California integrated waste management board july 22 2008
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California Integrated Waste Management Board July 22, 2008 PowerPoint PPT Presentation


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Item #14 Discussion And Request For Additional Direction On Long-Term Postclosure Maintenance And Corrective Action Financial Assurances For Landfills. California Integrated Waste Management Board July 22, 2008. Phase II Group A.

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California Integrated Waste Management Board July 22, 2008

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California integrated waste management board july 22 2008

Item #14

Discussion And Request For Additional Direction On Long-Term Postclosure Maintenance And Corrective Action Financial Assurances For Landfills

California Integrated Waste Management BoardJuly 22, 2008


Phase ii group a

Phase II Group A

Staff shared initial draft language with stakeholders, and will bring revised language to Board in Aug 2008

  • Five-Year PCM Review (1988-2003 sites)

  • As-built costs

  • Closure certification report submittal

  • Insurance amendments

  • Pledge of Revenue form


Phase ii group b

Phase II Group B

Staff shared initial draft language with stakeholders, and will bring revised language to Board in Aug 2008

  • Reasonable PCM Contingency

  • Grandfather Closed Sites

  • Non-water Corrective Action FA Piggybacking on Water Board

  • Cost Estimating Dialogue

  • No anticipated reductions in PCM costs


Group b pcm reasonable contingency

Group B:PCM Reasonable Contingency

  • Staff Proposing Language Requiring a 10% Contingency on All PCM Costs

  • Need Depends on LTFA Option Chosen

  • Grandfather Closed Sites


Group b non water quality corrective action fa

Group B: Non-Water Quality Corrective Action FA

Staff Proposal Addresses Stakeholders’ Concerns:

  • Simplify – No CA Plan - Use Water Quality Cost Estimate

  • Establish Schedule for Repayment When Used

  • Consider Ability to Repay Before Release of Funds

  • More Guidance Helpful on Current Regulations


Group b cost estimating dialogue

Group B:Cost Estimating Dialogue

Staff Proposal Addresses Stakeholders’ Concerns:

  • Costing for Landfill Gas Control Systems

  • Operating vs. Closing Costs


Phase ii group c

Phase II Group C

Explore Further with AB 2296 Consulting Group and bring back to Board in July 2008 for further direction

  • Consider additional proposals

  • How to extend PCM beyond 30 years

  • Individual FA and/or Pooled Fund

  • How much $$$


Extending financial assurance

ExtendingFinancialAssurance

  • How much FA is enough?

  • How much risk should be avoided?

  • What risks can and should be managed?

  • What are the system costs associated with avoidable and non-avoidable risk?


How much risk can be avoided

How Much Risk Can be Avoided?

  • Long Term Landfill Postclosure Maintenance Costs

  • Landfill Owner Defaults

  • Landfill Owner Divestitures

  • Future Changes to Landfill Design

  • Future Changes to Operation of Existing/Closed Landfills


Long term landfill pcm costs

Long Term Landfill PCM Costs

  • 15 Years of California Experience Shows No PCM Cost Reductions

  • Industry Study Does Not Have Empirical Data Showing Costs Declining

  • Other State Data Inconclusive

  • Modeling Shows That Annual 0.5% Cost Reduction Achieves Equilibrium and Reduces System Costs by 20%


Potential landfill operator default types

Potential Landfill Operator Default Types

  • Standard Default – Operator and Financial Institution, Except Means Test

  • Single Privates (29) – Most (22) Permanently Default

    • 14 closed

    • 6 operating

    • 2 permitted

    • 7 corporate or publicly assured

  • Rural Publics – Temporary Defaults (64)

  • Divestiture – Sell After 30 years PCM, All Privates (a Few Publics), Start-up Business Permanent Default Rate


System costs associated with risk

System Costs Associated With Risk

  • A Certain Level of Defaults Will Occur Regardless of the Amount of Individual Financial Assurance

  • Imposition of a 100-year scenario will likely precipitate an increase in early defaults of Single Private operators

  • Divestiture Leading to Default Can Be Controlled:

    • Buyer Financial Means

    • Buyer Financial Assurance

    • All Owners Retain Responsibility


Risks converted to system costs

Risks Converted to System Costs


Managing longterm pcm risk of landfill system

Managing Longterm PCM Risk of Landfill System

$ in Millions over 100 years


Option 1 individual fa no pooled fund

Option 1 – Individual FA; No Pooled Fund

  • Step-down/Draw-down Rolling 15

  • Exposure to State=$96-170M over 100 Years

  • Minimizes Divestiture Defaults

  • 10% PCM Contingency if Draw-down


Option 2 individual fa combined with pooled fund

Option 2 – Individual FA Combined With Pooled Fund

  • Step-down/Draw-down Rolling 15

  • Pooled Fund as Backstop for Defaults

  • Exposure to State Covered by Fund=$96-170M over 100 years

    • Standard Defaults

    • Single Privates

    • Rural Publics

  • Minimizes Divestiture Defaults

  • No PCM Contingency


Option 3 status quo with pooled fund

Option 3 – Status Quo With Pooled Fund

  • Exposure to State Covered by Fund=$896M over 100 years

    • Private = 90%

    • Public = 10%

  • Addresses Defaults

    • Standard Defaults

    • Single Privates

    • Rural Publics

    • Divestiture Defaults

  • No PCM Contingency


Option 4 pooled fund with controlled divestiture

Option 4 – Pooled Fund with Controlled Divestiture

  • Site History Assessed

  • Financial Test or Appropriate FA

  • Exposure to State Covered by Fund=From $170M to $896M over 100 years

  • Addresses Defaults

    • Standard Defaults

    • Single Privates

    • Rural Publics

  • No PCM Contingency


Next steps

Next Steps

  • Jul 17 – Informal Rulemaking Workshop

  • Jul 22 – Board Update and Additional Direction

  • Aug 11 – P&C Request for Rulemaking Direction


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