Bill Text: PA SB454 | 2011-2012 | Regular Session | Introduced

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Bill Title: Establishing a program for the purchase of certain types of environmental liability insurance and for subsidies for the costs of premiums; and providing for powers and duties of the Department of Environmental Protection.

Spectrum: Moderate Partisan Bill (Republican 5-1)

Status: (Introduced - Dead) 2011-02-07 - Referred to ENVIRONMENTAL RESOURCES AND ENERGY [SB454 Detail]

Download: Pennsylvania-2011-SB454-Introduced.html

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PRINTER'S NO. 436
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 454 Session of2011
INTRODUCED BY ERICKSON, BROWNE, RAFFERTY, TOMLINSON, YUDICHAK AND FARNESE, FEBRUARY 7, 2011
REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, FEBRUARY 7, 2011
AN ACT
Establishing a program for the purchase of certain types of
environmental liability insurance and for subsidies for the
costs of premiums; and providing for powers and duties of the
Department of Environmental Protection.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Environmental
Insurance Program Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Account." The Environmental Insurance Program Subsidies
Account consisting of funds appropriated from the General
Assembly or received from Federal grants and loans.
"Borrower." Any individual, trust, firm, joint stock
company, corporation, partnership, limited liability corporation
or partnership, or association that has applied for and in due
course will receive the proceeds of a commercial real estate
loan, which proceeds will be used exclusively to pay the costs
of remedial program activities for a site and site
redevelopment.
"Commercial real estate loan." Loan documents evidencing an
obligation that is secured by real property that is subject to
the Environmental Insurance Program and in which the lender
relies upon the property as security for the loan and in due
course will obtain a perfected mortgage or other security
interest in the property.
"Damages." Any of the following:
(1) Property damage incurred at a site as an unforeseen,
unanticipated or unexpected result of a pollution condition.
(2) Unforeseen, unanticipated or unexpected remedial
program costs incurred at a site for actions taken in
implementing a department-approved interim remedial measure
work plan, remedial action work plan or postremedial
construction operation, monitoring and maintenance work plan.
(3) Bodily injury, property damage or remedial program
costs sustained or incurred by a third party as a result of a
pollution condition at a site.
"Default." The failure of a borrower to make any part of a
scheduled, periodic or final payment by the due date under a
commercial real estate loan or the occurrence of a designated
cause or event of default under the terms of a commercial real
estate loan.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Eligible borrower." A borrower that has:
(1) Entered into a voluntary agreement with the
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Department of Environmental Protection for the implementation
of an interim remedial measure work plan, a remedial action
work plan or a postremedial construction operation,
monitoring and maintenance work plan.
(2) Been conditionally approved to receive a commercial
real estate loan from a lender the proceeds of which will be
used for the remediation of a site in order to allow the site
to be redeveloped, subject to obtaining environmental
insurance under the program.
(3) Committed to the initiation of the redevelopment of
the real property within six months of the completion of
remedial construction activities.
"Environmental insurance." Unanticipated environmental costs
insurance or pollution legal liability insurance required by a
lender in conjunction with the objectives of the Environmental
Insurance Program.
"Hazardous waste." A substance or waste that, because of its
physical, chemical or other characteristics, may pose a risk of
endangering human health or safety or of degrading the
environment. The term does not include undisturbed naturally
occurring hazardous material unless it will adversely affect the
reasonable use of a property after response action is completed.
"Insurance company." An insurance company authorized in this
Commonwealth to offer environmental insurance and that has an
A.M. Best Financial Strength Rating of A+ or better and an A.M.
Best Financial Size Category of FSC X or larger, or the
equivalent of both as determined by the Insurance Department.
"Lender." Any State bank, State banking association, State
savings and loan association or State savings bank, any Federal
bank, national banking association, Federal Savings and Loan
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Association or Federal savings bank or any other institutional
lender authorized in this Commonwealth to make commercial real
estate loans.
"Pollutants." Any solid, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapors, soot, fumes, acids,
alkalis or toxic chemicals and including waste, hazardous waste,
oil, hazardous material and solid waste.
"Pollution condition." The discharge, dispersal, release or
escape of pollutants into or upon land, the atmosphere or any
watercourse or body of water, including groundwater, resulting
in the presence of pollutants in concentrations or amounts
exceeding maximum levels allowed by applicable environmental
