Federal Register / VoL 54. No. 216 /.Tharaday.  November 9.. 1989 / Rules and Regulations    47077
   Dated: November 3,1989.
 Lauro F. Cavazos,
 Secretary of Education.
 [FR Doc. 89-26383 Filed ll-*-89; 8:45 am]'
 BILLMM CODE 40MMn-M
 ENVIRONMENTAL PROTECTION
 AGENCY

 40CFRPAHT52           • .. .

 [FRL-3644-3 KY-057]

 Approval and Promulgation of
 Implementation Pians

 AGENCY: Environmental Protection
 Agency (EPA).
 ACTION: final rule.
  SUMMARY: Pursuant to procedures
  described at 54 FR 2214 (Janaary 18,
  1989). EPA recently approved a minor
  State Implementation Plan (SIP]
  revision. This notice identifies tiie
  revision EPA approved and incorporates
  the relevant material into the Code of
  Federal Regulations. Kentucky amended
  401KAR 50:015 to incorporate  by
  reference Supplement A to the
  Guidelines on Air Quality Models.
  These modeling procedures are used in
  processing prevention of significant
  deterioration permits.
  DATE This action will be effective
  November 9.1989.
  ADDRESSES: Copies of the material
  submitted by the State may be
  examined during normal business hours
  at the-following locations:
  Public Information Reference Unit.
   Environmental Protection Agency, 401
   M Street SW., Washington, DC 20460.
  Environmental Protection Agency,
   Region IV, Air Programs Branch. 345
   Courtiand Street NE., Atlanta.
   Georgia 03065.
  Natural Resources and Environmental'
   Protection Cabinet, Division for Air
   Quality, 18 Reilly Road, Frankfort
   Office Park, Frankfort, Kentucky
   40801.
  FOR FURTHER INFORMATION CONTACT:
  Richard Schutt of the EPA Region IV Air
  Program* Branch at the above address,
  telephone (404) 347-2884 or FTS 257-p
  2864..
  SUPPLEMENTARY INFORMATION: EPA
 Region IV has approved the following
 minor SIP revision request under section
 110(a) of the Clean Air Act (CAA):
StaSt
Kentucky 	
PoNutant
AH enter* PtrifatMt.. _.„,„..

Subf«ct,RMtMr
Suppfomtnt A to ttw GiirtaNnM tut
MrOut&r UodoM.

StvMirirta





March 23, 1989.
   EPA has determined that this SEP
 revision complies with all applicable
 requirements of the CAA and EPA
 policy and regulations concerning such
 revision*. Due to the minor nature of this
 revision, EPA concluded that conducting
 notice-and-comment rulemaking prior to
 approving the revision would have bees
 ^'unnecessary and contrary to the public
 interest," and hence was not required by
 the Administrative Procedure Act, 5
 U.S.C. section 553{b). This SIP approval
 became final and effective on the date
 of EPA approval as listed in the chart
 above.
   The Office of Management and Budget
 has exempted all SIP approvals from the
 requirements of section 3 of Executive
 Order 12291.
   Under 5 U.S.C 805(b). I certify that
 this SIP revision will not have a
 significant impact on a substantial
 number of small entities. See 46 FR 8709.
   Under section 307(b)(l) of the CAA, as
 amended, judicial review of this action
 is available only be filing a petition for
 review in the United States Court of
 Appeals for the appropriate circuit
 within 60 days of today. This action may
 not be challenged later in proceedings to
 enforce their requirements. See section
 307(b)(2).

 Ust of Subjects in 40 CFR Part 52
  Air pollution control. Carbon
 monoxide. Hydrocarbons, Incorporation
 by reference, Intergovernmental
relations. Lead, Nitrogen dioxide.
Particulate matter. Ozone and sulfur
oxide.
   Note: Incorporation by reference of the SIP
 for the Commonwealth of Kentucky WM
 approved by thr Director of the Federal
 Register on July 1,1962.
   Dated: August 25.1989.
 L»« A. DeHihn* HI,
 Acting Regional Administrator.

   Part 52 of chapter I, title 40, Code of  -
 Federal Regulations, is amended as
 follows:

 PART 52—{AMENDED]

 SubpartS—Kentucky

   1. The authority citation for part 52
 continues to read as follows:
   Authority; 42 UAC 7401-7B42.

   2. Section S2JS2O is amended by
 adding paragraph (c)(62) to read as
 follows:

 §52*20  Identification of plan.
,«":•»••'    >     •    -

   (C)  * **
   (82) Revision to Kentucky Regulation
 401 KAR 50:015, Documents
 incorporated by reference submitted on
 February 9,1989, by the Kentucky
 Natural Resources and Environmental
 Protection Cabinet Section 5(l)(a) was
 amended to incorporate by reference
 Supplement A to the Guideline on Air
 Quality Models (Revised), July 1987.
 Supplement A became effective
 Februarys, 1988. Section 12(4) was
 amended to reflect the current phone
 number for the Florence Regional Office.
 The revisions to 50&15 became state
 effective October 28,1988.
   (i) Incorporation by Reference.
   (A) Kentucky Regulation 401 KAR
 509015, Documents incorporated by
 reference. Section 12(4) was amended
 on October 28,1988.
   (B) Supplement A to the Guideline on
 Air Quality Models EPA-450/2-78-027R
 that became effective February 5,1988.
   (ii) Other material
   (A) Letter of February fl, 1989, from
 the Kentucky Natural Resources and
 Environmental Protection Cabinet
 [FR Doc. 89-28017 Tiled ll-ft-89: 8:45 am]
 BOXUM CODC «sao-«o-H
 40CFR Part 280

