APPENDIX X. ASSIGNMENT OF CERTIFICATE OF DEPOSIT ACCOUNT.

(Note: The instructions in brackets are to be replaced by the relevant information and the brackets deleted.)

[Name and Address of Bank]

City _______________________      ____________, 20__

___ FOR VALUE RECEIVED, the undersigned assigns all right, title, and interest to the State Water Control Board, Commonwealth of Virginia, and its successors and assigns the State Water Control Board the principal amount of the instrument, including all moneys deposited now or in the future to that instrument, indicated below:

__If checked here, this assignment includes all interest now and hereafter accrued.

Certificate of Deposit Account No. _____________________

This assignment is given as security to the State Water Control Board in the amount of _______________________ Dollars ($_____________).

Continuing Assignment. This assignment shall continue to remain in effect for all subsequent terms of the automatically renewable certificate of deposit.

Assignment of Document. The undersigned also assigns any certificate or other document evidencing ownership to the State Water Control Board.

Additional Security. This assignment shall secure the payment of any financial obligation of [name of operator] to the State Water Control Board to cover containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines identified below in the amount of [in words] $ [insert dollar amount] per occurrence and [in words] $ [insert dollar amount] annual aggregate:

[List for each facility: the name and address of the facility where tanks assured by this mechanism are located, either the registration identification number assigned by the Department or the Oil Discharge Contingency Plan facility identification number, and whether tanks are assured by this mechanism. If more than one instrument is used to assure different tanks at any one facility, list each tank covered by this instrument.

For pipelines, list: the home office address and the names of the cities and counties in the Commonwealth where the pipeline is located.]

The certificate of deposit may not be drawn on to cover any of the following:

(a) Any obligation of operator under a workers' compensation, disability benefits, or unemployment compensation law or other similar law;

(b) Bodily injury to an employee of operator arising from, and in the course of, employment by operator;

(c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft;

(d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by an operator that is not the direct result of a discharge of oil from an aboveground storage tank and/or pipeline;

(e) Bodily injury or property damage for which an operator is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 9VAC25-640-50.

Application of Funds. The undersigned agrees that all or any part of the funds of the indicated account or instrument may be applied to the payment of any and all financial responsibility obligations of [name of operator] to the State Water Control Board to cover containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines at the [facility name and address]. The undersigned authorizes the State Water Control Board to withdraw any principal amount on deposit in the indicated account or instrument including any interest, if indicated, and to apply it in the State Water Control Board's discretion to fund containment and clean up necessitated by discharges of oil arising from operating the aboveground storage tank(s) and pipelines at the [facility name] or in the event of [operator's] failure to comply with the Aboveground Storage Tank and Pipeline Facility Financial Responsibility Requirements, 9VAC25-640. The undersigned agrees that the State Water Control Board may withdraw any principal and/or interest from the indicated account or instrument without demand or notice. [The undersigned] agrees to assume any and all loss of penalty due to federal regulations concerning the early withdrawal of funds. Any partial withdrawal of principal or interest shall not release this assignment.

The party or parties to this Assignment set their hand or seals, or if corporate, has caused this assignment to be signed in its corporate name by its duly authorized officers and its seal to be affixed by authority of its Board of Directors the day and year above written.

The party or parties to this Assignment also certify that the wording of this Assignment is identical to the wording specified in Appendix X of 9VAC25-640 as such regulations were constituted on the date this Assignment was executed.

THE FOLLOWING SECTION IS TO BE COMPLETED BY THE BRANCH OR LENDING OFFICE:

The signature(s) as shown above compare correctly with the name(s) as shown on record as owner(s) of the Certificate of Deposit indicated above. The above assignment has been properly recorded by placing a hold in the amount of $ _______________________ for the benefit of the State Water Control Board, Commonwealth of Virginia.

___  If checked here, the accrued interest on the Certificate of Deposit indicated above has been maintained to capitalize versus being mailed by check or transferred to a deposit account.

