[Code of Federal Regulations]
[Title 40, Volume 26]
[Revised as of July 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR280.106]

[Page 546-551]
 
                   TITLE 40--PROTECTION OF ENVIRONMENT
 
         CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
 
PART 280_TECHNICAL STANDARDS AND CORRECTIVE ACTION REQUIREMENTS FOR OWNERS AND 
 
                   Subpart H_Financial Responsibility
 
Sec. 280.106  Local government guarantee.

    (a) A local government owner or operator may satisfy the 
requirements of Sec. 280.93 by obtaining a guarantee that conforms to 
the requirements of this section. The guarantor must be either the state 
in which the local government owner or operator is located or a local 
government having a ``substantial governmental relationship'' with the 
owner and operator and issuing the guarantee as an act incident to that 
relationship. A local government acting as the guarantor must:
    (1) demonstrate that it meets the bond rating test requirement of 
Sec. 280.104 and deliver a copy of the chief financial officer's letter 
as contained in Sec. 280.104(c) to the local government owner or 
operator; or
    (2) demonstrate that it meets the worksheet test requirements of 
Sec. 280.105 and deliver a copy of the chief financial officer's letter 
as contained in Sec. 280.105(c) to the local government owner or 
operator; or
    (3) demonstrate that it meets the local government fund requirements 
of Sec. 280.107(a), Sec. 280.107(b), or Sec. 280.107(c) and deliver a 
copy of the chief financial officer's letter as contained in Sec. 
280.107 to the local government owner or operator.
    (b) If the local government guarantor is unable to demonstrate 
financial assurance under any of Sec. Sec. 280.104, 280.105, 
280.107(a), 280.107(b), or 280.107(c), at the end of the financial 
reporting year, the guarantor shall send by certified mail, before 
cancellation or non-renewal of the guarantee, notice to the owner or 
operator. The guarantee will terminate no less than 120 days after the 
date the owner or operator receives the notification, as evidenced by 
the return receipt. The owner or operator must obtain alternative 
coverage as specified in Sec. 280.114(c).
    (c) The guarantee agreement must be worded as specified in paragraph 
(d) or (e) of this section, depending on which of the following 
alternative guarantee arrangements is selected:
    (1) If, in the default or incapacity of the owner or operator, the 
guarantor guarantees to fund a standby trust as directed by the Director 
of the implementing agency, the guarantee shall be worded as specified 
in paragraph (d) of this section.
    (2) If, in the default or incapacity of the owner or operator, the 
guarantor guarantees to make payments as directed by the Director of the 
implementing agency for taking corrective action or compensating third 
parties for bodily injury and property damage, the guarantee shall be 
worded as specified in paragraph (e) of this section.
    (d) If the guarantor is a state, the local government guarantee with 
standby trust must be worded exactly as follows, except that 
instructions in brackets are to be replaced with relevant information 
and the brackets deleted:

      Local Government Guarantee With Standby Trust Made by a State

    Guarantee made this [date] by [name of state], herein referred to as 
guarantor, to [the state implementing agency] and to any and all third 
parties, and obliges, on behalf of [local government owner or operator].

                                Recitals

    (1) Guarantor is a state.
    (2) [Local government owner or operator] owns or operates the 
following underground storage tank(s) covered by this guarantee: [List 
the number of tanks at each facility and the name(s) and address(es) of 
the facility(ies) where the tanks are located. If more than one 
instrument is used to assure different tanks at any one facility, for 
each tank covered by this instrument, list the tank identification 
number provided in the notification submitted pursuant to 40 CFR part 
280 or the corresponding state requirement, and the name and address of 
the facility.] This guarantee satisfies 40 CFR part 280, subpart H 
requirements for assuring funding for [insert: ``taking corrective 
action'' and/or ``compensating third parties for

