33 C.F.R. Subpart C—Financial Responsibility for Offshore Facilities
Title 33 - Navigation and Navigable Waters
(a) This subpart applies to the owner or operator of each offshore facility required by the Act to establish and maintain evidence of financial responsibility. (b) For the purpose of this subpart: (1) All structures, including platforms, wells, and pipelines, are considered a single offshore facility if they are physically connected, located upstream of the point of custody transfer, within the same oil field, and under one ownership. (2) If separate parts of a structure, including platforms and pipelines, are owned separately, each part having common ownership is considered a separate offshore facility. (3) A mobile offshore drilling unit is considered an offshore facility from the moment a drill shaft or other device connected to the unit first touches the seabed or connects to a well for the purposes of exploration, development, or production of oil until drilling is completed and the unit is no longer attached to the well or drill hole by any device. (4) A mobile offshore drilling unit considered an offshore facility under paragraph (b)(3) of this section remains a separate facility when physically connected to another offshore facility, unless both are under one ownership. (5) All segments of a common carrier pipeline from the point of custody transfer to the shore, including any pumping or booster stations, which are under one ownership are considered a single offshore facility. (6) Any pipeline, which is under one ownership, between two offshore facilities, or between an offshore facility and the shore, is considered a single offshore facility. (7) Offshore facilities which drill for, produce, or process only natural gas are not subject to this subpart unless the facilities have the capacity to transport, store, or otherwise handle more than 1,000 barrels of condensate at any one time. Note: Regulations governing financial responsiblity and certification for vessels are promulgated by the Federal Maritime Commission.
Title 33: Navigation and Navigable Waters
PART 135—OFFSHORE OIL POLLUTION COMPENSATION FUND
Subpart C—Financial Responsibility for Offshore Facilities
§ 135.201 Applicability.
§ 135.203 Amount required.
(a) Each facility that is used for drilling for, producing, or processing oil, or which has the capacity to transport, store, transfer, or otherwise handle more than one thousand barrels of oil at any one time must be covered by evidence of financial responsibility submitted by or on behalf of the owner or operator of the facility, in the amount of $35,000,000.
(b) Evidence of financial responsibility established and maintained by a person who owns or operates more than one facility, or who has an interest in the ownership or operation of more than one facility, may be applied by that person towards establishing and maintaining the required evidence of financial responsibility for each facility in which that person has an interest, if the evidence is available to satisfy liabilities arising out of incidents involving those facilities.
§ 135.204 Submission of evidence.
(a) Where the offshore facility is owned and operated solely by one person, that person must establish and maintain evidence of financial responsibility covering the facility.
(b) Where the offshore facility is owned in its entirety by one person and operated solely by another person, evidence of financial responsibility covering the facility must be established and maintained by either the owner or the operator, or, in consolidated form, by both the owner and operator.
(c) Where the offshore facility is owned or operated by more than one person, evidence of financial responsibility covering the facility must be established and maintained by any one of the owners or operators, or, in consolidated form, by or on behalf of two or more owners or operators.
(d) When evidence of financial responsibility is established in a consolidated form, the proportional share of each participant must be shown. The evidence must be accompanied by a statement authorizing the applicant to act for and in behalf of each participant in submitting and maintaining the evidence of financial responsibility.
(e) Each owner and operator of a facility is subject to the penalty provided by section 312(a) of the Act if evidence of financial responsibility is not established and maintained for that facility.
§ 135.205 Methods of establishing.
(a) Evidence of financial responsibility may be established by any one, or any combination acceptable to the Fund Administrator, of the following methods:
(1) Insurance;
(2) Guaranty;
(3) Indemnity;
(4) Surety bond; or
(5) Qualification as self-insurer.
(b) The Fund Administrator will accept alternative evidence of financial responsibility if, in the Fund Administrator's opinion, it establishes an equivalent degree of financial responsibility for the purposes of this subpart.
§ 135.207 Insurance as evidence.
