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l / ? Æ â yIntroduction Subpart H--Financial Responsibility Sec. 280.90 Applicability 280.91 Compliance Dates 280.92 Definition of Terms 280.93 Amount and Scope of Required Financial Responsibility 280.94 Allowable Mechanisms and Combinations of Mechanisms 280.95 Financial Test of Self-Insurance 280.96 Guarantee 280.97 Insurance and Risk Retention Group Coverage
280.98 Surety Bond
280.99 Letter of Credit 280.100 Use of State-Required Mechanism 280.101 State Fund or Other State Assurance 280.102 Trust Fund 280.103 Standby Trust Fund 280.104 Substitution of Financial Assurance Mechanisms by Owner or Operator 280.105 Cancellation or Nonrenewal by a Provider of Financial Assurance Press the PgDn key to see 280.106 -- 280.112 280.106 Reporting by Owner or Operator 280.107 Recordkeeping 280.108 Drawing on Financial Assurance Mechanisms 280.109 Release from the Requirements 280.110 Bankruptcy or Other Incapacity of Owner or Operator or Provider of Financial Assurance 280.111 Replenishment of Guarantees, Letters of Credit, or Surety Bonds 280.112 Suspension of Enforcement Press the PgUp key to see 280.90 -- 280.105 0 280.90 Applicability. ü Applicability Advisor (Explain 280.90(a) (a) This subpart applies to owners and operators of all petroleum underground storage tank (UST) systems except as otherwise provided in this section. )Explain 280.90(b) (b) Owners and operators of petroleum UST systems are subject to these requirements if they are in operation on or after the date for compliance established in 280.91. *Explain 280.90(c) (c) State and federal government entities whose debts and liabilities are the debts and liabilities of a state or the United States are exempt from the requirements of this subpart. +Explain 280.90(d) (d) The requirements of this subpart do not apply to owners and operators of any UST system described in ¢ 280.10(b) or (c). ,Explain 280.90(e) (e) If the owner and operator of a petroleum underground storage tank are separate persons, only one person is required to demonstrate financial responsibility; however, both parties are liable in event of noncompliance. Regardless of which party complies, the date set for compliance at a particular facility is determined by the characteristics of the owner as set forth in 280.91. e 280.91 Compliance Dates. à Coverage/Deadlines Advisor Owners of petroleum underground storage tanks are required to comply with the requirements of this subpart by the following dates: (a) All petroleum marketing firms owning 1,000 or more USTs and all other UST owners that report a tangible net worth of $20 million or more to the U.S. Securities and Exchange Commission (SEC), Dun and Bradstreet, the Energy Information Administration, or the Rural Electrification Administration; Janurary 24, 1989. (b) All petroleum marketing firms owning 100-999 USTs; October 26,1989. (c) All petroleum marketing firms owning 13-99 USTs at more than one facility; April 26, 1989. (d) All petroleum UST owners not described in paragraphs (a), (b), or (c) of this section, including all local government entities; October 26,1990. 280.92 Definition of Terms. When used in this subpart, the following terms shall have the meanings given below: (a) Accidental release (b) Bodily injury (c) Controlling interest (d) Director of the Implementing Agency (e) Financial reporting year (f) Legal defense cost (g) Occurrence (h) !Owner or operator (i) "Petroleum marketing facilities (j) #Petroleum marketing firms (k) $Property damage (l) %Provider of financial assurance (m) &Substantial business relationship (n) 'Tangible net worth w + - 0 5 6 < = > @ C D E F G H J P Q a280.93 Amount and Scope of Required Financial Responsibility. k Coverage/Deadlines Advisor -Explain 280.93 in general .Explain 280.93(a) (a) Owners or operators of petroleum underground storage tanks must demonstrate financial responsibility for taking corrective action and for compensating third parties for bodily injury and property damage caused by accidental releases arising from the operation of petroleum underground storage tanks in at least the following per- occurrence amounts: (1) For owners or operators of petroleum underground storage tanks that are located at petroleum marketing facilities, or that handle an average of more than 10,000 gallons of petroleum per month based on annual throughput for the previous calendar year; $1 million. (2) For all other owners or operators of petroleum underground storage tanks; $500,000. /Explain 280.93(b) (b) Owners or operators of petroleum underground storage tanks must demonstrate financial responsibility for taking corrective action and for compensating third parties for bodily injury and property damage caused by accidental releases arising from the operation of petroleum underground storage tanks in at least the following annual aggregate amounts: (1) For owners or operators of 1 to 100 petroleum underground storage tanks, $l million; and (2) For owners or operators of 101 or more petroleum underground storage tanks, $2 million. 0Explain 280.93(c) (c) For the purposes of paragraphs (b) and (f) only, "a petroleum underground storage tank" means a single containment unit and does not mean combinations of single containment units. 1Explain 280.93(d) å Coverage/Deadlines Advisor (d) Except as provided in paragraph (e), if the owner or operator uses separate mechanisms or separate combinations of mechanisms to demonstrate financial responsibility for: (1) Taking corrective action; (2) Compensating third parties for bodily injury and property damage caused by sudden accidental releases; or (3) Compensating third parties for bodily injury and property damage caused by nonsudden accidental releases, the amount of assurance provided by each mechanism or combination of mechanisms must be in the full amount specified in paragraphs (a) and (b) of this section. 2Explain 280.93(e) (e) If an owner or operator uses separate mechanisms or separate combinations of mechanisms to demonstrate financial responsibility for different petroleum underground storage tanks, the annual aggregate required shall be based on the number of tanks covered by each such separate mechanism or combination of mechanisms. ç Coverage/Deadlines Advisor 3Explain 280.93(f) (f) Owners or operators shall review the amount of aggregate assurance provided whenever additional petroleum underground storage tanks are acquired or installed. If the number of petroleum underground storage tanks for which assurance must be provided exceeds 100, the owner or operator shall demonstrate financial responsibility in the amount of at least $2 million of annual aggregate assurance by the anniversary of the date on which the mechanism demonstrating financial responsibility became effective. If assurance is being demonstrated by a combination of mechanisms, the owner or operator shall demonstrate financial responsibility in the amount of at least $2 million of annual aggregate assurance by the first-occurring effective date anniversary of any one of the mechanisms combined (other than a financial test or guarantee) to provide assurance. 4Explain 280.93(g) (g) The amounts of assurance required under this section exclude legal defense costs. 5Explain 280.93(h) (h) The required per-occurrence and annual aggregate coverage amounts do not in any way limit the liability of the owner or operator. 280.94 Allowable Mechanisms and Combinations of Mechanisms. 6Explain 280 94(a) (a) Subject to the limitations of paragraphs (b) and (c) of this section, an owner or operator may use any one or combination of the mechanisms listed in 280.95- b280.103 to demonstrate financial responsibility under this subpart for one or more underground storage tanks. 7Explain 280.94(b) (b) An owner or operator may use a guarantee or surety bond to establish financial responsibility only if the Attorney(s) General of the state(s) in which the underground storage tanks are located has (have) submitted a written statement to the implementing agency that a guarantee or surety bond executed as described in this section is a legally valid and enforceable obligation in that state. 8Explain 280.94(c) (c) An owner or operator may use self-insurance in combination with a guarantee only if, for the purpose of meeting the requirements of the financial test under this rule, the financial statements of the owner or operator are not consolidated with the financial statements of the guarantor. e ! 1 3 Y ] q280.95 Financial Test of Self-Insurance. Self-Insurance Advisor 9Explain 280.95 (a) An owner or operator, and/or guarantor, may satisfy the requirements of 280.93 by passing a financial test as specified in this section. To pass the financial test of self-insurance, the owner or operator, and/or guarantor must meet the criteria of paragraph (b) or (c) of this section based on year-end financial statements for the latest completed fiscal year. YExplain 280.95(b) # % * p(b)(1) The owner or operator, and/or guarantor, must have a tangible net worth of at least ten times: (i) The total of the applicable aggregate amount required by 280.93, based on the number of underground storage tanks for which a financial test is used to demonstrate financial responsibility to EPA under this section or to a state implementing agency under a state program approved by EPA under _40 CFR Part 281; (ii) The sum of the corrective action cost estimates, the current closure and post-closure care cost estimates, and amount of liability coverage for which a financial test is used to demonstrate financial responsibility to EPA under Æ40 CFR Parts 264.101, 264.143, 264.145, 265.143, 265.145, 264.147, and 265.147 or to a state implementing agency under a state program authorized by EPA under 40 CFR Part 271; and (iii) The sum of current plugging and abandonment cost estimates for which a financial test is used to demonstrate financial responsibility to EPA under ô40 CFR Part 144.63 or to a state implementing agency under a state program authorized by EPA under 40 CFR Part 145. (2) The owner or operator, and/or guarantor, must have a tangible net worth of at least $10 million. (3) The owner or operator, and/or guarantor, must have a letter signed by the chief financial officer worded as specified in paragraph (d). (4) The owner or operator, and/or guarantor, must either: (i) File financial statements annually with the U.S. Securities and Exchange Commission, the Energy Information Administration, or the Rural Electrification Administration; or (ii) Report annually the firm's tangible net worth to Dun and Bradstreet, and Dun and Bradstreet must have assigned the firm a financial strength rating of 4A or 5A. (5) The firm's year-end financial statements, if independently audited, cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification. öExplain 280.95(c) r(c)(1) The owner or operator, and/or guarantor must meet the financial test requirements of ò40 CFR 264.147(f)(1), substituting the appropriate amounts specified in 280.93(b)(1) and (b)(2) for the "amount of liability coverage" each time specified in that section. (2) The fiscal year-end financial statements of the owner or operator, and/or guarantor, must be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination. (3) The firm's year-end financial statements cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification. (4) The owner or operator, and/or guarantor, must have a letter signed by the chief financial officer, worded as specified in paragraph (d). (5) If the financial statements of the owner or operator, and/or guarantor, are not submitted annually to the U.S. Securities and Exchange Commission, the Energy Information Administration or the Rural Electrification Administration, the owner or operator, and/or guarantor, must obtain a special report by an independent certified public accountant stating that: (i) He has compared the data that the letter from the chief financial officer specifies as having been derived from the latest year-end financial statements of the owner or operator, and/or guarantor, with the amounts in such financial statements; and (ii) In connection with that comparison, no matters came to his attention which caused him to believe that the specified data should be adjusted. <Explain 280.95(d) " d(d) To demonstrate that it meets the financial test under paragraph (b) or (c), the chief financial officer of the owner or operator, and/or guarantor, must sign, within 120 days of the close of each financial reporting year, as defined by the twelve-month period for which financial statements used to support the financial test are prepared, a letter worded exactly as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted: ë Letter from Chief Financial Officer =Explain 280.95(e) (e) If an owner or operator using the test to provide financial assurance finds that he or she no longer meets the requirements