Section 329IAC9-8-6. Financial test of self-insurance

   (a) An:

(1) owner or operator and guarantor;

(2) owner or operator; or

(3) guarantor;

may satisfy the requirements of section 4 of this rule by passing a financial test as specified in this section. To pass the financial test of self-insurance, the owner or operator and guarantor, the owner or operator, or the guarantor shall meet the criteria of subsection (b) or (c) based on year end financial statements for the latest completed fiscal year.

  (b) The owner or operator and guarantor, the owner or operator, or the guarantor shall complete the following:

(1) The owner or operator and guarantor, the owner or operator, or the guarantor shall have a tangible net worth of at least ten (10) times:

(A) the total of the applicable aggregate amount required by:

(i) section 4 of this rule, based on the number of underground storage tanks for which a financial test is used to demonstrate financial responsibility to the commissioner under this rule; or

(ii) the EPA under 40 CFR 280.93 and 40 CFR 280.95;

(B) 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:

(i) the commissioner under 329 IAC 3.1-9, 329 IAC 3.1-14, and 329 IAC 3.1-15; or

(ii) the EPA under:

(AA) 40 CFR 264.101;

(BB) 40 CFR 264.143;

(CC) 40 CFR 264.145;

(DD) 40 CFR 264.147;

(EE) 40 CFR 265.143;

(FF) 40 CFR 265.145; and

(GG) 40 CFR 265.147; and

(C) the sum of current plugging and abandonment cost estimates for which a financial test is used to demonstrate financial responsibility:

(i) under a state program authorized by the EPA under 40 CFR 145; or

(ii) to the EPA under 40 CFR 144.63.

(2) The owner or operator and guarantor, the owner or operator, or the guarantor shall have a tangible net worth of at least ten million dollars ($10,000,000).

(3) The owner or operator and guarantor, the owner or operator, or the guarantor shall have a letter signed by the chief financial officer worded as specified in subsection (d).

(4) The owner or operator and guarantor, the owner or operator, or the guarantor shall complete either of the following:

(A) File financial statements annually with the U.S. Securities and Exchange Commission (SEC), the Energy Information Administration, or the Rural Utilities Service of the United States Department Of Agriculture (formerly the Rural Electrification Administration).

(B) Report annually the firm's tangible net worth to Dun and Bradstreet. Dun and Bradstreet shall 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:

(A) an adverse auditor's opinion;

(B) a disclaimer of opinion; or

(C) a going concern qualification.

  (c) The owner or operator and guarantor, the owner or operator, or the guarantor shall complete the following:

(1) The owner or operator and guarantor, the owner or operator, or the guarantor shall meet the financial test requirements of 40 CFR 265.147(f)(1), substituting the appropriate amounts specified in section 4(b) of this rule for the amount of liability coverage each time specified in that section. 40 CFR 265.147(f)(1), revised as of July 1, 1997, is incorporated by reference. The Code of Federal Regulations is available from the Superintendent of Documents, Government Printing Office, Washington, D.C. 20402.

(2) The fiscal year end financial statements of the owner or operator and guarantor, the owner or operator, or the 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:

(A) an adverse auditor's opinion;

(B) a disclaimer of opinion; or

(C) a going concern qualification.

(4) The owner or operator and guarantor, the owner or operator, or the guarantor shall have a letter signed by the chief financial officer, worded as specified in subsection (d).

(5) If the financial statements of the owner or operator and guarantor, the owner or operator, or the guarantor are not submitted annually to the U.S. Securities and Exchange Commission (SEC), the Energy Information Administration, or the Rural Utilities Service of the United States Department of Agriculture (formerly the Rural Electrification Administration), the owner or operator and guarantor, the owner or operator, or the guarantor shall obtain a special report by an independent certified public accountant stating that:

(A) the independent certified public accountant 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 guarantor, the owner or operator, or the guarantor with the amounts in such financial statements; and

(B) in connection with that comparison, no matters came to the attention that caused the certified public accountant to believe that the specified data should be adjusted.

  (d) To demonstrate that it meets the financial test under subsection (b) or (c), the chief financial officer of the owner or operator or guarantor shall sign, within one hundred twenty (120) days of the close of each financial reporting year as defined by the twelve (12) month period for which financial statements used to support the financial test are prepared, a letter worded exactly as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted:

Letter from Chief Financial Officer

I am the chief financial officer of [insert name and address of the owner or operator or guarantor]. This letter is in support of the use of [insert "the financial test of self-insurance" or "guarantee" or both of those phrases] to demonstrate financial responsibility for [insert "taking corrective action" or "compensating third parties for bodily injury and property damage" or both of those phrases] caused by [insert "sudden accidental releases" or "nonsudden accidental releases" or both of those phrases] 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, a financial test under an authorized state program, or a financial test under the United States Environmental Protection Agency (EPA) regulations by this [insert "owner or operator" or "guarantor" or both of those phrases]: [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, a financial test under a state program approved under 40 CFR 281, or a financial test under EPA under 40 CFR 280.95. 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, a financial test under a state program authorized under 40 CFR 281, or a financial test under EPA under 40 CFR 280.95 by the tank identification number provided in the notification submitted pursuant to 329 IAC 9-2-2, the applicable regulation of a state program authorized under 40 CFR 281, or EPA under 40 CFR 280.22.]