(a) Insurance filed with the Fund Administrator as evidence of financial responsibility shall be issued by an insurer that is acceptable to the Fund Administrator. Those insurers may include domestic and foreign insurance companies, corporations or associations of individual insurers, protection and indemnity associations, or other persons acceptable to the Fund Administrator.
(b) An insurer must:
(1) Agree to be sued directly, within the limits of the policy coverage, by any person for claims under the Act against the owner or operator; and
(2) Designate an agent in the United States for service of process.
(c) Insurance as evidence of financial responsibility must indicate the effective date in the endorsement on the application for Certificate of Financial Responsibility, and must remain in force until the date of termination indicated in the endorsement or until—
(1) 30 days after mailing, by certified mail, to the Fund Administrator, and the person insured, notification of intent to cancel; or
(2) Other evidence of financial responsibility acceptable to the Fund Administrator has been established; or
(3) The facility to which the insurance applies ceases to be a facility under §135.201(b).
(d) Termination of insurance coverage shall not affect the liability of the insurer for an incident occurring before the effective date of termination.
(e) Confirmation of insurance may be accepted from an insurance broker that is acceptable to the Fund Administrator, subject to the Fund Administrator's approval of the individual underwriters, in lieu of their signature on an application, provided the confirmation:
(1) States the insurance covers liabilities under the Act;
(2) Sets forth the limit and deductible;
(3) Provides for direct action against the individual underwriters to the extent of their contracts;
(4) Names the underwriters and percentages of the limit accepted by each;
(5) States that the underwriters agree to give prior written notice of cancellation or change to the Fund Administrator as required in paragraph (c) of this section; and
(6) States that the notice indicated in paragraph (e)(5) of this section will not affect the underwriter's liability for incidents occurring before the effective date of cancellation.
§ 135.209 Guaranty as evidence.
(a) Guarantors must:
(1) Agree to be sued directly, within the limits the guaranty, by any person for claims under the Act against the owner or operator; and
(2) Designate an agent in the United States for service of process.
(b) Guaranties filed as evidence of financial responsibility must be accompanied by the same proof that the Guarantor is financially responsible as this subpart would require of the owner or operator; i.e., insurance, surety bond, self-insurance, or other acceptable methods.
(c) A guaranty as evidence of financial responsibility must indicate the effective date in the endorsement on the application for Certificate of Financial Responsibility, and must remain in force until the date of termination indicated in the endorsement or until:
(1) 30 days after mailing, by certified mail, to the Fund Administrator, and the person guarantied, notification of intent to cancel; or
(2) Other evidence of financial responsibility acceptable to the Fund Administrator has been established; or
(3) The facility to which the guaranty applies ceases to be a facility under §135.201(b).
(d) Termination of the guaranty shall not affect the liability of the guarantor for an incident occurring before the effective date of termination.
§ 135.210 Indemnity as evidence.
(a) An indemnitor must:
(1) Agree to be sued directly, within the limits of the contract coverage, by any person for claims under the Act against the owner or operator to the extent of the indemnity coverage; and
(2) Designate an agent in the United States for service of process.
(b) Indemnity filed as evidence of financial responsibility must be accompanied by the same proof of the indemnitor's financial responsibility as this subpart would require of the owner or operator; i.e., insurance, surety bond, self-insurance; or other acceptable methods.
(c) An indemnity as evidence of financial responsibility must indicate the effective date in the endorsement on the application for Certificate of Financial Responsibility, and must remain in force until the date of termination indicated in the endorsement or until—
(1) 30 days after mailing, by certified mail, to the Fund Administrator, and the person indemnified, notification of intent to cancel; or
(2) Other evidence of financial responsibility acceptable to the Fund Administrator has been established; or
(3) The facility to which the indemnity applies ceases to be a facility under §135.201(b).
(d) Termination of an indemnity shall not affect the liability of the indemnitor for an incident occurring before the effective date of termination.
§ 135.211 Surety bond as evidence.