of the financial test based on the year-end financial statements, the owner or operator must obtain alternative coverage within 150 days of the end of the year for which financial statements have been prepared. >Explain 280.95(f) (f) The Director of the implementing agency may require reports of financial condition at any time from the owner or operator, and/or guarantor. If the Director finds, on the basis of such reports or other information, that the owner or operator, and/or guarantor, no longer meets the financial test requirements of 280.95(b) or (c) and (d), the owner or operator must obtain alternate coverage within 30 days after notification of such a finding. ?Explain 280.95(g) V(g) If the owner or operator fails to obtain alternate assurance within 150 days of finding that he or she no longer meets the requirements of the financial test based on the yearend financial statements, or within 30 days of notification by the Director of the implementing agency that he or she no longer meets the requirements of the financial test, the owner or operator must notify the Director of such failure within 10 days. >Explain 280.95(f) (f) The Director of the implementing agency may require reports of financial condition at any time from the owner or operator, and/or guarantor. If the Director finds, on the basis of such reports or other information, that the owner or operator, and/or guarantor, no longer meets the financial test requirements of 280.95(b) or (c) and (d), the owner or operator must obtain alternate coverage within 30 days after notification of such a finding. ?Explain 280.95(g) V(g) If the owner or operator fails to obtain alternate assurance within 150 days of finding that he or she no longer meets the requirements of the financial test based on the year-end financial statements, or within 30 days of notification by the Directory of the implementing agency that he or she no longer meets the requirements of the financial test, the owner or operator must notify the Director of such failure within 10 days. n M `280.96 Guarantee. @Explain 280.96(a) (a) An owner or operator may satisfy the requirements of 280.93 by obtaining a guarantee that conforms to the requirements of this section. The guarantor must be: (1) A firm that (i) possesses a controlling interest in the owner or operator; (ii) possesses a controlling interest in a firm described under (1)(i); or, (iii) is controlled through stock ownership by a common parent firm that possesses a controlling interest in the owner or operator; or, (2) A firm engaged in a substantial business relationship with the owner or operator and issuing the guarantee as an act incident to that business relationship. AExplain 280.96(b) &(b) Within 120 days of the close of each financial reporting year the guarantor must demonstrate that it meets the financial test criteria of !280.95 based on year-end financial statements for the latest completed financial reporting year by completing the letter from the chief financial officer described in "280.95(d) and must deliver the letter to the owner or operator. If the guarantor fails to meet the requirements of the financial test at the end of any financial reporting year, within 120 days of the end of that financial reporting year the guarantor shall send by certified mail, before cancellation or nonrenewal of the guarantee, notice to the owner or operator. If the Director of the implementing agency notifies the guarantor that he no longer meets the requirements of the financial test of #280.95(b) or (c) and (d), the guarantor must notify the owner or operator within 10 days of receiving such notification from the Director. In both cases, the guarantee will terminate no less than 120 days after the date the owner or operator receives the notification, as evidenced by the return receipt. The owner or operator must obtain alternate coverage as specified in $280.110(c). ,(c) The guarantee must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: è ÇGUARANTEE CExplain 280.96(d) (d) An owner or operator who uses a guarantee to satisfy the requirements of -280.93 must establish a standby trust fund when the guarantee is obtained. Under the terms of the guarantee, all amounts paid by the guarantor under the guarantee will be deposited directly into the standby trust fund in accordance with instructions from the Director of the implementing agency under .280.108. This standby trust fund must meet the requirements specified in /280.103. u 280.97 Insurance and Risk Retention Group Coverage. DExplain 280.97(a) (a) An owner or operator may satisfy the requirements of 0280.93 by obtaining liability insurance that conforms to the requirements of this section from a qualified insurer or risk retention group. Such insurance may be in the form of a separate insurance policy or an endorsement to an existing insurance policy. (b) Each insurance policy must be amended by an endorsement worded as specified in paragraph (l) or evidenced by a certificate of insurance worded as specified in paragraph (2), except that instructions in brackets must be replaced with the relevant information and the brackets deleted: 2 ï ü(1) ENDORSEMENT FExplain 280.97(c) (c) Each insurance policy must be issued by an insurer or a risk retention group that, at a minimum, is licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in one or more states. N280.98 Surety Bond. GExplain 280.98(a) (a) An owner or operator may satisfy the requirements of 5280.93 by obtaining a surety bond that conforms to the requirements of this section. The surety company issuing the bond must be among those listed as acceptable sureties on federal bonds in the latest Circular 570 of the U.S. Department of the Treasury. HExplain 280.98(b) 9(b) The surety bond must be worded as follows, except that instructions in brackets must be replaced with the relevant information and the brackets deleted: î éPERFORMANCE BOND IExplain 280.98(c) (c) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond. In all cases, the surety's liability is limited to the per-occurrence and annual aggregate penal sums. JExplain 280.98(d) (d) The owner or operator who uses a surety bond to satisfy the requirements of <280.93 must establish a standby trust fund when the surety bond is acquired. Under the terms of the bond, all amounts paid by the surety under the bond will be deposited directly into the standby trust fund in accordance with instructions from the Director under ;280.108. This standby trust fund must meet the requirements specified in :280.103. s
O280.99 Letter of Credit. KExplain 280.99(a) (a) An owner or operator may satisfy the requirements of =280.93 by obtaining an irrevocable standby letter of credit that conforms to the requirements of this section. The issuing institution must be an entity that has the authority to issue letters of credit in each state where used and whose letter-of-credit operations are regulated and examined by a federal or state agency. ?(b) The letter of credit must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: ì âIRREVOCABLE STANDBY LETTER OF CREDIT MExplain 280.99(c) (c) An owner or operator who uses a letter of credit to satisfy the requirements of @280.93 must also establish a standby trust fund when the letter of credit is acquired. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the Director of the implementing agency will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the Director under A280.108. This standby trust fund must meet the requirements specified in B280.103. NExplain 280.99(d) (d) The letter of credit must be irrevocable with a term specified by the issuing institution. The letter of credit must provide that credit be automatically renewed for the same term as the original term, unless, at least 120 days before the current expiration date, the issuing institution notifies the owner or operator by certified mail of its decision not to renew the letter of credit. Under the terms of the letter of credit, the 120 days will begin on the date when the owner or operator receives the notice, as evidenced by the return receipt. r Z280.100 Use of State-Required Mechanism. OExplain 280.100(a) (a) For underground storage tanks located in a state that does not have an approved program, and where the state requires owners or operators of underground storage tanks to demonstrate financial responsibility for taking corrective action and/or for compensating third parties for bodily injury and property damage, an owner or operator may use a staterequired financial mechanism to meet the requirements of C280.93 if the Regional Administrator determines that the state mechanism is at least equivalent to the financial mechanisms specified in this subpart. PExplain 280.100(b) (b) The Regional Administrator will evaluate the equivalency of a state-required mechanism principally in terms of: certainty of the availability of funds for taking corrective action and/or for compensating third parties; the amount of funds that will be made available; and the types of costs covered. The Regional Administrator may also consider other factors as is necessary. QExplain 280.100(c) (c) The state, an owner or operator, or any other interested party may submit to the Regional Administrator a written petition requesting that one or more of the staterequired mechanisms be considered acceptable for meeting the requirements of D280.93. The submission must include copies of the appropriate state statutory and regulatory requirements and must show the amount of funds for corrective action and/or for compensating third parties assured by the mechanism(s). The Regional Administrator may require the petition to submit additional information as is deemed necessary to make this determination. RExplain 280.100(d) (d) Any petitioner under this section may be submitted on behalf of all of the state's underground storage tank owners and operators. SExplain 280.100(e) (e) The Regional Administrator will notify the petitioner of his determination regarding the mechanism's acceptability in lieu of financial mechanisms specified in this subpart. Pending this determination, the owners and operators using such mechanisms will be deemed to be in compliance with the requirements of E280.93 for underground storage tanks located in the state for the amounts and types of costs covered by such mechanisms. 280.101 State Fund or Other State Assurance. TExplain 280.101(a) (a) An owner or operator may satisfy the requirements of F280.93 for underground storage tanks located in a state, where EPA is administering the requirements of this subpart, which assures that monies will be available from a state fund or state assurance program to cover costs up to the limits specified in G280.93 or otherwise assures that such costs will be paid if the Regional Administrator determines that the state's assurance is at least equivalent to the financial mechanisms specified in this subpart. UExplain 280.101(b) (b) The Regional Administrator will evaluate the equivalency of a state fund or other state assurance principally in terms of: certainty of the availability of funds for taking corrective action and/or for compensating third parties; the amount of funds that will be made available; and the types of costs covered. The Regional Administrator may also consider other factors as is necessary. VExplain 280.101(c) (c) The state must submit to the Regional Administrator a description of the state fund or other state assurance to be supplied as financial assurance, along with a list of the classes of underground storage tanks to which the funds may be applied. The Regional Administrator may require the state to submit additional information as is deemed necessary to make a determination regarding the acceptability of the state fund or other state assurance. Pending the determination by the Regional Administrator, the owner or operator of a covered class of USTs will be deemed to be in compliance with the requirements of H280.93 for the amounts and types of costs covered by the state fund or other state assurance. WExplain 280.101(d) \(d) The Regional Administrator will notify the state of his determination regarding the acceptability of the state's fund or other assurance in lieu of financial mechanisms specified in this subpart. Within 60 days after the Regional Administrator notifies a state that a state fund or other state assurance is acceptable, the state must provide to each owner or operator for which it is assuming financial responsibility a letter or certificate describing the nature of the state's assumption of responsibility. The letter or certificate from the state must include, or have attached to it, the following information: the facility's name and address and the amount of funds for corrective action and/or for compensating third parties that is assured by the state. The owner or operator must maintain this letter or certificate on file as proof of financial responsibility in accordance with I280.107(b)(5). i [ ^ n o280.102 Trust Fund. XExplain 280.102(a) (a) An owner or operator may satisfy the requirements of J280.93 by establishing a trust fund that conforms to the requirements of this section. The trustee must be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal agency or an agency of the state in which the fund is established. ÜExplain 280.102(b) (b) The wording of the trust agreement must be identical to the wording specified in K280.103(b)(1), and must be accompanied by a formal certification of acknowledgment as specified in Ä280.103(b)(2). ZExplain 280.102(c) (c) The trust fund, when established, must be funded for the full required amount of coverage, or funded for part of the required amount of coverage and used in combination with other mechanism(s) that provide the remaining required coverage. [Explain 280.102(d) (d) If the value of the trust fund is greater than the required amount of coverage, the owner or operator may submit a written request to the Director of the implementing agency for release of the excess. \Explain 280.102(e) (e) If other financial assurance as specified in this subpart is substituted for all or part of the trust fund, the owner or operator may submit a written request to the Director of the implementing agency for release of the excess. ]Explain 280.102(f) (f) Within 60 days after receiving a request from the owner or operator for release of funds as specified in paragraphs (d) or (e) of this subpart, the Director of the implementing agency will instruct the trustee to release to the owner or operator such funds as the Director specifies in writing. n / : B b280.103 Standby Trust Fund. ^Explain 280.103(a) (a) An owner or operator using any one of the mechanisms authorized by M280.96,
