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Storage Tank Financial Responsibility General Guidance

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Financial Responsibility Reference Guides and FAQs

Reference Guides

Tables to Calculate Amount of Financial Responsibility (FR) Needed

Reference Manuals

  • Financial Responsibility (FR) Handbook - A Guide to the Financial Responsibility Mechanisms (DEP) [coming soon]
  • Financial Responsibility for Underground Storage Tanks: A Reference Manual - EPA's Comprehensive 320-page manual provides UST inspectors with the restrictions, limitations, and requirements of each financial assurance mechanism provided in the federal UST regulations. Most details are applicable to FR for ASTs and USTs in Florida.
  • UST Technical Compendium: Financial Responsibility - EPA
    • Includes guidance on occurrence, tangible net worth, and value of a trust fund funded by marketable securities.
    • Explains unacceptability of voluntary tank removal and voluntary tank site investigation exclusions, self-insured retentions (SIRs), and loading and unloading exclusions.
    • This guidance is applicable to both USTs and ASTs.

Insurance Guidance

EPA Link

Provider Companies

  • Provider Companies - Self-nominated list of companies providing financial assurance for Solid Waste facilities in Florida includes several companies offering standby trust fund agreements. This may be useful to Storage Tank owners or operators.

FAQs (Frequently Asked Questions)

Click on a question to jump to the answer.

  1. Why do we have financial responsibility (FR) for storage tanks?

  2. When is financial responsibility (FR) not required?

  3. Do Out-of-Service tanks require FR?

  4. Who must provide proof of FR? 

  5. Where can I find the mechanisms that need to be used to demonstrate FR?

  6. What amount of FR do I need?

  7. Where do I keep the financial documentation?

  8. What financial assurance (FA) documents need to be shown to inspectors?

  9. Can the ACORD form substitute for the insurance certificate form?

  10. What are alternatives to having an embossed seal on the Certificate of Insurance?

  11. Can I continue to use my existing "Code of Federal Regulation (40 CFR 280) wording" mechanisms?

  12. What are the Financial Test "Period of Coverage" dates?

  13. Does continuing FR coverage represent a ‘stacking’ obligation where the first year’s coverage is (for example) $1 million, the second year’s coverage is $2 million and the third year’s coverage is $3 million (etc.)?

  14. Why is "and/or" wording not allowed?


  1. Why do we have financial responsibility (FR) for storage tanks?

  • Financial responsibility requirements ensure that owners and operators of regulated petroleum storage tanks have the financial resources to pay for the cost of corrective action and compensating third parties for bodily injury and property damage that might result from a release from a petroleum storage tank system.  [Reference: Rules 62-761.420 and 62-762.421, Florida Administrative Code (F.A.C.)]  [return to FAQ list]
  1. When is financial responsibility (FR) not required?

  • There are many exemptions!  Following is a very abbreviated (and sometimes generalized) list of petroleum storage tanks that do not require financial responsibility (FR). Complete lists and most details are in Rules 62-761.300(2) and 62-762.301(2), F.A.C.  (Rule paragraph references are included with each exemption listed [e.g., "(e)" references 62-761.300(2)(e) and 62-762.301(2)(e), F.A.C.]). Definitions in 62-761.200 and 62-762.201, F.A.C. further characterize some exemptions.
    • Tanks with a capacity less than a certain volume do not require FR; specifically,
      • UST: 110 gallons or less  [62-761.300(1)(a), F.A.C.]
      • AST: 550 gallons or less  [62-762.301(1)(a), F.A.C.]
        • There is a caveat for any facility with a regulated aboveground storage tank:  the facility capacity will include all tanks with petroleum-based products, including those ASTs with a 550 gallon capacity or less.
    • On-site heating oil tanks with a capacity of less than 30,000 gallons  (e)
    • Propane tanks  (h)
    • Residential storage tank systems  (m)
    • Mobile tanks  (y)  (AST only!)  
    • Facilities under foreclosure [40 CFR 280.230, reference: Rules 62-761.210(2)(n)1. and 62-762.211(2)(n)1., F.A.C.]  [return to FAQ list]
  1. Do Out-of-Service tanks require Financial Assurance?

  • Yes, Out-of-Service tanks require financial assurance (FA). [761.800(1)(b)2. and 62-762.801(1)(b)2., F.A.C.]
  • Most insurance companies will not cover out-of-service tanks. Before a tank is registered out-of-service, the owner or operator needs to make sure the tank will continue to be covered by an FA mechanism. If the current provider will not cover the tank, another form of financial responsibility needs to be found.

  • A storage tank system must be closed within 90 days of the termination of the FA mechanism if the FA mechanism is not replaced, [761.800(2)(a)3. and 62-762.802(3)(a)4., F.A.C.] [return to FAQ list]

  1. Who must provide proof of FA?

  • The owner or operator who demonstrates FR must be one (or more) of the following 'persons':
    • Facility owner
    • Tank owner
    • Facility operator
    • Tank operator
  • A guarantor (such as a parent company) can demonstrate financial responsibility using a Guarantee. When completing Form 62-761.900(3) Part B, the owner or operator (from the list above) is identified, and the guarantor must complete and pass the financial test (Part A); the owner or operator must obtain a standby trust fund agreement (Part H).
    • Variations on this guidance are possible for governmental agency owners or operators, allowing for the use of other form parts.
  • Another person (such as a mortgage holder) wanting to provide the required financial responsibility in the form of insurance must have the policy identify one of the above identified 'persons' (facility owner, etc.) as an insured (or as an 'additional named insured'); the Certificate of Insurance [Form 62-761.900(3) Part D] will identify (only) the owner or operator as being the Insured.
  1. Where can I find the mechanisms that need to be used to demonstrate FR?

