This comment is in reference to the financial assurance requirement for permit issuance (https://law.lis.virginia.gov/admincodefull/title9/agency20/chapter70/). Updates to these regulations are needed to improve the regulations’ ability to protect public health, safety, and welfare. Specifically, updates are needed to reduce risk of permitting a landfill that is prone to insolvency and the subsequent environmental and financial harm to localities and the Commonwealth. Landfill bankruptcy can lead to landfills being turned over to state, becoming public responsibility. The recent case of the Bristol landfill illustrates the public impact of unfunded landfill remediation and associated settlements[1].  Despite being permitted under current regulations, the Bristol landfill's closure fund is unfunded. Taxes and fees will have to be increased or state funds will need to be deployed to address this problem. Other recent cases of privately owned landfills declaring bankruptcy have also resulted in extensive public liability[2].

Over the past 20 years, landfill size has increased dramatically, greatly increasing the potential public environmental and financial impact of a bankruptcy. At the same time, financial crises in our nation (Enron, banking and mortgage crisis of 2008, current inflation crisis) have brought into relief how simple assurances may be inadequate. Without requiring multiple methods of financial assurance and relying only on those highly susceptible to credit risk, and remaining blind to red flags of corporate dishonesty, the current regulations do not sufficiently ensure financial stability in applicants.

We propose the following amendments to 9VAC20-70-81. General purpose and scope.

1. “A…the owner or operator of such facility shall obtain one, or a combination of the financial responsibility mechanisms described in this part.” At least two methods should be required. Any one approach may be flawed, as we have seen through ratings agencies’ failures to recognize the Enron risk or the mortgage backed securities risks in 2008.

We propose the following amendments to 9VAC20-70-140.

1. Regarding “9VAC20-70-140. Allowable financial mechanisms. Owners and operators shall choose from the options specified in this article.”
   1. Applicant discretion in selecting financial assurance mechanism is inappropriate. The financial assurance mechanism should be selected by the regulatory agency (DEQ).
   2. The options are not equal in reliability or susceptibility to credit risk. Virginia should prefer the most stringent, non-credit based methods: Trust Fund; Surety bond and trust fund; certificate of deposit, corporate financials test.
2. Regarding 9VAC20-70-200. Corporate financial test. 1.a. (1) (2) and (3). Corporate financials test should be performed by DEQ for all applicants. Meeting the test should be a minimum requirement.  All 3 elements of the corporate financial test should be required (as opposed to any one of the three). (2) and (3) are simple calculations that can be done by agency employees in a few minutes. (1) Bond ratings are easily obtained in less than a minute.
3. Due diligence research, when needed, must be supported by regulation. Currently there is no way to act on concerns of dishonesty/financial red flags that emerge outside of the list of assurance mechanisms (such as previous fraud, analyst concerns of corporate financials being misrepresented or criminal ties). DEQ should have discretion to 1) research such information on their own or request thorough review by the attorney general's office, as they can do with other agencies during the solid waste permitting process; 2) reject permit applications based on these red flags even if other financial assurances can be met.

As a final note, the following section is good as it stands (9VAC20-70-81 section D.):

The director may reject the proposed evidence of financial responsibility if the mechanism or mechanisms submitted do not adequately assure that funds will be available for closure, post-closure care, or corrective action. The owner or operator shall be notified in writing within 60 days of receipt of a complete financial assurance submission of the tentative decision to accept or reject the proposed evidence.

10 July 2022

Dear Sir, 

I am responding to the DEQ's invitation for public commentary regarding the possibility of changes to the current guidelines for financial assurance by companies applying for the permitting of private landfills.   My comments are written with the proposed facility in Cumberland County in mind, as submitted by the corporation Green For Life (GFL).

Private enterprise should be required to have sufficient financial resources to protect against public liability should there be infrastructure failures or unforeseen closure of the facility.  In other words, the requirement for backup financial assurance should be structured such that there will be no need for state or federal intervention or funds to pay for closure, emergency repairs, etc. 

It is my understanding that currently the applicant would be allowed to choose its own method of guaranteeing financial resources should a problem arise, and that this financial assurance can be limited to only one entity for the guarantee of such financing. 

It is my opinion that it is the regulator (DEQ) that should be responsible for determining which methods should be used to determine the financial strength of the corporation, as well as for choosing which means should be used to provide the undergirding financial resources, not only at the onset of the project, but on an ongoing basis, subject to periodic review, throughout the life of the project and beyond.  Multiple sources of backup financing for closure or repair should be required, and, in order to prevent gaming of the process, these choices should not be left to the applicant.

I assume these comments will be read by members of the General Assembly. Therefore, I can only hope that all politicians, liberal and conservative, will recognize the need to protect their citizens' well being and quality of life, and that part of this awareness is not to sacrifice the human and natural environment to the sole goal of being open to all businesses while reducing all other concerns to secondary status. 

Thank you for your attention. 

