1Establishing a program for the purchase of certain types of
2environmental liability insurance and for subsidies for the
3costs of premiums; and providing for powers and duties of the
4Department of Environmental Protection.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1.  Short title.

8This act shall be known and may be cited as the Environmental
9Insurance Program Act.

10Section 2.  Definitions.

11The following words and phrases when used in this act shall
12have the meanings given to them in this section unless the
13context clearly indicates otherwise:

14"Account."  The Environmental Insurance Program Subsidies 
15Account consisting of funds appropriated from the General 
16Assembly or received from Federal grants and loans.

17"Borrower."  Any individual, trust, firm, joint stock 
18company, corporation, partnership, limited liability corporation 
19or partnership, or association that has applied for and in due 

1course will receive the proceeds of a commercial real estate 
2loan, which proceeds will be used exclusively to pay the costs 
3of remedial program activities for a site and site 
4redevelopment.

5"Commercial real estate loan."  Loan documents evidencing an 
6obligation that is secured by real property that is subject to 
7the Environmental Insurance Program and in which the lender 
8relies upon the property as security for the loan and in due 
9course will obtain a perfected mortgage or other security 
10interest in the property.

11"Damages."  Any of the following:

12(1)  Property damage incurred at a site as an unforeseen,
13unanticipated or unexpected result of a pollution condition.

14(2)  Unforeseen, unanticipated or unexpected remedial
15program costs incurred at a site for actions taken in
16implementing a department-approved interim remedial measure
17work plan, remedial action work plan or postremedial
18construction operation, monitoring and maintenance work plan.

19(3)  Bodily injury, property damage or remedial program
20costs sustained or incurred by a third party as a result of a
21pollution condition at a site.

22"Default."  The failure of a borrower to make any part of a 
23scheduled, periodic or final payment by the due date under a 
24commercial real estate loan or the occurrence of a designated 
25cause or event of default under the terms of a commercial real 
26estate loan.

27"Department."  The Department of Environmental Protection of 
28the Commonwealth.

29"Eligible borrower."  A borrower that has:

30(1)  Entered into a voluntary agreement with the

1Department of Environmental Protection for the implementation
2of an interim remedial measure work plan, a remedial action
3work plan or a postremedial construction operation,
4monitoring and maintenance work plan.

5(2)  Been conditionally approved to receive a commercial
6real estate loan from a lender the proceeds of which will be
7used for the remediation of a site in order to allow the site
8to be redeveloped, subject to obtaining environmental
9insurance under the program.

10(3)  Committed to the initiation of the redevelopment of
11the real property within six months of the completion of
12remedial construction activities.

13"Environmental insurance."  Unanticipated environmental costs 
14insurance or pollution legal liability insurance required by a 
15lender in conjunction with the objectives of the Environmental 
16Insurance Program.

17"Hazardous waste."  A substance or waste that, because of its 
18physical, chemical or other characteristics, may pose a risk of 
19endangering human health or safety or of degrading the 
20environment. The term does not include undisturbed naturally 
21occurring hazardous material unless it will adversely affect the 
22reasonable use of a property after response action is completed.

23"Insurance company."  An insurance company authorized in this 
24Commonwealth to offer environmental insurance and that has an 
25A.M. Best Financial Strength Rating of A+ or better and an A.M. 
26Best Financial Size Category of FSC X or larger, or the 
27equivalent of both as determined by the Insurance Department.

28"Lender."  Any State bank, State banking association, State 
29savings and loan association or State savings bank, any Federal 
30bank, national banking association, Federal Savings and Loan 

1Association or Federal savings bank or any other institutional 
2lender authorized in this Commonwealth to make commercial real 
3estate loans.

4"Pollutants."  Any solid, liquid, gaseous or thermal irritant 
5or contaminant, including smoke, vapors, soot, fumes, acids, 
6alkalis or toxic chemicals and including waste, hazardous waste, 
7oil, hazardous material and solid waste.

8"Pollution condition."  The discharge, dispersal, release or 
9escape of pollutants into or upon land, the atmosphere or any 
10watercourse or body of water, including groundwater, resulting 
11in the presence of pollutants in concentrations or amounts 
12exceeding maximum levels allowed by applicable environmental 
13laws or by court order, provided such conditions are not 
14naturally present in the environment.