(a) Each surety bond filed with the Fund Administrator as evidence of financial responsibility shall be issued by a bonding company that:
(1) Is authorized to do business in the United States;
(2) Is licensed to do business in the state or territory in which the bond is executed;
(3) Is certified by the Department of the Treasury with respect to the issuance of Federal bonds in the penal sum of the bond; and
(4) Designates an agent in the United States for service of process.
(b) The bonding company must agree to be sued directly, within the limits of the surety bond, by any person for claims under the Act against the owner or operator.
(c) A surety bond as evidence of financial responsibility must indicate the effective date in the endorsement on the application for Certificate of Financial Responsibility, and must remain in force until the date of termination indicated in the endorsement or until:
(1) 30 days after mailing, by certified mail, to the Fund Administrator, and the person bonded, notification of intent to cancel; or
(2) Other evidence of financial responsibility acceptable to the Fund Administrator has been established; or
(3) The facility to which the surety bond applies ceases to be a facility under §135.201(b).
(d) Termination of the surety bond shall not affect the liability of the surety for an incident occurring before the effective date of termination.
§ 135.213 Qualification as self-insurer.
(a) Qualification for self insurance must be supported by a copy of the self-insurer's current balance sheet, income statement, and statement of changes in financial position that are certified by an independent Certified Public Accountant and must be accompanied by either:
(1) An additional statement confirming that the self-insurer's current U.S. assets, including those of consolidated subsidiaries held in the U.S., not including pledged assets or stock not publicly traded, exceed the current U.S. liabilities, and the self-insurers net worth exceeds the amount of the requested self-insurance; or
(2) A statement, based on an analysis of the self-insurer's financial position, which shows that sufficient assets or cash flow, other than which might be damaged as a result of a pollution incident, are available which may be liquidated to provide the funds necessary to retire a claim for the amount of the self-insurance without placing the self-insurer in an insolvent position.
(b) The statements required by paragraphs (a) (1) and (2) of this section must be prepared and submitted by the involved Certified Public Accountant when the required financial statements are prepared in consolidated form and the liability represents less than the full financial backing of the consolidated entity, otherwise they may be prepared and submitted by the Treasurer or equivalent official.
(c) If the self-insurer files a Securities and Exchange Commission Form 10–K report, a copy of the self-insurer's most recent 10–K report must be filed with the Fund Administrator within 120 days after the end of the fiscal year to which it relates, in addition to filing the most recent 10–K report with the initial application.
(d) Each self-insurer must file annually with the Fund Administrator, copies of documents required under paragraph (a) of this section, within 120 days after the close of the self-insurer's fiscal accounting period. If a self-insurer files a 10–K report with the Fund Administrator under paragraph (c) of this section which contains some of the financial statements required in paragraph (a), a separate filing of those specific statements need not be made.
§ 135.215 Certification.
(a) Applicants shall:
(1) If the facility is in existence before September 17, 1979, apply for a Certificate of Financial Responsibility before September 17, 1979.
(2) If the offshore facility is not in existence on September 17, 1979, apply for a Certificate of Financial Responsibility at least 45 days before placing the offshore facility into operation or coverage becomes effective.
(3) If submitting an application to include an additional facility under previously established evidence of financial responsibility, apply for a Certificate of Financial Responsibility as early as possible before the anticipated date of desired coverage.
(b) Each application for a Certificate of Financial Responsibility must be made on a Coast Guard prescribed Application for Certificate of Financial Responsibility form, available from the Fund Administrator or any Coast Guard District Office. This form must be submitted for each facility; however, if evidence of financial responsibility has been previously established in an amount sufficient to meet §135.203 (a), no additional evidence need be submitted with the application.
(c) Each application form submitted under this section must be signed by the applicant. A written statement proving authority to sign must also be submitted where the signer is not disclosed as an individual (sole proprietor) applicant, a partner in a partnership applicant, or a director or other officer of a corporate applicant.