laws or by court order, provided such conditions are not
naturally present in the environment.
"Pollution legal liability insurance." Insurance that covers
damages caused by a pollution condition from or at a site that
is preexisting and unknown or was otherwise unknown at the time
the insurance is first obtained and at a minimum provides for
all of the following:
(1) A minimum policy period of three years.
(2) A duty to defend and pay for defense costs in an
amount at least up to the amount of coverage available under
the policy, irrespective of whether an administrative or
judicial order requires the insured to compensate any party
or pay for the damages, so long as there already exists a
legal obligation to pay those damages.
For purposes of this definition, "damages" means either property
damage incurred at a site as an unforeseen and unexpected result
of a pollution condition or bodily injury, property damage and
response action costs sustained or incurred by a third party as
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a result of a pollution condition at a site. Damages includes
the property damage, bodily injury and response costs specified
in the preceding sentence, irrespective of whether an
administrative or judicial order requires the insured to
compensate any party or pay for the property damage, bodily
injury or response costs, so long as there exists a reasonably
quantifiable legal obligation to pay for those damages.
"Program." The Environmental Insurance Program.
"Program manager." The person appointed, designated or
contracted by the Department of Environmental Protection as
manager of the Environmental Insurance Program.
"Secured creditor." A lender that originates a commercial
real estate loan to an eligible borrower, the proceeds of which
will be used within this Commonwealth exclusively to pay the
costs of remedial program activities and redevelopment at the
site.
"Self-insured retention amount." Costs that are in excess of
the estimated costs, as accepted and approved by the insurer, of
implementing a voluntary agreement and work plan that the
borrower is obligated to pay before being eligible to make a
claim under an unanticipated environmental cost insurance
policy.
"Site." The term includes:
(1) Property that meets both of the following
conditions:
(i) The property was previously the site of an
economic activity that is no longer in operation at that
location.
(ii) The property has been vacant or has had no
occupant engaged in year-round economically productive
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activities for a period of not less than the 12 months
previous to the date of application for a loan pursuant
to this act.
(2) Notwithstanding the foregoing, the term does not
include any of the following:
(i) Property listed or proposed for listing on the
National Priorities List pursuant to section 105(a)(8)(B)
of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (Public Law
96-510, 94 Stat. 2767).
(ii) Property that is or was owned or operated by a
department, agency or instrumentality of the United
States.
(iii) Property that will be the site of a contiguous
expansion or improvement of an operating industrial or
commercial facility.
"Unanticipated environmental cost insurance." Insurance that
reimburses a borrower for some or all of the unanticipated
environmental costs and shall, at a minimum, provide for all of
the following:
(1) The costs of remedial program activities required by
the Department of Environmental Protection for the site in
excess of the estimated cost, as accepted and approved by the
insurer, of implementing an approved work plan based on the
information available to the insurance company providing the
environmental insurance at the time that the insurance is
obtained, including the information contained or referenced
in the work plan or plans attached to the commitment document
or agreement with the department, and minus any prenegotiated
buffer layer or self-insured retention.
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(2) A policy period of sufficient length to cover the
duration of the remedial program activities.
"Unanticipated environmental costs." State-required costs
that exceed the estimated costs, as accepted and approved by the
insurer, of implementing a voluntary agreement and work plan
approved by the Department of Environmental Protection based on
information available to the carrier at the time the insurance
is first obtained or any costs related to the presence of
hazardous waste at an affected site that were unknown to the
borrower and the department at the time such agreement was
approved.
Section 3. Environmental Insurance Program Subsidies Account.
(a) Establishment of account.--The Environmental Insurance
Program Subsidies Account is established in the General Fund to
be utilized by the department for the creation, development,
administration, management and implementation of the program.
(b) Moneys deposited in account.--All of the following
moneys shall be deposited into the account:
(1) Federal or State funds or both appropriated by the
General Assembly for the purposes of this act.
(2) Notwithstanding any other provision of law to the
contrary, any interest earned upon money deposited into the
account.
(c) Continuous appropriation.--
(1) Except as provided in paragraph (2), notwithstanding
any other provision of law to the contrary, the money in the
account is appropriated on a continuing basis, without regard