N280.98, or O280.99 must establish a standby trust fund when the mechanism is acquired. The trustee of the standby trust fund must be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal agency or an agency of the state in which the fund is established. K m ä(b)(l) The standby trust agreement must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: Ä àTRUST AGREEMENT Ä(2) ù ìCERTIFICATION OF ACKNOWLEDGEMENT `Explain 280.103(c) (c) The Director of the implementing agency will instruct the trustee to refund the balance of the standby trust fund to the provider of financial assurance if the Director determines that no additional corrective action costs or third-party liability claims will occur as a result of a release covered by the financial assurance mechanism for which the standby trust fund was established. aExplain 280.103(d) (d) An owner or operator may establish one trust fund as the depository mechanism for all funds assured in compliance with this rule. c 280.104 Substitution of Financial Assurance Mechanisms by Owner or Operator. bExplain 280 104(a) (a) An owner or operator may substitute any alternate financial assurance mechanisms as specified in this subpart, provided that at all times he maintains an effective financial assurance mechanism or combination of mechanisms that satisfies the requirements of Q280.93. cExplain 280.104(b) (b) After obtaining alternate financial assurance as specified in this subpart, an owner or operator may cancel a financial assurance mechanism by providing notice to the provider of financial assurance. 280.105 Cancellation or Nonrenewal by a Provider of Financial Assurance. dExplain 280.105(a) (a) Except as otherwise provided, a provider of financial assurance may cancel or fail to renew an assurance mechanism by sending a notice of termination by certified mail to the owner or operator. (1) Termination of a guarantee, a surety bond, or a letter of credit may not occur until 120 days after the date on which the owner or operator receives the notice of termination, as evidenced by the return receipt. (2) Termination of insurance, risk retention group coverage, or state-funded assurance may not occur until 60 days after the date on which the owner or operator receives the notice of termination, as evidenced by the return receipt. eExplain 280.105(b) W(b) If a provider of financial responsibility cancels or fails to renew for reasons other than incapacity of the provider as specified in R280.106, the owner or operator must obtain alternate coverage as specified in this section within 60 days after receipt of the notice of termination. If the owner or operator fails to obtain alternate coverage within 60 days after receipt of the notice of termination, the owner or operator must notify the Director of the implementing agency of such failure and submit: (l) The name and address of the provider of financial assurance; (2) The effective date of termination; and (3) The evidence of the financial assurance mechanism subject to the termination maintained in accordance with S280.107(b). i R280.106 Reporting by Owner or Operator. (a) An owner or operator must submit the appropriate forms listed in T280.107(b) documenting current evidence of financial responsibility to the Director of the implementing agency: fExplain 280.106(a)(1) (l) Within 30 days after the owner or operator identifies a release from an underground storage tank required to be reported under E 280.53 or L 280.61; gExplain 280.106(a)(2) (2) If the owner or operator fails to obtain alternate coverage as required by this subpart, within 30 days after the owner or operator receives notice of: (i) Commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming a provider of financial assurance as a debtor, (ii) Suspension or revocation of the authority of a provider of financial assurance to issue a financial assurance mechanism, (iii) Failure of a guarantor to meet the requirements of the financial test, (iv) Other incapacity of a provider of financial assurance; or (3) As required by V280.95(g) and W280.105(b). hExplain 280.106(b) (b) An owner or operator must certify compliance with the financial responsibility requirements of this Part as specified in the new tank notification form when notifying the appropriate state or local agency of the installation of a new underground storage tank under B 280.22. iExplain 280.106(c) (c) The Director of the Implementing Agency may require an owner or operator to submit evidence of financial assurance as described in U280.107(b) or other information relevant to compliance with this subpart at any time. (The information requirements in this section have been approved by the Office of Management and Budget and assigned OMB control number 2050-0066.) l 280.107 Recordkeeping. Ç Recordkeeping Advisor jExplain 280.107(a) (a) Owners or operators must maintain evidence of all financial assurance mechanisms used to demonstrate financial responsibility under this subpart for an underground storage tank until released from the requirements of this subpart under X280.109. An owner or operator must maintain such evidence at the underground storage tank site or the owner's or operator's place of business. Records maintained off-site must be made available upon request of the implementing agency. S T U _(b) An owner or operator must maintain the following types of evidence of financial responsibility: (1) An owner or operator using an assurance mechanism specified in Y280.95- Z280.100 or [280.102 must maintain a copy of the instrument worded as specified. (2) An owner or operator using a financial test or guarantee must maintain a copy of the chief financial officer's letter based on year-end financial statements for the most recent completed financial reporting year. Such evidence must be on file no later than 120 days after the close of the financial reporting year. (3) An owner or operator using a guarantee, surety bond, or letter of credit must maintain a copy of the signed standby trust fund agreement and copies of any amendments to the agreement. (4) An owner or operator using an insurance policy or risk retention group coverage must maintain a copy of the signed insurance policy or risk retention group coverage policy, with the endorsement or certificate of insurance and any amendments to the agreements. I(5) An owner or operator covered by a state fund or other state assurance must maintain on file a copy of any evidence of coverage supplied by or required by the State under \280.101(d). (6) An owner or operator using an assurance mechanism specified in ]280.95- ^280.102 must maintain an updated copy of a certification of financial responsibility worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: ÿ ÅCERTIFICATION OF FINANCIAL RESPONSIBILITY ' ( ) . 7 8 ; A280.108 Drawing on Financial Assurance Mechanisms. (a) The Director of the implementing agency shall require the guarantor, surety, or institution issuing a letter of credit to place the amount of funds stipulated by the Director, up to the limit of funds provided by the financial assurance mechanism, into the standby trust if: lExplain 280.108(a)(1) (l)(i) The owner or operator fails to establish alternate financial assurance within 60 days after receiving notice of cancellation of the guarantee, surety bond, letter of credit, or, as applicable, other financial assurance mechanism; and (ii) The Director determines or suspects that a release from an underground storage tank covered by the mechanism has occurred and so notifies the owner or operator or the owner or operator has notified the Director pursuant to Subparts E or F of a release from an underground storage tank covered by the mechanism; or (2) The conditions of paragraph (b)(l) or (b)(2)(i) or (b)(2)(ii) are satisfied. mExplain 280.108(b) (b) The Director of the implementing agency may draw on a standby trust fund when: (l) The Director makes a final determination that a release has occurred and immediate or long-term corrective action for the release is needed, and the owner or operator, after appropriate notice and opportunity to comply, has not conducted corrective action as required under 40 CFR Part 280, Subpart F; or (2) The Director has received either: (i) Certification from the owner or operator and the third-party liability claimant(s) and from attorneys representing the owner or operator and the third-party liability claimant(s) that a third- party liability claim should be paid. The certification must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: Ö ÉCERTIFICATION OF VALID CLAIM nExplain 280.108(c) (c) If the Director of the implementing agency determines that the amount of corrective action costs and third-party liability claims eligible for payment under paragraph (b) may exceed the balance of the standby trust fund and the obligation of the provider of financial assurance, the first priority for payment shall be corrective action costs necessary to protect human health and the environment. The Director shall pay third-party liability claims in the order in which the Director receives certifications under paragraph (b)(2)(i) and valid court orders under paragraph (b)(2)(ii). a X280.109 Release from the Requirements. :Explain 280.109 An owner or operator is no longer required to maintain financial responsibility under this subpart for an underground storage tank after the tank has been properly closed or, if corrective action is required, after corrective action has been completed and the tank has been properly closed as required by û40 CFR Part 280, Subpart G. i 280.110 Bankruptcy or Other Incapacity of Owner or Operator or Provider of Financial Assurance. oExplain 280.110(a) (a) Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming an owner or operator as debtor, the owner or operator must notify the Director of the implementing agency by certified mail of such commencement and submit the appropriate forms listed in _280.107(b) documenting current financial responsibility. pExplain 280.110(b) (b) Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming a guarantor providing financial assurance as debtor, such guarantor must notify the owner or operator by certified mail of such commencement as required under the terms of the guarantee specified in `280.96. qExplain 280.110(c) $(c) An owner or operator who obtains financial assurance by a mechanism other than the financial test of self-insurance will be deemed to be without the required financial assurance in the event of a bankruptcy or incapacity of its provider of financial assurance, or a suspension or revocation of the authority of the provider of financial assurance to issue a guarantee, insurance policy, risk retention group coverage policy, surety bond, letter of credit, or state-required mechanism. The owner or operator must obtain alternate financial assurance as specified in this subpart within 30 days after receiving notice of such an event. If the owner or operator does not obtain alternate coverage within 30 days after such notification, he must notify the Director