2009 California Health and Safety Code - Section 25395.40-25395.45 :: Article 8.7. California Financial Assurance And Insurance For Redevelopment Program

HEALTH AND SAFETY CODE
SECTION 25395.40-25395.45

25395.40.  For the purposes of this article, the following
definitions shall apply:
   (a) "CLEAN Program" means the Cleanup Loans and Environmental
Assistance to Neighborhoods Program established pursuant to Section
25395.22.
   (b) "Cost overrun insurance" means insurance that covers some, or
all of the response costs caused by a known pollution condition at a
site, that exceed the estimated response action costs that have been
accepted and approved by the insurer, based on information from the
department and other relevant sources at the time the insurance is
first obtained.
   (1) Cost overrun insurance shall, at a minimum, provide for all of
the following:
   (A) The response costs in excess of the estimated response action
costs that have been accepted and approved by the insurer.
   (B) A policy period of sufficient length to cover the duration of
the response activities, not including post-completion operation and
maintenance.
   (C) A self-insured retention amount not to exceed 25 percent of
the estimated response action costs that have been accepted and
approved by the insurer.
   (c) "Eligible property" has the same meaning as defined in
paragraph (6) of subdivision (a) of Section 25395.20.
   (d) "Environmental insurance" means insurance intended to limit
the liability associated with the discovery and cleanup of a
hazardous materials release, including secured creditor insurance,
pollution liability insurance, and cost overrun insurance, and any
other insurance product that the secretary selects to be provided
pursuant to Section 25395.41.
   (e) "Estimated response action costs" means the projected costs of
taking a response action in implementing an approved removal action
work plan or remedial action plan prepared to address a pollution
condition at a site.
   (f) "FAIR" means the Financial Assurance and Insurance for
Redevelopment Program created pursuant to this article.
   (g) "Hazardous material" means 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. "Hazardous material" includes, but is not limited to,
all of the following:
   (1) A hazardous substance, as defined in Section 25281 or 25316,
including the substances specified in Section 25317.
   (2) A hazardous waste, as defined in Section 25117.
   (3) A waste, as defined in Section 101075, or as defined in
Section 13050 of the Water Code.
   (h) "Insurance company" means an insurance company authorized in
California 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.
   (i) "Pollution condition" means a release or threatened release of
a hazardous material and any resulting impact upon the environment.
   (j) (1) "Pollution liability insurance" means 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:
   (A) A minimum policy period of five years after the completion of
remediation activities, not including post-completion operation and
maintenance.
   (B) 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 reasonably quantifiable legal obligation to
pay those damages.
   (2) For purposes of this subdivision, "damages" means either of
the following:
   (A) Property damage incurred at a site as an unforeseen and
unexpected result of a pollution condition.
   (B) Bodily injury, property damage, and response action costs
sustained or incurred by a third party as a result of a pollution
condition at a site.
   (3) For purposes of this subdivision, "damages" includes the
property damage, bodily injury, and response costs specified in
paragraph (2), 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.
   (k) "Secured creditor insurance" means insurance made available to
an insured that covers all of the following:
   (1) Response costs at a site incurred by the lender after a
default by the borrower or foreclosure by the lender that occurs as a
result of a pollution condition at the site, and the costs are
reasonably necessary to remediate the site for its intended use so
that it can be sold.
   (2) Damages or other liability for a pollution condition at a site
incurred by a lender as a result of that lender exercising a
foreclosure option.
   (3) Loss or damages incurred by a lender as a result of a borrower'
s inability to satisfy a loan obligation or due to the existence of
an unforeseen and unexpected pollution condition.
   (4) 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 loss, damages, or
liability, so long as there exists a reasonably quantifiable legal
obligation to pay damages.
   ( l) "Self-insured retention amount" means response action costs
in excess of the estimated response action costs that have been
accepted and approved by the insurer that the insured is obligated to
pay before being eligible to make a claim of an insurer under a cost
overrun insurance policy.
   (m) "Unforeseen and unexpected response action costs" means those
costs that exceed the estimated response action costs.

