|Financial Assurance Mechanism||Advantages||Disadvantages||Pollution Liability (3rd Party)||Provides money for bodily injury and property damage resulting from accidental releases at a facility.||Limitations & exclusions in policies may make them worthless. No guidance available from EPA to judge adequacy.|
|Trust Fund||Conventional instrument Pay-as- you-go.
TSDs must be fully fund.
|5 year pay in period allowed for used oil and recycling facilities. Facility shutdown or closure before end of pay-in period means the facility doesn't pay for the waste removal and cleanup.|
|Protection available immediately. Semi-conventional instrument.||Complex (two financial instruments) Expensive. Likely not available in current market.|
|Same as payment surety bond. Flexibility for bond holder.||Same as for payment surety bond. Expensive. Likely not available in current market.|
|Letter of Credit||Conventional instrument. Protection available immediately.||Complexity (standby trust fund).
Expensive. Likely not available in current market.
|Closure Insurance||Familiar, can bundle liability into one policy.||Instability of the insurance industry, excess line coverage. Limitations & exclusions in policies may make them worthless. No guidance available from EPA to Judge adequacy.|
|Financial Test||Cheaper, easier to understand||Credibility of financial reports and audits, confidence of financial reports to calculate company worth.|
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