of the implementing agency. rExplain 280.110(d) (d) Within 30 days after receipt of notification that a state fund or other state assurance has become incapable of paying for assured corrective action or third-party compensation costs, the owner or operator must obtain alternate financial assurance. n 280.111 Replenishment of Guarantees, Letters of Credit, or Surety Bonds. sExplain 280.111(a) (a) If at any time after a standby trust is funded upon the instruction of the Director of the implementing agency with funds drawn from a guarantee, letter of credit, or surety bond, and the amount in the standby trust is reduced below the full amount of coverage required, the owner or operator shall by the anniversary date of the financial mechanism from which the funds were drawn: (1) Replenish the value of financial assurance to equal the full amount of coverage required, or (2) Acquire another financial assurance mechanism for the amount by which funds in the standby trust have been reduced. ;Explain 280.111(b) (b) For purposes of this section, the full amount of coverage required is the amount of coverage to be provided by a280.93 of this Subpart. If a combination of mechanisms was used to provide the assurance funds which were drawn upon, replenishment shall occur by the earliest anniversary date among the mechanisms. r 280.112 Suspension of Enforcement. When Reg-in-a-Box was finished January,1989, OUST had not yet decided what to do about suspension of enforcement. If you want to know more about this, please call the EPA Hotline at 1-800-424-9346. cSMARTREG d "Accidental release" means any sudden or nonsudden release of petroleum from an underground storage tank that results in a need for corrective action and/or compensation for bodily injury or property damage neither expected nor intended by the tank owner or operator. c "Bodily injury" shall have the meaning given to this term by applicable state law; however, this term shall not include those liabilities which, consistent with standard insurance industry practices, are excluded from coverage in liability insurance policies for bodily injury. c "Controlling interest" means direct ownership of at least 50 percent of the voting stock of another entity. d "Director of the Implementing Agency" means the EPA Regional Administrator, or, in the case of a state with a program approved under Section 9004, the Director of the designated state or local agency responsible for carrying out an approved UST program. c "Financial reporting year" means the latest consecutive twelve-month period for which any of the following reports used to support a financial test is prepared: (1) a 10K report submitted to the SEC; (2) an annual report of tangible net worth submitted to Dun and Bradstreet; or (3) annual reports submitted to the Energy Information Administration or the Rural Electrification Administration. "Financial reporting year" may thus comprise a fiscal or a calendar year period. e "Legal defense cost" is any expense that an owner or operator or provider of financial assurance incurs in defending against claims or actions brought, (1) by EPA or a state to require corrective action or to recover the costs of corrective action; (2) by or on behalf of a third party for bodily injury or property damage caused by an accidental release; or (3) by any person to enforce the terms of a financial assurance mechanism. n "Occurrence" means an accident, including continuous or repeated exposure to conditions, which results in a release from an underground storage tank. [Note: This definition is intended to assist in the understanding of these regulations and is not intended either to limit the meaning of "occurrence" in a way that conflicts with standard insurance usage or to prevent the use of other standard insurance terms in place of "occurrence."] n "Owner or operator," when the owner or operator are separate parties, refers to the party that is obtaining or has obtained financial assurances. "Petroleum marketing facilities" include all facilities at which petroleum is produced or refined and all facilities from which petroleum is sold or transferred to other petroleum marketers or to the public. "Petroleum marketing firms" are all firms owning petroleum marketing facilities. Firms owning other types of facilities with USTs as well as petroleum marketing facilities are considered to be petroleum marketing firms. "Property damage" shall have the meaning given this term by applicable state law. This term shall not include those liabilities which, consistent with standard insurance industry practices, are excluded from coverage in liability insurance policies for property damage. However, such exclusions for property damage shall not include corrective action associated with releases from tanks which are covered by the policy. n "Provider of financial assurance" means an entity that provides financial assurance to an owner or operator of an underground storage tank through one of the mechanisms listed in 280.95-280.103, including a guarantor, insurer, risk retention group, surety, issuer of a letter of credit, issuer of a state-required mechanism, or a state. d "Substantial business relationship" means the extent of a business relationship necessary under applicable state law to make a guarantee contract issued incident to that relationship valid and enforceable. A guarantee contract is issued "incident to that relationship" if it arises from and depends on existing economic transactions between the guarantor and the owner or operator. n "Tangible net worth" means the tangible assets that remain after deducting liabilities; such assets do not include intangibles such as goodwill and rights to patents or royalties. For purposes of this definition, "assets" means all existing and all probable future economic benefits obtained or controlled by a particular entity as a result of past transactions. n 280.90(a) Subpart H requires proof of financial responsibility from owners and operators of petroleum USTs identified in 280.10(a). Select the "Applicability Advisor" if you believe these requirements might not apply to ìyou. n 280.90(b) You must be able to pay to correct damages that releases from your USTs may cause. These regulations give you choices of different ways you ìcan meet your financial responsibility for damages caused ìby releases from your USTs. You must show financial responsibility for your USTs operating on or after the compliance dates identified in 280.91. Use the Coverage/Deadlines Advisor in 280.91 to find out ìwhen your deadline is. n 280.90(c) State or Federal government agencies do not have to meet these financial responsibility requirements. (But they do have to take action to correct damages caused by releases from their USTs.) u 280.90(d) Most UST owners/operators must meet these requirements, but some USTs are exempt or excluded from these requirements. There are also some USTs which these regulations do ìnot apply to now, but that may be required to meet ìfinancial responsibility requirements in the future. Use the "Applicability Advisor" module in section ì280.90 to see if these requirements apply to you. n 280.90(e) Either the owner or the operator must meet financial responsibility requirements. Both the owner and the operator are liable in cases of noncompliance. When you have to comply depends on how many tanks the owner has and the owner's net worth. t 280.93 UST owners or operators must be able to pay the costs of corrective action and compensate third parties for leaks from the owners/operators' USTs. There is a minimum amount you have to be ready to cover for each release that occurs. There is also a minimum amount you have to be ready to cover for annual total costs of all releases at all your tanks. n 280.93(a) Minimum coverage for each release is either $1 million or $500,000 per year: o If your USTs are used for petroleum marketing or have a monthly throughput of more than 10,000 gallons your minimum is $1 million per release. o If you do not use your USTs for petroleum marketing and have less than 10,000 gallons of throughput monthly, your minimum is $500,000 per release. n 280.93(b) The minimum total costs you must be ready to cover are $2 million or $1 million per year: o If you have more than 100 USTs, your minimum total coverage is $2 million per year. o If you have 100 or fewer USTs, your minimum total coverage is $1 million per year. o 280 93(c) When you count your tanks to see how much insurance you are required to have, you must count each individual tank as one tank. You cannot count groups of tanks as one tank. i 280.93(d) You can use a combination of financial responsibility mechanisms to show your financial responsibility if ìthe total amount of coverage equals the "per ìoccurrence" amount you are required to have. (Use the "Coverage/Deadline Advisor if you don't ìknow.) o 280.93(e) A combination of mechanisms can be used to show financial responsibility if the coverage provided equals the "aggregate" amount required for the number of tanks covered. [For example, if you had 90 tanks covered by one mechanism, your aggregate would be $1 million. But, if you used one mechanism to cover 30 tanks and a combination of mechanisms to cover the remaining 60 tanks, then your aggregate coverage would be $1 million for the 30 tanks and $1 million for the 60 tanks.] t 280.93(f) If you have more than 100 USTs, when you must meet the aggregate coverage requirement of $2 million depends on whether you use one or a combination of financial responsibility mechanisms: o If you use only one mechanism, comply by the anniversary of the date on which the financial responsibility mechanism became effective; o If you use a combination of mechanisms, comply by the first-occurring effective anniversary date of one of the mechanisms. (Use the "Coverage/Deadlines Advisor" if you need ì more information.) p 280.93(g) These coverage amounts ranging from $500,000 to $2 million do not limit the actual amount for which you could be liable. c 280.93(h) These coverage amounts ranging from $500,000 to $2 million do not limit the actual amount for which you could be liable. c 280.94(a) Owners and operators may use any of the mechanisms identified in 280.95 through 280.103 to show financial responsibility, with the following two limitations: o A guarantee or surety bond can be used only in a State in which the State Attorney General has written a letter to the UST agency that says these State mechanisms are legally valid and enforceable. If EPA has not received such a letter by July 24, 1989, you cannot use a guarantee or surety bond. o A guarantee can only be combined with self-insurance if the financial statements of the guarantor are not consolidated with those of the owner or operator. w 280.94(b) Owners and operators may use any of the mechanisms identified in 280.95 through 280.103 to show financial responsibility, with the following two limitations: o A guarantee or surety bond can be used only in a State in which the State Attorney General has written a letter to the UST agency that says these State mechanisms are legally valid and enforceable. If EPA has not received such a letter by July 24, 1989, you cannot use a guarantee or surety bond. o A guarantee can only be combined with self-insurance if the financial statements of the guarantor are not consolidated with those of the owner or operator. w 280.94(c) Owners and operators may use any of the mechanisms identified in 280.95 through 280.103 to show financial responsibility, with the following two limitations: o A guarantee or surety bond can be used only in a State in which the State Attorney General has written a letter to the UST agency that says these State mechanisms are legally valid and enforceable. If EPA has not received such a letter by July 24, 1989, you cannot use a guarantee or surety bond. o A guarantee can only be combined with self-insurance if the financial statements of the guarantor are not consolidated with those of the owner or operator. w 280.95 If your firm has a tangible net worth of at least $10 million, you can prove your financial responsibility by passing one of the financial tests. Use the "Self-Insurance Advisor" to see if you can pass ìeither of these two tests. w 280.109 You don't have to meet financial responsibility requirements after your tank is properly closed and any corrective action needed has been completed. The reference to "40CFR Part 280 Subpart G" ìmeans the closure requirements in Part 280 of ìthese regulations. 280.111(b) The funding level that you must keep in your financial assurance mechanisms has to equal the amounts required in Sec. 280.93. If you use a combination of mechanisms, they must be replenished by the renewal date of the one that is due to be renewed earliest. 