R. 29.2163c - Financial test of self-insurance

R. 29.2163c. Financial test of self-insurance

Rule 63c. Section 280.95 is amended to read as adopted from the July 15, 2015, EPA-UST rules as follows:

Section 280.95.

(a) An O/O, and/or guarantor, may satisfy the requirements of section 280.93 by passing a financial test as specified in this section. To pass the financial test of self-insurance, the O/O, and/or guarantor must meet the criteria of subsection (b) or (c) of this section based on year-end financial statements for the latest completed fiscal year.

(b)

(1) The O/O, and/or guarantor, shall have a tangible net worth of at least 10 times all of the following:

(i) The total of the applicable aggregate amount required by section 280.93, based on the number of USTs 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 C.F.R. part 281 (2015);

(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 40 C.F.R. 264.101, 264.143, 264.145, 265.143, 265.145, 264.147, and 265.147 (2015) or to a state implementing agency under a state program authorized by EPA under 40 C.F.R. part 271 (2015).

(iii) The sum of current plugging and abandonment cost estimates for which a financial test is used to demonstrate financial responsibility to EPA under 40 C.F.R. part 144.63 (2015) or to a state implementing agency under a state program authorized by EPA under 40 C.F.R. part 145 (2015).

(2) The O/O, and/or guarantor, shall have a tangible net worth of at least $10 million.

(3) The O/O, and/or guarantor, shall have a letter signed by the chief financial officer worded as specified in subsection (d) of this section.

(4) The O/O, and/or guarantor, shall do either of the following:

(i) File financial statements annually with the U.S. securities and exchange commission, the energy information administration, or the rural utilities service.

(ii) Report annually the firms 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 firms year-end financial statements, if independently audited, cannot include an adverse auditors opinion, a disclaimer of opinion, or a going concern qualification.

(c)

(1) The O/O, and/or guarantor shall meet the financial test requirements of 40 C.F.R. part 264.147(f)(1) (2015), substituting the appropriate amounts specified in subdivisions 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 O/O, and/or guarantor, must be examined by an independent certified public accountant and be accompanied by the accountants report of the examination.

(3) The firms year-end financial statements cannot include an adverse auditors opinion, a disclaimer of opinion, or a going concern qualification.

(4) The O/O, and/or guarantor, shall have a letter signed by the chief financial officer, worded as specified in subsection (d) of this section.

(5) If the financial statements of the O/O, and/or guarantor, are not submitted annually to the U.S. Securities and Exchange Commission, the energy information administration, or the rural utilities service, the O/O, and/or guarantor, shall obtain a special report by an independent certified public accountant stating all of the following:

(i) He or she 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 O/O, and/or guarantor, with the amounts in such financial statements.

(ii) In connection with that comparison, no matters came to his or her attention that caused him or her to believe that the specified data should be adjusted.

(d) To demonstrate that the test for self-insurance meets the financial test under subdivision (b) or (c) of this section, the chief financial officer of the O/O, or guarantor, shall sign, within 120 days of the close of each financial reporting year, as defined by the 12-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:

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 re-leases or "accidental releases"] in the amount of at least [insert: dollar amount] per occurrence and [insert: dollar amount] annual aggregate arising from operating (an) UST(s).

USTs 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 C.F.R. 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 C.F.R. part 281 by the tank identification number provided in the notification submitted pursuant to 40 C.F.R. part 280.22 or the corresponding State requirements.]

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 C.F.R. parts 271 and 145:

EPA Regulations

Amount

Closure (section section 264.143 and 265.143) ..........................

Post-Closure Care (section section 264.145 and 265.145) .................

Liability Coverage (section section 264.147 and 265.147) ...............

Corrective Action (section subsection 264.101(b)) .........................

Plugging and Abandonment (section 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 subsection (b) of section 280.95 are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of subsection (c) of section 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 postclosure 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 theSecurities 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 Utilities Service? ___ ___

12. Has financial information been provided to Dun and Bradstreet, and has Dun and Bradstreet provided a financial strength rating of 4A or 5A? [Answer Yes only if both criteria have been met.] ___ ___

Alternative II

1. Amount of annual UST aggregate coverage being assured by a test, and/or guarantee

$ ______

2. Amount of corrective action, closure and postclosure 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 1215 or lines 1618:]

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

Utilities Service? ___ ___

[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 C.F.R. part 280.95(d) as such regulations were constituted on the date shown immediately below.

[Signature]

[Name]

[Title]

[Date]

(e) If an O/O 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 O/O shall obtain alternative coverage within 150 days of the end of the year for which financial statements have been prepared.

(f) The director of the implementing agency may require reports of financial condition at any time from the O/O, and/or guarantor. If the director finds, on the basis of such reports or other information, that the O/O, and/or guarantor, no longer meets the financial test requirements of subsections 280.95(b) or (c) and (d), the O/O shall obtain alternate coverage within 30 days after notification of such a finding.

(g) If the O/O 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 director of the implementing agency that he or she no longer meets the requirements of the financial test, the O/O shall notify the director of such failure within 10 days.

(1998-2000 AACS; 2018 MR 21, Eff. Nov. 14, 2018)

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