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Financial Assurance

TechLaw’s environmental professionals and financial analysts are experienced in reviewing closure and post-closure plans for compliance with both technical and financial regulatory standards. We can determine the reasonableness of nominal cost estimates and develop present worth cost estimates using accepted accounting and financial analysis methods. TechLaw’s financial assurance experience includes the following:

  • Support to EPA Headquarters for revision of Closure Cost and Financial Assurance Training
  • 15 years of closure/post-closure plan cost estimate and financial assurance training and support to federal, state, and tribal regulatory personnel
  • Preparation of PRP ability-to-pay modeling based on review and analysis of individual and corporate financial statements and income tax records
  • Analysis of incurred and estimated third-party response and closure costs and allocation of costs among responsible parties for RCRA corrective actions
  • Auditing of incurred costs and trust fund income for settlement groups at superfund sites (See also Cost Evaluation, Analysis and Audits)

Corporate Guarantees & Letters of Credit – Our experienced financial analysts review and analyze public filings and corporate financial statements. They conduct corporate solvency testing through ratio analysis and reviewing bond rating agency reports.
Corporate Financial Tests – TechLaw’s staff is experienced in the use of EPA’s ability-to-pay models (e.g., BEN and ABEL). We have analyzed corporate financial statements, state and federal income tax filings, and responses to 104(e) letters to determine the ability of an entity to self-fund remediation, closure, or post-closure costs.
Insurance Policies and Surety Bonds – Our insurance professionals (former underwriters, investigators, and attorneys), have conducted analysis of various commercial insurance vehicles including occurrence and claims-made liability insurance, umbrella insurance, reinsurance, and surety bonds.
Trust Funds – TechLaw’s environmental attorneys and financial analysts review trust fund documents.

Projects
 
U.S. Department of Justice and U.S. Army Corps of Engineers
As part of the penalty phase in a civil enforcement action in U.S. District Court, District of Delaware, TechLaw prepared an expert opinion on the economic benefit enjoyed by a defendant’s avoidance of compliance with Section 404 of the Clean Water Act. TechLaw staff reviewed the U.S. Army Corps of Engineers remediation cost estimate for reasonableness, and using the EPA BEN model, prepared a discounted cash flow analysis of the economic benefit.
EPA, Region 6
Evaluation of PRP’s Demonstration of Financial Assurance
EPA asked TechLaw to evaluate a PRP’s financial assurances regarding its ability to complete work required by a consent decree. TechLaw reviewed the Consent Decree, the PRP’s cost estimates for closure and post-closure care, audited year-end financial statements, and the PRP’s financial test assurances. The financial test and PRP representations were benchmarked against the requirements designated by EPA in 40 C.F.R. Part 264, Subpart H. TechLaw prepared a report for EPA that identified deficiencies in the financial assurance documentation.

 
EPA, Region 1

Financial Analysis for a Houlton, Maine Site
TechLaw analyzed an individual’s ability to contribute to the cleanup costs associated with response by EPA Region 1 to a fire that destroyed a laundry mat. The individual operated the laundry mat and a rental property business. TechLaw conducted a review of the individual’s personal financial statement and 5-years of federal and state tax returns. TechLaw’s analyses indicated that although the individual had little reportable tax income, he had significant assets in his real estate portfolio that could be liquidated to contribute to the cleanup costs.

PRP Ability-to-Pay Analysis
EPA Region 1 asked TechLaw to conduct a financial analysis of the company to determine the amount of funding, if any, the company could contribute to cleanup costs associated with the Site (estimated at $300K). TechLaw reviewed the Financing Statement, Articles of Incorporation, Corporate income tax returns (1998–2002), trial balances, a business loan application, and an Annual Report. TechLaw found that the company was in run-off mode with the primary source of income coming from rental real estate and the liquidation of real estate holdings. There did not appear to be an ongoing source of income for the company, and the prospect of using future earnings to contribute toward site response costs seemed remote.

New England Superfund Sites
TechLaw provides insurance analysis support to EPA Region 1 for Superfund sites located throughout New England. Project activities include the extraction of information from policies, analysis of coverage, insurance archaeology, and analysis of legal issues including state law, defenses, standing, and orchestration of claims.
     
     
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