25395.41.  (a) The secretary shall solicit proposals for a package
of environmental insurance products from insurance companies through
a competitive bidding process. The request for proposal prepared by
the secretary shall identify the objectives of this article and the
specific types and coverage limits of the insurance products desired,
including endorsements and exclusions. The request for proposal
shall require that the proposal allow a purchaser the opportunity to
pay for additional coverage without losing the lower transaction
costs structure of the prenegotiated policy. The secretary shall hold
at least one public workshop in both the northern and the southern
part of the state to present and solicit comments on the request for
proposal prior to receiving any proposals.
   (b) (1) The secretary shall evaluate the extent to which each
proposal submitted pursuant to subdivision (a) meets the objectives
of the request for proposal and shall also evaluate each proposal and
interested party using all of the following factors:
   (A) Product pricing.
   (B) Claims history.
   (C) Underwriting history.
   (D) Company financial strength and size.
   (E) Scope of policy coverages, including endorsements and
exclusions.
   (F) Marketing and distribution of the insurance products.
   (G) Any other factor that the secretary determines will affect the
ability of the selected insurance company to meet the requirements
of this article and provide the environmental insurance products in
the most effective and efficient manner and at the least cost to the
state and to persons seeking that insurance.
   (2) The secretary shall select one or more insurance companies
that have submitted a proposal pursuant to subdivision (a) to be the
exclusive state-designated provider of environmental insurance under
this article for a period of three years from the date of selection.
The secretary shall select a company that, in his or her
determination, has submitted a proposal that best meets the
requirements of this article and the objectives stated in the request
for proposal at the best possible price. Every three years, the
secretary shall repeat the competitive bidding process specified in
this section.
   (c) An insurance company selected to provide prenegotiated
environmental insurance products pursuant to subdivision (b) shall
offer this prenegotiated package of insurance products to any
interested recipient of a loan under the CLEAN Program. The insurance
company shall also offer the environmental insurance products made
available under this article to any other person who conducts a
response action in the state.
   (d) The secretary shall implement this section in consultation
with representatives of other appropriate state agencies, including
the Business, Transportation and Housing Agency, the Office of
Planning and Research, the Pollution Control Financing Authority, the
Department of Insurance, the state board, the department, and with
other interested parties, including developers, lenders, insurers,
and representatives from environmental organizations. The secretary
shall implement this section in a manner that is consistent with the
requirements for state procurement of services set forth in Article 4
(commencing with Section 10335) of Chapter 2 of Part 2 of Division 2
of the Public Contract Code.

25395.42.  (a) The secretary shall expend the funds from the Cleanup
Loans and Environmental Assistance to Neighborhoods Account
established pursuant to Section 25395.20 that are made available in
the annual Budget Act for expenditure to subsidize the cost of the
environmental insurance products offered by the insurance company
selected pursuant to subdivision (b) of Section 25395.41, in
accordance with subdivision (b).
   (b) The secretary shall provide the following subsidies, in
accordance with the application process specified in Section
25395.43, from the funds made available pursuant to subdivision (a):
   (1) Up to 50 percent of the cost of the premiums for the
environmental insurance products provided pursuant to subdivision (c)
of Section 25395.41.
   (2) (A) Up to 80 percent of the self-insured retention amount of
the cost overrun insurance provided pursuant to subdivision (c) of
Section 25395.41, up to a maximum of five hundred thousand dollars
($500,000).
   (B) The secretary may expend the funds available to pay a portion
of the self-insured retention amount of the cost overrun insurance
provided pursuant to subdivision (b) of Section 25395.41 only under
all of the following conditions:
   (i) The insured demonstrates that it exercised reasonably prudent
business judgment in insuring the cost overrun, consistent with an
attempt to minimize the incurred costs, and incurred the costs
through no fault of its own.
   (ii) The insured pays, at a minimum, the first 20 percent of the
self-insured retention amount.
   (iii) The secretary determines that the amount of the payment is
in the best interests of the state, taking into account the
environmental and economic benefits of the specified project, as
compared to the benefit of conserving funds for assistance at other
sites.