280.95(d) If you think you pass the self-insurance test, your firm's chief financial officer has to fill in the Chief Financial Officer's Letter, sign it, and send it in by 120 days after the end of your financial year. t 280.95(e) If your financial status changes so that you can no longer pass either financial test, you have 150 days from the end of your financial year to get alternative coverage. t 280.95(f) Your UST agency can require reports on your financial condition any time. If these reports indicate that you could no longer pass either financial test, you have 30 days to get alternative coverage. t 280.95(g) If you fail the financial test based on year-end financial statements, your deadline for alternative coverage is 150 days from the year's end. If you are notified by your UST agency that you have ìfailed the financial test requirements, your ìdeadline for alternative coverage is 30 days from ìthe date you are notified. If you cannot get alternative coverage within the ìtime limit, you must notify your UST agency within ì10 days after your deadline for getting alternative ìcoverage. i 280.96(a) A guarantee is another way you can meet your financial assurance requirements. But the person or firm who backs the guarantee must have either a controlling interest in your firm or a formal business relationship to issue your guarantee. The exact wording that your guarantee must have is given below. w 280.96(b) The backer of your guarantee--the "guarantor"--must pass ìone of the financial tests for self-insurance. And, the ìguarantor's chief financial officer must fill in, sign, ìand submit the Chief Financial Officer's Letter in Sec. ì280.95 within 120 days of the end of the guarantor's ìfinancial year. If your guarantor fails the financial test, he must ìnotify you by certified mail. If your UST agency fails your guarantor on the financial ìtest, your guarantor has to tell you within 10 days. If your guarantor fails the financial test, you have 120 ìdays after you are notified to get alternative coverage. eREGINBOX - e 280.96(d) If you use a guarantee to meet these requirements, you also must have a standby trust fund. When the person providing your guarantee pays, the money goes into this standby trust fund. This is described in more detail in Sec. 280.103. 280.97(a) Another way you can meet these requirements is to get liability insurance from an insurance company or a risk retention group. This insurance can be a separate policy or an add-on to a policy you already have (called an "endorsement" by insurance companies). REGINBOX . 280.97(c) Your insurer or risk retention group must be licensed by at least one state to provide the kind of insurance you are getting for your tanks. d 280.98(a) A surety bond is another way you can meet these requirements. But the company that issues your surety bond must be listed as acceptable in the latest Circular 570 of the U.S. Department of the Treasury. d 280.98(b) Select this to see the exact wording that your surety bond must have. (Whoever prepares your surety bond must fill in the blanks and choose the right words from the choices shown in brackets.) d 280.98(c) If you don't pay as guaranteed by your surety bond, the costs will be paid out of the surety funds. But the most the surety can pay is the maximum annual aggregate sums that apply to you. d 280.98(d) If you use a surety bond, you must have a standby trust fund too. Payments from the surety bond are deposited into the standby trust fund, from which the actual cleanup bills are paid. d 280.99(a) A letter of credit is another way you can meet these requirements. Whoever issues your letter of credit must have the authority to do so in each State where you might need to use it. Also, the issuer must be regulated and examined by a State or Federal agency. REGINBOX / t 280.99(c) You must also have a standby trust fund if you use a letter of credit. Any money paid from your letter of credit goes into this standby trust fund. a 280.99(d) Whoever issues your letter of credit cannot revoke it during the time specified in the letter. The issuer must also agree to renew your letter of credit automatically for the same term as that specified originally, unless he tells you at least ì 120 days in advance that he plans not to renew your letter of credit. 280.100(a) If your State doesn't have an EPA-approved program but does require that you prove you can pay for an UST cleanup, you might be able to use whatever financial assurance your State requires. But EPA's Regional Administrator must determine that your State's requirements are at least equivalent to these EPA financial assurance requirements. 280.100(b) The EPA Regional Administrator will evaluate the financial assurance requirements of unapproved States based on: o Certainty of the money being available; o The amount of money made available; and o The types of corrective action costs covered. The Regional Administrator may also consider other factors in the evaluation. 280.100(c) You, your State, or others interested can formally ask the EPA Regional Administrator to approve one or more of the State's required mechanisms. Of course, you have to document such a request in detail. 280.100(d) Even if one group seeks EPA approval of a State mechanism, all UST owners/operators in the State may be eligible to use it if approved. 280.100(e) Until the EPA Regional Administrator tells you whether or not a particular State's mechanism is approved, EPA will consider you in compliance with these requirements if you are using the State's mechanism. If the State's mechanism is disapproved, then you will have to meet these requirements in another way. 280.101(a) If EPA is running the UST program in your State but your State has a fund or assurance program that EPA has approved, you may meet these financial assurance requirements with your State's fund or program. e 280.101(b) The EPA Regional Administrator will evaluate the financial assurance requirements of such States based on: o Certainty of the money being available; o The amount of money made available; and o The types of corrective action costs covered. The Regional Administrator may also consider other factors in the evaluation. 280.101(c) If EPA is running the UST program in your State, your State can still have its financial assurance mechanisms approved by EPA's Regional Administrator. To do so the State must submit a description of the mechanisms and the classes of tanks to which they apply to the EPA Regional Administrator. Until the Regional Administrator has approved or disapproved your State's mechanisms, you can use them to meet these financial assurance requirements. s 280.101(d) If you are relying on your State's fund or mechanism to meet these requirements, your State must send you a letter or certificate within 60 days after EPA approves the mechanism. This letter or certificate has to show how much cost will ìbe covered and the name and address of the UST facility. ìYou have to keep this letter or certificate on file. r 280.102(a) You can set up your own trust fund to meet these requirements. If you do, it must have a real trustee and must be examined and regulated by the State's agency or a Federal agency. This trust fund is different from the standby trust fund required if you use some other financial assurance mechanisms. The standby trust fund is like a checking account into which you put money when you know that cleanup costs are going to have to be paid. The trust fund is like a savings account with funds set aside for a rainy day. 280.95(b) This section is the OUST test for self-insurance. ìThese criteria are incorporated in the ìSelf-Insurance Advisor, Alternative Test I. a 280.102(c) Your trust fund must be able to pay the full amount of coverage required or whatever amount you have not covered with another approved mechanism. a 280.102(d) If your trust fund has more money than the amount of coverage required, you can ask your UST agency to release the excess amount from your trust fund. a 280.102(e) If you have covered part of your required amount with another approved mechanism, you can ask your UST agency to release that amount from your trust fund. a 280.102(f) Within 60 days of getting your written request to release excess money from your trust fund, your UST agency will tell the trustee how much excess money to release from your trust fund. a 280.103(a) If you use a guarantee, a surety bond, or a letter of credit to meet these requirements, you must also have a standby trust fund. This trust fund must have a real trustee who can spend the money. Also, the trust fund must be regulated and examined by the State or a Federal agency. (Whoever prepares your letter of credit must fill in the blanks and choose the right words from the choices shown in brackets.) e 40 CFR Part 281 is OUST's state program approval ìregulations. These are not included in Reg-In-A-Box. 280.103(c) Your UST agency can tell your trustee to put unspent, unneeded money from the standby trust fund back into the financial assurance mechanism that it came from. t 280.103(d) If you use several different mechanisms, each of which requires a standby trust fund, you can have one standby trust fund for all of them. t 280.104(a) You can use any combination of these approved financial assurance mechanisms as long as their combined coverage meets the total amounts and scope required here. t 280.104(b) If you decide to switch from one mechanism to another, you can cancel the "old" one by notifying its provider. t 280.105(a) If your financial assurance provider decides to cancel or not renew your financial assurance, he must send you a termination notice by certified mail. A guarantee or a surety bond can't be terminated until ì120 days after you receive the notice of termination sent ìby certified mail. Insurance, risk retention group, or State-fund assurance can't be terminated until 60 days after you receive the notice of termination sent by certified mail. Your certified mail receipt is your proof, so save it if ìyou get a termination notice. 280.105(b) You have 60 days to get alternative coverage if your financial assurance is terminated for any reason besides incapacity of the provider. If you can't get another provider of financial assurance within 60 days you have to notify your State UST agency and document the details of the coverage that was terminated. t 280.106(a)(1) You must submit documentation that you meet financial responsibility requirements 30 days after a release is reported. n 280.106(a)(2) If your financial assurance is terminated because the provider has gone broke, failed the financial test, lost authority to provide financial assurance, or is otherwise unable to provide the assurance, you have to notify your State UST agency. t 280.106(b) You have to certify that you meet these financial responsibility requirements on the form that you must submit to your UST agency when you install a new tank. 280.106(c) Your State UST agency can require that you submit proof that you meet these financial responsibility requirements--or other information related to your compliance with them--at any time. 280.107(a) You must keep records of your financial assurance mechanisms until your tank is properly closed and/or any necessary corrective action is completed. You have to keep these records either at the tank site or at your place of business. If you keep your records off the tank site, you must provide them if your UST agency asks for them. tDTAFIN c 280.108(a)(1) Your UST agency can require that money be put into your standby trust fund if: o You can't get alternative coverage within 60 days after your coverage is terminated or o Your UST agency finds or suspects a release at your tank site. t 280.108(b) Your UST agency may pay claims with money from your standby trust fund if: o A release has occurred at your tank site, corrective action is required, you've had a chance to comply, and you've not taken the required corrective action; or if o The UST agency has received either a Certification of Valid Claim or an unsatisfied court judgment against you for damage caused by your tank release. o 280.108(c) If corrective action costs and third-party claims are more than the amount of your financial assurance o Corrective action costs get paid first and o Third-party claims are paid in the order in which your UST agency receives them. t 280.110(a) If you begin bankruptcy proceedings, you have to notify your UST agency and document your current UST financial responsibility mechanisms within 10 days. y 280.110(b) If your provider of financial assurance begins bankruptcy proceedings, your provider must notify you by certified mail. y 280.110(c) If your provider of financial assurance begins bankruptcy proceedings, loses its authority, or becomes unable to provide coverage, you have 30 days after receiving notice to get alternative coverage. If you can't get alternative coverage within 30 days, you must notify your UST agency. t 280.110(d) If a State fund or other State assurance mechanism becomes incapable of paying, you have 30 days to get alternative financial assurance. a 280.111(a) Funds that are taken out of a financial assurance mechanism and put into the standby trust fund must be replaced by the date on which the financial assurance mechanism must be renewed. You can do this in one of two ways: o Replenish the funding of the original mechanism to the original amount; or, o Add another mechanism with funding equal to the amount of money that has been spent out of your standby trust fund. o280.22 bbSMARTREG bSMARTREG bSMARTREG bSMARTREG bSMARTREG bSMARTREG bSMARTREG bSMARTREG bSMARTREG bSELFINS bRECORD bAPPLY bRULE ( b sFor the reasons set out in the preamble, Parts 280 and 281 of Title 40 of the Code of Federal Regulations are amended as follows: PART 280--TECHNICAL STANDARDS AND CORRECTIVE ACTION REQUIREMENTS FOR OWNERS AND OPERATORS OF UNDERGROUND STORAGE TANKS. y1. The Authority citation for Part 280 continues to read as follows: Authority: Sections 2002, 9001, 9002, 9003, 9004, 9005, 9006, 9007, and 9009 of the Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. 