OAR 740-040-0060: Irrevocable Letters of Credit

(1) In lieu of filing liability insurance or cargo insurance, a motor carrier may file with the Department an irrevocable letter of credit. (2) Any irrevocable letter of credit must meet the definition and requirements of ORS 75.1010 through 75.1170 and must: (a) State the name and address of the issuing bank; (b) State the name of the motor carrier; (c) List the account number or numbers upon which draws may be made; (d) Identify the Department as beneficiary of the letter; (e) Set forth the amount of credit of the letter; (f) Allow for partial draws; (g) State the effective and termination dates of the letter; (h) Be signed by a person with authority to bind the issuing bank; and (i) Contain a provision that the issuing bank agrees to provide the Department written notice of at least 30 days before the issuing bank cancels the letter. (3) The minimum amount of credit in an irrevocable letter of credit shall be as follows: (a) For liability insurance, the minimum limit required by OAR 740-040-0020; (b) For cargo insurance, the minimum limit required by OAR 740-040-0030. (4) A claimant requesting that the Department make a payment under an irrevocable letter of credit shall provide: (a) A true copy of an agreement showing that the motor carrier has consented to settle for the amount of the payment; or (b) A true copy of a judgment showing that a court is requiring the motor carrier to tender the amount of the payment and a statement certifying: (A) That the judgment has not been appealed and that the time for appeal has run; or (B) That the motor carrier has exhausted its appeal rights and that such appeal or appeals were unsuccessful. (5) If the Department's authorization of payment will cause the amount of credit in an irrevocable letter of credit to fall below the applicable minimum of section (3) of this rule, the Department shall, prior to such authorization, send the motor carrier a written notice requiring the motor carrier to increase the amount of credit so that, after payment, the amount of credit will at least equal the applicable minimum of section (3) of this rule. (6) On or before the tenth day following the date of the written notice required by section (5) of this rule, the motor carrier shall increase the amount of credit in its irrevocable letter of credit so that, after payment, the amount of credit will at least equal the applicable minimum of section (3) of this rule. (7) A motor carrier that fails to comply with any requirement of this rule is subject to suspension of its authority.