Md. Code Regs. 26.10.01.23

Current through Register Vol. 51, No. 12, June 14, 2024

Section 26.10.01.23 - Bonding Requirements for Tank Vessels

A. The terms "assets", "current assets", "current liabilities", "liabilities", "net working capital", "net worth", "parent corporation", and "tangible net worth" as used in §D of this regulation have the meanings stated in 40 CFR § 264.141.

B. Exceptions.

(1) The requirements of this regulation do not apply to a public vessel.

(2) An owner and an operator of a tank vessel transferring greater than 25 barrels of oil in bulk as cargo in waters of the State may not be required to obtain a bond or other security for the tank vessel if:

(a) The tank vessel is carrying oil removed from:

(i) Waters of the State as the result of a spill, release, or discharge or at the request of the Department, the federal government, or a person responsible for the discharge; or

(ii) Another vessel because of the threat of a spill, release, or discharge into waters of the State; and

(b) The tank vessel is not owned or operated by the person responsible for the discharge resulting in the need for removal of oil from waters of the State.

C. Bonding Requirement. Upon entering waters of the State to transfer greater than 25 barrels of oil in bulk as cargo, an owner and an operator of a tank vessel shall post a bond or other security as set forth in §D of this regulation:

(1) In the amount of $500 per gross ton of tank vessel; and

(2) In a form approved by the Department.

D. Other Acceptable Forms of Security. In lieu of posting a bond, an owner and an operator of a tank vessel may satisfy the requirement under §C of this regulation by posting another acceptable form of security that meets the conditions under §D(1) or (2) of this regulation:

(1) A certification signed by a certified public accountant that the owner and the operator of the tank vessel has:

(a) Two out of the three following ratios:

(i) A ratio of total liabilities to net worth of less than 2.0;

(ii) A ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities of greater than 0.1; or

(iii) A ratio of current assets to current liabilities of greater than 1.5;

(b) Net working capital and tangible net worth that are individually at least six times the bond amount required under §C(1) of this regulation;

(c) Tangible net worth of at least $10,000,000; and

(d) Assets located in the United States amounting to at least:

(i) 90 percent of total assets; or

(ii) Six times the bond amount required under §C(1) of this regulation; or

(2) A certification signed by a certified public accountant that the owner and the operator of the tank vessel has:

(a) A current rating for the most recent bond issuance of:

(i) AAA, AA, A, or BBB as issued by the Standard and Poor's (S&P); or

(ii) Aaa, Aa, A, or Baa as issued by Moody's;

(b) A parent corporation that meets the requirements of §D(1)(b)-(d) of this regulation; and

(c) An absolute guaranty by the parent corporation of the owner and the operator of the tank vessel.

E. An owner and an operator of a tank vessel may satisfy §C of this regulation by offering proof to the Department of a current Certificate of Financial Responsibility issued to the owner and the operator of the tank vessel by the USCG under 33 CFR Part 138 for each tank vessel of the owner and the operator entering waters of the State.

F. The Department may waive the requirements of this regulation if the Department determines that the bonds or other securities required under this regulation are not generally available.

G. Bond Forfeiture.

(1) If the Department determines that a spill, release, or discharge into waters of the State originated from a tank vessel, the bond or other security posted by the owner and the operator of the tank vessel is forfeited and becomes due and payable to the Department to the extent of:

(a) The costs incurred by the Department to eliminate the residue of the oil spill, release, or discharge;

(b) Damage caused to the natural and recreational resources of the State; and

(c) Any uncollectible penalty levied against the owner and the operator of the tank vessel; and

(2) If a bond or other security is forfeited to the Department as described in §G(1) of this regulation, an owner and an operator of a tank vessel shall post a new bond or other security for the tank vessel in accordance with §C of this regulation.

Md. Code Regs. 26.10.01.23

Regulations .23 repealed effective February 4, 1991 (18:2 Md. R. 151)
Regulation .23 amended effective May 1, 1989 (16:8 Md. R. 911)
Regulations .23 recodified effective January 1, 1996 (22:26 Md. R. 2031); Regulations .23 repealed effective February 4, 1991 (18:2 Md. R. 151)
Regulation .23 amended effective May 1, 1989 (16:8 Md. R. 911)
Regulations .23 recodified effective January 1, 1996 (22:26 Md. R. 2031); adopted effective 49:12 Md. R. 642, eff. 6/13/2022