california integrated waste management board february 11, 2009

California Integrated Waste Management BoardFebruary 11, 2009

California Integrated Waste Management BoardFebruary 11, 2009

Long-Term Postclosure Maintenance And Corrective

Action

AB 2296 Consulting GroupWorkshop

Long-Term Postclosure Maintenance And Corrective

Action

AB 2296 Consulting GroupWorkshop

1

AGENDAAGENDA

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

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 2

Managing Long-Term PCM Risk of Landfill System

Managing Long-Term PCM Risk of Landfill System

ScenariScenarioo

AssureAssured Riskd Risk

UnassureUnassured Riskd Risk

StdStd Rural Rural PublicPublicss

Sgl Sgl PvtPvt

DefaultDefaultss

DivesDivest-t-ituresitures

TotalTotal

43X $5,590 0 $11 $26 $263 $300 0 $300

30X 4,562 $1,232 29 26 41 96 0 96

15X 2,972 2,748 60 26 84 170 0 170

5X 2,153 2,955 75 26 103 204 $578 782

Status Quo

1,822 3,172 83 26 120 229 667 896

$ in Millions over 100 years$ in Millions over 100 years 3

How Long Does PCM FA $$ Last?

How Long Does PCM FA $$ Last?

49X = perpetual43X = 100 years30X = 46 years15X = 18 years5X = 5 years

49X = perpetual43X = 100 years30X = 46 years15X = 18 years5X = 5 years

4

What is Current Phase II Reg Proposal?

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 periodAnnual Drawdown For First 15 Years5X Step-downs For Good

Performance Every 5 YearsMinimum 5X PCM Throughout PeriodNon-water CA Uses Existing

Reasonably Foreseeable CA FA

PCM and CA FA required as long as waste poses a threat

30X Annual PCM at start of periodAnnual Drawdown For First 15 Years5X Step-downs For Good

Performance Every 5 YearsMinimum 5X PCM Throughout PeriodNon-water CA Uses Existing

Reasonably Foreseeable CA FA 5

Managing Long-Term PCM Risk of Landfill System

Managing Long-Term PCM Risk of Landfill System

ScenariScenarioo

AssureAssureddRiskRisk

UnassureUnassureddRiskRisk

StdStd RuralRuralPublicPublicss

SglSglPvtPvt

DefaultDefaultss

DivestDivest--ituresitures

TotaTotall

43X $5,590 0 $11 $26 $263

$300 0 $300

30X 4,562 $1,232 29 26 41 96 0 96

15X 2,972 2,748 60 26 84 170 0 170

5X 2,153 2,955 75 26 103 204 $578 782

StatusQuo

1,822 3,172 83 26 120 229 667 896

$ in Millions over 100 years$ in Millions over 100 years 6

What is Effective Multiplier (Likelihood to Step-down)?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

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 7

Proposed Regulation ImpactDefaults/Divestitures (at 8X)Proposed Regulation ImpactDefaults/Divestitures (at 8X)

ScenarioScenario DefaultsDefaults DivestituresDivestitures TotalsTotals

PCM $209 $433 $642

CorrectiveAction

154 109 263

Total 363 542 905

$ in Millions over 100 years$ in Millions over 100 years 8

Divestiture ProblemDivestiture Problem

Primarily an Issue for Private Landfills

Becomes a Problem when PCM FA <15X

Affects Both PCM and CA ExposureStakeholders Seem to Agree Not

to Address Through Pooled Fund

Primarily an Issue for Private Landfills

Becomes a Problem when PCM FA <15X

Affects Both PCM and CA ExposureStakeholders Seem to Agree Not

to Address Through Pooled Fund

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Types of DivestitureTypes of Divestiture

Sell to Another Company for Development or Other Postclosure Land Use

Sell/Donate to Public EntitySell to Another Waste

Management CompanyChange in ControlSell to Company in the Business of

Divestiture

Sell to Another Company for Development or Other Postclosure Land Use

Sell/Donate to Public EntitySell to Another Waste

Management CompanyChange in ControlSell to Company in the Business of

Divestiture 10

Divestiture – Regulatory 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/OperatorsWaiver provision for proven track record

When? During Phase II Rulemaking

What? Change to Minimum 15X Add 5X Step-up Provision for lack of

continued performance Add Step-up to 15X for New

Owners/OperatorsWaiver provision for proven track record

When? During Phase II Rulemaking

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Change to Minimum 15XChange to Minimum 15X

Pros:Pros: Straightforward Addresses Divestiture Lessens Default

Exposure Not Dependent on a

Pooled Fund Not Dependent on a

Change to Liability Scheme

?