[[Page 547]]

bodily injury and property damage caused by'' either ``sudden accidental 
releases'' or ``nonsudden accidental releases'' or ``accidental 
releases''; if coverage is different for different tanks or locations, 
indicate the type of coverage applicable to each tank or location] 
arising from operating the above-identified underground storage tank(s) 
in the amount of [insert dollar amount] per occurrence and [insert 
dollar amount] annual aggregate.
    (3) Guarantor guarantees to [implementing agency] and to any and all 
third parties that:
    In the event that [local government owner or operator] fails to 
provide alternative coverage within 60 days after receipt of a notice of 
cancellation of this guarantee and the [Director of the implementing 
agency] has determined or suspects that a release has occurred at an 
underground storage tank covered by this guarantee, the guarantor, upon 
instructions from the [Director] shall fund a standby trust fund in 
accordance with the provisions of 40 CFR part 280.112, in an amount not 
to exceed the coverage limits specified above.
    In the event that the [Director] determines that [local government 
owner or operator] has failed to perform corrective action for releases 
arising out of the operation of the above-identified tank(s) in 
accordance with 40 CFR part 280, subpart F, the guarantor upon written 
instructions from the [Director] shall fund a standby trust fund in 
accordance with the provisions of 40 CFR part 280.112, in an amount not 
to exceed the coverage limits specified above.
    If [owner or operator] fails to satisfy a judgment or award based on 
a determination of liability for bodily injury or property damage to 
third parties caused by [''sudden'' and/or ``nonsudden''] accidental 
releases arising from the operation of the above-identified tank(s), or 
fails to pay an amount agreed to in settlement of a claim arising from 
or alleged to arise from such injury or damage, the guarantor, upon 
written instructions from the [Director], shall fund a standby trust in 
accordance with the provisions of 40 CFR part 280.112 to satisfy such 
judgment(s), award(s), or settlement agreement(s) up to the limits of 
coverage specified above.
    (4) Guarantor agrees to notify [owner or operator] by certified mail 
of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), 
U.S. Code naming guarantor as debtor, within 10 days after commencement 
of the proceeding.
    (5) Guarantor agrees to remain bound under this guarantee 
notwithstanding any modification or alteration of any obligation of 
[owner or operator] pursuant to 40 CFR part 280.
    (6) Guarantor agrees to remain bound under this guarantee for so 
long as [local government owner or operator] must comply with the 
applicable financial responsibility requirements of 40 CFR part 280, 
subpart H for the above identified tank(s), except that guarantor may 
cancel this guarantee by sending notice by certified mail to [owner or 
operator], such cancellation to become effective no earlier than 120 
days after receipt of such notice by [owner or operator], as evidenced 
by the return receipt.
    (7) The guarantor's obligation does not apply to any of the 
following:
    (a) Any obligation of [local government owner or operator] under a 
workers' compensation, disability benefits, or unemployment compensation 
law or other similar law;
    (b) Bodily injury to an employee of [insert: local government owner 
or operator] arising from, and in the course of, employment by [insert: 
local government owner or 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, loaded to, in the 
care, custody, or control of, or occupied by [insert: local government 
owner or operator] that is not the direct result of a release from a 
petroleum underground storage tank;
    (e) Bodily damage or property damage for which [insert owner or 
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 40 CFR part 280.93.
    (8) Guarantor expressly waives notice of acceptance of this 
guarantee by [the implementing agency], by any or all third parties, or 
by [local government owner or operator],
    I hereby certify that the wording of this guarantee is identical to 
the wording specified in 40 CFR part 280.106(d) as such regulations were 
constituted on the effective date shown immediately below.
Effective date:_________________________________________________________
[Name of guarantor]
[Authorized signature for guarantor]
[Name of person signing]
[Title of person signing]
Signature of witness or notary:

    If the guarantor is a local government, the local government 
guarantee with standby trust must be worded exactly as follows, except 
that instructions in brackets are to be replaced with relevant 
information and the brackets deleted:

Local Government Guarantee With Standby Trust Made by a Local Government

    Guarantee made this [date] by [name of guaranteeing entity], a local 
government organized under the laws of [name of state], herein referred 
to as guarantor, to [the state implementing agency] and to any and all 
third parties, and obliges, on behalf of [local government owner or 
operator].

