Iowa Administrative Code › Agency 567 - Environmental Protection Commission › Title IX - Spills and Hazardous Conditions › Chapter 136 - Financial Responsibility for Underground Storage Tanks › Rule 567-136.12 - Standby Trust Fund

Current through Register Vol. 47, No. 3, July 24, 2024
(1) An owner or
				operator using any one of the mechanisms authorized by rules 136.7(455B),
				136.9(455B) or 136.10(455B) must establish a standby trust fund when the
				mechanism is acquired. The trustee of the standby trust fund must be an entity
				that has the authority to act as a trustee and whose trust operations are
				regulated and examined by a federal agency or an agency of the state in which
				the fund is established.
(2) The
				standby trust agreement or trust agreement must be worded as follows, except
				that instructions in brackets are to be replaced with the relevant information
				and the bracket deleted:
TRUST AGREEMENT
Trust agreement, the "Agreement," entered into as of [date]
				  by and between [name of the owner or operator], a [name of state] [insert
				  "corporation," "partnership," "association," or "proprietorship"], the
				  "Grantor," and [name of corporate trustee], [insert "Incorporated in the state
				  of_____________________" or "a national bank"], the "Trustee."
[Whereas, the Iowa Department of Natural Resources has
				  established certain rules applicable to the Grantor, requiring that an owner or
				  operator of an underground storage tank 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 underground storage tank. The
				  attached Schedule A lists 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 guarantee," "surety bond," or "letter of credit"] to provide all or part of
				  such financial assurance for the underground storage tanks identified herein
				  and is required to establish a standby trust fund able to accept payments from
				  the instrument (This paragraph is only applicable to the standby trust
				  agreement.)];
[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 the owner or operator who enters into this Agreement and any successors
				or assigns of the Grantor.
(b) The
				term "Trustee" means the Trustee who enters into this Agreement and any
				successor Trustee.
[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 Fund.
The
				  Grantor and the Trustee hereby establish a trust fund, the "Fund," for the
				  benefit of the Iowa Department of Natural Resources. The Grantor and the
				  Trustee intend that no third party have access to the Fund except as herein
				  provided. [The Fund is established initially as a standby to receive payments
				  and shall not consist of any property.] Payments made by the provider of
				  financial assurance pursuant to the Director of the Iowa Department of Natural
				  Resources. Instructions 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 as provider of financial
				  assurance, any payments necessary to discharge any liability of the Grantor
				  established by the Iowa Department of Natural Resources.
Section 4. Payment for ["Corrective Action" and/or
				  "Third-Party Liability Claims"].
The Trustee shall make payments from
				  the Fund as the Director of the Iowa Department of Natural Resources shall
				  direct, in writing, to 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 the financial assurance mechanism identified in this
				  Agreement.
The Fund may not be drawn upon to cover any of the
				  following:
(a) Any obligation of
				[insert owner or operator] under a workers' compensation, disability benefits,
				or unemployment compensation law or other similar law;
(b) Bodily injury to an employee of [insert
				owner or operator] arising from, and in the course of, employment by [insert
				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 [insert
				owner or operator] that is not the direct result of a release from a petroleum
				underground storage tank;
(e)
				Bodily injury or property damage for which [insert 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 rule
				567-1364.
				(455B).
The Trustee shall reimburse the Grantor, or other persons as
				  specified by the Director, from the Fund for corrective action expenditures
				  and/or third-party liability claims in such amounts as the Director shall
				  direct in writing. In addition, the Trustee shall refund to the Grantor such
				  amounts as the Director 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 duties
				  with respect to the trust fund solely in the interest of the beneficiaries 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 like character
				  and with like aims; except that:
(i)
				Securities or other obligations of the Grantor, or any other owner or operator
				of the tanks, or any of their affiliates as defined in the Investment Company
				Act of 1940, as amended, 15 U.S.C. 80 a - 2(a), shall not be acquired or held,
				unless they are securities or other obligations of the federal or a state
				government;
(ii) 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
(iii) 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, 15U.S.C. 80 a-l etseq., 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 saving 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. Advice of Counsel.
The Trustee
				  may from time to time consult with counsel, who may be counsel to the Grantor,
				  with respect to any questions arising as to the construction 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 11. 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 12. 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 writing sent to the Grantor and
				  the present Trustee by certified mail 10 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 13. 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 the attached Schedule B or
				  such other designees as the Grantor may designate by amendment to Schedule B.
				  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 Director of the Iowa Department of Natural Resources to
				  the Trustee shall be in writing, signed by the Director, 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 Director 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 Director, except as provided for herein.
Section 14. Amendment of Agreement.
This
				  Agreement may be amended by an instrument in writing executed by the Grantor
				  and the Trustee, or by the Trustee and the Director of the Iowa Department of
				  Natural Resources if the Grantor ceases to exist.
Section 15. Irrevocability and Termination.
Subject to the right of the parties to amend this Agreement as provided in
				  Section 14, this Trust shall be irrevocable and shall continue until terminated
				  at the written direction of the Grantor and the Trustee, or by the Trustee and
				  the Director of the Iowa Department of Natural Resources, 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 16. 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 the Director of the Iowa
				  Department of Natural Resources 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 17. Choice of law.
This Agreement
				  shall be administered, construed, and enforced according to the laws of the
				  state of Iowa, or the Comptroller of the Currency in the case of National
				  Association banks.
Section 18. 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 the
				  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 duly authorized and their corporate
				  seals (if applicable) 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 567-subrule 136.12(2) "TRUST AGREEMENT"
				  as such regulations were constituted on the date written above.
[Signature of Grantor]
[Name of the Grantor]
[Title] Attest:
[Signature of Trustee]
[Name of the Trustee]
[Title]
[Seal] Attest:
[Signature of Witness]
[Name of Witness]
[Title]
[Seal]
The standby trust agreement must be accompanied by a formal
				  certification of acknowledgment similar to the following.