(A) No person as defined herein shall operate a confined hog facility without providing to the Fiscal Court financial assurance as herein required. The owner or operator must submit a detailed written estimate, in current dollars, of the cost to clean up the natural resources which could be contaminated, polluted, defiled or soiled by leaks or spills from the manure storage structures including lagoons which are part of the facility. The owner or operator must annually adjust the cost estimate for inflation using the U.S. Consumers Price Index for rural areas.
(B) The cost estimate shall be calculated as follows:
(1) Cost of clean-up of above-ground facilities. The clean-up of above ground facilities and manure shall be calculated by determining the costs of a third party:
(a) Disposing of all manure stored on-site at an identified site; and
(b) Cleaning or removing all above ground structures. For purposes of this calculation, it is assumed that the manure storage container is 100% full. The estimate submitted shall be certified by a registered engineer and shall set out how the cost was determined.
(2) Cost of remediation of off-site contamination. The costs of remediation of off-site contamination shall be calculated by multiplying the animal weight capacity of the operation by $2 for those facilities which store manure in earthen manure storage basins; by $1 for those facilities which store manure in anaerobic lagoons; and by $0.50 for those facilities which store manure in formed manure storage structures.
(3) Credit for maintaining wells.
(a) The financial assurance amount for a facility that has installed groundwater monitoring wells with at least one well located upgradient, and two wells located downgradient from the manure lagoon, basin or structure shall be reduced by 50% provided the test results are submitted to the Fiscal Court annually and reveal no groundwater contamination.
(b) Using EPA approved methods and procedures for chemical analysis, each water sample drawn shall be tested for the following chemical constituents:
1. pH;
2. Conductivity;
3. Total dissolved solids;
4. Temperature;
5. Total alkalinity;
6. Chemical oxygen demand;
7. Ammonia-nitrogen;
8. Total Kjeldahl nitrogen;
9. Sulfate;
10. Chloride;
11. Total organic carbon;
12. Sodium; and
13. Nitrate-nitrogen.
(c) If appropriate, the facility may substitute Vadose Zone monitoring devices for groundwater monitoring wells, subject to the approval of the Cabinet for Natural Resources and Environmental Protection.
(4) Amount of financial assurance required.
(a) The cost determined under divisions (B)(1) and (B)(2) above and the credit, if any, under division (B)(3) above shall be added together and the sum shall be the financial assurance amount required under the provisions of this section.
(b) The mechanisms used to demonstrate financial assurance must insure that the funds necessary to meet the costs of clean-up and remediation will be available if needed. In establishing financial assurance, owners and operators must choose from the following options:
1. A facility may obtain a payment or performance surety bond. The bond must be effective before the initial receipt of hogs into the facility, and a copy filed with the Fiscal Court. The surety company issuing the bond must, at a minimum, be as acceptable sureties on Federal Bonds and Circular 570 of the U.S. Department of the Treasury. In addition, the bond shall:
a. Be in an amount at least equal to the cost estimates established above;
b. Provide that the surety will become liable under the bond if the facility fails to perform as guaranteed by the bond; and
c. Provide that the surety may cancel the bond by sending notice of cancellation by certified mail to the facility and Fiscal Court 120 days before cancellation. If cancelled, the facility must obtain alternate financial assurance or cease operations.
2. A facility may obtain insurance which shall be effective before the initial receipt of hogs at the operation. At a minimum, the insured must be authorized to transact the business of insurance in the state. A copy of the policy must be filed with the Fiscal Court and shall provide:
a. All funds will be available for any on- or off-site clean-up resulting from the operation. The policy must guarantee that the insurer will be responsible for: paying out funds to the facility or others authorized to conduct the clean-up in an amount equal to the face amount of the policy;
b. The policy must be issued for a face amount at least equal to the cost estimate for financial assurance established herein. The term FACE AMOUNT means the total amount the insurer is obligated to pay under the policy. Actual payments to the insurer will not change the face amount, although the insurer’s future liability will be lowered by the amount of payments;
c. The policy must contain a provision allowing assignment of the policy to a successor facility. Said assignment may be conditional upon consent of the insurer, provided that such consignment is not unreasonably refused; and
d. The policy must provide that the insurer may not cancel, terminate or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy must, at a minimum, provide the insurer with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may cancel the policy by sending notice of cancellation by certified mail to the facility and Fiscal Court 120 days before the cancellation. If the insurer cancels the policy, the facility must obtain alternate financial assurance or cease operation.
3. A facility may demonstrate financial assurance by deposits with the Fiscal Court of unsubordinated debentures, U.S. government bonds or notes, or certificates of deposit issued by federal or state chartered banks with a market value equal to or exceeding the sum of the financial assurance requirement. Said financial instruments shall beheld by the Fiscal Court for so long as the provisions of this chapter apply and may not be otherwise pledged by the facility. Interest payments, if any, from the financial instruments pledged as security shall be paid to the owner.
(Ord. 97-5, passed 11-19-1997)