No. 30908 (Amendment): R315-15-10. Liability/Financial Requirements

DAR File No.: 30908
Filed: 01/15/2008, 09:59
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of these changes is to clarify wording and make the rule consistent with other division programs.

Summary of the rule or change:

The changes specify that the liability coverage (i.e., insurance policy or financial mechanism) must be maintained and requires approval of the Executive Secretary. These changes establish the amount of liability insurance or other financial responsibility an applicant shall have to qualify for a used oil permit as specified in Subsection 19-6-704(1)(e). These changes also clarify the liability responsibility for used oil collection centers.

State statutory or constitutional authorization for this rule:

Section 19-6-704

Anticipated cost or savings to:

the state budget:

The requirements that affect state agencies are not changed and the oversight and enforcement of the rule will not change. Currently, there are no state governmental entities that are operating a permitted used oil facility so there is no anticipated effect on the state budget.

local governments:

There are currently no local governments that operate a permitted used oil facility so there is no anticipated effect on local government budget. Also, the proposed requirements do not change the costs of oversight or enforcement of the used oil rules by local governments.

small businesses and persons other than businesses:

Small businesses and other persons that operate a permitted used oil facility and that do not already have the required minimum limits for third party pollution liability insurance will have to increase their cover limits. For these small companies, they may experience an increase in insurance premiums to meet the proposed minimum limits for third party pollution liability insurance required by the proposed changes. The actual increase in insurance premiums depends on the financial stability and credit worthiness of the company and the increased costs could range from less than $100 to over a $1,000 annually.

Compliance costs for affected persons:

The majority of the proposed changes clarify the existing used oil rule and incorporate language that makes the used oil program consistent with the other programs within the Division of Solid and Hazardous Waste. These changes should not pose an increase in compliance costs. However, the proposed new minimum levels for third party pollution liability insurance may require affected persons to increase their existing limits, and therefore experience an increase in insurance premiums to meet the proposed minimum limits. The actual increase in insurance premiums depends on the financial stability and credit worthiness of the company and the increased costs could range from less than $100 to over a $1,000 annually.

Comments by the department head on the fiscal impact the rule may have on businesses:

A person that owns or operates a used oil facility may experience an increase in insurance premiums to meet the proposed minimum limits for third party pollution liability insurance. The increase in insurance premium costs depends on the financial stability and credit worthiness of the business. Anticipated increases may range from less than $100 to over a $1,000 anually. Richard W. Sprott, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Environmental Quality
Solid and Hazardous Waste
288 N 1460 W
SALT LAKE CITY UT 84116-3231

Direct questions regarding this rule to:

Jim Smith at the above address, by phone at 801-538-7061, by FAX at 801-538-6715, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/03/2008

This rule may become effective on:

03/10/2008

Authorized by:

Dennis Downs, Director

RULE TEXT

R315. Environmental Quality, Solid and Hazardous Waste.

R315-15. Standards for the Management of Used Oil.

R315-15-10. [Liability/]Financial Requirements.

(a) Used oil activities. An owner or operator of an [used oil collection, ]off-specification burner, transportation, processing, re-refining, or transfer facility, or a group of such facilities, is financially responsible for:[ shall demonstrate financial responsibility for any liability resulting from accidental spill or mishandling of used oil, e.g., bodily injury, property damage, and damage to third parties arising from operations of the facility or group of facilities.]

(1) cleanup and closure costs,

(2) general liabilities, including operation of motor vehicles, worker compensation and contractor liability, and

(3) environmental pollution legal liability for bodily injury or property damage to third parties resulting from sudden or non-sudden used oil releases. The owner or operator of a permitted used oil facility or operation shall present evidence satisfactory to the Executive Secretary of its ability to meet these financial requirements. The owner or operator shall present with its permit application the information the Executive Secretary requires to demonstrate its general comprehensive liability coverage. The owner or operator shall use the financial mechanisms described in Section R315-15-12 to demonstrate its ability to meet the financial requirements of Subsection R315-15-10(a)(1) and (a)(3). In approving the financial mechanisms used to satisfy the financial requirements, the Executive Secretary will take into account existing financial mechanisms already in place by the facility if required by Sections R315-7-15, R315-8-8, and R311-201-6. Additionally, the Executive Secretary will consider other relevant factors in approving the financial mechanisms, such as the volumes of used oil handled[,] and existing secondary containment[, etc]. [Evidence of f]financial responsibility, environmental pollution legal liability and general liability coverage shall be provided to the Executive Secretary as part of the permit[/registration] application and approval process and shall be maintained until released by Executive Secretary. Changes in extent, type, or amount of the environmental pollution legal liability and financial responsibility shall be considered a permit modification requiring notification to and approval from the Executive Secretary.

