California Integrated Waste Management Board Workshop July 9, 2009 AB 2296 Consulting Group Financial Assurances Phase II Rulemaking AB 2296 Consulting Group Financial Assurances Phase II Rulemaking 1

Sankofa Bird 2

Agenda Introductions and General Overview Options to Address the May 2009 Board Direction for Phase II Regulations on Closed/Closing Facilities Postclosure Maintenance Financial Assurances Corrective Action Financial Assurances Lunch Break Continuity of Financial Assurances During Transfer of Ownership Wrap Up and Next Steps Introductions and General Overview Options to Address the May 2009 Board Direction for Phase II Regulations on Closed/Closing Facilities Postclosure Maintenance Financial Assurances Corrective Action Financial Assurances Lunch Break Continuity of Financial Assurances During Transfer of Ownership Wrap Up and Next Steps 3

Overview of Operating, Closing, and Closed Landfills What is the impact of establishing a rolling 30X level of financial assurance on current landfill operators? Cash-type and Non cash-type demonstrations How many facilities are impacted? What is the impact of establishing a rolling 30X level of financial assurance on current landfill operators? Cash-type and Non cash-type demonstrations How many facilities are impacted? 4

Landfills Years Into Postclosure Maintenance

What is the impact of establishing a rolling 30X level of financial assurance on current landfill operators? Adjusted Annual Cost Estimate for Inflation Since Closure Compared to Current Amount of Demonstration 6 of 20 Have Received Disbursements Returning to 30X Would Impact 6 Closed Landfills with Cash Mechanisms Cost an Estimated $2.3 million 6

Options to Address Postclosure Maintenance Closing/Closed 1. 30X the PCM estimate a) Same as Operating – including criteria allowing step-down b) Allow build up period for cash mechanisms 2. Not require increase (to 30X) above current demonstration level, no less than 15X 3. Perform Evaluation to set level (options to determine level?) Closing/Closed 1. 30X the PCM estimate a) Same as Operating – including criteria allowing step-down b) Allow build up period for cash mechanisms 2. Not require increase (to 30X) above current demonstration level, no less than 15X 3. Perform Evaluation to set level (options to determine level?) 7

1.a) Same as Operating – including criteria allowing step-down Pros: More Protective Minimal System Impact Equity Ease of Administration May Be Eligible for Step- down Cons: Increased Early Defaults Increased Enforcement Inability for Some to Raise Additional Funds Fairness – already closed and imposing additional financial demonstration requirement 8

1.b) Allow Build Up Period for Cash Mechanisms Pros: Reduces Impact Flexibility Opportunity to Step-down Reduced Enforcement Cons: Equity for cash vs. non-cash mechanisms 9

2. Not require increase (to 30X) above current demonstration level, no less than 15X Pros: Mitigates Impact on Individual Landfills Fairness Cons: Increase Exposure to State Equity for operating vs closing/closed and for cash vs non-cash 10

3. Perform Evaluation to Set Level – Not Less Than 15X Pros: Better Match Likelihood of Default and Level of Assurance Cons: High Transaction Costs for Operator and Board Criteria outside existing Mechanisms/program difficult to develop 11

What is the impact of the Corrective Action Direction? Effective July 1, of 282 Landfills are subject 125 landfills are currently in compliance with Water Board Requirements (47%) Final cover replacement is more expensive 93% of the time (based on in place levels of FA demonstrations) Effective July 1, of 282 Landfills are subject 125 landfills are currently in compliance with Water Board Requirements (47%) Final cover replacement is more expensive 93% of the time (based on in place levels of FA demonstrations) 12

Corrective Action – Estimated Financial Exposure 13 * This amount includes $677 million for Eagle Mountain landfill Total Dollar Amounts for all Facilities of Difference from Water Quality CA Estimate to Cap Replacement Estimate – in Millions of Dollars PublicPrivateTotal Active$489.5$945.1*$1,434.5 Closing$26.2$23.3$49.5 Closed$45.8$46.1$91.9 Total$561.4$1,014.5$1,575.9 Percentage of Total Facilities by type and activity In Compliance PublicPrivateTotal Active51%70%57% Closing46%33%44% Closed33%32%33% Total44%55%47%