9VAC25-640-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Aboveground storage tank" or "AST" means any one or combination of tanks, including pipes, used to contain an accumulation of oil at atmospheric pressure, and the volume of which, including the volume of the pipes, is more than 90% above the surface of the ground. This term does not include line pipe and breakout tanks of an interstate pipeline regulated under the federal Accountable Pipeline Safety and Partnership Act of 1996 (49 USC § 60101 et seq.).

"Accidental discharge" means any sudden or nonsudden discharge of oil from a facility that results in a need for containment and clean up which was neither expected nor intended by the operator.

"Annual aggregate" means the maximum financial responsibility requirement that an operator is required to demonstrate annually.

"Board" means the State Water Control Board.

"Change in service" means change in operation, conditions of the stored product, specific gravity, corrosivity, temperature or pressure that has occurred from the original that may affect the tank's suitability for service.

"Containment and clean up" means abatement, containment, removal and disposal of oil and, to the extent possible, the restoration of the environment to its existing state prior to an oil discharge.

"Controlling interest" means direct ownership of at least 50% of the voting stock of another entity.

"Department" or "DEQ" means the Department of Environmental Quality.

"Discharge" means any spilling, leaking, pumping, pouring, emitting, emptying or dumping.

"Facility" means any development or installation within the Commonwealth that deals in, stores or handles oil, and includes a pipeline.

"Financial reporting year" means the latest consecutive 12-month period for which any of the following reports used to support a financial test is prepared: (i) a 10-K report submitted to the U.S. Securities & Exchange Commission (SEC); (ii) an annual report of tangible net worth submitted to Dun and Bradstreet; (iii) annual reports submitted to the Energy Information Administration or the Rural Utilities Service; or (iv) a year-end financial statement authorized under 9VAC25-640-70 B or C. "Financial reporting year" may thus comprise a fiscal or calendar year period.

"Group self-insurance pool" or "pool" means a pool organized by two or more operators of  facilities for the purpose of forming a group self-insurance pool in order to demonstrate financial responsibility as required by § 62.1-44.34:16 of the Code of Virginia.

"Legal defense cost" means any expense that an operator or provider of financial assurance incurs in defending against claims or actions brought (i) by the federal government or the board to require containment or clean up or to recover the costs of containment and clean up, or to collect civil penalties under federal or state law or to assert any claim on behalf of the Virginia Petroleum Storage Tank Fund; or (ii) by any person to enforce the terms of a financial assurance mechanism.

"Local government entity" means a municipality, county, town, commission, separately chartered and operated special district, school board, political subdivision of a state or other special purpose government which provides essential services.

"Member" means an operator of an aboveground storage tank or pipeline who has entered into a member agreement and thereby becomes a member of a group self-insurance pool.

"Member agreement" means the written agreement executed between each member and the pool, which sets forth the conditions of membership in the pool, the obligations, if any, of each member to the other members, and the terms, coverages, limits, and deductibles of the pool plan.

"Occurrence" means an accident, including continuous or repeated exposure to conditions, that results in a discharge from an AST. Note: This definition is intended to assist in the understanding of this chapter and is not intended either to limit the meaning of "occurrence" in a way that conflicts with standard insurance usage or to prevent the use of other standard insurance terms in place of "occurrence."

"Oil" means oil of any kind and in any form, including, but not limited to, petroleum and petroleum byproducts, fuel oil, lubricating oils, sludge, oil refuse, oil mixed with other wastes, crude oil and all other liquid hydrocarbons regardless of specific gravity.

"Operator" means any person who owns, operates, charters by demise, rents or otherwise exercises control over or responsibility for a facility or a vehicle or a vessel. For purposes of this chapter, the definition of operator is restricted to operators of facilities.

"Person" means an individual; trust; firm; joint stock company; corporation, including a government corporation; partnership; association; any state or agency thereof; municipality; county; town; commission; political subdivision of a state; any interstate body; consortium; joint venture; commercial entity; the government of the United States or any unit or agency thereof.

