fxEPA
                United States
                Environmental Pratt
                Ag«ncy
                Office of
                Drinking Water
                Washington, OC 20460
May 1385
EPA 570/9^4-007
                Underground injection Control
Federal Financial
Demonstrations for
Owners and Operators
of  Class II  Injection Wells
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                  ACKNOWLEDGMENT
This summary  was  prepared  for  the U.S. Environmental
Protection  Agency  under Contract No.  68-01-6827.   Mr.
George  Denning,  EPA Project  Officer, and Mr. A.  Roger
Anzzolin,  EPA  Assignment  Manager,  provided  valuable
guidance to  the project.   Technical support to prepare this
summary was provided by Jasbinder Singh of Policy  Planning
& Evaluation, Inc., of McLean, Virginia.

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   UNDERGROUND INJECTION CONTROL PROGRAM
FEDERAL FINANCIAL RESPONSIBILITY DEMONSTRATIONS
          FOR OWNERS AND OPERATORS
          OF CLASS II INJECTION WELLS
                 A SUMMARY

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                         TABLE OF CONTENTS


                                                         Page No.

A.  INTRODUCTION	    I

B.  APPLICABILITY  	    2

C.  FINANCIAL RESPONSIBILITY OPTIONS	    3

D.  FINANCIAL COVERAGE CRITERIA  	    4

E.  SUBMISSION OF APPLICATION 	    6

    I.  Selection of Mechanism  	    7
    2.  Information Submitted 	    7

F.  FINANCIAL INSTRUMENTS  	   II

    I.  Surety Bond	   II
    2.  Letter of Credit	   12
    3.  Trust Fund	   13
    4.  Standby Trust Fund 	   14

G.  DESCRIPTION OF THE FINANCIAL TEST  	   15

    I.  Financial Ratio Alternative 	   15
    2.  Bond Rating Alternative	   16

H.  USE OF STATE MECHANISMS 	   17

I.   COST OF FINANCIAL MECHANISMS 	   17

APPENDIX A-FEDERALLY ADMINISTERED UNDERGROUND
             INJECTION CONTROL PROGRAMS-CLASS II
             INJECTION WELLS	   19

APPENDIX B-EPA REGIONAL OFFICES 	   22

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            FEDERAL FINANCIAL RESPONSIBILITY DEMONSTRATIONS
                         FOR OWNERS AND OPERATORS
                          OF CLASS II INJECTION WELLS
A.  INTRODUCTION

    Under the Safe  Drinking  Water Act of 1974  (SDWA), the  U.S.  Environmental
Protection Agency (EPA)  has established  an  Underground Injection  Control  (UIC)
program.  As a part of this program, Class II oil and gas operators, whether authorized by
rule or by permit, are required to "... maintain financial responsibility and resources to
close, plug, and abandon the underground injection operation ..." in accordance with an
approved plugging and abandonment plan. This requirement is found in Sections I44.28(d)
and I44.52(a) (7) in the Code of Federal Regulations.'

    To satisfy this requirement, operators must demonstrate financial responsibility by
submitting a  financial  mechanism that  meets  the  approval  of the  EPA  Regional
Administrator. An applicant  may choose one of several  mechanisms to  demonstrate
financial assurance: a financial instrument, such as. a surety bond, trust fund, or letter of
credit; or a financial statement.

    This booklet explains what operators  and owners (applicants) should do to comply
with these requirements.  It discusses the following five basic elements:

    •    financial responsibility options;
    •    types of financial coverages;
    •    procedures for demonstrating financial responsibility;
    •    submission requirements; and
    •    requirements of the financial instruments and statements.
'The UIC program regulations are found in Parts 124, 144,  145, 146, and 147 of Title 40
of the Code of Federal Regulations (cited as 40 CFR Parts 124, 144, 145, 146, 147) and
are available from the Regional EPA offices.

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    Furthermore, this  booklet explains  the criteria and  guidelines EPA  will use  to
evaluate the major types of possible financial responsibility demonstrations that apply to
owners and operators of Class  II wells. Each demonstration will be evaluated on a case-
by-case basis with close cooperation between the applicant and EPA.  Surety  associations
and other organizations providing financial services also may find this booklet useful in
their  business with Class II applicants. All information in this booklet is offered only as
guidance to the operator or owner; this booklet contains no new binding regulations, and
no new  requirements for submitting informatiort to EPA. Any method of demonstrating
financial  responsibility, which fulfills the UIC regulation and  which  is  acceptable to
EPA's Regional Administrator,  may be used.

