ILLINOIS

POLLUTION CONTROL BOARD

April

6, 1989

IN

THE MATTER OF:

)

UST FINANCIAL ASSURANCE

R89-4

USEPA REGULATIONS

(10/26/88)

PROPOSAL

FOR

PUBLIC

COfl~1ENT

PROPOSED

ORDER

OF

THE

BOARD

(by

J.

Anderson):

Pursuant to Section

22.4(e)

of the

Environmental

Protection

Act

(Act),

the Board

proposes to add to the UST underground

storage

tank regulations.

Section

22.4 of the Act governs adoption of regulations establishing tho

RCRA program

in Illinois.

Section

22.4(e) provides for quick adoption of

regulations which

are “identical

in

substance”

to

federal

regulations.

Section 22.4(e) provides that Title VII

of the Act

and Section

5 of the

Administrative Procedure Act

(APA)

shall

not apply.

Because this rulemaking

is

not subject

to Section

5

of the APA,

it

is not subject to

first

notice

or

to

second notice

review by the Joint Connittee on Administrative Rules

(JCAR).

The federal

UST

rules are

found

at

40 CFR 280.

This rulemaking

updates

Illinois’ UST

rules to correspond with major federal amendments which

appeared at

53 Fed.

Reg. 43370, October 26, 1988.

This proposal

supplements the February 2,

1989 proposal

in R88—27, which

appeared

on flarch

3,

1989,

at

13

Ill. Reg.

2650.

This proposal assumes

that

R88~27will

be adopted prior to this proposal.

This Order

is

supported by

a proposed

Opinion

adopted this same day.

The

Board

will

receive

public

conri~nton the proposal

for

a

period

of

45

days

following publication

in

the Illinois Register.

Because

of

its

length,

the

text

of

the proposal

will

not

be published

in the Environmental Register,

or

appear

in the Opinion volumes.

The

complete text of the proposed

rules

follows.

IT

IS

SO ORDERED

I,

Dorothy

U. Gunn,

Clerk

of the Illinois Pollution Control

Board,

hereby

certify

tha~t

the

above Proposed Order

was

adopted

on

the ~

day

of

~2~-v&_-cL.

,

1989,

by

a vote of

7_~~

Illinois Poll

Control

Board

98—18 1

---

—2-

TITLE

35:

ENVIRONMENTAL PROTECTION

SUBTITLE

G:

WASTE

DISPOSAL

CHAPTER

I:

POLLUTION CONTROL BOARD

SUBCHAPTER d:

UNDERGROUND

INJECTION CONTROL

AND UNDERGROUND STORAGE TANK PROGRAMS

PART

731

UNDERGROUND STORAGE TANKS

Definitions

and exemptions

(Repealed)

Interim prohibitions

(Repealed)

Notification Requirements

(Repealed)

________

Applicability

_______

Compliance Dates

________

Definitions

_______

Amount

and Scope

of Required Financial Responsibility

_______

Allowable Uechanisms

and Combinations

________

Financial Test

of Self-insurance

_________

Guarantee

________

Insurance or Risk Retention Group Coverage

________

Surety Bond

________

Letter

of Credit

________

Trust Fund

________

Standby

Trust

Fund

________

Substitution

of

Uechanisms

_______

Cancellation

or Nonrenewal

by Provider

________

Reporting

________

Recordkeepi ny

________

Drawing_on

Financial

Assurance

_______

Release

from

Financial

Assurance

Requirement

________

Bankruptcy

or

other

Incapacity

________

Repl eni shrient

Incorporations

by

reference

(Repealed)

Compliance

Date

(Repealed)

Notification

Form

AUTHORITY:

Implementing Section 22.4(e)

and authorized

by Section

27

of

the

Environmental Protection Act (Ill.

Rev.

Stat.

1987,

ch.

111

1/2,

pars.

1022.4(e) and 1027).

SOURCE:

Adopted

in R86-1

at

10 Ill. Reg. 14175,

effective August

12,

1986;

amended

in R86—28

at

11

Ill.

Reg.

6220,

effective flarch

24,

1987;

amended

in

R88-27

at

13

Ill.

Reg.

,.

,

effective

;

amended

in

R99-4

at

13

Ill.

Reg.

,

effective

SUBPART H:

FINANCIAL RESPONSIBILITY

Section 731.190

Applicability

a)

This Subpart

applies

to owners

and operators of

all petroleum UST

SUBPART

H:

FINANCIAL

RESPONSIBILITY

Secti on

731. 101

731. 102

731. 103

Section

731.190

731. 191

731.192

731.193

731.194

731. 195

731.196

731.197

731.198

731.199

731.202

731.203

731.204

731. 205

731. 206

731.207

731. 208

731.209

731.210

731. 211

731.900

731. 901

Appendix

A

98—182

---

—3—

systems

except

as otherwise provided

in this Section.

~j

Owners and operators of petroleum UST systems

are subject

to these

requirements

if they are

in operation on

or after the date

for

compliance

established

in Section 731.191.

~J_

State

and federal

government entities whose debts and liabilities are

the

debts

and

liabilities

of

the

State

or

the

United

States

are

exempt

from

the

requirements

of

this

Subpart.

d)

The requirements

of this Subpart

do

not apply

to

owners

and operators

of

any UST system described

in

Section

731.110

(b)

or

(c).

e)

If

the

owner

and

operator

of

a

petroleum

underground

storage

tank

are

separate

persons,

only

one

person

is

required

to demonstrate

financial

responsibility;

however,

both

parties

are

liable

in

event

of

noncompliance.

