(b) The costs of site investigation and remedial action plan and design, including permitting, following the removal of any structural impediment.
(c) Dredging and disposal of contaminated sediment in the area that may be affected by the unplanned event.
(d) The costs of post-event inspection, monitoring, maintenance, and repair.
(6) Duplicative costs. The department shall not impose financial responsibility costs under sub. (5) that are duplicative of those required under subs. (3) and (4).
Note: The department shall not impose financial responsibility costs under sub. (5) that are duplicative of those required under subs. (3) and (4). For example, if financial assurance is required for the cost of replacement of an engineering control under sub. (3), then the costs of replacement of an engineering control may only be required under sub. (5) to the extent that additional funding would be needed due to the nature or timing of the event or third-party action.
(7) Inflation rate. The rates of inflation applied to cost estimates approved by the department in previous years shall be derived from the most recent implicit price deflator for gross domestic product published by the U.S. department of commerce in its Survey of Current Business. The inflation rate is the result of dividing the latest published annual deflator by the deflator for the previous year. The projected rate of inflation to be applied in proof of financial responsibility calculations for all future years shall be equal to the rate of inflation for the last full calendar year.
NR 756.08 Calculating the amount of the proof of financial responsibility. (1) A person required to submit proof shall, as part of the initial request for approval of the plan and compliance schedule, calculate the necessary amounts of proof of financial responsibility based on the methods of providing proof of financial responsibility under s. NR 756.06 that have been chosen by the person required to submit proof. (2) For the planned costs under s. NR 756.04 (2) (b) 1. and 3., all of the following procedures for calculating the amount of proof of financial responsibility shall be used, as applicable: (a) If proof of financial responsibility is submitted as escrow, trust or department accounts, the amount of proof of financial responsibility shall, at minimum, be equal to the sum of all estimated planned action expenditures for the entire proof period when the expenditure for each year has first been expressed in future dollars and then brought to present value using a discount rate based on future earnings. Future earnings shall be calculated based on a projected rate of return equal to the projected rate of inflation plus one percent, or the department may require that, when estimating future earnings on these accounts, the weighted average rate of return of the investments held in the account be used for a period of time not to exceed the weighted average maturity of the investments held in the account rounded to the nearest whole year. Earnings for years beyond the weighted average maturity of the investments in the account shall be calculated based on a projected rate of return equal to the projected rate of inflation plus one percent.
(b) If proof of financial responsibility is submitted as bonds, letters of credit, or insurance, the amount of proof of financial responsibility shall be equal to the sum of the costs in current dollars of performing the requirements for each year of the proof period.
(3) For the additional costs under s. NR 756.04 (2) (b) 2. and 4., the amount of proof of financial responsibility shall be equal to the sum of the costs in current dollars for completion of the requirements. NR 756.09 Changing methods of proof of financial responsibility. A person required to submit proof may change from one method authorized under s. NR 756.06 to another with written approval from the department, but not more than once per year. A change may only be made on the anniversary of the first submittal of proof of financial responsibility under s. NR 756.06, unless otherwise approved by the department. The amount of funds secured by the new method of providing proof of financial responsibility shall be in the amount that is equal to the amount that would have accumulated had the new method been used as the original method. NR 756.10 Adjustment of financial responsibility. (1) A person required to submit proof shall submit to the department verification of the adjustment of the amount of funds secured by a method of proof of financial responsibility on a form supplied by the department.
(2) The amounts of funds secured by methods of proof of financial responsibility shall be adjusted according to all of the following requirements:
(a) The amounts of funds for all proof methods shall be adjusted annually under s. NR 756.07 (7) to account for increases in cost estimates based on adjustments for inflation. The annual proof method adjustments shall be submitted to the department by December 31. (b) Adjusted proof methods shall be submitted within 60 days after a new cost estimate submitted in accordance with s. NR 756.07 is approved by the department. The adjusted proof methods shall be in an amount adequate to cover the most recently approved cost estimate. (3) For a person using trust accounts, escrow accounts or deposits with the department to meet the requirements of this chapter, revised proof of financial responsibility calculations shall be performed under s. NR 756.08 and submitted to the department by March 1 of the year succeeding the calendar year in which the weighted average annual rate of return of any trust or escrow account has fallen by one percent or more. NR 756.11 Access and default. If the department determines that a person required to submit proof is in violation of any of the requirements specified in the plan and compliance schedule or this chapter, the department and its designees may enter upon the site or facility and carry out the approved actions or plan and compliance schedule requirements. The department may use part or all of the funds deposited with it, or the funds deposited in escrow or trust accounts, or performance or forfeiture bonds, or letters of credit, insurance, or funds accumulated under other approved methods to carry out the approved actions or plan and compliance schedule requirements.
