PURPOSE: This rule describes the requirements for use of a letter of credit as evidence of financial responsibility.

1. (1) An owner or operator may satisfy the financial responsibility requirements of 10 CSR 20-11.093 by obtaining an irrevocable standby letter of credit that conforms to the requirements of this section. The issuing institution must be an entity that has the authority to issue letters of credit in each state where used and whose letter of credit operations are regulated and examined by a federal or state agency.
2. (2) The letter of credit must be worded as specified in 10 CSR 20-11 Appendix, Form 6 (see 10 CSR 20-11.115).
3. (3) An owner or operator who uses a letter of credit to satisfy the requirements of 10 CSR 20-11.093 shall also establish a standby trust fund when the letter of credit is acquired. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the director will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the director under 10 CSR 20-11.108. This standby trust fund must meet the requirements specified in 10 CSR 20-11.103.
4. (4) The letter of credit shall be irrevocable with a term specified by the issuing institution. The letter of credit must provide that credit be automatically renewed for the same term as the original term unless, at least one hundred twenty (120) days before the current expiration date, the issuing institution notifies the owner or operator by certified mail of its decision not to renew the letter of credit. Under the terms of the letter of credit, the one hundred twenty (120) days will begin on the date when the owner or operator receives the notice as evidenced by the return receipt.

AUTHORITY: sections 319.114, RSMo (Cum. Supp. 1989) and 644.026, RSMo (Cum. Supp. 1993).* Original rule filed Feb. 7, 1991, effective Aug. 30, 1991. *Original authority: 319.114, RSMo (1989); 319.129, RSMo (1989), amended 1991, 1996; and 644.026, RSMo (1972), amended 1973, 1987, 1993.