Regardless

of

which

party

complies,

the

date

set

for

compliance

at

a

particular

facility

is

determined

by

the

characteristics

of the owner

as

set forth

in Section 731.191.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section

731.191

Compliance

Dates

Owners

of

petroleum

underground

storage

tanks

are

required

to

comply

with

the

requirements

of

this

Subpart

by

the

following

dates:

a)

All

petroleum

marketing

firms

owning

1,000

or

more

USTs

and

all

other

UST

owners

that

report

a

tangible

net

worth

of

$20

million

or

more

to

the

U.S.

Securities

and

Exchange

Cornission

(SEC),

Dun and

Bradstreet,

the

Energy

Information

Administration

or

the

Rural

Electrification Administration:

Immediately.

b)

All

petroleum

marketing

firms

owning

100

through

999

USTs:

October

26,

1989.

C)

All

petroleum

marketing

firms

owning

13

through

99

USTs

at

more

than

one

facility:

April

26,

1990.

d)

All

petroleum

UST

owners

not

described

in

subsections

(a),

(b)

or

(c),

including units

of

local

government:

October

26,

1990.

(Source:

Added

at

13

Ill. Reg.

,

effective

Section 731.192

Definitions

When used

in

this Subpart., the following terms

have the meanings given

below:

“Accidental

release”

means

any

sudden

or

nonsudden

release

of

petroleum from an underground

storage tank that results

in

a need

for

corrective

action

or

compensation

for

bodily

injury

or

property

damage

neither

expected

nor

intended

by

the

tank

owner

or

operator.

“Bodily

injury”

means

bodily

injury,

sickness

or

disease

sustained

by

98—183

---

-4-

a person, including death

resulting from any of these

at any

time.

However, this term does not include those

liabilities which,

consistent with standard

insurance industry practices,

are excluded

from coverage

in

liability insurance policies for bodily

injury.

BOARD NOTE:

Derived from 40 CFR 280.92,

as adopted

at

53 Fed. Reg.

43370,

October 26,

1988, modified

to

insert the Insurance Services

Office definition.

“Controlling

interest”

means

direct

ownership

of

at

least

50

percent

of the

voting stock

of another entity.

“Director of the Implementing Agency”.

See Section 731.114.

“Environmental

damage”

means

the

injurious presence

in

or upon

land,

the atmosphere or

any watercourse

or

body of water

of solid,

liquid,

g~_eousor thermal contaminants, irritants

or pollutants.

BOARD NOTE:

This term

is used

in

the definition

of “pollution

incident”.

“Financial

reporting year”

means:

The latest consecutive twelve-month period

for which any

of the

following

reports used to

support

a financial

test

is

prepared:

A

10-K report submitted to the Securities Exchange

Corni ssi on;

An annual

report

of tangible net worth submitted

to Dun and

Bradstreet;

or

Annual

reports

submitted

to

the

Energy Information

Administration or

the Rural

Electrification Administration.

“Financial

reporting year” may thus comprise

a fiscal

or

a

calendar year period.

“Legal

defense cost”

is

any expense that

an owner

or operator

or

provider of

financial assurance incurs

in

defending against

claims

or

actions

brought,

By USEPA or

the State

to require corrective

action

or

to

recover

the costs

of corrective action;

By

or

on behalf of

a third party

for bodily injury

or

property

damage caused

by

an

accidental

release;

or

~~yperson

to

enforce

the

terms

of

a

financial

assurance

rnechani sm.

“Occurrence” means

an

accident,

including continuous

or repeated

exposure

to conditions, which

results

in

a release from an

underground storage tank.

98—184

---

-5-

BOARD

NOTE:

This

definition

is

intended to assist

in the

understanding of

these

regulations

and

is not

intended either to

limit the meaning

of “occurrence”

in

a way that conflicts with

standard insurance usage

or

to prevent the use of other

standard

insurance terms

in place

of “occurrence”.

“Owner

or operator”, when the owner or

operator are separate persons,

refers

to

the person that

is

obtaining or

has obtained financial

assurance.

“Petroleum marketing facilities” include

all

facilities

at which

petroleum

is

produced or

refined

and

all

facilities from which

petroleum

is sold or transferred to other petroleum marketers

or

to

the public.

“Petroleum

marketing

firms”

are

all

firms

owning

petroleum

marketing

facilities.

Firms owning other types

of facilities with USTs as well

~_petroleuni

marketing

facilities

are considered

to

be petroleum

marketing firms.

“Pollution

incident” means emission, discharge,

release or escape

of

pollutants

into or upon land,

the atmosphere

or

any watercourse

or

body of water,

provided that such emission, discharge,

release

or

escape

results

in

“environmental

damage”.

The entirety

of any such

emission, discharge,

release

or escape

shall

be deemed

to

be one

“pollution

incident”.

“Pollutants” means

any solid,

liquid, gaseous

or thermal

irritant or contaminant,

including smoke, vapor,

soot,

fumes,

acids,

alkalis,

chemicals and waste.

“Waste”

includes

materials

to

be

recycled,

reconditioned

or

reclaimed.

The

term

“pollution incident” includes

an

“accidental

release” or

an

“occurrence”.

BOARD NOTE:

This

definition

is used

in the definition

of

“property

damage.