B.  APPLICABILITY

    Federal  financial responsibility requirements  apply to owners and operators  in all
states and U.S. territories.  This booklet applies  only to owners/operators of Class II
injection  wells  in  those  states, territories, or  Indian  lands that  have  Federally
administered UIC programs.  It is not applicable to operators in states which have been
approved  by  EPA to assume primary  enforcement responsibility.  EPA administers the
program only for states which have either not applied to administer  the program,  or
which have not  submitted a program meeting the requirements of the Safe Drinking
Water Act.  See 40 CFR Part 147 for detailed information about whether  EPA or the
state administers the UIC program for the state in question.

    Operators  applying for  a  new permit should submit  evidence  of  financial
responsibility which is  effective at the time of permit issuance.  A new  owner or new
operator requesting, a permit transfer should demonstrate financial responsibility by the
effective date of permit transfer.  Operators authorized under rule in the states marked
with an asterisk in  Appendix A are required to show evidence by June 24, 1985.  The
operators in the remaining states listed in Appendix A are required to show financial
responsibility by December 29, 1985.  Owners and operators who are not certain of their
need to comply with these financial requirements or the UIC regulations should contact
the appropriate EPA regional office.  Appendix B lists the EPA offices, their addresses,
and telephone numbers.
                                             -2-

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C.  FINANCIAL RESPONSIBILITY OPTIONS

    As stated in the introduction, the applicant may choose one of several mechanisms
to demonstrate financial responsibility.  The two basic types of mechanisms are:

    I.  Financial Instruments  — Agreements such as surety  bonds,  letters of
        credit, and trust  funds. Through these instruments a  third party, such as a
        surety or bank, guarantees the availability of a specified amount of funds
        for plugging the applicant's wells,
    2.  Financial Statements — Financial statement data  which demonstrate the
        company's financial strength.

    The applicant has  several options  for  demonstrating  financial  responsibility.  The
first is to  submit  a financial instrument that guarantees  funds  that cover the cost of
plugging all of the applicant's injection wells.  This option is known  as full coverage.  If
the coverage  amount of the financial  instrument meets or exceeds the plugging cost
specified in the Plugging  and Abandonment Plan (EPA Form 7520-14), then financial
responsibility is demonstrated.

    A second  option is to submit  information, such  as  financial statements,  which
demonstrate the likelihood of future successful operation and proper well abandonment.
This option is known as financial statement coverage.   An applicant's eligibility  to use
this option depends on  his ability to satisfy  certain criteria. By meeting these basic
criteria and passing the financial test, an applicant shows a  low risk of abandoning his
injection wells and successfully demonstrates financial responsibility.

    A third option exists  for applicants that meet some, but not all, of the criteria for
the second option.  In this  case EPA will allow the  applicant to submit a financial
instrument for a coverage amount that is less than the total cost of plugging all injection
wells.  The coverage under this option, known as blanket coverage, is specified  by the
EPA regional office and generally will not be less than the cost of plugging ten injection
wells.

    Thus,  depending  on  an  applicant's  circumstances, three types  of coverage are
available and can be summarized as follows:
                                             -3-

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             Coverage — A financial instrument that guarantees funds equal to the
        Wfal plugging cost of all wells.  This plugging^cost corresponds to the
        amount  in the Plugging and Abandonment Plan submitted  to EPA (EPA
        F%rm 7520-14).  This option is available to any applicant.

    •  -Financial  Statement  Coverage  —   Financial  statements  and  other
        information that is evidence of'the applicant's ability to plug his wells in
        the future. This verification is based on meeting various criteria including
        passing a financial  test.

    •   Blanket  Coverage  — A financial  instrument  that   guarantees  funds
        amounting to an EPA-specified  portion of the plugging cost of all wells.
        Generally, the minimum blanket coverage amount is equal to the cost of
        plugging  ten  injection wells.  This option is available to applicants that
        pass  certain  criteria, but  do not qualify  for the financial  statement
        coverage option.


    The criteria applied by EPA to qualify an applicant for either blanket coverage or

financial statement coverage are described in the next section.


