The DOJ and State of California have issued filings with the U.S. District Court in support of the finalized agreement for the Environmental Mitigation Trust. The Trust Effective Date has not been set yet. The Trust Effective Date will be the date that the fully executed Trust Agreements are filed with the Court.
Below are some key changes to the original agreement:
- The Establishment of Two Trust Agreements: There will be two trusts instead of one for tax reasons. One trust, the State Mitigation Trust will serve the 50 States, Puerto Rico, and the District of Columbia, and a second trust, the Indian Tribe Mitigation Trust will serve the Indian Tribe Beneficiaries. This change required a reallocation of administrative funds (data on the EV Hub has been updated to reflect these changes).
- Directed Trust:** Each Trust Agreement will be a directed trust in which each the Beneficiary submits a funding request certifying that its request meets the requirements regarding Eligible Mitigation Actions. The Trustee will not need inquire any further to validate the funding requests.
- Each Beneficiary must prepare a detailed budget, certify that all vendors are selected in accordance with law, identify the governmental entity responsible to audit expenditures, and commit to make all supporting documentation publicly available.
- Each funding request from a Beneficiary must be posted on the Trustee’s website.
- Each Beneficiary must submit semiannual reports on the Eligible Mitigation Actions, which will be made publicly available on the Trustee’s website.
- Delaware Statutory Trust: The trust will be established as a Delaware statutory trust.
- Separation of Trustee and Investment Manager Roles: Wilmington Trust, N.A. is acting in two distinct roles to reflect the different standard of care under Delaware law for trust administrators and investment managers.
- Insurance and Indemnification: The Trustee will have authority to obtain insurance that includes its officers and directors as well as tax professionals hired by the Trustee. In addition, the Trustee will have indemnification against each Trust’s administration accounts for claims unless the Court finds that the Trustee’s actions were fraudulent, negligent or willful misconduct.
- Consequential Damages: Consequential damages claims by Beneficiaries against the Trustee will be limited to cases of fraudulent or willful misconduct, and third parties will be banned from making consequential damages claims against the Trustee.
** This change resulted in a change in the timeline for Beneficiaries. After being deemed a Beneficiary, each Beneficiary must submit and make publicly available its Mitigation Plan not later than 30 Days prior to submitting its first funding request. The plan should summarize how the Beneficiary plans to use the mitigation funds allocated to it under this Trust.