LAC 33: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 1of 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. 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" 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 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. If separate mechanisms or combinations of mechanisms, other than the combination of this letter and the owner's or operator's status as an eligible participant in the Underground Motor Fuels Storage Tank Trust, are being used to assure any of the tanks at any one facility, list each tank assured by this financial test by the tank identification number provided in the registration submitted pursuant to LAC 33:XI.301.] 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 the following regulations: Regulations | Amount Closure (LAC 33:V.3707 and 4403) | $____________ Post-Closure Care (LAC 33:V.3711 and 4407) | $____________ Liability Coverage (LAC 33:V.3715 and 4411) | $____________ Corrective Action (LAC 33:V.3322) | $____________ Plugging and Abandonment (40 CFR 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 LAC 33:XI.1111.B.1 are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of LAC 33:XI.1111.B.1 are being used to demonstrate compliance with the financial test requirements. Fill in the information for Alternative II if the criteria of LAC 33:XI.1111.C are being used to demonstrate compliance with the financial test requirements.] Alternative I 1. Amount of annual UST aggregate coverage being assured by a financial test, and/or guarantee | $____________ 2. Amount of corrective action, closure and post-closure 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 UST aggregate coverage being assured by a financial test, and/or guarantee | $____________ 2. Amount of corrective action, closure and post-closure 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 U.S. [required only if less than 90 percent of assets are located in the U.S.] 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 U.S.? [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 | _____________ Yes No 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 the 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 LAC 33:XI.1111.D as such regulations were constituted on the date shown immediately below. [Signature] [Name] [Title] [Date] 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.