Hazardous waste treatment, storage and disposal facilities must show EPA they can pay for closure and post-closure care. One way is a surety bond guaranteeing payment into a standby trust fund. Its wording is fixed by 40 CFR 264.151(b), and the penal sum must be at least the facility’s current closure and post-closure cost estimates.
| Title / common name | Financial Guarantee Bond — surety bond guaranteeing payment into a closure or post-closure trust fund, 40 CFR 264.151(b) (often called a payment bond) |
|---|---|
| Bond type | Commercial — environmental financial assurance (RCRA Subtitle C) |
| Industry / license category | Environmental / hazardous waste closure |
| Jurisdiction | United States (federal) → U.S. EPA → RCRA hazardous waste rules, 40 CFR part 264 subpart H (also used under part 265 for interim status) |
| Obligee | U.S. Environmental Protection Agency, acting through the EPA Regional Administrator for each Region where a bonded facility is located The bond text reads “firmly bound to the U.S. Environmental Protection Agency (hereinafter called EPA)”. In a state with an authorized RCRA program, the state agency is the regulator and the authorized state-equivalent wording applies (EPA Surety Bond Fact Sheet). EPA reports that 49 states, the District of Columbia and Guam are authorized for the base RCRA program — see EPA state authorization. |
| Typical penal sum | At least the current closure cost estimate and/or current post-closure cost estimate for each facility § 264.143(b)(6) (closure) and § 264.145(b)(6) (post-closure), except where the bond is one of several combined mechanisms (§ 264.143(g), § 264.145(g)). The bond face lists each facility’s EPA Identification Number, name, address and the closure and post-closure amounts separately. If a cost estimate rises above the penal sum, the owner or operator has 60 days to raise the penal sum or add other assurance; a decrease needs the Regional Administrator’s written approval (§ 264.143(b)(7), § 264.145(b)(7)). |
| Who needs it | Owners and operators of hazardous waste treatment, storage and disposal facilities (TSDFs) with a RCRA permit or interim status that choose a surety bond for closure and/or post-closure financial assurance Closure assurance applies to all TSDFs (§ 264.140(a)); post-closure assurance applies to disposal facilities and units that close with waste in place (§ 264.140(b)). A new facility must submit the bond at least 60 days before it first receives hazardous waste, and the bond must be in effect before then. The surety must, at a minimum, be listed in U.S. Treasury Circular 570. States and the Federal government are exempt (§ 264.140(c)). |
| What it covers | The owner or operator’s duty to fund the standby trust fund for closure and/or post-closure care The bond is void if the principal funds the standby trust before final closure begins, or within 15 days after a final order to begin closure, or replaces the bond with approved alternate assurance within 90 days after a cancellation notice. Otherwise, on notice from the Regional Administrator, the surety places the guaranteed amount into the standby trust. Total liability never exceeds the penal sum. |
| Standby trust | Required. The surety pays only into a standby trust fund, as the Regional Administrator directs An originally signed duplicate of the trust agreement (40 CFR 264.151(a) wording) is submitted with the bond. Until the trust is funded, the owner or operator does not have to make trust payments, update Schedule A, obtain annual valuations or send nonpayment notices (§ 264.143(b)(3), (c)(3); § 264.145(b)(3), (c)(3)). |
| Form number / edition | No form number · wording prescribed by regulation and must be identical § 264.143(b)(2) and § 264.145(b)(2) require wording “identical to the wording specified in § 264.151(b)”. eCFR is current as of 2026-10-15. The last change to § 264.151 (eCFR version of January 22, 2025) corrected paragraph (l) only; paragraph (b) is unchanged. |
| Effective / cancellation | Effective date stated on the bond; the surety may cancel only on 120 days’ notice Notice goes by certified mail to the principal and the Regional Administrator(s), and the 120 days run from receipt by both, shown by the return receipts. The principal can terminate only after the Regional Administrator authorizes it in writing. If the surety goes bankrupt or loses its authority to issue bonds, the owner or operator must replace the assurance within 60 days (§ 264.148(b)). |
| Source | eCFR — 40 CFR 264.151, Wording of the instruments (official regulation text · paragraph (b) · current as of 2026-10-15) Also: 40 CFR 264.143 (closure) and 40 CFR 264.145 (post-closure care) for penal sum, standby trust and cancellation rules; EPA Surety Bond Fact Sheet (PDF); EPA — Financial assurance requirements for TSDFs |
| Status | current |
| Last verified | 2026-10-19 |
From the conditions paragraph of 40 CFR 264.151(b): the obligation is void “if the Principal shall faithfully, before the beginning of final closure of each facility identified above, fund the standby trust fund in the amount(s) identified above for the facility”.
On default: “Upon notification by an EPA Regional Administrator that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) shall place funds in the amount guaranteed for the facility(ies) into the standby trust fund as directed by the EPA Regional Administrator.”
A financial guarantee bond only promises money into the standby trust. It can be used at permitted and interim-status facilities, and it can be combined with trust funds, letters of credit and insurance (§ 264.143(g)). The EPA RCRA performance bond (40 CFR 264.151(c)) lets the surety do the closure work instead, but only permitted facilities can use it and it cannot be combined with other mechanisms.
The regulation offers an optional rider under which principal and surety adjust the penal sum yearly to the new closure and/or post-closure amount. Any increase is capped at 20 percent in one year, and no decrease happens without the Regional Administrator’s written permission. EPA’s fact sheet encourages using it.
The surety must, at a minimum, be listed in U.S. Treasury Circular 570. Our public owner’s guide to verifying surety bonds covers how to check that listing. For a Canadian comparison of regulator-held closure security, see Alberta AER Directive 068 demand forfeiture bonds.
Open the Source link above for the official regulation text on eCFR. We summarize field facts and quote short key clauses rather than reproducing the complete bond body. Authorized states may use their own equivalent wording, so confirm with the state agency.