Claims Counsel All transporters and generators of solid and hazardous waste are aware of high disposal costs. However, new developments in landfill regulation taking effect in 1997 may have yet another effect on increasing costs.

Currently, this country generates in excess of 160 million tons per year of household garbage and trash. Roughly 84 percent of this waste stream, more commonly referred to as municipal waste, is transported to municipal solid waste landfills ("municipal landfills"). The United States Environmental Protection Agency (EPA) estimates that there are approximately 10,000 municipal landfills open to receive this waste. A modern state-of-the-art municipal landfill receiving strictly household wastes will generate landfill gas, composed of roughly 60 percent methane; leachate, containing a variety of hazardous organic and inorganic constituents; and offensive odors. All of these pose a threat to human health and the environment.

Closure Issues

The threat unfortunately does not disappear when a landfill closes. The landfill gas must be collected and controlled. The leachate must be collected and treated. Monitoring wells must be installed to insure that leachate does not contaminate the groundwater. A landfill must be properly capped to minimize the generation of both leachate and landfill gas. Moreover, these systems must be operated for many years after the landfill has closed. This of course is not an inexpensive proposition. Industry experts estimate that the average cost to cap a landfill is approximately $150,000 per acre. In addition, the cost to maintain the cap, once installed, is roughly $2,000 per year. Thus, for a typical landfill covering 50 acres the cost of installing the cap would be $7.5 million dollars, while an additional cost of $100,000 per year would be incurred to maintain it. On April 9, 1997, all owners and operators of municipal landfills will be required, many for the first time, to provide financial assurance that closure and post-closure activities will be carried out. Thus, it is foreseeable that this may in turn result in an increase in the tipping fees that generators and transporters pay to dispose of municipal waste.

In 1991, the EPA, alarmed by the potential threat to the environment and human health posed by municipal landfills, and after much study and deliberation, promulgated regulations that established minimum national criteria for the location, design, operation, monitoring, closure and post-closure operation of municipal solid waste landfills. See 40 C.F.R. §258. Subpart F of these regulations describes in detail closure criteria and post-closure care requirements. See 40 C.F.R. §§258.60-258.61. The post-closure care required by these regulations includes: maintaining the integrity of the final cover, maintaining and operating the leachate collection system, maintaining the groundwater monitoring system, and maintaining and operating the gas monitoring system. These activities are required to be undertaken for a period of not less than 30 years unless decreased or extended by the State Director responsible for implementing the particular state's municipal solid waste program.

Financial Assurance

Subpart G of these regulations sets forth financial assurance criteria that an owner or operator of a municipal landfill must comply with, throughout the duration of post-closure, to assure that its landfill will be closed and operated properly after closure. The amount required to be assured, adjusted annually for inflation, includes the cost of hiring a third party to:

• install final cover (as required under 40 C.F.R. §258.60) over
• the largest possible area that the municipal landfill will likely encompass;
• conduct post-closure care; and
• undertake corrective action,

if required. Five methods of financial assurance are permitted: a trust fund, surety bond, letters of credit, insurance, or demonstration that the corporation or municipality would meet the requirements of a financial test. Regardless of the method selected to comply with the financial assurance requirements for municipal landfill operators, additional costs (whether a policy premium, trust administration costs, bank fee for an annual letter of credit, costs to perform under the surety bond or costs to maintain and demonstrate compliance with the financial test) will be incurred and likely passed on to the transporter or generator. While the costs will vary, a well advised owner or operator will select the financial assurance option with the minimal corresponding risks per the dollar expended. Depending upon the particular situation, the owner or operator will select one or perhaps a combination of the above mechanisms. Nonetheless, transporters serving those municipalities capable of meeting the financial test will likely suffer the smallest increase in tipping fee.

Selecting A Cost-Effective Disposal Method

Transporters or generators of hazardous or solid waste should be aware of the new municipal landfill financial assurance regulations taking effect this Spring. Though these new requirements are not expected to cause prohibitive increases in tipping fees, it is possible that different landfill facilities will address the new requirements differently, thus adding a new variable to the decision-making process of landfill selection. As with the land disposal restrictions, it is important to recognize all disposal alternatives and to select the most appropriate, cost-effective method. The environmental consultants and attorneys at XL Environmental Claims Administrators work with generators and transporters in responding to new regulations impacting their business and identifying advantageous, cost-effective solutions.