Code Section Group

Health and Safety Code - HSC

DIVISION 20. MISCELLANEOUS HEALTH AND SAFETY PROVISIONS [24000 - 26217]

  ( Division 20 enacted by Stats. 1939, Ch. 60. )

CHAPTER 6.8. Hazardous Substance Account [25300 - 25395.45]

  ( Chapter 6.8 repealed and added by Stats. 1999, Ch. 23, Sec. 2. )

ARTICLE 8.7. California Financial Assurance and Insurance for Redevelopment Program [25395.40 - 25395.45]
  ( Article 8.7 added by Stats. 2001, Ch. 549, Sec. 4. )

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.

(Added by Stats. 2001, Ch. 549, Sec. 4. Effective January 1, 2002.)

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.

(Amended by Stats. 2004, Ch. 225, Sec. 43. Effective August 16, 2004.)

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.

(Added by Stats. 2001, Ch. 549, Sec. 4. Effective January 1, 2002.)

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.

(Added by Stats. 2001, Ch. 549, Sec. 4. Effective January 1, 2002.)

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.

(Repealed and added by Stats. 2002, Ch. 999, Sec. 52. Effective January 1, 2003.)

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.

(Added by Stats. 2001, Ch. 549, Sec. 4. Effective January 1, 2002.)

HSCHealth and Safety Code - HSC8.7.