[[Page 548]]

                                Recitals

    (1) Guarantor meets or exceeds [select one: the local government 
bond rating test requirements of 40 CFR part 280.104, the local 
government financial test requirements of 40 CFR part 280.105, or the 
local government fund under 40 CFR part 280.107(a), 280.107(b), or 
280.107(c)].
    (2) [Local government owner or operator] owns or operates the 
following underground storage tank(s) covered by this guarantee: [List 
the number of tanks at each facility and the name(s) and address(es) of 
the facility(ies) where the tanks are located. If more than one 
instrument is used to assure different tanks at any one facility, for 
each tank covered by this instrument, list the tank identification 
number provided in the notification submitted pursuant to 40 CFR part 
280 or the corresponding state requirement, and the name and address of 
the facility.] This guarantee satisfies 40 CFR part 280, subpart H 
requirements for assuring funding for [insert: ``taking corrective 
action'' and/or ``compensating third parties for bodily injury and 
property damage caused by'' either ``sudden accidental releases'' or 
``nonsudden accidental releases'' or ``accidental releases''; if 
coverage is different for different tanks or locations, indicate the 
type of coverage applicable to each tank or location] arising from 
operating the above-identified underground storage tank(s) in the amount 
of [insert dollar amount] per occurrence and [insert: dollar amount] 
annual aggregate.
    (3) Incident to our substantial governmental relationship with 
[local government owner or operator], guarantor guarantees to 
[implementing agency] and to any and all third parties that:
    In the event that [local government owner or operator] fails to 
provide alternative coverage within 60 days after receipt of a notice of 
cancellation of this guarantee and the [Director of the implementing 
agency] has determined or suspects that a release has occurred at an 
underground storage tank covered by this guarantee, the guarantor, upon 
instructions from the [Director] shall fund a standby trust fund in 
accordance with the provisions of 40 CFR part 280.112, in an amount not 
to exceed the coverage limits specified above.
    In the event that the [Director] determines that [local government 
owner or operator] has failed to perform corrective action for releases 
arising out of the operation of the above-identified tank(s) in 
accordance with 40 CFR part 280, subpart F, the guarantor upon written 
instructions from the [Director] shall fund a standby trust fund in 
accordance with the provisions of 40 CFR part 280.112, in an amount not 
to exceed the coverage limits specified above.
    If [owner or operator] fails to satisfy a judgment or award based on 
a determination of liability for bodily injury or property damage to 
third parties caused by [``sudden'' and/or ``nonsudden''] accidental 
releases arising from the operation of the above-identified tank(s), or 
fails to pay an amount agreed to in settlement of a claim arising from 
or alleged to arise from such injury or damage, the guarantor, upon 
written instructions from the [Director], shall fund a standby trust in 
accordance with the provisions of 40 CFR part 280.112 to satisfy such 
judgment(s), award(s), or settlement agreement(s) up to the limits of 
coverage specified above.
    (4) Guarantor agrees that, if at the end of any fiscal year before 
cancellation of this guarantee, the guarantor fails to meet or exceed 
the requirements of the financial responsibility mechanism specified in 
paragraph (1), guarantor shall send within 120 days of such failure, by 
certified mail, notice to [local government owner or operator], as 
evidenced by the return receipt.
    (5) Guarantor agrees to notify [owner or operator] by certified mail 
of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), 
U.S. Code naming guarantor as debtor, within 10 days after commencement 
of the proceeding.
    (6) Guarantor agrees to remain bound under this guarantee 
notwithstanding any modification or alteration of any obligation of 
[owner or operator] pursuant to 40 CFR part 280.
    (7) Guarantor agrees to remain bound under this guarantee for so 
long as [local government owner or operator] must comply with the 
applicable financial responsibility requirements of 40 CFR part 280, 
subpart H for the above identified tank(s), except that guarantor may 
cancel this guarantee by sending notice by certified mail to [owner or 
operator], such cancellation to become effective no earlier than 120 
days after receipt of such notice by [owner or operator], as evidenced 
by the return receipt.
    (8) The guarantor's obligation does not apply to any of the 
following:
    (a) Any obligation of [local government owner or operator] under a 
workers' compensation, disability benefits, or unemployment compensation 
law or other similar law;
    (b) Bodily injury to an employee of [insert: local government owner 
or operator] arising from, and in the course of, employment by [insert: 
local government owner or 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 [insert: local government 
owner or operator] that is