15"Pollution legal liability insurance."  Insurance that covers 
16damages caused by a pollution condition from or at a site that 
17is preexisting and unknown or was otherwise unknown at the time 
18the insurance is first obtained and at a minimum provides for 
19all of the following:

20(1)  A minimum policy period of three years.

21(2)  A duty to defend and pay for defense costs in an
22amount at least up to the amount of coverage available under
23the policy, irrespective of whether an administrative or
24judicial order requires the insured to compensate any party
25or pay for the damages, so long as there already exists a
26legal obligation to pay those damages.

27For purposes of this definition, "damages" means either property 
28damage incurred at a site as an unforeseen and unexpected result 
29of a pollution condition or bodily injury, property damage and 
30response action costs sustained or incurred by a third party as 

1a result of a pollution condition at a site. Damages includes 
2the property damage, bodily injury and response costs specified 
3in the preceding sentence, irrespective of whether an 
4administrative or judicial order requires the insured to 
5compensate any party or pay for the property damage, bodily 
6injury or response costs, so long as there exists a reasonably 
7quantifiable legal obligation to pay for those damages.

8"Program."  The Environmental Insurance Program.

9"Program manager."  The person appointed, designated or 
10contracted by the Department of Environmental Protection as 
11manager of the Environmental Insurance Program.

12"Secured creditor."  A lender that originates a commercial 
13real estate loan to an eligible borrower, the proceeds of which 
14will be used within this Commonwealth exclusively to pay the 
15costs of remedial program activities and redevelopment at the 
16site.

17"Self-insured retention amount."  Costs that are in excess of 
18the estimated costs, as accepted and approved by the insurer, of 
19implementing a voluntary agreement and work plan that the 
20borrower is obligated to pay before being eligible to make a 
21claim under an unanticipated environmental cost insurance 
22policy.

23"Site."  The term includes:

24(1)  Property that meets both of the following
25conditions:

26(i)  The property was previously the site of an
27economic activity that is no longer in operation at that
28location.

29(ii)  The property has been vacant or has had no
30occupant engaged in year-round economically productive

1activities for a period of not less than the 12 months
2previous to the date of application for a loan pursuant
3to this act.

4(2)  Notwithstanding the foregoing, the term does not
5include any of the following:

6(i)  Property listed or proposed for listing on the
7National Priorities List pursuant to section 105(a)(8)(B)
8of the Comprehensive Environmental Response,
9Compensation, and Liability Act of 1980 (Public Law 96-
10510, 94 Stat. 2767).

11(ii)  Property that is or was owned or operated by a
12department, agency or instrumentality of the United
13States.

14(iii)  Property that will be the site of a contiguous
15expansion or improvement of an operating industrial or
16commercial facility.

17"Unanticipated environmental cost insurance."  Insurance that 
18reimburses a borrower for some or all of the unanticipated 
19environmental costs and shall, at a minimum, provide for all of 
20the following:

21(1)  The costs of remedial program activities required by
22the Department of Environmental Protection for the site in
23excess of the estimated cost, as accepted and approved by the
24insurer, of implementing an approved work plan based on the
25information available to the insurance company providing the
26environmental insurance at the time that the insurance is
27obtained, including the information contained or referenced
28in the work plan or plans attached to the commitment document
29or agreement with the department, and minus any prenegotiated
30buffer layer or self-insured retention.

1(2)  A policy period of sufficient length to cover the
2duration of the remedial program activities.

3"Unanticipated environmental costs."  State-required costs 
4that exceed the estimated costs, as accepted and approved by the 
5insurer, of implementing a voluntary agreement and work plan 
6approved by the Department of Environmental Protection based on 
7information available to the carrier at the time the insurance 
8is first obtained or any costs related to the presence of 
9hazardous waste at an affected site that were unknown to the 
10borrower and the department at the time such agreement was 
11approved.

12Section 3.  Environmental Insurance Program Subsidies Account.

13(a)  Establishment of account.--The Environmental Insurance
14Program Subsidies Account is established in the General Fund to
15be utilized by the department for the creation, development,
16administration, management and implementation of the program.

17(b)  Moneys deposited in account.--All of the following
18moneys shall be deposited into the account:

19(1)  Federal or State funds or both appropriated by the
20General Assembly for the purposes of this act.

21(2)  Notwithstanding any other provision of law to the
22contrary, any interest earned upon money deposited into the
23account.

24(c)  Continuous appropriation.--

25(1)  Except as provided in paragraph (2), notwithstanding
26any other provision of law to the contrary, the money in the
27account is appropriated on a continuing basis, without regard
28to fiscal years, to the department for the implementation and
29administration of the program.

