---
kind: "range"
citation: "40 C.F.R. §§ 280.95–280.100"
title: "40"
from: "280.95"
to: "280.100"
count: 6
url: "https://uscodex.org/cfr/40/280.95..280.100"
---

# §280.95. Financial test of self-insurance.

- (a) An owner or operator, and/or guarantor, may satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) 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)](#b) or [(c)](#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](/cfr/40/280.93.md), 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](/cfr/40/part281.md);
    - (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](/cfr/40/264.101.md), [264.143](/cfr/40/264.143.md), [264.145](/cfr/40/264.145.md), [265.143](/cfr/40/265.143.md), [265.145](/cfr/40/265.145.md), [264.147](/cfr/40/264.147.md), and [265.147](/cfr/40/265.147.md) or to a state implementing agency under a state program authorized by EPA under [40 CFR part 271](/cfr/40/part271.md); 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](/cfr/40/144.63.md) or to a state implementing agency under a state program authorized by EPA under [40 CFR part 145](/cfr/40/part145.md).
  - (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)](#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 Utilities Service; 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)](/cfr/40/264.147.md?p=f-1), substituting the appropriate amounts specified in § [280.93(b)(1)](/cfr/40/280.93.md?p=b-1) and [(2)](/cfr/40/280.93.md?p=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)](#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 Utilities Service, the owner or operator, and/or guarantor, must obtain a special report by an independent certified public accountant stating that:
    - (i) He has compared the data that the letter from the chief financial officer specifies as having been derived from the latest year-end financial statements of the owner or operator, and/or guarantor, with the amounts in such financial statements; and
    - (ii) In connection with that comparison, no matters came to his attention which caused him to believe that the specified data should be adjusted.
- (d) To demonstrate that it meets the financial test under paragraph [(b)](#b) or [(c)](#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:

  I am the chief financial officer of [insert: name and address of the owner or operator, or guarantor]. This letter is in support of the use of [insert: “the financial test of self-insurance,” and/or “guarantee”] to demonstrate financial responsibility for [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage”] caused by [insert: “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”] in the amount of at least [insert: dollar amount] per occurrence and [insert: dollar amount] annual aggregate arising from operating (an) underground storage tank(s).

  Underground storage tanks at the following facilities are assured by this financial test or a financial test under an authorized State program by this [insert: “owner or operator,” and/or “guarantor”]: [List for each facility: the name and address of the facility where tanks assured by this financial test are located, and whether tanks are assured by this financial test or a financial test under a State program approved under [40 CFR part 281](/cfr/40/part281.md). 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](/cfr/40/part281.md) by the tank identification number provided in the notification submitted pursuant to [40 CFR 280.22](/cfr/40/280.22.md) 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](/cfr/40/part271.md) and [145](/cfr/40/part145.md):

  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)](#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)](#c) of § 280.95 are being used to demonstrate compliance with the financial test requirements.]

  [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 280.95(d)](#d) as such regulations were constituted on the date shown immediately below.

- (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)](#b) or [(c)](#c) and [(d)](#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.

# §280.96. Guarantee.

- (a) An owner or operator may satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) by obtaining a guarantee that conforms to the requirements of this section. The guarantor must be:
  - (1) **A firm that—**
    - (i) Possesses a controlling interest in the owner or operator;
    - (ii) Possesses a controlling interest in a firm described under [paragraph (a)(1)(i)](#a-1-i) of this section; or,
    - (iii) Is controlled through stock ownership by a common parent firm that possesses a controlling interest in the owner or operator; or,
  - (2) A firm engaged in a substantial business relationship with the owner or operator and issuing the guarantee as an act incident to that business relationship.
- (b) Within 120 days of the close of each financial reporting year the guarantor must demonstrate that it meets the financial test criteria of [§ 280.95](/cfr/40/280.95.md) based on year-end financial statements for the latest completed financial reporting year by completing the letter from the chief financial officer described in [§ 280.95(d)](/cfr/40/280.95.md?p=d) and must deliver the letter to the owner or operator. If the guarantor fails to meet the requirements of the financial test at the end of any financial reporting year, within 120 days of the end of that financial reporting year the guarantor shall send by certified mail, before cancellation or nonrenewal of the guarantee, notice to the owner or operator. If the Director of the implementing agency notifies the guarantor that he no longer meets the requirements of the financial test of § [280.95(b)](/cfr/40/280.95.md?p=b) or [(c)](/cfr/40/280.95.md?p=c) and [(d)](/cfr/40/280.95.md?p=d), the guarantor must notify the owner or operator within 10 days of receiving such notification from the Director. In both cases, the guarantee will terminate no less than 120 days after the date the owner or operator receives the notification, as evidenced by the return receipt. The owner or operator must obtain alternative coverage as specified in [§ 280.114(e)](/cfr/40/280.114.md?p=e).
- (c) The guarantee must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:

  Guarantee

  Guarantee made this [date] by [name of guaranteeing entity], a business entity organized under the laws of the state of [name of state], herein referred to as guarantor, to [the state implementing agency] and to any and all third parties, and obligees, on behalf of [owner or operator] of [business address].

  Recitals.

  - (1) Guarantor meets or exceeds the financial test criteria of 40 CFR [280.95(b)](/cfr/40/280.95.md?p=b) or [(c)](/cfr/40/280.95.md?p=c) and [(d)](/cfr/40/280.95.md?p=d) and agrees to comply with the requirements for guarantors as specified in [40 CFR 280.96(b)](#b).
  - (2) [Owner or operator] owns or operates the following underground storage tank(s) covered by this guarantee: [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to [40 CFR 280.22](/cfr/40/280.22.md) or the corresponding state requirement, and the name and address of the facility.] This guarantee satisfies [40 CFR part 280](/cfr/40/part280.md), [subpart H](/cfr/40/subpartH.md) requirements for assuring funding for [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the above-identified underground storage tank(s) in the amount of [insert dollar amount] per occurrence and [insert dollar amount] annual aggregate.
  - (3) [Insert appropriate phrase: “On behalf of our subsidiary” (if guarantor is corporate parent of the owner or operator); “On behalf of our affiliate” (if guarantor is a related firm of the owner or operator); or “Incident to our business relationship with” (if guarantor is providing the guarantee as an incident to a substantial business relationship with owner or operator)] [owner or operator], guarantor guarantees to [implementing agency] and to any and all third parties that:

    In the event that [owner or operator] fails to provide alternative coverage within 60 days after receipt of a notice of cancellation of this guarantee and the [Director of the implementing agency] has determined or suspects that a release has occurred at an underground storage tank covered by this guarantee, the guarantor, upon instructions from the [Director], shall fund a standby trust fund in accordance with the provisions of [40 CFR 280.112](/cfr/40/280.112.md), in an amount not to exceed the coverage limits specified above.

    In the event that the [Director] determines that [owner or operator] has failed to perform corrective action for releases arising out of the operation of the above-identified tank(s) in accordance with [40 CFR part 280](/cfr/40/part280.md), [subpart F](/cfr/40/subpartF.md), the guarantor upon written instructions from the [Director] shall fund a standby trust in accordance with the provisions of [40 CFR 280.112](/cfr/40/280.112.md), in an amount not to exceed the coverage limits specified above.

    If [owner or operator] fails to satisfy a judgment or award based on a determination of liability for bodily injury or property damage to third parties caused by [“sudden” and/or “nonsudden”] accidental releases arising from the operation of the above-identified tank(s), or fails to pay an amount agreed to in settlement of a claim arising from or alleged to arise from such injury or damage, the guarantor, upon written instructions from the [Director], shall fund a standby trust in accordance with the provisions of [40 CFR 280.112](/cfr/40/280.112.md) to satisfy such judgment(s), award(s), or settlement agreement(s) up to the limits of coverage specified above.

