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Financial Assurance for Dangerous Waste Facilities

Photo: Filing cabinets labeled Financial Assurance.

“Financial assurance” or “financial responsibility” describes how companies make sure money will be available to clean up after their operations. This is so that taxpayers won’t have to pay for a cleanup if they go out of business.

Companies that recycle, store, or dispose of dangerous waste for others need to have financial assurance. Businesses that recycle used motor oil, solvents, or antifreeze must also have financial assurance. Companies that are cleaning up contaminated sites may also need to have financial assurance, depending on the specifics of the cleanup. Businesses that generate dangerous waste don’t usually need to have financial assurance, even if they treat their waste on site.

As a rule: if a company takes care of its own waste, it probably doesn’t need financial assurance. If it takes care of other people’s waste, it probably does.

Most types of financial assurance are required by federal law. Although Ecology enforces the financial assurance rules in Washington, the Environmental Protection Agency (EPA) takes the lead in enforcement in many situations, especially for Superfund sites. Even for sites that aren’t subject to Superfund rules, EPA may take enforcement actions if they aren’t satisfied with the financial assurance provided by a company.

Financial assurance not only protects taxpayers, it also protects the dangerous-waste-generating customer. If a company that generates waste sends it to a disposal business that goes bankrupt, the customer is still on the hook financially—even if they’ve paid the disposal company to handle it! Doing business with a company that has proper financial assurance helps guarantee that a customer will not have to pay twice to get rid of waste.

Financial Assurance Types include third-party liability, closure clean-up, post-closure safety, and corrective action.

Financial Assurance Annual Updates explains inflation adjustment and offers the yearly inflation factors for cost estimates.

Financial Assurance Mechanisms describe the ways in which a company might provide financial assurance, such as trust funds, payment bonds and letters of credit.

Ecology is currently working on developing more Web-based forms to help you prepare financial assurance documents. Until they are available, email us, and we can send a Microsoft Word document to fill in. We can assist with all forms.

Whether for a business owner who needs financial assurance, an insurance agent who represents companies that provide financial assurance, or just an interested private citizen, we are happy to explain financial assurance. To know more about financial assurance email Kimberly Goetz, Ecology’s Financial Assurance Officer, or call her at (360) 407-6754.

Related information

Closure Cost Estimating Tool User Guide Version 1.3 offers instructions for the Closure Cost Estimating Tool, an Excel spreadsheet to help estimate closure costs.