Source: https://law.lis.virginia.gov/admincodeexpand/title9/agency25/chapter640/
Timestamp: 2020-07-08 22:43:08
Document Index: 71527967

Matched Legal Cases: ['§ 62', 'art 280', '§ 62', '§ 62', '§ 62', '§ 62', '§ 62', '§ 62', '§ 10', '§ 62', '§ 62', '§ 62', '§ 80', '§ 80']

9VAC25-640-10. Definitions.
"Accidental discharge" means any sudden or nonsudden discharge of oil from a facility that results in a need for containment and clean up which was neither expected nor intended by the operator.
"Annual aggregate" means the maximum financial responsibility requirement that an operator is required to demonstrate annually.
"Change in service" means change in operation, conditions of the stored product, specific gravity, corrosivity, temperature or pressure that has occurred from the original that may affect the tank's suitability for service.
"Containment and clean up" means abatement, containment, removal and disposal of oil and, to the extent possible, the restoration of the environment to its existing state prior to an oil discharge.
"Discharge" means any spilling, leaking, pumping, pouring, emitting, emptying or dumping.
"Financial reporting year" means the latest consecutive 12-month period for which any of the following reports used to support a financial test is prepared: (i) a 10-K report submitted to the U.S. Securities & Exchange Commission (SEC); (ii) an annual report of tangible net worth submitted to Dun and Bradstreet; (iii) annual reports submitted to the Energy Information Administration or the Rural Utilities Service; or (iv) a year-end financial statement authorized under 9VAC25-640-70 B or C. "Financial reporting year" may thus comprise a fiscal or calendar year period.
"Group self-insurance pool" or "pool" means a pool organized by two or more operators of facilities for the purpose of forming a group self-insurance pool in order to demonstrate financial responsibility as required by § 62.1-44.34:16 of the Code of Virginia.
"Legal defense cost" means any expense that an operator or provider of financial assurance incurs in defending against claims or actions brought (i) by the federal government or the board to require containment or clean up or to recover the costs of containment and clean up, or to collect civil penalties under federal or state law or to assert any claim on behalf of the Virginia Petroleum Storage Tank Fund; or (ii) by any person to enforce the terms of a financial assurance mechanism.
"Local government entity" means a municipality, county, town, commission, separately chartered and operated special district, school board, political subdivision of a state or other special purpose government which provides essential services.
"Member" means an operator of an aboveground storage tank or pipeline who has entered into a member agreement and thereby becomes a member of a group self-insurance pool.
"Occurrence" means an accident, including continuous or repeated exposure to conditions, that results in a discharge from an AST. Note: This definition is intended to assist in the understanding of this chapter 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."
"Oil" means oil of any kind and in any form, including, but not limited to, petroleum and petroleum byproducts, fuel oil, lubricating oils, sludge, oil refuse, oil mixed with other wastes, crude oil and all other liquid hydrocarbons regardless of specific gravity.
"Operator" means any person who owns, operates, charters by demise, rents or otherwise exercises control over or responsibility for a facility or a vehicle or a vessel. For purposes of this chapter, the definition of operator is restricted to operators of facilities.
"Pipeline" means all new and existing pipe, rights of way, and any equipment, facility, or building used in the transportation of oil, including, but not limited to, line pipe, valves and other appurtenances connected to line pipe, pumping units, fabricated assemblies associated with pumping units, metering and delivery stations and fabricated assemblies therein, and breakout tanks.
"Provider of financial assurance" means a person that provides financial assurance to an operator of an aboveground storage tank through one of the mechanisms listed in 9VAC25-640-70 through 9VAC25-640-120, including a guarantor, insurer, group self-insurance pool, surety, certificate of deposit, or issuer of a letter of credit.
"Release" means any spilling, leaking, emitting, discharging, escaping, leaching, or disposing from an underground storage tank or facility into groundwater, surface water, or upon lands, subsurface soils or storm drain systems.
"Storage capacity" means the total capacity of an AST or a container, whether filled in whole or in part with oil, a mixture of oil, or mixtures of oil with nonhazardous substances, or empty. An AST that has been permanently closed in accordance with the requirements of 9VAC25-91 has no storage capacity.
"Substantial business relationship" means the extent of a business relationship necessary under Virginia 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 operator.
"Tank" means a device designed to contain an accumulation of oil and constructed of nonearthen materials, such as concrete, steel, or plastic, that provides structural support. For purposes of 9VAC25-640-220, a tank means a device, having a liquid capacity of more than 60 gallons, designed to contain an accumulation of oil and constructed of nonearthen materials, such as concrete, steel, or plastic, that provides structural support. This term does not include flow-through process tanks as defined in 40 CFR Part 280.
"Underground storage tank" means any one or combination of tanks, including connecting pipes, used to contain an accumulation of regulated substances, and the volume of which, including the volume of underground connecting pipes, is 10% or more beneath the surface of the ground. This term does not include any:
1. Farm or residential tanks having a capacity of 1,100 gallons or less and used for storing motor fuel for noncommercial purposes;
2. Tanks used for storing heating oil for consumption on the premises where stored;
3. Septic tanks;
4. Pipeline facilities (including gathering lines) regulated under:
a. The Natural Gas Pipeline Safety Act of 1968 (49 USC App. 1671 et seq.);
b. The Hazardous Liquid Pipeline Safety Act of 1979 (49 USC App. 2001 et seq.); or
c. Any intrastate pipeline facility regulated under state laws comparable to the provisions of the law referred to in subdivision 4 a or 4 b of this definition;
5. Surface impoundments, pits, ponds, or lagoons;
6. Storm water or wastewater collection systems;
7. Flow-through process tanks;
8. Liquid traps or associated gathering lines directly related to oil or gas production and gathering operations; or
9. Storage tanks situated in an underground area, such as a basement, cellar, mineworking, drift, shaft, or tunnel, if the storage tank is situated upon or above the surface of the floor.
The term "underground storage tank" does not include any pipes connected to any tank which is described in subdivisions 1 through 9 of this definition.
"Vessel" means every description of watercraft or other contrivance used as a means of transporting on water, whether self-propelled or otherwise, and shall include barges and tugs.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; amended, Virginia Register Volume 25, Issue 2, eff. November 1, 2008; Volume 29, Issue 26, eff. October 10, 2013.
9VAC25-640-20. Applicability.
A. Unless otherwise exempted in this section or excluded in 9VAC25-640-30, operators of aboveground storage tank facilities having a maximum storage capacity of 25,000 gallons or greater of oil must demonstrate financial responsibility in accordance with the requirements of this chapter as a condition of operation.
B. Unless otherwise exempted in this section or excluded in 9VAC25-640-30, operators of pipelines must demonstrate financial responsibility in accordance with the requirements of this chapter as a condition of operation.