“Property damage” means

Physical

injury

to,

destruction

of

or

contamination

of

tangible

property,

including all

resulting

loss of use of that

property;

or

Loss

of use of tangible property that

is not physically injured,

destroyed

or contaminated, but has

been evacuated, withdrawn

from use or

rendered inaccessible

because of

a ‘~6llution

incident”.

This

term

does

not

include those

liabilities

which,

consi~ent

with

standard insurance industry practices,

are

excluded

from

~ver~g_

in

liability insurance policies

for property damage.

However, such

exclusions

for property damage

do

not

include corrective action

associated with releases

from tanks which

are covered

by the

policy.

BOARD NOTE:

Derived from 40 CFR

280.92,

as adopted

at

53 Fed. Reg.

98—185

---

-6-

43370, October

26, 1988, modified

to

insert the Insurance Services

Office definition.

“Provider of financial assurance” means

an entity that provides

financial

assurance to

an

owner

or operator

of

an underground storage

tank through one of the mechanisms

listed

in

Section 731.195 through

731.203, including a guarantor,

insurer,

risk retention group, surety

or issuer

of

a letter

of credit.

“Substantial

business relationship” means

that one business entity

has

an ownership onterest

in another.

“Tangible

net

worth”

means

the

tangible

assets

that

remain

after

deducting liabilities;

such assets

do

not

include

intangibles such

as

goodwill

and

rights

to patents

or royalties.

For purposes

of this

definition,

“assets” means

all

existing and

all

probable future

economic benefits obtained or controlled

by

a

particular entity

as

a

result

of past transactions.

“Unit

of

local

government”

is

as defined

in

the Illinois

Constitution, Art. VII, Section

1.

(Source:

Added

at

13 Ill. Reg.

,

effective

Section

731.193

Amount

and Scope of Required Financial Responsibility

a)

Owners

or operators of petroleum underground storage tanks

shall

demonstrate financial

responsibility for taking corrective action and

for compensating third

parties for bodily injury and property damage

caused

by

accidental

releases

arising

from

the

operation

of

petroleum

underground storage tanks

in

at least

the

following

per—occurrence

amounts:

1)

For

owners

or operators

of petroleum under~ound

storage

tanks

that

are

located

at petroleum marketing facilities, or that

handle

an average

of more than 10,000 gallons

of petroleum per

month

based

on annual

throughput

for the previous calendar

year:

$1 million.

2)

For

all

other owners

or operators of

petroleum underground

storage tanks:

$500,000.

b)

Owners

or operators of

petroleum

underground

storage

tanks

shall

demonstrate

financial responsibility for taking

corrective

action

and

for compensating third

parties

for bodily

injury and property damage

caused

by accidental

releases arising from the operation of petroleum

underground

storage

tanks

in

at

least

the

following

annual

ag~jate

amounts:

1)

For

owners

or operators

of

1

to

100 petroleum underground

storage tanks:

$1 million;

and

2)

For

owners

or

operators

of

101

or

more

petroleum

underground

storage tanks:

$2 million.

98—186

---

-7-

~

For the purposes of

subsections

(b)

and

(f)

only,

a

“petroleum

underground storage tank”

means

a single containment unit and does

not mean combinations

of single containment units.

4)

Except

as provided

in

subsection Ce),

if the owner

or operator

uses

separate mechanisms

or separate combinations

of mechanisms

to

demonstrate financial

responsibility

for:

1)

Taking

corrective action

2)

Compensating third

parties

for bodily

injury and property damage

caused

by sudden accidental

releases; or

3)

Compensating third parties

for bodily

injury and property damage

caused

by nonsudden accidental

releases, the amount

of

assurance

provided by each mechanism or combination

of mechanisms must

be

in the

full

amount specified

in

subsection

(a)

and

rb).

e)

If

an

owner

or operator uses separate mechanisms

or

separate

combinations

of mechanisms

to demonstrate financial

responsibility

for different petroleum underground

storage tanks,

the annual

aggregate

required must

be based

on the number

of

tanks covered

by

each such separate mechanism or combination

of mechanisms.

f)

Owners

or operators

shall

review the amount of aggregate assurance

provided whenever additional

petroleum underground storage

tanks

are

acquired or

installed.

If the

number

of petroleum underground

storage tanks

for which

assurance must

be provided exceeds

100, the

owner or

operator shall

demonstrate financial

responsibilty

in the

amount

of

at least

$2 million

of annual

aggregate assurance by the

first—occurring effective date anniversary

of any one

of the

mechanisms

combined

(other than

a financial

test or

guarantee) to

provide

assurance.

~gj

The

amounts

of assurance required under this Section exclude

legal

defense costs.

h)

The

required per—occurrence and

annual

aggregate coverage amounts

do

not

in

any way limit

the liability of the owner

or

operator.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section 731.194

Allowable Mechanisms and Combinations

Subject

to the limitations of subsections

(b) and

(c),

an owner

or

operator may use, any one or combination

of the mechanisms

listed

in

Sections 731.195 through 731.203_to demonstrate

financial

~~ponsibiTi ty

under

this

Subpart

for

one

or more underground

storage

tanks.

c)

An owner

or operator may

use self-insurance

in

combination

with

guarantee only

if,

for the purpose of meeting

the

requirements

of the

financial test under this Subpart,

the

financial

statements

of

the

98—187

---

-8-

owner or operator

are not consolidated with the financial

statements

of the

guarantor.

(Source:

Added

at

13

Ill. Reg.