"Pipeline" means all new and existing pipe, rights of way, and any equipment, facility, or building used in the transportation of oil, including, but not limited to, line pipe, valves and other appurtenances connected to line pipe, pumping units, fabricated assemblies associated with pumping units, metering and delivery stations and fabricated assemblies therein, and breakout tanks.

"Pool plan" means the plan of self-insurance offered by the pool to its members as specifically designated in the member agreement.

"Provider of financial assurance" means a person that provides financial assurance to an operator of an aboveground storage tank through one of the mechanisms listed in 9VAC25-640-70 through 9VAC25-640-120, including a guarantor, insurer, group self-insurance pool, surety, certificate of deposit, or issuer of a letter of credit.

"Release" means any spilling, leaking, emitting, discharging, escaping, leaching, or disposing from an underground storage tank or facility into groundwater, surface water, or upon lands, subsurface soils or storm drain systems.

"Storage capacity" means the total capacity of an AST or a container, whether filled in whole or in part with oil, a mixture of oil, or mixtures of oil with nonhazardous substances, or empty. An AST that has been permanently closed in accordance with the requirements of 9VAC25-91 has no storage capacity.

"Substantial business relationship" means the extent of a business relationship necessary under Virginia law to make a guarantee contract issued incident to that relationship valid and enforceable. A guarantee contract is issued "incident to that relationship" if it arises from and depends on existing economic transactions between the guarantor and the operator.

"Tangible net worth" means the tangible assets that remain after deducting liabilities; such assets do not include intangibles such as goodwill and rights to patents or royalties. For purposes of this definition, "assets" means all existing and all probable future economic benefits obtained or controlled by a particular entity as a result of past transactions.

"Tank" means a device designed to contain an accumulation of oil and constructed of nonearthen materials, such as concrete, steel, or plastic, that provides structural support. For purposes of 9VAC25-640-220, a tank means a device, having a liquid capacity of more than 60 gallons, designed to contain an accumulation of oil and constructed of nonearthen materials, such as concrete, steel, or plastic, that provides structural support. This term does not include flow-through process tanks as defined in 40 CFR Part 280.

"Termination" under Appendix III and Appendix IV 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.

"Underground storage tank" means any one or combination of tanks, including connecting pipes, used to contain an accumulation of regulated substances, and the volume of which, including the volume of underground connecting pipes, is 10% or more beneath the surface of the ground. This term does not include any:

1. Farm or residential tanks having a capacity of 1,100 gallons or less and used for storing motor fuel for noncommercial purposes;

2. Tanks used for storing heating oil for consumption on the premises where stored;

3. Septic tanks;

4. Pipeline facilities (including gathering lines) regulated under:

a. The Natural Gas Pipeline Safety Act of 1968 (49 USC App. 1671 et seq.);

b. The Hazardous Liquid Pipeline Safety Act of 1979 (49 USC App. 2001 et seq.); or

c. Any intrastate pipeline facility regulated under state laws comparable to the provisions of the law referred to in subdivision 4 a or 4 b of this definition;

5. Surface impoundments, pits, ponds, or lagoons;

6. Storm water or wastewater collection systems;

7. Flow-through process tanks;

8. Liquid traps or associated gathering lines directly related to oil or gas production and gathering operations; or

9. Storage tanks situated in an underground area, such as a basement, cellar, mineworking, drift, shaft, or tunnel, if the storage tank is situated upon or above the surface of the floor.

The term "underground storage tank" does not include any pipes connected to any tank which is described in subdivisions 1 through 9 of this definition.

"Vehicle" means any motor vehicle, rolling stock, or other artificial contrivance for transport whether self-propelled or otherwise, except vessels.

"Vessel" means every description of watercraft or other contrivance used as a means of transporting on water, whether self-propelled or otherwise, and shall include barges and tugs.

9VAC25-640-115. Certificate of deposit.

