(a) Regulations of the Environmental Quality Board.--The Environmental Quality Board is authorized to establish, by regulation, requirements for maintaining evidence of financial responsibility as deemed necessary and desirable, for taking corrective action and for compensating third parties for bodily injury and property damage caused by sudden and nonsudden releases arising from operation of a storage tank. Every owner or operator shall meet the financial responsibility requirements established by the department.

(b) Methods of obtaining financial responsibility.--Financial responsibility required by this section may be established in accordance with regulations promulgated by the Environmental Quality Board by any one or any combination of the following: insurance, guarantee, surety, bond, letter of credit, qualification as a self-insurer, indemnity contract, risk retention coverage or any other method deemed satisfactory by the department. Owners of underground storage tanks must meet these requirements by complying with sections 703, 704, 705 and 706.¹ In regulations under this section, the department is authorized to specify policy or other contractual terms, conditions or defenses which are necessary or acceptable in establishing such evidence of financial responsibility.

(c) Bankruptcy of owner or operator.--In any case where the owner or operator is in bankruptcy, reorganization or arrangement pursuant to the Federal Bankruptcy Code or where with reasonable diligence jurisdiction in any State court or the Federal courts cannot be obtained over an owner or operator likely to be solvent at the time of judgment, any claim arising from conduct for which evidence of financial responsibility must be provided under this subsection may be asserted directly against the guarantor providing such evidence of financial responsibility. In the case of any action pursuant to this subsection, such guarantor shall be entitled to invoke all rights and defenses which would have been available to the owner or operator if any action had been brought against the owner or operator by the claimant and which would have been available to the guarantor if an action had been brought against the guarantor by the owner or operator.

(d) Guarantor liability.--The total liability of any guarantor shall be limited to the aggregate amount which the guarantor has provided as evidence of financial responsibility to the owner or operator under this section. Nothing in this subsection shall be construed to limit any other State or Federal statutory, contractual or common law liability of a guarantor to its owner or operator, including, but not limited to, the liability of such guarantor for bad faith either in negotiating or in failing to negotiate the settlement of any claim. Nothing in this subsection shall be construed to diminish the liability of any person under section 107 or 111 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 or other applicable statutes.

(e) Definition.--As used in this subsection, the term “guarantor” means any person, other than the owner or operator, who provides evidence of financial responsibility for an owner or operator under this subsection.