(d) Financial data or other information submitted under this section that is proprietary in nature, or constitutes a trade secret, must be clearly designated as such to insure confidential treatment by the Fund Administrator, under 5 U.S.C. 552, the Freedom of Information Act, which provides for exemption from disclosure of trade secret data.
(e) If any of the information submitted for certification is determined by the Fund Administrator to be insufficient the Fund Administrator may require additional information before final consideration of the application.
(f) Certificates, as issued, are to be considered property of the U.S. Government, are not to be altered in any manner, and must be surrendered on demand when revoked in accordance with §135.223 of this subpart.
(g) Applicants shall obtain a Certificate of Financial Responsibility for each facility.
§ 135.219 Notification of changes affecting certification.
(a) Each owner, operator, or guarantor of an offshore facility shall within ten days notify the Fund Administrator in writing when any changes occur which prevent the owner, operator, or guarantor, from meeting the obligations for which a Certificate of Financial Responsibility has been issued.
(b) Based on notice of a change in financial capability under paragraph (a) of this section, the Fund Administrator may revoke a Certificate of Financial Responsibility.
§ 135.221 Reapplication for certification.
(a) If a Certificate of Financial Responsibility becomes invalid for any reason, an application for a new certificate must be immediately submitted to the Fund Administrator in accordance with §135.204.
§ 135.223 Certificates, denial or revocation.
(a) A certificate may be denied or revoked for any of the following reasons:
(1) Making any willfully false statement to the Fund Administrator in connection with establishing or maintaining evidence of financial responsibility.
(2) Failure of an applicant or certificant to establish or maintain evidence of financial responsibility as required by the regulations in this subpart.
(3) Failure to comply with or respond to inquiries, regulations, or orders of the Fund Administrator concerning establishing or maintaining evidence of financial responsibility.
(4) Failure to timely file the reports or documents required by §135.213 (c) and (d).
(5) Cancellation or termination of any insurance policy, surety bond, indemnity, or guaranty issued under this subpart or modification thereto which reduces the financial capacity of the applicant or certificant to meet the requirements of this subpart, unless substitute evidence of financial responsibility has been submitted to and accepted by the Fund Administrator.
(b) Denial or revocation of a certificate shall be immediate and without prior notice in a case where the applicant or certificant:
(1) Is no longer the owner or operator of the offshore facility in question;
(2) Fails to furnish acceptable evidence of financial responsibility in support of an application; or
(3) Permits the cancellation or termination of the insurance policy, surety bond, indemnity, or guaranty upon which the continued validity of the certificate is based.
(c) In any other case, before the denial or revocation of a certificate, the Fund Administrator advises the applicant or certificant, in writing, of the intention to deny or revoke the certificate, and shall state the reason therefor.
(d) If the reason for an intended revocation is failure to file the reports or documents required by §135.213 (c) and (d) the revocation shall be effective 10 days after the date of receipt of the notice of intention to revoke, unless the certificant shall, before revocation, submit the required material or demonstrate that the required material was timely filed.
(e) If the intended denial or revocation is based upon one of the reasons in paragraph (a)(1) or (a)(3) of this section, the applicant or certificant may request, in writing, a hearing to show that the applicant or certificant is in compliance with this subpart. If the applicant or certificant fails to file a timely request for a hearing, the denial or revocation is effective 10 days after receipt of the notice.
(f) If a request for a hearing under paragraph (e) of this section is received by the Fund Administrator within 10 days after the date of receipt of a notice of intention to deny or revoke, the Fund Administrator grants a hearing and notifies the requesting party of the date, time, and location of the hearing. If a requesting party fails to enter an appearance at the scheduled hearing, or in lieu thereof fails to submit written evidence for the consideration of the hearing official, denial or revocation is effective as of the scheduled date and time of the hearing, unless an extension of time is granted by the Fund Administrator for good cause shown.
(g) Hearings under this section are informal and are conducted by an official designated by the Fund Administrator. The official conducting the hearing considers all relevant material submitted and makes recommendations to the Fund Administrator.
(h) The Fund Administrator's decision is final agency action.
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