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California Integrated Waste Management Board February 11, 2009

Long-Term Postclosure Maintenance And Corrective Action AB 2296 Consulting Group Workshop. California Integrated Waste Management Board February 11, 2009. AGENDA. 10:00 - 10:15 Introductions and General Overview 10:15 – 12:00 Dealing with Divestiture Regulatory

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California Integrated Waste Management Board February 11, 2009

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  1. Long-Term Postclosure Maintenance And Corrective Action AB 2296 Consulting Group Workshop California Integrated Waste Management BoardFebruary 11, 2009

  2. AGENDA 10:00 - 10:15 Introductions and General Overview 10:15 – 12:00 Dealing with Divestiture • Regulatory • Add 5X Step-up for lack of continued performance • Add Step-up to 15X for new owner/operator with Board waiver • Change to 15X minimum for PCM • Statutory • Keep former owners/operators liable • Make generators liable 12:00– 1:00 Lunch 1:00 – 2:30 Continue Morning Discussions (if necessary) 2:30 – 3:15 Status of Pooled Fund Discussions 3:15 – 3:30 Wrap Up and Next Steps

  3. Managing Long-Term PCM Risk of Landfill System $ in Millions over 100 years

  4. How Long Does PCM FA $$ Last? 49X = perpetual 43X = 100 years 30X = 46 years 15X = 18 years 5X = 5 years

  5. What is Current Phase II Reg Proposal? • PCM and CA FA required as long as waste poses a threat • 30X Annual PCM at start of period • Annual Drawdown For First 15 Years • 5X Step-downs For Good Performance Every 5 Years • Minimum 5X PCM Throughout Period • Non-water CA Uses Existing Reasonably Foreseeable CA FA

  6. Managing Long-Term PCM Risk of Landfill System $ in Millions over 100 years

  7. What is Effective Multiplier (Likelihood to Step-down)? • Refine Exposure between 5X-15X PCM under proposed Phase II regulations • Modeled No Corrective Actions during 5-year period • Estimated participation in Enhanced Monitoring program during 5-year period • Effective Multiplier equals 8X

  8. Proposed Regulation ImpactDefaults/Divestitures (at 8X) $ in Millions over 100 years

  9. Divestiture Problem • Primarily an Issue for Private Landfills • Becomes a Problem when PCM FA <15X • Affects Both PCM and CA Exposure • Stakeholders Seem to Agree Not to Address Through Pooled Fund

  10. Types of Divestiture • Sell to Another Company for Development or Other Postclosure Land Use • Sell/Donate to Public Entity • Sell to Another Waste Management Company • Change in Control • Sell to Company in the Business of Divestiture

  11. Divestiture – Regulatory What? • Change to Minimum 15X • Add 5X Step-up Provision for lack of continued performance • Add Step-up to 15X for New Owners/Operators • Waiver provision for proven track record When? • During Phase II Rulemaking

  12. Change to Minimum 15X Pros: Cons Ties up more Operator Resources from Other Uses 15X Not Stringent Enough Some Exposure Remains May Result in Earlier Defaults ? • Straightforward • Addresses Divestiture • Lessens Default Exposure • Not Dependent on a Pooled Fund • Not Dependent on a Change to Liability Scheme • ?

  13. Add 5X Step-up For Lack of Continued Performance Pros: Cons: Limited Effect on Divestiture Some Exposure Remains Enforcement/Litigation Difficulties Penalize for CA Beyond Operator’s Control Timing, Step-up When Funds Are Needed Most ? • Indirectly Partially Addresses Divestiture • Incentivizes Continued Maintenance • Minimizes Moral Hazard • ?

  14. Add Step-up to 15X for New Owner/Operators with Waiver Pros: Cons: Not Stringent Enough Some Exposure Remains Increase Price/Affect Sales Doesn’t Address Change in Control ? • Reduces Divestiture • Discourages Marginal/Unproven Operators • Ensures New Owner/Operator has Adequate Financial Resources?

  15. Add 5X Step-up and Step-up to 15X for New Owner/Operators Pros: Cons: Previous Cons Convoluted ? • Previous Pros • Approaches 15X in Addressing Divestiture • ?

  16. Nominal Group Options to Address Divestiture Statutory • Keep Former Site Owners and Operators liable (Water Board-like) • Make Generators, Arrangers, Transporters also liable (DTSC-like)

  17. Keep Former Site Owners/ Operators Liable Pros: Cons: Doesn’t Address Bankruptcy Increases Litigation Perpetual Liability Local Gov’t is Ultimately Responsible for Protecting PHSE ? • Reduces Divestiture by Solvent Companies • Incentive for Increased Due Diligence by Seller • Increases Sources of Revenue • ?

  18. Make Generators, Arrangers, Transporters Also Liable Pros: Cons: Lengthy Litigation for Limited Effectiveness Generators Have No Control Over Operation No Manifests Available Timely Resources Doubtful ? • Greatly Expanded Potential Sources of Revenue • ?

  19. Nominal Group Options to Address Divestiture Ballot • Name (optional) • Representing • Regulatory • Rank Top Two Choices (mark 1 and 2) • Statutory • Rank Top Two Choices (mark 1 and 2)

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