 [FRli-3877-4]

 Underground Storage Tanks
 Containing Petroleum; Financial
 Responsibility Requirements

 AGENCY: Environmental Protection
 Agency (EPA).
 ACTION: Interim final rule.

 SUMMARY: EPA is today publishing an
 interim final rule amending the financial
 responsibility requirements for
 underground storage tanks containing
 petroleum which appeared in the
 Federal Register on October 28,1988 [53
FR 43322). Specifically, EPA is
interpreting the required language of
endorsements to existing insurance
policies under 40 CFR 2C0.97(b)(l) and

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47078   Federal Register / VoL 54. No. 216  / Thursday. November 9. 1989  /  Rules and
certificates of insurance under 40 CFR
280.97(b)(2). The provisions interpreted
and amended include the requirement
that all endorsements and certificates
include a six-month extended reporting
period for claims-made policies and that
cancellations or terminations of
insurance by insurers will be effective
60 days aftsr written notice of such
termination is received by the insured.
The amendments nublished today will
bnng the financial responsibility
requirements into greater conformity
with insurance industry practices
concerning cancellation and extended
reporting and thus avoid possible
impacts on the  availability and
affordability of such insurance.
DATES: The amendments to 40 CFR part
280 contained in this rulemaking
published today were effective on
October 26,1989. EPA will accept
comments on today's rulemaking that
are submitted on  or before December 11.
1989,
ADDRESSES: Comments may be mailed
to the Docket Clerk (Docket No. UST-3),
Office of Underground Storage Tanks
(WH-582A), U.S. Environmental
Protection Agency, 401M Street SW.,
Washington, DC 20460. Comments
received by EPA. and all references
used in this document, may be inspected
in the public docket, located in Room
LG—100, U.S. Environmental Protection
Agency, 401M Street SW., Washington,
DC 20460, from ftOO a jn. to 4:00 p jn.,
Monday through Friday, excluding
Federal holidays.
FOR RiaTHEH INFORMATION CONTACT:
The RCRA/Superfund Hotline at (800)
424-3346 (toll free) or (202) 382-3000 hi .
Washington, DC.
SUPPLEMENTARY INFORMATION: On
October 25,1988, EPA promulgated
financial responsibility requirements
applicable to owners and operators of
underground storage tanks containing
petroleum (53 FR 43322). The final rules
permitted the owner or operator of a
petroleum underground storage tank to
satisfy'the requirements by obtaining
liability insurance from a qualified ,
insurer or risk retention group.
   Section 280.97 of the rules specified.
certain coverage  terms that must be
included in any new insurance policy or
in any endorsement to an existing
insurance policy. Except for limited
opportunities to supply information'
regarding the parties to the contract,
addresses, types  of tanks, the scope of
coverage, and so forth, the insurer and
insured are not allowed to vary the
language of the policy or the
endorsement. Language in the
endorsement and certificate of
insurance found in § 280.97(b) require
 that the insurer attest to the fact that the
 language of the endorsement and
 certificate of insurance is identical to,
 the form specified hi the' regulations.
 The Agency believes that the
 requirement of uniform language would
 ensure the availability of insurance to
 cover corrective action or third psirty
 damage payments.                '
   Through meetings with insurers and
 segments of the regulated community,
 EPA has subsequently learned of the
 prevalence of certain interpretations of
 the required language of the certificate
 of insurance and endorsement not
 intended by EPA. EPA has received
 information indicating that insurers are
 reluctant to issue policies or to enter the
 underground storage tank insurance
 market so long as these interpretations
 are not refuted by EPA. Thus EPA is
 today setting forth its intended
 interpretations of the required language
 of the certificate of insurance and the
 endorsement as well as amending the
 certificate and endorsement to require
 that insurers use alternative language
 that more explicitly reflects the intended
 meaning of these provisions. EPA is not
 changing the requirements that the
 language of all endorsements and,
 certificates of insurance be identical to
 that language found in the regulations.
 Instead, EPA is changing the exact
 nature of that mandatory identical
 language in accordance with the 'wishes
 of insurers and insureds.
   EPA is not soliciting comments prior
 to the effective date of today's
 rulemaking. Under section 3(b) of the  -
 Administrative Procedures Act S U.S.C.
 553(b), the Agency may for good cause
 or where the rule is interpretative!, omit
• notice and comment procedures. The
 Agency believes that it has good cause
 to omit notice and comment prior to the
 effective date of today's technical
 amendments. First with the exception of
 changes to S § 280.97(b)(l)(d),
 280.S7(b)(2)(d) and 280.105(a)(2), the
 Agency believes that notice and
 comment are unnecessary due to the
 non-substantive nature of the changes.
 These changes do not impose new.
• substantive standards upon the
 regulated community, but rather require
 only that insurers substitute in future   . •
 endorsements and certificates of
 insurance language that more carefully
 reflects the  intended meaning of the
 currently required provisions.
   Second, the Agency believes that it is
 in the public interest to omit notice and
 comment procedures with respect to all
. of the regulatory amendments made .
 today, including those to
 55 280.97(b)(l)(d), 280.97(b)(2)(d) and
 280.97(b)(2)(e), which govern
 termination due to non-payment of
premium. The Agency has received
information to the effect that these
amendments may increase the
availability of insurance policies to
owners and operators of 100-999 tanks
required to comply with the financial
responsibility rule by October 26,1989,
as required by 40 CFR 280.91(b). At the
same time, the Agency has received
information that greater availability of
insurance-may ease the burden of
compliance with the financial
responsibility requirements among those
owners and operators subject to' the
October 26,1989, deadline. Finally, the
information referred to was received too
late to prepare and publish regulatory
changes in response to this information
before today. Thus the Agency has
concluded that due to the delays
involved hi such procedures, providing
notice and comment on these
amendments is contrary to the public
interest The delays consequent to
soliciting and responding to public
comments are likely to prevent these
amendments from becoming effective hi
time for insurers entering the
underground storage tank insurance
market because of these amendments to
prepare policies and for owners and
operators to obtain these new policies
by the October 26,1989, deadline.
  However, the Agency is soliciting
comment on today's regulatory
amendments. Comments may be
submitted on-or before December 11,
1989. Comments will be considered by
the Agency and, if necessary, the
Agency will issue a final rule changing
today's amendments to respond to these
comments. •
  The amendments to 40 CFR part 280
contained in today's rulemaking and
effective today apply only to those
insurance policies, endorsements and
certificates of insurance that are issued
or renewed after today's date. Thus
policies, endorsements and certificates
of insurance-that were issued prior to
today's date and in compliance with 40
CFR part 280 as written prior to today's
rule will continue to be valid until such
time as they are cancelled or
terminated, or must be renewed.