Straightforward Addresses Divestiture Lessens Default

Exposure Not Dependent on a

Pooled Fund Not Dependent on a

Change to Liability Scheme

?

ConsCons Ties up more Operator

Resources from Other Uses

15X Not Stringent Enough

Some Exposure Remains

May Result in Earlier Defaults

?

Ties up more Operator Resources from Other Uses

15X Not Stringent Enough

Some Exposure Remains

May Result in Earlier Defaults

?12

Add 5X Step-up For Lack of Continued Performance

Add 5X Step-up For Lack of Continued Performance

Pros:Pros: Indirectly Partially

Addresses Divestiture Incentivizes Continued

Maintenance Minimizes Moral

Hazard ?

Indirectly Partially Addresses Divestiture

Incentivizes Continued Maintenance

Minimizes Moral Hazard

?

Cons: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 ?

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 ?

13

Add Step-up to 15X for New Owner/Operators with

Waiver

Add Step-up to 15X for New Owner/Operators with

WaiverPros:Pros: Reduces Divestiture Discourages

Marginal/Unproven Operators

Ensures New Owner/Operator has Adequate Financial Resources?

Reduces Divestiture Discourages

Marginal/Unproven Operators

Ensures New Owner/Operator has Adequate Financial Resources?

Cons:Cons: Not Stringent Enough Some Exposure

Remains Increase Price/Affect

Sales Doesn’t Address

Change in Control ?

Not Stringent Enough Some Exposure

Remains Increase Price/Affect

Sales Doesn’t Address

Change in Control ?

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Add 5X Step-up and Step-up to 15X for New Owner/OperatorsAdd 5X Step-up and Step-up to 15X for New Owner/Operators

Pros:Pros: Previous Pros Approaches 15X in

Addressing Divestiture ?

Previous Pros Approaches 15X in

Addressing Divestiture ?

Cons:Cons: Previous Cons Convoluted ?

Previous Cons Convoluted ?

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Nominal Group Options to Address Divestiture

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)

Statutory Keep Former Site Owners and Operators

liable (Water Board-like) Make Generators, Arrangers,

Transporters also liable (DTSC-like)

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Keep Former Site Owners/ Operators Liable

Keep Former Site Owners/ Operators Liable

Pros:Pros: Reduces Divestiture

by Solvent Companies Incentive for Increased

Due Diligence by Seller

Increases Sources of Revenue

?

Reduces Divestiture by Solvent Companies

Incentive for Increased Due Diligence by Seller

Increases Sources of Revenue

?

Cons:Cons: Doesn’t Address

Bankruptcy Increases Litigation Perpetual Liability Local Gov’t is

Ultimately Responsible for Protecting PHSE

?

Doesn’t Address Bankruptcy

Increases Litigation Perpetual Liability Local Gov’t is

Ultimately Responsible for Protecting PHSE

?

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Make Generators, Arrangers, Transporters

Also Liable

Make Generators, Arrangers, Transporters

Also LiablePros:Pros: Greatly Expanded

Potential Sources of Revenue

?

Greatly Expanded Potential Sources of Revenue

?

Cons:Cons: Lengthy Litigation for

Limited Effectiveness Generators Have No

Control Over Operation

No Manifests Available Timely Resources

Doubtful ?

Lengthy Litigation for Limited Effectiveness

Generators Have No Control Over Operation

No Manifests Available Timely Resources

Doubtful ?

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Nominal Group Options to Address Divestiture BallotNominal Group Options to Address Divestiture Ballot

Name (optional)RepresentingRegulatory

Rank Top Two Choices (mark 1 and 2) Statutory

Rank Top Two Choices (mark 1 and 2)

Name (optional)RepresentingRegulatory

Rank Top Two Choices (mark 1 and 2) Statutory

Rank Top Two Choices (mark 1 and 2)

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