,

effective

)

Section 731.195

Financial Test of Self-insurance

a)

An owner or operator,

or

guarantor, may satisfy the requirements

of

Section 731.193

by passing

a financial

test

as specified

in

this

Section.

To

pass

the

financial

test

of

self-insurance,

the

owner

or

operator,

or guarantor, shall

meet

the criteria of

subsection

(b)

or

(c)

based

on year—end financial

statements for the

latest completed

fiscal

year.

b)

Financial Test

1)

The owner

or operator,

or

guarantor,

shall

have

a

tangible net

worth

of

at

least ten times:

A)

The total

of the applicable aggregate amount

required

by

Section

731.193, based

on the number

of underground

storage

tanks

for which

a financial

test

is used to demonstrate

financial

responsibility for UST systems

to USEPA pursuant

to

40

CFR 280,

to the Fire Marshal pursuant to this Part

or

to

implementing agencies

of UST programs

in other

states

authorized

by USEPA pursuant

to

40 CFR 281

~

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 for hazardous

waste facilities

to USEPA pursuant

to

40 CFR

264 or

265,

to

the Agency pursuant to

35

Ill. Adm.

Code

724 or

725 or to

other state

agencies

authorized

by USEPA

to administer

hazardous waste programs pursuant to

40 CFR 271.

C)

The sum of current plugging and abandonment

cost estimates

for which

a financial

test

is used

to

demonstrate financial

responsibility for underground

injection wells

to USEPA

pursuant to 40 CFR

144,

to the Agency pursuant to

35

Ill.

Adm. Code 704,

to the Department

of Mines and Minerals

pursuant to

62

111.

Adm. Code 240 or

to other state

agencies authorized

to administer underground

injection

control programs pursuant

to

40 CFR

145.

2)

The

owner

or operator,

or guarantor,

shall

have

a tangible net

worth

of at,least $10 million.

3)

The

owner

or operator,

or

guarantor,

shall

have

a

letter signed

by the chief

financial officer worded

as specified

in

subsection

(d).

4)

The owner

or

operator,

or guarantor,

shall

either:

98—188

---

—9—

A)

File financial

statements

annually with the U.S. Securities

and Exchange Commission,

the Energy

Information

Administration or the Rural

Electrification Administration

or

fl

Report

annually the firm’s tangible net worth

to Dun and

Bradstreet,

and Dun and Bradstreet must have assigned

the

firm

a financial strength rating of 4A

or

5A.

5)

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)

RCRA Financial Test

1)

The owner

or operator,

or

guarantor

shall

meet

the

financial

test requirements

of

35 111. Adm. Code 724.247(f)(1)

substituting the appropriate amounts specified

in Section

731.193(b)(1) and

(b)(2) for

the

“amount

of liability coverage”

each time specified

in the Section.

2)

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.

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,

or guarantor,

shall

have

a

letter signed

by the chief

financial

officer, worded

as

specified

in

subsection

(d).

5)

If the

financial

statements

of

the owner

or operator, or

guarantor, are

not submitted annually to the U.S.

Securities and

Exchange Commission,

the Energy Information Administration or

the Rural

Electrification Administration,

the owner

or operator,

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 specifies

as

having been

derived from the latest year-end financial

statements

of

the

owner

or

operator,

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.

d)

The Board incorporates

by reference 40 CFR 280.95(d)

as adopted

at

53

Fed.

Reg. 43370,

October 26,

1988.

This Section incorporates

no

future editions

or amendments.

To demonstrate that

it meets

the

98—189

---

-10-

financial

test under subsection

(b) or

(c),

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 twelve-month period for which financial

statements used to

support the

financial

test are prepared,

a

letter worded exactly

as

provided

by

40 CFR 280.95(d), except that the instructions

in

brackets

are to

be replaced

by the

relevant information

and the

brackets

deleted.

~

If

an owner or operator using the test

to provide financial

assurance

finds

that the owner

or

operator 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 Fire Marshal

may require

reports

of financial condition

at

any

time from the owner

or operator,

or

guarantor.

If

the Fire Marshal

finds,

on the basis

of such reports

or other information,

that the

owner or operator, or guarantor,

no

longer

meets the

financial

test

requirements

of subsection

(b)

or

(c) and

(d), the owner or operator

shall

obtain

alternate coverage within

30 days after notification

of

such

a

finding.

~j

If the owner

or operator fails

to obtain alternate assurance within

150

days of

finding that the owner

or

operator no

longer meets the

requirements

of the financial

test based

on the year—end financial

statements,

or within

30 days

of notification

by the Fire Marshal

that the owner

or operator no longer meets

the requirements of the

financial

test, the

owner

or operator shall

notify the Fire ~iarshal

of such failure within

10 days.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section

731.195

Guarantee

a)

An owner

or

operator may satisfy the requirements

of

Section 731.193

by obtaining

a guarantee that conforms to the requirements

of this

Section.

The guarantor shall

have an ownership interest

in

the owner

or operator.

b)

Within

120 days after the close

of each financial reporting year the

guarantor shall

demonstrate that

it meets the financial

test criteria

of Section 731.195

based

on

year-end

financial

statements

for

the

latest

completed financial

reporting year

by

completing the letter

from the chief financial officer described

in Section

731.195(d~~nd

shall

deliver the

letter

to

the owner or operator.

