Requirements for a Standby Trust

(1) Any Owner or Operator who establishes one or more of the financial assurance mechanisms at 310 CMR 80.54(3), (4), (9) or (11) shall establish a standby trust fund when the mechanism is acquired. The trustee of the standby trust fund shall be a bank or other financial institution which has the authority to act as a trustee and whose trust operations are regulated and examined by the Massachusetts Commissioner of Banks or the trustee shall be a national bank. (2) A standby trust agreement, or trust agreement, shall be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted: Trust Agreement This Trust Agreement, hereafter referred to as the "Agreement," is entered into as of [date] by and between [name of the owner or operator], a [name of State] [insert "corporation," "partnership," "association," "trust", “limited liability company”, “limited liability partnership” or "individual"], hereafter referred to as the "Grantor," and [name of corporate trustee], [insert "Incorporated in the state of ___" or "a national bank"], hereafter referred to as the "Trustee". Whereas, the Massachusetts Department of Environmental Protection, hereafter referred to as "the Department" an agency of the Commonwealth of Massachusetts, has established certain regulations applicable to the Grantor, requiring that the Grantor shall provide assurance that funds will be available when needed for corrective action and third-party compensation for bodily injury and property damage caused by sudden and nonsudden accidental releases arising from the operation of the UST system(s) identified in Schedule A. Schedule A shall list the number of tanks at each facility and the name(s) and address(es) of the facility(ies) where the tanks are located that are covered by the standby trust agreement. Whereas, the Grantor has elected to establish [insert either "a "trust fund" or "standby trust fund"] to provide all or part of such financial assurance for the UST systems identified in Schedule A; and Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee; Now, therefore, the Grantor and the Trustee agree as follows: Section 1. Definitions As used in this Agreement: (a) The term "Grantor" means [name of owner or operator]. (b) The term "Trustee" means [name of corporate trustee], [insert "incorporated in the State of ______ "or "a national bank"], and any successor thereof. (c) The terms "Department" and "Beneficiary" mean the Massachusetts Department of Environmental Protection, an agency of the Commonwealth of Massachusetts, and any successor of said Department. Section 2. Identification of the Financial Assurance Mechanism This Agreement pertains to the [identify the financial assurance mechanism, either a guarantee, surety bond, or letter of credit, from which the standby trust fund is established to receive payments (This paragraph is only applicable to the standby trust agreement.)]. Section 3. Establishment of Trust Fund The Grantor and the Trustee hereby establish a trust fund, the "Fund," for the benefit of the Department. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. The Fund is established [insert either "initially as a standby to receive payments and shall not consist of any property" or "as a trust initially consisting of the property, which is acceptable to the Trustee, fully described in Schedule B".] Payments made by the provider of financial assurance pursuant to the Department's instruction are transferred to the Trustee and are referred to as the Fund, together with all earnings and profits thereon, less any payments or distributions made by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor, any payments necessary to discharge any liability of the Grantor established by the Department. Section 4. Payment for "Corrective Action" and/or Third-party Liability Claims" The Trustee shall make payments from the Fund as directed by the Department in writing. Said payments shall provide for the payment of the costs of [insert "taking corrective action" and/or compensating third parties for bodily injury and property damage caused by" either "sudden accidental releases" or "nonsudden accidental releases" or "accidental releases"] arising from operating the tanks covered by this Agreement for Corrective Action and/or Third-party Liability Claims. The Trustee shall reimburse from the Fund, the Grantor or other persons as specified in writing by the Department. Such reimbursement(s) shall be in the amount(s) as the Department directs in writing. The Fund may not be drawn upon to cover any of the following: (a) Any obligation of [name of owner or operator] under a workers' compensation, disability benefits, or unemployment compensation law or other similar law; (b) Bodily injury to an employee of [name of owner or operator] arising from, and in the course of employment by [name of owner or operator]; (c) Bodily injury or property damage arising from the ownership, maintenance, use, or entrustment to others of any aircraft, motor vehicle, or watercraft; (d) Property damage to any property owned, rented, loaned to, in the care, custody, or control of, or occupied by [name of owner or operator] that is not the direct result of a release from a UST system; (e) Bodily injury or property damage for which [name of owner or operator] is obligated to pay damages by reason of the assumption of liability in a contract or agreement other than a contract or agreement entered into to meet the requirements of 310 CMR 80.52. The Trustee shall reimburse the Grantor, or other persons as specified by the Department, from the Fund for corrective action expenditures and/or third-party liability claims in such amounts as the Department shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as the Department specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein. Section 5. Payments Comprising the Fund Payments made to the Trustee for the Fund shall consist of cash and securities acceptable to the Trustee. Section 6. Trustee Management The Trustee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that: (a) Securities or other obligations of the Grantor, any other Owner or Operator of the UST system(s) or any affiliates of the