[[Page 549]]

not the direct result of a release from a petroleum underground storage 
tank;
    (e) Bodily damage or property damage for which [insert: owner or 
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 40 CFR part 280.93.
    (9) Guarantor expressly waives notice of acceptance of this 
guarantee by [the implementing agency], by any or all third parties, or 
by [local government owner or operator].
    I hereby certify that the wording of this guarantee is identical to 
the wording specified in 40 CFR part 280.106(d) as such regulations were 
constituted on the effective date shown immediately below.
Effective date:_________________________________________________________
[Name of guarantor]
[Authorized signature for guarantor]
[Name of person signing]
[Title of person signing]
Signature of witness or notary:
________________________________________________________________________

    (e) If the guarantor is a state, the local government guarantee 
without standby trust must be worded exactly as follows, except that 
instructions in brackets are to be replaced with relevant information 
and the brackets deleted:

    Local Government Guarantee Without Standby Trust Made by a State

    Guarantee made this [date] by [name of state], herein referred to as 
guarantor, to [the state implementing agency] and to any and all third 
parties, and obliges, on behalf of [local government owner or operator].

                                Recitals

    (1) Guarantor is a state.
    (2) [Local government owner or operator] owns or operates the 
following underground storage tank(s) covered by this guarantee: [List 
the number of tanks at each facility and the name(s) and address(es) of 
the facility(ies) where the tanks are located. If more than one 
instrument is used to assure different tanks at any one facility, for 
each tank covered by this instrument, list the tank identification 
number provided in the notification submitted pursuant to 40 CFR part 
280 or the corresponding state requirement, and the name and address of 
the facility.] This guarantee satisfies 40 CFR part 280, subpart H 
requirements for assuring funding for [insert: ``taking corrective 
action'' and/or ``compensating third parties for bodily injury and 
property damage caused by'' either ``sudden accidental releases'' or 
``nonsudden accidental releases'' or ``accidental releases''; if 
coverage is different for different tanks or locations, indicate the 
type of coverage applicable to each tank or location] arising from 
operating the above-identified underground storage tank(s) in the amount 
of [insert: dollar amount] per occurrence and [insert: dollar amount] 
annual aggregate.
    (3) Guarantor guarantees to [implementing agency] and to any and all 
third parties and obliges that:
    In the event that [local government owner or operator] fails to 
provide alternative coverage within 60 days after receipt of a notice of 
cancellation of this guarantee and the [Director of the implementing 
agency] has determined or suspects that a release has occurred at an 
underground storage tank covered by this guarantee, the guarantor, upon 
written instructions from the [Director] shall make funds available to 
pay for corrective actions and compensate third parties for bodily 
injury and property damage in an amount not to exceed the coverage 
limits specified above.
    In the event that the [Director] determines that [local government 
owner or operator] has failed to perform corrective action for releases 
arising out of the operation of the above-identified tank(s) in 
accordance with 40 CFR part 280, subpart F, the guarantor upon written 
instructions from the [Director] shall make funds available to pay for 
corrective actions in an amount not to exceed the coverage limits 
specified above.
    If [owner or operator] fails to satisfy a judgment or award based on 
a determination of liability for bodily injury or property damage to 
third parties caused by [``sudden'' and/or ``nonsudden''] accidental 
releases arising from the operation of the above-identified tank(s), or 
fails to pay an amount agreed to in settlement of a claim arising from 
or alleged to arise from such injury or damage, the guarantor, upon 
written instructions from the [Director], shall make funds available to 
compensate third parties for bodily injury and property damage in an 
amount not to exceed the coverage limits specified above.
    (4) Guarantor agrees to notify [owner or operator] by certified mail 
of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), 
U.S. Code naming guarantor as debtor, within 10 days after commencement 
of the proceeding.
    (5) Guarantor agrees to remain bound under this guarantee 
notwithstanding any modification or alteration of any obligation of 
[owner or operator] pursuant to 40 CFR part 280.
    (6) Guarantor agrees to remain bound under this guarantee for so 
long as [local government owner or operator] must comply with the 
applicable financial responsibility requirements of 40 CFR part 280, 
subpart H for the above identified tank(s), except that guarantor may 
cancel this guarantee by sending notice by certified mail to [owner or