If thg_9~rantor

fail

S

to meet the

req~iirements

of the financ i al

test attheon d

of

any

financial

reporting year, within

120 days

of the

end

of

thaL

financial

reporting

year

the

guarantor

shall

send

by

certified

mail,

before cancellation

or nonrenewal

of the

guarantee,

notice

to the

owner

or operator.

If the Fire Marshal

notifies

the guarantor

that

the guarantor no

lon9er meets

the requirements

of the

financial test

of Section 731.195(b)

or

(c)

and

(d),

the guarantor shall

notify the

98—190

---

—11—

owner

or operator within

10 days of

receiving such notification from

the Fire Marshal.

In both cases,

the guarantee will

terminate

no

less than 120 days after the date

the owner

or operator receives the

notification,

as evidenced by the

return receipt.

The owner

or

operator shall

obtain alternative coverage as

specified in Section

731.210(c).

~ç~jThe Board incorporates

by reference 40 CFR 280.96(c)

as

adopted

at

53

Fed.

Reg.

43370, October

26,

1988.

This Section

incorporates

no

future

editions

or

amendments.

The

guarantee

must

be

worded

as

provided

in

40 CFR

280.96(c),

except that instructions

in

brackets

are to

be

replaced with the relevant

information

and

the brackets

del eted.

d)

An

owner

or operator who uses

a

guarantee to

satisfy the requirements

of Section

731.193 shall

establish

a

standby

trust

fund

when

the

gqarantee

is

obtained.

Under

the

terms

of the guarantee,

all

amounts

paid

by the guarantor under the guarantee will

be deposited directly

into the standby trust

fund

in

accordance with instruction from the

Fire Marshal

under Section

731.208.

This standby_trust fund must

meet

the

requirements specified

in Section 731.203.

e)

Additional

requirements

for guarantors.

1)

The guarantor shall

have

a

registered agent

pursuant to Section

5.05 of the Business Corporation Act

of 1983

(Ill.

Rev.

Stat.

1987,

ch.

32,

par. 5.05 or Section 105.05

of the General Not-

for-profit Corporation Act

of

1986 (Ill.

Rev.

Stat.

1987,

ch.

32,

par. 105.05.

2)

The

guarantor shall

execute the guarantee

in Illinois.

The

guarantee shall

be

accompanied

by

a

letter signed

by the

~

that:

A)

The guarantee was

signed

in

Illinois

by an

authorized a9q~~

of the guarantor

B)

The guarantee

is

governed by

Illinois

law;

and,

C)

The name and address

of

the guarantor’s registered agent

for service

of

process.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section

731.197

Insurance

or Risk Retention Group Coverage

~

An

owner

or

operator

may

satisfy the requirements

of Section

731.193

this Section

from

a qualified

insurer

or

risk retention ~

Such

insurance must

be

in the

form of

a

separate insurance policy or

an

endorsement

to

an existing insurance policy.

b)

The

Board

incorporates

by

reference

40

CFR

280.97(b) as adopted

at

53

Fed.

Reg.

43370, October

26,

1988.

This Section

incorporates

no

98—19 1

---

—12—

future editions

or amendments.

Each insurance policy must

be amended

by an endorsement worded

as

specified

in 40 CFR 280.97(b)(1),

or

evidenced b~’ a certificate

of insurance worded

as

specified

in

40

CFR

280.97(b)(2), except that instructions

in brackets must be replaced

with the relevant information and

the brackets deleted.

c)

Each insurance policy must be issued

by

an

insurer

or

a

risk

retention group which

is

licensed by the Illinois Department

of

Insurance.

(Source:

Added

at

13 111.

Reg.

,

effective

)

Section

731.198

Surety Bond

a)

An owner

or operator may satisfy the

requirements of Section

731.193

by obtaining

a surety

bond that conforms to the requirements

of this

Section.

The surety

company issuing the

bond shall

be licensed

by

the Illinois Department

of Insurance.

b)

The

Board

incorporates

by

reference 40 CFR 280.98(b),

as adopted

at

53 Fed.

Reg.

43370, October 26,

1988.

This Section

incorporates

no

future editions

or amendments.

The

surety bond must be worded

as

provided

in

40 CFR 280.98(b),

except

that instructions

in

brackets

must

be

replaced with the

relevant information and the brackets

deleted.

c)

Under the

terms

of the

bond,

the surety will

become liable

on the

bond obligation when the owner

or operator fails

to perform as

guaranteed

by the bond.

In

all

cases,

the surety’s liability

is

limited

to the per-occurrence and annual

aggregate penal

sums.

d)

The owner

or operator who uses

a

surety bond to satisfy the

requirements

of Section

731.193 must establish

a

standby trust fund

when

the

surety

bond

is

acquired.

Under

the

terms

of

the

bond,

all

amounts

paid by the surety under the bond will

be deposited diectly

into the standby trust

fund

in

accordance with instructions

from the

Fire Marshal

under Section 731.208.

This standby trust

fund must

meet the

requirements

specified

in Section 731.203.

(Source:

Added

at

13

Ill.

Reg.

,

effective

)

Section 731.199

Letter

of Credit

a)

An owner

or

operator may satisfy

the requirements

of Section 731.193

by obtaining

an

irrevocable

standby

letter of credit that conforms to

the requirements

of this Section.

The issuing

institution

shall

be

an entity with ai~thorityto issue

letters

of credit

and whose letter

of credit

operations

are

regulated

by the

Illinois Commissioner of

Banks

and

Trust

Compani Cs.

b)

The Board

incorporates

by

reference 40 CFR 280.99(b)

as adopted

at

53

Fed. Reg. 43370, October 26,

1988.