L Authority
  •These regulations are issued under the
authority of sections 2002, 9001, 9002,
9003, 9004, 9005, 9006, 9007, and 9009 of
the Solid Waste Disposal Act as
amended. The principal  amendments to
this Act have been under the Resource
Conservation and Recovery Act of 1976,
the Hazardous and Solid Waste
Amendments of 1984 (Pub. L. 98-616)
and the Superfund Amendments and
Reauthorization Act of 1986 (Pub. L. 99-

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           Federal  Register / Vol. 54, No. 216  /  Thursday, November 9, 1989 /Rules and Regulations    47079
  499) (42 U.S.C. 6921. 6991, 6991(a),
  6991(b) 6991(c), 6991(d). 8991(e), 6991(f),
  and6991(h)).

  n. Background                    •

  A. Six-month Extended Reporting
  Requh-ement for Claims-Made Policies
   Mandatory language in the
  endorsement and certificate of
  insurance requires that a claims-made
  insurance contract cover claims for any
 .occurrence that commenced during the
  term of the policy and that is discovered
  and reported to the insurer within six
  months of the effective date of the  -
  cancellation or other termination of the
  policy. The language of 40 CFR 2B0.97(b),
  Endorsement paragraph 2.e; S  280.97(b),
  Certification paragraph 2-e. reads: "The
  insurance covers claims for any
  occurrence that commenced during the
  term of the policy that is discovered and
  reported to the ['Insurer' or 'Group']
  within six months of the effective date
  of the cancellation or termination of the
  policy.]" This provision was meant to
'  address concerns that a claims-made
 policy might leave a gap in coverage, if,
  for example, a claim is reported after the
  expiration of a policy for a release that
 began prior to the policy expiration
 date. Such claims might not be covered
 by the usual claims-made policy that is
 issued in the insurance industry. This is
 discussed in the preamble to the
 October 26,1988, final rule. 53  FR 43350-
 51.       .
   Through discussions with      -
 representatives of the insurance
 industry, however, EPA has learned that
 the industry generally interprets EPA's
 extended reporting period provision to •
 require that every claims-made policy
 issued, regardless of what retroactive
 date is incorporated, contain an
 extended reporting period. Because
 charging a fee for the extended reporting
 period is a widespread practice within
 the industry, this interpretation has
 caused insurance companies to routinely
 request payment for the extended
 reporting period at the start of  the policy
 period. Due to a reluctance on  the part
 of insured* to pay for this coverage at
 the beginning of a policy period when
 they expect to renew their policy or
 otherwise purchase a new policy with
 the same retroactive; date as their prior
 policy, this interpretation is apparently
 impinging upon the availability of UST
 insurance.
   As explained below; however, this
 prevalent interpretation of the extended
 reporting period is not intended by the
 Agency, and is in fact unnecessary to
 the protection of human health and the
 environment EPA intends that insurers
 provide extended reporting period
 coverage only where the termination or
 non-renewal of the policy results in the
 owner or operator having no coverage
 for releases that occurred during the
 time period of the previous policy and
 which are reported within six months
 after the termination or non-renewal of
 that policy. For discussion purposes,
 EPA .has labelled this predicament as a
 "gap" in coverage. Because a "gap" in '
 coverage-will not always exist at the
 termination or other non-renewal of
 every insurance policy, interpreting the
 EPA regulation to require every
 insurance policy to have an extended
 reporting period results in the provision
 of unnecessary coverage and,
 considering Jhe industry's standard fee
 practice, an unnecessary restraint upon
 die availability of UST insurance. For
 instance, a "gap" in coverage will not
 normally occur where ah existing policy
 is renewed. According to standard
 insurance industry practice, a renewed
 policy incorporates the retroactive  date.
 of the previous policy. Thus should the