  - (4) Guarantor agrees that if, at the end of any fiscal year before cancellation of this guarantee, the guarantor fails to meet the financial test criteria of 40 CFR [280.95(b)](/cfr/40/280.95.md?p=b) or [(c)](/cfr/40/280.95.md?p=c) and [(d)](/cfr/40/280.95.md?p=d), guarantor shall send within 120 days of such failure, by certified mail, notice to [owner or operator]. The guarantee will terminate 120 days from the date of receipt of the notice by [owner or operator], as evidenced by the return receipt.
  - (5) Guarantor agrees to notify [owner or operator] by certified mail of a voluntary or involuntary proceeding under [Title 11](/cfr/11.md) (Bankruptcy), U.S. Code naming guarantor as debtor, within 10 days after commencement of the proceeding.
  - (6) Guarantor agrees to remain bound under this guarantee notwithstanding any modification or alteration of any obligation of [owner or operator] pursuant to [40 CFR part 280](/cfr/40/part280.md).
  - (7) Guarantor agrees to remain bound under this guarantee for so long as [owner or operator] must comply with the applicable financial responsibility requirements of [40 CFR part 280](/cfr/40/part280.md), [subpart H](/cfr/40/subpartH.md) for the above-identified tank(s), except that guarantor may cancel this guarantee by sending notice by certified mail to [owner or operator], such cancellation to become effective no earlier than 120 days after receipt of such notice by [owner or operator], as evidenced by the return receipt.
  - (8) **The guarantor's obligation does not apply to any of the following—**
- (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law;
- (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator];
- (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft;
- (d) Property damage to any property owned, rented, loaded to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank;
- (e) Bodily damage or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of [40 CFR 280.93](/cfr/40/280.93.md).
  - (9) Guarantor expressly waives notice of acceptance of this guarantee by [the implementing agency], by any or all third parties, or by [owner or operator].

    I hereby certify that the wording of this guarantee is identical to the wording specified in [40 CFR 280.96(c)](#c) as such regulations were constituted on the effective date shown immediately below.

- (d) An owner or operator who uses a guarantee to satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) must establish a standby trust fund when the guarantee is obtained. Under the terms of the guarantee, all amounts paid by the guarantor under the guarantee will be deposited directly into the standby trust fund in accordance with instructions from the Director of the implementing agency under [§ 280.112](/cfr/40/280.112.md). This standby trust fund must meet the requirements specified in [§ 280.103](/cfr/40/280.103.md).

# §280.97. Insurance and risk retention group coverage.

- (a) An owner or operator may satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) by obtaining liability insurance that conforms to the requirements of this section from a qualified insurer or risk retention group. Such insurance may be in the form of a separate insurance policy or an endorsement to an existing insurance policy.
- (b) Each insurance policy must be amended by an endorsement worded as specified in [paragraph (b)(1)](#b-1) of this section, or evidenced by a certificate of insurance worded as specified in [paragraph (b)(2)](#b-2) of this section, except that instructions in brackets must be replaced with the relevant information and the brackets deleted:
  - (1) **Endorsement.** Endorsement:

    1. This endorsement certifies that the policy to which the endorsement is attached provides liability insurance covering the following underground storage tanks:

    [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to [40 CFR 280.22](/cfr/40/280.22.md), or the corresponding state requirement, and the name and address of the facility.] for [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”; 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 underground storage tank(s) identified above.

    The limits of liability are [insert the dollar amount of the “each Occurrence” and “annual aggregate” limits of the Insurer's or Group's liability; if the amount of coverage is different for different types of coverage or for different underground storage tanks or locations, indicate the amount of coverage for each type of coverage and/or for each underground storage tank or location], exclusive of legal defense costs, 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].

