SECTION 37.880. Drawing on Financial Assurance Mechanisms

(a) The executive director shall require the guarantor, surety, or institution issuing a letter of credit to place the amount of funds stipulated by the executive director, up to the limit of funds provided by the financial assurance mechanism, into the standby trust if:

(1) the owner or operator fails to establish alternate financial assurance within 60 days after receiving notice of cancellation of the guarantee, surety bond, letter of credit, or, as applicable, other financial assurance mechanism; and

(2) the agency determines or suspects that a release from an underground storage tank (UST) covered by the mechanism has occurred and so notifies the owner or operator or the owner or operator has notified the executive director under Chapter 334, Subchapter D of this title (relating to Release Reporting and Corrective Action) of a release from an UST covered by the mechanism; or

(3) the conditions of subsections (b)(1) or (2)(A) or (B) of this section are satisfied.

(b) The executive director may draw on a standby trust fund when:

(1) the agency makes a final determination that a release has occurred and immediate or long-term corrective action for the release is needed, and the owner or operator, after appropriate notice and opportunity to comply, has not conducted corrective action as required under Chapter 334, Subchapter D of this title; or

(2) the executive director has received either:

(A) certification from the owner or operator and the third-party liability claimant(s) and from attorneys representing the owner or operator and the third-party liability claimant(s) that the third-party liability claim should be paid. The certification must be worded as follows, except that instructions in parentheses are to be replaced with the relevant information and the parentheses deleted:

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(B) a valid final court order establishing a judgment against the owner or operator for bodily injury or property damage caused by an accidental release from an UST covered by financial assurance under this subchapter and the agency determines that the owner or operator has not satisfied the judgment.

(c) If the agency determines that the amount of corrective action costs and third-party liability claims eligible for payment under subsection (b) of this section may exceed the balance of the standby trust fund and the obligation of the provider of financial assurance, the first priority for payment shall be corrective action costs necessary to protect human health and the environment. The executive director shall pay third-party liability claims in the order in which the executive director receives certifications under subsection (b)(2)(A) of this section and valid court orders under subsection (b)(2)(B) of this section.

Source Note: The provisions of this §37.880 adopted to be effective November 23, 2000, 25 TexReg 11399