 insured who renews his policy report a
. release that occurred during tide time
 period of the previous policy, the release
 would be covered by the renewed
 policy. It may also be true that no "gap"
 will exist even when the insured
 purchases a new policy from a different
 insurance company. Many companies
 will incorporate the retroactive date of
 the insured's previous policy (as  well as
 the same type of insurance coverage as
 provided by the previous policy)  for   ;
 releases that are reported during the
 time period of the new policy but which
 occurred during the time of the previous
 policy. Here, as in the case of renewed
 policies, die requirement to obtain an
 extended reporting period at the  end of
 the first policy period would not be of
 any benefit to human health and the -
 environment since the new policy
 provides the same coverage as that
 provided by the extended reporting
 period.             -
   EPA .believes that there are only two
 situations where the termination  of a
 policy results in a "gap" in coverage and
 thus only two situations where die
 insured whose policy is terminated must
 obtain extended reporting period
 coverage. The first situation occurs
 where the insured renews his existing
 policy or purchases a new policy and
 the renewed or new policy contains a
 retroactive date subsequent to the
 retroactive date of the insured's
 previous insurance policy. The second
 situation occurs where the policy is
 terminated or is otherwise not renewed
 and the insured elects a financial
 assurance mechanism other than
 insurance (such as a guarantee, surety
 bond, etc.) as a replacement EPA is
 today promulgating revised language to
 clarify EPA's intended interpretation of
 paragraph 2.e. of the Endorsement
 contained in 5 280.97(b)(l) and of
 paragraph 2.e. of the Certification
- contained in § 280.97(b}(2).
.   In addition, EPA is also revising the
 language of these two paragraphs to
 state explicitly what it had previously
 believed to be self-evident: that claims
 reported to the insurer during the six-
 month reporting period are subject to all
 of the terms, limits and conditions that
 existed during the'policy period that it
 modifies. Because die Agency has
 received questions on this matter since
 promulgating, die October 26,1988, rule,
 the Agency decided to add clarifying
 language on this point in addition to the
 more important changes to S 280.97(b)
 described above.
   The language of paragraph 2.e. of the
 Endorsement and Certification in
 S 280.97(b) now reads:    ,
   The insurance coven claims otherwise  •
 covered by the policy that are reported to the
 ["Insurer" or "Group"] within six months of
 the effective date of cancellation or non-
 renewal of the policy except where the new
 or renewed policy has the same retroactive
 date or a retroactive date earlier than that of
 the prior policy, and which arise but of any
 covered occurrence that commenced after the
policy retroactive date, if applicable, and
.prior to such policy renewal or termination
date. Claims reported during such extended
reporting period are subject to the terms.
conditions, limits, including limits of liability,
and exclusion* of the policy.

   Because EPA expects that these
regulatory changes will result in owners
and operators purchasing extended •
reporting period coverage, where
needed, at die end, rather than the
beginning of tiieir policy period, EPA
wishes to clarify exactly when such
coverage must be obtained for
compliance purposes. Where extended
'reporting period coverage is necessary,
such coverage must be obtained before
the time and date of die expiration of
the prior policy;
   A related issue raised by insurers
concerns die possibility of double
coverage-through an expansive
interpretation of what constitutes
"termination" of the claims-made policy
under^i 280.97(b)(l) Endorsement
paragraph fe), and § 28Q.97(bl(2)
Certification paragraph (e),—the act that
triggers the six-month extended
reporting requirement discussed above.
For example,  under some  state
insurance laws, .the mere addition or
deletion of retail outlets from a
company's insurance policy may
constitute a "termination" of die policy.