C. State and federal government entities whose debts and liabilities are the debts and liabilities of the Commonwealth of Virginia or the United States have the requisite financial strength and stability to fulfill their financial assurance requirements and are relieved of the requirements to further demonstrate an ability to provide financial responsibility under this chapter.
D. Local government entities are not required to comply with the requirements of this chapter.
E. If there is more than one operator for a facility, only one operator is required to demonstrate financial responsibility; however, all operators are jointly responsible for ensuring compliance with financial responsibility requirements.
F. The provisions in 9VAC25-640-220 apply to all operators of aboveground storage tank facilities, regardless of storage capacity, unless otherwise exempted or excluded in 9VAC25-640-30.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; amended, Virginia Register Volume 25, Issue 2, eff. November 1, 2008.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; amended, Virginia Register Volume 25, Issue 2, eff. November 1, 2008; Volume 35, Issue 24, eff. September 5, 2019.
9VAC25-640-40. Compliance dates.
Operators of existing facilities are required to comply with the requirements of this chapter by June 30, 2001. Operators of new facilities shall comply with the requirements of this chapter by the date the facility begins operation.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001.
9VAC25-640-50. Amount and scope of required financial responsibility.
A. Operators shall demonstrate per occurrence and annual aggregate financial responsibility for containment and clean up of discharges of oil in an amount equal to (i) five cents per gallon of the aggregate aboveground storage capacity for ASTs in all Virginia facilities up to a maximum of $1 million and (ii) $5 million for pipelines.
B. If the operator uses separate mechanisms or combinations of mechanisms to demonstrate financial responsibility for the containment and clean up of oil, (i) the amount of assurance provided by the combination of mechanisms shall be in the full amount specified in subsection A of this section, and (ii) the operator shall demonstrate financial responsibility in the appropriate amount of annual aggregate assurance specified in subsection A of this section by the first-occurring effective date anniversary of any one of the mechanisms combined (other than a financial test or guarantee) to provide assurance.
C. The amounts of assurance required under this section exclude legal defense costs.
D. The required demonstration of financial responsibility does not in any way limit the liability of the operator under § 62.1-44.34:18 of the Code of Virginia.
E. Operators which demonstrate financial responsibility shall maintain copies of those records on which the determination is based. The following documents may be used by operators to support a financial responsibility requirement determination:
1. Copies of the registration form required under 9VAC25-91.
2. Any other form of documentation that the board may deem to be acceptable evidence to support the financial responsibility requirement determination.
F. For purposes of the financial test of self-insurance, an operator and/or guarantor shall have a tangible net worth at least equal to the applicable amount required by subsection A of this section plus any aggregate amount required to be demonstrated under 9VAC25-590-40 for which a financial test is used to demonstrate financial responsibility.
9VAC25-640-70. Financial test of self-insurance.
A. An operator and/or guarantor may satisfy the requirements of 9VAC25-640-50 by passing a financial test as specified in this section. To pass the financial test of self-insurance, the operator and/or guarantor shall meet the requirements of subsection B or C and subsection D of this section based on year-end financial statements for the latest completed financial reporting year.
B. 1. The operator and/or guarantor shall have a tangible net worth at least equal to the total of the applicable amount required by 9VAC25-640-50 for which a financial test is used to demonstrate financial responsibility.
2. The operator and/or guarantor shall comply with either subdivision a or b below:
a. (1) The financial reporting year-end financial statements of the operator and/or guarantor shall be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination; and
(2) The financial reporting year-end financial statements of the operator and/or guarantor cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
(b) Report annually the tangible net worth of the operator and/or guarantor to Dun and Bradstreet, and Dun and Bradstreet must have assigned a financial strength rating which at least equals the amount of financial responsibility required by the operator in 9VAC25-640-50.
(2) The financial reporting year-end financial statements of the operator and/or guarantor, if independently audited, cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
3. The operator and/or guarantor shall have a letter signed by the chief financial officer worded identically as specified in Appendix I/Alternative I.
C. 1. The operator and/or guarantor shall have a tangible net worth at least equal to the total of the applicable amount required by 9VAC25-640-50 for which a financial test is used to demonstrate financial responsibility.
2. The financial reporting year-end financial statements of the operator and/or guarantor shall be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination.
3. The financial reporting year-end financial statements cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
4. If the financial statements of the operator 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 operator and/or guarantor shall obtain a special report by an independent certified public accountant stating that:
a. The accountant has compared the data that the letter from the chief financial officer specified as having been derived from the latest financial reporting year-end financial statements of the operator and/or guarantor with the amounts in such financial statements; and
b. In connection with that comparison, no matters came to the accountant's attention that caused him to believe that the specified data should be adjusted.
5. The operator and/or guarantor shall have a letter signed by the chief financial officer, worded identically as specified in Appendix I/Alternative II.
D. To meet the financial demonstration test under subsections B or C of this section, the chief financial officer of the operator and/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 identically as specified in Appendix I with the appropriate alternative, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted.
E. If an operator using the test to provide financial assurance finds that he no longer meets the requirements of the financial test based on the financial reporting year-end financial statements, the operator shall obtain alternative coverage and submit to the board the appropriate original forms listed in 9VAC25-640-170 B within 150 days of the end of the year for which financial statements have been prepared.
F. The board may require reports of financial condition at any time from the operator and/or guarantor. If the board finds, on the basis of such reports or other information, that the operator and/or guarantor no longer meets the financial test requirements of subsection B or C and D of this section, the operator shall obtain alternate coverage and submit to the board the appropriate original forms listed in 9VAC25-640-170 B within 30 days after notification of such finding.
G. If the operator fails to obtain alternate assurance within 150 days of finding that he no longer meets the requirements of the financial test based on the financial reporting year-end financial statements, or within 30 days of notification by the board that he no longer meets the requirements of the financial test, the operator shall notify the board of such failure within 10 days.
9VAC25-640-90. Insurance and group self-insurance pool coverage.
A. 1. An operator may satisfy the requirements of 9VAC25-640-50 by obtaining liability insurance that conforms to the requirements of this section from a qualified insurer or entering into a member agreement with a group self-insurance pool.
2. Such liability insurance may be in the form of a separate insurance policy or an endorsement to an existing insurance policy.
3. Group self-insurance pools shall comply with § 62.1-44.34:16 of the Code of Virginia and the rules promulgated by the State Corporation Commission designated as Chapter 385 of Title 14 of the Virginia Administrative Code and entitled "Rules Governing Aboveground Storage Tank and Pipeline Operators Group Self-Insurance Pools" (14VAC5-385).
B. Each liability insurance policy shall be amended by an endorsement worded in no respect less favorable than the coverage as specified in Appendix III, or evidenced by a certificate of insurance worded identically as specified in Appendix IV, except that instructions in brackets shall be replaced with the relevant information and the brackets deleted.
C. Each liability insurance policy shall be issued by an insurer that, at a minimum, is licensed to transact the business of insurance or eligible to provide insurance as an excess or approved surplus lines insurer in the Commonwealth of Virginia.
