Financial Responsibility (FR) is the process of paying for site rehabilitation as well as compensating third
parties for bodily injury and property damage caused by accidental releases from underground storage tanks
containing petroleum or petroleum products. Site rehabilitation means investigation, evaluation, planning,
design, engineering, construction, or other services put forth to investigate or clean up affected subsurface
soils, groundwater, or surface water.
According to R. 61-92, Part 280 Underground Storage
Regulations all owners and/or operators of regulated tanks (including temporarily closed tanks) must provide
financial responsibility. If the owner and operator are separate persons, only one person is required to provide
financial responsibility; however, both parties are liable in the event of noncompliance.
According to South Carolina Code of Laws, Title 44,
Chapter 2 ( SUPERB Act of 1988 ), the amount owners and/or operators must provide is a $25,000 per
occurrence deductible. This works in much the same way as a health insurance policy. For a qualified release,
once the tank owner satisfies the deductible the SUPERB fund will begin paying for site rehabilitation and third
party claims (up to 1 million dollars).
There are several ways tank owners can satisfy the $25,000 per occurrence deductible requirement. A single
mechanism, or a combination of mechanisms, can be used to meet the requirement. The following information is
only an outline of the various mechanisms. More specific information, including language that must be used in
policies or letters, can be found in the regulations.
Self-Test (Section 280.95)
The owner or operator must pass a financial test as specified in the regulation.
Must provide a Financial self-test letter from a Chief Financial Officer or a report prepared by a CPA
as stated in the regulation.
Self-Insurance (Section 280.101)
Self-insurance requires that an owner or operator show a tangible net worth of $50,000 or more.
Must provide an annual financial statement and letter prepared by a Certified Public Accountant,
Licensed Public Accountant, a board-licensed Accounting Practitioner or the chief financial officer of
A guarantee is a promise by another company to fund a standby trust fund. The third party company must
have a significant business interest in the owner or operator. They must provide information outlined in
Self-Insurance (Section 280.101).
Must provide a guarantee letter as defined in Section 280.96.
Must provide an annual financial statement from guarantor and a letter from a Certified Public
Accountant, Licensed Public Accountant, a board-licensed Accounting Practitioner or the chief financial
officer of the company.
Pollution Liability Insurance (Section 280.97)
The owner or operator obtains liability insurance from a qualified insurer or risk retention group. The
policy must specifically address releases from USTs.
Must provide a copy of the policy or the Certificate of Insurance Endorsement.
Must have minimum liability limits of $25,000 per occurrence/annual aggregrate.
Must specifically list site address and number of tanks covered.
A surety bond is a guarantee by a surety company that will meet the obligation of the owner or operator.
Surety companies eligible to issue surety bonds are listed in Circular
Must provide the surety bond.
Letter of Credit (280.99)
A letter of credit is a contract between the issuer (normally a bank), the principal (the UST owner or
operator), and the third party (DHEC). The issuer promises to pay a certain amount to the third party in
the event the principal fails to meet an obligation.
Must provide the Irrevocable Standby Letter of Credit (language defined in Section 280.99).
Effective May 26, 2017 the bank is required to notify the Department if the tank owner/operator's Letter
of Credit will not be renewed.
Trust Fund (Section 280.102)
The owner or operator may establish a fully funded trust fund. Money is held and managed by an impartial
third party (trustee). The trustee must have authority to act as a trustee and be regulated and examined
by a federal agency or a South Carolina Agency. The trust fund may be funded for the full-required
amount or funded for part of the required amount in combination with another mechanism.
Must provide the Trust Fund Agreement and the Certification of Acknowledgment
Local Government Options (Section 280.104-107)
Local government entities may use a bond rating test, a financial test, issue a guarantee, or dedicate a
fund to meet financial responsibility requirements.
Must provide a letter from the Chief Financial Officer, Local Government Guarantee with Standby Trust,
or Local Government Guarantee without Standby Trust.