    2. The insurance afforded with respect to such occurrences is subject to all of the terms and conditions of the policy; provided, however, that any provisions inconsistent with [subsections (a) through (e)](#a..e) of this Paragraph 2 are hereby amended to conform with [subsections (a) through (e)](#a..e);

    a. Bankruptcy or insolvency of the insured shall not relieve the [“Insurer” or “Group”] of its obligations under the policy to which this endorsement is attached.

    b. The [“Insurer” or “Group”] is liable for the payment of amounts within any deductible applicable to the policy to the provider of corrective action or a damaged third-party, with a right of reimbursement by the insured for any such payment made by the [“Insurer” or “Group”]. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated under another mechanism or combination of mechanisms as specified in 40 CFR [280.95-280.102](/cfr/40/280.95-280.102.md) and [280.104-280.107](/cfr/40/280.104-280.107.md).

    c. Whenever requested by [a Director of an implementing agency], the [“Insurer” or “Group”] agrees to furnish to [the Director] a signed duplicate original of the policy and all endorsements.

    d. Cancellation or any other termination of the insurance by the [“Insurer” or “Group”], 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. 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 10 days after a copy of such written notice is received by the insured.

    e. The insurance covers claims otherwise covered by the policy that are reported to the [“Insurer” or “Group”] within six months of the effective date of cancellation or non-renewal 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 instrument is identical to the wording in [40 CFR 280.97(b)(1)](#b-1) and that the [“Insurer” or “Group”] is [“licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in one or more states”].

  - (2) **Certificate of Insurance.** Certification:

    1. [Name of Insurer or Risk Retention Group], [the “Insurer” or “Group”], as identified above, hereby certifies that it has issued liability insurance covering the following underground storage tank(s):

    [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to [40 CFR 280.22](/cfr/40/280.22.md), or the corresponding state requirement, and the name and address of the facility.] for [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”; 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 underground storage tank(s) identified above.

    The limits of liability are [insert the dollar amount of the “each occurrence” and “annual aggregate” limits of the Insurer's or Group's liability; if the amount of coverage is different for different types of coverage or for different underground storage tanks or locations, indicate the amount of coverage for each type of coverage and/or for each underground storage tank or location], exclusive of legal defense costs, 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].

    2. The [“Insurer” or “Group”] further certifies the following with respect to the insurance described in Paragraph 1:

    a. Bankruptcy or insolvency of the insured shall not relieve the [“Insurer” or “Group”] of its obligations under the policy to which this certificate applies.

    b. The [“Insurer” or “Group”] is liable for the payment of amounts within any deductible applicable to the policy to the provider of corrective action or a damaged third-party, with a right of reimbursement by the insured for any such payment made by the [“Insurer” or “Group”]. This provision does not apply with respect to that amount of any deductible for which coverage is demonstrated under another mechanism or combination of mechanisms as specified in 40 CFR [280.95-280.102](/cfr/40/280.95-280.102.md) and [280.104-280.107](/cfr/40/280.104-280.107.md).

    c. Whenever requested by [a Director of an implementing agency], the [“Insurer” or “Group”] agrees to furnish to [the Director] a signed duplicate original of the policy and all endorsements.

    d. Cancellation or any other termination of the insurance by the [“Insurer” or “Group”], 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. 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 10 days after a copy of such written notice is received by the insured.

    [Insert for claims-made policies]:

    e. The insurance covers claims otherwise covered by the policy that are reported to the [“Insurer” or “Group”] within six months of the effective date of cancellation or non-renewal 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 instrument is identical to the wording in [40 CFR 280.97(b)(2)](#b-2) and that the [“Insurer” or “Group”] is [“licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more states”].

- (c) Each insurance policy must be issued by an insurer or a risk retention group that, at a minimum, is licensed to transact the business of insurance or eligible to provide insurance as an excess or surplus lines insurer in one or more states.

# §280.98. Surety bond.

- (a) An owner or operator may satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) by obtaining a surety bond that conforms to the requirements of this section. The surety company issuing the bond must be among those listed as acceptable sureties on federal bonds in the latest Circular 570 of the U.S. Department of the Treasury.
- (b) The surety bond must be worded as follows, except that instructions in brackets must be replaced with the relevant information and the brackets deleted:

  Penal sums of bond:

  Know All Persons by These Presents, that we, the Principal and Surety(ies), hereto are firmly bound to [the implementing agency], in the above penal sums for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sums jointly and severally only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sums only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sums.