D. Each group self-insurance pool must be licensed in accordance with 14VAC5-385, and any coverage provided by such a pool shall be evidenced by a certificate of group self-insurance worded identically as specified in Appendix VIII, except that instructions in brackets shall be replaced with the relevant information and the brackets deleted.
E. Each liability insurance policy or group self-insurance plan shall provide first dollar coverage. The insurer or group self-insurance pool shall be liable for the payment of all amounts within any deductible applicable to the policy to the provider of containment and clean up as provided in this chapter, with a right of reimbursement by the insured for any such payment made by the insurer or group self-insurance pool. 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 9VAC25-640-70 through 9VAC25-640-120.
9VAC25-640-100. Surety bond.
A. An operator may satisfy the requirements of 9VAC25-640-50 by obtaining a surety bond that conforms to the requirements of this section. The surety company issuing the bond shall be licensed to operate as a surety in the Commonwealth of Virginia and be among those listed as acceptable sureties on federal bonds in the latest Circular 570 of the U.S. Department of the Treasury.
B. The surety bond shall be worded identically as specified in Appendix V, except that instructions in brackets shall be replaced with the relevant information and the brackets deleted.
C. Under the terms of the bond, the surety will become liable on the bond obligation when the 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.
9VAC25-640-110. Letter of credit.
A. An operator may satisfy the requirements of 9VAC25-640-50 by obtaining an irrevocable standby letter of credit that conforms to the requirements of this section. The issuing institution shall be an entity that has the authority to issue letters of credit in the Commonwealth of Virginia and whose letter-of-credit operations are regulated and examined by a federal agency or the State Corporation Commission.
B. The letter of credit shall be worded identically as specified in Appendix VI, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted.
C. The letter of credit shall be irrevocable with a term specified by the issuing institution. The letter of credit shall provide that credit will 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 operator and the board 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 operator and the board receives the notice, as evidenced by the return receipts.
9VAC25-640-115. Certificate of deposit.
A. An operator may satisfy the requirements of 9VAC25-640-50, wholly or in part, by assigning all rights, title, and interest of a certificate of deposit to the State Water Control Board, Commonwealth of Virginia. The operator shall maintain the certificate of deposit until the requirements of 9VAC25-640-190 are met. The original assignment and the certificate of deposit, if applicable, must be submitted to the board to prove that the certificate of deposit has been obtained and meets the requirements of this section. A copy of the certificate of deposit shall be maintained at the aboveground storage tank site or the operator's place of work located in Virginia. The issuing institution shall be a bank or other financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) and whose operations are regulated and examined by the Commonwealth of Virginia, by a federal agency, or by an agency of another state.
B. The operator shall be entitled to demand, receive, and recover the interest and income from the certificate of deposit as it becomes due and payable as long as the market value of the certificate of deposit plus any other mechanisms used continue to at least equal the amount of financial responsibility the operator is required to demonstrate.
C. In the event of failure of the operator to comply with the requirements of 9VAC25-640-150, the board shall cash the certificate of deposit.
E. The wording of the assignment shall be identical to the wording specified in Appendix X.
Derived from Virginia Register Volume 29, Issue 26, eff. October 10, 2013.
9VAC25-640-120. Trust fund.
A. An operator may satisfy the requirements of 9VAC25-640-50 by establishing an irrevocable trust fund that conforms to the requirements of this section. The trustee shall 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 the State Corporation Commission.
B. The trust fund shall be irrevocable and shall continue until terminated at the written direction of the grantor and the trustee, or by the trustee and the State Water Control Board, 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 operator. The wording of the trust agreement shall be identical to the wording specified in Appendix VII.
C. The irrevocable trust fund, when established, shall 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 mechanisms that provide the remaining required coverage.
D. If the value of the trust fund is greater than the required amount of coverage, the operator may submit a written request to the board for release of the excess.
E. If other financial assurance as specified in this chapter is substituted for all or part of the trust fund, the operator may submit a written request to the board for release of the excess.
F. Within 60 days after receiving a request from the operator for release of funds as specified in subsection D or E of this section, the board will instruct the trustee to release to the operator such funds as the board specifies in writing.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; repealed, Virginia Register Volume 25, Issue 2, eff. November 1, 2008.
9VAC25-640-150. Cancellation or nonrenewal by a provider of financial assurance.
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 operator and the board.
Termination of a guarantee, a surety bond, or a letter of credit may not occur until 120 days after the date on which the operator and the board receives the notice of termination, as evidenced by the return receipts.
Termination of insurance or group self-insurance pool coverage, except for nonpayment or misrepresentation by the insured, may not occur until 60 days after the date on which the operator and the board receives the notice of termination, as evidenced by the return receipts. Termination for nonpayment of premium or misrepresentation by the insured may not occur until a minimum of 15 days after the date on which the operator and the board receives the notice of termination, as evidenced by the return receipts.
B. If a provider of financial responsibility cancels or fails to renew for reasons other than incapacity of the provider as specified in 9VAC25-640-200, the operator shall obtain alternate coverage as specified in this section and shall submit to the board the appropriate original forms listed in 9VAC25-640-170 B documenting the alternate coverage within 60 days after receipt of the notice of termination. If the operator fails to obtain alternate coverage within 60 days after receipt of the notice of termination, the operator shall immediately notify the board of such failure and submit:
3. A copy of the financial assurance mechanism subject to the termination maintained in accordance with 9VAC25-640-170.
9VAC25-640-160. Reporting by operator.
A. An operator shall submit the appropriate original forms listed in 9VAC25-640-170 B documenting current evidence of financial responsibility to the board within 30 days after the operator identifies or confirms a discharge from an aboveground storage tank or pipeline required to be reported under 9VAC25-91. For all subsequent discharges within the same period of time for which the documents submitted according to this subsection are still effective, the operator shall submit a letter that identifies the operator's name and address and the aboveground storage tank's or pipeline's location by site name, street address, board incident designation number and a statement that the financial responsibility documentation previously provided to the board is currently in force.
B. An operator shall notify the board if the operator fails to obtain alternate coverage as required by this chapter within 30 days after the operator receives notice of:
1. Commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming a provider of financial assurance as a debtor.
2. Suspension or revocation of the authority of a provider of financial assurance to issue a financial assurance mechanism.
3. Failure of a guarantor to meet the requirements of the financial test.
C. An operator shall submit the appropriate original forms listed in 9VAC25-640-170 B documenting current evidence of financial responsibility to the board as required by 9VAC25-640-70 E and F and 9VAC25-640-150 B.
D. An operator shall submit to the board the appropriate original forms listed in 9VAC25-640-170 B documenting current evidence of financial responsibility upon substitution of its financial assurance mechanisms as provided by 9VAC25-640-140.
E. The board may require an operator to submit evidence of financial assurance as described in 9VAC25-640-170 B or other information relevant to compliance with this chapter at any time. The board may require submission of originals or copies at its sole discretion.