This Section incorporates

no

future editions or

amendments.

The letter

of credit must be worded

as provided

in

40 CFR 280.99(b),

except that instructions

in

brackets

98—192

---

-13-

are to

be

replaced with teh relevant information

and the brackets

deleted.

~j

An

owner

or

operator

who

uses

a

letter

of

credit

to

satisfy

the

requirements

of Section 731.193 shall

also establish

a standby trust

fund when the letter

of credit

is acquired.

Under the terms

of the

letter

of credit,

all

amounts

paid pursuant to

a draft by the Fire

Marshal

shall

be deposited

by the issuing institution directly into

the standby trust

fund

in

accordance with instructions

from the Fire

Marshal

under Section 731.208.

This standby trust fund must meet

the

requirements

specified

in Section

731.203.

d)

The

letter of credit must be irrevocable with

a

term specified by the

issuing

institution.

The

letter

of credit must provide that credit

be automatically renewed

for the same term as the

original

term,

unless,

at

least 120 days before the current expiration

date,

the

issuing institution

notifies the owner

or operator by certified mail

of

its decision not to

renew the

letter

of credit.

Under the terms

of the letter

of credit,

the 120 days

will

begin

on the date when the

owner

or operator

receives

the notice,

as evidenced

by the return

receipt.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section 731.202

Trust Fund

a)

An owner

or

operator may satisfy the requirements

of Section 731.193

by establishing

a trust fund that conforms to the requirements

of

this Section.

The trustee

shall

be

an

entity which has authority to

act

as

trustee and whose trust

operations are regulated and examined

by the

Illinois Commissioner of Banks and Trust Companies,

or who

complies with

the Foreign Corporations as Fiduciaries Act.

(Ill.

Rev. Stat.

1987,

ch.

17,

par 2801 et

seq.)

b)

The wording of the trust

agreement must be identical

to

the wording

specified

in Section

731.2O3(b)(1),

and must be accompanied

by

a

formal

certification of acknowledgement

as

specified

in Section

731.203(b)(2).

In

addition, the

owner

or operator and trustee shall

agree

that Illinois

law

governs the trust.

c)

The trust

fund, when established, must be

funded

for the

full

required amount

of coverage,

or funded for part of the required

amount

of coverage and

used

in combination with other mechanisms

that

provide the remaining required coverage.

ci)

If the

value of the trust

fund

is

greater than the required amount

of

coverage, the owper

or

operator may

submit

a written

request

to the

Fire Marshal

for_release

of the_excess.

e)

If other financial

assurance

as

specified

in this Subpart

is

substituted for

all

or

part of the trust fund,

the owner

or operator

may submit

a written

request

to the Fire Marshal

for

release of the

excess.

98—193

---

-14-

fi

Within

60 days after receiving

a

request from the owner

or operator

Tbr release

of funds

as specified in subsection

(d) or

(e),

the Fire

Marshal

shall

instruct the trustee to release

to the owner

or

~peratorsuch funds

as the Fire Marshal

specifies in writing.

(Source:

Added at

13 Ill. Reg.

,

effective

Section 731.203

Standby Trust Fund

a)

An owner or operator using any one of

the machanisms authorized

by

Sections 731.196,

731.198 or 731.199 shall

establish a standby trust

fund when the mechanism

is

acquired.

The trustee

of the standby

trust

fund

shall

be

an

entity that has the authority to act

as

a

trustee

and whose trust operations

are regulated and examined by the

Illinois Commissioner of Banks

and Trust Companies,

or who complies

with the Foreign Corporations

as Fiduciaries Act.

(Ill.

Rev. Stat.

1987,

ch.

17,

par 2801 et

seq.)

b)

The Board

incorporates

by

reference 40 CFR 280.103(b)

as adopted

at

53 Fed. Reg.

43370, October

26,

1988.

This Section incorporates

no

future editions

or

amendments.

The standby trust

agreement must be

worded

as

provided

in

40 CFR 280.103(b),

except that instructions

in

brackets

are to

be

replaced with

the relevant information and the

brackets deleted.

In addition, the owner

or operator and trustee

shall

agree that Illinois law

governs

the

trust.

c)

The Fire Marshal

shall

instruct

the trustee to

refund

the balance of

the standby trust fund to the provider of financial

assurance if the

Fire Marshal

determines that no additional

corrective action costs

or

third-party

liability claims will occur

as

a

result

of

a

release

covered

by the financial

assurance mechanism for which the standby

trust fund was established.

d)

An

owner

or_pp

tor

may

establish

one

trust

fund

as

the

depository

mechanism for

all funJ~assuredin

compliance with this Subpart.

(Source:

Added

at

13

ill.

Reg.

,

effective

Section 731.204

Substitution of Mechanisms

a)

An owner

or

operator may substitute

any alternate financial

assurance

mechanisms

as

specified

in

this Subpart, provided that

at

all

times

the owner

or operator maintains

an effective financial

assurance

mechanism or combination

of mechanisms that satisfies the

requirements

of Section

731.193.

b)

After obtaining~Jternatefinancial assurance

as ~p~ecified

in this

Subpart,anowno

ror

operator

may

cancelafi

nancia

1

assurance

mechanism by providing not ~ceto the provider

of

financial

assurance.

(Source:

Added

at

13

Ill. Reg.

