SECTION 37.551. Corporate Guarantee for Liability

(a) An owner or operator may meet the requirements of financial assurance for liability as specified in Subchapter E of this chapter (relating to Financial Assurance Requirements for Liability Coverage) by obtaining a written guarantee for liability coverage, hereinafter referred to as "corporate guarantee," which conforms to the requirements of this section, in addition to the requirements as specified in Subchapter A of this chapter (relating to General Financial Assurance Requirements).

(b) The guarantor must be the direct or higher-tier parent corporation of the owner or operator or a corporation with a substantial business relationship with the owner or operator. The guarantor must meet the requirements for owners or operators as specified in §37.541 of this title (relating to Financial Test for Liability). The guarantor must comply with the terms of the corporate guarantee.

(c) The wording of the corporate guarantee must be identical to the wording specified in §37.661 of this title (relating to Corporate Guarantee for Liability). The corporate guarantee shall accompany the items sent to the executive director as specified in §37.541(d) of this title.

(d) If the guarantor has a substantial business relationship with the owner or operator, in addition to the requirements specified in this chapter for the financial test and corporate guarantee, the guarantor will submit the following:

(1) a description of the substantial business relationship and the value received in consideration of the guarantee;

(2) an original or certified original copy of the Resolution by the Board of Directors or a certified letter from the chief financial officer, authorizing the corporate guarantee on behalf of the entity;

(3) an original or certified original copy of the Resolution by the Board of Directors authorizing the formation or acquisition of the guaranteed entity;

(4) an organizational chart which shows the relationship between the two entities; and

(5) the partnership agreement or other agreements, articles, or bylaws which set out the formation, structure, and operation of the guaranteed entity.

(e) After the initial submission of the items required in subsection (d) of this section, the chief financial officer may submit a letter attesting that there has been no change, to demonstrate a substantial business relationship, if there has been no change in the substantial business relationship.

(f) The terms of the corporate guarantee shall provide that if the owner or operator fails to satisfy a judgement based on a determination of liability for bodily injury or property damage to third parties caused by sudden or nonsudden accidental occurrences (or both, as the case may be), arising from the operation of facilities covered by this corporate guarantee, or fails to pay an amount agreed to in settlement of claims arising from or alleged to arise from such injury or damage, the guarantor shall do so up to the limits of coverage.

(g) In the case of corporations incorporated in the United States, a guarantee may be used to satisfy the requirements of this section only if the Attorneys General or Insurance Commissioners of:

(1) the state in which the guarantor is incorporated; and

(2) each state in which a facility covered by the guarantee is located have submitted a written statement to the commission that a guarantee executed as described in this section and §37.661 of this title is a legally valid and enforceable obligation in that state.

(h) In the case of corporations incorporated outside the United States (U.S.), a guarantee may be used to satisfy the requirements of this section only if:

(1) the non-U.S. corporation has identified a registered agent for service of process in each state in which a facility covered by the guarantee is located and in the state in which it has its principal place of business; and

(2) the Attorneys General or Insurance Commissioners of each state in which a facility covered by the guarantee is located and the state in which the guarantor corporation has its principal place of business, has submitted a written statement to the commission that a guarantee executed as described in this section and §37.661 of this title is a legally valid and enforceable obligation in that state.

Source Note: The provisions of this §37.551 adopted to be effective December 30, 1996, 21 TexReg 12297; amended to be effective October 7, 1999, 24 TexReg 8555; amended to be effective March 21, 2000, 25 TexReg 2347; amended to be effective February 13, 2003, 28 TexReg 1196