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§280.95 Financial test of self-insurance.
(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.
(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 40 CFR 264.101, 264.143, 264.145, 265.143, 165.145, 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 40 CFR 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) of this section.
(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.
(c)(1) The owner or operator, and/or guarantor must meet the financial test requirements of 40 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) of this section.
(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 form 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.
(d) To demonstrate that it meets the financial test under paragraph (b) or
(c) of this section, the chief financial officer of the owner or operator, 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:
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: "suddent accidential releases" and/or "nonsudden accidential 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 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 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....................................... $____
Liabilitly 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
Administrati
on?
11. Have __ _
financial
statements
for the
lastest
fiscal year
been filed
with the
Rural
Electrificat
ion
Administrati
on?
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
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
Administrati
on, or the
Rural
Electrificat
ion
Administrati
on?
[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] (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.
(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.
(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 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.