Mich. Admin. Code R. 299.9711 - Financial capability requirements for transporters
Rule 711.
(1) A
transporter shall demonstrate proof of financial capability as required
pursuant to the provisions of section 30(2)(c) of part 111 of the act. To meet
this requirement, the transporter shall demonstrate proof of financial
responsibility for bodily injury and property damage to third parties caused by
accidental occurrences arising from the hazardous waste transportation
activities of the transporter. The transporter shall have and maintain
liability coverage for accidental occurrences in an amount not less than
$1,000,000.00 per occurrence, exclusive of legal defense costs.
(2) A transporter who operates a transfer
facility or group of transfer facilities shall, in addition to the requirements
of subrule (1) of this rule, demonstrate financial responsibility for bodily
injury and property damage to third parties caused by sudden and accidental
occurrences arising from the operations of the facility or group of facilities.
The transporter shall have and maintain liability coverage for sudden and
accidental occurrences in an amount not less than $500,000.00 per occurrence,
exclusive of legal defense costs. The requirement for liability coverage is in
addition to any other insurance requirements of sections 3101 and 3102 of act
218. The transporter shall comply with the liability coverage requirements of
this subrule by obtaining an insurance policy in accordance with the provisions
of subrule (3) of this rule or by passing the financial test specified in the
provisions of subrule (4) of this rule.
(3) Each insurance policy that is obtained by
a transporter to fulfill the requirements of subrule (2) of this rule shall be
in compliance with all of the following provisions:
(a) The policy shall include a provision that
the insurer notify the director 30 days before either of the following:
(i) Cancellation or termination of the
insurance by either party for any reason.
(ii) A material change to the policy for any
reason.
(b) The policy
shall be issued by an insurer which, at a minimum, is licensed to transact the
business of insurance, or which is eligible to provide insurance as an excess
or surplus line insurer, in the state of Michigan.
(c) The deductible written into the policy
shall not be more than 5% of the per occurrence limit of liability of the
policy. If more than 1 policy is used to provide the coverage required by this
rule, the total of all deductibles shall not be more than 5% of the total of
the per occurrence limits of the policies used.
(d) The policy shall be amended by attaching
an endorsement on a form provided by the director.
(4) A transporter may satisfy the liability
coverage requirements of subrule (2) of this rule by demonstrating that he or
she passes a financial test as specified in this rule. To pass the test, the
owner or operator shall meet the criteria of either subdivision (a) or (b) of
this subrule as follows:
(a) A transporter
shall comply with all of the following provisions:
(i) Have a net working capital and a tangible
net worth which, for each, is not less than 6 times the amount of liability
coverage to be demonstrated by the test.
(ii) Have a tangible net worth of not less
than $10,000,000.00.
(iii) Have
assets in the United States that amount to not less than 90% of his or her
total assets or not less than 6 times the amount of liability coverage to be
demonstrated by the test.
(b) A transporter shall comply with all of
the following provisions:
(i) Have a current
rating for his or her most recent bond issuance of AAA, AA, A, or BBB as issued
by Standard and Poors corporation or Aaa, Aa, A, or Baa as issued by Moodys
investors service, inc.
(ii) Have
tangible net worth of not less than $10,000,000.00.
(iii) Have a tangible net worth that is not
less than 6 times the amount of liability coverage to be demonstrated by the
test.
(iv) Have assets in the
United States that amount to not less than 90% of his or her total assets or
not less than 6 times the amount of liability coverage to be demonstrated by
the test.
(c) The phrase
"amount of liability coverage" as used in this subrule refers to the annual
aggregate amounts for which coverage is required pursuant to the provisions of
subrule (2) of this rule.
(5) A transporter shall demonstrate the
existence of the required liability coverage by submitting 1 of the following
to the director:
(a) A signed copy of the
"endorsement for motor carrier policies of insurance for public liability under
sections 29 and 30 of the motor carrier act of 1980" (OMB no. 2125-0074, form
MCS-90) and a signed duplicate original of an endorsement on a form provided by
the director which identifies the insurance policy number and expiration date,
all vehicles covered under the policy, and modifies the policy to comply with
subrule (1) of this rule. The transporter shall submit the amendatory
endorsement on a form provided by the director within 90 days of the effective
date of this amendatory rule or upon issuance of a transporter business
license, whichever comes first. If requested by the director, the transporter
shall also submit signed duplicate originals of all insurance policies needed
to fulfill the requirements of subrule (1) of this rule.
(b) A "motor carrier public liability surety
bond under sections 29 and 30 of the motor carrier act of 1980" (OMB no.
2125-0075, form MCS-82) issued by a surety that, at a minimum, is among those
listed as acceptable sureties on federal bonds in circular 570 of the United
States department of the treasury.
(c) A written decision, order, or
authorization from the interstate commerce commission which authorizes the
transporter to self-insure pursuant to the provisions of 49 C.F.R.
ยง1043.5, provided the transporter maintains a satisfactory safety rating
as determined by the bureau of motor carrier safety pursuant to the provisions
of 49 C.F.R. part 385.
(6) A transporter who operates a transfer
facility shall demonstrate the existence of the required liability coverage
pursuant to the provisions of subrule (2) of this rule by submitting either of
the following with his or her business application:
(a) All information that is necessary to meet
the financial test, as follows:
(i) A letter
which is signed by the transporters chief financial officer and which is worded
as specified by the director.
(ii)
A copy of the independent certified public accountants report upon examining
the transporters financial statements for the latest completed fiscal
year.
(iii) A special report from
the transporters independent certified public accountant to the transporter
which states that the transporters independent certified public accountant has
compared the data that the letter from the chief financial officer specifies as
having been derived from the independently audited, year-end financial
statements for the latest completed fiscal year with the amounts in such
financial statements, and that, in connection with that procedure, no matters
came to the attention of the transporters independent certified public
accountant which caused the accountant to believe that the specified data
should be adjusted.
(b)
An endorsement provided by the director which shows that the coverage required
in subrules (2) and (3) of this rule has been obtained by the transporter. The
transporter shall submit a signed duplicate original of each insurance
endorsement. If requested by the director, the transporter shall provide signed
duplicate originals of all insurance policies that are needed to fulfill the
requirements of subrule (2) of this rule.
(7) If underlying policies that are required
pursuant to the provisions of subrule (1) or (2) of this rule do not provide
sufficient limits of liability, the policy shall be amended by attaching an
excess liability insurance endorsement on a form provided by the
director.
(8) If a transporter is
using the financial test to demonstrate financial responsibility for liability
coverage required pursuant to the provisions of subrule (2) of this rule and no
longer meets the requirements of subrule (4) of this rule, then he or she shall
send notice to the director of the intent to obtain an insurance policy as
specified in this rule. The notice shall be sent by certified mail within 90
days after the end of the fiscal year for which year-end financial data show
that the transporter no longer meets the requirements of subrule (4) of this
rule. The transporter shall obtain liability insurance within 120 days after
the end of such fiscal year.
(9)
The director may disallow the use of a financial test to meet the requirements
of subrule (2) of this rule on the basis of qualifications in the opinion
expressed by the independent certified public accountant in his or her report
upon examining the transporters financial statements. An adverse opinion or
disclaimer of opinion is cause for the disallowance of the use of a financial
test to meet the requirements of subrule (2) of this rule. The director shall
evaluate other qualifications on an individual basis. The transporter shall
obtain an insurance policy as specified in this rule within 30 days after
notification of the disallowance.
Notes
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