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 47080
Federal Register  / Vol. 54. No. 216 / Thursday. November 9, 1989  /  Rules and Regulations
 Such a change would not constitute a
 "termination" under EPA's
 interpretation of that term. EPA
 interprets "termination" to encompass
 only those changes that could result in a
 gap in coverage as where .the insured
 has not obtained substitute coverage or
 haa obtained substitute coverage with a
 different retroactive date than the
 retroactive date of the original pokey.
  Finally, the Agency wishes to clarify
 its position witn respect to the current
 insurance industry practice of charging
 insureds for the six month extended
 reporting period. EPA's regulations
 require that owners and operators
 obtain a six-month extended reporting
 period whenever a gap in their
 insurance coverage may exist EPA's
 regulations go to owners and operators
 and not to those providing the insurance
 required under the rules. Therefore,
 whether insurers choose to provide the
 extended reporting period to insureds
 only for an additional cost is of no
 concern to the Agency with respect to
 compliance with the financial
 responsibility requirements. Insurers are
 free to provide the extended reporting
 period only for an additional cost;
 however, insureds who fail to obtain
 •uch coverage due to non-payment of
 this added cost will be out of
 compliance with EPA's financial
 responsibility requirements.
B. Sixty Days Required Coverage
Following Cancellation or Termination
by Insurer
  Mandatory language in the
 endorsement and certificate of
 insurance requires that cancellation or
 any other termination of the insurance
 by the insurer will be effective only
 upon written notice and only after
 expiration of 60 days after written  	
notice is received by the insured. 40 CFR
280.97(b](l) Endorsement paragraph d
 and 280.97(b)(2) Certification paragraph
 d. A-separate provision of the
regulations restates this requirement for
 cancellation of insurance. 40 CFR
280.105(a)(2). Additionally, the insurer
must provide a six-month extended
reporting period following cancellation.
These provisions were meant to ensure
 that an owner or operator whose
 insurance was cancelled or terminated
would have sufficient time to obtain an
 alternative assurance mechanism,
 thereby avoiding eny unacceptable gaps
 in coverage. These provisions did not
 distinguish between the effective date of
 cancellation where the cancellation was
 due to non-payment of premium or
misrepresentation as opposed to
cancellation for any other cause.
  Subsequent discunioas with insurers
and segments of the regulated
                             community that are seeking insurance
                             have persuaded the Agency that the
                             provision for extended coverage fcir
                             sixty days following cancellation of
                             coverage for non-payment of premium or
                             misrepresentation is reducing the
                             availability of insurance. The Agency
                             has received indications that some
                             insurers have decided against entering
                             the market because of concerns that
                             they might be forced to pay claims
                             without ever having received any
                             premiums or where the insured hais
                             made a misrepresentation. The Agency
                             has also been informed that other
                             insurers have increased premiums to
                             protect against situations in which the
                             insurer would have to pay for losses for
                             which it has never collected a premium.
                               EPA is today amending the language
                             of S 280.97(b)(l) Endorsement paragraph
                             d, §.280.97fb)(2) Certification paragraph
                             d and § 280.10S(a)(2) to allow  an insurer
                             to terminate an insurance contract for
                             non-payment of premium or
                             misrepresentation by the insured after a
                             10 day notice period. EPA does not;
                             intend for this shortening of the
                             coverage period from 60 to 10  dayi to
                             apply to termination for any reason
                             other than non-payment of premium or
                             misrepresentation. The Agency is uware
                             that some state insurance laws mandate
                             a longer notice period following
                             cancellation. In order to accomnuxlate
                             these state-specific situations, the
                             amended language of 5 28O57{b)(l|
                             Endorsement paragraph d. S 280.97'(b)(2)
                             Certification paragraph d and
                             5 2S0.105(a)(2j specifies that the
                             mandatory coverage period following
                             termination for non-payment of pntmium
                             or misrepresentation shall be a
                             "minimum of 10 days." The insurer it
                             still bound to provide the owner or
                             operator with written notice of
                             cancellation with the 10 day period
                             beginning upon receipt of notice by the
                             owner or operator.
                               When the final rule was promulgated,
                             the Agency believed that a 60-day
                             cancellation coverage period was
                             •necessary to allow the insured owner or
                             operator to. obtain an alternative
                             assurance mechanism, and thus avoid
                             any unacceptable gap in coverage. The
                             Agency thought that this requirement
                             would not have a serious impact oil   .
                             insurance providers since insurers could
                             protect themselves by establishing an
                             appropriate schedule of premium
                             payment For example, insurers could
                             require payment 90 days before the
                            . expiration date of coverage for
                             maintenance or renewal of the policy.
                             The insurer could then terminate tine
                             policy with 00 days notice if an insiured
does not meet the schedule of payment
within 30 days of the premium due date.
  Subsequently, the Agency has come to
a better understanding of the economic
impact on insurers of not allowing more
than a 10-day cancellation period for
non-payment of premium or
misrepresentation. Insurers currently
covering USTs have found restructuring
premium payment schedules to be costly
and impractical primarily because the
practice is a major departure from
existing industry practices. An
important consequence of the 60-day
cancellation requirement for non-
payment of premium or
misrepresentation has been the
deterrence of new insurers from entering
the UST market
  Although the Agency continues to be
concerned about the adequacy of the 10-
day cancellation in terms of finding
alternative financial assurance after
cancellation for non-payment EPA does
not want this requirement to have an
impact on the availability and
affordability of UST insurance. The
Agency believes that today's
amendment will bring the financial
responsibility requirements into greater
conformity with insurance industry
practices concerning cancellation and
thus avoid possible impacts upon the
availability and affordability of such
insurance. Generally, EPA believes that
the insurance industry should be paid
for bearing the risks of corrective action
and third-party liability costs. In the
cases of non-payment the industry is
unfairly undertaking risks without
rightful compensation. For those
insurers resisting entry into the market
the threat of insuring risks without ever
receiving any premium is apparently a
serious concern. Thus, today's change
should remove a serious obstacle to the
supply of insurance to owners and
operators of underground storage tanks.
  The Agency is not amending the
requirement for a six-month extended
reporting period following cancellation
for non-payment of premium or
misrepresentation. As noted in the
previous section, the Agency believes
that such a reporting period must be
mandatory for all claims-made
insurance contracts used to demonstrate
financial assurance, regardless of the
reason for termination. The six-month
extended reporting period is essential to
avoiding gaps in coverage that could
threaten human health and environment
especially in.cases where the owner or
operator .may have as few as 10 days
upon receipt of notice of cancellation to
obtain substitute coverage. The
distinction between the two provisions,
extended reporting period and the

