§ 265a.156. Special terms and conditions for collateral bonds and bonds pledging corporate guarantee for closure.
(a) The Department obtains possession and keeps custody of collateral deposited by the owner or operator until authorized for release or replacement as provided in this subchapter.
(b) The Department values governmental securities for both current market value and face value. For the purpose of establishing the value of the securities for bond deposit, the Department uses the lesser of current market value or face value. Government securities shall be rated at least BBB by Standard and Poor’s or Baa by Moody’s.
(c) Collateral bonds pledging Pennsylvania bank certificates of deposit are subject to the following conditions:
(1) The Department requires that certificates of deposit be assigned to the Department, in writing, and the assignment recorded upon the books of the issuing institution.
(2) The Department may accept an individual certificate of deposit for the maximum insurable amount as determined by the Federal Deposit Insurance Corporation (FDIC) and which is otherwise secured under Pennsylvania law.
(3) The Department requires the issuing institution to waive all rights of setoff or liens which it has or might have against the certificates.
(4) The Department only accepts automatically-renewable certificates of deposit.
(5) The Department requires that the certificates of deposit be assigned to the Department to assure that the Department can liquidate the certificates prior to maturity, upon forfeiture, for the amount of the bond determined under this subchapter.
(6) The Department only accepts certificates of deposit only from banks or banking institutions licensed, chartered or otherwise authorized to do business in the United States.
(7) The Department does not accept certificates of deposit from banks that failed or delayed to make payment on defaulted certificates of deposit.
(d) Collateral bonds pledging a letter of credit are subject to the following conditions:
(1) The letter of credit is a standby letter of credit issued only by a bank organized or authorized to do business in the United States, examined by a state or Federal agency and Federally insured or equivalently protected.
(2) The letter of credit may not be issued without a credit analysis substantially equivalent to that of a potential borrower in an ordinary loan situation. A letter of credit so issued is supported by the customer’s unqualified obligation to reimburse the issuer for moneys paid under the letter of credit.
(3) The letter of credit may not be issued when the amount of the letter of credit, aggregated with other loans and credits extended to the owner or operator, exceeds the issuer legal lending limits for that owner or operator as defined in the United States Banking Code (12 U.S.C.A. § § 21—220).
(4) The letter of credit is irrevocable and is so designated. The Department may accept a letter of credit for which at least a 1 year period is stated if the following conditions are met and are stated in the credit:
(i) The letter of credit is automatically renewable for additional time periods of at least 1 year, unless the bank gives at least 120 days prior written notice by certified mail to the Department and the customer of its intent to terminate the credit at the end of the current time period.
(ii) The Department has the right to draw upon the credit before the end of the time period, if the customer fails to replace the letter of credit with other acceptable bond guarantee within 30 days of the bank’s notice to terminate the credit.
(5) Letters of credit shall name the Department as the beneficiary and be payable to the Department, upon demand, in part or in full, upon presentation of the Department’s drafts at sight. The Department’s right to draw upon the letter of credit will not require documentary or other proof by the Department that the customer has violated the conditions of the bond, the permit or another requirement of this subchapter.
(6) Letters of credit are subject to 13 Pa.C.S. (relating to the Uniform Commercial Code) and the latest revision of the Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce. The Department may accept 13 Pa.C.S. Division 5 (relating to letters of credit) in effect in the state of the issuer.
(7) The issuing bank waives the rights to setoff or liens it has or might have against the letter of credit.
(8) The Department will not accept letters of credit from a bank that failed or delayed in making payment on a letter of credit previously submitted as collateral to the Department.
(e) Bonds pledging a financial test or corporate guarantee for closure shall be subject to the requirements of 40 CFR 265.143(e) (relating to financial test and corporate guarantee for closure) and 40 CFR 265.145(e) (relating to financial assurance for post-closure care) except for the provision of 40 CFR 265.143(e)(10)(i) (relating to financial assurance for closure) as specified in § 264a.143(a) (relating to financial assurance for closure). This is replaced by the procedures of § 265a.168 (relating to bond forfeiture).
Authority The provisions of this § 265a.156 amended under sections 105, 402 and 501 of the Solid Waste Management Act (35 P. S. § § 6018.105, 6018.402 and 6018.501); sections 303 and 305(e)(2) of the Hazardous Sites Cleanup Act (35 P. S. § § 6020.303 and 6020.305(e)(2)); section 5, 402 and 501 of The Clean Streams Law (35 P. S. § § 691.5, 691.402 and 691.501); and section 1920-A of The Administrative Code of 1929 (71 P. S. § § 510-20).
Source The provisions of this § 265a.156 amended January 9, 2009, effective January 10, 2009, 39 Pa.B. 201. Immediately preceding text appears at serial pages (254977) to (254979).
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