Letter of Credit

Section 845.990  Letter of Credit a)         An owner or operator may satisfy the requirements of this Subpart by obtaining an irrevocable standby letter of credit that conforms to the requirements of this Section and submitting the letter to the Agency. b)         The issuing institution must be an entity that has the authority to issue letters of credit and: 1)         Whose letter of credit operations are regulated by the Illinois Department of Financial and Professional Regulation under the Illinois Banking Act [205 ILCS 5]; or 2)         Whose deposits are insured by the Federal Deposit Insurance Corporation. c)         Forms 1)         The letter of credit must be on forms prescribed by the Agency. 2)         The letter of credit must be accompanied by a letter from the owner or operator, referring to the letter of credit by number, the name and address of the issuing institution, and the effective date of the letter, and providing the following information: the name and address of the CCR surface impoundment, the identification number (see Section 845.130), and the amount of funds assured by the letter of credit for closure and post-closure care of the CCR surface impoundment, or for corrective action at the CCR surface impoundment. d)         Any amounts drawn by the Agency under the letter of credit will be deposited in the Coal Combustion Residual Surface Impoundment Financial Assurance Fund within the State Treasury. e)         Conditions on Which the Agency Must Draw on the Letter of Credit 1)         The Agency must draw on the letter of credit if the owner or operator fails to perform closure or post-closure care in accordance with the approved closure and post-closure care plans or fails to perform corrective action at a CCR surface impoundment in accordance with this Part. 2)         The Agency must draw on the letter of credit if the owner or operator: A)        Abandons the CCR surface impoundment; B)        Is adjudicated bankrupt; C)        Fails to initiate closure of the CCR surface impoundment or post-closure care or corrective action when ordered to do so by the Board under Title VIII of the Act (Enforcement), or when ordered to do so by a court of competent jurisdiction; D)        Notifies the Agency that it has initiated closure or corrective action, or initiates closure or corrective action, but fails to provide closure and post-closure care or corrective action in accordance with the Agency-approved closure and post-closure care or corrective action plans; E)        For a corrective action letter of credit, fails to implement or complete corrective action at a CCR surface impoundment in accordance with Section 845.670; or F)         Fails to, within 90 days after receipt by both the owner or operator and the Agency of a notice from the surety that the bond will not be renewed for another term: i)          Provide alternative financial assurance, as specified in this Subpart; and ii)         Obtain the Agency's written approval of the assurance. 3)         If the owner or operator does not establish alternative financial assurance, as specified in this Subpart, and obtain written approval of that alternative assurance from the Agency within 90 days after receipt by both the owner or operator and the Agency of a notice of expiration from the issuing institution (see subsection (g)(2)), the Agency must draw on the letter of credit. During the last 30 days of a notice of expiration, the Agency must draw on the letter of credit if the owner or operator has failed to provide alternative financial assurance, as specified in this Section, and obtain from the Agency written approval of that assurance. f)         Amount 1)         The letter of credit must be issued in an amount at least equal to the current cost estimate. 2)         Whenever the current cost estimate decreases, the amount of credit may be reduced to the amount of the current cost estimate following written approval by the Agency. 3)         Whenever the current cost estimate increases to an amount greater than the amount of the credit, the owner or operator, within 90 days after the increase, must either cause the amount of the credit to be increased to an amount at least equal to the current cost estimate and submit evidence of that increase to the Agency or obtain other financial assurance, as specified in this Subpart, to cover the increase and submit evidence of the alternative financial assurance to the Agency. g)         Term 1)         The letter of credit must be issued for a term of at least one year and must be irrevocable during that term. 2)         The letter of credit must provide that, on the current expiration date and on each successive expiration date, the letter of credit will be automatically extended for a period of at least one year unless, at least 120 days before the current expiration date, the issuing institution notifies both the owner or operator and the Agency by certified mail of a decision not to extend the letter of credit for another term.  Under the terms of the letter of credit, the 120 days will begin on the date when both the owner or operator and the Agency have received the notice, as evidenced by the return receipts. 3)         The Agency must return the letter of credit to the issuing institution for termination when either of the following occurs: A)        An owner or operator substitutes alternative financial assurance, as specified in this Subpart; or B)        The Agency releases the owner or operator from the requirements of this Subpart in accordance with Section 845.920(b). h)         Cure of Default and Refunds 1)         The Agency must release the financial institution if, after the Agency is allowed to draw on the letter of credit, the owner or operator or another person provides financial assurance for closure and post-closure care of the CCR surface impoundment or corrective action at a CCR surface impoundment; unless the Agency determines that the closure, post-closure care, or corrective action plan, or the amount of substituted financial assurance, is inadequate to provide closure and post-closure care or implement corrective action in compliance with this Part. 2)         After closure and post-closure care have been completed in accordance with the plans and requirements of this Part or after the completion of corrective action at a CCR surface impoundment in accordance with this Part, the Agency must refund any unspent money that was drawn and paid into the Coal Combustion Residual Surface Impoundment Financial Assurance Fund by the financial institution, subject to appropriation of funds by the Illinois General Assembly.