(b) Environmental pollution legal liability coverage for third party damages at used oil facilities. Each used oil processor, re-refiner, transfer facility, and off-specification burner shall obtain and maintain environmental pollution liability coverage for bodily injury and property damage to third parties resulting from sudden and non-sudden accidental releases of used oil at its facility. This liability coverage shall be maintained for the duration of the permit or until released by the Executive Secretary as provided for in this section. Changes in extent, type, or amount of the financial mechanism will be considered a permit modification requiring notification to and approval from the Executive Secretary. The minimum amount of environmental pollution legal liability coverage using an assurance mechanism as specified in this section for third-party damages shall be:

(1) For operations where individual volumes of used oil are greater than 55 gallons, such as tanks, storage vessels, used oil processing equipment, and that are raised above grade-level sufficiently to allow for visual inspection of the underside for releases shall be required to obtain coverage in the amount of $1 million per occurrence for sudden releases, with an annual aggregate coverage of $2 million, exclusive of legal defense costs, and

(2) For operations in whole or part that do not qualify under Subsection R315-15-10(b)(1), coverage shall be in the amount of $1 million per occurrence for sudden releases, with an annual aggregate coverage of $2 million, and $3 million per occurrence for non-sudden releases, with an annual aggregate coverage of $6 million, exclusive of legal defense costs.

(3) For operations covered under Subsection R315-15-10(b)(2), the owner or operator may choose to use a combined liability coverage for sudden and non-sudden accidental releases in the amount of $4 million per occurrence, with an annual aggregate coverage of $8 million, exclusive of legal defense costs.

(c) Used oil transporter environmental pollution legal liability coverage for third party damages. Each used oil transporter shall obtain environmental pollution legal liability coverage for bodily injury and property damage to third parties covering sudden accidental releases of used oil from its vehicles and other equipment and containers used during transit, loading, and unloading in Utah, and shall maintain this coverage for the duration of the permit or until released by the Executive Secretary as provided for in this section. The minimum amount of the coverage for used oil transporters shall be $1 million per occurrence for sudden releases, with an annual aggregate coverage of $2 million, exclusive of legal defense costs. Changes in extent, type, or amount of the liability coverage shall be considered a permit modification requiring notification to and approval from the Executive Secretary.

(d) An owner or operator responsible for cleanup and closure under Section R315-15-11 or environmental pollution legal liability for bodily injury and property damage to third parties under Subsections R315-15-10(b) and (c) shall demonstrate its ability to satisfy its responsibility to the Executive Secretary through the use of an acceptable financial assurance mechanism indicated under Section R315-15-12.

(e) Used Oil Collection Centers. An owner of a used oil collection center shall be subject to the same liability requirements as a permitted facility under Subsection R315-15-10(a) and (b) unless these requirements are waived by the Executive Secretary. Pursuant to Section 19-6-710, the Executive Secretary may waive the requirement of proof of liability insurance or other means of financial responsibility that may be incurred in collecting or storing used oil if the following criteria are satisfied:

(1) The used oil storage tank or container is in good condition with no severe rusting, apparent structural defects or deterioration, and no visible leaks;

(2) There is adequate secondary containment for the tank or container that is impervious to used oil to prevent any used oil released into the secondary containment system from migrating out of the system;

(3) The storage tank or container is clearly labeled with the words "Used Oil";

(4) DIYer log entries are complete including the name and address of the generator, date and quantity of used oil received; and

(5) Oil sorbent material is readily available on site for immediate cleanup of spills.

(f) The Executive Secretary shall release an owner or operator from its existing financial responsibility mechanism as described in Section R315-15-10 when:

(1) The Executive Secretary approves an alternative mechanism;

(2) The owner or operator has achieved cleanup and closure according to Section R315-15-11; or

(3) The Executive Secretary determines that financial responsibility is no longer applicable under Rule R315-15.

(g) State of Utah and Federal government used oil permittees are exempt from the requirements of Section R315-15-10.

 

KEY: hazardous waste, used oil[*]

Date of Enactment or Last Substantive Amendment: [June 17, 1998]2008

Notice of Continuation: October 4, 2007

Authorizing, and Implemented or Interpreted Law: 19-6-704