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           Federal Register / Vol. 54. No.  216 / Thursday. November  9. 1989 / Rules and Regulations
                                                                       47081
  effective date of cancellation, is that
  even if a policy is cancelled for non-
  payment of premium, the extended
  reporting period merely extends tha time
  during which an insured may report
  occurrences covered by the policy for
  which he or she has already paid. Thus
  the extended reporting provision does
  not provide the- insured with a benefit
  for which he or she has not paid. In
  contrast, any delay in the effective date
  of a policy cancellation or termination
  due to regulatory requirements provides
  insureds who failed to pay their
  premiums coverage for which they have
  not paid.

  C. Other Regulatory Changes  ,   -
   Today's action makes three other
  regulatory changes hi the requirements
  for the language in the endorsement and
  certificate of insurance. As noted above,
  EPA is not changing the requirement
  that the language of all endorsements
  and certificates of insurance be identical
  to that language found in the
 regulations. Instead, EPA is changing the
 mandatory language itself to meet the
 needs of insurers -and insureds.
   While insurance policies issued in
 connection with the financial
, responsibility requirements must be
 amended by attaching the endorsement
 or evidenced by the certificate of
 insurance, the endorsement and
 certificate do not stand apart from the
 insurance policy. Some insurers were
 concerned that the existing mandatory
 language did not allow the parties to
 make the relationship between the
 scope of the policy and the requirements
 of the certificate and endorsement clear.
 The first two technical amendments
 made today are intended to make that
 connection.
   First the phrase "in accordance with
 the subject to the limits of liability,
 exclusions, conditions, and other terms,
 of the policy" is being added to the first
paragraph of both the  endorsement and
certification after the explanation of
what the endorsement and certificate
provide to clarify that these instruments
do not narrow or broaden the scope of
coverage provided in the policy itself.
This correction also brings the required
regulatory language into conformity with
standard UST insurance industry
practices. The amendment should
reduce any confusion on- the part of
insureds concerning the coverage they
are purchasing and also mi
insurers' concerns about potential
conflicts with insureds over the scope of
coverage. The second phrase, "which
are subject to a separate limit under the
policy," is inserted in the language of the
certificate and endorsement to modify
the phrase "exclusive of legal defense
costs" in paragraph 1 of the
  endorsement and certification where the
  limits of liability found in the policy are
  discussed. While the language of the
  endorsement and the certification
  prevent the insurer from describing any
  existing limits upon legal defense costs,
  EPA did not intend to indicate that such
  limitations are not allowable or that
  such limitations that may be present in
  .the policy are not valid. The Agency
  does not want the mandatory language
  concerning legal defense costs to
  inerfere with the parties' understanding
  of the policy itself. Third, the phrase
  "after the policy retroactive date" is
  being added to specify the beginning of
  the period when occurrences are
  covered under the policy. It is common
  for insurers to establish such a date in a
  policy and use that date to determine
  when to divide coverage between
  policies when a second policy is coming
  into effect. Each of the above phrases
  being added conform to standard UST
  insurance industry usage and are not  •
  intended to change the requirements for
  the certificate and endorsement These
  technical changes are effective
 immediately.

 List of Subjects in 40 CFR Part 280

   Administrative practice and
 procedure, Environmental protection,
 Hazardous materials insurance. Surety •
 bonds. Underground storage tanks.
   Dated: October 28,1989.
 Jonathan g. Cannon.
 Acting Assistant Administrator, Office of
 Solid Waste and Emergency Response.
   Accordingly, title 40 of the Code of
 Federal Regulations is amended as set
 forth below.

