[Code of Federal Regulations]

[Title 40, Volume 26]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 40CFR280.103]



[Page 541-544]

 

                   TITLE 40--PROTECTION OF ENVIRONMENT

 

         CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)

 

PART 280_TECHNICAL STANDARDS AND CORRECTIVE ACTION REQUIREMENTS FOR 

OWNERS AND OPERATORS OF UNDERGROUND STORAGE TANKS (UST)--Table of Contents

 

                   Subpart H_Financial Responsibility

 

Sec.  280.103  Standby trust fund.



    (a) An owner or operator using any one of the mechanisms authorized 

by Sec. Sec.  280.96, 280.98, or 280.99 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.

    (b)(1) 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 brackets 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 United States Environmental Protection Agency, ``EPA,'' 

an agency of the United States Government, has established certain 

regulations 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 

standpoint 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 [implementing agency]. 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 

implementing agency'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



[[Page 542]]



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 state implementing agency]



    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 implementing agency] 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 40 CFR 280.93.

    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 his 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 a 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. 80a-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, 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



[[Page 543]]



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. 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 implementing agency] 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 implementing agency] if the Grantor ceases to exist.



[[Page 544]]



               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 implementing 

agency], 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 implementing agency] 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 [insert name of state], 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 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 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 40 

CFR 280.103(b)(1) 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]

    [Signature of Witness]

    [Name of the Witness]

    [Title]

    [Seal]



    (2) The standby trust agreement, or trust agreement must be 

accompanied by a formal certification of acknowledgement similar to the 

following. State requirements may differ on the proper content of this 

acknowledgment.



State of________________________________________________________________



County of_______________________________________________________________



    On this [date], before me personally came [owner or operator] to me 

known, who, being by me duly sworn, did depose and say that she/he 

resides at [address], that she/he is [title] of [corporation], the 

corporation described in and which executed the above instrument; that 

she/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/he signed her/

his name thereto by like order.



[Signature of Notary Public]

    [Name of Notary Public]



    (c) The Director of the implementing agency will instruct the 

trustee to refund the balance of the standby trust fund to the provider 

of financial assurance if the Director 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.

    (d) An owner or operator may establish one trust fund as the 

depository mechanism for all funds assured in compliance with this rule.



[53 FR 43370, Oct. 26, 1988; 53 FR 51274, Dec. 21, 1988]