Background Action Taken Today Discussion United States Environmental Protection Agency Solid Waste and Emergency Response Washington, DC 20460 OS-420 (WF) EPA510-F-93-010 February 1993 Office of Underground Storage Tanks Environmental Fact Sheet Additional Mechanisms For Local Government Entities Owning Or Operating Petroleum Underground Storage Tanks: Final Rule Subtitle I of the Resource Conservation and Recovery Act (RCRA) requires owners and operators of underground storage tanks (USTs) to show through insurance coverage or other acceptable financial mechanisms that they can pay for cleanups and third-party damages resulting from any leaks that may occur. In the final regulations on financial responsibility that were published on October 26,1988, EPA stated that it would accept a variety of mechanisms as meeting this criteria. These mechanisms included a corporate test of self- insurance, a letter of credit, a surety bond, private insurance, and a guarantee. In the intervening years, the Agency has learned that many of these mecha- nisms (e.g., the corporate self-insurance test) are not appropriate for use by local governments. As a result of this new information, the Agency has developed this final rule to establish four alternate mechanisms that local governments may use to demonstrate compliance with the financial responsibil- ity regulations. Local governments that own or operate USTs were originally required to comply with the financial responsibility regulations by October 26,1990. The Agency later extended this compliance date to one year past publication of this final rule describing additional financial responsibility mechanisms for local governments. On February 18,1993, EPA promulgated additional assurance mechanisms for use by local government entities that own or operate petroleum underground storage tanks. These mechanisms will help local governments comply with the UST financial responsibility requirements and add to the mechanisms previ- ously identified in 53 FR 43322. The compliance date for local governments is February 18,1994. The additional mechanisms allowed are: Bond Rating Test - General purpose governments (e.g., cities, counties) with outstanding issues of general obligation bonds rated by Standard & Poor's or Moody's as "investment grade" will be allowed to self-insure. In addition, special districts (e.g., school districts, airport authorities) that do not have the authority to issue general obligation bonds may also self-insure if they have outstanding revenue bonds rated "investment grade." To be eligible to use the test, a local government must have $1 million or more in currently outstanding bonds. -over- ------- Rationale Contact Worksheet Test - A financial worksheet has been developed that recognizes the unique financial structure of government entities. Local governments can use readily available financial data to complete the worksheet anc culate a score. Governments with scores at or above a selected level will tx illowed to self-insure. Governmental Guarantee - A local government will be allowed to obtain a guarantee from its state or another local government with which it can demon- strate a "substantial governmental relationship." In order to serve as guarantor, a local government must qualify using the bond rating or worksheet test Fund Balance Test - Local governments may self-administer an UST response fund if appropriate safeguards are met Because several of the mechanisms contained in the original financial respon- sibility rule promulgated on October 26,1988 do not apply to local govern- ments (e.g., the corporate test for self-insurance), the Agency has developed a rule which addresses the unique financial characteristics of local governments, and which allows financially capable entities the opportunity to self-insure. For additional information, contact EPA's RCRA/Superfund Hotline, Monday through Friday, 8:30 a.m. to 7:30 p.m. EST. The national toll-free number is 800 424-9346; for the hearing impaired, the number is TDD 800 553-7672. ------- |