La. Admin. Code tit. 33 § XI-1111

Current through Register Vol. 50, No. 11, November 20, 2024

Section XI-1111 - Financial Test of Self-Insurance

A. An owner or operator, and/or guarantor, may satisfy the requirements of LAC 33:XI.1107 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 criteria of Subsection B or C of this Section based on year-end financial statements for the latest completed fiscal year.

B. The owner or operator, and/or guarantor, shall meet the requirements of Paragraph 1 of this Subsection below.

1. The owner or operator, and/or guarantor, shall meet the following requirements.

a. The owner or operator, and/or guarantor, shall have a tangible net worth of at least 10 times:

i. the total of the applicable aggregate amount required by LAC 33:XI.1107, based on the number of underground storage tanks for which a financial test is used to demonstrate financial responsibility to the administrative authority under this Section;

ii. the sum of the corrective action cost estimates, the current closure and post-closure care cost estimates, and the amount of liability coverage for which a financial test is used to demonstrate financial responsibility under LAC 33:V.3322, 3707, 3711, 3715, 4403, 4407, and 4411; and

iii. the sum of current plugging and abandonment cost estimates for which a financial test is used to demonstrate financial responsibility to EPA under 40 CFR 144.63.

b. The owner or operator, and/or guarantor, shall have a tangible net worth of at least $10 million.

c. The owner or operator, and/or guarantor, shall have a letter signed by the chief financial officer worded as specified in Subsection D of this Section.

d. The owner or operator, and/or guarantor, shall either:

i. file financial statements annually with the U.S. Securities and Exchange Commission, the Energy Information Administration, or the Rural Utilities Service; or

ii. report annually the firm's tangible net worth to Dun and Bradstreet, and Dun and Bradstreet shall have assigned the firm a financial strength rating of 4A or 5A.

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

C. The owner or operator, and/or guarantor shall meet the following requirements.

1. The owner or operator, and/or guarantor shall meet the financial test requirements of LAC 33:V.3715.F.1, substituting the appropriate amounts specified in LAC 33:XI.1107.B.1 for the "amount of liability coverage" each time specified in that Section.

2. The fiscal 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.

3. The firm's year-end financial statements 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 as specified in Subsection D of this Section.

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. he 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/or guarantor, with the amounts in such financial statements; and

b. in connection with that comparison, no matters came to his attention which caused him to believe that the specified data should be adjusted.

D. To demonstrate that it meets the financial test under Subsection B or C of this Section, the chief financial officer of the owner or operator, 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 exactly as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted. To prepare this letter, the owner or operator shall use the form required by the department. This form may be obtained from the Office of Environmental Assessment.

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E. If an owner or operator using the test to provide financial assurance finds that he or she 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 150 days of the end of the year for which financial statements have been prepared.

F. The administrative authority may require reports of financial condition at any time from the owner or operator, and/or guarantor. If the administrative authority 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 LAC 33:XI.1111.B or C and D, the owner or operator shall obtain alternate coverage within 30 days after notification of such a finding.

G. If the owner or operator fails to obtain alternate assurance within 150 days of finding that he or she no longer meets the requirements of the financial test based on the year-end financial statements, or within 30 days of notification by the administrative authority that he or she no longer meets the requirements of the financial test, the owner or operator shall notify the Office of Environmental Assessment of such failure within 10 days.

La. Admin. Code tit. 33, § XI-1111

Promulgated by the Department of Environmental Quality, Office of Solid and Hazardous Waste, Underground Storage Tank Division, LR 16:614 (July 1990), amended by the Office of Environmental Assessment, Environmental Planning Division, LR 26:2560 (November 2000), LR 27:2232 (December 2001), amended by the Office of the Secretary, Legal Affairs Division, LR 31:2521 (October 2005), LR 33:2173 (October 2007), amended by the Office of the Secretary, Legal Division, LR 38:2763 (November 2012), Amended by the Office of the Secretary, Legal Affairs and Criminal Investigations Division, LR 432145 (11/1/2017), Amended by the Office of the Secretary, Legal Affairs and Criminal Investigations Division, LR 441621 (9/1/2018).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:2001 et seq.