UNDERGROUND STORAGE TANK
Authority, Purpose, and Scope
(1) These rules are promulgated in accordance with and under the authority of ORS 466.706 through 466.835 as amended by Chapter 863, Oregon Laws, 1991 (Senate Bill 1215). These rules are in addition to OAR Chapter 340, Division 172.
(2) The purpose of these rules is to:
(a) Provide for the regulation of persons who receive loan guarantees for UST project work at UST facilities holding or that previously held an accumulation of motor fuel for resale; and
(b) Provide for the regulation of commercial lending institutions who issue guaranteed UST loans.
(3) These rules establish requirements and standards for:
(a) Loan guarantees for UST project work;
(b) Applying and qualifying for a guaranteed loan through a commercial lending institution;
(c) Loan default; and
(d) Administration and enforcement of these rules by the Department.
(1) The definitions in OAR 340-172-0010 and the following definition apply to these rules.
(2) "Collection Expenses" means out of pocket expenses, attorney fees, administrative expenses, filing fees, recording fees, and other expenses related to collection of unpaid loan monies.
General Provisions, Guaranteed Underground Storage Tank Facility Loan
(1) The guaranteed loan must be issued by a commercial lending institution as defined in OAR Chapter 340, Division 172.
(2) Grant funds, described in OAR Chapter 340, Division 175, may not be used to pay either the principal or interest portion of the guaranteed loan.
Application for Underground Storage Tank Loan Guarantee
Any person wishing to apply for a loan guarantee under these rules shall submit a written application in accordance with OAR Chapter 340, Division 172.
Loan Guarantee Certificate
(1) In accordance with this part, the Department shall issue a loan guarantee certificate to an applicant who has filed a complete application and meets the requirements of OAR Chapter 340, Division 172 and this Division.
(2) Only one loan guarantee certificate shall be issued for each facility location. All tanks at a facility location shall be covered by the loan guarantee certificate.
(3) An applicant may receive a loan guarantee certificate for more than one facility location.
(4) The loan applicant may not assign any right, title, and interest in the loan guarantee certificate to any person other than a subsequent property owner, tank owner or permittee of the underground storage tank facility.
(5) Loan guarantee certificates shall be valid for one year from the date of issue. A certificate may be renewed subject to availability of funds from the USTCCA fund.
(1) The Department shall issue a loan guarantee confirmation letter of 80 percent of the loan principal, not to exceed $80,000, to a commercial lending institution for a loan to provide UST project work where:
(a) A loan guarantee certificate has been issued to the loan applicant;
(b) The loan guarantee does not provide a guarantee for work other than UST project work;
(c) The interest rate is fixed and the loan is amortized with equal payments over the term of the loan.
NOTE: To assure that funds are available from the UST Compliance and Corrective Action Fund (USTCCA Fund) to pay loan guarantees during the life of the loan, it is necessary for most loans to have equal payments over the term of the loan. The Department, however, recognizes that the lending policies may differ between commercial lending institutions and may differ between individual loans, particularly during construction. The Department expects that equal loan payments will start after construction is complete. The Department is willing to consider other loan arrangements and other loan repayment schedules subsequent to the initial loan, such as multiple loans and loan refinancing where USTCCAF monies are available to pay loan guarantees, upon default, in full. Each new loan arrangement may be approved by the Department on a case by case basis. The final maturity date of the loan may not exceed 20 years from the initial note date.
(d) The maturity date of the loan does not exceed 20 years from the initial loan closing date;
(e) The commercial lending institution has approved the loan, subject to receiving the loan guarantee confirmation letter from the Department; and
(f) The loan applicant or the commercial lending institution has provided the terms of the loan to the Department. The terms of the loan shall include but are not limited to:
(A) Amount of loan principal;
(B) Amount and period of payment;
(C) Fixed interest rate; and
(D) The term of the loan from the initial note date.
(2) The loan guarantee shall terminate on the first to occur of:
(a) Thirty days after loan maturity date, including all extensions or renewals by the lender or extensions caused by the Department.
NOTE: For example, if the initial note has a five year maturity date, it's maturity date may be extended beyond five years, but not past 20 years. The loan guarantee will terminate 30 days after the new maturity date. All of the above rules apply to any extension of the maturity date.
(b) Upon payment of the loan guarantee to the commercial lending institution; or
(c) When the loan guarantee provided by the Department is replaced by a loan guarantee provided by the U.S. Small Business Administration (SBA).
(3) The commercial lending institution shall notify the Department promptly when a loan guaranteed by the Department is paid in full or if the guarantee is replaced with a SBA loan guarantee for the same purpose.
NOTE: Because SBA loans provide a more complete guarantee (SBA guarantees can include costs outside of UST project work and a 90 percent guarantee), the Department encourages transfer of loan guarantees to the SBA. It is expected that the SBA will agree to provide their loan guarantee (takeout the loan) after corrective action and UST construction work is complete, approximately six months after the Department issues the original loan guarantee.
(4) The payment of the loan guarantee is subject to monies being allocated and being available from the Underground Storage Tank Compliance and Corrective Action Fund throughout the term of the loan.
Notice of Default on a Guaranteed Loan
(1) Any commercial lending institution wishing to obtain payment from the Department under the Department's loan guarantee shall provide the following:
(a) Written notice from the commercial lending institution in the form of a demand for payment of the loan guarantee, stating:
(A) The guaranteed loan to the borrower is in default;
(B) The commercial lending institution has made a good faith effort to work with the borrower, using the institution's established procedures, to bring the loan back into good standing;
(C) Demand for payment in full has been made to the borrower by the commercial lending institution; and
(D) The borrower has not paid the loan in full.
(b) The demand for payment of the loan guarantee shall include:
(A) A copy of the demand letter to the borrower from the commercial lending institution; and
(B) A statement showing the principal balance outstanding on the date the demand letter was sent to the borrower.
(2) Subject to the availability of funds from the Underground Storage Tank Compliance and Corrective Action Fund, the Department, within 30 days after receipt of the default notice:
(a) Shall institute procedures to pay to the commercial lending institution the lesser of:
(A) The amount guaranteed by the Department; or
(B) The principal balance outstanding on the date the commercial lending institution sent the default notice to the Department.
(b) Where agreed upon by the commercial lending institution and where the borrower is unable to pay, the Department may make partial principal payments of the loan guarantee equal to the monthly loan principal payment for up to 12 monthly loan payments. If the loan is still in default after the Department has made 12 monthly payments, the Department will pay the loan guarantee, pursuant to subsection (2)(a) of this rule.
(3) If the commercial lending institution receives payment of the loan, in whole or in part, after the date of the default notice, the commercial lending institution shall promptly notify the Department in writing of such payment.
(4) Once the Department has paid the loan guarantee certificate in whole or in part, the commercial lending institution shall reimburse the Department for any collection of the principal portion on the unpaid loan at the guarantee percentage shown on the loan guarantee certificate. The reimbursement shall be in legal tender. The expenses of collection including interest accrued after default may be deducted from the reimbursement paid to the Department.
(5) The Department understands that collection may consist of cash, securities, notes, personal property, real property or any other form of payment accepted by the commercial lending institution. The reimbursement to the Department shall be after the collection has been converted to legal tender. Payment to the Department by the commercial lending institution shall be made within 30 days after any collection is converted into legal tender.
An applicant may appeal determinations by the Department under these rules, in accordance with OAR 340-172-0110, by sending a written request for a formal contested case hearing within 20 days after the Department awards or denies financial assistance.