9VAC25-640-170. Recordkeeping.
A. Operators shall maintain evidence of all financial assurance mechanisms used to demonstrate financial responsibility under this chapter for an aboveground storage tank or pipeline, or both, until released from the requirements of this regulation under 9VAC25-640-190. An operator shall maintain such evidence at the aboveground storage tank site or the operator's place of work in this Commonwealth. Records maintained off-site shall be made available upon request of the board.
B. Operators shall maintain the following types of evidence of financial responsibility:
1. An operator using an assurance mechanism specified in 9VAC25-640-70 through 9VAC25-640-120 shall maintain the original instrument worded as specified.
2. An operator using a financial test or guarantee shall maintain (i) the chief financial officer's letter, and (ii) year-end financial statements for the most recent completed financial reporting year or the Dun and Bradstreet rating on which the chief financial officer's letter was based. Such evidence shall be on file no later than 120 days after the close of the financial reporting year.
3. An operator using an insurance policy or group self-insurance pool coverage shall maintain a copy of the signed insurance policy or group self-insurance pool coverage policy, with the endorsement or certificate of insurance and any amendments to the agreements.
4. a. An operator using an assurance mechanism specified in 9VAC25-640-70 through 9VAC25-640-120 shall maintain an original certification of financial responsibility worded identically as specified in Appendix IX, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted.
b. The operator shall maintain a new original certification at or before the time specified in 9VAC25-640-160 or whenever the financial assurance mechanisms used to demonstrate financial responsibility changes.
5. For submissions required under 9VAC25-640-160:
a. The operator must provide an insurance endorsement or certificate, or a notice of extension from the provider of financial assurance evidencing continuation of coverage in lieu of a new original surety bond or letter of credit, provided the form of the insurance endorsement or certificate, or notice of extension is approved by the board;
b. The operator need not provide a new original guarantee, letter of credit, certificate of deposit, or trust fund, provided the same mechanism is to continue to act as the operator's demonstration mechanism for the subsequent year or years;
c. The operator must provide a new original mechanism as specified in subdivision 2 of this subsection;
d. The operator need not provide a new original certification of acknowledgment, provided the associated trust agreement has not changed;
e. The operator must provide a new original certification of financial responsibility.
9VAC25-640-190. Release from the requirements.
An operator is no longer required to maintain financial responsibility under this chapter for an aboveground storage tank or pipeline after the tank or pipeline has been permanently closed pursuant to the requirements of 9VAC25-91, except when the board determines clean up of a discharge from the aboveground storage tank or pipeline is required.
9VAC25-640-200. Bankruptcy or other incapacity of operator provider of financial assurance.
A. Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming an operator as debtor, the operator shall notify the board by certified mail of such commencement.
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 shall notify the operator and the board by certified mail of such commencement as required under the terms of the guarantee specified in 9VAC25-640-80.
C. An 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, group self-insurance pool coverage policy, surety bond, certificate of deposit, or letter of credit. The operator shall obtain alternate financial assurance as specified in this chapter and submit to the board the appropriate original forms specified in 9VAC25-640-170 B within 30 days after receiving notice of such an event. If the operator does not obtain alternate coverage within 30 days after such notification, he shall immediately notify the board in writing.
9VAC25-640-210. Replenishment of guarantees, letters of credit, certificates of deposit, or surety bonds.
A. If at any time a guarantee, letter of credit, certificate of deposit, or surety bond is drawn upon by instruction of the board and the board has expended all or part of the funds for containment and cleanup, the operator by the anniversary date of the financial mechanism from which the funds were drawn shall:
1. Replenish the value of financial assurance to equal the full amount of coverage required; or
B. For purposes of this section, the full amount of coverage required is the amount of coverage to be provided by 9VAC25-640-50. 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.
9VAC25-640-220. Virginia Petroleum Storage Tank Fund.
A. The Virginia Petroleum Storage Tank Fund will be used for reasonable and necessary costs, in excess of the financial responsibility amounts specified below, incurred by an operator for containment and cleanup of a petroleum release from a facility of a product subject to § 62.1-44.34:13 of the Code of Virginia as follows:
1. Reasonable and necessary per occurrence containment and cleanup costs incurred by an operator whose net annual profits from all facilities in Virginia do not exceed $10 million:
a. For a release from a facility with a storage capacity less than 25,000 gallons, per occurrence costs in excess of $2,500 up to $1 million;
b. For a release from a facility with a storage capacity from 25,000 gallons to 100,000 gallons, per occurrence costs in excess of $5,000 up to $1 million;
c. For a release from a facility with a storage capacity from 100,000 gallons to four million gallons, per occurrence costs in excess of $.05 per gallon of aboveground storage capacity up to $1 million; and
d. For a release from a facility with a storage capacity greater than four million gallons, per occurrence costs in excess of $200,000 up to $1 million.
e. For purposes of this subdivision, the per occurrence financial responsibility requirements for an operator shall be based on the total storage capacity for the facility from which the discharge occurs.
2. Reasonable and necessary per occurrence containment and cleanup costs incurred by an operator whose net annual profits from all facilities in Virginia exceed $10 million:
a. For a release from a facility with a storage capacity less than four million gallons, per occurrence costs in excess of $200,000 up to $1 million;
b. For a release from a facility with a storage capacity from four million gallons to 20 million gallons, per occurrence costs in excess of $.05 per gallon of aboveground storage capacity of up to $1 million; and
c. For a release from a facility with a storage capacity greater than 20 million gallons no access to the fund will be permitted.
d. For purposes of this subdivision, the financial responsibility requirements for an operator are based on the total aboveground storage capacity for all facilities operated in Virginia.
B. The Virginia Petroleum Storage Tank Fund will be used for reasonable and necessary per occurrence costs of containment and cleanup incurred for releases reported after December 22, 1989, by the operator of a facility in excess of $500 up to $1 million for any release of petroleum into the environment from an aboveground storage tank with a capacity of 5,000 gallons or less used for storing heating oil for consumption on the premises where stored.
C. The Virginia Petroleum Storage Tank Fund may be used for all other uses authorized in § 62.1-44.34:11 of the Code of Virginia.
D. An operator of a facility responding to a release and conducting board-approved corrective action may proceed to pay for all costs incurred for such activities. Documentation submitted to the board of all costs incurred will be reviewed and those documented costs in excess of the financial responsibility requirements up to $1 million that are reasonable and necessary and have been approved by the board will be reimbursed from the fund.
E. Operators shall pay the financial responsibility requirement specified in this section for each occurrence.
F. Section 62.1-44.34:11 A of the Code of Virginia provides that no person shall receive reimbursement from the fund:
1. For costs incurred for corrective action taken prior to December 22, 1989 by an owner or operator of an underground storage tank exempted in subdivisions 1 and 2 of the definition of an underground storage tank in § 62.1-44.34:10 of the Code of Virginia, or an owner of an aboveground storage tank with a capacity of 5,000 gallons or less used for storing heating oil for consumption on the premises where stored.
