ARTICLE 74:07
ENVIRONMENTAL FINANCIAL ASSURANCE
Chapter
74:07:01 Water Management Board requirements for environmental financial assurance.
CHAPTER 74:07:01
WATER MANAGEMENT BOARD REQUIREMENTS FOR ENVIRONMENTAL FINANCIAL ASSURANCE
Section
74:07:01:01 Definitions.
74:07:01:02 Financial assurance -- Applicability.
74:07:01:03 Preparation of estimated amount of financial assurance -- Department recommendation.
74:07:01:04 Preparation of estimated amount of financial assurance -- Owner or operator responsibilities.
74:07:01:05 Department review of estimated amount of financial assurance -- Recommendation.
74:07:01:06 Preparation of estimated amount of financial assurance -- Appeal.
74:07:01:07 Adjustment of amount of financial assurance.
74:07:01:08 Phased financial assurance schedule.
74:07:01:09 Financial assurance held after cancellation or expiration of permit.
74:07:01:10 Release of financial assurance.
74:07:01:11 Release of financial assurance upon ownership change.
74:07:01:12 Substitution of financial assurance.
74:07:01:13 Management of approved financial assurance -- Board hearing.
74:07:01:14 Procedure to disburse financial assurance funds.
74:07:01:01. Definitions. Terms defined in SDCL chapters 34A-2 and 46-1 have the same meaning when used in this chapter. In addition, terms used in this chapter mean:
(1) "Act of nature," a weather event that causes department-approved design capacities for a permitted activity to be exceeded;
(2) "Aquifer," a geologic formation, a group of geologic formations, or part of a geologic formation that contains sufficient saturated permeable material to yield economical quantities of ground water to wells and springs;
(3) "Board," the Water Management Board created by SDCL 1-40-15;
(4) "Department," the Department of Agriculture and Natural Resources;
(5) "Financial assurance," a financial instrument, documentation, or other means to guarantee that sufficient funds are available to ensure the performance of corrective actions to contain, mitigate, and remediate all pollution, contamination, or degradation of the environment that may result from an impact;
(6) "Impact," pollution, contamination, or degradation of the environment caused by wastewater or associated solids that may result from either abandonment of the permitted activity or from an event not caused by an act of nature;
(7) "Owner or operator," any person legally responsible for an activity authorized by a permit;
(8) "Permit," a water right permit, water right, validated vested water right, water quality variance permit, ground water discharge facility construction permit, or ground water discharge permit that is granted, amended, extended, or renewed by the board and which may include conditions or qualifications.
Source: 24 SDR 90, effective January 4, 1998; SL 2021, ch 1, §§ 8, 19, effective April 19, 2021.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.4.
74:07:01:02. Financial assurance -- Applicability. In the discretion of the board pursuant to SDCL 34A-10-2.1, the board may require, as a condition of a permit, that the owner or operator of a proposed or existing facility which produces, stores, or disposes of wastewater or associated solids to post financial assurance to contain, mitigate, and remediate any impact provided the board finds that such financial assurance is necessary:
(1) To meet the public interest requirement of SDCL 46-2A-9 for approval of a permit or right to appropriate water; or
(2) As a condition of a water quality variance permit, ground water discharge facility construction permit, or ground water discharge permit to ensure that beneficial uses are not impaired and that no hazard is posed to human health in accordance with § 74:54:02:09.
Financial assurance required under this chapter shall be in effect and on file with the department before any construction or operation authorized by the permit. If the activity being permitted preexists approval of the permit, the financial assurance shall be posted within 120 days of the date of the permit approval. Financial assurance required as a condition of amending, renewing, or extending an existing permit shall be posted within 120 days of the date of board approval.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-2-28, 34A-2-30, 34A-10-2.4, 46-2-5.
Law Implemented: SDCL 34A-2-27, 34A-10-2.1, 46-1-2, 46-1-14, 46-2A-9.
74:07:01:03. Preparation of estimated amount of financial assurance -- Department recommendation. If the department recommends posting of financial assurance as a condition of permit approval, the owner or operator shall provide an estimated amount of financial assurance for board consideration at the hearing on the permit application. Whether or not the department recommends posting of financial assurance, the board may require an owner or operator to post financial assurance consistent with provisions of §§ 74:07:01:02 and 74:07:01:04.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.4.
74:07:01:04. Preparation of estimated amount of financial assurance -- Owner or operator responsibilities. If the owner or operator is requested by the department or board to prepare an estimated amount of financial assurance, the owner or operator is responsible for having a South Dakota registered professional engineer or other qualified individual prepare the estimate. The estimate shall include an itemized listing of each cost and how the cost was calculated, including the cost of contracting with a third party. The estimated amount of financial assurance shall include the costs to:
(1) Remove, transport, and safely dispose of the maximum amount of either wastewater or associated solids, or both, that may be stored at the project site if the permitted activity is abandoned; and
(2) Cleanup the most costly impact likely to occur from a release of either wastewater or associated solids, or both. A description of the type of release, conditions under which such a release may occur, and the basis for the anticipated extent of the release shall be included with the estimate. Calculation of this cost shall consider the following factors:
(a) Design parameters relating to the method of storage, transport, and disposal of wastewater or associated solids, or both;
(b) Proximity of the facility and waste disposal areas in relation to aquifers or surface water;
(c) Beneficial uses assigned to waters of the state in or contiguous to the facility and waste disposal areas; and
(d) Topography, geology, and hydrology of the facility site and waste disposal areas and contiguous areas that may be impacted.
If requested by the department, the owner or operator shall provide a copy of the cost estimate to the department at least twenty days before the scheduled hearing date. No provision of this section precludes an owner or operator from presenting evidence or testimony to the board as to whether financial assurance is necessary for approval of the permit application.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.2, 34A-10-2.4.