NR 756.12 Authorization to release funds. (1) Planned actions. Subject to sub. (3), for costs under s. NR 756.04 (2) (b) 1. and 3., one year after the issuance of the interim action, remedial action, or closure approval that is the subject of the financial responsibility requirement, and annually thereafter for the proof period, the person required to submit proof who has carried out all required actions and response actions under the approved plan and compliance schedule during the preceding year may apply to the department for reimbursement of funds from an escrow account, trust account, deposit with the department, or other approved methods, or for reduction of the bond, insurance or letter of credit equal to the estimated costs for that year. The application shall be accompanied by an itemized list of costs incurred. Upon determination that the expenditures incurred are in accordance with the requirements anticipated in the approved plan and compliance schedule, the department may authorize in writing the release of the funds or approve a reduction in the bond, insurance, or letter of credit. Prior to authorizing a release of the funds or a reduction of the amount of funds secured by the bond, insurance, or letter of credit, the department shall determine that adequate funds exist to complete the required actions under the plan and compliance schedule for the remaining proof period. The department shall make determinations within 90 days after the application is received. For persons using escrow accounts, trust accounts, or deposits with the department, the department may authorize the release and return of up to 75 percent of the expected cost of planned actions for the current year. Any funds remaining in an escrow account, trust account, or on deposit with the department at the termination of the proof period shall be released to the person required to submit proof. (2) Events. Subject to sub. (3), for costs under s. NR 756.04 (2) (b) 2. and 4., when a person required to submit proof has completed all of the requirements under the plan and compliance schedule, the person required to submit proof may apply to the department for release of the bond, insurance, or the letter of credit or return of the money held on deposit, in escrow, or in trust. Upon determination by the department that requirements under the plan and compliance schedule have been fulfilled and financial responsibility for costs under s. NR 756.04 (2) (b) 2. and 4. is no longer necessary to protect human health and the environment, the department shall authorize in writing the release and return of all funds accumulated in such accounts or give written permission for cancellation of the bond, insurance, or letter of credit. The department shall make a determination within 90 days after the application is received. (3) Evaluation of proof period. Prior to submitting an application for the release of funds under sub. (1) or (2), the person required to submit financial assurances under s. NR 756.04 (1) shall request in writing that the department review the length of the plan and compliance schedule and the length of the proof period for each applicable financial responsibility requirement. The department shall respond within 60 days of the request and shall provide the length of any extension or reduction in writing. NR 756.13 Bankruptcy or receivership notification. (1) A person required to submit proof shall notify the department by certified mail of the commencement of a voluntary or involuntary proceeding under the bankruptcy code, 11 USC 101 to 1532, naming the person required to submit proof as debtor, within 10 days after commencement of the proceeding. (2) A person required to submit proof shall notify the department by certified mail of the commencement of a voluntary or involuntary proceeding within a state circuit court under ch. 128, Stats., naming the person required to submit proof as debtor, within 10 days after commencement of the proceeding. NR 756.14 Compliance. (1) If a person required to submit proof fails to comply with any requirements in the approved plan and compliance schedule, the department may take any of the following actions:
(a) The department may require the forfeiture or conversion of any standard method of establishing proof of financial responsibility. All funds received from the forfeiture or conversion of any standard method of establishing proof of financial responsibility shall be credited to the department and managed specifically for the site in the same manner as a settlement to the environmental fund.
(b) The department may request the department of justice to initiate court action against the person required to submit proof to recover funds sufficient to pay the cost of complying with the plan and compliance schedule. Any funds recovered in an action under this paragraph or as a settlement in anticipation of an action under this paragraph shall be credited to the department and managed specifically for the site in the same manner as a settlement to the environmental fund.
(2) If a person required to submit proof fails to comply with any requirements in the approved plan and compliance schedule, the department may take action or contract with a person to take action to comply with these requirements from funds obtained for that purpose under sub. (1) (a).
Section 263 Chapter NR 758 is created to read: INSURANCE AND FINANCIAL RESPONSIBILITY AT CONTAMINATED SEDIMENT SITES IN THE VOLUNTARY PARTY LIABILITY EXEMPTION PROGRAM
NR 758.01 Purpose. This chapter establishes rules and procedures promulgated under s. 292.15 (2) (af) 3m., (am) 2m., and (e), Stats., that the department shall use to determine if voluntary parties have met the requirements under s. 292.15 (2) (af) and (am), Stats., related to environmental insurance, or other forms of financial responsibility, for voluntary parties seeking liability exemptions for sites with contaminated sediment. NR 758.03 Applicability. This chapter applies to voluntary parties, and successors and assigns of voluntary parties, as described under s. 292.15 (3), Stats., seeking an exemption from liability for voluntary party remediation under s. 292.15 (2) (af) or (am), Stats., where contaminated sediment exists from a release of a hazardous substance on or originating from a property. In this chapter, requirements that apply to a voluntary party shall also apply to successors or assigns of the voluntary party, if the successor or assignee agrees to pay for the insurance required under this chapter pursuant to a third-party agreement shared with the department. NR 758.05 Definitions.