  1. What must the financial assurance (FA) document cover?

  • Financial assurance documentation must cover both “corrective action” and “compensating third parties … caused by accidental releases”. Coverage may be divided between multiple mechanisms.  [Reference: 40 CFR 280.93(a) and (d)]   [return to FAQ list]
  1. What amount of FA do I need?

  1. Where do I keep the financial documentation?

  • An owner or operator must maintain financial responsibility records at the facility site or at the business office. If not kept at the facility, they shall be made available at the facility or another agreed upon location upon five business days notice by a department or county inspector. (The original should never be sent to Tallahassee for filing.  Send a copy only if we ask you to or if you are requesting guidance.)  [Reference: Rules 62-761.420(4) and 62-762.421(4), F.A.C.]  [return to FAQ list]
  1. What financial assurance (FA) documents need to be shown to inspectors?

  1. Can the ACORD form substitute for the insurance certificate form?

  1. What are alternatives to having an embossed seal on the Certificate of Insurance?

  • Electronic seal of Insurer
  • Signature is of Insurer's President (no seal required) -
  • Electronic signatures (for both insurer rep and witness) that follow industry best practice standards (and requirements of ESIGN Act and UETA) are acceptable.
  • Signature matches signature on policy [the policy, not the declarations page] (no seal required)
  • Accompanying letter from President verifies signatory has authority to amend policies (no seal required)  [return to FAQ list]
  1. Can I continue to use my existing "Code of Federal Regulation (40 CFR 280) wording" mechanisms?

  • Mechanisms that remain current and were issued before January 11, 2017 [before Rules 62-761 and 62-762 required the use of Form 62-761.900(3) parts] do not need to be replaced, unless there are mistakes.
    • An 'evergreen' financial assurance instrument issued prior to January 2017 but only recently found to have errors (such as not explicitly including all required coverage - for example, using "and/or" language) must be replaced with a current part of Form 62-761.900(3).
    • Amendments to acceptable 'old' mechanisms can update the facility list, etc.
  • Mechanisms with expiration dates (that don't automatically renew) will need to be replaced with appropriate parts of Form 62-761.900(3) when they are replaced or renewed.  [return to FAQ list]
  1. What are the Financial Test "Period of Coverage" dates?

  • A financial test (FT) must be completed during the first 120 days of the fiscal year, so the period of coverage (entered on the Certificate of Financial Responsibility - Part P) will be the current fiscal year plus 120 days (e.g., 1/1/2019 – 4/30/2020 or 10/1/2018 – 1/28/2020). The audited year ended the day before the period of coverage begins.
    • An amended or revised FT (e.g., due to the addition of tanks) will have the same period of coverage as the original FT.
    • Data on the FT includes information derived from the previous fiscal year's audited financial statements.
  • For the Local Government Fund (Part O), the period of coverage is also the current fiscal year plus 120 days. (For this instrument, no data from audited statements is required.)
  • For the Local Government Bond Rating Test (Part I), the period of coverage is from the published date of the bond rating to the end of the month, 12 months later  (e.g., 1/7/2019 - 1/31/2020).  [return to FAQ list]
  1. Does continuing FR coverage represent a ‘stacking’ obligation where the first year’s coverage is (for example) $1 million, the second year’s coverage is $2 million and the third year’s coverage is $3 million (etc.)?

  • No.  Any incident (“occurrence”) can cause the FR issuer to pay up to the “per occurrence” amount.  Anything beyond that is payable by the owner/operator.  Similarly, if there were multiple occurrences during a (fiscal) year, up to the “annual aggregate amount” would be payable by the issuer of the FR instrument.  During year ‘two’, only new occurrences would be eligible for drawing on the FR instrument. 
    • There could be $3 million drawn in three years on a bond with a multi-year life and a $1 million annual aggregate amount, but only $1 million if the first two years had no occurrences. [This discussion does not deal with the nuances of payments due associated with occurrences discovered at the end of a fiscal year.]
  • An occurrence can be sudden (split seem on an aboveground tank) or nonsudden (pinhole in an underground tank that did not get noticed for several years).  [return to FAQ list]
  1. Why is "and/or" wording not allowed?

  • The phrase "and/or" is frequently legally ambiguous.  (Who decides if it is "and" or "or", and when do they get to decide it?)
  • Several blanks on the form parts have directions to enter "Phrase A and/or Phrase B".  Drop down boxes make clear that the term "and/or" is never to be entered into the blank.  With a two-phrase option, the choices will be
    • "Phrase A"
    • "Phrase B"
    • "Phrase A and Phrase B"
  • The word "or" or phrase "and/or" should never be included in a filled blank.  [return to FAQ list]

 

Links:

Storage Tank Financial Responsibility Main Page  *  Coverage Amounts  *  Facilities  *  Forms (Mechanisms)  *  Form Guidance (FAQs)  *  Rules and Related Laws  *  Storage Tank Program Contact List

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Last Modified:
May 30, 2019 - 11:13am

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