  Whereas said Principal is required under Subtitle I of the Solid Waste Disposal Act, as amended, to provide financial assurance for [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”; if coverage is different for different tanks or locations, indicate the type of coverage applicable to each tank or location] arising from operating the underground storage tanks identified above, and

  Whereas said Principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance;

  Now, therefore, the conditions of the obligation are such that if the Principal shall faithfully [“take corrective action, in accordance with [40 CFR part 280](/cfr/40/part280.md), [subpart F](/cfr/40/subpartF.md) and the Director of the state implementing agency's instructions for,” and/or “compensate injured third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”] arising from operating the tank(s) identified above, or if the Principal shall provide alternate financial assurance, as specified in [40 CFR part 280](/cfr/40/part280.md), [subpart H](/cfr/40/subpartH.md), within 120 days after the date the notice of cancellation is received by the Principal from the Surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect.

  Such obligation does not apply to any of the following:

- (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law;
- (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator];
- (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft;
- (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank;
- (e) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of [40 CFR 280.93](/cfr/40/280.93.md).

  The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above.

  Upon notification by [the Director of the implementing agency] that the Principal has failed to [“take corrective action, in accordance with [40 CFR part 280](/cfr/40/part280.md), [subpart F](/cfr/40/subpartF.md) and the Director's instructions,” and/or “compensate injured third parties”] as guaranteed by this bond, the Surety(ies) shall either perform [“corrective action in accordance with [40 CFR part 280](/cfr/40/part280.md) and the Director's instructions,” and/or “third-party liability compensation”] or place funds in an amount up to the annual aggregate penal sum into the standby trust fund as directed by [the Regional Administrator or the Director] under [40 CFR 280.112](/cfr/40/280.112.md).

  Upon notification by [the Director] that the Principal has failed to provide alternate financial assurance within 60 days after the date the notice of cancellation is received by the Principal from the Surety(ies) and that [the Director] has determined or suspects that a release has occurred, the Surety(ies) shall place funds in an amount not exceeding the annual aggregate penal sum into the standby trust fund as directed by [the Director] under [40 CFR 280.112](/cfr/40/280.112.md).

  The Surety(ies) hereby waive(s) notification of amendments to applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond.

  The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the annual aggregate to the penal sum shown on the face of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said annual aggregate penal sum.

  The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by the Principal, as evidenced by the return receipt.

  The Principal may terminate this bond by sending written notice to the Surety(ies).

  In Witness Thereof, the Principal and Surety(ies) have executed this Bond and have affixed their seals on the date set forth above.

  The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in [40 CFR 280.98(b)](#b) as such regulations were constituted on the date this bond was executed.

  [For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.]

- (c) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond. In all cases, the surety's liability is limited to the per-occurrence and annual aggregate penal sums.
- (d) The owner or operator who uses a surety bond to satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) must establish a standby trust fund when the surety bond is acquired. Under the terms of the bond, all amounts paid by the surety under the bond will be deposited directly into the standby trust fund in accordance with instructions from the Director under [§ 280.112](/cfr/40/280.112.md). This standby trust fund must meet the requirements specified in [§ 280.103](/cfr/40/280.103.md).

# §280.99. Letter of credit.

- (a) An owner or operator may satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) by obtaining an irrevocable standby letter of credit that conforms to the requirements of this section. The issuing institution must be an entity that has the authority to issue letters of credit in each state where used and whose letter-of-credit operations are regulated and examined by a federal or state agency.
- (b) The letter of credit must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:

  Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No. ____ in your favor, at the request and for the account of [owner or operator name] of [address] up to the aggregate amount of [in words] U.S. dollars ($[insert dollar amount]), available upon presentation [insert, if more than one Director of a state implementing agency is a beneficiary, “by any one of you”] of

  - (1) your sight draft, bearing reference to this letter of credit, No. ____ and
  - (2) your signed statement reading as follows: “I certify that the amount of the draft is payable pursuant to regulations issued under authority of Subtitle I of the Solid Waste Disposal Act, as amended.”