 PART 280—TECHNICAL STANDARDS
 AND CORRECTIVE ACTION
 REQUIREMENTS FOR OWNERS AND
 OPERATORS OF UNDERGROUND
 STORAGETANKS

   1. The  authority citation for part 280
 continues to read as follows:
  Authority: 42 U.S.C. 6912. 6991, 6S91(a),
 6991(b), 6891{o). 6991(d), 8991(e}, 8991(f), and
 9991(h).

   2. Section 280.92 is amended to add
 the following new definition:

 § 280.92  Definition of terms.
  (o) Termination under 5 280.97(b)(l]
and 5 280.97(b)(2) means only those
changes that could result in a gap in.
coverage as where the insured has-not-
obtained substitute coverage or has
obtained substitute coverage with a
different retroactive date than the
retroactive date of the original policy.
  S 230.97  [Amended]
    3. In | 280.97(b)(l), under
  "Endorsement", the first paragraph of 1.
 : is amended by removing " 'accidental
  releases'; if' and adding " 'accidental
  release'; in accordance with and subject
  to the limits of liability, exclusions,
  conditions, and other terms of the policy;

    4. In 5 280.97[b](l). under
  "Endorsement.-", in the second
  paragraph of J., after "exclusive of legal
  defense costs." insert ", which are
  subject to a separate limit under the
  policy."
   5. In S  26U97(b)(l}. under
  "Endorsement", in paragraph 2.d^ after
  "['Insurer' or 'Group']" insert ", except
  for non-payment of premium or
  misrepresentation by the insured,"
   6. In § 280.97(b)(l), under
  "Endorsement-", -in paragraph 2.dM after
  "received by the insured." insert
  "Cancellation for non-payment of
  premium or misrepresentation by the
  insured will be effective only upon
  written notice and only after expiration
  of a minimum of 10 days after a copy of
  such written notice is received by the
 insured."
   7. In, § 2SO.fl7(b}(l), under
 "Endorsement", the first paragraph of
 2.e., ia revised to read as follows:
   e. The insurance coven claims otherwise
 covered by the policy that are reported to the
 ["Insurer" or "Group"] within six months of
 the effective date of cancellation or. non-
 renewal of the policy except where the new
 or renewed policy has .the same retroactive
 date or a retroactive date earlier than that of
 the prior policy, and which arise out of any
 covered occurrence that commenced after the
 policy retroactive date, if applicable, and
 prior to such policy renewal or termination
 date. Claims reported during such extended
 reporting period are subject to the terms,
 conditions, limits, including limits of liability,
 and exclusions of the policy.]
 *    »••    *

   a In § 280.97(bX2), under
 "Certification:", the first paragraph of 1..
 removing " 'accidental releases'; if" and
 adding " 'accidental releases'; in
 accordance with and subject to the
 limits of liability, exclusions, conditions.
 and other terms of the-policy; if.
  9. In § 280.97(b)(2),  under
 "Certification?', in the second paragraph
 of 1., after "exclusive of legal defense
 costs." insert ", which are subject to a
 separate limit under the policy."
  10. In $ 280.97(b)(2), under
 ''Certification?', in paragraph 2.d»
 "['Insurer* or 'Group']" insert ", except
for non-payment of premium or
misrepresentation by  the insured.".
  11. In S 280.97(b)(2), under
"Certification.-", in paragraph 2.d.. after

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 47082   Federal Register / Vol. 54. No. 216 / Thursday, November 9, 1988 / Rules and  Regulations
 "received by the insured." insert
 "Cancellation for non-payment of
 premium or misrepresentation by the
 insured will be effective only upon
 written notice and only after expiration
 of a minimum of 10 days after a copy of
 such written notice is received by the
 insured."
  12. In 5  280.97(b)(2), under
 "Certification:", the first paragraph of
 2.e.. is revised to read as follows:
   2. * * *
   e. The Insurance covers claims otherwise
 covered by the policy that are reported to the
 ["Insurer" or "Croup"] within six months of'
 the effective date of cancellation or non-
 renewal of the policy except where the new
 or renewed policy has th« same retroactive
 date or a retroactive date earlier than that of
 the prior policy, and which arise out of any
 covered occurrence that commenced after the
 policy retroactive date. If applicable,-and
 prior to such policy renewal or termination
•date. Claims reported during such extended
 reporting period are subject to the .terms,
 conditions, limits, including limits of liability,
 and exclusions of mi policy.]
   13. Section 280.105 is amended by
 revising paragraph fa)(2) to read as
 follows:
 $ 280.105  Cancellation or nomvnewai by a
 provider of financial a**uranc*.
ACTION: Final rule.
   (a) • • *
   (2) Termination of insurance or risk
 retention group coverage, except for
 non-payment or misrepresentation by
 the insured, or state-funded assurance
 may 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
 Termination for non-payment of
 premium or misrepresentation by the
 insured may not occur until a minimum
 of 10 days after the date on which the
 owner or operator receives the notice of
 termination, as evidenced by the return
 receipt
 [FR Doc. 83-281M Filed ll-S-«9;*45 am]
 •4UJWO CODE M*0-«0-»l