A. An operator may satisfy the requirements of 9VAC25-640-50, wholly or in part, by assigning all rights, title, and interest of a certificate of deposit to the State Water Control Board, Commonwealth of Virginia. The operator shall maintain the certificate of deposit until the requirements of 9VAC25-640-190 are met. The original assignment and the certificate of deposit, if applicable, must be submitted to the board to prove that the certificate of deposit has been obtained and meets the requirements of this section. A copy of the certificate of deposit shall be maintained at the aboveground storage tank site or the operator's place of work located in Virginia. The issuing institution shall be a bank or other financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) and whose operations are regulated and examined by the Commonwealth of Virginia, by a federal agency, or by an agency of another state.

B. The operator shall be entitled to demand, receive, and recover the interest and income from the certificate of deposit as it becomes due and payable as long as the market value of the certificate of deposit plus any other mechanisms used continue to at least equal the amount of financial responsibility the operator is required to demonstrate.

C. In the event of failure of the operator to comply with the requirements of 9VAC25-640-150, the board shall cash the certificate of deposit.

D. Payments made under the terms of the certificate of deposit will be deposited by the issuing institution directly into the Virginia Petroleum Storage Tank Fund. Payments from the fund shall be approved by the board.

E. The wording of the assignment shall be identical to the wording specified in Appendix X.

9VAC25-640-170. Recordkeeping.

A. Operators shall maintain evidence of all financial assurance mechanisms used to demonstrate financial responsibility under this chapter for an aboveground storage tank or pipeline, or both, until released from the requirements of this regulation under 9VAC25-640-190. An operator shall maintain such evidence at the aboveground storage tank site or the operator's place of work in this Commonwealth. Records maintained off-site shall be made available upon request of the board.

B. Operators shall maintain the following types of evidence of financial responsibility:

1. An operator using an assurance mechanism specified in 9VAC25-640-70 through 9VAC25-640-120 shall maintain the original instrument worded as specified.

2. An operator using a financial test or guarantee shall maintain (i) the chief financial officer's letter, and (ii) year-end financial statements for the most recent completed financial reporting year or the Dun and Bradstreet rating on which the chief financial officer's letter was based. Such evidence shall be on file no later than 120 days after the close of the financial reporting year.

3. An operator using an insurance policy or group self-insurance pool coverage shall maintain a copy of the signed insurance policy or group self-insurance pool coverage policy, with the endorsement or certificate of insurance and any amendments to the agreements.

4. a. An operator using an assurance mechanism specified in 9VAC25-640-70 through 9VAC25-640-120 shall maintain an original certification of financial responsibility worded identically as specified in Appendix IX, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted.

b. The operator shall maintain a new original certification at or before the time specified in 9VAC25-640-160 or whenever the financial assurance mechanisms used to demonstrate financial responsibility changes.

5. For submissions required under 9VAC25-640-160:

a. The operator must provide an insurance endorsement or certificate, or a notice of extension from the provider of financial assurance evidencing continuation of coverage in lieu of a new original surety bond or letter of credit , provided the form of the insurance endorsement or certificate, or notice of extension is approved by the board;

b. The operator need not provide a new original guarantee, letter of credit, certificate of deposit, or trust fund, provided the same mechanism is to continue to act as the operator's demonstration mechanism for the subsequent year or years;

c. The operator must provide a new original mechanism as specified in subdivision 2 of this subsection;

d. The operator need not provide a new original certification of acknowledgment, provided the associated trust agreement has not changed;

e. The operator must provide a new original certification of financial responsibility.

9VAC25-640-180. Drawing on financial assurance mechanisms.

