9VAC25-590-60. Financial test of self-insurance.
A. An owner or operator and/or guarantor, may satisfy the requirements of 9VAC25-590-40 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 shall meet the requirements of subsection B or C and subsection D of this section based on year-end financial statements for the latest completed financial reporting year.
B. 1. The owner or operator and/or guarantor shall have a tangible net worth at least equal to the total of:
a. The applicable aggregate financial responsibility amount required by 9VAC25-590-40 B for which a financial test is used to demonstrate financial responsibility, except as provided in 9VAC25-590-210; and
b. The aggregate aboveground storage tank financial responsibility amount required under 9VAC25-640, for which a financial test is used to demonstrate financial responsibility.
2. In addition to the requirements set forth in subdivision 1 of this subsection, the owner or operator and/or guarantor shall also have a tangible net worth of at least 10 times:
a. 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 for self-insurance is used in each state of business operations to demonstrate financial responsibility to EPA under 40 CFR §§ 264.101(b), 264.143, 264.145, 265.143, 265.145, 264.147, and 265.147, to another state implementing agency under a state program authorized by EPA under 40 CFR Part 271 or the Virginia Waste Management Board under 40 CFR 264.143, 264.145 and 264.147 (as incorporated by reference in 9VAC20-60-264) and 40 CFR 265.143, 265.145 and 265.147 (as incorporated by reference in 9VAC20-60-265) of the Virginia Hazardous Waste Management Regulations; and
b. The sum of current plugging and abandonment cost estimates for which a financial test for self-insurance is used in each state of business operations to demonstrate financial responsibility to EPA under 40 CFR 144.63 or to a state implementing agency under a state program authorized by EPA under 40 CFR Part 145 (Underground Injection Control Program).
3. The owner or operator, and/or guarantor shall comply with either subdivision a or b of this subdivision:
a. (1) The financial reporting year-end financial statements of the owner or operator and/or guarantor shall be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination; and
(2) The financial reporting year-end financial statements of the owner or operator and/or guarantor cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
b. (1) (a) File financial statements annually with the U.S. Securities and Exchange Commission, the Energy Information Administration, or the Rural Utilities Service; or
(b) Report annually the tangible net worth of the owner or operator and/or guarantor to Dun and Bradstreet, and Dun and Bradstreet shall have assigned a financial strength rating which at least equals the amount of financial responsibility required by the owner or operator under subdivisions 1 and 2 of this subsection. Relevant Dun and Bradstreet ratings are as follows (current Dun and Bradstreet ratings will be used for demonstration requirements which exceed the annual aggregate amounts listed below):
Annual Aggregate Requirement | Dun and Bradstreet Rating |
$20,000 | EE ($20,000 to $34,999) |
$40,000 | DC ($50,000 to $74,999) |
$80,000 | CB ($125,000 to $199,999) |
$150,000 | BB ($200,000 to $299,999) |
$200,000 | BB ($200,000 to $299,999) |
$300,000 | BA ($300,000 to $499,999) |
$500,000 | 1A ($500,000 to $749,999) |
$750,000 | 2A ($750,000 to $999,999) |
$1,000,000 | 3A ($1,000,000 to 9,999,999); and |
(2) The financial reporting year-end financial statements of the owner or operator and/or guarantor, if, independently audited, cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
4. The owner or operator and/or guarantor shall have a letter signed by the chief financial officer worded identically as specified in Appendix I/Alternative I or Appendix XI.
C. 1. The owner or operator and/or guarantor shall have a tangible net worth at least equal to the total of:
a. The applicable aggregate amount required by 9VAC25-590-40 B for which a financial test is used to demonstrate financial responsibility, except as provided in 9VAC25-590-210; and
b. The aggregate aboveground storage tank financial responsibility amount required under 9VAC25-640 for which a financial test is used to demonstrate financial responsibility.
2. In addition to the requirements set forth in subdivision 1 of this subsection, the owner or operator and/or guarantor shall also have a tangible net worth of at least six times:
a. The financial test requirements for self insurance of the corrective action cost estimates, the current closure and post-closure care cost estimates, and amount of liability coverage in each state of business operations to the EPA under 40 CFR 264.101(b), 264.143, 264.145, 265.143, 265.145, 264.147, and 265.147, to another state implementing agency under a state program authorized by EPA under 40 CFR Part 271 or the Virginia Waste Management Board under 40 CFR 264.143, 264.145 and 264.147 (as incorporated by reference in 9VAC20-60-264) and 40 CFR 265.143, 265.145, and 265.147 (as incorporated by reference in 9VAC20-60-265) of the Virginia Hazardous Waste Management Regulations; and
b. The financial test requirements for self-insurance of current plugging and abandonment cost estimates in each state of business operations to EPA under 40 CFR 144.63 or to a state implementing agency under a state program authorized by EPA under 40 CFR Part 145 (Underground Injection Control Program).
3. The financial reporting year-end financial statements of the owner or operator and/or guarantor shall be examined by an independent certified public accountant and be accompanied by the accountant's report of the examination.
4. The financial reporting year-end financial statements of the owner or operator and/or guarantor cannot include an adverse auditor's opinion, a disclaimer of opinion, or a "going concern" qualification.
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 shall obtain a special report by an independent certified public accountant stating that:
a. The accountant has compared the data that the letter from the chief financial officer specified as having been derived from the latest financial reporting year-end financial statements of the owner or operator and/or guarantor with the amounts in such financial statements; and
b. In connection with that comparison, no matters came to the accountant's attention which caused him to believe that the specified data should be adjusted.
6. The owner or operator and/or guarantor shall have a letter signed by the chief financial officer, worded identically as specified in Appendix I/Alternative II or Appendix XI.
D. To meet the financial demonstration test under subsection B or C of this section, the chief financial officer of the owner or operator and/or guarantor shall sign, within 120 days of the close of each financial reporting year, as defined by the 12-month period for which financial statements used to support the financial test are prepared, a letter worded identically as specified in Appendix I with the appropriate alternative or Appendix XI, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted.
E. If an owner or operator using the financial test to provide financial assurance finds that he no longer meets the requirements of the financial test based on the financial reporting year-end financial statements, the owner or operator shall obtain alternative coverage within 150 days of the end of the year for which financial statements have been prepared.
F. The department may require reports of financial condition at any time from the owner or operator and/or guarantor. If the department 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 subsection B or C and subsection D of this section, the owner or operator shall obtain alternate coverage within 30 days after notification of such finding.
G. If the owner or operator fails to obtain alternate assurance within 150 days of finding that he no longer meets the requirements of the financial test based on the financial reporting year-end financial statements, or within 30 days of notification by the department that he or she no longer meets the requirements of the financial test, the owner or operator shall notify the department of such failure within 10 days.
Statutory Authority
§§ 62.1-44.15 and 62.1-44.34:9 of the Code of Virginia; 42 USC § 6901 et seq.; 40 CFR Parts 280 and 281.
Historical Notes
Derived from VR680-13-03 § 6, eff. May 9, 1990; amended, Virginia Register Volume 10, Issue 1, eff. November 3, 1993; Volume 14, Issue 23, eff. September 2, 1998; Volume 21, Issue 8, eff. January 26, 2005; Volume 34, Issue 1, eff. January 1, 2018; Volume 39, Issue 5, eff. November 23, 2022.