2. For costs incurred prior to January 1, 1992, by an operator of a facility for containment and cleanup of a release from a facility of a product subject to § 62.1-44.34:13 of the Code of Virginia.
3. For containment and cleanup costs that are reimbursed or are reimbursable from other applicable state or federal programs.
4. If the operator of a facility has not complied with applicable statutes or regulations governing reporting, prevention, containment and cleanup of a discharge of oil.
5. If the owner or operator of an underground storage tank or the operator of an aboveground storage tank facility fails to report a release of petroleum or a discharge of oil to the board as required by applicable statutes, laws or regulations.
6. Unless a reimbursement claim has been filed with the board within two years from the date the board issues a site remediation closure letter for that release or July 1, 2000, whichever is later.
G. In addition to the statutory prohibitions quoted in subsection F of this section, no person shall receive reimbursement from the fund for containment and cleanup:
1. Where the release is caused, in whole or in part, by the willful misconduct or negligence of the operator, his employee, contractor, or agent, or anyone within his privity or knowledge;
2. Where the claim cost has been reimbursed or is reimbursable by an insurance policy;
3. Where the operator does not demonstrate the reasonableness and necessity of the claim costs;
4. Where the person, his employee, contractor or agent, or anyone within the privity or knowledge of that person has (i) failed to carry out the instructions of the board, (ii) committed willful misconduct or been negligent in carrying out the instructions of the board, or (iii) has violated applicable federal or state safety, construction or operating laws or regulations in carrying out the instructions of the board; and
5. Where the costs or damages were incurred pursuant to § 10.1-1232 of the Code of Virginia and the regulations promulgated thereunder.
H. No disbursements shall be made from the fund for operators who are federal government entities or whose debts and liabilities are the debts and liabilities of the United States.
I. No funds shall be paid in excess of the minimum disbursement necessary to contain and cleanup each occurrence to the acceptable level of risk, as determined by the board.
J. The board may perform a detailed review of all documentation associated with a reimbursement claim up to seven years following payment of the claim. Based upon the results of the review, the board may take actions to address any deficiencies found in the claim documentation. Such actions may include, but are not limited to, publishing a list of audit concerns associated with the claim, withholding payment of future claims, and/or recovering costs paid on prior claims.
K. The board shall seek recovery of all costs and expenses incurred by the Commonwealth for investigation, containment and cleanup of a discharge of oil or threat of discharge against any person liable for a discharge of oil as specified in Article 11 (§ 62.1-44.34:14 et seq.) of the State Water Control Law; however, the board shall seek recovery from an operator of expenditures from the fund only in the amount by which such expenditures exceed the amount authorized to be disbursed to the operator under subdivisions A 1 and A 2 of this section. This limitation on recovery shall not apply if the release was caused, in whole or in part, by the willful misconduct or negligence of the owner or operator, his employee, contractor, or agent, or anyone within his privity or knowledge.
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; amended, Virginia Register Volume 25, Issue 2, eff. November 1, 2008; Volume 34, Issue 13, eff. February 19, 2018.
9VAC25-640-240. Delegation of authority.
The Director of the Department of Environmental Quality or a designee acting for him may perform any act of the board provided under this chapter, except as limited by § 62.1-44.14 of the Code of Virginia.
9VAC25-640-250. (Repealed.)
Derived from Virginia Register Volume 17, Issue 10, eff. March 2, 2001; amended, Virginia Register Volume 25, Issue 2, eff. November 1, 2008; repealed, Virginia Register Volume 35, Issue 24, eff. September 5, 2019.
APPENDIX I. LETTER FROM CHIEF FINANCIAL OFFICER.
I am the chief financial officer of [insert: name and address of the 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 the containment and clean up of discharges of oil in the amount of at least [insert: dollar amount] per occurrence and [insert: dollar amount] annual aggregate arising from operating [insert: "(an) aboveground storage tank(s)" and/or "(a) pipeline(s)"].
Aboveground storage tanks at the following facilities and/or pipelines are assured by this financial test by this [insert: "operator" and/or "guarantor"]:
[List for each facility: the name and address of the facility where tanks assured by this financial test are located, either the registration identification number assigned by the Department or the Oil Discharge Contingency Plan facility identification number, and whether tanks are assured by this financial test. 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.
List for each pipeline: the home office address and the names of the cities and counties in the Commonwealth where the pipeline is located.]
This [insert: "operator " or "guarantor"] has not received an adverse opinion, a disclaimer of opinion, or a "going concern" qualification from an independent auditor on the financial statements for the latest completed fiscal year.
[Fill in the information for Alternative I if the criteria of 9VAC25-640-70 B are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of 9VAC25-640-70 C are being used to demonstrate compliance with the financial test requirements.]
1. Amount of AST annual aggregate coverage being assured by a financial test, and/or guarantee
2. Amount of pipeline annual aggregate coverage covered by a financial test, and/or guarantee
3. Amount of annual underground storage tank (UST) aggregate coverage being assured by a financial test and/or guarantee pursuant to 9 VAC 25-590
4. Total AST/Pipeline/UST financial responsibility obligations assured by a financial test and/or guarantee (Sum of lines 1, 2 and 3)
5. Total tangible assets
6. Total liabilities [if any of the amount reported on line 4 is included in total liabilities, you may deduct that amount from this line or add that amount to line 7]
7. Tangible net worth [subtract line 6 from line 5]
8. Is line 7 at least equal to line 4 above?
9. Have financial statements for the latest financial reporting year been filed with the Securities and Exchange Commission?
10. Have financial statements for the latest financial reporting year been filed with the Energy Information Administration?
11. Have financial statements for the latest financial reporting 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 at least equal to the amount of annual AST/pipeline aggregate coverage being assured? [Answer Yes only if both criteria have been met.]
13. If you did not answer Yes to one of lines 9 through 12, please attach a report from an independent certified public accountant certifying that there are no material differences between the data reported in lines 5 through 8 above and the financial statements for the latest financial reporting year.
3. Amount of annual underground storage tank (UST) aggregate coverage being assured by a financial test and/or guarantee pursuant to 9VAC25-590
4. Total AST/Pipeline?UST financial responsibility obligations assured by a financial test and/or guarantee (Sum of lines 1, 2 and 3)
6. Total liabilities [if any of the amount reported on line 4 is included in total liabilities, you may deduct that amount from this line or add that amount to line]
8. Total assets in the U.S. [required only if less than 90 percent of assets are located in the U.S.]
9. Is line 7 at least equal to line 4 above?
10. Are at least 90 percent of assets located in the U.S.? [If No, complete line 11.]
11. Is line 8 at least equal to line 4?
[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]
15. Is line 14 at least equal to line 4?
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 5-18 above and the financial statements for the latest financial reporting year.]
[For Alternatives I and II, complete the certification with this statement.]
