18 AAC 75.265. Letters of credit

(a) An applicant may demonstrate financial responsibility with a letter of credit, in favor of the State of Alaska, for the applicable amount required under 18 AAC 75.235(a) , in full or in part. The letter of credit

(1) must be irrevocable for a period of not less than one year on the part of the issuer; in addition, the letter must provide that it will be automatically extended for one year unless the department and the applicant are notified in writing at least 90 days before expiration of its stated term that the letter will not be renewed; however, if a vessel is to be used in state waters for less than one year, the letter of credit must cover the period that the vessel is to be used in state waters plus 30 days;

(2) must be irrevocable until satisfaction of a judgment or of a claim against the applicant under AS 46.04.040 (i) or the provisions cited in it which results from a discharge occurring during its term, subject to the limit of credit;

(3) must be a standby letter of credit to respond specifically to a claim under AS 46.04.040 (i) or the provisions cited in it, subject to the limit of credit;

(4) may not be used as collateral and may not be drawn upon by the applicant except to respond to a claim under AS 46.04.040 (i) or the provisions cited in that subsection for as long as the letter of credit is used by the applicant as proof of financial responsibility under AS 46.04.040 or 46.04.055;

(5) must be issued by a financial institution that has authority to issue letters of credit, and that is regulated and examined by state and federal banking agencies; and

(6) must state an effective date and an expiration date, and must be effective on or before the approval date of proof of financial responsibility.

(b) The issuing bank shall pay upon presentation by the State of Alaska of a draft or other document as specified in the letter of credit and may not make determinations of fact or law that might be at issue between the responsible party and the department.

History: Eff. 5/14/92, Register 122; am 11/26/94, Register 132; am 10/28/2000, Register 156

Authority: AS 46.03.020

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