(1) “Preexisting pollution condition” means contaminated soil, groundwater or sediment or other media from a discharge of a hazardous substance that occurred prior to the date the environmental investigation of a property was approved by the department.
(2) “Property” has the meaning specified under s. 292.15 (1) (c), Stats. Note: Section 292.15 (1) (c), 2017 Stats., defines “property” to mean “the area of real property that is included in an application to obtain an exemption under this section, made up of a legally identifiable parcel or legally identifiable contiguous parcels created in compliance with applicable laws.” (3) “Voluntary party” has the meaning specified under s. 292.15 (1) (f), Stats. Note: Section 292.15 (1) (f), Stats., defines “voluntary party” to mean a person who submits an application to obtain an exemption under s. 292.15, Stats., and pays any fees required under s. 292.15 (5), Stats. NR 758.07 Insurance requirement. (1) State insurance contract. (a) If the department enters into a contract under s. 292.15 (2) (e), Stats., the voluntary party seeking a liability exemption under s. 292.15 (2) (af), Stats., shall do all of the following: 1. Pay the department insurance fees calculated under par. (b).
2. Submit a completed application form to the department.
3. Comply with the requirements and procedures described in this chapter for the property to obtain coverage under the state’s master insurance contract.
(b) The department shall publish a state insurance contract fee schedule annually. The fee shall be calculated based on the cost of the insurance premium, a contribution towards the state’s deductible, and other expenses necessary to administer the program.
(2) Individual policy. If the department does not enter into a contract with an insurance company as described under sub. (1) or the voluntary party is unable to use the contract under sub. (1), the voluntary party seeking the liability exemption under s. 292.15 (2) (af), Stats., shall obtain and maintain insurance that conforms to all of the following requirements unless a waiver is obtained under s. NR 758.15: (a) The insurance policy shall provide liability insurance covering claims for response action expenses caused by preexisting pollution conditions in the sediment on, at, or emanating from the insured location.
(b) The insurance policy shall cover response action expenses in the event that the department issues a written determination that additional remedial action is necessary due to the occurrence of the conditions described under s. 292.15 (2) (b) 2. or 3., Stats. Note: Section 292.15 (2) (b) 2. and 3., Stats., refer to situations when the department discovers that a cleanup fails to fully restore the environment and minimize the effects from a discharge of a hazardous substance and when the department discovers the contamination from a hazardous substance that is the subject of a cleanup is more extensive than anticipated. (c) The insurance policy shall name the department as an insured party for response action.
(d) The insurer providing the insurance policy shall be rated at A X or better from A.M. Best Rating Services. If the insurer’s rating falls below A X, the voluntary party shall notify the department within 30 days of this change and provide replacement coverage with a subsequent, qualified insurer within 90 days.
(e) Except under par. (f), the voluntary party shall submit a signed certificate of insurance from the insurer to the department that includes endorsement language developed by the department that certifies that coverage conforms with the requirements of this chapter.
(f) As an alternative to the endorsement language required under par. (e), the voluntary party may request that the department approve an alternative set of endorsements naming the voluntary party as the insured. The department may approve an alternative set of endorsements if all of the following requirements are met:
1. The alternative endorsements do not dilute the coverage naming the department as an insured party that are required by this chapter.
2. The alternative endorsements substantially meet the purpose and intent of this section.
3. The voluntary party provides an explanation of why the required endorsements described under par. (e) were not provided.
(g) If the insurer terminates or lapses coverage for any reason, the insurer shall directly notify the department of the termination within 30 days.
(h) The insurance policy may not include any of the following:
1. An exclusion that limits coverage for response action expenses caused by pre-existing pollution conditions in the sediment on, at, or emanating from the insured location.
2. Capital improvements exclusions.
3. Voluntary investigation exclusions.
(i) The insurance policy shall state that, except for non-payment of premium or misrepresentation by the insured, cancellation or termination of the insurance by the insurer will only be effective upon the following occurrences:
1. Notification to the department and the voluntary party in writing by registered or certified mail not less than 90 days prior to the proposed cancellation date.
