                                 CODE OF VIRGINIA

FINANCIAL RESPONSIBILITY FOR VESSELS AND FACILITIES (§ 62.1-44.34:16)

A. The operator of any tank vessel entering upon state waters shall have a
Certificate of Financial Responsibility approved by the U.S. Coast Guard
pursuant to &#xA7; 4202 of the federal Oil Pollution Act of 1990 or shall
deposit with the Board cash or its equivalent in the amount of $500 per gross
ton of such vessel. Any such cash deposits received by the Board shall be held
in escrow in the Virginia Petroleum Storage Tank Fund.

B. If the Board determines that oil has been discharged in violation of this
article or that there has been a substantial threat of such discharge from a
vessel for which a cash deposit has been made, any amount held in escrow may be
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 deposit
requirements specified in this section if the operator of the tank vessel
provides evidence of financial responsibility pursuant to the terms and
conditions of this subsection. The Board shall adopt requirements for operators
of tank vessels for maintaining evidence of financial responsibility in an
amount equivalent to the cash deposit which would be required for such tank
vessel pursuant to this section.

D. The Board is authorized to promulgate regulations requiring operators of
facilities to demonstrate financial responsibility sufficient to comply with the
requirements of this article as a condition of operation. Operators of
facilities shall demonstrate financial responsibility based on the total storage
capacity of all facilities operated within the Commonwealth. Regulations
governing the amount of any financial responsibility required shall take into
consideration the type, oil storage or handling capacity and location of a
facility, the risk of a discharge of oil at that type of facility in the
Commonwealth, the potential damage or injury to state waters or the impairment
of their beneficial use that may result from a discharge at that type of
facility, the potential cost of containment and cleanup at that type of
facility, and the nature and degree of injury or interference with general
health, welfare and property that may result from a discharge at that type of
facility. In no instance shall the financial responsibility requirements for
facilities exceed $.05 per gallon of aboveground storage capacity or $5 million
for a pipeline. In no instance shall any financial test of self-insurance
require the operator of a facility to demonstrate more than $1 of net worth for
each dollar of required financial responsibility. If such net worth does not
equal the required financial responsibility, then the operator shall demonstrate
the minimum required amount by a combination of financial responsibility
mechanisms in accordance with subsection E of this section. No governmental
agency shall be required to comply with any such regulations.

E. Financial responsibility may be demonstrated by self-insurance, insurance,
guaranty or surety, or any other method approved by the Board, or any
combination thereof, under the terms the Board may prescribe. To obtain an
exemption from the cash deposit requirements under this section: the operator of
a tank vessel and insurer, guarantor or surety shall appoint an agent for
service of process in the Commonwealth; any insurer must be authorized by the
Commonwealth to engage in the insurance business; and any instrument of
insurance, guaranty or surety must provide that actions may be brought on such
instrument of insurance, guaranty or surety directly against the insurer,
guarantor or surety for any violation of this chapter by the operator up to, but
not exceeding, the amount insured, guaranteed or otherwise pledged. An operator
of a tank vessel or facility whose financial responsibility is accepted by the
Board under this subsection shall notify the Board at least 30 days before the
effective date of a change, expiration or cancellation of any instrument of
insurance, guaranty or surety. Operators of facilities who are unable to
demonstrate financial responsibility in the amounts established pursuant to
subsection D may establish an insurance pool pursuant to the requirements of
&#xA7; 62.1-44.34:12 in order to demonstrate such financial responsibility.

F. Acceptance of proof of financial responsibility for tank vessels shall
expire:

   1. One year from the date on which the Board exempts an operator from the cash
   deposit requirement based on evidence of self-insurance, except that the Board
   may establish by regulation a different expiration date for acceptance of
   evidence of self-insurance submitted by public agencies;

   2. On the effective date of any change in the operator&#8217;s instrument of
   insurance, 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 responsibility
   shall be filed 30 days before the date of expiration.

G. Operators of facilities shall annually demonstrate and maintain evidence of
financial responsibility for containment and cleanup in accordance with
regulations adopted by the Board.

H. The Board, after notice and opportunity for hearing, may revoke its
acceptance 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 of
   acceptance of evidence of financial responsibility under this section or the
   requirements established by the Board pursuant to this section.

I. It is not a defense to any action brought for failure to comply with the cash
deposit requirement or to provide acceptable evidence of financial
responsibility that the person charged believed in good faith that the tank
vessel or facility or the operator of the tank vessel or facility had made the
required cash deposit or possessed evidence of financial responsibility accepted
by the Board.

HISTORY: 1990, c. 917; 1992, cc. 456, 819; 1993, c. 375; 1994, c. 196; 1999, c.
91; 2004, c. 276.