D.  FINANCIAL COVERAGE CRITERIA


    EPA will  use several criteria to  determine whether an applicant can use blanket or

financial statement coverage.  These criteria will  help EPA identify those operator that

are likely %> properly  plug their wells. Operators that meet all of the criteria are not

required t» obtain a financial instrument, but  instead  will be  allowed  to demonstrate
their financial responsibility through a financial statement. However, if an operator fails

to meet certain criteria, then  he should submit  a financial instrument for full coverage.

For example,  if an operator has a history of abandoning  wells  without plugging them,

then EPA-fvobably will  request that he submit  a  financial instrument providing full
coverage.  An operator meeting  other criteria may  be allowed to  submit a financial

instrument providing blanket  coverage.   EPA will  use the following  six  criteria to

determine4he likelihood of proper well abandonment.


    I.  History of plugging  wells  — Has the  applicant  plugged  his wells in
        accordance with regulations in  the past?   If  the applicant has plugged
        wells properly in the past then he is likely to do so in the future.

    2.  Remaining  economic  life of production  fields/leases — Is  the  applicant
        producing from at least  one field or lease  with  an estimated  remaining
        economic life exceeding  five years within the state or territory?  If the
        remaining economic life of at least one field  is more than five  years, an
        operator  is more likely to remain in business until another periodic review
        by EPA.

                                            -4-

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    3.   Number of years in business — Has the applicant been in the oil business
         more than five years?  The financial performance of a business has more
         significance after five years of operation.

    4.   Number of production fields — Is the applicant producing from more than
         one field within the state or territory?  A company producing from several
         production fields is less likely to deplete all its resources simultaneously.
         Hence, it is more likely to remain in business until another periodic review
         by EPA.

    5.   Number of injection wells — Is the  applicant  operating more than ten
         injection wells? Since the usual minimum blanket coverage amount will be
         for ten  injection wells, applicants considering that option should  operate
         more than ten wells.

    6.   Financial  condition —  Does  the  company  pass  the financial  test
         requirements given in Section G? A company in strong financial condition
         is more likely to be able to plug its wells in the future.


    EPA generally will use the criteria and the guidelines outlined below  to determine

the options available to the applicant.


    •    Companies in business less than five years may submit;

         A financial instrument providing full coverage; or

         A financial instrument providing blanket coverage,  if they have a history
         of  plugging  wells,  produce from at  least one field  or lease  with an
         estimated remaining economic  life exceeding five years, and operate ten
         or more injection wells (meet Criteria I, 2, and 5 above).

    •    Companies with one or no production fields may submit;

         A financial instrument providing full coverage; or

         A financial instrument providing blanket coverage,  if they have a history
         of  plugging  wells,  produce from at  least one field  or lease  with an
         estimated remaining economic  life exceeding five years,  have been  in
         business five or more years, operate ten or more injection wells, and pass
         the financial test (meet Criteria I, 2, 3, 5, and 6 above).

    •    Companies in business five years or longer with two or more production
         fields or leases may submit;

         A financial instrument providing full coverage; or

         Financial.statements, if  they  have a history  of plugging wells, produce
         from two or more fields at least one of which has an estimated remaining
         economic  life  exceeding  five  years, have been in  business five or more
         years, and pass the financial test (meet Criteria I, 2, 3, 4, and 6 above).


                                            -5-

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E.  SUBMISSION OF APPLICATION

    The applicant's  procedure for demonstrating financial responsibility will depend on
which  financial  coverage option and  financial mechanism is selected.  The applicant
therefore should:

    •    Select  the  preferred type of financial mechanism and the corresponding
         financial coverage; and
    •    Obtain and  submit the appropriate information and financial mechanism.

     I.   Selection of Mechanism

         The applicant should first determine the financial coverage options for which he
thinks he can qualify.  If the applicant cannot submit the information needed to verify
qualification (described  in  the preceding section), EPA may request the  applicant to
apply under another  option.

         Next, the applicant should select a financial responsibility mechanism for which
he  qualifies.  He may want to review the mechanisms and consult various providers of
financial instruments. Brief descriptions of the various financial mechanisms are found
in Section F.