[[Page 550]]

operator], such cancellation to become effective no earlier than 120 
days after receipt of such notice by [owner or operator], as evidenced 
by the return receipt. If notified of a probable release, the guarantor 
agrees to remain bound to the terms of this guarantee for all charges 
arising from the release, up to the coverage limits specified above, 
notwithstanding the cancellation of the guarantee with respect to future 
releases.
    (7) The guarantor's obligation does not apply to any of the 
following:
    (a) Any obligation of [local government owner or operator] under a 
workers' compensation disability benefits, or unemployment compensation 
law or other similar law;
    (b) Bodily injury to an employee of [insert local government owner 
or operator] arising from, and in the course of, employment by [insert: 
local government owner or 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, loaded to, in the 
care, custody, or control of, or occupied by [insert: local government 
owner or operator] that is not the direct result of a release from a 
petroleum underground storage tank;
    (e) Bodily damage or property damage for which [insert: owner or 
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 40 CFR part 280.93.
    (8) Guarantor expressly waives notice of acceptance of this 
guarantee by [the implementing agency], by any or all third parties, or 
by [local government owner or operator].
    I hereby certify that the wording of this guarantee is identical to 
the wording specified in 40 CFR part 280.106(e) as such regulations were 
constituted on the effective date shown immediately below.
Effective date:_________________________________________________________
[Name of guarantor]
[Authorized signature for guarantor]
[Name of person signing]
[Title of person signing]
Signature of witness or notary:

    If the guarantor is a local government, the local government 
guarantee without standby trust must be worded exactly as follows, 
except that instructions in brackets are to be replaced with relevant 
information and the brackets deleted:

    Local Government Guarantee Without Standby Trust Made by a Local 
                               Government

    Guarantee made this [date] by [name of guaranteeing entity], a local 
government organized under the laws of [name of state], herein referred 
to as guarantor, to [the state implementing agency] and to any and all 
third parties, and obliges, on behalf of [local government owner or 
operator].

                                Recitals

    (1) Guarantor meets or exceeds [select one: the local government 
bond rating test requirements of 40 CFR part 280.104, the local 
government financial test requirements of 40 part CFR 280.105, the local 
government fund under 40 CFR part 280.107(a), 280.107(b), or 280.107(c).
    (2) [Local government owner or operator] owns or operates the 
following underground storage tank(s) covered by this guarantee: [List 
the number of tanks at each facility and the name(s) and address(es) of 
the facility(ies) where the tanks are located. If more than one 
instrument is used to assure different tanks at any one facility, for 
each tank covered by this instrument, list the tank identification 
number provided in the notification submitted pursuant to 40 CFR part 
280 or the corresponding state requirement, and the name and address of 
the facility.] This guarantee satisfies 40 CFR part 280, subpart H 
requirements for assuring funding for [insert: ``taking corrective 
action'' and/or ``compensating third parties for bodily injury and 
property damage caused by'' either ``sudden accidental releases'' or 
``nonsudden accidental releases'' or ``accidental releases''; if 
coverage is different for different tanks or locations, indicate the 
type of coverage applicable to each tank or location] arising from 
operating the above-identified underground storage tank(s) in the amount 
of [insert: dollar amount] per occurrence and [insert: dollar amount] 
annual aggregate.
    (3) Incident to our substantial governmental relationship with 
[local government owner or operator], guarantor guarantees to 
[implementing agency] and to any and all third parties and obliges that:
    In the event that [local government owner or operator] fails to 
provide alternative coverage within 60 days after receipt of a notice of 
cancellation of this guarantee and the [Director of the implementing 
agency] has determined or suspects that a release has occurred at an 
underground storage tank covered by this guarantee, the guarantor, upon 
written instructions from the [Director] shall make funds available to 
pay for corrective actions and compensate third parties for bodily 
injury and property damage in an amount not to exceed the coverage 
limits specified above.
    In the event that the [Director] determines that [local government 
owner or operator] has failed to perform corrective action for releases 
arising out of the operation of the above-identified tank(s) in 
accordance with 40 CFR part 280, subpart F, the guarantor upon written 
instructions from the [Director] shall make funds available to pay for

