The Administrative Rules of Montana (ARM) Title 17, Chapter 56, Subchapter 8, require Underground Storage Tank (UST) owners and operators to demonstrate financial responsibility for the clean-up or third party liability compensation that results from a petroleum release from UST systems.
Who must demonstrate financial responsibility?
- Owners or operators of petroleum UST systems must demonstrate financial responsibility for taking corrective action and for compensating third parties.
What UST systems require demonstration of financial responsibility?
- Financial responsibility requirements apply to underground tanks and piping storing petroleum.
There are two categories of exclusions that are listed below:
- State and federal owned UST systems,
- Tanks excluded under ARM 17.56.102(2), 17.56.102(3), 17.56.102(4), 17.56.102(5), or 17.56.102(6).
Click here for Financial Responsibility Brochure
FR Types of Mechanisms
A firm with a tangible net worth of at least $10 million may demonstrate FR by passing one of the two financial tests listed in the Montana Administrative Rules.
You may secure a corporate guarantee from another eligible firm. The provider of the guarantee must pass one of the financial tests listed in the Montana Administrative Rules.
You may buy insurance from an insurer or a risk retention group.
You may obtain a surety bond that is a guarantee by a surety company that will satisfy FR obligations if the person who obtained the surety bond does not.
You may obtain a letter of credit that obligates the issuer to provide funding for corrective action and third-party compensation. If selecting this type, must also have a standby trust fund.
Petroleum Tank Release Cleanup Fund (PTRCF) is a state-funded program. The PTRCF is set up and maintained by the State of Montana to assist with the cost of clean-up associated with a leak or spill. There are several guidelines and requirements that must be met for you to qualify for the full amount of the reimbursement. If you select the PTRCF, you must also choose an additional mechanism or combination of mechanisms (listed previously) to cover the $17,500 co-payment requirement of the PTRCF. Non-Compliance with UST rules & regulations will result in a reduction of the reimbursement amount paid by the PTRCF. Be sure to have inspections completed on time, correct any violations, and keep all information up to date. The Owner/Operator is responsible for all cleanup costs not reimbursed by the PTRCF.
It is important for UST owners/operators to recognize that Insurance is a possible additional mechanism and that it can be leveraged to cover the co-payment requirements of the PTRCF. If an insurer or grantor pays or reimburses an owner or operator for costs that qualify as PTRCF eligible costs, the costs paid or reimbursed by the insurer or grantor are considered to have been paid by the owner or operator toward satisfaction of the 50% share requirements. The owner or operator must receive the payment or reimbursement before applying for reimbursement from the PTRCF. If the owner has $25,000 of Insurance coverage with a $5,000 deductible, and that owner has a release, they can claim costs from insurance and from the PTRCF in a manner that yields no final out of pocket costs.
You may set up a fully funded trust fund administered by a third-party to pay for corrective action and third-party claims.
Standby trust that uses one of these assurance mechanisms (guarantee, surety bond or letter of credit) to fund the trust.
Elements of FR
There are four primary elements that make up the financial responsibility requirements for Underground Storage Tank (UST) Systems. Owners or Operators must demonstrate each of the following elements:
Financial Responsibility mechanism: This is the financial assurance option selected by owners/operators.
Amount of financial responsibility: This is the amount of coverage required that depends on the tank operator, number of tanks covered and name of issuer and mechanism number (if applicable).
Scope of financial responsibility: This is the financial responsibility mechanism that must cover the required categories of obligations and releases (e.g., corrective action and third-party compensation) and period of coverage.
Certification: This is the documentation that demonstrates the correct financial responsibility mechanisms, coverage amount and scope sufficient.
Scope of FR
Obligations
- Accidental - Owner/Operator must be able to cover all UST system releases classified as accidental, as opposed to intentional releases.
- Sudden and Non-Sudden - Owner/Operator must be able to cover both sudden and non-sudden UST system releases.
Releases
- Corrective Action - FR must address both on and off-site corrective action due to UST system releases.
- Third-Party Compensation - FR mechanism must cover both bodily injury and property damage claims from third parties as a result of UST system releases.
FR Forms
Certificate of Financial Responsibility Form
Montana Certificate of Financial Responsibility: This form must be completed and made available at the facility. It will be reviewed by the inspector at your regularly scheduled inspection. Inspectors will require a review of documentation that demonstrates that owners/operators have the financial resources – through insurance, PTRCF, or other means – to pay for the costs of corrective action and third-party liability that can result from leaking USTs.
During 3-year compliance inspections, inspectors will be looking for a current and complete “Montana Certificate of Financial Responsibility”. If an owner selects the PTRCF, they must also choose an additional mechanism (or combination of mechanisms) to demonstrate coverage of the $17,500 Co-payment requirement of the PTRCF or certify a tangible net worth of at least $17,500 on a form approved by the department. A possible additional mechanism, if noting the PTRCF is to provide a Certificate of $17,500 Tangible Net Worth. If they can provide a Certificate Tangible Net Worth equal to or exceeding $17,500, or some other satisfactory type of mechanism, then they are not required to have an insurance policy to cover the $17,500 co-pay.
Financial Statement Forms
Amounts Required and/or Paid
Owner/Operator
- Must have valid operating permit if using PTRCF
- And must be in full regulatory compliance to receive full reimbursement
- If not in full regulatory compliance for *period of:
- 1-30 days – 90 percent reimbursement
- 31-60 days- 75 percent reimbursement
- 61-90 days – 50 percent reimbursement
- 91-180 days – 25 percent reimbursement
- Greater than 180 days = No reimbursement
- CO-PAY: If checking PTRCF must have other mechanism(s) checked to cover the co-pay requirement of $17,500 and costs in excess of $1 million
- If checking Letter of Credit, must also check and have a Standby Trust Fund
PTRCF
- Must meet Owner/Operator requirements listed above
- PTRCF covers:
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Per Occurrence:
- 50 percent of the first $35,000 of eligible costs and 100 percent of subsequent eligible costs, up to a maximum total reimbursement of $982,500 for occurrences of a release.
- 50 percent of the first $10,000 of eligible costs and 100 percent of subsequent eligible costs, up to a maximum total reimbursement of $495,000 for all tanks storing heating oil for consumptive use on the premises.
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Annual Aggregate:
- Federal Requirement: <= 100 tanks $1 million, OR > 100 tanks $2 million
- The PTRCF covers each release or occurrence for $1 million less the required copay, without any aggregation (excluding tanks that are storing heating oil that is being consumed on the premises).
Other Coverage
Farm, Residence or Heating Oil Tanks
Tanks on farms, residences or used for heating oil and that are <= 1,100 gallons
- 100 percent eligible for costs up to $500,000 if properly designed and have double-walled system with release between 10/01/1993 to 10/01/2009, OR
- Owner needs $5,000 co-pay, then PTRCB pays 50 percent of first $10,000 and 100 percent of costs up to $495,000.
More Info on Financial Responsibility
List of Known Insurance Providers for Underground Storage Tank Owners and Operators (EPA)
If you have questions about FR, please contact the UST Program at (406) 444-5300, DEQUSTProgram@mt.gov or Petroleum Tank Cleanup Section at (406) 444-9710 or Petroleum Tank Release Compensation Board at (406) 444-9710.
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