I hereby certify that the wording of this letter is identical to the wording specified in Appendix I of 9VAC25-640 as such regulations were constituted on the date shown immediately below.
APPENDIX II. GUARANTEE.
Guarantee made this [date] by [name of guaranteeing entity], a business entity organized under the laws of the state of [insert name of state], herein referred to as guarantor, to the State Water Control Board of the Commonwealth of Virginia and obligees, on behalf of [operator] of [business address].
(1) Guarantor meets or exceeds the financial test criteria of 9VAC25-640-70 B or C and D and agrees to comply with the requirements for guarantors as specified in 9VAC25-640-80.
(2) Operator operates the following aboveground storage tank(s) and/or pipelines covered by this guarantee:
[List for each facility: the name and address of facility where tanks assured by this financial test are located, either the registration identification number assigned by the Department or the Oil Discharge Contingency Plan facility identification number, and whether tanks are assured by this guarantee. If more than one instrument is used to assure different tanks at any one facility, list each tank assured by this mechanism.
This guarantee satisfies the requirements of 9VAC25-640 for assuring funding for taking containment and clean up measures necessitated by a discharge of oil; [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 aboveground storage tank(s) and/or pipelines 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 operator); "On behalf of our affiliate" (if guarantor is a related firm of the operator); or "Incident to our business relationship with" (if guarantor is providing the guarantee as an incident to a substantial business relationship with operator)] [operator], guarantor guarantees to the State Water Control Board that:
In the event that operator fails to provide alternate coverage within 60 days after receipt of a notice of cancellation of this guarantee and the State Water Control Board has determined or suspects that a discharge has occurred at an aboveground storage tank and/or pipeline covered by this guarantee, the guarantor, upon instructions from the State Water Control Board, shall pay the funds to the State Water Control Board in accordance with the provisions of 9VAC25-640-180, in an amount not to exceed the coverage limits specified above.
In the event that the State Water Control Board determines that operator has failed to perform containment and clean up for discharges arising out of the operation of the above-identified tank(s) and/or pipelines in accordance with 9VAC25-91, the guarantor upon written instructions from the State Water Control Board shall pay the funds to the State Water Control Board in accordance with the provisions of 9VAC25-640-180, in an amount not to exceed the coverage limits specified above.
(4) Guarantor agrees that if, at the end of any financial reporting year before cancellation of this guarantee, the guarantor fails to meet the financial test criteria of 9VAC25-640-70 B or C and D, guarantor shall send within 120 days of such failure, by certified mail, notice to operator and the State Water Control Board. The guarantee will terminate 120 days from the date of receipt of the notice by operator and the State Water Control Board, as evidenced by the return receipt.
(5) Guarantor agrees to notify operator and the State Water Control Board by certified mail of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming the 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 operator pursuant to 9VAC25-91 or 9VAC25-640.
(7) Guarantor agrees to remain bound under this guarantee for so long as operator shall comply with the applicable financial responsibility requirements of 9VAC25-640 for the above-identified tank(s) and/or pipelines, except that guarantor may cancel this guarantee by sending notice by certified mail to operator and the State Water Control Board, such cancellation to become effective no earlier than 120 days after receipt of such notice by operator and the State Water Control Board, as evidenced by the return receipt.
(d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by operator that is not the direct result of a discharge from an aboveground storage tank and/or pipeline;
(e) Bodily damage or property damage for which 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 9VAC25-640.
(9) Guarantor expressly waives notice of acceptance of this guarantee by the State Water Control Board or by operator.
I hereby certify that the wording of this guarantee is identical to the wording specified in Appendix II of 9VAC25-640 as such regulations were constituted on the effective date shown immediately below.
APPENDIX III. ENDORSEMENT.
Name: ________ [name of each covered location] _____________
Address: _____ [address of each covered location] _____________
Policy Number: _____________
Period of Coverage: ____ [current policy period] _____________
Name of Insured: _____________
1. This endorsement certifies that the policy to which the endorsement is attached provides liability insurance covering the following aboveground storage tanks and/or pipelines in connection with the insured's obligation to demonstrate financial responsibility under 9VAC25-640:
[List for each facility: the name and address of the facility where tanks assured by this mechanism are located, either the registration identification number assigned by the department or the Oil Discharge Contingency Plan facility identification number, and whether tanks are assured by this mechanism. If more than one instrument is used to assure different tanks at any one facility, list each tank assured by this mechanism.
for containment and clean up of a discharge of oil in accordance with and subject to the limits of liability, exclusions, conditions, and other terms of the policy; [if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the aboveground storage tank(s) and/or pipelines identified above.
The limits of liability are [insert the dollar amount of the containment and clean up "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 aboveground storage tanks, pipelines or locations, indicate the amount of coverage for each type of coverage and/or for each aboveground storage tank, pipeline or location], exclusive of legal defense costs, which are subject to a separate limit under the policy. This coverage is provided under [policy number]. The effective date of said policy is [date].
b. The Insurer is liable for the payment of amounts within any deductible applicable to the policy to the provider of containment and clean up, with a right of reimbursement by the insured for any such payment made by the Insurer.
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 9VAC25-640-70 through 9VAC25-640-120.
d. Cancellation or any other termination of the insurance by the Insurer, except for on-payment of premium or misrepresentation by the insured, 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 and the State Water Control Board. Cancellation for non-payment of premium or misrepresentation by the insured will be effective only upon written notice and only after expiration of a minimum of 15 days after a copy of such written notice is received by the insured and the State Water Control Board.
e. The insurance covers claims otherwise covered by the policy that are reported to the Insurer within six months of the effective date of cancellation or nonrenewal of the policy except where the new or renewed policy has the same retroactive date or a retroactive date earlier than that of the prior policy, and which arise out of any covered occurrence that commenced after the policy retroactive date, if applicable, and prior to such policy renewal or termination date. Claims reported during such extended reporting period are subject to the terms, conditions, limits, including limits of liability, and exclusions of the policy.]
I hereby certify that the wording of this endorsement is in no respect less favorable than the coverage specified in Appendix III of 9VAC25-640 and has been so certified by the State Corporation Commission of the Commonwealth of Virginia. I further certify that the Insurer is licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in the Commonwealth of Virginia.
APPENDIX IV. CERTIFICATE OF INSURANCE.
Name: _______ [name of each covered location] _____________
Address: ____ [address of each covered location] _____________
Endorsement (if applicable): _____________
Address of Insured: _____________
1. [Name of Insurer], [the Insurer, as identified above, hereby certifies that it has issued liability insurance covering the following aboveground storage tank(s) and/or pipelines in connection with the insured's obligation to demonstrate financial responsibility under 9VAC25-640:
for containment and clean up of discharges of oil; in accordance with and subject to the limits of liability, exclusions, conditions, and other terms of the policy; [if coverage is different for different tanks, pipelines or locations, indicate the type of coverage applicable to each tank, pipeline or location] arising from operating the aboveground storage tank(s) and/or pipelines identified above.
