 without approval from the joint committee on finance.

SB624,8 Section 8. Nonstatutory provisions.

SB624,,26 (1) Emergency rules. The department of natural resources shall use the procedure under s. 227.24 to promulgate rules under s. 289.41 (3m) no later than the first day of the 7th month beginning after the effective date of this subsection. Notwithstanding s. 227.24 (1) (c) and (2), emergency rules promulgated under this subsection remain in effect until the first day of the 36th month beginning after the effective date of the emergency rules or the date on which permanent rules take effect, whichever is earlier. Rules promulgated under this subsection shall, at a minimum, reflect the minimum financial requirements established in s. 289.41 (3m) and in 40 CFR 258.74 (f), as amended. Notwithstanding s. 227.24 (1) (a) and (3), the department of natural resources is not required to provide evidence that promulgating a rule under this subsection as an emergency rule is necessary for the preservation of public peace, health, safety, or welfare and is not required to provide a finding of emergency for a rule promulgated under this subsection.

SB624,,27 (end)