74:07:01:05. Department review of estimated amount of financial assurance -- Recommendation. Upon receipt of the financial assurance estimate prepared pursuant to § 74:07:01:04, the department shall review the estimate for purposes of preparing a recommendation for the board's consideration. The recommendation shall assess compliance with provisions of § 74:07:01:04, the basis for the type and extent of impacts used in calculations, and whether the estimated amount is sufficient. At the hearing, the board may accept, revise, or reject the department's recommendation.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.4.
74:07:01:06. Preparation of estimated amount of financial assurance -- Appeal. In lieu of preparing an estimated dollar amount of financial assurance in advance of the board hearing pursuant to §§ 74:07:01:03 and 74:07:01:04, the owner or operator may appeal to the board the department recommendation that the owner or operator prepare an estimated amount of financial assurance. If the board determines that an estimate is necessary, the board shall defer action on the permit application until an estimate is prepared pursuant to § 74:07:01:04.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.4.
74:07:01:07. Adjustment of amount of financial assurance. The dollar amount of financial assurance filed with the board shall be reviewed at least once every five years. During the review, the board may adjust the amount for inflation based on the United States consumers price index for rural areas. In addition, the owner or operator may request that the amount of financial assurance be adjusted based on factors occurring since the posting of the existing financial assurance. The owner or operator shall describe the basis for the adjustment request and shall follow the procedure described in § 74:07:01:04. The department shall make a recommendation to the board concerning the proposed adjustment or may propose an adjustment in accordance with applicable provisions of § 74:07:01:03. Notice of the board review shall be provided to the owner or operator in accordance with applicable provisions of SDCL chapter 1-26.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.2, 34A-10-2.4.
74:07:01:08. Phased financial assurance schedule. The dollar amount of financial assurance required at any one time may be phased by the owner or operator according to a schedule based on project development and approved by the board. The schedule shall be attached to and become a condition of the permit upon board approval.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.2, 34A-10-2.4.
74:07:01:09. Financial assurance held after cancellation or expiration of permit. Financial assurance may be held following cancellation or expiration of a permit for one or more of the following reasons as determined by the board:
(1) A written request for release of the financial assurance has not been received from the owner or operator as required under § 74:07:01:10;
(2) The owner or operator has not completed all postclosure, corrective, or site closure activities in accordance with the approved permit;
(3) The owner or operator has an unresolved enforcement action or penalty judgment involving an impact covered by the financial assurance; or
(4) The permitted activity or consequences of such activity continues to pose a significant risk of pollution, contamination, or degradation of the environment based on:
(a) Findings of an on-site inspection of the permitted activity by the department; or
(b) Information available to the department through monitoring or other reporting requirements included in the permit or permit conditions.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.3, 34A-10-2.4.
74:07:01:10. Release of financial assurance. The board may release the financial assurance or a portion of the financial assurance if the board or department:
(1) Receives a written request for release of the financial assurance or a portion thereof from the owner or operator. The written request shall include certification that all postclosure, corrective, or site closure activities have been completed in accordance with the approved permit;
(2) Has inspected the permitted activity to confirm satisfactory completion of all postclosure, corrective, or site closure activities; and
(3) Has determined that the permitted activity's potential to cause an impact has been removed.
After the board has released the financial assurance, the board or department shall notify the owner or operator in writing.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.3, 34A-10-2.4.
74:07:01:11. Release of financial assurance upon ownership change. Upon a change of permit ownership, the board shall release the existing financial assurance if:
(1) The owner or operator who posted the financial assurance makes a written request for release of the existing financial assurance and is in compliance with all provisions of the permit or permit conditions; and
(2) The successor owner or operator is in compliance with federal, state, and local laws or regulations within or outside of the state of South Dakota, assumes all liability for the permitted activity, posts financial assurance in a form approved by the board, and complies with provisions of this chapter and SDCL 34A-10-2.1 to 34A-10-2.4, inclusive.
Release of the existing financial assurance may not occur until the financial assurance posted by the successor owner or operator is in effect and on file with the department. After the board has released the financial assurance, the board or department shall notify the former owner or operator in writing.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.3, 34A-10-2.4.
74:07:01:12. Substitution of financial assurance. If an owner or operator requests substitution of one type of financial assurance for another, the owner or operator shall submit to the board a proposal for alternate financial assurance that meets the requirements of this chapter. The alternate financial assurance must be as secure or more secure than the existing financial assurance as determined by the board. Upon approval and receipt of the alternate financial assurance by the board, the board shall release the existing financial assurance and the board or department shall notify the owner or operator in writing.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.2, 34A-10-2.4.
74:07:01:13. Management of approved financial assurance -- Board hearing. The board shall conduct a hearing, which may be held by telephone conference call, for purposes of holding, releasing, substituting, or requiring reimbursement of financial assurance. The hearing shall be held in accordance with applicable provisions of SDCL chapter 1-26.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.2, 34A-10-2.4.
74:07:01:14. Procedure to disburse financial assurance funds. The board shall conduct a hearing, which may be held by telephone conference call, to authorize disbursement of financial assurance funds to cleanup an impact or mitigate a pending impact. Notice of the hearing shall be given to the owner or operator if the owner or operator can be located after a reasonable attempt by the department. The board shall conduct the hearing in accordance with applicable provisions of SDCL chapter 1-26. The board may require the owner or operator to replace any expended financial assurance funds.
Source: 24 SDR 90, effective January 4, 1998.
General Authority: SDCL 34A-10-2.4.
Law Implemented: SDCL 34A-10-2.1, 34A-10-2.3, 34A-10-2.4.