A. The board may require the guarantor, surety, or institution issuing a letter of credit or certificate of deposit to pay to the board an amount up to the limit of funds provided by the financial assurance mechanism if:

1. a. The operator fails to establish alternate financial assurance within 60 days after receiving notice of cancellation of the guarantee, surety bond, letter of credit, certificate of deposit; and

b. The board determines or suspects that a discharge from an aboveground storage tank or pipeline covered by the mechanism has occurred and so notifies the operator, or the operator has notified the board pursuant to 9VAC25-91 of a discharge from an aboveground storage tank or pipeline covered by the mechanism; or

2. The conditions of subsection B of this section are satisfied.

B. The board shall deposit the financial assurance funds forfeited pursuant to subsection A of this section into the Virginia Petroleum Storage Tank Fund. The board may use the financial responsibility funds obtained pursuant to subsection A of this section to conduct containment and cleanup when it makes a final determination that a discharge has occurred and immediate or long-term containment and/or clean up for the discharge is needed, and the operator, after appropriate notice and opportunity to comply, has not conducted containment and clean up as required under 9VAC25-91.

9VAC25-640-200. Bankruptcy or other incapacity of operator provider of financial assurance.

A. Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming an operator as debtor, the operator shall notify the board by certified mail of such commencement.

B. Within 10 days after commencement of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S. Code, naming a guarantor providing financial assurance as debtor, such guarantor shall notify the operator and the board by certified mail of such commencement as required under the terms of the guarantee specified in 9VAC25-640-80.

C. An operator who obtains financial assurance by a mechanism other than the financial test of self-insurance will be deemed to be without the required financial assurance in the event of a bankruptcy or incapacity of its provider of financial assurance, or a suspension or revocation of the authority of the provider of financial assurance to issue a guarantee, insurance policy, group self-insurance pool coverage policy, surety bond, certificate of deposit, or letter of credit. The operator shall obtain alternate financial assurance as specified in this chapter and submit to the board the appropriate original forms specified in 9VAC25-640-170 B within 30 days after receiving notice of such an event. If the operator does not obtain alternate coverage within 30 days after such notification, he shall immediately notify the board in writing.

9VAC25-640-210. Replenishment of guarantees, letters of credit, certificates of deposit, or surety bonds.

A. If at any time a guarantee, letter of credit, certificate of deposit, or surety bond is drawn upon by instruction of the board and the board has expended all or part of the funds for containment and cleanup, the operator by the anniversary date of the financial mechanism from which the funds were drawn shall:

1. Replenish the value of financial assurance to equal the full amount of coverage required; or

2. Acquire another financial assurance mechanism for the amount by which the face value of the letter of credit, certificate of deposit, surety bond, or guarantee has been reduced.

B. For purposes of this section, the full amount of coverage required is the amount of coverage to be provided by 9VAC25-640-50. If a combination of mechanisms was used to provide the assurance funds which were drawn upon, replenishment shall occur by the earliest anniversary date among the mechanisms.

APPENDIX IX. CERTIFICATION OF FINANCIAL RESPONSIBILITY.

(Note: The instructions in brackets are to be replaced by the relevant information and the brackets deleted.)

Operator hereby certifies that it is in compliance with the requirements of 9VAC25-640.

The financial assurance mechanism[s] used to demonstrate financial responsibility under 9VAC25-640 is [are] as follows:

Indicate type of Mechanism:

____ Letter from Chief Financial Officer

____ Guarantee

____ Insurance Endorsement or Certificate

____ Letter of Credit

____ Certificate of Deposit

____ Surety Bond

____ Trust Fund

Name of Issuer: _____________

Mechanism Number (if applicable): _____________

Total number of gallons of aboveground storage capacity for which demonstration is provided: _____________

Amount of coverage for mechanism:

$______________ containment and clean up per occurrence and annual aggregate

Effective period of coverage: _______________ to _______________

Do(es) mechanism(s) cover(s): containment and clean up caused by either sudden accidental discharges or nonsudden accidental discharges or accidental discharges? ____ Yes ____ No

If "No," specify in the following space the items the mechanism covers:

[Signature of operator]

[Name of operator]

[Title] [Date]

[Signature of notary]

[Name of notary] [Date] My Commission expires: _______________