25395.43.  (a) Any person who is conducting a response action at an
eligible property under the oversight of the department or a regional
board and who purchases the prenegotiated environmental insurance
products from the insurance company selected pursuant to subdivision
(b) of Section 25395.41 may apply to the secretary for the subsidies
that are made available pursuant to Section 25395.42. To the extent
that the funds that are made available in the annual Budget Act for
expenditure to subsidize the cost of the environmental insurance
products provided pursuant to this article are available, an
applicant is eligible for a subsidy in the order in which the
applicant's application is received.
   (b) An applicant for a subsidy made available pursuant to Section
25395.42 shall provide the secretary with all information necessary
to demonstrate to the secretary that the applicant is eligible to
receive a subsidy.
   (c) The state and the Cleanup Loans and Environmental Assistance
to Neighborhoods Account do not have any obligation to provide funds
to any person that applies for a subsidy pursuant to this article.
The secretary shall provide an applicant with a subsidy only to the
extent that money in the Cleanup Loans and Environmental Assistance
to Neighborhoods Account established pursuant to Section 25395.20 has
been reserved in the annual Budget Act for the purpose of providing
environmental insurance and the money that has been reserved for this
purpose is available.

25395.44.  (a) Notwithstanding any other provision of law, the
agency, the secretary, the state, their respective employees and
agents, and any of the state's other political subdivisions or
employees thereof, shall not be liable to any person for any of the
following:
   (1) Any acts or omissions by the agency, the secretary, the state,
their respective employees and agents, and any of the state's other
political subdivisions or employees thereof, in implementing this
article.
   (2) Any acts or omissions by an insurance company selected to
provide prenegotiated environmental insurance products pursuant to
subdivision (b) of Section 25395.41.
   (3) Any acts or omissions by any person that purchases a
prenegotiated environmental insurance product made available pursuant
to this article.
   (b) The immunity from liability set forth in subdivision (a)
specifically includes, but is not limited to, immunity if an
insurance company selected to provide prenegotiated environmental
insurance products pursuant to subdivision (b) of Section 25395.41
does any of the following:
   (1) Cancels, rescinds, or otherwise terminates its contract with
the secretary.
   (2) Fails, for any reason, to compensate an insured for a loss
covered by a policy.
   (3) Delays payment to an insured, or otherwise breaches a duty or
covenant imposed by law or required by a policy or contract with an
insured that purchased an environmental insurance product pursuant to
this article.
   (c) The immunity set forth in this section is in addition to other
immunities and defenses otherwise available to the agency, the
secretary, the state, their respective employees and agents, and any
of the state's political subdivisions and employees thereof.
   (d) In implementing this article, the agency, the secretary, the
state, their respective employees and agents, and any of the state's
other political subdivisions and employees thereof, may not:
   (1) Be construed to be an insurer, as defined in Section 23 of the
Insurance Code, an insurance agent, as defined in Sections 31 and
1621 of the Insurance Code, an insurance solicitor, as defined in
Sections 34 and 1624 of the Insurance Code, or an insurance broker,
as defined in Sections 33 and 1623 of the Insurance Code.
   (2) Be construed to be transacting insurance, as defined in
Section 35 of the Insurance Code.
   (3) Be required to obtain a license or other authorization
pursuant to any provision of the Insurance Code.

25395.45.  The agency may adopt regulations to implement this
article pursuant to this section. The regulations adopted to
implement this article shall be deemed to be emergency regulations
for purposes of Section 11346.1 of the Government Code.
Notwithstanding the 120-day limit specified in subdivision (e) of
Section 11346.1 of the Government Code, those emergency regulations
may remain in effect for up to 180 days.


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