6912, 6991, 6991(a), 6991(b), 6991(c), 6991(d), 6991(e), 6991(f), and 6991(h)). 2. The Table of Contents of 40 CFR Part 280 is amended to add a new Subpart H as follows: Press the Esc key to see the contents of OUST's financial responsibility regulations. 2DTAFIN (DTAFIN (DTAFIN (DTAFIN (RULE ) ( Letter from Chief Financial Officer I am the chief financial officer of [insert: name and address of the owner or operator, or guarantor]. This letter is in support of the use of [insert: "the financial test of self-insurance," and/or "guarantee"] to demonstrate financial responsibility for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage"] caused by [insert: "sudden accidental releases" and/or "nonsudden accidental releases"] in the amount of at least [insert: dollar amount] per occurrence and [insert: dollar amount] annual aggregate arising from operating (an) underground storage tank(s). Underground storage tanks at the following facilities are assured by this financial test or a financial test under an authorized state program by this [insert: "owner or operator," and/or "guarantor"]: [List for each facility: the name and address of the facility where tanks assured by this financial test are located, and whether tanks are assured by this financial test or a financial test under a state program approved under 40 CFR Part 281. If separate mechanisms or combinations of mechanisms are being used to assure any of the tanks at this facility, list each tank assured by this financial test or a financial test under a state program authorized under 40 CFR Part 281 by the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22 or the corresponding state requirement.] A [insert: "financial test," and/or "guarantee"] is also used by this [insert: "owner or operator," or "guarantor"] to demonstrate evidence of financial responsibility in the following amounts under other EPA regulations or state programs authorized by EPA under 40 CFR Parts 271 and 145: EPA Regulations Amount Closure (264.143 and 265.143) .............$ Post-Closure Care(264.145 and 265.145).... $ Liability Coverage (264.147 and 265.147).. $ Corrective Action (264.101(b))............ $ Plugging and Abandonment (144.63)......... $ Closure................................... $ Post-Closure Care......................... $ Liability Coverage........................ $ Corrective Action......................... $ Plugging and Abandonment.................. $ TOTAL ............. $ This [insert: "owner or operator," or "guarantor"] has not received an adverse opinion, a disclaimer of opinion, or a "going concern" qualification from an independent auditor on his financial statements for the latest completed fiscal year. [Fill in the information for Alternative I if the criteria of paragraph (b) of 280.95 are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of paragraph (c) of 280.95 are being used to demonstrate compliance with the financial test requirements.] ALTERNATIVE I 1. Amount of annual UST aggregate coverage being assured by a financial test, and/or guarantee ...................$ 2. Amount of corrective action, closure and post-closure care costs, liability coverage, and plugging and abandonment costs covered by a financial test, and/or guarantee .............................................. $ 3. Sum of lines 1 and 2 ................................... $ 4. Total tangible assets .................................. $ 5. Total liabilities [if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6] ...................................... $ 6. Tangible net worth [subtract line 5 from line 4]........ $ Yes No 7. Is line 6 at least $10 million? ......................... 8. Is line 6 at least 10 times line 3? ..................... 9. Have financial statements for the latest fiscal year been filed with the Securities and Exchange Commission? ............................................. 10. Have financial statements for the latest fiscal year been filed with the Energy Information Administration? .. 11. Have financial statements for the latest fiscal year been filed with the Rural Electrification Administration? ......................................... 12. Has financial information been provided to Dun and Bradstreet, and has Dun and Bradstreet provided a financial strengthrating of 4A or 5A? [Answer "Yes" only if both criteriahave been met.]..................... ALTERNATIVE II 1. Amount of annual UST aggregate coverage being assured by a financial test, and/or guarantee .................. $ 2. Amount of corrective action, closure and post-closure care costs, liability coverage, and plugging and abandonment costs covered by a financial test, and/or guarantee .............................................. $ 3. Sum of lines 1 and 2 ................................... $ 4. Total tangible assets .................................. $ 5. Total liabilities [if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6].............................................. $ 6. Tangible net worth [subtract line 5 from line 4] ....... $ 7. Total assets in the U.S. [required only if less than 90 percent of assets are located in the U.S.] .......... $ Yes No 8. Is line 6 at least $10 million? ........................ 9. Is line 6 at least 6 times line 3? ..................... 10. Are at least 90 percent of assets located in the U.S.? [If "No," complete line 11.] .................... 11. Is line 7 at least 6 times line 3? .................... [Fill in either lines 12-15 or lines 16-18:] 12. Current assets ........................................ $ 13. Current liabilities ................................... $ 14. Net working capital [subtract line 13 from line 12]................................................ $ Yes No 15. Is line 14 at least 6 times line 3? ................... 16. Current bond rating of most recent bond issue ......... 17. Name of rating service ................................ 18. Date of maturity of bond .............................. 19. Have financial statements for the latest fiscal year been filed with the SEC, the Energy Information Administration, or the Rural Electrification Administration? ........................................ [If "No," please attach a report from an independent certified public accountant certifying that there are no material differences between the data as reported in lines 4-18 above and the financial statements for the latest fiscal year.] [For both Alternative I and Alternative II complete the certification with this statement.] I hereby certify that the wording of this letter is identical to the wording specified in 40 CFR Part 280.95(d) as such regulations were constituted on the date shown immediately below. [Signature] [Name] [Title] [Date] a ÇGUARANTEE Guarantee made this [date] by [name of guaranteeing entity], a business entity organized under the laws of the state of [name of state], herein referred to as guarantor, to [the state implementing agency] and to any and all third parties, and obligees, on behalf of [owner or operator] of [business address]. Recitals. (1) Guarantor meets or exceeds the financial test criteria of 40 CFR 280.95(b) or (c) and (d) and agrees to comply with the requirements for guarantors as specified in 40 CFR 280.96(b). (2) [Owner or operator] owns or operates the following underground storage tank(s) covered by this guarantee: [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22 or the corresponding state requirement, and the name and address of the facility.] This guarantee satisfies 40 CFR Part 280, Subpart H requirements for assuring funding for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the above-identified underground storage tank(s) in the amount of [insert dollar amount] per occurrence and [insert dollar amount] annual aggregate. (3) [Insert appropriate phrase: "On behalf of our subsidiary" (if guarantor is corporate parent of the owner or operator); "On behalf of our affiliate" (if guarantor is a related firm of the owner or operator); or "Incident to our business relationship with" (if guarantor is providing the guarantee as an incident to a substantial business relationship with owner or operator)] [owner or operator], guarantor guarantees to [implementing agency] and to any and all third parties that: In the event that [owner or operator] fails to provide alternate coverage within 60 days after receipt of a notice of cancellation of this guarantee and the [Director of the implementing agency] has determined or suspects that a release has occurred at an underground storage tank covered by this guarantee, the guarantor, upon instructions from the [Director], shall fund a standby trust fund in accordance with the provisions of 40 CFR 280.108, in an amount not to exceed the coverage limits specified above. In the event that the [Director] determines that [owner or operator] has failed to perform corrective action for releases arising out of the operation of the above-identified tank(s) in accordance with 40 CFR Part 280, Subpart F, the guarantor upon written instructions from the [Director] shall fund a standby trust in accordance with the provisions of 40 CFR 280.108, in an amount not to exceed the coverage limits specified above. If [owner or operator] fails to satisfy a judgment or award based on a determination of liability for bodily injury or property damage to third parties caused by ["sudden" and/or "nonsudden"] accidental releases arising from the operation of the above-identified tank(s), or fails to pay an amount agreed to in settlement of a claim arising from or alleged to arise from such injury or damage, the guarantor, upon written instructions from the [Director], shall fund a standby trust in accordance with the provisions of 40 CFR 280.108 to satisfy such judgment(s), award(s), or settlement agreement(s) up to the limits of coverage specified above. (4) Guarantor agrees that if, at the end of any fiscal year before cancellation of this guarantee, the guarantor fails to meet the financial test criteria of 40 CFR 280.95(b) or (c) and (d), guarantor shall send within 120 days of such failure, by certified mail, notice to [owner or operator]. The guarantee will terminate 120 days from the date of receipt of the notice by [owner or operator], as evidenced by the return receipt. (5) Guarantor agrees to notify [owner or operator] by certified mail of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days after commencement of the proceeding. (6) Guarantor agrees to remain bound under this guarantee notwithstanding any modification or alteration of any obligation of [owner or operator] pursuant to 40 CFR Part 280. (7) Guarantor agrees to remain bound under this guarantee for so long as [owner or operator] must comply with the applicable financial responsibility requirements of 40 CFR Part 280, Subpart H for the above-identified tank(s), except that guarantor may cancel this guarantee by sending notice by certified mail to [owner or operator], such cancellation to become effective no earlier than 120 days after receipt of such notice by [owner or operator], as evidenced by the return receipt. (8) The guarantor's obligation does not apply to any of the following: (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law; (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator]; (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft; (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank; (e) Bodily damage or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 40 CFR 280.93. (9) Guarantor expressly waives notice of acceptance of this guarantee by [the implementing agency], by any or all third parties, or by [owner or operator]. I hereby certify that the wording of this guarantee is identical to the wording specified in 40 CFR 280.96(c) as such regulations were constituted on the effective date shown immediately below. Effective date: [Name of guarantor] [Authorized signature for guarantor] [Name of person signing] [Title of person signing] Signature of witness or notary: a 2 ü(1) ENDORSEMENT Name: [name of each covered location] Address: [address of each covered location] Policy Number: Period of Coverage: [current policy period] Name of [Insurer or Risk Retention Group]: Address of [Insurer or Risk Retention Group]: Name of Insured: Address of Insured: Endorsement: 1. This endorsement certifies that the policy to which the endorsement is attached provides liability insurance covering the following underground storage tanks: [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22, or the corresponding state requirement, and the name and address of the facility.] for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the underground storage tank(s) identified above. The limits of liability are [insert the dollar amount of the "each occurrence" and "annual aggregate" limits of the Insurer's or Group's liability; if the amount of coverage is different for different types of coverage or for different underground storage tanks or locations, indicate the amount of coverage for each type of coverage and/or for each underground storage tank or location], exclusive of legal defense costs. This coverage is provided under [policy number]. The effective date of said policy is [date]. 