[[Page 551]]

corrective actions in an amount not to exceed the coverage limits 
specified above.
    If [owner or operator] fails to satisfy a judgment or award based on 
a determination of liability for bodily injury or property damage to 
third parties caused by [``sudden'' and/or ``nonsudden''] accidental 
releases arising from the operation of the above-identified tank(s), or 
fails to pay an amount agreed to in settlement of a claim arising from 
or alleged to arise from such injury or damage, the guarantor, upon 
written instructions from the [Director], shall make funds available to 
compensate third parties for bodily injury and property damage in an 
amount not to exceed the coverage limits specified above.
    (4) Guarantor agrees that if at the end of any fiscal year before 
cancellation of this guarantee, the guarantor fails to meet or exceed 
the requirements of the financial responsibility mechanism specified in 
paragraph (1), guarantor shall send within 120 days of such failure, by 
certified mail, notice to [local government owner or operator], as 
evidenced by the return receipt.
    (5) Guarantor agrees to notify [owner or operator] by certified mail 
of a voluntary or involuntary proceeding under Title 11 (Bankruptcy), 
U.S. Code naming guarantor as debtor, within 10 days after commencement 
of the proceeding.
    (6) Guarantor agrees to remain bound under this guarantee 
notwithstanding any modification or alteration of any obligation of 
[owner or operator] pursuant to 40 CFR part 280.
    (7) Guarantor agrees to remain bound under this guarantee for so 
long as [local government owner or operator] must comply with the 
applicable financial responsibility requirements of 40 CFR part 280, 
subpart H for the above identified tank(s), except that guarantor may 
cancel this guarantee by sending notice by certified mail to [owner or 
operator], such cancellation to become effective no earlier than 120 
days after receipt of such notice by [owner or operator], as evidenced 
by the return receipt. If notified of a probable release, the guarantor 
agrees to remain bound to the terms of this guarantee for all charges 
arising from the release, up to the coverage limits specified above, 
notwithstanding the cancellation of the guarantee with respect to future 
releases.
    (8) The guarantor's obligation does not apply to any of the 
following:
    (a) Any obligation of [local government owner or operator] under a 
workers' compensation disability benefits, or unemployment compensation 
law or other similar law;
    (b) Bodily injury to an employee of [insert: local government owner 
or operator] arising from, and in the course of, employment by [insert: 
local government owner or 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, loaded to, in the 
care, custody, or control of, or occupied by [insert: local government 
owner or operator] that is not the direct result of a release from a 
petroleum underground storage tank;
    (e) Bodily damage or property damage for which [insert: owner or 
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 40 CFR part 280.93.
    (9) Guarantor expressly waives notice of acceptance of this 
guarantee by [the implementing agency], by any or all third parties, or 
by [local government owner or operator],
    I hereby certify that the wording of this guarantee is identical to 
the wording specified in 40 CFR part 280.106(e) as such regulations were 
constituted on the effective date shown immediately below.
Effective date:_________________________________________________________
[Name of guarantor]
[Authorized signature for guarantor]
[Name of person signing]
[Title of person signing]
Signature of witness or notary:

[58 FR 9056, Feb. 18, 1993]