Section 840. Letter of credit

A. A permit holder or applicant may satisfy the requirements of this article by obtaining an irrevocable standby letter of credit that satisfies the terms of the letter of credit and by submitting the original letter of credit to the department.

B. Terms of the letter of credit.

1. The letter of credit shall be effective before the initial application of biosolids.

2. The issuing institution shall be a bank or other financial institution that has the authority to issue letters of credit and whose letter of credit operations are regulated and examined by the Commonwealth of Virginia, by a federal agency, or by an agency of another state.

3. The letter of credit shall be irrevocable and issued for a period of at least one year in an amount of $2 million to cover the costs for clean-up costs, personal injury, bodily injury, and property damage that may result from the transport, storage, or land application of biosolids in Virginia by the permit holder or applicant.

4. The letter of credit shall provide that the expiration date will be automatically extended for a period of at least one year. If the issuing institution decides not to extend the letter of credit beyond the current expiration date, it shall, at least 120 days before the date, notify both the permit holder or applicant and the department by certified mail of that decision. The 120-day period will begin on the date of receipt by the department as shown on the signed return receipt. Expiration cannot occur, however, while an enforcement action is pending. Within 60 days of receipt of notice from the issuing institution that it does not intend to extend the letter of credit, the permit holder or applicant shall obtain alternate financial assurance and submit evidence of the alternate financial assurance to the department.

C. In the event of failure of the permit holder or applicant to comply with the requirements of this article, the department may cash the letter of credit.

D. The permit holder or applicant may cancel the letter of credit only if alternate financial assurance acceptable to the department is substituted as specified in this article or if the permit holder or applicant is released by the department from the requirements of this chapter.

E. The department shall return the original letter of credit to the issuing institution for termination when:

1. The permit holder or applicant substitutes acceptable alternate financial assurance for clean-up costs, personal injury, bodily injury, and property damage resulting from the transport, storage, or land application of biosolids in Virginia; or

2. The department notifies the permit holder or applicant that he is no longer required by this article to maintain financial assurance for clean-up costs, personal injury, bodily injury, and property damage resulting from the transport, storage, or land application of biosolids in Virginia.

F. The permit holder or applicant shall establish a standby trust fund. The standby trust fund shall meet the requirements of 9VAC25-32-850, except the requirements for initial payments and subsequent annual payments.

G. Payments made under the terms of the letter of credit will be deposited by the issuing institution directly into the standby trust fund. Payments from the trust fund shall be approved by the department.

H. The department may cash the letter of credit if it is not replaced 30 days prior to expiration with alternate financial assurance approved by the department.

I. The wording of the letter of credit shall be identical to that specified in the Letter of Credit form.

Historical Notes

Derived from Volume 29, Issue 24, eff. September 1, 2013.

Statutory Authority

§ 62.1-44.15 of the Code of Virginia.