Pennsylvania Code › Title 25 - ENVIRONMENTAL PROTECTION › Part I - Department of Environmental Protection › Subpart D - Environmental Health and Safety › Article IX - Residual Waste Management › Chapter 287 - RESIDUAL WASTE MANAGEMENT-GENERAL PROVISIONS › Subchapter E - BONDING AND INSURANCE REQUIREMENTS › TYPES OF BONDS › Section 287.323 - Collateral bonds; letters of credit

Current through Register Vol. 54, No. 28, July 13, 2024
(a) Letters of credit submitted as collateral
						  for collateral bonds shall be subject to the following conditions:
(1) The letter of credit shall be a standby
						  or guarantee letter of credit issued by a Federally insured or equivalently
						  protected state-chartered or National financial institution chartered or
						  authorized to conduct the business of banking in the United States and examined
						  by a State or Federal agency. The letter of credit may not be issued without a
						  credit analysis substantially equivalent to a credit analysis applicable to a
						  potential borrower in an ordinary loan situation. A letter of credit so issued
						  shall be supported by the customer's unqualified obligation to reimburse the
						  issuer for monies paid under the letter of credit.
(2) The letter of credit shall be irrevocable
						  and shall be so designated. The Department may accept a letter of credit for
						  which a limited time period is stated if both of the following conditions are
						  met and are stated in the letter:
(i) The
						  letter of credit is automatically renewable for additional time periods unless
						  the bank gives at least 90 days prior written notice to the Department and the
						  operator of its intent to terminate the credit at the end of the current time
						  period.
(ii) The Department has the
						  right to draw upon the credit before the end of its time period, if the
						  operator fails to replace the letter of credit with other acceptable bond
						  guarantees within 60 days of the bank's notice to terminate the
						  credit.
(3) The
						  Department may not accept letters of credit issued for a customer when the
						  amount of the letter of credit, aggregated with other loans and credits
						  extended to the customer, exceeds the issuer's legal lending limit for that
						  customer as defined in the United States Banking Code (12 U.S.C.A. §§
															21-220).
(4) Letters of credit shall name the
						  Department as the beneficiary and shall be payable to the Department, upon
						  demand, in part or in full, upon presentation of the Department's drafts, at
						  sight. The Department's right to draw upon the letter of credit does not
						  require documentary or other proof by the department that the customer has
						  violated the conditions of the bond, the permit or another
						  requirement.
(5) Letters of credit
						  shall be subject to
						  13 Pa.C.S. §§
															5105-5117 (relating to letters of credit) or
						  the equivalent Article or Division of the Uniform Commercial Code in effect in
						  the state of and which governs the bank issuing the letter of credit and the
						  latest edition of "Uniform Customs and Practice for Documentary Credits,"
						  published by the International Chamber of Commerce.
(6) The Department may not accept letters of
						  credit from a bank which has failed or delayed in making payment on a letter of
						  credit previously submitted as collateral to the Department.
(7) The issuing bank shall waive rights of
						  set-off or liens which it has or might have against the letter of
						  credit.