         If  the  applicant  has selected  a financial  instrument  for  full coverage, the
coverage amount would be based on the cost estimate to plug the well(s) given in the
Plugging and Abandonment  Plan (EPATorm 7520-14).  If the applicant has selected the
blanket  coverage option, he should contact the EPA office in his region to ascertain the
coverage amount. At that time, the applicant should know the plugging cost estimate in
his own Plugging and Abandonment Plan.  If qualification  for  an  option depends on
financial statements, the applicant should meet the financial test requirements described
in Section G.
                                             -6-

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    2.   Information Submitted


         Finally, the applicant should obtain the required information and documents and

submit them to EPA.  This step could involve obtaining a bond from a surety agent,

requesting  financial statement information from  the firm's accounting department,  or

obtaining a letter of credit and standby trust fund from a bank.


         The following  list  describes  information  that  could  be  required  by  EPA,

depending on the financial coverage option selected by the applicant.  A particular option

may not require all  of the information contained in this list. The applicant should consult

the table following this list for the information that EPA  could require to be submitted

under a particular coverage option.


    a.   History of Plugging Wells; An applicant may be requested to furnish prior
         proof of plugging and abandoning his injection wells by submitting plugging
         records of injection activities.

    b.   Remaining Economic  Life  of a Field;   An applicant  should provide a
         certification  by  a registered professional   engineer  or  a  certified
         professional  geologist that  the remaining economic life of  at  least  one
         field exceeds  five  years.  This statement should be  co-signed  by the
         Manager of Field Operations or a person with similar authority.

    c.   Statement of Years in Business; An applicant should submit a statement
         of the company's original date of operation and  number of years  in
         business certified by a person of sufficient authority in the company.

    d.   Number of Production Fields and Number of Injection Wells;  An applicant
         should provide a list of producing fields or leases  and their location in the
         state (region), number of production wells associated with injection well
         operations, and number of injection  wells.  This information should be
         certified by a person of sufficient authority in the company or a consulting
         engineer.

    e.   Estimated Cost of Plugging Wells;  The estimate should  correspond to the
         cost of plugging wells described in the Plugging and Abandonment Plan
         submitted  to EPA (EPA  Form  7520-14).  This estimate could be obtained
         from a service company.

    f.   Financial Statement Informoiion; An applicant not submitting a financial
         instrument submits  a financial statement  for the most recent fiscal year.
         The statement should be accompanied by:

             a  letter from the Chief Financial Officer (CFO), or the person
             of sufficient authority to legally bind the company, that  includes
             required financial information for the financial test;
                                             -7-

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            a  report expressing an  opinion  on the  financial  statements
            prepared by an independent certified public accounting firm; and
            a  verification  of the information in the  letter from the CFO
            prepared by an independent certified public accounting firm.
    g.  Financial Instruments;  An  applicant must submit a financial instrument
        that provides adequate coverage and meets EPA UlC^requirements.  The
        financial instrument options are:
            (1)   a Surety Bond and a Standby Trust Fund;
            (2)   a Letter of Credit and a Standby Trust Fund; or
            (3)   a Trust Fund.

        Section F contains descriptions of these financial instruments.

        Model forms for the requested 'information and documents are available from
the EPA regional offices.  However, an applicant may use any documents or financial
instruments which  comply with EPA  regulations  and are acceptable to the Regional
Administrator.  Table I summarizes  the items  requested for each of the three financial
coverage options. An (X) indicates that the information or document should be submitted
to satisfy the requirements of the indicated financial coverage option.

        All necessary certifications and representations should be submitted before a
financial mechanism can be evaluated by  EPA.  If the applicant submits  items and
information that meet EPA criteria, then  he  has satisfied the financial responsibility
requirements.   Typical information which EPA may request the applicant to  submit is
detailed in the following sections.
                                            -8-

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                               TABLE I
                        TYPICAL INFORMATION

                          TO BE SUBMITTED
Information and Documents
a. History of Plugging Wells
b. Remaining Economic Life of a
Field
c. Statement of Years in
Business
d. Number of Production Fields
and Number of Injection
Wells
e. Estimated Cost of Plugging
Weils
f. Financial Statements
g. Financial Instruments
Full
Coverage




X

X
Financial
Statement
Coverage
X
X
X
X
X
X

Blanket
Coverage
X
X
X
X
X
X1
X
'Companies  in  business  less  than  five  years  need  not submit  financial
statements.
Note:   The EPA  Regional  Administrator  may  require that the  financial
        statements be submitted on an annual basis.