Sincerely, 

Keith Oulie

146 Brown Road

Cumberland, VA  23040  

To whom it may concern,

Please consider the amendments below. We believe they will better protect the general public of our Commonwealth of Virginia from pollution of our air, water, and soil brought by landfills.

We agree with and also propose the following recommended amendments by Laura Franke to 9VAC20-70-81. General purpose and scope.

1. “A…the owner or operator of such facility shall obtain one, or a combination of the financial responsibility mechanisms described in this part.” At least two methods should be required. Any one approach may be flawed, as we have seen through ratings agencies’ failures to recognize the Enron risk or the mortgage backed securities risks in 2008.

We propose the following amendments to 9VAC20-70-140.

1. Regarding “9VAC20-70-140. Allowable financial mechanisms. Owners and operators shall choose from the options specified in this article.”
   1. Applicant discretion in selecting financial assurance mechanism is inappropriate. The financial assurance mechanism should be selected by the regulatory agency (DEQ).
   2. The options are not equal in reliability or susceptibility to credit risk. Virginia should prefer the most stringent, non-credit based methods: Trust Fund; Surety bond and trust fund; certificate of deposit, corporate financials test.
2. Regarding 9VAC20-70-200. Corporate financial test. 1.a. (1) (2) and (3). Corporate financials test should be performed by DEQ for all applicants. Meeting the test should be a minimum requirement.  All 3 elements of the corporate financial test should be required (as opposed to any one of the three). (2) and (3) are simple calculations that can be done by agency employees in a few minutes. (1) Bond ratings are easily obtained in less than a minute.
3. Due diligence research, when needed, must be supported by regulation. Currently there is no way to act on concerns of dishonesty/financial red flags that emerge outside of the list of assurance mechanisms (such as previous fraud, analyst concerns of corporate financials being misrepresented or criminal ties). DEQ should have discretion to 1) research such information on their own or request thorough review by the attorney general's office, as they can do with other agencies during the solid waste permitting process; 2) reject permit applications based on these red flags even if other financial assurances can be met.

As a final note, the following section is good as it stands (9VAC20-70-81 section D.):

The director may reject the proposed evidence of financial responsibility if the mechanism or mechanisms submitted do not adequately assure that funds will be available for closure, post-closure care, or corrective action. The owner or operator shall be notified in writing within 60 days of receipt of a complete financial assurance submission of the tentative decision to accept or reject the proposed evidence.

The purpose of the regulating agency (DEQ) is to protect the Commonwealth of Virginia and its citizens, not the interests of landfill applicants.  As indicated by the previous commenter, the current standards for financial assurance for solvency have often proven inadequate, most recently in the case involving the landfill in Bristol, VA.  These inadequacies create significant liability for affected communities and in turn the Commonwealth.

Updates to these regulations are needed to improve the protection of public health, safety and welfare.  

"Mega landfills" under consideration for permitting within close proximity to populated communities have incalculable risks associated with the health, safety and welfare of individuals and communities as a whole.  Costs associated with safe landfill operation over time have proven to be ever-changing thereby creating significant unknowns.  These operational uncertainties make thirty year forecasting for closing and post operational activity costs nearly impossible.  For these reasons, regulations which provide leniency or optional choices for the selection of financial assurance mechanisms on behalf of the applicant should be amended, giving DEQ the ability to provide more intense scrutiny over a variety of methods of the highest standards. 

I read the comments of the citizens who are concerned with the financial assurance of a company wanting to put a landfill in our fine Commonwealth.  Ms. Franke did an excellent job of presenting her position on this matter.  I, for one, am in full support of everything she and others said.  It is time for the regulators to take a more firm stand on ensuring the citizens quality of life and protecting our environment.  It is right that companies who built and managed landfills such as Bristol, VA are now looking to us, the taxpayers, for funds to correct things that are very costly.  Where was the regulator over the last 20 years while this landfill was operational; what were they doing to protect the citizens of Bristol; and, what type of monitoring did they do over the years in the financial assurance area to protect the people of Bristol?  It is time to hold our local, state, and federal government responsible to the citizens and not corporations who put dollar signs in front of their eyes. 

One major component of the current regulation I do not understand is why the corporation is allowed to pick its own option of financial assurance.  How do we know it is not a sub-corporation of the corporation asking for the permit.  Self-insurance is not good business. 

I know CCLA submitted a letter to the current Attorney General and the prior Attorney General of Virginia concerning the financial stability of the parent company of Green Ridge who is proposing to put a 1200-acre mega dump in Cumberland County.  There are many questions about the financial stability of Green for Life (GFL) whose company is currently operating at a loss and is heavily leveraged.  The letter was quite long and presented many weaknesses in GFL's financial condition and leadership.  Naturally, no response was received from either of the people filling the position of Attorney General.

There is a strong need to strengthen the regulation regarding the financial assurance of corporations seeking to ruin our environmental with landfills (dump).  It is time for the DEQ and others concerned with the safety and quality of life for citizens to stand up and do what is right for the people of this Commonwealth.  The loss of even one life from illness caused by a landfill, is not protecting the residents of Virginia and cannot compare to the few dollars generated by a dump!