Grantor as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-2(a), shall not be acquired or held, unless they are securities or other obligations of the Federal or State government; (b) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal or State government; and (c) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon. Section 7. Commingling and Investment The Trustee is expressly authorized in its discretion: (a) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and (b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion. Section 8. Express Powers of Trustee Without in any way limiting the powers and discretions conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition; (b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund; (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the Federal or State government; and (e) To compromise or otherwise adjust all claims in favor of or against the Fund. Section 9. Taxes and Expenses All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee shall be paid from the Fund. Section 10. Annual Valuation The Trustee shall annually, at least 30 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the Department a statement confirming the value of the Trust. Any securities in the Fund shall be valued at market value as of no more than 60 days prior to the anniversary date of establishment of the Fund. Section 11. Advice of Counsel The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any question arising as to the interpretation of this Agreement or any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel. Section 12. Trustee Compensation The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the Grantor. Section 13. Successor Trustee The Trustee may resign or the Grantor may replace the Trustee, but such resignation or replacement shall not be effective until the Grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee shall specify the date on which it assumes administration of the trust in a writing sent to the Grantor, the present Trustee and the Department by certified mail ten days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 9. Section 14. Instructions to the Trustee All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in Schedule C or such other designees as the Grantor may designate by amendment to Schedule C. The Trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by [the Department to the Trustee shall be in writing, signed by the Commissioner or his designee], and the Trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor or the Department hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or the Department, except as provided for herein. Section 15. Notice of Nonpayment The Trustee shall notify the Grantor and the Department, by certified mail, within ten days following the expiration of the 30 day period after the anniversary of the establishment of the Trust, if no payment into the Fund is received from the Grantor during that period. After the pay-in period is completed, the Trustee shall not be required to send a notice of nonpayment. Section 16. Amendment of Agreement This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee and the Department, or by the Trustee and the Department if the Grantor ceases to exist. Section 17. Irrevocability and Termination Subject to the right of the parties to amend this Agreement as provided in Section 16, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee and the Department or by the Trustee and the Department, if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be delivered to the Grantor. Section 18. Immunity and Indemnification The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor or by the Department issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense. Section 19. Choice of Law This Agreement shall be administered, construed, and enforced according to the laws of the Commonwealth of Massachusetts. Section 20. Interpretation As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. In Witness Whereof the parties have caused this Agreement to be executed by their respective [“officers” or “members” or “partners” or applicable title] duly authorized [if a corporation “and their corporate seals to be hereunto affixed and”] attested as of the date first above written. The parties below certify that the wording of this Agreement is identical to the wording specified in 310 CMR 80.55(2) as in effect on the date written above. [Signature of Grantor] [Name of the Grantor] [Title] Attest: 80.55:continued [Signature of Trustee] [Name of the Trustee] [Title] [Seal if a corporation] [Signature of Witness] [Name of the Witness] [Title] [Seal if a corporation] (3) The standby trust agreement, or trust agreement, shall be accompanied by a formal certification of acknowledgement as follows, except that instructions in brackets shall be replaced with the relevant information and the brackets deleted. State of___[Name of State]_________________ County of_[Name of County]___________________ On this [date], before me personally came [name of owner or operator] to me known, who, being by me duly sworn, did depose and say that [“she” or “he”] resides at [address], that [“she” or “he”] is [title] of [“corporation”, “partnership,” “association,” “trust”, “limited liability company”, “limited liability partnership” or “individual”], the corporation described in and which executed the above instrument; that [“she” or “he”] knows the seal of said corporation; that the seal affixed to such instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation]; and that [“she” or “he”] signed [“her” or “his”] name thereto duly authorized. [Signature of Notary Public] [] My Commission expires [Date] (4) The Department will instruct the trustee to refund the balance of the standby trust fund to the provider of financial assurance if the Department determines that no additional corrective action costs or third-party liability claims will occur as a result of a release covered by the financial assurance mechanism for which the standby trust fund was established. (5) An Owner or Operator may establish one trust fund as the depository mechanism for all funds assured in compliance with 310 CMR 80.51 through 80.63.