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F.  FINANCIAL INSTRUMENTS

    Financial instruments are designed  to  assure  continued  availability of plugging
resources under a  variety of circumstances  that can  occur during  well  life.   These
circumstances include:  a change  in financial mechanism by an applicant; a change in
ownership of wells; proper plugging and abandonment of wells; and improper plugging and
abandonment of wells.  Financial mechanisms submitted by an applicant  should meet
specific requirements mentioned below.  Sample forms of the instruments are available
upon request from the EPA regional offices.  Instruments similar to these  model forms
and meeting the regulatory requirements also are acceptable to EPA.

     I.   Surety Bond

         A surety bond is a guarantee by a surety company that obligations specified in
the bond will be fulfilled.  Two types of surety bonds are allowed.  One  kind, the
Financial Guarantee Bond, guarantees that the surety company will fund a standby trust
fund (described below) in the amount guaranteed by the bond.  The other kind of bond, a
Performance Bond,  guarantees that  if the owner or operator does  not  properly plug
specified wells,  the  surety company will perform these duties or pay  the amount of the
bond into the standby trust fund.

         When  either kind of surety  bond is used,  a standby  trust fund also must be
established.  The purpose of the  standby trust fund is  to  receive any funds that may
eventually be paid by the  surety company. (Standby  trust funds are explained in Section
4.) Both the bond and  the standby trust agreement  should be submitted as evidence of
financial assurance.

         A surety bond should:

    •   Be issued by a surety company on the U.S. Treasury list (Circular 570) of
         acceptable sureties  on Federal bonds.
    •   Specify the wells it covers; hence, if new  wells are started, a new bond
         will be required by EPA.
    •   Guarantee  that if the owner  or operator does not  properly plug specified
         wells, the surety company will pay the amount of the bond into a  standby
         trust fund.  Hence, a standby  trust fund where the beneficiary is EPA must
         also be established.  (See  Section 4 for further information.)

                                            -10-

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     •   Provide for a 120-day notice of cancellation to the owner or operator and
         EPA.
     •   Provide for payment of its face value into the standby trust fund if the
         owner or operator does not provide substitute assurance to EPA within 90
         days of such notice.

         The owner or operator may cancel the bond only after written consent by the
EPA  Regional Administrator.  Such consent may be given after a substitute financial
assurance is provided  or the obligations guaranteed have  been fulfilled.  An  owner or
operator interested in obtaining a  surety  bond should consult his insurance agent. The
agent should be able to help the owner or operator assess the availability and costs of a
surety bond  for his facility, including possible requirements for collateral.

     2.   Letter of Credit

         A  letter of  credit  guarantees the availability  of funds to a specified party
subject  to the conditions in  the agreement.  The letter of credit, normally issued by a
bank, should provide for  payment of funds into a standby trust fund. The payment of the
credit amount occurs if the operator fails  to plug his injection wells as required.  Both a
standby trust fund and a  letter of credit should be established.  The letter  of credit
should:

     •   Be  issued by a bank or other institution whose operations are regulated and
         examined by a state or Federal agency.
     •    Require that funds in it be deposited into the operator's standby trust fund
         if the owner or operator fails to  fulfill plugging requirements. Hence, an
         operator using a letter of credit  must also submit to EPA a standby trust
         agreement, of  which  EPA is the sole  beneficiary.  (See Section 4 for
         further information.)
    •    Identify the covered wells.
    •    Provide for a  120-day notice of nonrenewal from the issuing institution.
    •    Provide  that  the Regional Administrator may  draw upon  the letter of
         credit if the owner or operator does  not  provide substitute assurance
         within 90 days.
    •    Provide  that the  operator may cancel the letter of credit  only  with the
         EPA Regional Administrator's written consent.
                                            -II-

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         Commercial banks and some savings and loan institutions and credit unions meet
the qualifications in the regulations for institutions which may issue letters of credit.

    3.   Trust Fund

         Another financial assurance  option is the trust fund.   The owner/operator
establishing a trust fund deposits funds equivalent to the required financial coverage into
the trust fund.   The trustee's  responsibilities generally will  include:  (I) investing the
funds; (2)  providing  an annual  valuation to the owner or operator and to EPA;  and
(3) accepting  further deposits  or  releasing  funds  as wells are plugged  or new wells
drilled.  In investing the funds the trustee will follow the general guidance of the owner
or operator as long as it is in accordance with the trust provisions.

