62.1-44.34:16 - Financial responsibility for vessels and facilities
§ 62.1-44.34:16. Financial responsibility for vessels and facilities.
A. The operator of any tank vessel entering upon state waters shall have aCertificate of Financial Responsibility approved by the U.S. Coast Guardpursuant to § 4202 of the federal Oil Pollution Act of 1990 or shall depositwith the Board cash or its equivalent in the amount of $500 per gross ton ofsuch vessel. Any such cash deposits received by the Board shall be held inescrow in the Virginia Petroleum Storage Tank Fund.
B. If the Board determines that oil has been discharged in violation of thisarticle or that there has been a substantial threat of such discharge from avessel for which a cash deposit has been made, any amount held in escrow maybe used to pay any fines, penalties or damages imposed under this chapter.
C. The Board shall exempt an operator of a tank vessel from the cash depositrequirements specified in this section if the operator of the tank vesselprovides evidence of financial responsibility pursuant to the terms andconditions of this subsection. The Board shall adopt requirements foroperators of tank vessels for maintaining evidence of financialresponsibility in an amount equivalent to the cash deposit which would berequired for such tank vessel pursuant to this section.
D. The Board is authorized to promulgate regulations requiring operators offacilities to demonstrate financial responsibility sufficient to comply withthe requirements of this article as a condition of operation. Operators offacilities shall demonstrate financial responsibility based on the totalstorage capacity of all facilities operated within the Commonwealth.Regulations governing the amount of any financial responsibility requiredshall take into consideration the type, oil storage or handling capacity andlocation of a facility, the risk of a discharge of oil at that type offacility in the Commonwealth, the potential damage or injury to state watersor the impairment of their beneficial use that may result from a discharge atthat type of facility, the potential cost of containment and cleanup at thattype of facility, and the nature and degree of injury or interference withgeneral health, welfare and property that may result from a discharge at thattype of facility. In no instance shall the financial responsibilityrequirements for facilities exceed $.05 per gallon of aboveground storagecapacity or $5 million for a pipeline. In no instance shall any financialtest of self-insurance require the operator of a facility to demonstrate morethan $1 of net worth for each dollar of required financial responsibility. Ifsuch net worth does not equal the required financial responsibility, then theoperator shall demonstrate the minimum required amount by a combination offinancial responsibility mechanisms in accordance with subsection E of thissection. No governmental agency shall be required to comply with any suchregulations.
E. Financial responsibility may be demonstrated by self-insurance, insurance,guaranty or surety, or any other method approved by the Board, or anycombination thereof, under the terms the Board may prescribe. To obtain anexemption from the cash deposit requirements under this section: the operatorof a tank vessel and insurer, guarantor or surety shall appoint an agent forservice of process in the Commonwealth; any insurer must be authorized by theCommonwealth to engage in the insurance business; and any instrument ofinsurance, guaranty or surety must provide that actions may be brought onsuch instrument of insurance, guaranty or surety directly against theinsurer, guarantor or surety for any violation of this chapter by theoperator up to, but not exceeding, the amount insured, guaranteed orotherwise pledged. An operator of a tank vessel or facility whose financialresponsibility is accepted by the Board under this subsection shall notifythe Board at least 30 days before the effective date of a change, expirationor cancellation of any instrument of insurance, guaranty or surety. Operatorsof facilities who are unable to demonstrate financial responsibility in theamounts established pursuant to subsection D may establish an insurance poolpursuant to the requirements of § 62.1-44.34:12 in order to demonstrate suchfinancial responsibility.
F. Acceptance of proof of financial responsibility for tank vessels shallexpire:
1. One year from the date on which the Board exempts an operator from thecash deposit requirement based on evidence of self-insurance, except that theBoard may establish by regulation a different expiration date for acceptanceof evidence of self-insurance submitted by public agencies;
2. On the effective date of any change in the operator's instrument ofinsurance, guaranty or surety; or
3. Upon the expiration or cancellation of any instrument of insurance,guaranty or surety.
Application for renewal of acceptance of proof of financial responsibilityshall be filed 30 days before the date of expiration.
G. Operators of facilities shall annually demonstrate and maintain evidenceof financial responsibility for containment and cleanup in accordance withregulations adopted by the Board.
H. The Board, after notice and opportunity for hearing, may revoke itsacceptance of evidence of financial responsibility if it determines that:
1. Acceptance has been procured by fraud or misrepresentation; or
2. A change in circumstances has occurred that would warrant denial ofacceptance of evidence of financial responsibility under this section or therequirements established by the Board pursuant to this section.
I. It is not a defense to any action brought for failure to comply with thecash deposit requirement or to provide acceptable evidence of financialresponsibility that the person charged believed in good faith that the tankvessel or facility or the operator of the tank vessel or facility had madethe required cash deposit or possessed evidence of financial responsibilityaccepted by the Board.
(1990, c. 917; 1992, cc. 456, 819; 1993, c. 375; 1994, c. 196; 1999, c. 91;2004, c. 276.)