Title 18 . Environmental Conservation

Chapter 75 . Administrative Enforcement

Section 235. Amount and evidence of financial responsibility; general provisions

18 AAC 75.235. Amount and evidence of financial responsibility; general provisions

(a) Each vessel or facility must be specifically covered by an approved form of financial responsibility. The dollar amounts of required financial responsibility set out in AS 46.04.040 or 46.04.055 are adjusted, based upon the percentage change between the reference base index and the semi-annual average Consumer Price Index for all urban consumers in the Anchorage metropolitan area for the second half of 2001, as reported by the United States Department of Labor, bureau of labor statistics. An applicant under 18 AAC 75.205 or 18 AAC 75.225 must demonstrate financial responsibility to respond in damages for claims covered by AS 46.04.040 (i) in the following applicable minimum amount:

(1) for a crude oil terminal facility, $66,700,000 per incident;

(2) for a noncrude oil terminal facility, $33.35, per incident, for each barrel of total noncrude oil storage capacity at the terminal, or $1,334,000, whichever is greater, subject to a maximum of $66,700,000; if the facility stores more noncrude oil than crude oil, the $33.35 per incident, per barrel requirement of this paragraph applies to each barrel of oil storage capacity at the facility;

(3) for a tank vessel or barge carrying crude oil, $400.20, per incident, for each barrel of storage capacity or $133,400,000, whichever is greater;

(4) for a tank vessel or barge carrying noncrude oil, $133.40, per incident, for each barrel of storage capacity or $1,334,000, whichever is greater, subject to a maximum of $46,690,000;

(5) for a nontank vessel carrying predominantly nonpersistent product, $133.40 per incident, for each barrel of total oil storage capacity, persistent and nonpersistent product, on the vessel or $1,334,000, whichever is greater;

(6) for a nontank vessel carrying predominantly persistent product, $400.20 per incident, for each barrel of total oil storage capacity, persistent product and nonpersistent product, on the vessel or $6,670,000, whichever is greater;

(7) for a railroad tank car,

(A) $400.20 per incident for each barrel of persistent product based on the maximum amount of persistent product storage capacity of any train on the railroad; and

(B) $133.40 per incident for each barrel of nonpersistent product based on the maximum amount of nonpersistent product storage capacity of any train on the railroad or $1,334,000, whichever is greater;

(8) for a pipeline, $66,700,000 per incident;

(9) for an offshore exploration or production facility, $66,700,000 per incident;

(10) for an onshore production facility that produces more than 10,000 barrels per day of oil, $26,680,000 per incident;

(11) for an onshore production facility that produces more than 5,000, but not more than 10,000 barrels per day of oil, $13,340,000 per incident;

(12) for an onshore production facility that produces more than 2,500, but not more than 5,000 barrels per day of oil, $6,670,000 per incident;

(13) for an onshore production facility that produces 2,500 or fewer barrels per day of oil, $1,334,000 per incident;

(14) except as provided in (15) of this subsection, for an onshore exploration facility, $1,334,000 per incident;

(15) for a shallow gas exploration facility, $33,350 per incident.

(b) The required amount of financial responsibility does not increase with increasing numbers of vessels or facilities operated by the same applicant. An application for multiple vessels or facilities must show proof of financial responsibility in an amount equal to the highest applicable amount prescribed by (a) of this section. The department will, in its discretion, consider the proof of financial responsibility as being applicable to all operations if each separate operation is named as being specifically covered by the proof submitted.

(c) The applicant may add an owned, operated, leased, or chartered vessel or facility to its proof of financial responsibility by submitting a letter to the department requesting an amendment to the application and including documents that verify to the department's satisfaction that the additional operation is covered by the current approved proof of financial responsibility.

(d) The applicant may delete an owned, operated, leased, or chartered vessel or facility from its proof of financial responsibility by submitting a letter to the department requesting an amendment to the application and including documents that verify to the department's satisfaction that the vessel or facility is no longer covered by the current approved proof of financial responsibility.

(e) In satisfying proof of financial responsibility requirements for a combined application, a guarantor or insurer is responsible only for the amount applicable to the vessel or facility that discharges oil and not the amount applicable to another vessel or facility listed on the application.

(f) If a vessel or facility subject to AS 46.04.040 or 46.04.055 discharges oil and the department determines that a claim has been or is likely to be presented as a result of the discharge and that payment of the claim will reduce the owner's or operator's demonstrated financial responsibility below that required by (a) of this section, the department will, in its discretion, require the owner or operator to demonstrate an additional amount of financial responsibility equal to the amount the department determines might be paid as a result of the claim.

(g) If the applicant fails to comply with the requirement imposed under (f) of this section to demonstrate an additional amount of financial responsibility, the department will, in its discretion, provide the owner or operator with 10 days' notice of the department's intent to revoke its approval of the proof of financial responsibility.

(h) If the department provides a notice under (g) of this section, the applicant may request an informal review under 18 AAC 15.195 - 18 AAC 15.340. The requirement of (f) of this section is not stayed during the pendency of an adjudicatory hearing.

(i) Proof of financial responsibility may be demonstrated by one or any combination of the mechanisms listed in AS 46.04.040 (e), as approved by the department.

(j) An insurer or surety shall respond to damages covered by AS 46.04.040 (i), but only with respect to the stated limit of liability contained in an insurance policy or surety submitted as proof of financial responsibility and approved under this chapter.

(k) For purposes of this section, the reference base index is the semi-annual average Consumer Price Index for all urban consumers in the Anchorage metropolitan area for the first half of 1990, as reported by the United States Department of Labor, bureau of labor statistics.

( l ) A person required to demonstrate proof of financial responsibility under AS 46.04.040 or 46.04.055 shall maintain coverage for at least 60 days after operation of the vessel or facility ceases.

(m) Short-term testing, evaluation, or experimental pilot production activities are subject to the financial responsibility requirements of AS 46.04.040 and 18 AAC 75.205 - 18 AAC 75.290 for exploration facilities.

(n) For purposes of AS 46.04.040 , 46.06.055, and this section, "operation" means, for

(1) an oil terminal facility, until the

(A) department finds that storage tanks are empty and out of use and that all connecting pipe lines are rendered unusable and posted with a placard prohibiting refilling of the tank without department approval; or

(B) facility is closed and dismantled;

(2) a pipeline, while the pipeline

(A) is connected to a production facility; or

(B) contains oil;

(3) an exploration or production facility, until the department has been notified in writing that the Alaska Oil and Gas Conservation Commission found that all wells were properly plugged and abandoned; for purposes of this paragraph, "abandoned" means that a well has been plugged as required by 20 AAC 25.105; and

(4) a vessel, while the vessel is in the waters of the state, unless the owner or operator submits a notarized statement to the department certifying that all oil on the vessel has been removed.

History: Eff. 5/14/92, Register 122; am 11/26/94, Register 132; am 12/8/95, Register 136; am 10/1/99, Register 151; am 10/28/2000, Register 156; am 10/27/2002, Register 164; am 11/27/2002, Register 164

Authority: AS 46.03.020

AS 46.04.040

AS 46.04.045

AS 46.04.055

AS 46.04.070