         EPA  approves  payments  from  the  fund  to  the  owner  or  operator  in
reimbursement for costs of plugging as completed.  If the cost of plugging appears to be
significantly higher  than the value of  the  trust fund at the time plugging begins, EPA
       4
may delay releasing funds until plugging is completed and certified.  EPA will approve
refunds if the value of  the trust fund exceeds the estimated costs of plugging, or if other
financial assurance is substituted for the trust fund, or if plugging is completed and funds
still remain in the trust.

         There are  about 4,000 banks in the country, plus trust companies and some
savings and  loan institutions,  which are qualified  to manage trust funds.   Financial
institutions with which an owner or operator normally does business should be able to
assist  him in  establishing a trust fund for plugging, either by serving as trustee or by
referring him to trust institutions.

         A trust fund should:

    •   Be established at a bank or other institution with authority  to act as  a
         trustee  and whose trust activities are examined  andpegulated by a state
         or Federal agency.
    •   Contain funds  equal to the required financial coverage.
    •   Designate EPA as the beneficiary.
                                             -12-

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    •    Specify  the acceptable  ways of  investing money  in  the  fund (by the
         Trustee).
    •    Be accompanied by o "certificate of acknowledgment."
    •    Specify  conditions 
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        An  applicant  should  meet  at  least  three  of  the following  four  ratio
requirements.
         a.          Current liabilities
                       Net worth               <   L0
                          and
                  Long term liabilities
                        Net worth              <   2'°
         b.         Current assets less
                   current liabilities
                      Total assets
         c.          Net income plus
                  depreciation, depletion
                     and amortization
                     Total liabilities           >   °-lu

         d.             Net profit              >   0

         To demonstrate that he passes this test, the applicant submits the information
described in Section E under the financial statement coverage option. Initially he should
submit data only for the latest fiscal year.  Only when he fails the test for that year
should he  submit the data for the  previous two years..  Upon failing the test or being
disallowed from using  the test, the owner or operator should  provide a bond or other
financial instrument for a coverage  amount specified by EPA.

         If an operator is a subsidiary of a large corporation, the financial statements of
the  parent corporation  may  be submitted  if the parent also guarantees  that  it will
provide funds sufficient to plug the subsidiary's wells. Such a guarantee should be from a
parent  that directly owns at  least 50% of the  operator's voting stock.   The  parent
corporation is bound  by the guarantee until  released by EPA.^Jf the subsidiary is audited
as a separate entity, its financial statements may be submitted.
                                             -14-

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    2.  Bond Rating Alternative

        This alternative is available to those companies that have issued bonds to raise
capital.  For the applicant to pass the financial test, a bond rating of the most recent
boncl  issuance should  be within the four highest categories of ratings by Standard and
       *^
Poor's (AAA, AA, A, or BB) or Moody's (Aaa, Aa, A, or Baa).  The applicant should submit
a statement of the firm's latest bond rating by one of these two rating services on an
annual basis.

H.  USE OF STATE MECHANISMS

    States in which EPA is administering the UIC program may have their own financial
responsibility requirements  for  plugging  and  abandonment  of wells.   Under certain
circumstances,  owners or operators may use a  State-required mechanism to satisfy the
Federal requirements, if it provides assurance at least equivalent to that of mechanisms
specified in the Federal regulations.  The Agency will evaluate the equivalency of the
mechanism primarily  on the basis of the  certainty of availability  of funds for the
required plugging and  abandonment activities, and the amount of funds that will be made
available. Other factors also may be considered. The owner or operator should submit to
EPA  evidence  of  having  established  the  State-required  mechanism,  and a  letter
requesting that it be considered  acceptable  for meeting the Federal requirements. The
Regional Administrator will evaluate  the equivalency of the mechanism and determine
its acceptability.

I.   COST OF FINANCIAL MECHANISMS

    To determine which method of financial  assurance is least costly, the owner or
operator should review all the mechanisms and consult various providers  of financial
services.

    For each mechanism, the owner or operator should consider any  fees or premiums
charged, requirements for collateral to secure the mechanism, tax consequences, possible
effect on credit standing, and "opportunity cost" — the cost to him of using funds which
could otherwise be invested in ways that would bring a higher return.
                                           -15

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    The financial test or corporate guarantee is probably the least expensive mechanism
for owners or operators who meet the requirements for these  mechanisms.  However,
there may be the additional burden of submitting these statements on an annual basis.