    This letter of credit may be drawn on to cover [insert: “taking corrective action” and/or “compensating third parties for bodily injury and property damage caused by” either “sudden accidental releases” or “nonsudden accidental releases” or “accidental releases”] arising from operating the underground storage tank(s) identified below in the amount of [in words] $[insert dollar amount] per occurrence and [in words] $[insert dollar amount] annual aggregate:

    [List the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located. If more than one instrument is used to assure different tanks at any one facility, for each tank covered by this instrument, list the tank identification number provided in the notification submitted pursuant to [40 CFR 280.22](/cfr/40/280.22.md), or the corresponding state requirement, and the name and address of the facility.]

    The letter of credit may not be drawn on to cover any of the following:

- (a) Any obligation of [insert owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law;
- (b) Bodily injury to an employee of [insert owner or operator] arising from, and in the course of, employment by [insert owner or operator];
- (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft;
- (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [insert owner or operator] that is not the direct result of a release from a petroleum underground storage tank;
- (e) Bodily injury or property damage for which [insert owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of [40 CFR 280.93](/cfr/40/280.93.md).

  This letter of credit is effective as of [date] and shall expire on [date], but such expiration date shall be automatically extended for a period of [at least the length of the original term] on [expiration date] and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify [owner or operator] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event that [owner or operator] is so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by [owner or operator], as shown on the signed return receipt.

  Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the amount of the draft directly into the standby trust fund of [owner or operator] in accordance with your instructions.

  We certify that the wording of this letter of credit is identical to the wording specified in [40 CFR 280.99(b)](#b) as such regulations were constituted on the date shown immediately below.

  This credit is subject to [insert “the most recent edition of the Uniform Customs and Practice for Documentary Credits, published and copyrighted by the International Chamber of Commerce,” or “the Uniform Commercial Code”].

- (c) An owner or operator who uses a letter of credit to satisfy the requirements of [§ 280.93](/cfr/40/280.93.md) must also establish a standby trust fund when the letter of credit is acquired. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the Director of the implementing agency will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the Director under [§ 280.112](/cfr/40/280.112.md). This standby trust fund must meet the requirements specified in [§ 280.103](/cfr/40/280.103.md).
- (d) The letter of credit must be irrevocable with a term specified by the issuing institution. The letter of credit must provide that credit be automatically renewed for the same term as the original term, unless, at least 120 days before the current expiration date, the issuing institution notifies the owner or operator by certified mail of its decision not to renew the letter of credit. Under the terms of the letter of credit, the 120 days will begin on the date when the owner or operator receives the notice, as evidenced by the return receipt.

# §280.100. Use of state-required mechanism.

- (a) For underground storage tanks located in a state that does not have an approved program, and where the state requires owners or operators of underground storage tanks to demonstrate financial responsibility for taking corrective action and/or for compensating third parties for bodily injury and property damage, an owner or operator may use a state-required financial mechanism to meet the requirements of [§ 280.93](/cfr/40/280.93.md) if the Regional Administrator determines that the state mechanism is at least equivalent to the financial mechanisms specified in this subpart.
- (b) The Regional Administrator will evaluate the equivalency of a state-required mechanism principally in terms of: certainty of the availability of funds for taking corrective action and/or for compensating third parties; the amount of funds that will be made available; and the types of costs covered. The Regional Administrator may also consider other factors as is necessary.
- (c) The state, an owner or operator, or any other interested party may submit to the Regional Administrator a written petition requesting that one or more of the state-required mechanisms be considered acceptable for meeting the requirements of [§ 280.93](/cfr/40/280.93.md). The submission must include copies of the appropriate state statutory and regulatory requirements and must show the amount of funds for corrective action and/or for compensating third parties assured by the mechanism(s). The Regional Administrator may require the petitioner to submit additional information as is deemed necessary to make this determination.
- (d) Any petition under this section may be submitted on behalf of all of the state's underground storage tank owners and operators.
- (e) The Regional Administrator will notify the petitioner of his determination regarding the mechanism's acceptability in lieu of financial mechanisms specified in this subpart. Pending this determination, the owners and operators using such mechanisms will be deemed to be in compliance with the requirements of [§ 280.93](/cfr/40/280.93.md) for underground storage tanks located in the state for the amounts and types of costs covered by such mechanisms.