to fiscal years, to the department for the implementation and
administration of the program.
(2) The money in the account may be expended by the
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department for the implementation and administration of the
program only upon appropriation by the General Assembly.
Section 4. Environmental Insurance Program.
(a) Establishment.--The Environmental Insurance Program is
established within the department.
(b) Purpose.--The program shall provide subsidies for
environmental insurance premiums in order to facilitate the
remediation of contaminated real property as part of a plan for
redevelopment of a site.
Section 5. Selection of insurance companies.
(a) Solicitation of proposals.--
(1) The department shall solicit proposals for a package
of environmental insurance products from insurance companies.
The request for proposal prepared by the department, in
conjunction with the program manager, shall identify the
objectives of this act and the specific types and coverage
limits of the insurance products desired.
(2) The department shall require interested parties to
submit proposals for environmental insurance that meet those
objectives in the most effective and efficient manner.
(3) The request for proposal shall require that
proposals allow purchasers of the environmental insurance the
ability to obtain additional coverage necessary to address
the specific needs of an individual insured and require that
the proposal allow a purchaser the opportunity to pay for
additional coverage without losing the lower transaction
costs structure of the prenegotiated environmental insurance
policy.
(b) Evaluation of proposals.--
(1) The department shall select one insurance company
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that has submitted a proposal pursuant to subsection (a) to
be the exclusive State-designated provider of environmental
insurance under this act for a period of three years.
(2) The department, in conjunction with the program
manager, shall select the insurance company that has
submitted a proposal that best meets the requirements of this
section and the objectives stated in the request for
proposal.
(3) The insurance company selected by the department
must have substantial experience in environmental insurance
underwriting and providing insurance for State environmental
insurance programs.
(c) Prenegotiated package.--
(1) The insurance company selected pursuant to
subsection (b) shall offer a prenegotiated package of
environmental insurance products to any eligible borrower
under any commercial real estate loan to fund remediation
costs and redevelopment with a maximum subsidy of $500,000
per site.
(2) The insurance company may also provide to any person
an unsubsidized environmental insurance similar to that made
available under this program.
Section 6. Implementation of program.
(a) Subsidies.--The department shall use moneys from the
account to:
(1) Pay the fee of the project manager.
(2) Within the limits of appropriations or Federal
grants and loans, provide a subsidy up to 50% of the cost of
environmental insurance offered pursuant to this section when
purchased by an eligible borrower and provide a subsidy up to
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80% of the self-insured retention amount.
(b) Method of awarding subsidies.--
(1) Eligible borrowers shall receive subsidies under the
program in the order in which their applications are received
by the program manager.
(2) In the event that an application is received from an
eligible borrower before the department has given final
approval to an earlier application, the department may
provide a subsidy to the subsequent applicant, provided that
it has reserved sufficient funds to provide the subsidy to
all eligible borrowers in the order in which their
applications are received.
(c) Marketing.--The department shall assist the program
manager in the marketing of the program to lenders, developers
and other potential program participants.
(d) Access to information.--The department shall assist the
program manager in providing developers and other potential
program participants with access to information regarding:
(1) The program.
(2) Lenders whose borrowers have previously participated
in the program or that have expressed interest in
participating in the program.
(3) The availability and costs of environmental
insurance.
(4) Environmental risk management issues.
(5) Available economic development programs.
(6) Other related information.
Section 7. Application for subsidies.
All applicants for the program must provide the program
manager all information necessary to demonstrate that the
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applicant is an eligible borrower, and a detailed estimate of
the cost of implementing any and all interim remedial measure
work plans, remedial action work plans, postremedial
construction operation, monitoring and maintenance work plans
necessary for the remediation of the site or costs incurred to
remove asbestos or lead paint from buildings and structures to
be demolished, repaired or renovated.
Section 8. Coordination.
The department shall implement this act in consultation with
representatives of other appropriate State agencies.
Section 9. Rules and regulations.
The department may promulgate rules and regulations to
administer and enforce this act.
Section 10. Effective date.
This act shall take effect in 60 days.
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