Financial Test of SelfInsurance

PURPOSE: This rule describes the requirements a person must meet for self- insurance. (1) An owner or operator, or guarantor, may satisfy the requirements of 10 CSR 26-3.093 by passing a financial test as specified in this rule. To pass the financial test of self-insurance, the owner or operator, or guarantor, shall meet the criteria of section (2) or (3) of this rule based on year-end financial statements for the latest completed fiscal year. (2) The owner or operator, or guarantor, shall have a tangible net worth that meets the following requirements: (A) The owner or operator, or guarantor, shall have a tangible net worth of at least ten (10) times— 1. The total of the applicable aggregate amount required by 10 CSR 26-3.093 based on the number of underground storage tanks (USTs) for which a financial test is used to demonstrate financial responsibility to the department; 2. The sum of the corrective action cost estimates, the current closure and post-closure care cost estimates, and amount of liability coverage for which a financial test is used to demonstrate financial responsibility to the Environmental Protection Agency (EPA) in 40 CFR parts 264.101, 264.143, 264.145, 264.147, 265.143, 265.145, and 265.147 or under any state program authorized by EPA under 40 CFR part 271; or 3. 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 part 144.63 or under any program authorized by EPA under 40 CFR part 145; (B) The owner or operator, or guarantor shall have a tangible net worth of at least ten (10) million dollars; (C) The owner or operator, or guarantor shall have a letter signed by the chief financial officer worded as specified in section (4) of this rule; (D) The owner or operator, or guarantor either must— 1. File financial statements annually with the United States Securities and Exchange Commission (SEC), the Energy Information Administration (EIA) or the Rural Electrification Administration (REA); or 2. Report annually the firm’s tangible net worth to Dunn and Bradstreet and Dunn and Bradstreet shall have assigned the firm a financial strength rating of 4A or 5A; and (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. (3) The owner or operator, or guarantor, shall meet the financial test requirements of 40 CFR 264.147(f)(1), modified as follows: (A) The owner or operator, or guarantor, must meet the financial test requirements of 40 CFR 264.147(f)(1), substituting the appropriate amounts specified in 10 CSR 263.093 (2)(A) and (B) for the amount of liability coverage each time specified in that section; (B) The fiscal year-end financial statements of the owner or operator, or guarantor must be examined by an independent certified public accountant and be accompanied by the accountant’s report of the examination; (C) The firm’s year-end financial statements cannot include an adverse auditor’s opinion, a disclaimer of opinion or a going concern qualification; (D) The owner or operator, or guarantor shall have a letter signed by the chief financial officer worded as specified in section (4); and (E) If the financial statements of the owner or operator, or guarantor are not submitted annually to the United States SEC, the EIA or the REA, the owner or operator, or guarantor shall obtain a special report by an independent certified public accountant stating that— 1. S/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, or guarantor with the amounts in those financial statements; and 2. In connection with that comparison, no matters came to his/her attention which caused him/her to believe that the specified data should be adjusted. (4) To demonstrate that it meets the financial test under section (2) or (3), the chief financial officer of the owner or operator, or guarantor, shall sign within one hundred twenty (120) days of the close of each financial reporting year, as defined by the twelve (12)- month period for which financial statements used to support the financial test are prepared, a letter worded exactly as listed in Form 1 (see 10 CSR 26-3.094). (5) If an owner or operator using the test to provide financial assurance finds that s/he 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 one hundred fifty (150) days of the end of the year for which financial statements have been prepared. (6) The director may require reports of financial condition at any time from the owner or operator, or guarantor. If the director finds, on the basis of these reports or other information, that the owner or operator, or guarantor, no longer meets the financial test requirements of 10 CSR 26-3.095(2) or (3) and (4), the owner or operator shall obtain alternate coverage within thirty (30) days after notification of that finding. (7) If the owner or operator fails to obtain alternate assurance within one hundred fifty (150) days of finding that s/he no longer meets the requirements of the financial test based on the year-end financial statements, or within thirty (30) days of notification by the director that s/he no longer meets the requirements of the financial test, the owner or operator shall notify the director of that failure within ten (10) days. AUTHORITY: section 319.114, RSMo 2000.* This rule originally filed as 10 CSR 2011.095. Original rule filed Feb. 7, 1991, effective Aug. 30, 1991. Moved and amended: Filed April 15, 2011, effective Dec. 30, 2011. *Original authority: 319.114, RSMo 1989.