2. The insurance afforded with respect to such occurrences is subject to all of the terms and conditions of the policy; provided, however, that any provisions inconsistent with subsections (a) through (e) of this Paragraph 2 are hereby amended to conform with subsections (a) through (e): a. Bankruptcy or insolvency of the insured shall not relieve the ["Insurer" or "Group"] of its obligations under the policy to which this endorsement is attached. b. The ["Insurer" or "Group"] is liable for the payment of amounts within any deductible applicable to the policy to the provider of corrective action or a damaged third-party, with a right of reimbursement by the insured for any such payment made by the ["Insurer" or "Group"]. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated under another mechanism or combination of mechanisms as specified in 40 CFR 280.95-280.102. c. Whenever requested by [a Director of an implementing agency], the ["Insurer" or "Group"] agrees to furnish to [the Director] a signed duplicate original of the policy and all endorsements. d. Cancellation or any other termination of the insurance by the ["Insurer" or "Group"] will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the insured. [Insert for claims-made policies: e. The insurance covers claims for any occurrence that commenced during the term of the policy that is discovered and reported to the ["Insurer" or "Group"] within six months of the effective date of the cancellation or termination of the policy.] I hereby certify that the wording of this instrument is identical to the wording in 40 CFR 280.97(b)(l) and that the ["Insurer" or "Group"] is ["licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in one or more states"]. [Signature of authorized representative of Insurer or Risk Retention Group] [Name of person signing] [Title of person signing], Authorized Representative of [name of Insurer or Risk Retention Group] [Address of Representative] 4(2 CERTIFICATE OF INSURANCE Name: [name of each covered location] Address: [address of each covered location] Policy Number: Endorsement (if applicable): Period of Coverage: [current policy period] Name of [Insurer or Risk Retention Group]: Address of [Insurer or Risk Retention Group]: Name of Insured: Address of Insured: Certification: . [Name of Insurer or Risk Retention Group], [the "Insurer" or "Group"], as identified above, hereby certifies that it has issued liability insurance covering the following underground storage tank(s): [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22, or the corresponding state requirement, and the name and address of the facility.] for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the underground storage tank(s) identified above. The limits of liability are [insert the dollar amount of the "each occurrence" and "annual aggregate" limits of the Insurer's or Group's liability; if the amount of coverage is different for different types of coverage or for different underground storage tanks or locations, indicate the amount of coverage for each type of coverage and/or for each underground storage tank or location], exclusive of legal defense costs. This coverage is provided under [policy number]. The effective date of said policy is [date]. 2. The ["Insurer" or "Group"] further certifies the following with respect to the insurance described in Paragraph 1: a. Bankruptcy or insolvency of the insured shall not relieve the ["Insurer" or "Group"] of its obligations under the policy to which this certificate applies. b. The ["Insurer" or "Group"] is liable for the payment of amounts within any deductible applicable to the policy to the provider of corrective action or a damaged third-party, with a right of reimbursement by the insured for any such payment made by the ["Insurer" or "Group"]. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated under another mechanism or combination of mechanisms as specified in 40 CFR 280.95-280.102. c. Whenever requested by [a Director of an implementing agency], the ["Insurer" or "Group"] agrees to furnish to [the Director] a signed duplicate original of the policy and all endorsements. d. Cancellation or any other termination of the insurance by the ["Insurer" or "Group"] will be effective only upon written notice and only after the expiration of 60 days after a copy of such written notice is received by the insured. [Insert for claims-made policies: e. The insurance covers claims for any occurrence that commenced during the term of the policy that is discovered and reported to the ["Insurer" or "Group"] within six months of the effective date of the cancellation or other termination of the policy.] I hereby certify that the wording of this instrument is identical to the wording in 40 CFR 280.97(b)(2) and that the ["Insurer" or "Group"] is ["licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more states"]. [Signature of authorized representative of Insurer] [Type name] [Title], Authorized Representative of [name of Insurer or Risk Retention Group] [Address of Representative] t éPERFORMANCE BOND Date bond executed: Period of coverage: Principal: [legal name and business address of owner or operator] Type of organization: [insert "individual," "joint venture," "partnership," or "corporation"] State of incorporation (if applicable): Surety(ies): [name(s) and business address(es)] Scope of Coverage: [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22, or the corresponding state requirement, and the name and address of the facility. List the coverage guaranteed by the bond: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases" "arising from operating the underground storage tank"]. Penal sums of bond.. : Per occurrence...... $ Annual aggregate.... $ Surety's bond number : Know All Persons by These Presents, that we, the Principal and Surety(ies), hereto are firmly bound to [the implementing agency], in the above penal sums for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sums jointly and severally only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sums only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sums. Whereas said Principal is required under Subtitle I of the Resource Conservation and Recovery Act (RCRA), as amended, to provide financial assurance for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the underground storage tanks identified above, and Whereas said Principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance; Now, therefore, the conditions of the obligation are such that if the Principal shall faithfully ["take corrective action, in accordance with 40 CFR Part 280, Subpart F and the Director of the state implementing agency's instructions for," and/or "compensate injured third parties for bodily injury and property damage caused by" either "sudden" or "nonsudden" or "sudden and nonsudden"] accidental releases arising from operating the tank(s) identified above, or if the Principal shall provide alternate financial assurance, as specified in 40 CFR Part 280, Subpart H, within 120 days after the date the notice of cancellation is received by the Principal from the Surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect. Such obligation does not apply to any of the following: (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law; (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator]; (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft; (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank; (e) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 40 CFR 280.93. The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by [the Director of the implementing agency] that the Principal has failed to ["take corrective action, in accordance with 40 CFR Part 280, Subpart F and the Director's instructions," and/or "compensate injured third parties"] as guaranteed by this bond, the Surety(ies) shall either perform ["corrective action in accordance with 40 CFR Part 280 and the Director's instructions," and/or "third-party liability compensation"] or place funds in an amount up to the annual aggregate penal sum into the standby trust fund as directed by [the Regional Administrator or the Director] under 40 CFR 280.108. Upon notification by [the Director] that the Principal has failed to provide alternate financial assurance within 60 days after the date the notice of cancellation is received by the Principal from the Surety(ies) and that [the Director] has determined or suspects that a release has occurred, the Surety(ies) shall place funds in an amount not exceeding the annual aggregate penal sum into the standby trust fund as directed by [the Director] under 40 CFR 280.108. The Surety(ies) hereby waive(s) notification of amendments to applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond. The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the annual aggregate to the penal sum shown on the face of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said annual aggregate penal sum. The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by the Principal, as evidenced by the return receipt. The Principal may terminate this bond by sending written notice to the Surety(ies). In Witness Thereof, the Principal and Surety(ies) have executed this Bond and have affixed their seals on the date set forth above. The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in 40 CFR 280.98(b) as such regulations were constituted on the date this bond was executed. PRINCIPAL [Signature(s)] [Name(s)] [Title(s)] [Corporate seal] CORPORATE SURETY(IES) [Name and address] State of Incorporation: Liability limit: $ [Signature(s)] [Name(s) and title(s)] [Corporate seal] [For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.] Bond premium: $ a âIRREVOCABLE STANDBY LETTER OF CREDIT [Name and address of issuing institution] [Name and address of Director(s) of state implementing agency(ies)] Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No. in your favor, at the request and for the account of [owner or operator name] of [address] up to the aggregate amount of [in words] U.S. dollars ($[insert dollar amount]), available upon presentation [insert, if more than one Director of a state implementing agency is a beneficiary, "by any one of you"] of (1) your sight draft, bearing reference to this letter of credit, No. , and (2) your signed statement reading as follows: "I certify that the amount of the draft is payable pursuant to regulations issued under authority of Subtitle I of the Resource Conservation and Recovery Act of 1976, as amended." This letter of credit may be drawn on to cover [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"] arising from operating the underground storage tank(s) identified below in the amount of [in words] $[insert dollar amount] per occurrence and [in words] $[insert dollar amount] annual aggregate: [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to 40 CFR 280.22, or the corresponding state requirement, and the name and address of the facility.] The letter of credit may not be drawn on to cover any of the following: (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law; (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator]; (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft; (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank; (e) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 40 CFR 280.93. This letter of credit is effective as of [date] and shall expire on [date], but such expiration date shall be automatically extended for a period of [at least the length of the original term] on [expiration date] and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify [owner or operator] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event that [owner or operator] is so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by [owner or operator], as shown on the signed return receipt. Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the amount of the draft directly into the standby trust fund of [owner or operator] in accordance with your instructions. We certify that the wording of this letter of credit is identical to the wording specified in 40 CFR 280.99(b) as such regulations were constituted on the date shown immediately below. [Signature(s) and title(s) of official(s) of issuing institution] [Date] This credit is subject to [insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce," or "the Uniform Commercial Code"]. àTRUST AGREEMENT Trust agreement, the "Agreement," entered into as of [date] by and between [name of the owner or operator], a [name of state] [insert "corporation," "partnership," "association," or "proprietorship"], the "Grantor," and [name of corporate trustee], [insert "Incorporated in the state of " or "a national bank"], the "Trustee." [Whereas, the United States Environmental Protection Agency, "EPA," an agency of the United States Government, has established certain regulations applicable to the Grantor, requiring that an owner or operator of an underground storage tank shall provide assurance that funds will be available when needed for corrective action and third- party compensation for bodily injury and property damage caused by sudden and nonsudden accidental releases arising from the operation of the underground storage tank (This paragraph is only applicable to the standby trust agreement.)]; [Whereas, the Grantor has elected to establish [insert either "a guarantee," "surety bond," or "letter of credit"] to provide all or part of such financial assurance for the underground storage tanks identified herein and is required to establish a standby trust fund able to accept payments from the instrument (This paragraph is only applicable to the standby trust agreement.)]; Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee; Now, therefore, the Grantor and the Trustee agree as follows: Section 1. Definitions. As used in this Agreement: (a) The term "Grantor" means the owner or operator who enters into this Agreement and any successors or assigns of the Grantor. (b) The term "Trustee" means the Trustee who enters into this Agreement and any successor Trustee. Section 2. Identification of the Financial Assurance Mechanism. This Agreement pertains to the [identify the financial assurance mechanism, either a guarantee, surety bond, or letter of credit, from which the standby trust fund is established to receive payments (This paragraph is only applicable to the standby trust agreement.)]. Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund, the "Fund," for the benefit of [implementing agency]. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. [The Fund is established initially as a standby to receive payments and shall not consist of any property.] Payments made by the provider of financial assurance pursuant to [the Director of the implementing agency's] instruction are transferred to the Trustee and are referred to as the Fund, together with all earnings and profits thereon, less any payments or distributions made by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor as provider of financial assurance, any payments necessary to discharge any liability of the Grantor established by [the state implementing agency]. Section 4. Payment for ["Corrective Action" and/or "Third-Party Liability Claims"]. The Trustee shall make payments from the Fund as [the Director of the implementing agency] shall direct, in writing, to provide for the payment of the costs of [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"] arising from operating the tanks covered by the financial assurance mechanism identified in this Agreement. The Fund may not be drawn upon to cover any of the following: (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law; (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator]; (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft; (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank; (e) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 40 CFR 280.93. The Trustee shall reimburse the Grantor, or other persons as specified by [the Director], from the Fund for corrective action expenditures and/or third-party liability claims in such amounts as [the Director] shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as [the Director] specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein. Section 5. Payments Comprising the Fund. Payments made to the Trustee for the Fund shall consist of cash and securities acceptable to the Trustee. Section 6. Trustee Management. The Trustee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiaries and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that: (i) Securities or other obligations of the Grantor, or any other owner or operator of the tanks, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-2(a), shall not be acquired or held, unless they are securities or other obligations of the federal or a state government; (ii) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the federal or state government; and (iii) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon. Section 7. Commingling and Investment. The Trustee is expressly authorized in its discretion: (a) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and (b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion. Section 8. Express Powers of Trustee. Without in any way limiting the powers and discretions conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition; (b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund; (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the federal or state government; and (e) To compromise or otherwise adjust all claims in favor of or against the Fund. Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund. Section 10. Advice of Counsel. The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any questions arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel. Section 11. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the Grantor. Section 12. Successor Trustee. The Trustee may resign or the Grantor may replace the Trustee, but such resignation or replacement shall not be effective until the Grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes administration of the trust in writing sent to the Grantor and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 9. Section 13. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in the attached Schedule B or such other designees as the Grantor may designate by amendment to Schedule B. The Trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by [the Director of the implementing agency] to the Trustee shall be in writing, signed by [the Director], and the Trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor or [the Director] hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or [the Director], except as provided for herein. Section 14. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor and the Trustee, or by the Trustee and [the Director of the implementing agency] if the Grantor ceases to exist. Section 15. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 14, this Trust shall be irrevocable and shall continue until terminated at the written direction of the Grantor and the Trustee, or by the Trustee and [the Director of the implementing agency], if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be delivered to the Grantor. Section 16. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor or [the Director of the implementing agency] issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense. Section 17. Choice of Law. This Agreement shall be administered, construed, and enforced according to the laws of the state of [insert name of state], or the Comptroller of the Currency in the case of National Association banks. Section 18. Interpretation. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. In Witness whereof the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals (if applicable) to be hereunto affixed and attested as of the date first above written. The parties below certify that the wording of this Agreement is identical to the wording specified in 40 CFR 280.103(b)(1) as such regulations were constituted on the date written above. [Signature of Grantor] [Name of the Grantor] [Title] Attest: [Signature of Trustee] [Name of the Trustee] [Title] [Seal] Attest: [Signature of Witness] [Name of Witness] [Title] [Seal] iRULE * RULE + RULE , These cross-references refer to items from RCRA's ìhazardous waste management regulations that you have ìto figure into your Tangible Net Worth when you use ìAlternative Test I for self-insurance. (See the ìSelf-Insurance Advisor). The regulations cross-referenced are not included in ìReg-In-A-Box. l These cross-references refer to items from EPA's ìunderground injection well regulations that you have ìto figure into your Tangible Net Worth when you use ìAlternative Test I for Self-Insurance. (See the ìSelf-Insurance Advisor). These regulations are not contained in Reg-In-A-Box. l 280.95(c) These are the criteria used in Alternative Test II ìfor Self-Insurance. (See the Self-Insurance ìAdvisor). a This cross-reference refers to the financial test for ìself-insurance under RCRA's hazardous waste ìmanagement regulations. This is Alternative Test II in the Self-Insurance ìAdvisor. (The text of these regulations is not included in ìReg-In-A-Box.) l 40 CFR Part 280, Subpart G means... OUST's tank closure regulations in Sec. 280.74 ìof these rules. L î ìCERTIFICATION OF ACKNOWLEDGEMENT (2) The standby trust agreement must be accompanied by a formal certification of acknowledgment similar to the following. State requirements may differ on the proper content of this acknowledgment. State of County of On this [date], before me personally came [owner or operator] to me known, who, being by me duly sworn, did depose and say that she/he resides at [address], that she/he is [title] of [corporation], the corporation described in and which executed the above instrument; that she/he knows the seal of said corporation; that the seal affixed to such instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that she/he signed her/his name thereto by like order. [Signature of Notary Public] [Name of Notary Public] o ÅCERTIFICATION OF FINANCIAL RESPONSIBILITY [Owner or operator] hereby certifies that it is in compliance with the requirements of Subpart H of 40 CFR Part 280. The financial assurance mechanism[s] used to demonstrate financial responsibility under Subpart H of 40 CFR Part 280 is[are] as follows: [For each mechanism, list the type of mechanism, name of issuer, mechanism number (if applicable), amount of coverage, effective period of coverage and whether the mechanism covers "taking corrective action" and/or "compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases."] [Signature of owner or operator] [Name of owner or operator] [Title] [Date] [Signature of witness or notary] [Name of witness or notary] [Date] The owner or operator must update this certification whenever the financial assurance mechanism(s) used to demonstrate financial responsibility change(s). (The information requirements in this section have been approved by the Office of Management and Budget and assigned OMB control number 2050-0066.) e ÉCERTIFICATION OF VALID CLAIM The undersigned, as principals and as legal representatives of [insert owner or operator] and [insert name and address of third- party claimant], hereby certify that the claim of bodily injury [and/or] property damage caused by an accidental release arising from operating [owner's or operator's] underground storage tank should be paid in the amount of $[ ]. [Signatures] Owner or Operator Attorney for Owner or Operator (Notary) Date [Signature(s)] Claimant(s) Attorney(s) for Claimant(s) (Notary) Date or (ii) A valid final court order establishing a judgment against the owner or operator for bodily injury or property damage caused by an accidental release from an underground storage tank covered by financial assurance under this subpart and the Director determines that the owner or operator has not satisfied the judgment. r 280.102(b) You must use the exact wording of the trust ìagreement and the certification of ìacknowledgement as published in these ìregulations. The regulation provides these in ì"fill-in-the-blank" format. Have your ìattorney take care of this for you. eREGINBOX 9 n