The limits of liability are [insert the dollar amount of the containment and clean up "each occurrence" and "annual aggregate" limits of the Insurer's liability; if the amount of coverage is different for different types of coverage or for different aboveground storage tanks or locations, indicate the amount of coverage for each type of coverage and/or for each aboveground storage tank, pipeline or location], exclusive of legal defense costs, which are subject to a separate limit under the policy. This coverage is provided under [policy number]. The effective date of said policy is [date].
a. Bankruptcy or insolvency of the insured shall not relieve the Insurer of its obligations under the policy to which this certificate applies.
b. The Insurer is liable for the payment of amounts within any deductible applicable to the policy to the provider of containment and clean up with a right of reimbursement by the insured for any such payment made by the Insurer.
c. Whenever requested by the State Water Control Board, the Insurer agrees to furnish to the State Water Control Board a signed duplicate original of the policy and all endorsements.
d. Cancellation or any other termination of the insurance by the Insurer, except for non-payment of premium or misrepresentation by the insured, 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 and the State Water Control Board. Cancellation for non-payment of premium or misrepresentation by the insured will be effective only upon written notice and only after expiration of a minimum of 15 days after a copy of such written notice is received by the insured and the State Water Control Board.
I hereby certify that the wording of this instrument is identical to the wording in Appendix IV of 9VAC25-640 and that the Insurer is licensed to transact the business of insurance, or eligible to provide insurance as an excess or approved surplus lines insurer, in the Commonwealth of Virginia.
[Type name] [Title], Authorized Representative of [name of Insurer]
APPENDIX V. PERFORMANCE BOND.
Principal: [legal name and address of operator] _____________
Type of organization: [insert "individual" "joint venture," "partnership," "corporation," or appropriate identification of type of organization] _____________
Surety(ies): [name(s) and business address(es)] _____________
[List for each facility: the name and address of the facility where tanks assured by this mechanism are located, either the registration identification number assigned by the Department or the Oil Discharge Contingency Plan facility identification number, and whether tanks are assured by this mechanism. If more than one instrument is used to assure different tanks at any one facility, list each tank assured by this mechanism. For pipelines, list the home office address and the names of the cities and counties in the Commonwealth where the pipeline is located.
List the coverage guaranteed by the bond: containment and clean up of oil from a discharge arising from operating the aboveground storage tank and/or pipeline.]
Containment and Clean up (per discharge) $ __________
Annual Aggregate $ __________
Know All Persons by These Presents, that we, the Principal and Surety(ies), hereto are firmly bound to the State Water Control Board of the Commonwealth of Virginia, 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 § 62.1-44.34:16 of the Code of Virginia and under 9VAC25-640 to provide financial assurance for containment and clean up necessitated by discharges of oil; [if coverage is different for different tanks or locations or pipelines, indicate the type of coverage applicable to each tank or location or pipeline] arising from operating the aboveground storage tanks and/or pipelines identified above;
Now, therefore, the conditions of the obligation are such that if the Principal shall faithfully contain and clean up, in accordance with the State Water Control Board's instructions for containment and clean up of discharges of oil arising from operating the tank(s) identified above, or if the Principal shall provide alternate financial assurance, as specified in 9VAC25-640, 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.
(e) Bodily injury or property damage for which 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 9VAC25-640.
Upon notification by the State Water Control Board that the Principal has failed to contain and clean up in accordance with 9VAC25-91 and the State Water Control Board's instructions, the Surety(ies) shall either perform containment and clean up in accordance with 9VAC25-91 and the board's instructions, or pay funds in an amount up to the annual aggregate penal sum to the State Water Control Board as directed by the State Water Control Board under 9VAC25-640-180. The State Water Control Board in its sole discretion may elect to require the surety to pay the funds or to perform containment and cleanup up to the annual aggregate penal sum.
Upon notification by the State Water Control Board 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 State Water Control Board has determined or suspects that a discharge has occurred, the Surety(ies) shall pay funds in an amount not exceeding the annual aggregate penal sum to the State Water Control Board as directed by the State Water Control Board under 9VAC25-640-180.
The Surety(ies) submit to the jurisdiction of the Circuit Court of the City of Richmond to adjudicate any claim against it (them) by the State Water Control Board and waive any objection to venue in that court. Interest shall accrue at the judgment rate of interest on the amount due beginning seven days after the date of notification by the State Water Control Board. In the event the State Water Control Board shall institute legal action to compel performance by the Surety under this agreement, the Surety shall be liable for all costs and legal fees incurred by the board to enforce this agreement.
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 Surety(ies) hereby agrees that it(they) has been notified of all material facts regarding this contract of suretyship and waiver(s) any defense founded in concealment of material facts. The Surety(ies) represents that the person executing this agreement has full authority to execute the agreement. Surety(ies) hereby waive(s) any right to notice of breach or default of the Principal. The State Water Control Board may enforce this agreement against the Surety(ies) without bringing suit against the Principal. The State Water Control Board shall not be required to exhaust the assets of the Principal before demanding performance by the Surety. No lawful act of the State Water Control Board, including without limitation any extension of time to the Principal, shall serve to release any surety, whether or not that act may be construed to alter or vary this agreement. Release of one cosurety shall not act as the release of another. This agreement shall be construed to affect its purpose to provide remedial action for discharges of petroleum.
The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail or overnight courier to the Principal and the State Water Control Board, 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 and the State Water Control Board, as evidenced by the return receipt.
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 Appendix V of 9VAC25-640 as such regulations were constituted on the date this bond was executed.
APPENDIX VI. IRREVOCABLE STANDBY LETTER OF CREDIT.
APPENDIX VII. TRUST AGREEMENT.
Trust agreement, the "Agreement," entered into as of [date] by and between [name of the operator], a [name of state] [insert "corporation," "partnership," "association," "proprietorship," or appropriate identification of type of entity], the "Grantor," and [name of corporate trustee], [insert "Incorporated in the state of ________" or "a national bank"], the "Trustee."
Whereas, the State Water Control Board of the Commonwealth of Virginia has established certain regulations applicable to the Grantor, requiring that an operator of an aboveground storage tank and/or pipeline shall provide assurance that funds will be available when needed for containment and clean up of a discharge of oil arising from the operation of the aboveground storage tank and/or pipeline. The attached Schedule A contains for each facility the name and address of the facility where tanks covered by this trust agreement are located, either the registration identification number assigned by the Department or the Oil Discharge Contingency Plan facility identification number and for pipelines the home office address and names of the cities and counties in the Commonwealth where the pipeline is located;
(a) The term "Grantor" means the operator who enters into this Agreement and any successors or assigns of the Grantor.
(c) "9 VAC 25-640" is the Aboveground Storage Tank and Pipeline Facility Financial Responsibility Requirements Regulation promulgated by the State Water Control Board for the Commonwealth of Virginia.