,

effective

)

Section

731.205

Cancellation

or Nonrenewal

by Provider

98—194

---

—15—

~j

Except

as

otherwise provided,

a provider of financial

assurance may

cancel

or

fail

to

renew an assurance mechanism by

sending

a notice

of

termination by certified mail

to the owner

or operator.

1)

Termination

of

a guarantee,

a surety bond

or

a letter of credit

must

not occur

until

120 days after the date

on which the owner

or operator receives the notice

of

termination

as evidenced by

the

return

receipt;

or

2)

Termination

of

insurance or

risk retention

group coverage must

not occur until

60 days after the date on which the owner

or

operator receives the notice

of termination,

as evidenced by the

return receipt.

b)

If

a provider of financial

responsibility cancels

or fails to

renew

for reasons

other

than incapacity

of the provider as specified

in

Section

731.206,

the

owner

or operator shall

obtain alternate

coverage

as

specified

in

this

Section

within

60 days after

receipt

of

the

notice

of termination.

If the owner or operator

fails to obtain

alternate coverage within

60 days after receipt

of the

notice of

termination, the owner or operator shall

notify the Fire Marshal

of

such failure

and

submit:

1)

The name and address

of the provider of financial assurance

2)

The effective date of termination;

and

3)

The evidence of the financial

assistance mechanism subject to

the termination maintained

in

accordance with Section

731.207(b).

(Source:

Added

at

13

Ill.

Reg.

,

effective

)

Section 731.206

Reporting

a)

An owner

or operator

shall

submit

the appropriate forms

listed

in

Section 731.207(b)

documenting current evidence of financial

responsibility to the Fire Marshal:

1)

Within

30 days after the owner

or operator identifies

a release

from an underground storage tank required

to

be reported under

Section 731.153

or 731.161

2)

If the owner

or operator fails

to obtain alternate coverage

as

required by this Subpart, within

30 days after the owner

or

operator receives

notice

of:

~J

fi

cement

ofavoiuntaryorinvoiuntarybankr~pt

proceeding

under

11

U.S.C.,

naiiing

a

provider

of

financial

assurance

as

a debtor,

B)

Suspension

or revocation

of the authority

of

a

provider of

financial assurance to

issue

a financial

assurance

mechani sm,

.8—195

---

—16-

ç~j

Failure of

a guarantor to meet

the requirements of the

financial

test,

D)

Other incapacity

of

a provider of

financial

assurance;

or

3)

As required by Section 731.195(g) and 731.205(b).

b)

An owner

or operator

shall

certify compliance with the

financial

responsibility requirements

of this Part

as specified

in the new tank

notification form when notifying the Fire Marshal

of the installation

of

a new underground storage tank under Section 731.122.

c)

The Fire Marshal

may require

an owner

or

operator to submit evidence

of

financial assurance as described in Section 731.207(b)

or other

information

relevant to compliance with this Subpart

at any time.

(Source:

Added

at

13

111. Reg.

,

effective

Section

731.207

Recordkeeping

a)

Owners

or operators shall

maintain evidence of

all

financial

assurance mechanisms used to

demonstrate

financial

responsibility

under this Subpart

for an underground

stora9e tank

until

release from

the

requirements

of

this Subpart under Section 731.209.

An owner

or

operator shall

maintain such evidence

at the underground storage tank

site or the owner’s

or operator’s place

of business.

Records

maintained off-site must be made available upon request

of the Fire

Marshal

b)

An

owner

or operator shall

maintain the following types

of evidence

of financial

responsibility:

1)

An owner

or

operator using

an assurance mechanism specified

in

Section 731.195 through

731.200 or

731.202 shall

maintain a copy

of the instrument worded

as

specified.

2)

An owner

or operator using

a financial test or

guarantee shall

maintain

a copy of the chief

financial officer’s

letter

based

on

year-end financial

statements

for the most recent completed

financial

reporting year.

Such evidence must

be

on file

no

later than

120 days after the close

of the financial

reporting

year.

3)

An

owner

or operator using

a guarantee,

surety bond or

letter

of

credit

shall

maintain

a c~ppyof the signed standby trust

fund

a~~and

copies

of any amendments

to the

agreement.

4)

An

owner

or ooer~torusin9

an insuran~’ olicy

or risk retention

group

coverage

shall

maintain

a

copy

of

the

signed

insurance

policy_or_risk_retention group coverage policy,

with

the

endorsement

or certificate

of insurance and any amendments

to

the agreements.

98—196

---

—17—

~j

The Board

incorporates by

reference 40 CFR 280.1O7(b)(6)

as

adopted

at

53 Fed. Reg. 43370, October 26, 1988.

This Section

incorporates

no future editions or

amendments.

An owner

or

operator using

an assurance mechanism specified in Section

731.195 through 731.202 shall

maintain an updated

copy of a

certification of

financial

responsibility worded

as

provided in

40 CFR 280.1O7(b)(6), except that instructions

in brackets

are

to

be replaced with the

relevant information and

the brackets

deleted.

The

owner or operator shall

update this certification

whenever

a financial

assurance mechanism used to demonstrate

financial

responsibility changes.

(Source:

Added

at

13

Ill.

Reg.

