N.D. Admin. Code 33-24-08-85

Current through Supplement No. 393, July, 2024

Section 33-24-08-85 - Financial test of self-insurance

1. An owner or operator, or guarantor, or both, may satisfy the requirements of section 33-24-08-83 by passing a financial test as specified in this section. To pass the financial test of self-insurance, the owner or operator, or guarantor, or both, must meet the criteria of subsection 2 or 3 based on yearend financial statements for the latest completed fiscal year.

2. The following apply:

a. The owner or operator, or guarantor, or both, must have a tangible net worth of at least ten times:

(1) The total of the applicable aggregate amount required by section 33-24-08-83, based on the number of underground storage tanks for which a financial test is used to demonstrate financial responsibility to the department;

(2) The sum of the corrective action cost estimates, the current closure and postclosure care cost estimates, and amount of liability coverage for which a financial test is used to demonstrate financial responsibility to the department under sections 33-24-05-58, 33-24-05-77, and 33-24-05-79; and

(3) The sum of current plugging and abandonment cost estimates for which a financial test is used to demonstrate financial responsibility to the department under 33-25-01.

b. The owner or operator, or guarantor, or both, must have a tangible net worth of at least ten million dollars.

c. The owner or operator, or guarantor, or both, must have a letter signed by the chief financial officer worded as specified in subsection 4.

d. The owner or operator, or guarantor, or both, must either:

(1) File financial statements annually with the United States securities and exchange commission, the energy information administration, or the utilities service; or

(2) 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.

e. The firm's yearend financial statements, if independently audited, cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.

3. The following apply:

a. The owner or operator, or guarantor, or both, must meet the financial test requirements of subdivision a of subsection 6 of section 33-24-05-79, substituting the appropriate amounts specified in subdivisions a and b of subsection 2 of section 33-24-08-83 for the "amount of liability coverage" each time specified in that section;

b. The fiscal yearend financial statements of the owner or operator, or guarantor, or both, must be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination;

c. The firm's yearend financial statements cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification;

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

e. If the financial statements of the owner or operator, or guarantor, or both, are not submitted annually to the United States securities and exchange commission, the energy information administration or the rural utilities service, the owner or operator, or guarantor, or both, must obtain a special report by an independent certified public accountant stating that:

(1) The certified public accountant has compared the data that the letter from the chief financial officer specifies as having been derived from the latest yearend financial statements of the owner or operator, or guarantor, or both, with the amounts in such financial statements; and

(2) In connection with that comparison, no matters came to the certified public accountant's attention which caused the certified public accountant to believe that the specified data should be adjusted.

4. To demonstrate that it meets the financial test under subsection 2 or 3, the chief financial officer of the owner or operator, or guarantor, must sign, within one hundred twenty days of the close of each financial reporting year, as defined by the twelve-month period for which financial statements used to support the financial test are prepared, a letter worded exactly as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted:

Letter From Chief Financial Officer

I am the chief financial officer of [insert: name and address of the owner or operator, or guarantor]. This letter is in support of the use of [insert: "the financial test of self-insurance", and/or "guarantee"] to demonstrate financial responsibility for [insert: "taking corrective action" and/or "compensating third parties for bodily injury and property damage"] caused by [insert: "sudden accidental releases" and/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 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. 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 by the tank identification number provided in the notification submitted pursuant to 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 environmental protection agency regulations or state programs authorized by the environmental protection agency under 40 CFR Parts 271 and 145:

EPA Regulations	Amount
Closure [§§264.143 and 265.143]	$ ________
Post-Closure Care [§§264.145 and 265.145]	$ ________
Liability Coverage [§§264.147 and 265.147]	$ ________
Corrective Action [§264.101(b)]	$ ________
Plugging and Abandonment [§144.63]	$ ________
Closure	$ ________
Post-Closure Care	$ ________
Liability Coverage	$ ________
Corrective Action	$ ________
Plugging and Abandonment	$ ________
Total	$ ________

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

[Fill in the information for Alternative I if the criteria of subsection 2 of section 33-24-08-85 are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of subsection 3 of section 33-24-08-85 are being used to demonstrate compliance with the financial test requirements.]

ALTERNATIVE I

1.	Amount of annual underground storage tank aggregate coverage being assured by a financial test, and/or guarantee	$ ________
2.	Amount of corrective action, closure and postclosure care costs, liability coverage, and plugging and abandonment costs covered by a financial test, and/or guarantee	$ ________
3.	Sum of lines 1 and 2	$ ________
4.	Total tangible assets	$ ________
5.	Total liabilities [if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6]	$ ________
6.	Tangible net worth [subtract line 5 from line 4]	$ ________
		Yes No
7.	Is line 6 at least $10 million?	________ ________
8.	Is line 6 at least 10 times line 3?	________ ________
9.	Have financial statements for the latest fiscal year been filed with the Securities and Exchange Commission?	________ ________
10.	Have financial statements for the latest fiscal year been filed with the Energy Information Administration?	________ ________
11.	Have financial statements for the latest fiscal 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 4A or 5A? [Answer "Yes" only if both criteria have been met.]	________ ________

ALTERNATIVE II

1.	Amount of annual underground storage tank aggregate coverage being assured by a test, and/or guarantee	$ ________
2.	Amount of corrective action, closure and postclosure care costs, liability coverage, and plugging and abandonment costs covered by a financial test, and/or guarantee	$ ________
3.	Sum of lines 1 and 2	$ ________
4.	Total tangible assets	$ ________
5.	Total liabilities [if any of the amount reported on line 3 is included in total liabilities, you may deduct that amount from this line and add that amount to line 6]	$ ________
6.	Tangible net worth [subtract line 5 from line 4]	$ ________
7.	Total assets in the United States [required only if less than 90 percent of assets are located in the United States]	$ ________
		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 United States? [If "No", complete line 11.]	________ ________
11.	Is line 7 at least 6 times line 3? [Fill in either lines 12-15 or lines 16-18:]	________ ________
12.	Current assets	$ ________
13.	Current liabilities	$ ________
14.	Net working capital [subtract line 13 from line 12]	$ ________
		Yes No
15.	Is line 14 at least 6 times line 3?	________ ________
16.	Current bond rating of most recent bond issue:	________ ________
17.	Name of rating service:	________ ________
18.	Date of maturity of bond:	________ ________
19.	Have financial statements for the latest fiscal year been filed with the SEC, the Energy Information 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 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 subsection 4 of section 33-24-08-85 as such rules were constituted on the date shown immediately below.

[Signature]

[Name]

[Title]

[Date]

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

6. The department may require reports of financial condition at any time from the owner or operator, or guarantor, or both. If the department finds, on the basis of such reports or other information, that the owner or operator, or guarantor, or both, no longer meets the financial test requirements of subsections 2 or 3 and 4 of section 33-24-08-85, the owner or operator must obtain alternate coverage within thirty days after notification of such a finding.

7. If the owner or operator fails to obtain alternate assurance within one hundred fifty days of finding that the owner or operator no longer meets the requirements of the financial test based on the yearend financial statements, or within thirty days of notification by the department that the owner or operator no longer meets the requirements of the financial test, the owner or operator must notify the department of such failure within ten days.

N.D. Admin Code 33-24-08-85

Effective December 1, 1989; amended effective January 1, 2009.

Amended by Administrative Rules Supplement 368, April 2018, effective 4/1/2018.

General Authority: NDCC 23-20.3-03, 23-20.3-04.1

Law Implemented: NDCC 23-20.3-04.1