The Grantor and the Trustee hereby establish a trust fund, the "Fund," for the benefit of the State Water Control Board of the Commonwealth of Virginia. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. Payments made by the provider of financial assurance pursuant to the State Water Control Board'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 Water Control Board.
Section 3. Payment for Containment and Clean up.
The Trustee shall make payments from the Fund as the State Water Control Board shall direct, in writing, to provide for the payment of the costs of containment and clean up of a discharge of oil arising from operating the tanks and/or pipelines covered by this Agreement.
(d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by operator that is not the direct result of a discharge from an oil aboveground storage tank or pipeline;
(e) Bodily injury or property damage for which 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 9VAC25-640-50.
The Trustee shall reimburse the Grantor, or other persons as specified by the State Water Control Board, from the Fund for containment and clean up in such amounts as the State Water Control Board shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as the State Water Control Board specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.
(a) Securities or other obligations of the Grantor, or any other 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;
(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.
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 8.
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 State Water Control Board to the Trustee shall be in writing, signed by the Executive Director of the Department of Environmental Quality, 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 State Water Control Board 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 State Water Control Board, except as provided for herein.
Section 13. 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 State Water Control Board if the Grantor ceases to exist.
Section 14. Irrevocability and Termination.
Subject to the right of the parties to amend this Agreement as provided in Section 13, 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 State Water Control Board, 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 15. Immunity and Indemnification.
Section 16. Choice of Law.
This Agreement shall be administered, construed, and enforced according to the laws of the Commonwealth of Virginia, or the Comptroller of the Currency in the case of National Association banks.
Section 17. Interpretation.
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 Appendix VII of 9VAC25-640 as such regulations were constituted on the date written above.
[Name of notary] [Date] My Commision expires: _____________.
Of this [date], before me personally came [operator's representative] 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.
APPENDIX VIII. CERTIFICATE OF GROUP SELF-INSURANCE [POOL MEMBERSHIP].
Name of Group self-insurance pool:
Address of Group self-insurance pool:
1. [Name of Group Self-Insurance Pool], the group self-insurance pool, "Pool," as identified above, hereby certifies that it has entered into a Membership Agreement (Agreement) with the member to provide liability coverage for the following aboveground storage tank(s) and/or pipelines in connection with the insured's obligation to demonstrate financial responsibility under the Virginia Petroleum Aboveground Storage Tank and Pipeline Facility Financial Responsibility Requirements Regulation (9VAC25-590-640) for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage containment and cleanup of discharges of oil"] caused by either sudden accidental releases or nonsudden accidental releases; in accordance with and subject to the limits of liability, exclusions, conditions, and other terms of the Pool Plan (Plan) and Agreement; [if coverage is different for different tanks, pipelines, or locations, indicate the type of coverage applicable to each tank, pipeline, or location] arising from operating the aboveground storage tank(s) and/or pipelines identified above.
The limits of liability of the Pool are [insert the dollar amount] of the containment and cleanup "each occurrence" and "annual aggregate" limits of the Group's liability; if the amount of coverage is different for different types of coverage or for different aboveground storage tanks, pipelines, or locations, indicate the amount of coverage for each type of coverage and/or for each aboveground storage tank, pipeline or location insert the dollar amount] corrective action per occurrence and [insert dollar amount] third party liability per occurrence and [insert dollar amount] annual aggregate [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, which are subject to a separate limit under the Plan or Agreement. This coverage is provided under the Plan dated [insert date] and the Agreement entered into between [name of member] and [name of Pool]. The effective date of said Agreement is [date].
2. The Pool further certifies the following with respect to the coverage described in paragraph 1:
a. Bankruptcy or insolvency of the member shall not relieve the Pool of its obligations under the policy to which this certificate applies.
b. The Pool 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, containment and cleanup with a right of reimbursement by the member for any such payment made by the Pool. 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 9VAC25-640-70 through 9VAC25-640-120.
c. Whenever requested by the State Water Control Board, the Pool agrees to furnish to the State Water Control Board a signed duplicate original of the Agreement and Plan and all endorsements.
d. Cancellation or any other termination of the coverage by the Pool, except for nonpayment of premium or misrepresentation by the member, 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 member and the State Water Control Board. Cancellation for nonpayment of premium or misrepresentation by the member will be effective only upon written notice and only after expiration of a minimum of 15 days after a copy of such written notice is received by the member and the State Water Control Board.
e. The Pool covers claims otherwise covered by the Agreement and Plan that are reported to the Pool within six months of the effective date of cancellation or nonrenewal of the Agreement except where the new or renewed Agreement has the same retroactive date or a retroactive date earlier than that of the prior Agreement and which arise out of any covered occurrence that commenced after the policy retroactive date, if applicable, and prior to such Agreement renewal or termination date. Claims reported during such extended reporting period are subject to the terms, conditions, limits, including limits of liability, and exclusions of the Agreement and Plan.
I hereby certify that the wording of this instrument is identical to the wording in APPENDIX XII of 9VAC25-640 and that the Pool is licensed by the Commonwealth of Virginia's State Corporation Commission pursuant to 14VAC5-3805.
[Signature of Authorized Representative of Pool]
[Type name], [Authorized Representative] of [name of Pool]
APPENDIX X. ASSIGNMENT OF CERTIFICATE OF DEPOSIT ACCOUNT.
This assignment is given as security to the State Water Control Board in the amount of _______________________ Dollars ($_____________).
Additional Security. This assignment shall secure the payment of any financial obligation of [name of operator] to the State Water Control Board to cover containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines identified below in the amount of [in words] $ [insert dollar amount] per occurrence and [in words] $ [insert dollar amount] annual aggregate:
Application of Funds. The undersigned agrees that all or any part of the funds of the indicated account or instrument may be applied to the payment of any and all financial responsibility obligations of [name of operator] to the State Water Control Board to cover containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines at the [facility name and address]. The undersigned authorizes the State Water Control Board to withdraw any principal amount on deposit in the indicated account or instrument including any interest, if indicated, and to apply it in the State Water Control Board's discretion to fund containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines at the [facility name] or in the event of [operator's] failure to comply with the Aboveground Storage Tank and Pipeline Facility Financial Responsibility Requirements, 9VAC25-640. The undersigned agrees that the State Water Control Board may withdraw any principal and/or interest from the indicated account or instrument without demand or notice. [The undersigned] agrees to assume any and all loss of penalty due to federal regulations concerning the early withdrawal of funds. Any partial withdrawal of principal or interest shall not release this assignment.
The party or parties to this Assignment also certify that the wording of this Assignment is identical to the wording specified in Appendix X of 9VAC25-640 as such regulations were constituted on the date this Assignment was executed.
[print Operator's name]
___ If checked here, the accrued interest on the Certificate of Deposit indicated above has been maintained to capitalize versus being mailed by check or transferred to a deposit account.