,

effective

)

Section

731.208

Drawing

on Financial Assurance

a)

The Fire Marshal

shall

require the

guarantor,

surety

or institution

issuing

a

letter

of credit

to place the

amount

of funds stipulated

by

the

Fire marshal

up

to the limit

of funds provided by the financial

assurance mechanism,

into the standby trust

if:

1)

Both:

A)

The owner

or operator fails

to establish alternate

financial

assurance within

60 days after receiving notice

of cancellation

of the guarantee,

surety bond,

letter of

credit

or

as

applicable, other

financial assurance

mechanism;

and

j~J

The Fire Marshal

determines

or suspects that

a release from

an underground

storage tank covered

by the mechanism has

occurred

and

so notifies

the owner

or operator or the owner

orooer-atoi’~~F~~ator

has notified ESDA pursuant to Sut~p~rtEof

a release

from an underground storage tank covered

by the

mechanism;

or

~j

The conditions

of subsections

(b)(1)

or

(b)(2)(A)

or

(8)

are

satisfied.

b)

The

Fire ~1arshal

shall

draw on

a standby trust fund when:

1)

The Fire Marshal

makes

a

final

determination that

a

release

has

occurred and immediate or

long-term corrective action

for the

release

is

needed,

and the owner

or operator, after

appropriate

notice

and opportunity

to

comply, has

not conducted corrective

action

as

required under Subpart

F;

or

2)

The

Fire Marshal

has

received either:

A)

Certification from the owner

or operator and third-party

liability claimant and from attorneys representing the

owner or operator and the third—party liability claimant

that

a third-party

liability claim should

be

paid.

The

Board

incorporates

by

reference 40 CFR 280.108(b)(2)(i)

as

98—197

---

-18-

adopted

at

53 Fed. Reg.

43370, October

26,

1988.

This

Section incorporates

no

future editions

or amendments.

The

certification must be worded

as

provided in

40 CFR

28O.1O8(b)(2)(i), except that instructions

in brackets

are

to

be replaced with the

relevant

information

and the

brackets deleted.

Or,

B)

A valid

final

court

order establishing

a judgment against

the owner or operator for bodily injury

or property damage

caused

by

an accidental

release from an

underground storage

tank covered by financial assurance

under this Subpart and

the Fire Marshal determines that

the owner or operator has

not satisfied the judgment.

C)

If the Fire Marshal determines

that the amount

of

corrective action costs

and third—party liability claims

eligible for payment under subsection

(b) may exceed

the

balance

of the standby trust fund

and the obligation

of the

provider of

financial assurance, the

first priority for

p~ymentmust

be corrective action

costs

necessary to

~

environment.

The Fire Marshal

shall

pay third-party

liability claims

in the order

in

which the Fire Marshal

receives certifications under

subsection

(b)(2)(A),

and valid court orders under

subsection

(b)(2)(B).

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section

731.209

Release

from

Financial

Assurance

Requirement

An owner

or operator

is

no longer required

to maintain financial

responsibility under this Subpart

for an underground storage tank after the

tank_has been properly closed

or,

if

corrective

action

is

required,

after

corrective

action

has

been

completed

and

the

tank

has

been

properly

closed

as

required by Subpart G.

(Source:

Added

at

13 Ill.

Reg.

,

effective

Section

731.210

Bankruptcy

or other Incapacity

a)

Within

10 days after commencement

of

a voluntary or involuntary

~p~eding

under

11

U.S.C.

(Bankruptcy), naming

an owner

or operator

as

debtor,

the owner

or operator shall

notify the Fire Marshal

by

certified

mail

of such commencement

and

submit

the appropriate forms

listed

in Section 731.207(b) documenting current financial

responsibility.

b)

Within

10

days after comencement

of

a voluntary or

invol untar~

proceedin~~rUU.S.C

(Bankruptcy),

naming

a yuarantoj~roviding

financial

assurance

as

debtor,

such

guarantor

shall

notify the owner

or operator

by certified mail

of such commencement

as

required under

the terms

of the~~n~especified

in Section 731.196.

c)

An owner

or

operator who obtains

financial

assurance by

a mechanism

98—198

---

-19-

other than

the financial test of self-insurance will

be deemed to

be

without the

required financial

assurance

in the event of

a bankruptcy

or incapacity

of

its provider of financial assurance,

or

a

suspension

or

revocation

of the authority of the provider of

financial

assurance

to issue

a guarantee,

insurance policy,

risk retention group coverage

policy,

surety bond or

letter of

credit.

The owner

or operator shall

obtain alternate

financial assurance as

specified

in this Subpart

within

30 days after receiving notice

of

such an event.

If the owner

or operator does not

obtain alternate coverage within

30 days after

such notification, the owner or operator shall

notify the Fire

Marshal.

(Source:

Added

at

13

Ill.

Reg.

,

effective

Section

731.211

Replenishment

a)

If

at

any time after

a standby trust

is

funded upon the instruction

of the

Fire Marshal

with

funds drawn from

a guarantee,

letter

of

credit

or surety bond,

and the amount

in the standby trust

is

reduced

below the

full

amount

of coverage required,

the owner

or

operator

shall

by the anniversary date

of the financial mechanism from which

the

funds were drawn:

1)

Replenish the value

of financial

assurance to equal

the full

amount

of coverage required,

or

2)

Acquire another financial

assurance mechanism for the amount

by

which funds

in the standby

trust have been reduced.

b)

For purposes of this Section,

the full

amount

of

coverage to

be

provided by Section

731.193.

If

a combination

of mechanisms was used

to provide the assurance funds which were drawn upon,

replenishment

must occur

by the earliest ~

(Source:

Added

at

13

Ill.

Reg.

,

effective

98—199

---

.

.

.