A [insert "financial test" or "guarantee" or both of those phrases] 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 271 and 40 CFR 145:

Indiana Rules  Amount

Closure (329 IAC 3.1-14-4 through 329 IAC

  3.1-14-12 and 329 IAC 3.1-15-4)  $____

Post-Closure Care (329 IAC 3.1-14-14 through

  329 IAC 3.1-14-22 and 329 IAC 3.1-15-6)  $____

Liability Coverage (329 IAC 3.1-14-24 and 329

  IAC 3.1-15-8)  $____

Corrective Action (329 IAC 3.1-9-1)  $____

Authorized State Rules under 40 CFR 145

Plugging and Abandonment  $____

EPA Regulations

Closure (40 CFR 264.143 and 40 CFR 265.143)  $____

Post-Closure Care (40 CFR 264.145 and

  40 CFR 265.145)  $____

Liability Coverage (40 CFR 264.147 and

  40 CFR 265.147)  $____

Corrective Action (40 CFR 264.101(b))  $____

Plugging and Abandonment (40 CFR 144.63)  $____

Total  $____

This [insert "owner or operator" or "guarantor"] has not received an adverse opinion, a disclaimer of opinion, or a going concern qualification from an independent auditor on his or her financial statements for the latest completed fiscal year.

[Fill in the information for Alternative I if the criteria of 329 IAC 9-8-6(b) are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of 329 IAC 9-8-6(c) are being used to demonstrate compliance with the financial test requirements.]

Alternative I

1. Amount of annual UST aggregate coverage being assured by a financial test or guarantee or both  $____

2. Amount of corrective action, closure and post-closure care costs, liability coverage, and plugging and abandonment costs covered by a financial test or guarantee or both  $____

3. Sum of lines 1 and 2  $____

4. Total tangible assets  $____

5. Total liabilities (if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6)  $____

6. Tangible net worth (subtract line 5 from line 4)  $____

Yes No

7. Is line 6 at least $10 million?  ___ ___

8. Is line 6 at least 10 times line 3?  ___ ___

9. Have financial statements for the latest fiscal year been filed with the U.S. Securities and Exchange Commission (SEC)?___ ___

10. Have financial statements for the latest fiscal year been filed with the Energy Information Administration?  ___ ___

11. Have financial statements for the latest fiscal year been filed with the Rural Utilities Service of the United States Department Of Agriculture (formerly the Rural Electrification Administration)?  ___ ___

12. Has financial information been provided to Dun and Bradstreet, and has Dun and Bradstreet provided a financial strength rating of 4A or 5A?  ___ ___

(Answer "Yes" only if both criteria have been met.)

Alternative II

1. Amount of annual UST aggregate coverage being assured by a financial test or guarantee or both  $____

2. Amount of corrective action, closure and post-closure care costs, liability coverage, and plugging and abandonment costs covered by a financial test or guarantee or both  $____

3. Sum of lines 1 and 2  $____

4. Total tangible assets  $____

5. Total liabilities (if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6)  $____

6. Tangible net worth (subtract line 5 from line 4)  $____

7. Total assets in the U.S. (required only if less than 90 percent of assets are located in the U.S.)  $____

Yes No

8. Is line 6 at least $10 million?  ___ ___

9. Is line 6 at least 6 times line 3?  ___ ___

10. Are at least 90 percent of assets located in the U.S.? (If "No," complete line 11.)  ___ ___

11. Is line 7 at least 6 times line 3?  ___ ___

[Fill in either lines 12-15 or lines 16-18]

12. Current assets  $____

13. Current liabilities  $____

14. Net working capital (subtract line 13 from line 12)  $____

Yes No

15. Is line 14 at least 6 times line 3?  ___ ___

16. Current bond rating of most recent bond issue  ___ ___

17. Name of rating service  ___ ___

18. Date of maturity of bond  ___ ___

19. Have financial statements for the latest fiscal year been filed with the U.S. Securities and Exchange Commission (SEC), the Energy Information Administration, or the Rural Utilities Service of the United States Department of Agriculture (formerly the Rural Electrification Administration)?  ___ ___

[If "No," please attach a report from an independent certified public accountant certifying that there are no material differences between the data as reported in lines 4-18 above and the financial statements for the latest fiscal year.]

[For both Alternative I and Alternative II, complete the certification with this statement.]

I hereby certify that the wording of this letter is identical to the wording specified in 329 IAC 9-8-6(d) as such regulations were constituted on the date shown immediately below.

[Signature]

[Name]

[Title]

[Date]

  (e) If an owner or operator using the test to provide financial assurance finds that the owner no longer meets the requirements of the financial test based on the year end financial statements, the owner or operator shall obtain alternative coverage within one hundred fifty (150) days of the end of the year for which financial statements have been prepared.

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

  (g) If the owner or operator fails to obtain alternate assurance within:

(1) one hundred fifty (150) days of finding that the owner no longer meets the requirements of the financial test based on the year end financial statements; or

(2) thirty (30) days of notification by the commissioner that the owner no longer meets the requirements of the financial test;

the owner or operator shall notify the commissioner of such failure within ten (10) days. (Solid Waste Management Division; 329 IAC 9-8-6; filed Jul 19, 1999, 12:00 p.m.: 22 IR 3731; readopted filed Jan 10, 2001, 3:25 p.m.: 24 IR 1535)