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Financial Responsibility

State regulations (Title 17, Chapter 56, Administrative Rules of Montana) require Underground Storage Tanks (UST) owners and operators to demonstrate financial responsibility for the clean-up or third party liability compensation that results from petroleum release from UST systems. Who must demonstrate financial responsibility? Owners or operators of petroleum UST systems must demonstrate financial responsibility for taking corrective action and for compensating third parties. What UST systems require demonstration of financial responsibility? Financial responsibility requirements apply to underground tanks and piping storing petroleum.

    There are two categories of exclusions that are listed below:
  1. State and federal owned UST systems,
  2. Tanks excluded under ARM 17.56.102(2),(3),(4),(5) or (6).

Elements of Financial Responsibility

There are four primary elements that make up the financial responsibility requirements for Underground Storage Tank (UST) Systems.

    Owners or Operators must demonstrate each of the following elements:
  1. Financial responsibility mechanism
    This is the financial assurance option selected by owners/operators.
  2. Amount of financial responsibility
    This is the amount of coverage required that depends on the tank operator and number of tanks covered.
  3. Scope of financial responsibility
    This is the financial responsibility mechanism that must cover the required categories of obligations and releases(e.g., corrective action and third-party compensation).
  4. Certification This is the documentation that demonstrates the correct financial responsibility mechanisms, coverage amount and scope sufficient.

Certification of Financial Responsibility

Owners and operators must keep certain records as evidence they are currently meeting their financial responsibility obligations. The primary record is the Certification of Financial Responsibility. The regulations require that an updated copy of a correctly worded certification of financial responsibility is maintained. The purpose of the certification is to declare the:

    • Mechanism of coverage,
    • Name of issuer and,
    • Amount of coverage
Every owner/operator must fill out the form below and keep a copy on site:
Montana Certificate of Financial Responsibility Form

Mechanisms of Financial Responsibility

Owners and operators have a variety of options available for providing financial responsibility for their UST systems.

State of Montana Petroleum Release Compensation Fund 
Owners/Operators that qualify are eligible to use the "state fund" for clean-up and third-party compensation. 
If PTRCB Fund is the mechanism selected by owner/operator, first dollar coverage in the amount of $17,500.00 must be documented using one of the mechanisms below, in addition to the Certificate of Financial Responsibility. 

 The financial statement forms below are available for documentation of the first dollar coverage amount.
Sole Proprietorship Financial Statement
  
Business Financial Statement
Financial Test of Self Insurance-A firm with a tangible net worth of at least 10 million may demonstrate FR by passing one of the two financial tests listed in the Montana Administrative Rules.
  
Surety Bond-You may obtain a surety bond that is a guarantee by a surety company that will satisfy FR obligations if the person who obtained the surety bond does not.
 
Insurance Coverage-You may buy insurance from an insurer or a risk retention group.

 
Letter of Credit-You may obtain a letter of credit that obligates the issuer to provide funding for corrective action and third-party compensation.
 
Corporate Guarantee-You may secure a corporate guarantee from another eligible firm. The provider of the guarantee must pass one of the financial tests listed in the Montana Administrative Rules.
Trust Fund-You may set up a fully funded trust fund administered by a third-party to pay for corrective action and third-party claims.
 
Stand-by Trust Fund-Stand-by trust that uses one of these assurance mechanisms(guarantee, surety bond or letter of credit) to fund the trust.

Financial Responsibility Mechanisms for Local Governments

Local governments may use the financial responsibility mechanisms available to other Owners and Operators.  However, they have the option of using four additional mechanisms that have been tailored to their characteristics.

Bond Rating Test-A local government may demonstrate (or guarantee) financial responsibility by passing a bond rating test.
  
Financial Test-A local government may demonstrate (or guarantee) by passing a financial test.
Guarantee-A local government may obtain from another local government or the State of Montana.
 
Dedicated Fund-A local government may demonstrate (or guarantee) financial responsibility by establishing a fund.

Amounts of Financial Responsibility

Group of UST Owners and Operators
Per Occurrence Coverage
Aggregate Coverage
Group 1 - Petroleum producers, refiners, or marketers
$1 million
$1 million for 100 or fewer tanks OR $2 million for more than 100 tanks
Group 2 - Non-marketers
$500,000 if throughput is 10,000 gallons monthly or less OR $1 million if more than 10,000 gallons monthly

Scope of Financial Responsibility

The scope of financial responsibility covers:

 OBLIGATIONS  

Accidental
Owner/Operator must be able to cover all UST system releases classified as accidental , as opposed to intentional releases.

Sudden and non-sudden
Owner/Operator must be able to cover both sudden and non-sudden UST system releases.
   

 
RELEASES  

Corrective Action
FR must address both on and off site corrective action due to UST system releases.

Third-party compensation
FR mechanism must cover both bodily injury and property damage claims from third parties as a result of UST system releases.