30(2)  The money in the account may be expended by the

1department for the implementation and administration of the
2program only upon appropriation by the General Assembly.

3Section 4.  Environmental Insurance Program.

4(a)  Establishment.--The Environmental Insurance Program is
5established within the department.

6(b)  Purpose.--The program shall provide subsidies for
7environmental insurance premiums in order to facilitate the
8remediation of contaminated real property as part of a plan for
9redevelopment of a site.

10Section 5.  Selection of insurance companies.

11(a)  Solicitation of proposals.--

12(1)  The department shall solicit proposals for a package
13of environmental insurance products from insurance companies.
14The request for proposal prepared by the department, in
15conjunction with the program manager, shall identify the
16objectives of this act and the specific types and coverage
17limits of the insurance products desired.

18(2)  The department shall require interested parties to
19submit proposals for environmental insurance that meet those
20objectives in the most effective and efficient manner.

21(3)  The request for proposal shall require that
22proposals allow purchasers of the environmental insurance the
23ability to obtain additional coverage necessary to address
24the specific needs of an individual insured and require that
25the proposal allow a purchaser the opportunity to pay for
26additional coverage without losing the lower transaction
27costs structure of the prenegotiated environmental insurance
28policy.

29(b)  Evaluation of proposals.--

30(1)  The department shall select one insurance company

1that has submitted a proposal pursuant to subsection (a) to
2be the exclusive State-designated provider of environmental
3insurance under this act for a period of three years.

4(2)  The department, in conjunction with the program
5manager, shall select the insurance company that has
6submitted a proposal that best meets the requirements of this
7section and the objectives stated in the request for
8proposal.

9(3)  The insurance company selected by the department
10must have substantial experience in environmental insurance
11underwriting and providing insurance for State environmental
12insurance programs.

13(c)  Prenegotiated package.--

14(1)  The insurance company selected pursuant to
15subsection (b) shall offer a prenegotiated package of
16environmental insurance products to any eligible borrower
17under any commercial real estate loan to fund remediation
18costs and redevelopment with a maximum subsidy of $500,000
19per site.

20(2)  The insurance company may also provide to any person
21an unsubsidized environmental insurance similar to that made
22available under this program.

23Section 6.  Implementation of program.

24(a)  Subsidies.--The department shall use moneys from the
25account to:

26(1)  Pay the fee of the project manager.

27(2)  Within the limits of appropriations or Federal
28grants and loans, provide a subsidy up to 50% of the cost of
29environmental insurance offered pursuant to this section when
30purchased by an eligible borrower and provide a subsidy up to

180% of the self-insured retention amount.

2(b)  Method of awarding subsidies.--

3(1)  Eligible borrowers shall receive subsidies under the
4program in the order in which their applications are received
5by the program manager.

6(2)  In the event that an application is received from an
7eligible borrower before the department has given final
8approval to an earlier application, the department may
9provide a subsidy to the subsequent applicant, provided that
10it has reserved sufficient funds to provide the subsidy to
11all eligible borrowers in the order in which their
12applications are received.

13(c)  Marketing.--The department shall assist the program
14manager in the marketing of the program to lenders, developers
15and other potential program participants.

16(d)  Access to information.--The department shall assist the
17program manager in providing developers and other potential
18program participants with access to information regarding:

19(1)  The program.

20(2)  Lenders whose borrowers have previously participated
21in the program or that have expressed interest in
22participating in the program.

23(3)  The availability and costs of environmental
24insurance.

25(4)  Environmental risk management issues.

26(5)  Available economic development programs.

27(6)  Other related information.

28Section 7.  Application for subsidies.

29All applicants for the program must provide the program
30manager all information necessary to demonstrate that the

1applicant is an eligible borrower, and a detailed estimate of
2the cost of implementing any and all interim remedial measure
3work plans, remedial action work plans, postremedial
4construction operation, monitoring and maintenance work plans
5necessary for the remediation of the site or costs incurred to
6remove asbestos or lead paint from buildings and structures to
7be demolished, repaired or renovated.

8Section 8.  Coordination.

9The department shall implement this act in consultation with
10representatives of other appropriate State agencies.

11Section 9.  Rules and regulations.

12The department may promulgate rules and regulations to
13administer and enforce this act.

14Section 10.  Effective date.

15This act shall take effect in 60 days.