2. Not less than 30 days prior to the expiration of the 90-day notice period, the voluntary party shall deliver to the department a replacement insurance policy or other proof of financial responsibility in compliance with this section that shall remain in effect for the length of coverage required under s. NR 758.11. (j) If the insurer becomes bankrupt or insolvent or if the company receives an unfavorable evaluation under s. 618.41 (6) (d), Stats., the voluntary party or its successor or assigns shall, within 30 days after receiving written notice, deliver to the department a replacement insurance policy or other proof of financial responsibility under this section. The replacement insurance policy or proof of financial responsibility shall remain in effect for the length of coverage required under s. NR 758.11. (k) The insurance policy shall contain a provision allowing assignment of the policy to a successor of the voluntary party. Assignment may be conditioned upon the consent of the insurer, provided consent is not unreasonably refused.
(3) If coverage beyond the required coverage described in this chapter is obtained, the voluntary party shall submit the insurance endorsements to the department, if requested by the department. If the department determines that the additional coverage and endorsements adversely interfere with coverage required under this chapter, the department may determine that the requirements of this section have not been met and deny the application for a liability exemption.
NR 758.09 Calculating the amount of the insurance coverage. To calculate the amount of insurance coverage required, the voluntary party shall submit to the department a summary of the total costs spent on the investigation and remediation of the contaminated sediment at the insured location, including all money spent by the voluntary party as well as other parties including local, state, or federal government entities. The limits of the insurance shall be dedicated to the response actions of the insured location and may not shared with other coverage parts and may not be limited by the insurance policy’s aggregate limit for other coverages. The insurance shall provide coverage with limits of no less than the following:
(1) If the cost of the site investigation and remediation of the contaminated sediment was less than $1,500,000, then the insurance limit for response action coverage shall be at least $1,000,000.
(2) If the cost of the site investigation and remediation of the contaminated sediment was $1,500,000 to $3,999,999, then the insurance limit for response action coverage shall be at least $3,000,000.
(3) If the cost of the site investigation and remediation of the contaminated sediment was $4,000,000 or more, then the insurance limit for response action coverage shall be at least $5,000,000.
(4) If the voluntary party is unable to provide a summary of the costs, the voluntary party shall provide the coverage described under sub. (3).
NR 758.10 Deductible. (1) All insurance policies providing coverage required under this chapter shall be written with a per-occurrence deductible and not with a self-insured retention basis.
(2) The insurance policy shall have a deductible of no more than $50,000 per occurrence unless a higher deductible is approved by the department in writing before the certificate of completion is issued.
(3) If a claim is made on the policy by the department, the department may pay the deductible if funds are available.
(4) The voluntary party shall pay a fee to the department that is equal to 5 percent of the deductible before a certificate of completion is issued. The department may use those funds toward payment of a future deductible.
NR 758.11 Length of coverage. (1) The voluntary party shall maintain insurance coverage that meets the conditions under this chapter for 25 years after a closure letter has been issued by the department under s. NR 758.19 (2). (2) The policy term of the insurance may be of any length longer than one year. If the policy term ends before 25 years after the date that the closure letter is issued, the policy shall be renewed by the voluntary party to provide the 25 years of coverage.
(3) At least 90 days before the end of the existing policy period, the voluntary party or its successors or assigns shall provide a certificate of insurance from the insurer and proof of insurance for a policy renewal or new policy that meet the requirements of this chapter.
NR 758.12 Proof of insurance. The voluntary party shall submit annually a copy of the certificate of insurance to the department that demonstrates that the requirements for insurance described in this chapter are being met.
NR 758.13 Financial responsibility other than insurance. (1) The department shall accept a form of financial responsibility from the voluntary party other than insurance to meet the requirements of this chapter if all of the following conditions apply:
(a) The financial responsibility is in the amount required under s. NR 758.09. (b) The financial responsibility will provide coverage for 25 years.
(c) The financial responsibility covers response action expenses in the event that the department issues a written determination that additional remedial action is necessary due to the occurrence of any of the conditions described under s. 292.15 (2) (b) 2. or 3., Stats. (d) The financial responsibility satisfies the requirements that a person required to submit proof financial responsibility under s. NR 756.04 (1) is required to follow, as specified under s. NR 756.06 (1), (2), (3), (4), (5), and (8). (e) The hazardous substance contained in the contaminated sediment is not mercury, PCBs, as defined in s. 299.45 (1) (a), Stats., or dioxin.
(2) If a form of financial responsibility is provided other than insurance, the voluntary party shall do all of the following:
(a) Follow the requirements under s. NR 756.09 if changes to the method of financial responsibility are requested. (b) Provide access to the department and its designees to enter upon the site or facility and carry out appropriate site investigation and response actions.
(c) Take actions needed in order for the department to use part or all of the money deposited with the department, or the money deposited in escrow or trust accounts, or performance or forfeiture bonds, or letters of credit, or funds accumulated under other approved methods, to carry out the approved actions or plan and compliance schedule requirements.
(d) Notify the department in the event of bankruptcy, insolvency, or receivership naming the voluntary party in accordance with s. NR 756.13.
