FAQ:

Is The Financing Debt to My Company or The Fund? No. Because NatLUST is buying a paper asset (the approved claim) and not technically lending money, one advantage is that the financing is not debt to the RP, their environmental consultant, the state LUST fund or the state's taxpayers. NatLUST financing does not impact the state's bond ratings.The only party going into debt is NatLUST.
 
Is the Financing Non-Recourse? Yes. Absent fraud, NatLUST financing is essentially non-recourse to the RP & their consultant. If a LUST fund ceases to reimburse claims or the 5%-10% "holdback" is insufficient to cover the accrued carrying costs, NatLUST and its credit providers will suffer the loss.
 
Do You Offer Direct Pay? Yes. In states where it is not barred by regulation or law, NatLUST will provide a “Direct Pay” option, where the RP can direct NatLUST to send the Initial and Residual payments directly to their environmental consultant. For more information on Direct Pay, click here.
 
What About Cost Recovery?

NatLUST financing does not prejudice the state environmental agency’s right to seek cost recover from the RP (or their consultant) at a later date. NatLUST mission is to step into the RP’s shoes and provide liquidity, not to assume liability that the clean up was done in compliance with the state’s program rules.
 
Are RP’s Exposed to Credit Risk from Other States?

No. While NatLUST will achieve economies of scale through large bond issues, participants in one state will not be exposed to credit risk of other states. Just like with the present VRA Program, each claim is deemed held in a "separate account" and stands on its own. NatLUST will not divert reimbursements intended for one party to another, or from one state program to another program.

 
Will This Be As Cost Effective As Virginia’s VRA Program?

Over time, we expect NatLUST to prove even more cost effective than the VRA Program.

As the Program builds, NatLUST will likely realize significant economies of scale from large and regular issuance of tax-exempt bonds (or commercial paper), which should result in low carrying costs for the participants. While interest rates will fluctuate with market conditions, the ability to finance with tax-exempt bonds is typically quite favorable vs. conventional means. For a history of VRA’s costs, click here.

 
Who Pays the Carrying Costs? The party that receives the Initial and Residual Payments pays NatLUST’s carrying costs. Carrying costs are deducted from the back end Residual Payment. Virginia’s experience suggests that in most cases, the RP & their consultant mutually agree to use Direct Pay, which means the consultant typically pays the carrying charges.
 
What About Corporate Governance ? Prior to its formal incorporation, NatLUST has formed an advisory committee of individuals with experience as LUST fund administrators, representatives from the major petroleum industry trade associations, and other individuals who can contribute to NatLUST’s success. For information on NatLUST's leadership, click here.
 
Does NatLUST Make the Fund’s Backlog of Unpaid Claims Go Away? No. The backlog remains, rising or falling depending on market conditions. But the problems caused by the backlog disappear, with RP’s and state agency working together on an aggressive path to cleaning up contaminated sites.
 
Will NATLUST Financing Be Available In All States? NatLUST will attempt to make financing available to RP’s in all states where a funding need is identified; however, an important factor that will influence whether NatLUST’s credit providers will approve a state will be the state regulatory agency's willingness to signal that they believe there is a public purpose benefit to their RP's having the option to participate.
 

Is Legislation Required? What Does the State Agency Have to Do For Its RP's to Have the Option of Participating?

 

Does NatLUST Restrict the State’s Ability to Make Changes To Its Fund Program?

In most cases, little governmental action would be required in order for stakeholders to participate. NatLUST and the state agency would simply enter into a cooperation agreement, which will evidence that the state agency believes there is a public purpose benefit to allowing its RP's the option of participating.

NatLUST does not prejudice the environmental agency, legislature & administration’s prerogative to make changes to their state LUST fund program as they see fit.
 

I'm a Fund Administrator. We Would Like to Clean Up Various Sites Instead of Just Monitoring Them. Could We Use NatLUST Financing ?

Our State LUST Fund Program is Somewhat Different Than Virginia's. Will NatLUST Adapt to Fit Our Needs?

Yes. You could accelerate your clean up program, allowing RP's and consultant's the option of assigning their approved claims to NatLUST. By getting these sites cleaned up now, you may save tax dollars in the long run, as well as provide for a better environment today. NatLUST will hold the approved claims until they are reimbursed.

Yes. You don't have to turn your present fund program upside down to participate.

 
This Sounds Too Good to be True. Does Any Party Lose? Virginia discovered through its VRA Program that all parties come out winners, including the LUST fund and taxpayers. Nobody loses.