 40 CFR Part 799

 [OPTS-42108; FRL 3682-7]
 RIN 2070-AB07

 Testing Consent Order on
 Crotonaldehyde

 AGENCY: Environmental Protection
 Agency (EPA).
SUMMARY: This document announce:;
that EPA has.signed an enforceable
testing Consent Order with Eastman
Kodak Company (Kodak). Kodak has
agreed to perform certain chemical fate
and environmental effects  tests on
crotonaldehyde (CAS No. 4170-30-3).
Kodak may also perform a monitoring
study for crotonaldehyde, as described
in this notice and detailed  in the Order.
This action, in response to the Toxic
Substances Control Act (TSCA)
Interagency Testing Committee's (ITC's)
designation of crotonaldehyde for
testing consideration, adds
crotonaldehyde to the list of testing
Consent Orders in 40 CFR  799.5000 for
which the export notification
requirements of 40 CFR part 707 apply.
EFFECTIVE DATE: November 8,1989.
FOR FURTHER INFORMATION CONTACT:
Michael M. StahL Director,
Environmental Assistance Division |TS-
799), Office of Toxic Substances, Rm.
EB-44,401M St, SW., Washington, DC
20460, (202) 554-1404, TDD (202) 554-
0551.
SUPPLEMENTARY INFORMATION: Under
.procedures described in 40 CFR par): 790,
Kodak has entered into a testing
Consent Order with EPA in which
Kodak has agreed to perform certain
chemical fate and environmental effects
tests for crotonaldehyde. This rule
amends 40 CFR 799.5000 by adding
crotonaldehyde to the list of chemical
substances and-mkctnres subject to
testing Consent Orders.           '

LITC Recommendation
  In its twenty-second Report to EPA,
published in the Federal Register of
May 20.1988 (53 FR 18196), the
Interagency Testing Committee (TTG)
recommended with intent- to-designate '
that crotonaldehyde be considered for
environmental effects and chemical fate
testing, tile recommended .environniisntal
effects testing was acute tcoddry to
algae, fish, and aquatic invertebrates.
Recommended chemical fate testing was
volatilization rate from water and
aerobic aquatic biodegradation.
  EPA responded to the ITCs
designation of crotonaldehyde by
holding a public focus meeting on June
17,1938, announcing that it would
pursue testing for crotonaldehyde, either
by a TSCA section 4 testing rule or by a
Consent Order. The proposed testing
would include both chemical fate arid
environmental effects.
  In its Twenty-third Report, published
in the Federal Register of November 16,
1988 (53 FR 46262), the ITC followed on
its recommendation by designating
crotonaldehyde for response by EPA
within 12 months.
IL Testing Consent Order Negotiations
  In the Federal Register of May 20.1988
(53 FR 18196), and in accordance with
the procedures established in 40 CFR
790.28, EPA requested persons
interested in participating in or
monitoring testing negotiations on
crotonaldehyde to contact EPA. EPA
held public meetings with interested
parties on July 21,1988, October 19,
1988. and March 3,1989, to discuss the
testing appropriate for crotonaldehyde.
On October 2,1989 EPA and Kodak
.signed a testing Consent Order fort,-
crotcmaldehyde. A consent order is not
based on a formal finding and expedites
testing, while retaining the same TSCA
penalty provisions applicable under
rulemaking. Under the Order. Kodak has
agreed to conduct or provide for the
conduct of aquatic toxidty tests and
aerobic aquatic biodegradation testing.
Kodak has also agreed to perform.
chronic toxicity testing of aquatic
organisms depending on the results *f
the acute toxicity testing and, if
conducted, the results of effluent-
monitoring, the specific test standards to
be followed and the testing schedule for
each test are included in the Order. '•
Procedures for submitting study plans,
modifying the Order,  monitoring the
testing and other provisions are also
included in the Order.
m. Use and Exposure            ;

  Crotonaldehyde, also known as 2-
butenai is a four-carbon aldehyde ,
having a double bond between the alpha
and beta carbon atoms, Crotonaldehyde
is typically manufactured by aldol
condensation of acetaldehyde followed
by dehydration (Ref. 1). Crotonaldehyde
is liquid at environmental temperatures
(Ref. 2). It is highly soluble in water (181
g/L. measured), moderately volatile
(estimated Henry's law constant of 1.881
x 10~» arm m*/mole at 20*C). and has
an estimated low Log P value of 0.55
(Refs. 3,4, and 5).
   Crotonaldehyde is used mostly as an
intermediate to produce crotonic acid,
sorbic acid, 3-methoxybutanol and n-
butanol Less commonly, it may have
such diverse uses as an additive to wool
to reduce solubility in alkali, a    »•
plasticizer of terpene resins, and a ,
deodorizer in the paper industry, and in
the preparation of some pesticides (Ref.
1).
   Crotonaldehyde is produced in the
United States by only one company;
Kodak,  which produces crotonaldehyde
by a continuous process with a reported
1987 production volume between 5 and

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