Corrective Action – Estimated Financial Exposure 14 * This amount includes $677 million for Eagle Mountain landfill Total Dollar Amounts for All Facilities to Achieve Compliance (based on Cap Replacement divided by Compliance Ratio – Millions of Dollars) PublicPrivateTotal Active$959.7$1,063.7*$2,023.4 Closing$56.7$69.9$126.6 Closed$139.3$145.0$284.3 Total$1,155.8$1,278.6$2,603.5 These exposure estimates represent the extrapolated values calculated from the exposure (based on May 2009 Board direction) for each landfill category (i.e., Active-Public, Active-Private, etc.) divided by the current percentage of compliance within each category to identify the estimated exposure calculated for 100% of each type landfill reaching compliance.

Options to Address Corrective Action Closing/Closed 1. Same as Active/Operating a) Immediately b) Allow Build Up Period 2. Original Phase II Proposal – Broaden Use of Water Board Financial Assurance 3. Delay Effective Date For Final Cover Replacement 4. Site Specific Corrective Action Plan 5. Include Costs in Pooled Fund Closing/Closed 1. Same as Active/Operating a) Immediately b) Allow Build Up Period 2. Original Phase II Proposal – Broaden Use of Water Board Financial Assurance 3. Delay Effective Date For Final Cover Replacement 4. Site Specific Corrective Action Plan 5. Include Costs in Pooled Fund 15

1.a) Same as Active/Operating Pros: More Protective Minimal System Impact Equity Ease of Administration Cons: Increased Early Defaults Increased Enforcement Inability for Some to Raise Additional Funds Fairness – already closed and imposing additional financial demonstration requirement 16

1.b) Allow Build Up Period Pros: May work well in Combination w/ Option 2 (next slide) Reduces Impact Flexibility Reduced Enforcement Cons: Equity for cash vs. non-cash mechanisms 17

2. Original Phase II Proposal – Broaden Use of Water Board Financial Assurance Pros: Simple to Implement Minimal Financial Impact Equity Fairness Cons: Might not provide enough financial assurance to cover the exposure Doesn’t address Major Maintenance 18

3. Delay Effective Date For Final Cover Replacement Pros: Note: This option would not require closed landfills to comply with the cover replacement estimate, but would require compliance with the original Phase II proposal (using Water Board corrective action estimate for financial assurance purposes). Cons: Might not provide enough financial assurance to cover the exposure Doesn’t address Major Maintenance 19 Incentivizes Closing landfills to be certified Closed (SD-4.2)

4. Site Specific Corrective Action Plan Pros: Recognizes potential for Major Maintenance Fairness Cons: Monetary Expense to Develop Plan Workload to Review Plans Equity Issue (unless also imposed on operating landfills) 20

5. Include Costs in Mandatory Pooled Fund Pros: Would reduce the amount required for individual financial assurances Cons: There is no Pooled Fund(s) yet 21

Continuity of Financial Assurances During Transfer of Ownership Stay at current landfill financial assurance requirement Automatically step-up to 30X Alternative “X” level 5X increments Based on what criteria? Stay at current landfill financial assurance requirement Automatically step-up to 30X Alternative “X” level 5X increments Based on what criteria? 22

Phase II Rulemaking Timeline Aug 2009 – Additional Board Direction on Closed/Closing Landfills Aug-Oct 2009 – 45-day comment period Nov-Dec 2009 – 15-day comment period Dec 2009 – Board adoption Jan 2010 – Prepare Formal Response to Comments and Final Statement of Reasons Feb 10 – Legal Review Feb 27, 2010 – Submit to OAL Aug 2009 – Additional Board Direction on Closed/Closing Landfills Aug-Oct 2009 – 45-day comment period Nov-Dec 2009 – 15-day comment period Dec 2009 – Board adoption Jan 2010 – Prepare Formal Response to Comments and Final Statement of Reasons Feb 10 – Legal Review Feb 27, 2010 – Submit to OAL 23