    The fees or premiums charged for letters of credit, trust funds, and surety bonds will
vary.  They  are determined by the  issuing  institutions on a case-by-case basis.  The
amounts  are  usually  in terms of percentages of the amount of the letter of credit or
bond.  For a trust  fund the amount  is  generally either  a  fixed fee or a percentage of
funds managed. The owner's or operator's financial condition, history,  and size would be
important  factors  affecting these charges.   These factors will  also  determine  any
requirements for collateral.
                                            -16-

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                              APPENDIX A
FEDERALLY ADMINISTERED UNDERGROUND INJECTION CONTROL PROGRAMS
                        CLASS II INJECTION WELLS
      EPA REGION II

          New York (including Indian lands except for Seneca)*
          Puerto Rico
          Virgin Islands

      EPA REGION HI

          District of Columbia*
          Pennsylvania*
          Virginia*

      EPA REGION IV

          Florida
          Kentucky*
          Mississippi
          Tennessee*

      EPA REGION V

          Indiana*
          Michigan (including Indian lands)*
          Minnesota (including Indian lands)
          Wisconsin (Indian lands only)

      EPA REGION VI

          Osage Mineral Reserve, Oklahoma

      EPA REGION VII

          Iowa (including Indian lands)*
          Nebraska (Indian lands only)*
          Kansas (Indian lands only)
                                      -17-

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                              APPENDIX A (Continued)
        EPA REGION VIII

             Colorado (Indian lands only except for.
              the Ute Mountain Reservation)*
             Montana (including Indian lands)*
             South Dakota (Indian lands only)  -

        EPA REGION IX

             American Samoa*
             Arizona (including Indian lands except Navajos)*
             California (Indian lands only)*
             Hawaii
             Nevada (including Indian lands)*
             Northern Mariana Islands*
             Trust Territories*

        EPA REGION X

             Alaska (including Indian lands)*
             Idaho (including Indian lands)*
Notes:   (I)   EPA is  in the process of reviewing state applications to administer the
              UIC program.  Therefore, this list is subject to change.

         (2)   States and  territories  with  an  asterisk are required to  demonstrate
              financial responsibility by June 24, 1985. All other states and territories
              are required to  demonstrate financial  responsibility by December 29,
              1985.
                                            -18-

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U.S. EPA REGIONAL MAP
             -19-

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                                  APPENDIX B

                            EPA REGIONAL OFFICES
Questions may be addressed to the following individuals at EPA Regional Offices.
        Jerome Healey
        Water Supply Branch Chief
        EPA, Region I
        JFK Federal Building
        Room 2113, 21st Floor
        Boston, MA 02203
        (617)223-6486

        Walter Andrews
        Water Supply Branch Chief
        EPA, Region II
        26 Federal  Plaza
        Room 824,  8th Floor
        New York,  NY 10278
        (212)264-1800

        Joseph T. Piotrowski
        Water Supply Branch Chief
        EPA, Region III
        841 Chestnut Street
        13th Floor
        Philadelphia, PA 19107
        (215)597-8227

        Donald J. Guinyard
        Water Supply Branch Chief
        EPA, Region IV
        345 Court land Street
        Room 305,  3rd Floor
        Atlanta,  GA 30365
        (404)881-3781

        Joe Harrison
        Safe Drinking Water Branch Chief
        EPA, Region V
        230 S. Dearborn Street
        12th Floor
        Chicago, IL 60604
        (312)353-2650
Oscar Cabra, Jr., PJ£.
Water Supply Branch Chief
EPA, Region VI
1201 Elm Street
Room 2930, 29th Floor
Dallas, TX 75270
(214)767-2618

Ralph N. Langemeier
Water Supply Branch Chief
EPA, Region VII
726 Minnesota Avenue
Kansas City, KS 66101
(913)236-2812
Roger Frenette
Drinking Water Branch Chief
EPA, Region VIII
999 18th Street
I Denver Place, 24th Floor
Denver, CO 80295
(303)844-1413

Steve Pardieck
Water Supply Branch Chief
EPA, Region IX
215 Fremont Street
5th Floor
San Francisco, CA 94105
(415) 974-8226

Richard R. Thiel, P.E.
Water Supply Branch Chief
EPA, Region X
1200 Sixth Avenue
Room 10-A,  I Oth Floor
Seattle, Wl 98101
(206) 442-4092
                                          -20-
                                                   GPO  : 1985 O - 481-863

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